Since 1979, Iran has expanded its role in the Middle East and Near Asia. Aside from the Iran-Iraq War, Iran has created or co-opted several terror groups including Hezbullah in Lebanon and Hamas in Palestine. It has a vast network of intelligence operatives across Europe and is currently making headway in South America through Venezuela. Hundreds, if not thousands, of people have been killed by Iranian-backed or Iranian-committed terrorist attacks. This does not include the tens of thousands that have been killed by Iranian-backed militias and terrorists in Iraq since 2003.
Iranian expansionism has been mostly covert for the last 30 plus years, but with the Global War on Terror expanding past simply defeating Al-Qeada to the rooting out of WMD programs by rouge states, the Iranians were put into a bind when their nuclear program was flushed out into the open by dissidents in 2002. The IAEA demanded that they be allowed to inspect the program. After negotiations, the IAEA was allowed to inspect Iran's nuclear sites in early 2003. The IAEA determined that Iran had not lived up to its agreements concerning nuclear material and that there had been a pattern of deception. Since then, Iran has had many offers thrown its way so it could have a peaceful nuclear power infrastructure, but the Iranians have insisted that any deal must allow them to enrich uranium. Enriching uranium is essential to both nuclear power and nuclear weapons.
Despite calls to allow the international community vindicate Iranian claims of a peaceful program, it continues to both deceive the West as well as antagonize it, creating a situation where all the players are put into places they do not want to be, save for Russia. Russia has the singular position of coming out on top in almost any realistic scenario. I'll summarize these positions:
Iran - The country is destabilizing due to the recent fraudulent re-election of President Ahmadinejad. Since the election last summer, millions have protested and thousands have been killed on the streets or executed by the regime. A vast internet-based campaign to free Iran from the mullahs has taken root and the campaign is supported by millions of people across the world. Iranian dissidents who used to be cowed by the state's security forces have upped the ante by confronting them and, in some cases, killing them. While the “Green Revolution” has not panned out as hoped, it has made its mark on the Iranian political structure, creating an air of uncertainty around the ruling Iranian elite. This makes Iranian brinkmanship with the West much more precarious if it turns on them. On the bright side for Iran, if it can get nuclear weapons, it will have completed its goal and would cement its rule over the Near East and Middle East. If a conflict were to happen, it benefits from a rugged terrain, vast territory and a military that has been modernizing for a while. Also, its ability to reach American and Israeli targets with its ballistic missiles and its terrorist network gives it ample room to maneuver if foreign troops start landing on its shores.As you can see, this situation is very much skewed against war if any of the nations save Russia wish to come out on top. There are many alternatives to war which should be considered, and which I will expand upon in part 2, but it should be very clear that while Iran's nuclear arms program is very dangerous to world stability, its also very dangerous to attempt to stop it by force. There is very little the West can do right now without creating a worst situation, but that does not mean they should stop trying to prevent an expansionist and radical government from acquiring one of the most horrific weapons on the planet.
United States – Debts, deficits and nearly ten years of continuous low-level war against Al-Qeada, the Taliban and Iraqi sectarians have made the American people tired of war. While its no guarantee that Americans won't initially support a strike or invasion of Iran because of the nuclear threat, the aftermath of any attack will involve hardships the American public would not tolerate. The cost of another war domestically, let alone geo-politically, is currently too much for the US to burden itself with. Its options for dealing with Iran are very narrow, which is never a good position to be in.
Russia – Russia has the best position out of any of the countries involved. If Iran backs down and accepts internationally enriched uranium for its nuclear power program, Russia would be the country most likely to be building those plants and supplying the Iranians with the technology to maintain them. If a conflict erupts between Iran and any of the Western powers, Russia can easily bring Europe to its knees with gas and oil embargoes, which puts pressure on the US and Israel (the most likely combatants with Iran) to end the conflict quickly without regard to the goals of the conflict being met. After any conflict, Russia would have ability to quickly help Iran rebuild.
Western Europe – Over the decades, Western Europe has put itself into a position of energy servitude to Russia. Most of Europe's gas and oil needs comes from its big neighbor and by that, its negotiation position with Russia's ally Iran can only do so much. Already, Italy has been caught dealing with Iran in the face of sanctions and European unity. Russia has already shown it can force the Europeans to their knees with gas shortages. Any conflict with Iran, even if the Europeans don't participate, will end up harming them greatly (gas price rises, forced gas shortages) unless they do the unthinkable and side with Russia/Iran in the conflict.
Israel – Israel is in the best position if Iran backs down, but worst position out of all other nations if conflict erupts. If Iran ends its arms program, Israel's goal of security would be met and it would not have to risk striking Iran and inciting war. But if Iran doesn't back down, then it is near certain that Israel will strike any and all Iranian nuclear facilities and maybe even attempt a decapitation strike on the Iranian civilian, religious and military leadership. Israel has no less than three Iranian allies on and within its borders: Hamas, Hezbullah and Syria. There is no doubt that Israel would suffer heavy, if not enormous, losses during a war with Iran and its allies, but the Israeli military is one of the best armed and best trained in the region and while it for sure it would suffer greatly, there is a high chance it could come out on top. The aftermath for Israel of any conflict would be moderate unrest within the country due to the diversity of Israeli politics as well as the ethnic tensions created by any war Israel has with its Islamic/Islamist neighbors. Also, even if Israel successfully attacks Iran without any overt military retaliation by Syria (something that is very unlikely), it will absolutely face a ramped up terrorist assault by Hamas and Hezbullah, and maybe even the more radical factions within the Fatah movement.