When Barack Obama takes office on 20 January, one of his first priorities will be to deal with the Iranian nuclear dossier. Signals coming from his transition team indicate that Obama will pursue a policy of "engagement without illusions".

His likely approach is flawless and compelling. The US has tried everything with Iran - except engagement. Its European allies keep whispering that what Iran really wants is direct talks with Washington. Without America, diplomatic offers are never attractive enough. But the dialogue that Obama will pursue with Tehran will not be for its own sake. Presumably, the new Administration will expect results within a reasonable timeframe. If these do not materialise by, say, mid-2010, it will conclude - this is the "without illusions" part - that Iran is not interested in renouncing its nuclear ambitions.

Once that happens, Obama will switch gears, and call upon America's allies to rally around a much tougher policy that might entail more sanctions or even the possibility of military action. To signal to Tehran that the US will not be fooled by Iran's foot dragging, Obama will probably adopt a number of robust measures. He may order the Pentagon to deploy more naval forces in the Gulf, to place missiles in the Gulf states to protect them and to engage in military exercises in and around the Straits of Hormuz. Obama might issue statements carefully crafted to deter Iranian bad behaviour vis-à-vis America's regional allies. At the same time, Obama will seek to reassure America's friends that a "grand bargain" with Tehran will not be done behind their backs and might suggest an advance agreement on the kind of sanctions Europe and the US might impose.