Iran's neighbors are nervous about Iran's nuclear weapons program, but they believe that the radicals currently in charge will soon be out of power. There is constant traffic between Iran and the other Gulf States, and Arabs are big believers in what the buzz on the street is. The buzz in Iran is that the Islamic radicals running the country are unpopular with the majority of Iranians. These Islamic radicals know they are not liked, and are running with the nuclear weapons program (which they insist does not exist) because this is popular with most Iranians. The Islamic radicals believe that once they carry out a successful nuclear weapons test, their popularity in Iran will go through the roof, and the rest of the world will be more reluctant to stand up to Iranian demands. But such a test may be years away, because of the apparently slow progress in developing some key technologies needed for the weapons.
March 8, 2006: The government insists it is not working on nuclear weapons, and will continue working on nuclear energy programs. However, much evidence has piled up that the Iranians are working on nuclear weapons, and most Iranians believe the effort exists, and support it.
In response to threats of UN sanctions, the government threatens right back, implying that Iran can withhold its oil shipments, thus sending the world price of oil upward. Iran also threatens to shut down all oil shipments out of the Persian Gulf. This is questionable, as Iran's military capability has been degraded by over two decades of weapons embargoes. Nevertheless, Iran is feisty and not backing down from a threat or a fight.
March 7, 2006: The U.S. has openly accused Iran of sending members of its Revolutionary Guard into Iraq to aid Islamic radical Iraqi Shia Arabs. There are factions among the Iraqi Shia Arabs who want to establish an Islamic republic. These are a minority, but the Iranians believe that with enough help, they can get an Islamic dictatorship established in Iraq. This is the worst nightmare of the Arab Gulf states, so they have been helpful to more moderate Iraqi Shia Arabs, and Iraqi Sunni Arabs who are not supporting terrorism.
March 7, 2006: Evidence has appeared revealing an Iranian project to build a warhead for their Shahab 3 missile, that would be capable of carrying and detonating a nuclear weapon. There have been arrests in Europe, of people arranging the illegal export of components for such a warhead. The effort is called "Project 111," and is typical of Iranian efforts to get around bans on selling it weapons technology. Meanwhile, Israel has pointed out that its Arrow anti-Missile system can stop the Shahab 3. Then again, the Iranians are building over a dozen Shahab 3's a year, and Israel only has a few Arrow systems.