Both Tehran and Washington must swallow the rhetoric and seek a deal

A few months ago, I suggested here that all of us who are sceptics about Iraq should subject ourselves to regular brain scans, just in case we were wrong. That is to say, enthusiasm to see George Bush's nose rubbed in his follies must never tip over into eagerness for US failure in Iraq. Its consequences for the world, and above all for the Iraqi people, are far too grave to indulge schadenfreude. There are three reasons today to revisit our thinking about Iraq even if, at the end of the process, we end up back where we started.

James Forysth rightly remarked in the Guardian's media pages yesterday that the British press has under-reported the success of the US troop surge. It is a notable achievement by General David Petraeus and his forces that insurgent attacks have fallen by two-thirds, and civilian fatalities have declined steeply.

Second, Gordon Brown told British troops outside Basra at the weekend that their role is almost over. Within weeks responsibility for security in the southern province will pass to local Iraqi forces.

Finally, last week's amazing US national intelligence estimate, which declared that Iran has no current nuclear weapons programme, could carry critical significance for Iraq. It removes the overriding obstacle to dialogue between Tehran and Washington, which itself is indispensable to stabilising Iraq.

For years, both sides have been acting irrationally. Iran should perceive a neighbourly relationship with a peaceful Iraq as a key national interest. Instead, however, its militants have chosen to regard embarrassing and harassing "the Great Satan" as a superior objective. For this, their country pays a heavy economic and political price. Washington, likewise, has preferred to conduct a war of words with Tehran - and to threaten a war of weapons - rather than build bridges to the many Iranians weary of their national isolation as a terror state.

Of these strands, the easiest to dismiss is the weekend claim by Britain's prime minister. Almost everybody who has recently visited Basra agrees that, far from being on the road to "peace and prosperity", it is dominated by unpleasant Shia militias, committed to repressive social policies, especially towards women. The Baghdad government's writ does not run there.

The British - politicians, soldiers and diplomats alike - tacitly concluded at least 18 months ago that Iraq was a lost cause. Everything they have since done has been aimed at extricating our forces as swiftly as possible. The judgment may well prove to have been right. But it seems implausible to dress up our policy as a success. If the US defies probability and amazes the world by delivering a stable Iraq, Britain will be able to claim scant credit for its contribution.

We are still a long day's march from such a happy outcome, though. Overriding doubts persist about whether America's military successes, however real, can be translated into lasting political progress. Even the most committed US officers remain dismayed by the stunning incoherence of the Iraqi national government. Its security forces are making negligible progress towards viability; its interior ministry is a byword for incompetence and corruption.

Many insurgents have concluded that it is futile to keep battering at the overwhelmingly superior US forces . They watch CNN. They know that a reduction of troop strength must begin soon; that the Bush presidency has only a year to run; and that the new incumbent will be desperate to get out of Iraq. There is therefore much to gain, for every Iraqi with aspirations to political power, by watching and waiting. So it may be rash to read too much into the decline of assaults on US and allied forces.

Could the picture change dramatically as a result of some US accommodation with Iran? A week after Washington's release of the intelligence report, there is much uncertainty about its significance. We know that some administration insiders, notably vice-president Dick Cheney, opposed its publication because they reject its findings. They believe intelligence chiefs have allowed themselves to be fooled by the Iranians.

No one knows whether president Bush supported the document's publication because it opens new political opportunities, or merely acquiesced because it was bound to leak anyway. All we can say with confidence is that if Iran and the US can contrive a deal in Iraq, there is a chance of a tolerable outcome there. If they do not, there is not.

If the Iranian militants continue to perceive a US military humiliation as their foremost objective, constructive dialogue will remain impossible. But if they are sufficiently eager to see an end of economic sanctions to abandon the promotion of insurgency in Iraq, then the Bush administration might be willing to swallow a torrent of past rhetoric, and deal.

An intriguing article in the International Institute for Strategic Studies journal argues that the consequences of a swift US withdrawal from Iraq could prove much less cataclysmic than pessimists have suggested. Christopher Fettweis of the US Naval War College suggests that "the unprecedented is also unlikely ... imagined consequences are usually worse than what reality delivers". He acknowledges the real risk, even probability, of intensified civil war for a time. But he is highly sceptical of scenarios for a regional war.

He cites the example of Vietnam, where the US's departure was delayed for years because of fears of mass slaughter in the South if the communists gained mastery. This did not happen. Fettweis suggests that those who predict worst-case scenarios in Iraq are in part influenced by a visceral distaste for acknowledging American defeat. He forecasts one of two outcomes after a US withdrawal - "political accommodation or a civil war that eventually someone wins, putting an overdue end to the bloodshed".

American hawks would find this argument abhorrently cynical. Yet some of us share Fettweis's instinct, that the consequences of a rapid US departure are unlikely to be worse than those of a protracted one. There is a strong case for trying to reach an accommodation with the Iranians before quitting. But there seems no reason to believe that Iraq's institutions and security forces are profiting from continued US engagement.

It would be absurd to underestimate the political difficulties of extricating the US from Iraq. In every predicament of this kind, fear that an unknown future could prove worse than a familiar present, however bloody, becomes an overriding influence upon governments.

Let us stick to the fundamentals, which have not changed much. Any tolerable outcome in Iraq demands dialogue between Washington and Tehran, and if possible also Damascus. Conditions for this look more favourable, thanks to the intelligence report, than at any time so far this century. The odds against anything Bush - or Brown - can plausibly call "success", remain great. But there is a window of opportunity, promising much to the Iraqi people, if all the parties can narrow their objectives sufficiently to use it.

Max Hastings