The report by the International Atomic Energy Agency accusing Iran of conducting research that goes beyond the civilian use of nuclear energy, is the most serious charge levelled against Iran by this agency. It states that 'the application of such studies to anything other than a nuclear explosive is unclear to the agency'. In diplomatic parlance, this is as damning as one might get.
Not surprisingly, the Iranian authorities have dismissed the report as 'politically motivated'. But this attitude will not be sufficient to prepare it for the impending international fallout. The United States has already signalled presenting the United Nations Security Council with tougher sanctions.
In anticipation of this report, President Obama even resorted to the language of his predecessor, by saying that all options are on the table. This is a not-so-subtle threat of a military response, even though most analysts don't see such action as realistic or helpful.
Nonetheless, the threat of a military strike against Iran is becoming a staple news item. The Israeli government has even discussed this in its cabinet. This may be brinkmanship diplomacy, but Israel has a track record of targeting nuclear facilities in its neighbourhood (Iraq in 1981, Syria in 2007).
A unilateral Israeli attack on Iran would be disastrous for the region, and Prime Minister Benjamin Netanyahu has denied any decision on that point. But leaks to the media that keep the threat in the public eye help Israel maintain pressure on Iran, and set the agenda for the United States.
This new development comes at a time when Iran's Islamic regime feels particularly vulnerable. The Arab revolution has shaken its confidence, allowing internal rifts and disputes to come to the fore.
The regime felt reasonably secure in 2010 after it suppressed the Green Movement for reform. Its use of para-military thugs and brute force put an end to street demonstrations and went some way towards rebuilding the image of the regime as united and 'in charge'.
But this image has come under strain during the 2011 revolutions in the Arab world. Despite every effort by the regime to present this popular movement as vindication of its ideology and model of government, the masses have made it clear that they are not following the Iranian model. Even the Muslim Brotherhood in Egypt rejected any suggestion that they follow the Iranian model.
For a while prior to the revolution, Iran seemed to be kept in good esteem by the Arab masses. But the fast pace of change has highlighted how isolated Iran really is. The growing pressure on the Bashar al-Assad regime, Iran's only state partner in the region, has brought the message home. The Islamic regime in Iran is friendless in the region and in the country.
The regime has been in denial over these developments. But the pressure is being felt behind the scenes. The most dramatic manifestation of the growing schism in the leadership has been the dispute between the Supreme Leader and the President over their respective jurisdiction.
Astonishingly, Supreme Leader Ali Khamenei announced last month that the presidency could be scrapped, removing all pretences at democracy. President Mahmoud Ahmadinejad, on the other hand, reminded his followers (and indirectly Khamenei) that the Islamic revolution was a product of the people, and it is they who have decided the model of the Islamic system of government.
It is ironic that Ahmadinejad should appeal to popular will in order to justify a system with the Supreme Leader at the top. But the irony appears to be lost on Ahmadinejad.
While the regime is showing signs of fatigue and internal discord, the IAEA report and threats of sanctions and military action could, paradoxically, be a lifesaver. The regime thrives on tension stemming from an identifiable, external enemy. The Iraqi invasion of 1980, for example, provided the political background for the regime to consolidate its hold on power.
The IAEA report and measures taken by the United States are likely to act in a similar way, galvanising the regime's support base and solidifying its ranks. Nothing suits the Islamic regime's ideology and world view better than being challenged by the US and the international community.
The prospects of resolving this tension look bleak.
Shahram Akbarzadeh is Professor of Asian Politics (Middle East & Central Asia) at the University of Melbourne.