Resident Fellow  David Frum

America's new intelligence estimate on Iran changes nothing--and it changes everything. Last week, the Bush administration released large portions of its latest National Intelligence Estimate (NIE) on the Iranian nuclear program. The NIE concluded that Iran had shut down its nuclear weapons program in 2003.

The NIE cautioned that there remained much to worry about. Iran could revive its weapons program at any time. And Iran continues to enrich uranium to levels that could serve as the fuel for a nuclear weapon.

Still, the NIE went far to lift the mood of imminent threat. The Iranian nuclear problem remains a huge problem--but maybe not an urgent problem.

Some have questioned the value of the NIE. No question, intelligence is a very imperfect art. Intelligence agencies often have institutional biases. The CIA in particular has been waging a long-term insurgency against the Bush administration through damaging leaks.

But an NIE is not a CIA product. An NIE represents the consensus view of the 16 U.S. national intelligence agencies, including the Defense Intelligence Agency and the high-tech listening specialists at the National Security Agency. This particular NIE seems to owe a great deal to information provided by Ali Reza Asghari, the Iranian deputy minister of defense who defected to the United States in February, 2007. It would be very unwise and irresponsible to mark the NIE down as the work of disgruntled internal political opponents in the bureaucracy.

The NIE is a foundational political fact that will make it politically impossible for the Bush administration to launch a strike at Iran's nuclear facilities.

Now in one sense, this changes nothing. Hype aside (and as I've been writing for 18 months) the Bush administration has never had any real intention of striking the Iranian nuclear facilities. The new intelligence estimate makes it politically impossible to do something that was not going to happen anyway.

Yet the estimate also changes everything. So long as the world believed that the administration might strike Iran, nobody attached much weight to the administration's utter lack of non-military policies toward the Islamic Republic.

But with force off the table, suddenly the world is noticing that nothing much else is on the table.

Into the void have rushed a thousand policy suggestions. (For those interested, I posted my own at frum.nationalreview.com last Wednesday.)

But few of these suggestions begin with a clear view of what the West needs to accomplish in Iran.

The problem in Iran is not the regime's weaponry: It is the regime itself.

Even without nuclear weapons, Iran supports terrorism worldwide. Between 1992 and 1996, Iran embarked on a terrorist rampage, carrying out attacks that killed some 200 people in Argentina, Germany and a U.S. base in Saudi Arabia, among other targets. The terror campaign temporarily subsided after 1996, only to resume in 2001, this time targeting first Israel and then Iraq and Afghanistan.

The idea that there is some kind of deal to be done with this regime is highly unrealistic.

The Western goal, rather, should be to drive a wedge between the regime and its disaffected population--in the way that the Reagan administration worked to isolate and discredit Eastern European communist regimes in the1980s.

That means reassuring the Iranian population that the United States intends no violence against them--while maintaining economic pressure against the regime and supporting dissident broadcasting and political movements.

Despite rising oil prices, the Iranian regime is in terrible economic shape. (That may be one reason it suspended its costly nuclear program.) Wages are stagnant, inflation is worsening, unemployment is high, gasoline is in short supply. Foreign investors shun Iran not only because of economic sanctions, but also because the country offers a dangerous and unpredictable business environment.

With oil at $100 a barrel, the regime can probably afford to buy enough support to survive. But as it becomes clear that Washington is not planning to attack Iran, that price should decline--as oil prices always do when threat of war subsides. At $60, $50, $40, $30, the regime becomes steadily less durable; the population increasingly impatient; and the chances for change increasingly promising.

Change should be the goal of U.S. policy. Economic pressure and communications operations should be the methods. A "grand bargain" is the dead end to avoid. And war should be seen as what it always is: a sign of policy failure, rather than a tactic to be used for failure to imagine anything better.

David Frum is a resident fellow at AEI.