A report by the Reut Institute warned that Washington and Teheran were quietly negotiating in an effort to reach a strategic accord, Middle East Newsline reported. Entitled "A Libya Scenario in Iran: the United States Goes It Alone," the report said the Bush administration could ignore Israel's interests in any U.S. reconcilitation with Iran.

"Israel must consider raising the matter of a deal with Iran in its talks with the United States," the report said. "The more Israel offers creative alternatives to blocking Iran's nuclear ambitions, the greater the chances that the United States will include it in its decision-making."

"This would present Israel with a strategic surprise," the report said.

Israel has favored a military option against Iran and regards the country as a strategic threat, the report said. In contrast, the United States has set the military withdrawal from Iraq as a priority.

"The war in Iraq limits U.S. operational capability against Iran," the report said. "The United States is exposed to a harsh Iranian response in the Gulf and Iraq."

The study has been relayed to several government agencies and the military. They included the Prime Minister's Office, Defense Ministry, Foreign Ministry and National Security Council.

Reut asserted that Israel has assumed shared interests with the United States regarding the need to stop Iran's nuclear program. The report questioned this assumption as well as the Israeli assessment that Washington has been sharing information on its negotiations with Iran.

The study determined that the United States appeared increasingly unlikely to launch a military strike against Iran. Instead, Reut raised the prospect of direct negotiations that would result in a U.S. agreement with Iran.

"The United States seeks a grand bargain with Iran," the report said. "Under this scenario, the United States will draft a deal that will preserve Iran's uranium enrichment capability. Israel would likely be seen as opposing the deal, and therefore be kept out of the process."