The debate over a possible American or Israeli attack against Iran's nuclear program has heated up, with some arguing, including a recent New York Times editorial, that the consequences would be "disastrous." Would they really? First, the good news is that we are not there yet, that Iran is highly vulnerable to external pressure and that we may never have to get there, if the international community gets its act together. What is needed is a comprehensive policy of heavy sanctions, combined with a big diplomatic carrot. To this end, the US should seek to fully engage Iran and offer a "grand bargain," an array of incentives, in exchange for its willingness to forgo its nuclear program. Iran hardliners in particular should support a policy of engagement: Only if the US proves to both domestic and world opinion that it has exhausted all diplomatic possibilities, will it gain support for major economic sanctions, let alone future military action. Iran will probably reject the offer, as it has all others, but we will only know if the option is pursued and it is a vital way station on the road to stronger measures. Talking to Iran does not imply acquiescence, or appeasement The US and the West, however, should engage from a position of strength. Important sanctions can be imposed now, such as heightened restrictions on trade credits, international banking transactions and investments in Iran. Iran imports 40% of its refined gasoline products: If the West banned these sales, its economy could be brought to its knees. Oil exports make up 80% of Iran's state budget: were imports of Iranian oil banned, its economy would be brought to a standstill. Iran's automobile industry is domestically produced, except for engines: cut sales of engines and its economy would be greatly weakened. SHOULD THESE and other measures fail, or sufficient international cooperation not be forthcoming, the US could impose a unilateral naval embargo on Iran, which would have the combined affect of most of these measures and then some. Only if this, too, failed, would there be a need to consider direct military action, primarily an aerial operation, with little or no ground forces. There is little doubt that Iran will respond to a direct attack, or a blockade, but its options, heated rhetoric notwithstanding, are actually limited. What can it truly do? Attack American ships, block the Gulf? Maybe a pinprick to make it look good at home, but beyond that, the risks of escalation and the costs to Iran's economy are too great. Iran is extremist, not irrational. It may very well cause the US greater difficulty in Iraq, and increased terror can be expected against US and Western targets. It is highly unlikely, however, that Iran would be willing to go beyond limited actions and risk direct military escalation, not when the US has 150,000 soldiers on its doorstep. Moreover, US preparations can greatly reduce, though not eliminate, the dangers of Iran's potential responses. Oil prices will further skyrocket and Iran could add to the crisis by cutting output, but anything beyond temporary measures would be tantamount to cutting off its nose to spite its face. There will be a strong public reaction in the Moslem world, though Arab regimes will be quietly relieved to be free of a nuclear Iran. If the US plays out the diplomatic route first, international reaction will be muted. MILITARY ACTION will incur costs for the US, but far from being "disastrous," or even heavy, they will probably be limited. Whether justified, is a strategic and normative judgment call, to be weighed against the dangers of a nuclear Iran. Instead of unwarranted, self-deterring risk aversion, let us not forget who wields the incalculably greater "stick": Iran certainly will not. Iran is far more likely to respond against Israel, indeed, to open up with everything it, Hizbullah and Hamas have - large scale terror, rocket attacks blanketing Israel, ballistic missiles. Israel may pay a heavy price and there is a significant danger of confrontation with Hizbullah, Hamas and, conceivably, Syria. It is a price Israel should be willing to pay. The real issue regarding military action is the operational outcome. Iran has dispersed and hardened its nuclear sites and may have a parallel covert program. Thus, even a fully "successful" strike would only destroy the known program and Iran, having largely mastered the technology, might be able to reconstitute it. The question is how long a delay is worthwhile: two years, maybe not, five, probably yes. The writer, a Senior Fellow at Harvard Kennedy School and a Schusterman Fellow, was a deputy national security advisor in Israel.