It is hard to tell if PM Netanyahu is bluffing about war to extract maximum concessions from both the US and Iran, or if he will only accept Iran's unconditional surrender. In any event, Israel will not go it alone in Iran - there are too many dispersed, hardened targets over distance to strike, unlike in Iraq and Syria. If Israel really does want to set the program back, its leaders would not risk taking action without the US's participation - this is why these generals and former spymasters keep painting talk of a unilateral attack as madness, because the risk of retaliation and international censure is too great. Concerns about state-sponsored terrorism and support for Syria, Hamas, Hezbollah, or Islamic Jihad are also present in this debate. But the Nuclear Question is the overriding issue.
Even though he has been crying wolf for years, Netanyahu is not stupid enough to think he can go it alone on Iran. What he is now doing, partly, is hoping that he can regain the initiative in Israeli domestic politics over his Iran critics by castigating anything Obama and Rouhani do to bring down barriers between the two countries. There is a big difference between what the Prime Minister's Office and the Israeli military-intelligence community want on Iran, because the latter sees Netanyahu as a bull in a china shop making the case for military action harder than it needs to be. Israel does not want to lose its unique strategic deterrent in the region. And it needs the US to prevent that from happening. A deal that leaves Iran wiggle room for a nuclear weapons capability is unacceptable, because even that - in the Israeli view - balances the equation between the two countries, emboldening Iran. Netanyahu sees Syria as a test-run for Iran: will the US go all in - increasingly unlikely - or will it give "advantage" to Assad, Putin, and Khameini by supporting a difficult to enforce WMD search and seizure?
The Saudi royal family remains very apprehensive about any deals with Iran as well, in part because of a similar calculus. As with Israel, Iran is a country which a much larger land area and population than them. Iran's leaders have called for their deposal and been linked to terrorist attacks on them. Saudi Arabia worries about Iranian instigations in its Eastern Province and in Bahrain, specifically. Aside from these ideological differences, the Saudis do not want to see a nuclear-weapons capable Iran because that could negate the Kingdom's qualitative military advantage over Iran, given that Iran's military is running on aging American arms and some newer Russo-Chinese equipment while the Saudis have the run of General Dynamics, Dassault, and BAE's catalogs. Geopolitically, the Kingdom is playing for keeps in Syria - they are making unhappy noises about the CW deal that tabled an American air strike, which they had been lobbying very heavily for. Rapprochement with Iran that holds out the prospect of a negotiated solution for Assad would diminish Saudi influence in postwar Syria, and is not welcome because the Saudis have long sought to bring that country closer to Riyadh.
Returning to the US-Iranian dynamic, the language barrier is immense - in the sense that both powers talk past each other (supervised enrichment versus no enrichment), and both are afraid of giving something and gaining nothing. Yet not a decade ago, Iran was helpful on Afghanistan - the pre-Operation Enduring Freedom period saw the best cooperation among the two countries' officials in years. But the Bush Administration's 2002 "Axis of Evil" speech deeply embarrassed Iranian moderates urging reconciliation. More significantly, American mistakes in Iraq emboldened the Iranian military, which saw an opportunity to compete against the clerical establishment for postwar influence - remember that some of the returning Iraqi clerics and parliamentarians, including PM Nouri al-Maliki and the founder of the Badr Organization, the late Mohammad Baqir al-Hakim, spent years in exile in Iran - by arming militias.
Surprisingly, one of the least-cited reasons by Western critics opposing detente with Iran is that Secretary Kerry should not be sitting across a table from people who green-lit the transfer of weapons used to kill American soldiers between 2003 and 2011. Of course, such critics would have a very weak leg to stand in the historical context: Nixon went to China and opened detente with the USSR while weapons supplied by these two countries had been used to kill thousands of American servicemen in Vietnam and Korea. But US critics of talking to the Soviets simply could not beat the people who felt talk was necessary to avoid WWIII. Whereas, because of US actions against Iran, because the Islamic Republic is not so vital to US interests, because there is nothing so concrete to cooperate on as anti-fascism, and because the Iranian Hostage Crisis is within living memory (no such event defined the Chinese or Russian Revolutions for Americans), a working relationship has been much harder to sell in either nation.
Iran sees itself as encircled by US bases and allies, has undergone two foreign-backed regime changes - during WWII, to remove the then pro-German Shah, and more famously in 1953. Westerners then trained SAVAK, the pre-Islamist secret police force, and were always the most visible supporters of the Shah from the 1950s to the 1980s. Iran's current leaders also do not forget what happened in the Iran-Iraq War when the US (with the USSR) sided with Saddam Hussein - even going so far as to give Iraq intelligence that the CIA knew would be used to help carry out chemical warfare. Since 2000, there have been cyber attacks, assassinations of nuclear scientists, and even more sanctions - all of which are either directly tied to the US, or ascribed to its Israeli allies. To shift course is difficult not simply because of public opinion, but because so much of the establishment cut its teeth on anti-Americanism and still sincerely feels the US wishes to strangle them by pursuing regime change. After all, dual containment of Iran and Iraq in the 1990s only came to an end with the invasion of Iraq. Though the current crisis in Iran is also the result of former President Mahmoud Ahmadinejad's fiscal policies and economic authoritarianism, there is the expectation that Iran will be allowed back into the world energy and banking community in exchange for nuclear concessions.
In Iran, the domestic calculus for whether a deal should be reached or not is more opaque, but two very important groups of people constrain Rouhani's hand. Rouhani can count on the support of the reformist press - some of those "Green Movement" outlets not shuttered since 2008, and some past notables like former President Khatami, Iran's international traders, and most of the Majles. Iranian social media has lit up in support of Rouhani's moves -- Netanyahu's clumsy, condescending attempt to speak directly to the Iranian public has backfired in these same forums. The hardliners, however, count players like the former nuclear negotiator and war hero Saeed Jalili, and the veteran diplomat Ali Velayati. If Rouhani is seen to be underperforming abroad, Khameini will want to have a back-up plan - in the form of pronounced skepticism about trusting the US's sincerity - to wash his hands of the president's work, and will use one of the president's rivals to lead the denunciation campaign.
Khameini, who puts his own credibility on the line by advancing talks, wants to reserve the option to blame the new president and the US if the talks tank - he does not want to get caught out by the US by offering concessions for no concrete gains. So he states that he approves Rouhani's efforts but finds some aspects of them troublesome. When the Grand Ayatollah talked about flexibility, he might as well be referring to his own position within Iran's domestic scene.
As for the IRGC, it remains the single most powerful institution in the country, because of its military reputation, forays into politics, and its revenue streams from the factories and trading companies it runs. Corrupt officials constitute the economic foil to sanctions-lifting. Rouhani received a relatively triumphant welcome back home - but not wholly triumphant, as the security services allowed hawkish protestors to jeer at and egg his motorcade. It has used sympathetic media to castigate Rouhani, and is making a big play rhetorically by opposing the idea of ending the regime's "Death to America" rallies. It sees itself as the guardian of a revolution - ossified as that revolutionary is in 2013 - and welcomes opportunities to confront the US and Israel in Iraq and the Levant, and to keep Assad in power despite exasperation with his military performance.
Press statements, editorials, and tweets are the tea leaves by which such factional scorekeeping can be discerned: which editorials are the most vituperative about conciliation, which reports offer praise of Obama, which date and place a speech praising or criticizing Rouhani was given at. Rouhani certainly has a strong position - perhaps stronger than Obama's, because no one has Obama's back while Rouhani has his powers conferred upon him in these talks by Khameini. The downside of that is that Rouhani has more to lose if he slips up, because without getting demonstrable relief from the sanctions, he risks having his mandate to negotiate revoked by Khameini. Obama is in a position to offer much, and has made major steps by allowing Secretary of State Kerry to negotiate directly with Foreign Minister Zarif, but will feel constrained by so many past failures in his and other administrations to take bigger risks.