Rumors Of War

In a pattern that would become familiar, however, a chill quickly followed the warming in relations. Barely a week after the Tokyo meeting, Iran was included with Iraq and North Korea in the "Axis of Evil." Michael Gerson, now a NEWSWEEK contributor, headed the White House speechwriting shop at the time. He says Iran and North Korea were inserted into Bush's controversial State of the Union address in order to avoid focusing solely on Iraq. At the time, Bush was already making plans to topple Saddam Hussein, but he wasn't ready to say so. Gerson says it was Condoleezza Rice, then national-security adviser, who told him which two countries to include along with Iraq. But the phrase also appealed to a president who felt himself thrust into a grand struggle. Senior aides say it reminded him of Ronald Reagan's ringing denunciations of the "evil empire."

Once again, Iran's reformists were knocked back on their heels. "Those who were in favor of a rapprochement with the United States were marginalized," says Adeli. "The speech somehow exonerated those who had always doubted America's intentions." The Khameini aide concurs: "The Axis of Evil speech did not surprise the Supreme Leader. He never trusted the Americans."

It would be another war that nudged the two countries together again. At the beginning of 2003, as the Pentagon readied for battle against Iraq, the Americans wanted Tehran's help in case a flood of refugees headed for the border, or if U.S. pilots were downed inside Iran. After U.S. tanks thundered into Baghdad, those worries eased. "We had the strong hand at that point," recalls Colin Powell, who was secretary of State at the time. If anything, though, America's lightning campaign made the Iranians even more eager to deal. Low-level meetings between the two sides had continued even after the Axis of Evil speech. At one of them that spring, Zarif raised the question of the Mujahedin-e Khalq (MEK), a rabidly anti-Iranian militant group based in Iraq. Iran had detained a number of senior Qaeda operatives after 9/11. Zarif floated the possibility of "reciprocity"--your terrorists for ours.

The idea was brought up at a mid-May meeting between Bush and his chief advisers in the wood-paneled Situation Room in the White House basement. Riding high, Bush seemed to like the idea of a swap, says a participant who asked to remain anonymous because the meeting was classified. Some in the room argued that designating the militants as terrorists had been a mistake, others that they might prove useful against Iran someday. Powell opposed the handover for a different reason: he worried that the captives might be tortured. The vice president, silent through most of the meeting as was his wont, muttered something about "preserving all our options." (Cheney declined to comment.) The MEK's status remains unresolved.

Around this time what struck some in the U.S. government as an even more dramatic offer arrived in Washington--a faxed two-page proposal for comprehensive bilateral talks. To the NSC's Mann, among others, the Iranians seemed willing to discuss, at least, cracking down on Hizbullah and Hamas (or turning them into peaceful political organizations) and "full transparency" on Iran's nuclear program. In return, the Iranian "aims" in the document called for a "halt in U.S. hostile behavior and rectification of the status of Iran in the U.S. and abolishing sanctions," as well as pursuit of the MEK.

An Iranian diplomat admits to NEWSWEEK that he had a hand in preparing the proposal, but denies that he was its original author. Asking not to be named because the topic is politically sensitive, he says he got the rough draft from an intermediary with connections at the White House and the State Department. He suggested some relatively minor revisions in ballpoint pen and dispatched the working draft to Tehran, where it was shown to only the top ranks of the regime. "We didn't want to have an 'Irangate 2'," the diplomat says, referring to the secret negotiations to trade weapons for hostages that ended in scandal during Reagan's administration. After Iran's National Security Council approved the document (under orders from Khameini), a final copy was produced and sent to Washington, according to the diplomat.