Lewis Carroll’s famous book Alice in Wonderland was followed by a sequel he wrote called Through the Looking-Glass and What Alice Found There. The book was full of symbols about the game of chess and the funny world Alice encounters inside the world of mirrors, especially with clocks running backward or other things turned on their heads.

The current tensions between Iran and its European counterparts, as well as the United States, are also a reflection of a strange game of chess, with different clocks telling different times and multiple players competing for the prize–which may in fact be difficult to define. Could 2012 be a year where a cross fire of domestic politics, Iranian intransigence, Israeli anxieties or an unintended provocation generate a war no one wants?

This past week, the European Union approved a phased ban on Iranian oil imports as part of a Western campaign to pressure Iran into stopping its nuclear processing. The EU and the U.S. accuse Iran of trying to develop a nuclear weapon capability under cover of a civilian energy program, a charge Tehran vehemently denies.

How this latest chapter in negotiations with Tehran plays out is anyone’s guess. The Iranian bluster of retaliating with an attempt to close down the Straits of Hormuz remains exactly that.  The threat aimed at Europe of turning off their oil pipelines immediately was also less impressive than expected, with Europeans quick to point out that they will replace the Iranian oil with other sources.

Iranian oil accounted for just 5.7 percent of total oil imports to the EU in 2010. The EU is the second largest importer after China. Some countries like Italy, Greece, and Spain import a higher percentage of oil from Iran, and the EU is going to have to address their needs precisely at a time when the southern EU countries are facing some tough economic pressures. Meanwhile, oil exports make up 50 percent of Iranian government revenue and such a boycott can cause a lot of pain in Tehran. Add the efforts of the United States to constrict the assets of the Iranian central bank to Teheran’s financial strain and the pressure is sure to be mounting on a government facing parliamentary elections in March, with the memories of a falsified election in 2009 still very much alive in the streets.

The fact that the EU is taking a rather tough stance toward Iran   and has managed to generate a common platform to do so, is noteworthy in itself. Both the British and the French governments have been pushing particularly hard, with the UK’s embassy recently ransacked in Tehran. Germany has been Iran’s most important trading partner in the EU, but Berlin has been responding to pressures to reduce those ties, even though the business community has not always been thrilled with that effort. Arguing against unilateral trade restrictions, German industry representatives claim that Germany would lose jobs and allow Chinese and other rivals to take over the market. Yet, Chancellor Merkel stood fully behind the oil boycott.

Meanwhile, there are continuing calls within the American domestic arena for keeping “all tools on the table” when it comes to dealing with Iran. Heightened by an election year atmosphere, threats to use military action against Iranian nuclear sites are part of the rhetoric, even reflected in President Obama’s State of the Union speech on January 25. Arguments that a nuclear Iran can be contained, as was the Soviet Union during the Cold War, generate heated debates, regardless of the source of that argument–Republican (read Ron Paul) or Democrat.

In addition, there are also electoral races and leadership changes coming up in France, China, and Russia which can contribute to more political posturing and uncertainty in those key countries.

Furthermore, a central piece on the chess board–Israel–is struggling with its own debate about Iran. A recent article in the New York Times magazine described that debate in dramatic fashion, and suggested that Israel may well decide that time to stop the Iranian march toward a nuclear weapon is running out. However, such arguments have been heard before both in Israel and elsewhere, while conflicting intelligence reports deliver differing evaluations of where Iran’s nuclear program is or will be.

The fact is that we do not know what Iran’s intentions are, but past experience and current rhetoric are strong suggestions that crossing the line of nuclear weapon capability is what Tehran has in mind. Looking at the experiences of Pakistan, India, and North Korea, the mullahs see nuclear capability as a useful tool in dealing with their neighborhood, apart from being able to throw threats at Israel.

The fact that crossing the line would also quite plausibly generate a nuclear arms race in the region does not seem to cancel out their paranoia. Nor does it erase the corresponding need to surge for the nuclear leverage they believe they require and have a right to exercise.

Given what the EU has decided to do, the question is whether there is any more ammunition it can generate, other than holding the line on the oil sanctions and continuing to urge Tehran to cooperate in making their nuclear program more transparent.

The efforts to convince Russia and China to add their own pressures on Iran have not been as successful so far. Yet both have some leverage to convince the Iranians that they have the ability to de-escalate the situation if they were to deal credibly with the IAEA.

In Alice’s world, the clocks run backward, but in the current tense situation in the Persian Gulf, the clocks seem to be running at different speeds. If the Iranian clock reads that it is time to declare itself a nuclear weapons state, what does the clock say in Tel Aviv, or in Washington, DC? Will it read that it is time to pursue a limited war? Or is it more likely that a rogue or unintended action might evolve into a shooting war, regardless of what the clocks say?

The chess board is full of complicated pieces, unpredictable moves, strategic ambiguities, and uncertain options and outcomes. The Iranian government is being pressured to make some genuine concessions about an expensive nuclear program, while trying to save political face at home with  rising domestic discontent. The Israeli government must deal with the anxiety of its citizens fearing Iranian threats to its existence by maintaining a position of credible deterrence against such a threat, without escalating the danger of a regional war.

The U.S. government is faced with the responsibility to help protect Israel from threats, while seeking ways to maintain dialogue with the other critical countries in the region–Turkey, Saudi Arabia, Egypt–who could be drawn into a regional war along with the U.S. Which incentives can be provided by whom to forge a course through many traps remains the challenge of this complicated chess game.

While the European Union has taken a harder stance toward Iran, there is not much more it can deliver in this stand-off. It cannot generate a military dimension–only certain countries can assemble that capacity and it is uncertain how it could be carried out.

Germany can still play the role of a broker amid this conundrum. As Berlin remains steadfast in its support of Israel, it has channels of communication with Tehran that are better than the French, the American, or the British ones. The Germans could supply a candid picture of what is at stake for the Iranians if things further deteriorate, while conveying to Israel what they are hearing from Tehran in the search for a way out of this morass.

Several key questions remain:  whether the Iranians want to listen and respond to the demand to prove their peaceful intention; if the Israeli government thinks there is reason to believe the Iranian government’s intentions. Do the other players in this complex confrontation have a stake in staving off a disaster for everyone?

Alice’s chess game was part of a dream. The current confrontation in the Middle East is reality and has the potential of becoming a very real nightmare.