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US Secretary of State and President Obama, were not the only senior US government officials to respond strongly to the recently unveiled plot that allegedly involved some elements of the Iranian Revolutionary Guard Quds-Force. This Hollywood-style story of an Iranian-American paying members of a Mexican drug cartel to assassinate the Saudi ambassador in a Washington restaurant also triggered the expansion of US Treasury sanctions and revived the debate in Congress to impose a comprehensive embargo by sanctioning Iran's central bank.

The unusually high level of attention this strange episode received and the actions it provoked reveal the lack of a coherent long-term strategy to deal with Iran and its nuclear deception. The fact that a shady car dealer could drag the two countries to the brink of war illustrates the problem associated with the lack of communication channels and the fatal consequences of a policy vacuum that has defined US policy on Iran.

Lacking any meaningful incentives for Iran, the overwhelmingly coercive two-track policy has isolated the country on the financial markets and made access to spare parts for its nuclear program more difficult. As a result, the regime has had to engage in increasingly risky procurements operations on the black market. Due to technical difficulties and foreign sabotage, the output of Iran's centrifuges declined sharply and has not yet fully recovered. The primary goal of preventing Iran from independently producing nuclear reactor fuel – the precondition for nuclear breakout capacity – have, however, not been achieved by means of increased economic and political isolation.

In fact, these measures could have only been sensible if the time window until Iran reaches the nuclear threshold had been used to make progress in serious negotiations. Within a carefully designed strategy, these biting sanctions could have been used as leverage to garner concessions from Iran such as full cooperation with the IAEA and the implementation of the Additional Protocol. Without such a coherent strategy, sanctions functioned mainly as policy substitutes holding together a badly-administered containment strategy. In order to overcome this Iranian sanction paradox - the continued use of sanctions irrespective of their apparent ineffectiveness - one has to focus on the psychological dimension of the conflict. From this perspective, the drive toward nuclear breakout capability must be understood as part of Iran's ongoing quest for sovereignty, modernity and control over energy resources. The broad support it receives across party lines, including reformists, exemplifies this fact.

Although the US and Iran share a lot of interests in the broader region, cooperation is not automatically ensured as the driving forces of their conflict lie in the history of Iran's relationship with the West. After the occupation during World War II and the coup engineered by the US Central Intelligence Agency (CIA) in 1953 that stifled Iran's nascent democracy, the country remains deeply suspicious of any foreign meddling in its internal affairs. In this regard, the nuclear issue forms only the tip of the iceberg. What lies underneath is first and foremost a struggle for recognition, standing, and respect rather than acquiring offensive capabilities. Progressive policy recommendations take this psychological dimension into account. More aggressive recommendations, such as half-heartedly veiled threats of a logistically and politically unfeasible air strike campaign against nuclear facilities in Iran, fail to tackle the root causes of the conflict and help to prolong it.

The upcoming US general election and a hawkish Congress will inhibit any serious efforts to end the Iranian sanction paradox any time soon. Therefore, a joint European initiative for an engagement policy based on concrete reciprocity, including the willingness to acknowledge past mistakes, is indispensable to end the current deadlock. Steps taken in the opposite direction would only be welcoming news for Iran's hardliners who fear nothing more than a gesture of reconciliation by the US.

The sole indication of such a move, exemplified by Obama's outreached hand in 2009, started to unsettle one of the regime's core ideological features and impacted its calculations more than tough sanctions, opposition support or other nonviolent tactics. Therefore, an engagement strategy that takes the psychological dispositions of the actors seriously could eventually break the vicious circle in which both countries continually appear as strong and uncompromising only to receive symmetrical reactions on their side. As long as the war drumbeat and the sanction paradox continue, Iran's moderate citizen activists will lack the leverage to capitalize on a potential identity crisis within the regime and stimulate change from within the country.

Sascha Lohmann is a recent graduate of Free University in Berlin.