The tensions simmering in the Gulf show no sign of easing as we enter the new year, if anything they threaten to boil over, with mounting speculation about the possibility of US or Israeli air strikes against Iran. But the escalating confrontation is a recipe for disaster, as it is making the Iranian situation a potential global geopolitical flashpoint.

In response to mounting Western pressure over its uranium enrichment program, Teheran embarked on a 10-day naval exercise in late December, test-firing a series of missiles. It also warned it could close the Strait of Hormuz, a vital oil tanker gateway, if sanctions were imposed on its oil exports.

Washington reacted by introducing new legislation targeting Iran's central bank on New Year's Eve, which will come into force in six months. If enforced, it will be equivalent to a de facto oil embargo, thanks to the bank's role in collecting most of Iran's revenue from oil exports.

However, US President Barack Obama is authorized to waive sanctions if they cause oil prices to skyrocket or threaten national security.

European Union ministers are also proposing tougher sanctions against Iran, including an embargo on imports of Iranian oil, although this would in all likelihood hurt the EU more than Iran.

Worse still, these tougher sanctions against Iran, the world's third largest oil-exporting country, will have unwanted side-effects, as they will push up oil prices and disturb the global energy market, which will curtail the already faltering economic recovery.

Crippling economic and financial sanctions orchestrated by the US and EU have squeezed the Iranian economy and are backing it into a corner, leading to Teheran's increasing unwillingness to change its nuclear course.

However, although the situation seems to be heading toward a military conflict, there is still time to change course and find a peaceful solution.

But a comprehensive and peaceful solution to the Iranian nuclear issue will only be achieved through dialogue and negotiation.

Besides flexing its muscles, Iran has proposed a new round of nuclear talks with the five permanent members of the UN Security Council and Germany, to which the EU has responded positively, saying it is open to meaningful discussions on confidence-building measures, without preconditions from the Iranian side.

But prior to resuming the talks, which stalled last January, Iran should seek to allay the suspicions of the International Atomic Energy Agency and reassure the international community that its nuclear program is purely for energy purposes, and the international community should guarantee Iran's right to the peaceful use of nuclear energy.

The latest moves by both sides are merely fanning the flames of confrontation and are not conducive to regional peace and boosting the prospects of the global economy. The sooner all parties concerned return to the negotiations with sincerity and flexibility, the less likely it is the situation will get out of control.

(China Daily 01/05/2012 page8)