This is a partial transcript from "The Journal Editorial Report," September 2, 2006, that has been edited for clarity.

STUART VARNEY, GUEST HOST: A U.N. deadline for Iran to suspend its nuclear program came and went this week, with that country's president defiantly refusing to compromise. Saying Tehran would not be bullied into giving up its right to that controversial technology.

The IAEA said Iran showed no signs of stopping its work, beginning enrichment of a new batch of uranium as recently as last week.

Iranian author and journalist, Amir Taheri, joins me now from London.

Amir, President Bush compares today's Islamists with the Nazis. And he's drawing a parallel, it seems, with the 1930's and, by implication, the suggestion is that we're headed towards World War III.

Do you think we are headed that way?

AMIR TAHERI, IRANIAN JOURNALIST AND AUTHOR: Well, the war has already started. In fact, it started in 1979 when the Khomeinis invaded the U.S. embassy in Tehran and seized these diplomats hostage.

But, of course, when we say war, we shouldn't think only of planes flying and huge armies with tanks and so on. This war has many different facets — ideological, low intensity war, terrorism and so on. And this has been going on for nearly three decades now. And we are nowhere near seeing the end of it.

VARNEY: But do you think we are headed for the classic military confrontation as in World War II?

TAHERI: The classic military confrontation has already also happened in Afghanistan and in Iraq. And I wouldn't exclude it in the case of Iran either, although, this might not be necessary at this moment.

The worst thing to do would be to launch a few missiles at Iran and leave it at that. Because what the present Iranian leadership wants now is a mini showdown with the United States so that they can say, OK, we have had our showdown and we won, and we survived.

You saw the similar case in Lebanon with Hezbollah recently. Hezbollah suffered very heavily. And Lebanon was damaged very heavily. And, nevertheless, they are claiming that they won. So one should not fall into that trap.

This is a war that requires patience and persistence. It has to be fought at many, many different levels. The military side of it should not be excluded. But there are lots of other things that could be done before we reach the military level of this war.

VARNEY: Like what, for example?

TAHERI: Like, to start with, beginning to apply the sanctions that exist under the non-proliferation treaty.

Like exposing the violations of human rights that the Iranian regime is doing.

Like applying the sanctions under the Iran-Syria Act that the U.S. itself has passed and has not applied diligently, like supporting the Iranian workers who are on the strike, supporting Iranian student movements, Iranian liberal and democratic organizations and the opposition inside and outside the country.

The Iranian's economy is in shambles even right now. As you saw today, we had an air crash, which is becoming a frequent feature in Iran because the Iranian planes are not maintained. They can't have spare parts because of the sanctions and so on.

A lot of money is leaving the country because of this uncertainty. And the continuation of this situation of uncertainty is very bad for the leadership. And — yes?

VARNEY: Amir, if Iran is bidding for leadership in the Muslim world, and if Ahmadinejad wants to strengthen his leadership domestically, it would seem almost impossible for Iran to retreat and walk away from its plans to acquire nuclear weapons. It's almost impossible, isn't it?

TAHERI: Yes, but, you know, at the moment, the package offered to Iran — and this is very important for people to understand — nobody is asking Iran to give up nuclear technology at all. What they are asking is the suspension of uranium processing and enrichment maybe until next March.

Anyway, Iran does not need to enrich uranium because it doesn't have a single working nuclear power station.

It is like, you know, somebody who buys gasoline but doesn't have a car, or a man who doesn't have a hair but wants to have a hair dryer.

So it is very easy for the present Iranian leadership to announce that we accept this package, we suspend uranium enrichment, which we don't need anyway, until next March when our first and only nuclear power station, built by the Russians, is supposed to start working, and then start negotiation.

But they don't want negotiation. But they want confrontation. And they think because the West is weak, because the United States will soon be in retreat after President Bush has left the office, they can push it and then say nuclear victory. They say, you see, we took up the infidel and the leader of the United States and we have won.

VARNEY: Amir Taheri joining us from London.

Thanks very much for being with us, sir.

TAHERI: Thank you.

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