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That policy lies in ruins after the election of Ahmadinejad in June radically changed the political calculus.

Meeting in Berlin last week it took less than an hour for Jack Straw, the foreign secretary, and his French and German counterparts to agree that talks with Iran had reached a “dead end”. It was time, they concluded, for the International Atomic Energy Agency’s 35-nation board of governors to refer the matter to the UN security council.

That was the easy part, confirmed over tea and biscuits. Whether sanctions will be imposed on Iran remains a matter of intense debate and negotiation. If they are, the Iranians have vowed to raise the stakes further by ending unannounced inspections and other co-operation with the agency.

In Tehran yesterday a defiant Ahmadinejad accused the West of hypocrisy and arrogance. “They think they have the power and want to deprive Iran of its rights,” he declared. Iran would not compromise “one iota” but insisted that it was seeking only to develop nuclear energy.

It is a claim greeted with scepticism by western experts who believe that Iran has plentiful supplies of fuel for its nuclear reactor at Bushehr without conducting uranium enrichment, a process that can produce either low-grade reactor fuel or the highly enriched material needed to make a nuclear bomb.

The next round of diplomacy opens tomorrow in London when senior EU3 officials will meet their counterparts from Washington, Moscow and Beijing at the Foreign Office. Top of the agenda will be an attempt to persuade the Russians and the Chinese, who have veto powers at the UN, to agree to a common front against Iran.

“We want to reassure them about what we intend to do at the next stage,” said a Foreign Office official. But there is no unanimity on the best course of action; nor is it obvious who will emerge the ultimate victor in the showdown between the Iranians and the West.

The EU3’s decision to recommend Iran’s referral to the security council should be a moment of vindication for the Americans, who have sought for years to persuade the Europeans that there is no point in dallying with the Iranians. As long ago as 2001 the neo-conservative hawk Richard Perle, then a senior adviser to the Pentagon, had accused Straw of “grovelling” to the mullahs.

Perle’s opinion of British and European negotiating efforts has not improved. “They’ll still be talking when the Iranians detonate their first bomb,” he said last week. “Ahmadinejad’s rantings are deeply rooted in an apocalyptic concept of the 12th imam which welcomes mass destruction. We may think it’s crazy, but the question is whether the Iranians are capable of acting on this madness. I’d rather not take the risk.”

Yet as Perle readily admits, much has changed in America in the past couple of years. “The (Bush) administration has become paralysed. It’s lost all clear sense of direction with regard to Iran and is all too content not to face difficult decisions,” he said.

In other words, as Straw said last week: “To quote the White House, Iran is not Iraq.”

()There was a time when American officials boasted of “turning right after we march to Baghdad” — towards Tehran. The toppling of Saddam Hussein in Iraq was supposed to be a warning to the remaining members of the “axis of evil”, Iran and North Korea, that nuclear proliferation was a fool’s game. Instead, Iran has been able to thumb its nose at the West while America struggles to prevent civil war in Iraq.

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