BACKGROUND: Last December, international media uncovered satellite imagery, which is interpreted to be two secret Iranian installations involved in uranium enrichment. According to senior U.S. State Department officials, Iran is actively working on a nuclear weapons program. State Department spokesman Richard Boucher stated that Iran\'s energy needs do not justify the nuclear facilities in Arak and Natanz. International Atomic Energy Agency (IAEA) Chairman Mohammed El-Baradei said in an interview that the alleged uranium enrichment plant is likely to produce highly enriched uranium for nuclear bombs while the heavy water plant is likely to be used in a reactor to produce weapons grade plutonium. Moreover, Boucher said, Iran flares more natural gas annually than the equivalent energy its future reactor may produce. Iran indeed has more natural gas than it knows what to do with. Since the deal to sell natural gas to Turkey has not been particularly successful, Tehran is now planning to build a giant natural gas pipeline to Pakistan and possibly India. The gas pipeline project, however, will remain on a drawing board as long as relations between Islamabad and New Delhi will remain as tense as they are today. In addition, Turkmenistan has recently signed a memorandum for constructing a pipeline through Afghanistan and Pakistan. Such a project is more likely to be supported by the United States than an Iranian pipeline, U.S. officials said. Thus, the power generation applications of the Russian-built, $800 million Bushehr nuclear plant, and follow-up nuclear projects, do not seem either economically justified or truthful. Iranian spokesmen vehemently denied military applications of the secret nuclear facilities and claimed that the secret projects were declared to IAEA (after they were identified through satellite imagery). Iran claimed that IAEA representatives would be invited to visit the facilities in February. Gholamreza Aghazadeh, the chief of Iranian atomic energy program, told El-Baradei that the construction is for a 6,000-megawatt reactor. Mohammed Javad Zarif, Iran\'s ambassador to the United Nations, parsed his words very carefully. He refused to explain what the large new facilities are, that experts have identified as having military applications, but claimed that the Nuclear Non-Proliferation Treaty (NPT) covers all Iranian nuclear activities. Russian nuclear industry minister Alexander Rumyantsev, who visited Iran in December of last year, found himself in the role of acting as Tehran\'s mouthpiece, elaborating Iranian peaceful intentions to the media: \"Iran is using nuclear energy exclusively for peaceful purposes...There are no programs to create nuclear weapons or develop sensitive nuclear technologies.\" Mr. Rumyantsev, however, failed to explain why Iran still did not sign an agreement to return used fuel to Russia for reprocessing. Perhaps, as American officials suggested, it is because Moscow already sold Iran uranium enrichment technology which has military applications. IMPLICATIONS: The North Korean example demonstrates how quickly a country can pull out of the NPT and kick out international inspectors, leaving great powers to grasp for a solution. Intelligence experts have suggested for a long time that this may be a path that the Iranian leadership could choose to follow. This will not be the first time Russian and Western business people supply what Madeleine Albright used to call \"states of concern\" with technologies necessary to produce weapons of mass destruction - with a nod and a wink, while officials look the other way. This is clearly the case with Russia. While declaring its support for the United States in the war on terrorism, Moscow intends to pocket hundreds of millions of dollars in supplying nuclear weapons to Iran. The Bush Administration is not likely to stand idle while the regime in Tehran builds its nuclear arsenal, just as Washington did not acquiesce to Saddam Hussein\'s buildup of Weapons of Mass Destruction. Russian-American cooperation in the war on terrorism, however, is likely to become a victim of the new confrontation. Another victim may be the current - and uneasy - geopolitical modus vivendi in the Caucasus. Today, Washington and Moscow are in agreement, at least outwardly, on fighting possibly Al Qaeda-related elements in the Pankisi gorge; Georgia\'s sovereignty and territorial inviolability; peaceful development of Caspian oil; and NATO troop deployment in Central Asia. The U.S. and Russia also share their disgust with excesses of Turkmenbashi, and would like to limit radical movements in Central Asia, such as the Islamic Movement of Uzbekistan (IMU) and Hizb-ut Tahrir. A new spat over the Iranian nuclear program, however, is likely to bring Russia and Iran into a cooperative framework which is moreover anti-American. Moscow and Tehran are likely to boost Armenian intransigence in seeking a solution over Karabakh, and enhance Russian support of Abkhaz separatists in Georgia and Ajaria\'s intransigence. CONCLUSIONS: A new U.S.-Russian confrontation, if it occurs, will make a new, more aggressive Russian intervention in succession struggles in Georgia and Azerbaijan more likely. Moscow may attempt to place, with Iranian support, anti-American candidates after Eduard Shevardnadze and Heydar Aliyev leave the scene. It is necessary, therefore, for the United States to get the Korean cooperative crisis resolution model right, in order to tackle a far more difficult Iranian nuclear weapons dilemma in the future. Developing a productive relationship between Washington and Moscow over the North Korean crisis, however, may contribute to preventing a grave confrontation, which would be caused by Russian proliferation policies towards Iran. AUTHOR\'S BIO: Ariel Cohen, Ph.D., is a Research Fellow in Russian and Eurasian studies in Davis Institute for International Studies at the Heritage Foundation in Washington, D.C., and author of Russian Imperialism: Development and Crisis (Greenwood/Praeger, 1998)