Americans are being played for fools by Iran—and fooling themselves. There is no case to be made that Iran is not pursuing a nuclear weapons capability. There is no evidence that Iran´s decision-makers are willing to stop the nuclear program in exchange for lifting sanctions or anything else. The International Atomic Energy Agency reported on Friday that it has made no progress in its negotiations with Iran and that Iran continues to accelerate its enrichment operations, which are in violation of U.N. Security Council resolutions and agreements with the IAEA.

Yet the policy discussion in the U.S. is confused. Former Ambassador Dennis Ross writes that the Iranians are ready for talks. Anonymous administration officials refer to one of the most dangerous Iranian nuclear installations, Fordow, outside the city of Qom, as "a Potemkin facility." The media are full of comparisons to Iraq in 2003, when suspicions that Iraq was pursuing a covert nuclear program led to war.

People are conflating intelligence assessment with policy recommendation. The prospect of war with Iran is so distasteful that people are desperate to persuade themselves that the problem is not serious.

IAEA inspectors on the ground at Iran´s nuclear facilities reported the following facts on Friday: Iran´s inventory of centrifuges enriching uranium isotopes has been steadily expanding, along with the stockpiles of uranium enriched to 3.5% and 20%—important stages on the road to weapons-grade uranium. Iran has installed and run advanced centrifuges in the Natanz Pilot Fuel Enrichment Plant. Iran has buried an enrichment facility under a small mountain at Fordow, installed air-defense systems around it, and brought new centrifuges online there.

Iran is developing techniques and technologies needed to turn weapons- grade uranium (which it is not yet producing) into an atomic bomb. The IAEA reported that the Iranians "dismissed the Agency´s concerns [about weaponization] . . . largely on the grounds that Iran considered them to be based on unfounded allegations." The Iranians have denied inspectors access to the facilities that inspectors suspect are being used to work on weaponization.

The price of this refusal, including U.N. and international sanctions, has devastated the Iranian economy. Unemployment and popular dissatisfaction with the regime are high. Unprecedentedly harsh sanctions imposed by the Obama administration are driving off customers for Iran´s oil.

What peaceful purpose could be served by accepting such damage to pursue an illegal nuclear program? The international community has repeatedly offered Iran enriched uranium for its reactors to produce both electricity and medical isotopes—and Iran has refused. Iran´s behavior makes sense only if its leadership is determined to have a nuclear program that can develop and field atomic weapons.

The pressure on Iran´s economy and tensions within its political elite persuade some observers that Iran´s leaders are nearing a decision to trade the nuclear program for relaxed sanctions. That may be true—but there is no evidence for it. Iran´s leaders continue to insist on Iran´s right to the nuclear program as it is being built. No Iranian leader has suggested that Iran should comply with the IAEA or abandon the program.

Western observers are confusing internal Iranian disagreements about how to manage their economic challenges with disagreements about foreign policy. Increasing external pressure this year could fracture the Iranian leadership on this issue, but no one has adduced any convincing evidence that is happening.

Iran is, however, preparing rhetorically for war with the West. Iran´s military has threatened to close the Strait of Hormuz, attack American naval ships passing through it, and pre-empt what it perceives to be preparations for an attack on Iran. The Supreme Leader Ayatollah Ali Khamenei and other political figures have seconded these threats, and no Iranian leader has denounced them.

By contrast, there has been no vocal outcry for military action against Iran in the U.S. Even Israel´s threats have been muted and confused. The bellicosity in this crisis is coming almost entirely from Tehran. Why should a state seeking a peaceful nuclear program work so hard to whip up war fever?

Some say that Iran´s leaders are irrational. But their statements and actions in this instance—juxtaposing bellicosity with offers of negotiations—make perfect sense if they are intended to cover the acquisition of a nuclear weapons capability.

The Iranians are advancing technically as fast as they can to acquire the fuel for a nuclear bomb. They also are pursuing key elements of a weaponization program separately and covertly. At the same time, they have attempted to draw the IAEA inspectors into protracted negotiations that would buy time to reach what the Israelis call the "zone of immunity" after which Israel no longer has a viable military option.

Add it up any way you like: Iran is starting to race to reach a breakout point at which the international community will be unable to prevent it from acquiring nuclear weapons, short of a massive American military strike. The evidence available supports no other conclusion.

This is not a recommendation for a military strike on the Iranian nuclear program. One could decide that allowing Iran to acquire nuclear weapons capabilities is preferable to the consequences of a military strike, or one could accept at face value President Obama´s statements that the prospect of Iran acquiring a nuclear arsenal is unacceptable (which implies a willingness to use military force to prevent it). But the debate must take place on the basis of a reality not skewed to support one or another policy option.

Those who oppose military action against Iran under any circumstances must say so, and must accept the consequences of that statement. Those who advocate military action must also accept and consider the consequences—regional and possibly global conflict and all of the associated perils of war. But neither American nor Israeli nor any Western interest is served by lying to ourselves and pretending the predicament will go away.

Mr. Kagan is director of the Critical Threats Project at the American Enterprise Institute. Mr. Zarif is research manager at the Critical Threats Project and leads its Iran team. (Copyright © Dow Jones & Company, Inc.) 02/27/12)