ANALYSIS-Obama likely to take cautious approach on Iran

WASHINGTON Jan 26 (Reuters) - U.S. President Barack Obama's outreach to Tehran is likely to be cautious ahead of June elections in Iran despite a promise in his inaugural address to engage anyone "willing to unclench your fist."

The Obama administration is reviewing U.S. policy toward Iran but analysts expect no immediate shift in the current strategy to rein in Tehran's nuclear activities -- with more sanctions likely and small steps toward dialogue.

"You don't suddenly rush out and try to get everything done in the first 100 days. One of the keys will be to test the parameters of a dialogue," said Anthony Cordesman of the Center for Strategic and International Studies think-tank.

The review will look at all aspects of Iran policy, from a possible low-level diplomatic presence in Iran to the correct mix of incentives and pressure to get Tehran to give up uranium enrichment the West says is aimed at building a nuclear bomb. Iran says its nuclear program is for power generation.

"We're looking for ways that we can engage the Iranian people. The interests section is something that's under review as well," said State Department spokesman Robert Wood, referring to a diplomatic office the Bush administration decided "in principle" to open in Tehran but left up to Obama.

Middle East expert Jon Alterman said a first step could be to allow informal contacts between lower-level U.S. diplomats rather than a "big, bold" shift. There would likely also be more cultural and sporting exchanges.

"A lot depends on what happens in Iran domestically," said Alterman, referring to the June election in Iran.

An early indicator of the U.S. approach will emerge next week when the State Department's point person on Tehran, Bill Burns, is set to meet senior officials from major powers China, Russia, Britain, France and Germany to discuss Iran strategy.

"We want to look at some new approaches," said a senior U.S. official of the meeting in Berlin. "But we will not engage in dialogue for the sake of dialogue" said the official, who asked not to be named as he was not authorized to speak publicly.

The new administration is still building a team of Iran experts, including possibly Gary Samore of the Council on Foreign Relations who may join the national security council.

Mideast expert Dennis Ross, is expected to be appointed special advisor on Iran to Secretary of State Hillary Clinton.

BILATERAL CHANNEL?

In a paper last month written with ex-CIA analyst Bruce Riedel, now with the Brookings Institution, Samore suggested opening up a bilateral channel, preferably with a representative of Iran's Supreme leader, on topics including the nuclear issue, U.S.-Iranian ties, Iraq, and the Israeli-Palestinian conflict.

The Obama administration, which has set Afghanistan as a priority, will also want to discuss this issue with Iran.

Such a dialogue on broader issues could happen without requiring Iran to suspend its enrichment and reprocessing activities as a precondition, the two experts argued.

It could also reinvigorate the multilateral process involving major powers, which has demanded Iran suspend its nuclear activities as a precondition for full-blown talks.

The Bush administration held limited talks with Iran on trying to reduce violence in Iraq but said talk on the nuclear issue was off-limits, except for a one-time meeting between Burns and his Iranian counterpart last year,

Clinton said during her confirmation hearing she wanted a new approach to Iran policy and that it would be devised in close consultation with other major powers.

The Bush administration had poor relations with Russia which, along with China, consistently blocked more punitive measures against Iran. The hope is that Obama will have more sway with Moscow.

Russia, however, is expected to link cooperation against Iran to a host of bilateral issues, including a proposed missile defense shield in Europe and NATO membership for Georgia and Ukraine, all of which Moscow opposes.

"The Russians are going to play a linkage game and say if you want new sanctions on Iran, then it is time for you to say Georgia and Ukraine are not coming into NATO," Riedel, who is with the Saban Center at Brookings, told Reuters.

The new administration will also have close ally Israel's response to contend with. Iranian President Mahmoud Ahmadinejad has predicted Israel's imminent demise and some experts suggest the United States must offer a "nuclear umbrella" to Israel.

Washington will also be looking to Arab allies for their support in reining in Tehran. A complicating factor there is the conflict in Gaza, where many in the Arab world say the United States did not do enough to curb Israel's actions.

The former Saudi ambassador to the United States, Turki al-Faisal, accused Washington in an editorial in the Financial Times last week of having an "arrogant attitude about the butchery in Gaza" and warned U.S.-Saudi ties were at risk.

"The Gaza war has overshadowed everything else and the moderates in the region are on the defensive and not eager to line up with a confrontation with the Iranians," said Riedel. (Editing by David Storey)