Iran poses the greatest foreign policy challenge to Barack Obama, the President-elect, with Tehran on course to produce a nuclear bomb in the first year of an Obama administration, a coalition of top think-tanks gave warning yesterday.

Mr Obama must keep his promises of direct talks with Tehran and engage the Middle East region as a whole if he is to halt a looming crisis that could be revisited on the US, the experts said.

“Diplomacy is not guaranteed to work,” Richard Haass, one of the authors said. “But the other options – military action or living with an Iranian weapon are sufficiently unattractive for it to warrant serious commitment.”

The warnings came in a report entitled Restoring the Balance. The Middle East strategy for the President-elect was drafted by the Council for Foreign Relations and the Brookings Institution.

Gary Samore, one of the authors, said that the level of alarm over the “hornet’s nest” facing the President-elect in the Middle East, and the need for the swift adoption of previously untested approach, had inspired the decision to write policy for him. “New administrations can choose new policies but they can’t choose next contexts,” Mr Samore said.

The report paints a grim picture of the problems in the region but asserts that Mr Obama is still in a strong position. For the first time since the Iranian revolution the leadership in Tehran has endorsed the idea of talking directly with Washington, as Mr Obama has suggested. Falling oil prices also provide an opportunity, restricting Iran’s means to sponsor terrorist groups such as Hamas and Hezbollah that act as its proxy in the region.

The new administration, however, must not fall into the trap of treating Iran in isolation to the rest of the Middle East, as the previous administration did.

Syria, which has shown tentative signs of a desire for better relations with the West and has held negotiations with Israel, could be the ideal test case for a new diplomatic approach.

The report laid blame for much of the crisis with the Bush Administration, whose war in Iraq fuelled Iran’s regional ascendancy. The authors warned against an “Anything but Bush” approach, urging Mr Obama to build on changes in direction adopted in the past two years.

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