This week's historic visit by Iranian President Mahmoud Ahmadinejad to Iraq, reportedly the first of an Iranian president since Iraq's founding, marks a watershed moment. It symbolizes the choice between two radically different futures: one of two Irans, the other of two Iraqs. Ostensibly, the visit is one of friendship, of two countries establishing new bonds. Seven agreements were signed between the leaders of the two countries. Iraqi President Jalal Talabani greeted his counterpart with a smile and a warm double handshake. Indeed, Iran's leader has done something no Arab leader has done: visit Iraq. The Sunni-led Arab governments have not even opened embassies in Baghdad. The irony is that Iran and Iraq, though seemingly in completely different camps, are using each other to break out of forms of international isolation. As these lines were written on Monday, the UN Security Council was set to pass a third sanctions resolution against Iran; while the Iraqi government, now Shi'ite-led, is treated as an illegitimate, rump state by its fellow Arab neighbors. Further, it is not lost on the Iraqi government that in less than year there will be a new American president, and that the Democratic front-runners are competing with each other over how quickly and decisively they will withdraw US troops. In this context, Ahmadinejad's visit clearly signals to Iraq and the region: America will leave, but we are not going anywhere, and indeed will replace American dominance. The friendliness of this visit, however, should confuse no one. The last thing Iraqi leaders - or other Arab states, for that matter - want is to be left alone with Iran, particularly an Iran armed with nuclear weapons. And the last thing the Iranian regime - and Iraq's Arab neighbors, for that matter - want is for Iraq to become a flourishing and peaceful democracy. The Iran-Iraq embrace, therefore, is illusory and unstable. It reflects a very temporary balance of power, fear and isolation. If the current Iranian regime becomes a nuclear power, it will work to turn Iraq and other Arab regimes into obedient satellites, like Syria. This will not be simple in Iraq, despite the Shi'ite-led government there. The Iraqi people and government have no interest in Iranian-style clerical rule. Even the Iraqi Shi'ite clerical leadership is not only against becoming an Iranian satrap, but against clerical rule in principle. These Iraqi religious leaders believe that the Iranian revolution is heretical. A nuclear Iran, in the context of a retreating United States, however, would have ways of dealing with the dual Iraqi threat of presenting a democratic model and an alternative center of Shi'ite leadership. As the BBC reported last week, "While nobody contests the US assertion that the security situation has improved a great deal, it is clearly neither perfect, universal nor irreversible." This is both the perception and the reality in the region. The US advances are real, but so is their reversibility if Iran were to go nuclear and the US were to withdraw. The lesson from all this is that the region must not be looked at statically, but in terms of the direction in which it is moving. That direction will be determined by whether the current Iranian regime is forced from its nuclear path. No one believes that new UN sanctions will alone be sufficient to move Iran. But there is nothing stopping the European Union from adopting draconian sanctions more like those that the US has already bilaterally imposed. We do not know whether a total or near total European trade and diplomatic embargo of Iran would be sufficient. Given the Iranian economy's current vulnerability and the regime's extreme unpopularity, such a dramatic step could force the mullahs to agree to verifiably abandon their nuclear project. What we do know is that the alternatives - a nuclear Iran or military action - would be much more dangerous to international security and the world economy. The time for non-military options is rapidly running out. While more UN sanctions are welcome, what is critical is for Europe to stop the one percent of its foreign trade that is with Iran, which amounts to 40 percent of Iran's trade with the world. This economically insignificant step for Europe could spell the difference between a freer and more peaceful world and one held hostage by the grinning megalomaniac who visited Baghdad.