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Dr. Trita Parsi is among the foremost U.S.-based scholars analyzing the current standoff over Iran's nuclear program. He has worked in an advisory capacity in government in both the U.S. and Sweden, and is currently the president of the National Iranian-American Council. In the course of research for his forthcoming book Treacherous Triangle — The Secret Dealings of Iran, Israel and the United States, Parsi interviewed more than 130 leading U.S., Israeli and Iranian officials. With European efforts to broker a compromise with Iran apparently faltering, TIME.com's Tony Karon asked Dr. Parsi to parse the prospects for a diplomatic solution.

TIME: The U.S. had agreed to hold off on pressing for sanctions to give the Europeans more time to negotiate a deal with Iran over suspending uranium enrichment. Those talks have failed to yield the desired result, and the U.S. is about to start pushing for U.N. sanctions. What can we expect in the weeks ahead?

Parsi: Although the EU representative, Javier Solana, reported that progress had been made in his talks with Iran's nuclear negotiator, Ali Larijani, the Iranians have thus far continued to reject the Western demand that Iran suspend uranium enrichment as a precondition for negotiations. Solana and Larijani had been looking for a formula that would have the Iranians halt enrichment activities for a clearly defined period to allow such talks to begin. But the Iranians are reluctant to accept any deal that removes their right to enrich uranium at some point in the future; even if they do so temporarily, they don't intend to give up that right permanently. The U.S. insists that the only acceptable outcome of the diplomatic process is that Iran agree to refrain from doing any uranium enrichment on its own soil, ever, but the Europeans have recognized that such a goal may no longer be realistic. Although they won't say so publicly, many European diplomats say they may accept the idea of some limited enrichment for research purposes of the sort currently under way in Iran, under closer scrutiny. But the Europeans aren't focused on the outcome; their prime objective is to get the U.S. to the table with Iran, believing that direct talks could change the dynamic. But to do that, they need to persuade Iran to suspend enrichment activity, because that was the precondition set in the U.N. Security Council. And so far, they've failed.

The U.S. is likely to push for some very mild sanctions, now, although Russia may oppose even that option. Meanwhile, the talks between Solana and Larijani will likely continue. The U.S. may be hoping that sanctions pressure will make the Iranians more likely to concede, but the opposite may be true: Even though the sanctions will be largely symbolic, they will likely further set back the diplomatic process. The irony is that the slow process represented by the sanctions option will simply give Iran more time to continue with its current enrichment activities.

TIME: Is there a consensus in the Iranian leadership on an acceptable compromise with the West?

Parsi: There's a fierce power struggle under way in Iran, and as a result, the nuclear issue has produced a tremendous amount of discussion right now. The regime is trying to establish a consensus in order to avoid a situation where any negotiations with the U.S. are used by one faction to gain domestic advantage over another. There's also concern in Tehran that Washington's real agenda is regime change. I don't think the Bush Administration has resolved the debate in its own ranks on that question. Last week, the House of Representatives passed the Iran Freedom Support Act, which speaks the language of regime change. If the Iranians remain convinced that active regime change is the real U.S. goal, then obviously diplomacy will have a slim chance of success.

TIME: The media often paints the picture of Iran led by a madman racing to get his hands on nuclear weapons. Do you believe that Iran's leaders have actually made a strategic choice to seek a strategic nuclear capability?

Parsi: First, it is critical to understand that while President Mahmoud Ahmadinejad may be getting all the attention with his scary rhetoric, he's not the one calling the shots in Tehran. Executive power in Iran does not rest with the presidency, but with the Supreme Leader and a couple of executive councils with which he consults. And that's particularly true on matters of foreign policy and national security. While Ahmedinajad was dominating the headlines at the U.N. two weeks ago, Larijiani was back in Iran receiving instructions for the negotiations with the Europeans. Apparently, Ahmadinejad is not actually involved in the discussions instructing Larijani. One diplomat quipped that Ahmadinejad has the same amount of control over Iran's decisions as [White House spokesman] Tony Snow has over Washington's.

Right now, I think, the majority of the leadership believes that weaponizing nuclear materials has very few benefits for Iran, but carries huge risks. There is, however, broad agreement among Iran's leaders that they should develop all the civilian nuclear technology allowed under the Non-Proliferation Treaty — and that, of course, would create infrastructure that would give them the option of building nuclear weapons very quickly if they chose to. So the consensus is not to build weapons, but to build nuclear infrastructure that would give them the option of building weapons. Whether or not they do so will depend on how they perceive the threat environment they face, so here the emphasis on the military option being on the table is quite counterproductive.

TIME: Is there still room for a diplomatic solution?

Parsi: Well, the Europeans believe that diplomacy has not been exhausted until the U.S. comes to the table. Europe is acting as the middle man between the U.S. and Iran, but there's only so much it can do. The Europeans fear sanctions because they know they won't change Iranian behavior, and will therefore bring the situation closer to war. But if, in their judgment, Iran has not done enough, they may be persuaded that they have to do something to punish Iran. But the Europeans see that as a road to disaster. They know Iran is prepared for sanctions, and will likely respond by squeezing world oil markets in a game of chicken to see which side can take more pain. The only cause for optimism is that both sides recognize the dreadful lose-lose situation they're in if they fail to reach agreement.

• TONY KARON
• In Depth: Dr. Trita Parsi, a leading expert on Iran's relations with the West, parses the current diplomatic effort to resolve the nuclear standoff