Should there be a “grand bargain” with Iran?

The Financial Times breaks a story that back in May, Iran wanted to join Libya on the Bandwagon Express:

The US has for 10 months been stalling over an Iranian offer of landmark talks that would see the Islamic republic address Washington's concerns on nuclear weapons, terrorism and Israel - because of divisions within the Bush administration. US officials and go-betweens say the talks, which could in return establish normal diplomatic relations between the countries, have been resisted by hawks in Washington who adamantly oppose opening a dialogue with the clerical regime in Iran, which George W. Bush, the US president, branded part of the "axis of evil". However, Colin Powell, the secretary of state, recently told an internal meeting that Mr Bush was looking for an "opening" with Iran, raising the possibility of a positive reply. The recent example of Libya has shown how some countries that Washington has labelled "rogue nations" can begin to rehabilitate themselves in US eyes. What has become known in diplomatic circles as Iran's "grand bargain" was first communicated to the US State Department through the "Swiss channel" on May 4 last year. Switzerland represents US interests in Iran. The communication quoted a senior Iranian official as laying out a "road map" to normalise relations, which have been hostile since the Iranian revolution of 1979. Under the plan, Iran would address US concerns over nuclear weapons and terrorism, co-ordinate policy on Iraq and consider a two-state solution to the Israeli-Palestinian conflict. In return, Iran expected a lifting of sanctions, recognition of its security interests, dropping of "regime change" from the official US lexicon and eventual re-establishment of relations. "There was a lot of detail to be worked out," said one American familiar with the proposal. "They proposed concrete steps on how to work on this. The substance of the agenda was pretty reasonable." However, Washington has given no formal response to the offer. Instead, the Swiss foreign ministry received a rebuke from the US for "overstepping" its mandate. Nonetheless, unofficial contacts have continued with Iran through various channels. Even those "realists" in the Bush administration, who believe it is in the US national interest to talk to Tehran's hardline clerics, perceive that Iran's behaviour is getting worse on issues such as its suspected nuclear weapons programme, support for "terrorist" groups and its human rights record. One high-level figure involved is Brent Scowcroft, a former national security adviser and retired general, who has held talks with Mohammad Javad Zarif, the Iranian ambassador to the United Nations. Both men declined to comment.

Here's my question -- should this deal have been made back in May? Should it be made now? Note that the FT story makes it clear that the quid pro quo required the US to give the Iranian regime a partial pass on human rights. On the other hand, that's also not part of the Libya deal either. One could argue that Iran's record of prior bad acts raises the bar for trusting them. On the other hand, Libya tried to acquire WMD capabilities while the negotiations with the US and UK were taking place. My initial take -- the deal should have been cut, and probably should still be cut. I say this fully aware that such a deal would be detrimental to the short-term advancement of human rights in Iran. The top priorities of the administration are the war on terror and remaking the Middle East. Iran's cooperation on the terror front would have been pretty easy to measure (making the deal easy to revoke if Iran failled to follow through), and an unambiguously good thing if Iran had followed through. The downside would have been giving the Iranian hardliners a freer hand in cracking down -- but it's not as if not making the deal has improved matters. Furthermore, if the deal increases Iraqi stability, then it improves the odds of Iraq democracy, which would have a powerful demonstration effect. I'm perfectly willing to entertain counterarguments. One final thought -- the deal is still out there. Should it be taken now? UPDATE: Lots of good feedback, mostly centered on a) whether Iran would live up to its side of the bargain, and b) what this would mean to Iran's citizenry. My arguments in favor rested on the notion that a) The Iranian government lived up to its bargain, and b) Our current policy of "regime change" via isolation and browbeating was not working (though check out my next post). Furthermore, cooperation on terrorism, WMD proliferation, and Iraqi stability cannot be lightly dismissed -- though I agree that there would need to be tangible metrics to ensure Iranian compliance. Furthermore, in terms of policy consistency, why would it be OK to cut a deal with Libya and not Iran? Roger L. Simon [who y'all should read] says that it's a question of magnitude -- Iran is bigger and more important than Libya. Fair enough -- but my question would be whether the demonstration effect of a more stable and democratic Iraq on the Irania population outweighs whatever direct effect U.S. condemnation has on the stability of the Iranian regime.