Stratfor’s George Friedman elucidates the differences between the 2005 NIE and the 2007 NIE.

Nuclear sabre-rattling previously served Iranian interests.

The assumption was that Iran wanted to develop nuclear weapons — though its motivations for wanting to do so were never clear to us. First, the Iranians had to assume that, well before they had an operational system, the United States or Israel would destroy it. In other words, it would be a huge effort for little profit. Second, assume that it developed one or two weapons and attacked Israel, for example. Israel might well have been destroyed, but Iran would probably be devastated by an Israeli or U.S. counterstrike. What would be the point?

For Iran to be developing nuclear weapons, it would have to have been prepared to take extraordinary risks. A madman theory, centered around the behavior of President Mahmoud Ahmadinejad, was essential. But as the NIE points out, Iran was “guided by a cost-benefit approach.” In simple terms, the Iranians weren’t nuts. That is why they didn’t build a nuclear program.

That is not to say Iran did not benefit from having the world believe it was building nuclear weapons. The United States is obsessed with nuclear weapons in the hands of states it regards as irrational. By appearing to be irrational and developing nuclear weapons, the Iranians created a valuable asset to use in negotiating with the Americans. The notion of a nuclear weapon in Iranian hands appeared so threatening that the United States might well negotiate away other things — particularly in Iraq — in exchange for a halt of the program. Or so the Iranians hoped. Therefore, while they halted development on their weapons program, they were not eager to let the Americans relax. They swung back and forth between asserting their right to operate the program and denying they had one. Moreover, they pushed hard for a civilian power program, which theoretically worried the world less. It drove the Americans up a wall — precisely where the Iranians wanted them.

Now, suddenly, the US Government apparently has decided that this is a convenient time to move beyond quarreling with Iran over Iranian nuclear ambitions to try to make a deal concerning Iraq. So, voilá! here is a new NIE determining that the Iranian nuclear threat is not quite so great as was previously feared. They probably won’t have the bomb until the middle of the next decade. Almost certainly not for another 18-to-24 months (when it will be another administration’s problem). Time to rachet down the confrontation.

The recent U.S. successes in Iraq, however limited and transitory they might be, may have caused the Iranians to rethink their view on dealing with the Americans on Iraq. The Americans, regardless of progress, cannot easily suppress all of the Shiite militias. The Iranians cannot impose a regime on Iraq, though they can destabilize the process. A successful outcome requires a degree of cooperation — and recent indications suggest that Iran is prepared to provide that cooperation.

That puts the United States in an incredibly difficult position. On the one hand, it needs Iran for the endgame in Iraq. On the other, negotiating with Iran while it is developing nuclear weapons runs counter to fundamental U.S. policies and the coalition it was trying to construct. As long as Iran was building nuclear weapons, working with Iran on Iraq was impossible.

The NIE solves a geopolitical problem for the United States. Washington cannot impose a unilateral settlement on Iraq, nor can it sustain forever the level of military commitment it has made to Iraq. There are other fires starting to burn around the world. At the same time, Washington cannot work with Tehran while it is building nuclear weapons. Hence, the NIE: While Iran does have a nuclear power program, it is not building nuclear weapons.

Friedman also thinks, plausibly enough, that something happened that they are not telling us.