Earlier this month, it became clear that Iran was defying the US and its Western allies by once again refusing to open serious negotiations over its nuclear program. After all, Iran's President Mahmoud Ahmadinejad declared on September 7 that, he believed, "the nuclear issue is finished," adding, "We will never negotiate on the Iranian nation's rights." Days later, Iran's new five-page proposal to the P-5 plus 1 (the US, Russia, China, the UK, France and Germany) did not provide an opening for serious nuclear negotiations, but rather vague formulations for the agenda of any future talks. Indeed, the Iranian document began by asserting that the world was moving beyond "the difficult era characterized by domination of empires, predominance of military powers." It made reference to the need for "complete disarmament," but said nothing about its own nuclear program. In his Friday sermon on September 11, Supreme Leader Ayatollah Ali Khamenei further backed the uncompromising Iranian nuclear stance. THIS PAST July, when the G-8 announced that the opening of the UN General Assembly "would be an occasion for taking stock of the situation in Iran," most international observers understood that there was a hard September deadline that Iran had to meet to begin serious negotiations. Obama himself stated at a July 10 press conference after the G-8 meeting: "We've offered Iran a path towards assuming its rightful place in the world. But with that right comes responsibilities. We hope Iran will make the choice to fulfill them, and we will take stock of Iran's progress when we see each other this September at the G20 meeting." The G20 will be convened September 23. Unfortunately, at this stage, there is little evidence that the Obama administration is about to adopt effective action in a timely manner in light of Iran's policy of rejectionism. Engagement was the centerpiece of its Middle East policy and has been hard to abandon. For example, while rejecting the newest Iranian proposals on September 10, State Department spokesman Philip J. Crowley reminded reporters that engagement was still official US policy, stating: "We remain willing to engage Iran." Moreover, within 24 hours Crowley announced that the US would negotiate with Iran despite his determination a day earlier that their proposals were inadequate. The hard-line Iranian newspaper Javan noted the dramatic US shift on September 14: "One day after the hasty response to Iran's updated package of proposals, America made a U-turn and announced that because these proposals could become a basis for direct talks with Iran, it accepts the talks over this package." Indicating Iranian understanding of the new US policy, the article was entitled: "The inevitable acceptance of nuclear Iran." The first meeting between Teheran and the West reportedly will take place in early October when Javier Solana, the EU foreign policy chief, and Western diplomats meet with Saeed Jalili, the chief Iranian nuclear negotiator. According to Solana's office, the meeting will not yet be a "formal negotiation," which presumably will come at a later stage. The September deadline appeared to have vanished and the Iranians have gained valuable time. The consequences of letting the September deadline pass without a decisive response is clearly not understood in Western capitals. Iran will carefully calibrate its next moves on the basis of how it believes the US and its allies will act in the weeks ahead. THERE ARE two very important Iranian considerations that are likely to be affected by what the West does now. Just recently, Glyn Davies, the US ambassador to the IAEA, acknowledged that the Iranian stockpile of low-enriched uranium has already reached a sufficient level so that it was possible to talk about Teheran having "a dangerous and destabilizing possible breakout capacity." What he probably meant was that the Iranians could soon take their low-enriched uranium and put it through a further stage of enrichment to produce weapons-grade fuel. He announced that Iran already has enough low-enriched uranium for at least one atomic bomb. Under the breakout scenario, Iran would refuse any more IAEA inspections, shut down the IAEA cameras that provide a partial picture of what transpires in the Natanz enrichment plant, and manufacture high-enriched fuel. International precedents in this area are not encouraging. North Korea's Yongbyon nuclear reactor was under IAEA monitoring until 2002, when Pyongyang removed the IAEA seals from its stock of spent fuel rods and expelled international inspectors. Since, North Korea conducted two nuclear tests and got away with them: first in October 2006 and then in May 2009. Reportedly, Iranian representatives were present at both. Teheran undoubtedly observed that no serious action was taken against North Korea for its nuclear breakout. Should Iran escape from the September deadline that the West itself instituted, then its readiness to follow the North Korean example will substantially increase. The second area which will be affected by how Iran is handled at present will be deterrence. The common assumption in Washington policy circles is that even if Iran reaches the nuclear finish line, the US can fall back on the same Cold War deterrence that was used against the Soviet nuclear arsenal. Secretary of State Hillary Clinton's offer in July of a "defense umbrella" against Iran to worried Arab states foreshadows the coming approach of the administration to a nuclear Iran. But will Iran respond to Western deterrence the way Washington hopes? Indeed, over the last year, Western leaders have repeatedly declared that a nuclear-armed Iran was "unacceptable." But should they subsequently acquiesce to Iran's final sprint to a nuclear capability, what credibility will US deterrence have with the leadership in Teheran after it successfully defies the West's repeated warnings? There is an unwarranted complacency growing in the West about Iran. Some believe that if the world survived the advent of Pakistani and North Korean nuclear weapons, and the sky did not fall, then an Iranian bomb will be no more threatening. The cases are, of course, very different. Iran is a revolutionary power whose aspirations extend into Iraq, Bahrain, and other oil-producing states. It is involved in both the Afghan and Iraqi insurgencies, while its support for terrorism reaches into Lebanon, Gaza, Egypt, Saudi Arabia and Sudan. Now Iran is heavily involved in South America and East Africa, with growing security and economic ties. In short, the nuclearization of Iran has global implications. In dealing with the new Ahmadinejad government, the proposals currently being considered for severe sanctions, including a gasoline quarantine, on Iran must be pursued immediately, despite the start of any negotiations. The West must demonstrate political will, but time is now short. The decision to engage Iran diplomatically has never been cost-free. In 2003-2005, Teheran engaged with the EU-3 (UK, Germany and France) for two years, exploiting the talks to race ahead with construction of key uranium enrichment facilities, while fending off punitive measures by the UN Security Council for three entire years. Iran today is far more advanced than it was then and the time for diplomatic experimentation is extremely limited. The scale of the next crisis with Iran will largely be affected by how the Obama administration responds to the challenge it faces when it meets the Iranians next month. The writer, president of the Jerusalem Center for Public Affairs, was ambassador to the UN in 1997-1999. He is the author of the newly-released The Rise of Nuclear Iran: How Teheran Defies the West (Regnery).