The pattern of the past 10 years with Iran clearly shows that when one side escalates, the other side counter-escalates. Neither side has had a particularly elaborate or sophisticated strategy. It's been nothing more than a kindergarten-level tit-for-tat game. This is the takeaway from the Moscow talks.
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There was neither a breakdown nor breakthrough in the Moscow talks between Iran and the five permanent members of the UN Security Council plus Germany (P5+1). The P5+1 and Iran negotiated but could not make any headway. No one should be surprised by this result -- after all, the two sides only had the ability to make demands. They -- particularly the U.S. -- lacked the political will to put real concessions on the table. But without a breakthrough, are we heading towards war?

Under normal circumstances, an uneventful diplomatic encounter would hardly get noticed. As long as the talks are kept alive, the situation would remain stable. After all, diplomacy takes patience and persistence. The diplomatic dance often takes one step back, two steps forward. For instance, negotiations to normalize relations between the U.S. and Vietnam took four long years -- between 1990-1994. It took seven years of talks to convince Gaddafi's Libya to dismantle its nuclear program. In both cases, there were numerous setbacks, even breakdowns, along the way before a final agreement was reached.

That is not the situation between the West and Iran for a very simple reason -- the U.S. and the EU are going to significantly escalate the pressure on Iran in the coming weeks. The EU's oil embargo and U.S. sanctions on Iran's oil sales will formally come into effect at the end of the month. And as unprecedented as these measures are, the U.S. will move shortly thereafter to impose even more sanctions to strangle Iran's oil exports.

The pattern of the past 10 years clearly shows that when one side escalates, the other side counter-escalates. Neither side has had a particularly elaborate or sophisticated strategy. It's been nothing more than a kindergarten-level tit-for-tat game.

Consequently, Iran will likely counter-escalate. What makes this latest round of escalatory steps more dangerous is that Iran's escalation options are fewer and fewer and more and more dangerous.

Iran's likely (counter)escalation will center on three possible steps. First, they may increase the level of enrichment to 60 percent or possibly even 95 percent. Sixty percent-enriched uranium can be used for producing fuel pads for their American-made medical reactor. The 95 percent-enriched uranium can be used to power nuclear submarines. But it can also be used to build bombs. And Iran doesn't have any nuclear fuel submarines (though it recently stated that it plans to build them). Both of these steps would be viewed by the U.S. as a major escalation and possibly as crossing Obama's red line for war.

Second, Tehran may complete the underground facility in Fordo -- the only facility it has that likely cannot be destroyed by an Israeli airstrike. Iran can speed up its installation of centrifuge cascades at Fordo. This would clearly cross Israel's stated red line by making Iran's nuclear program largely beyond the reach of Israeli bombing capabilities. While Iran has violated several Israeli red lines in the past without an Israeli military reaction, Israel has nevertheless responded without exception by increasing pressure on the U.S. to take military action.

Finally, Iran may stir up tensions in the Persian Gulf and the Strait of Hormuz in order to push up oil prices, making the Western escalation as costly as possible. This would be particularly problematic for Obama since higher oil prices translate into higher gas prices, which in turn hurts the U.S. economy. If you are an incumbent president looking to get reelected, you cannot afford a struggling economy and high unemployment rates.

Warnings about Iran's ability to close the Strait of Hormuz will likely begin anew. Initially, lower ranking government officials, including junior lawmakers, will issue statements on this matter. Within weeks, more senior political, military and religious officials will echo these warnings. Simultaneously, other officials will deny Iran's intent to close the straits, in order to infuse even greater confusion and uncertainty into the situation.

Without actually attacking a single ship, the Iranian navy and the IRGC navy will adopt a more threatening posture, including by harassing ships passing through the straits. The aim will be to create perpetual, low-grade instability in the waters. This would, among other things, increase the insurance cost for the passing ships and push up oil prices.

It is difficult to see how the next round of talks can survive this game of escalation. And it is difficult to see how the two sides will have greater flexibility to make talks succeed after this next round of heightened pressure.

From the U.S. side, this combination of talks and pressure is premised on the idea that Iran does not yield under pressure -- it only yields under enormous pressure. U.S. decision-makers are inspired by the events of 1988, when Ayatollah Khomeini finally agreed to end the war with Saddam Hussein's Iraq. Iran had suffered tremendous military losses, largely because Saddam's use of chemical weapons. (Incidentally, the components for those chemical weapons were provided to Saddam by the West.) Iran's economy was is shatters. Oil prices stood at less than $10 per barrel. Iran simply could not resist any longer.

Despite Khomeini's slogan of "war, war till victory," he had no choice but to throw in the towel. "Taking this decision was more deadly than taking poison," he said.

Washington wants the regime in Tehran to once again drink from that cup of poison, and to do that, a constant escalation of pressure is needed, the Obama administration calculates.

But there is a world of difference between Khamenei's Iran of 2012 and Khomeini's Iran of 1988. Beyond the obvious it is impossible to bring Iran anywhere near the type of pressure and suffering it endured during the eight year-long Iraq-Iran war, Khomeini also had a clear choice in 1988 with clear consequences. He knew that if he drank the poison, the war would end. There was near 100 percent certainty of that.

Khamenei does not perceive such a choice today because there is no clarity of what would happen if he were to give in to Western demands. Rather than clarity, there is ambiguity.

Sanctions could be lifted. Down the road. Perhaps.

Iran could have domestic nuclear enrichment capabilities. In the distant future. Maybe.

Beyond a clear choice, Khomeini also had an absolute decision-maker as his counterpart. Saddam made all the decisions and no one dared to challenge him. He didn't have to deal with a pesky Congress.

Khamenei does not perceive in Obama a forceful decision-maker whose decisions will stand and whose promises will be fulfilled. Khamenei already had a preconceived notion of Obama in early 2009 as weak and incapable of standing up to pressure from Republicans and Israel. After numerous cases in which Obama has altered his policies in response to these pressures, that impression of the U.S. president has likely not changed.

In the absence of clear exit ramps -- both for the U.S. and Iran -- the attempt to recreate the 1988 scenario is fundamentally flawed. Rather than creating stark choices, there is nothing more than naked escalation. And rather than causing Iran to capitulate, we are more likely to beget confrontation.

Meanwhile, even short of war, crippling sanctions and pressure will continue to decimate Iran's middle class -- the backbone of Iran's indigenous pro-democracy movement. Truly a lose-lose for all.

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