Iran's been in the news a lot recently, so I will share my humble opinion on Iran. Note: I am a Jewish Zionist, so this will be more than a bit biased.
Before anyone can have a reasonable discussion about foreign policy, it's necessary to know what we (the U.S.) wants. In the case of Iran, we want four things: oil, democracy in Iran, a market for U.S. goods, and no Iranian nuclear weapons. The first three make sense on their face, but we need to analyze the third one a bit more. After all, we didn't slap sanctions on France when it got its nuclear weapons.
We're scared of Iranian nuclear weapons for three reasons: First, they could obliterate Israel. Second, they could give their weapons to terrorists. Third, they could use their nuclear weapons to gain leverage and influence, both in the Middle East and abroad.
The first outcome is highly unlikely. Although most pundits consider Iran to be an undeterrable "rogue state" led by maniacs with one goal, that could easily describe Mao's China or the Soviet Union, and yet neither ever initiated nuclear holocaust upon getting their weapons. The Soviet Union, which existed for the sole purpose of spreading Marxism-Leninism at any cost to its own people, never initiated nuclear war. Neither did Mao Zedong, who famously stated "When 900 million are left out of 2.9 billion, several five-year plans can be developed for the total elimination of capitalism and for permanent peace. It is not a bad thing," in other words, that nuclear holocaust is a good thing. Iran's leadership is very rational and self interested, and they will continue to behave as such in the future.
With that in mind, the probability that Iran gives nuclear weapons to a terrorist group is very low. Even the most loyal terrorist organizations can often turn against the nation that sponsors them, as in the case of the U.S. funded Mujaheddin turning into Al-Qaeda. Further, the uranium in a nuclear weapon can be traced back to its source using modern nuclear forensics techniques, so any attack using an Iranian supplied bomb would be immediately identified as an attack by Iran, leading to a swift and deadly retaliation by the west. No self interested state would allow that to happen.
The main concern with a nuclear Iran, then, would be Iran becoming a major regional power and using its influence to spread terrorism, cause instability, and promote undemocratic and unfriendly regimes throughout the region through the use of coups and revolutions. Iran has been trying to do this for a long time, evidenced by its support for Hezbollah, Bashar al-Assad, Iraqi anti-government militias, and the 2011 attempted Shiite uprising in Bahrain. American military might has a record of providing credible deterrence against potentially harmful regimes, and it can continue to do so in the future. Thus, more troop deployments to the Middle East, coupled with more exercises, can help to credibly deter a rising Iran. Further, more financial and diplomatic aid to U.S. allies (and neutral countries) in the Middle East can strengthen U.S. allies in the region and bring neutral countries over to our side. Thus, in the event that Iran attempts to overthrow a friendly regime, the friendly regime will be stronger and better equipped to defeat an undemocratic uprising. To stop terrorism, small groups of U.S. special operations troops can be deployed to terrorist hotspots to train local forces and root out terrorist cells, in a fashion similar to the highly successful Operation Enduring Freedom - Philippines.
However, recent events, such as Iran's ultimatum warning the USS John C. Stennis not to return to the Persian Gulf, or this New York Times article (http://www.nytimes.com/2012/01/13/world/middleeast/us-warns-top-iran-leader-not-to-shut-strait-of-hormuz.html?pagewanted=1&_r=1&nl=todaysheadlines&emc=tha2), which claimed that the U.S. Navy would lose against the Iranian Navy, make the deployment of troops to the region look like a dangerous option. These fears are misguided. Although Iran has been making a lot of noise about how it won't tolerate any U.S. forces in the Gulf, the USS Abraham Lincoln and her carrier strike group entered the Gulf this morning without incident. Further, the day after Iran issued its ultimatum to the Stennis, her crew reported that the Iranian warships and aircraft in the Gulf were not stepping up their patrols (as would be expected if the Iranians actually planned to take action against the Stennis. The crew of the Stennis reported that the Iranian warships were returning to port, exactly the opposite of what would be expected. The 2002 Navy computer wargame cited by the New York Times as evidence that the Iranian navy would win in a fight over the Straight of Hormuz was highly flawed: the simulation glitched, allowing the Iranian patrol boats to both teleport and regenerate.
Note that I'm not advocating war with Iran. I advocate increased military exercises and deployments to the Persian Gulf region. War with Iran would be a disaster because it would cost an unreasonable amount of money, hurt our image abroad (which would erase our soft power and fuel terrorism), and probably not even work.
Further, sanctions have failed. Economic sanctions have mostly hurt the Iranian people, and have allowed the regime to skillfully paint a picture of unwarranted U.S. aggression that increases support for the regime, the exact thing we don't want. Besides, sanctions hurt the economies of Europe and our East-Asian allies by denying them the oil their economy relies on.
So what would work? The only policy that has seemed to work so far is covert attacks on Iran's nuclear program, such as Stuxnet or the "accidental" explosion of Iran's nuclear facilities earlier this year. However, a better solution would be to persuade Iran to give up its pursuit of nuclear weapons. This cannot be done with the overtly hostile current regime, regime change is thus needed. The problem of encouraging regime change in Iran is the high probability of a repeat of the 1979 Iranian revolution (U.S. funded!) which put Khomeini and the current regime in power. To avoid this, we need to covertly fund an opposition group in Iran that aligns itself with U.S. interests. From what I hear from Iranian people, such groups exist. If we can cause such a group to become powerful enough, they could overthrow the government, giving us an ally in the region.
Thus, we could achieve all four of our objectives in Iran fairly easily: lifting sanctions secures our oil, a revolution would spread democracy and give American businesses a market to export to, and increased troop deployments would stop Iranian regional hegemony in its tracks.
Citations:
http://www.worldfuturefund.org/wffmaster/Reading/Quotes/maoterror.htm
http://mideast.foreignpolicy.com/posts/2011/08/23/the_martyr_state_myth
Nuclear Forensics: Role, State of the Art, and Program Needs; Joint Working Group of the American Physical Society and the American Association for the Advancement of Science
Counterstrike: The untold story of America's secret campaign against Al Qaeda, Eric Schmitt and Thom Shanker. Times Books, 16 August 2011.
http://oilandglory.foreignpolicy.com/category/wordpress_tag/iran_sanctions
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