Editor's Note: George W. Bush appears determined to sharpen the confrontation with Iran over its nascent nuclear program, with the President declaring that a nuclear-armed Iran is unacceptable to the United States. A growing number of analysts believe his ultimate goal is regime change in Tehran, though few expect a full-scale invasion like Bush ordered against Iraq in 2003.

Indeed, the Iraq experience has limited U.S. options in two respects: first, the bloody occupation of Iraq has weakened the capability of the U.S. military to take on another major expeditionary mission, and second, the invasion created a disincentive for nations to disarm in the face of international pressure. As it turned out, Iraq not only had complied with demands that it forego weapons of mass destruction but it allowed in United Nations weapons inspectors to check.

Instead of earning the protection of the international community, however, Iraq's acquiescence led to a devastating assault on the country by the United States. Tens of thousands of Iraqis died, the nation now totters on the brink of civil war -- and Iraqi leader Saddam Hussein was captured, photographed in his underwear and is likely to face execution, probably by hanging.

By contrast, North Korea's leaders defied outside pressure, apparently built a nuclear bomb, and thus have kept the Bush administration at bay. In this guest essay, Ivan Eland of the Independent Institute looks at the unpleasant choices ahead on Iran because of Bush's WMD boomerang:

Stopping or slowing the spread of nuclear weapons has been a primary foreign policy goal for both Republican and Democratic administrations. During the Clinton administration, for example, Secretary of State Madeleine Albright explicitly gave the policy a very high priority.

U.S. policy has always focused on three tactics to stop nuclear proliferation in other countries: banning the materials and technology needed to develop nuclear weapons, punitive economic sanctions, and military action. Although banning materials can slow nuclear proliferation, economic sanctions and military action are counterproductive.

A “rally around the flag” effect against these external threats usually makes getting atomic weapons popular, even if the populace is fed up with their country’s regime—as in the case of theocratic Iran.

Military threats or actions can cause countries that are developing nuclear technology to accelerate their atomic program and shroud the location of the facilities to protect them from bombing. The invasion of Iraq and subsequent U.S. military threats against Iran have actually intensified the Iranian desire to get nuclear weapons to keep the superpower out.

Iran has hidden and buried nuclear facilities and put them in populated areas, which would be difficult for the United States to bomb without causing an international outcry. U.S. intelligence is unlikely to know the locations of all of the Iranian nuclear facilities, and Iran may even have a separate parallel set of facilities unbeknownst to the international community.

Both liberal and conservative U.S. advocates of non-proliferation policies pay too little attention to the effect U.S. interventionist foreign policy has on the acceleration of nuclear proliferation around the world. Countries interested in developing nuclear technology saw the respect that a nuclear North Korea got from the United States as well as the absence of respect that a non-nuclear Iraq received.

Many conservatives neglect this intervention-proliferation causal relationship because they believe U.S. military interventions overseas are necessary for the promotion of the national interest. On the other hand, some liberals minimize this relationship because they advocate military interventions for “humanitarian” purposes.

Both camps, however, should realize the long-term effects of U.S. military interventions on the proliferation of nuclear weapons around the world.

If threats are unlikely to dissuade Iran from rapidly acquiring nuclear weapons and will instead persuade it to do so, what can be done?

The United States needs to propose a grand bargain with Iran—such as that offered to North Korea and accepted by Libya. In exchange for ending its nuclear program, Iran would be offered a pledge of non-aggression by the United States and Israel and full economic and diplomatic integration with the world.

Although Israel considers Iran its main threat, Iran considers the Israeli nuclear arsenal of hundreds of warheads a major threat as well.

With the U.S. and Israeli threats neutralized by the non-aggression treaty, the Iranians just might feel secure enough to scrap their nuclear program. But even with that offer, Iran, which lives in a dangerous neighborhood, may still elect to proceed with its quest for nuclear armaments.

Nuclear powers, such as the United States and Israel, are hypocritical in denying other countries this ultimate guarantor of national security. Besides, the United States, with thousands of nuclear warheads, could easily deter an Iranian nuclear attack with only a few warheads. The United States deterred other radical rogue regimes when they obtained nuclear weapons, including the Soviet Union in the late 1940s and Maoist China in the mid-1960s.

Although the Iranians support terrorist groups, Iran has a home address that can be threatened with nuclear retaliation; the terrorists do not. More than likely, the Iranian government would be reluctant to give nuclear weapons, which are expensive to develop, to unpredictable terrorists groups that might be traced back to Iran—thus putting a bull’s eye on Iran.

Because the United States has no viable military solution against the Iranian nuclear program, it should offer Iran a grand bargain. If that fails, the United States may have to accept a nuclear Iran—an outcome far from optimal, but not catastrophic either.

Ivan Eland is a Senior Fellow at The Independent Institute, Director of the Institute’s Center on Peace & Liberty, and author of the books The Empire Has No Clothes, and Putting “Defense” Back into U.S. Defense Policy.