What should we make of Iran’s release of the 15 sailors and Marines — and of the entire standoff?

President Ahmadinejad’s announcement of his “gift” to Britain took Downing Street and the Foreign and Commonwealth Office by surprise. It appeared to take place without a formal deal, although there have been rumblings for two days that Iraq’s release this week of an Iranian diplomat might be part of a package. So, too, many suggested, would be granting Iran consular acccess to five other detained Iranians in northern Iraq.

But those always sounded like the trappings of a desperate attempt to feel out the parameters of a deal when the overarching question was unanswered: what did Iran actually want? British officials, frustrated after struggling to identify the right Iranians to talk to, never mind to talk to them, stumbled from the start over the answer.

President Bush, when finally invited to speak by Tony Blair, called the 15 sailors and Marines “hostages”, but that cast the dispute in the terms of a bargain, as if Iran were seeking a specified reward. Had that been its prime motive, then a few Iraqi gestures over detained diplomats would have been too flimsy to warrant the release (and in any case, Iraq is defying international obligations in withholding access, as Iran was in the last fortnight).

In the event, Ahmadinejad did not even brandish a British promise to stay out of Iranian waters, another face-saving trophy Britain might have offered him. In showmanship, he made do with the sheer suddenness of the announcement, and with giving medals of honour to the coastguards who had captured the crew.

The decision to release the sailors tells us three things about the regime in Tehran. First, at its summit — meaning the Supreme Leader Ayatollah Ali Khamenei — it does not want to pick a big fight with the West. This row was never like the 444-day US hostage crisis, which began in 1979 when a revolutionary regime was trying to define its ideals and rally Iranians behind it. This time, Iran seemed rattled by the support Britain won.

Secondly, even though we still do not know who ordered the capture, the regime is deeply confused and conflicted, as the contradictory signals about whether Iran would release Faye Turney showed.

Thirdly, it has settled this dispute on terms it finds helpful at home. It may have extracted little tangible gain, but that does not make it a humiliation. Many ordinary Iranians accepted the line that the boat was in Iranian waters; many will credit Ahmadinejad for having stood up to the British and then for having been magnanimous.

That is the key to the question of what Iran wanted: respect and a recognition of its power. It is hard to overstate its profound belief in its right to be involved in the running of Iraq and the region, by virtue of its size and its long history as a nation state, in a region of countries partitioned in the last century by lines in the sand. To many Iranians, the episode will look like an affirmation of that status, even if in Britain it may look like a climbdown. Tony Blair comes out of it well too. The shifts from the low-key approach to the arena of the United Nations Security Council, and then the careful regression again to quiet talks with Tehran, was risky. It could have made him look weak, and escalated the row. But it seems to have given Tehran precisely the jolt and the warning that he intended.

The conclusion also says much about the value of recent British overtures to Syria, a regime which proved a crucial go-between in the past fortnight.

For all that the episode has ended smoothly, it marks a long step backwards in Iran’s relations with the world. The regime’s reflexes tend towards confrontation much more quickly than those who try to wrestle with it, over Iraq and over its nuclear ambitions, have hoped. We can’t expect Iran to hand over its nuclear centrifuges so easily as a second “gift” to the cause of harmony.

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