This is a terrorist cult leader? Maryam Rajavi is dressed in a Chanel-style suit with her skirt at midcalf, lilac colored pumps and a matching headscarf. Over a dinner of kebab, rice and French pastries, Rajavi smiles often and laughs easily. She's at once colorful and demure, like many an educated woman in the Middle East. Indeed if George W. Bush--who relies on powerful females for counsel--were pressed to identify a Muslim model of womanhood, this 51-year-old Iranian would look very much the part.

But of course that's exactly the impression Rajavi seeks to give. Behind her smile is a saleswoman's savvy--and a revolutionary's zeal to prove that she and her mysterious husband, Massoud Rajavi, are neither cultists nor terrorists. Maryam Rajavi is demanding that the exile groups they lead together, centered on the Mujahedin-e Khalq (People's Holy Warriors) or MEK for short, should be taken off the State Department's list of terrorist organizations, their assets unfrozen and their energies unleashed. The MEK, Rajavi says, is the answer to American prayers as Tehran continues to dabble defiantly in both terrorism and nuclear arms. "I believe increasingly the Americans have come to realize that the solution is an Iranian force that is able to get rid of the Islamic fundamentalists in power in Iran," she told NEWSWEEK in a rare interview at her organization's compound in the quiet French village of Auvers sur Oise. The group's own former role in terrorist attacks dating back to its support for the U.S. Embassy takeover in 1979, Rajavi insists, is ancient history. And the MEK is not a Jim Jones-like cult as critics allege, with forced separation between men and women and indoctrination for children, all overseen by the Rajavis' autocratic style. Instead, she insists, it is "a democratic force."

Whatever Rajavi's true colors, NEWSWEEK has learned that her role may be growing in the calculations of Bush administration hard-liners. At a camp south of Baghdad--it's called Ashraf, after Massoud Rajavi's assassinated first wife--3,850 MEK members have been confined but gently treated by U.S. forces since the invasion of Iraq (once they were allies of Saddam against their own country in the 1980s Iran-Iraq war). Now the administration is seeking to cull useful MEK members as operatives for use against Tehran, all while insisting that it does not deal with the MEK as a group, American government sources say.

Some Pentagon civilians and intelligence planners are hoping a corps of informants can be picked from among the MEK prisoners, then split away from the movement and given training as spies, U.S. officials say. After that, the thinking goes, they will be sent back to their native Iran to gather intelligence on the Iranian clerical regime, particularly its efforts to develop nuclear weapons. Some hawks also hope they could help to reawaken the democratic reform movement in Iran, which the mullahs have silenced. "They [want] to make us mercenaries," one MEK official told NEWSWEEK.

Yet the administration's new engagement with MEK members has, so far, done little to clarify its still-murky approach to Iran. That is worrisome to many critics at home and abroad--especially since Vice President Dick Cheney said in recent weeks that Iran was now at the "top" of the president's national-security agenda. Last week, on her first trip abroad as secretary of State, Condoleezza Rice sought to play both hawk and diplomat, reviving the old role she negotiated so often as Bush's national-security adviser. Pressed by reporters, Rice declined to deny that Bush's policy toward Iran is regime change, and she even hinted broadly that it was. Rice said that Iranians "should be no different than the Palestinians or the Iraqis or the Afghans or peoples around the world--the Ukrainians--who are determining their own future." All these places have elected new governments under different degrees of U.S. pressure.

At the same time, however, Rice reassured her European counterparts in London, Paris and Berlin that, like them, the administration is putting diplomacy first. That mainly means continuing Washington's lukewarm support of a European effort to win a permanent freeze on Tehran's covert nuclear program, along with new rights for inspectors to verify the pact. Rice is also mulling over some new proposals from her own staff that call for Washington to wedge open a new relationship with the Iranian regime by striking "little deals" on areas of overlapping interest, such as Iraq, the Afghan border and the Gulf.

Confused? So are the Europeans. Rice, in fact, privately acknowledged to her European colleagues last week that the administration is still unable to agree on an Iran policy. She also indicated it will take months more to figure one out. One reason is that none of the options is very good. Many inside the administration believe the diplomatic efforts of the so-called European Three--Britain, France and Germany--are mere Band-Aids and will only delay Tehran's unstinting efforts to build a nuclear bomb, which intel analysts say is about five years off. But even most hawks agree that U.S. military options in Iran are just as unpalatable. What's left? Bush hopes that his rhetoric of freedom will inspire dissidents within Iran. But some hard-liners in the Defense Department want a more "forward leaning" policy: quietly pushing for regime change by making use of exiles like former MEK members.

Still, Rice and other top State officials remain leery of the MEK, despite renewed efforts to back and fund the group on Capitol Hill. In a conversation with one European counterpart last week, Rice seemed to belittle the Defense Department's recruitment efforts, saying "the Pentagon is playing at the margins" of the administration's Iran policy. Sources tell news-week that the CIA is also resisting the recruitment of agents from the MEK because senior officers regard them as unreliable cultists under the sway of Rajavi and her husband. A Defense Department spokesman denied there is any "cooperation agreement" with the MEK and said the Pentagon has no plans to utilize MEK members in any capacity.

Rajavi, for her part, is adamant that her organization will never be broken up. "There have been efforts to recruit individuals, or to dismantle parts of the movement," she says. "These have failed." Supporters of the MEK on Capitol Hill, where at least one bill is aimed at restoring the organization to State's good graces, say that some of its intelligence has already proved very accurate. (It was the MEK last year that revealed Iran's secret nuclear facilities at Natanz.) It is also clear that Tehran deeply fears the group's influence. "The Defense Department is thinking of them as buddies and the State Department sees them as terrorists. The truth is probably somewhere in the middle," says Rep. Brad Sherman, a Democrat from California. "Maybe they should get time off for good behavior." Perhaps. But that would require a coherent policy first.

Join the Discussion