The recent thaw in relations between Egypt and Iran - according to the Arabic press, they have agreed on full normal diplomatic relations - is one of the more interesting developments in recent Middle East diplomacy. The picture of a smiling Mohammed Khatami shaking hands with Hosni Mubarak in Geneva last month was a real show stopper - the kind of picture that makes you do an honest double take.
The containment of Iran has been a bipartisan feature of American foreign policy since the Iranian revolution and hostage crisis. During the second Clinton administration, after the surprising election of Khatami, there were some tentative moves towards a possible rapprochment - remember Christiane Amanpour's CNN interview with Khatami, or the lifting of the ban on Iranian pistachios and carpets. But it didn't come to much due to fierce opposition among hardliners in both Iran and the United States.
Those American hardliners - the same neocon hawks who brought you the Iraq war - savaged Clinton for even considering talks with the Iranian devil. They blasted the status quo of containment as insufficiently tough, calling instead for real attempts to promote regime change and an overthrow of the Islamic Republic. Their attacks, combined with the conservative assault on Khatami and the hostility of Ali Khameini (the Supreme Leader of the Islamic Republic), ensured that the nascent dialogue would be stillborn.
Flash forward to now. Iran has been in the firing line of the neocon hawks as part of the Axis of Evil, with the same cast of characters demanding a serious commitment to regime change. At a minimum, the Bush administration's ideologues insist on a tough containment policy, if regime change isn't possible.
So how to evaluate a resumption of normal ties between Egypt and Iran? There is no serious question that this is a blow against the neocon/hawkish policy. It breaks one more strand of Iran's isolation, and gives Egypt's imprimatur to dealings with the Islamic Republic. This comes at a time when Khatami and the moderates are reeling, on the defensive and in danger of losing their control of Parliament. It might, as some commentators have hoped, allow Egypt to exercise a moderating influence on Iran. But it might also strengthen the Iranian - and Egyptian - hand against American pressure.
Bottom line: the Egyptian-Iranian rapprochement is a blow to Bush's Middle East policy, but a potential positive for the region and for American interests in the long run. Engaging Iran can pay off, as the Europeans showed by securing the Iranian cooperation with the IAEA on the nuclear weapons file. Bringing Iran into closer dialogue with regional allies is a good thing, even if (or rather, precisely because) it undercuts the 'axis of evil' policy.