I don't think that such a strategy would work since it relies mostly on hope and prayers, and you can't base a foreign and military policy on hope. Iranian opposition isn't really in a position to put the brakes to Ahmadinejad and the mad mullahs but at this point, so the Brits are probably looking at the alternatives and finding the best among a bunch of bad ones. That means pursuing the diplomatic route.
Of course, the fact that the Brits are pursing this diplomatically is also a tacit recognition that they aren't in a position to take military action, despite the fact that the Iranians engaged in acts of war not only against the Brits but against the Iraqis by invading Iraqi sovereign waters.
All of this continues to play into the hands of the mad mullahs, who are pushing for confrontations with the West, both on the nuclear program front, and in order to free its resources inside Iraq. After the US pinched five Iranian Revolutionary Guards in Iraq earlier in the year, the US has rolled up hundreds of folks involved in insurgent activities and who were providing logistical and tactical support to terrorists and insurgents inside Iraq. That puts a hurt on Iran's capabilities and strategic goals, so the Iranians have been pursuing asymmetrical operations in order to further those goals. That's why the Iranians were suggesting a possible swap of the 5 IRG for the British Royal Marines and sailors.
The mullahs also know that the British government isn't in the best position to respond militarily because they're stretched thin and the public support for Blair is thin. This too could be a misreading by the Iranians since nothing gets the public behind its government quicker than attacks on its military that most folks recognize are acts of war.
The mullahs also sought to precipitate incidents - purposefully seeking out engagements. This was no accident. There was no accidental misreading of maps or accidentally crossing the border.
Ed Morrissey further comments that a low key economic pushback by the US and the West is putting the serious hurt on the Iranian economy.
The Bush administration has successfully conducted an indirect war on Iranian interests, and it is a progressive war. The effects of these efforts will be cumulative, and the Iranians have not much time left before their economy begins to completely collapse under the weight of them. Oil production accounts for 80% of their exports, and once those facilities start to fail, they will have nothing left with which to bargain -- and it will take years to repair the damage. When they reach that stage, Iranians will find plenty of motivation to shake off the disastrous reign of the mullahcracy, and even the Revolutionary Guard will not find much motivation to protect them.UPDATE:
Was the capture of the Brits in retaliation for the defection of a high level Iranian official? Speculation over the rationale for this gross violation of the Geneva Convention - especially as the Iranians claim that they're going to put the uniformed sailors and Royal Marines on trial for espionage and are busy interrogating them - detracts from the fact that the Iranians have crossed a line that they should not have crossed and may not prepared to deal with.
The mad mullahs may think that the British are showing weakness by not taking action against Iran, but they may simply be confusing restraint with weakness/incapacity, and that's a potentially fatal flaw in their handling of the situation.
UPDATE:
Is Iran softening its stance? I doubt it although the reports indicate that the Iranians are looking at charging the British sailors and Marines with illegally crossing into Iranian waters and not espionage.
The reality is that the facts don't matter to the Iranians, regardless of the proof offered by the British government that their Royal Marines and sailors were inside Iraqi waters at the time of the incident. I wonder why the British are not more emphatic with this information because the delay only harms their posture.
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