Iran responded formally to UN Resolution 1696 on August 22. They did not reveal any details, but frequent comments by high ranking officials made clear Iran's stance on the issue. It seems Iran will neither stop uranium enrichment activity nor forfeit the right to do independent research into nuclear technology. They have stressed that their nuclear program is for peaceful use. Iran elected to impose its own deadline to respond to the six-nation proposal, choosing August 22 instead of the UN's deadline, August 31.

Iran has been "warming-up" for the possible consequences of rejecting the resolution. It recently held a large military drill, the second this year, signaling its readiness to fight. It continues its efforts to split America and Europe and get more time to maneuver. Iran has proposed a new plan as a gesture of goodwill that may in fact stall the UN and prevent it from agreeing on sanctions.

The conflict in Lebanon has made Iran appear stronger and they are more confident. Iran has at least four major strategic advantages. Most significant for the west is the fact that Iran is the second largest oil exporter in OPEC, producing 3.8 million barrels daily. Not only that, it has control over the Straits of Hormuz, an instrumental thoroughfare for oil transport in the Gulf. Furthermore, Hezbollah, the militant group that recently clashed with Israeli forces, is backed by Iran. Hezbollah has emerged as the real winner of the war. The US hoped Israel would eradicate the group, but the scheme backfired. Further to these difficulties, the Shiites in Iraq are connected closely with Shiites in Iran. It is would be hard to stabilize the situation in Iraq without cooperation from Iran. Finally, there are the Kurds to consider. There are more than 20 million Kurds gathered in the border area where Iran, Iraq, Syria and Turkey meet, and those from Iraq and Iran belong to the same tribe.

President Bush said recently that an Iran equipped with nuclear weapons is "dangerous". Having trampled on Baghdad the US has cast its eyes to Teheran. In its report on the national security strategy, launched earlier this year, the US labeled Iran as its biggest enemy in the Middle East. The US' "Greater Middle East Initiative" is a strategic initiative to get control in the region, forcing it to be dependent on the US and part of its wider hegemony. The strategy, in which Iran was apparently marginalized, clashed with Iran's ambition to become a regional power.

There has been a return of Shiite influence in Iraqi politics in recent years, especially after the US launched the Iraqi war. This is also the case in other countries in the region and the trend has boosted Iran's confidence in launching a campaign for regional power. The ability to conduct independent research is an important part of such an ambition, so Iran will not yield easily on the issue. The aspirations of different players �C those that want the Middle East to become an important link in a global hegemony and those that want their country to become a regional power --will continue to rock Middle East politics.

The author, Ruan Zongze is Deputy Director of the Chinese Institute of International Studies.