BOB WOODRUFF, ABC NEWS
(Off Camera) Good evening, everyone, I'm Bob Woodruff, reporting tonight from the Iranian capital of Tehran. This is one of two countries at the center of a growing nuclear controversy tonight. Iran claims it is building a peaceful nuclear program. The US believes it is building a bomb. And to add to the tension, North Korea revealed this week it already has nuclear weapons and intends to keep them. We'll explain in a moment why there may be little to be done about Korea, but Iran, at least for now, is negotiating.

BOB WOODRUFF
(Voice Over) At a security conference in Germany today, Secretary of Defense Donald Rumsfeld said, on the issue of Iran, the US and Europe share a common goal.

DONALD RUMSFELD, SECRETARY OF DEFENSE
I think there's very broad agreement that it is not in the interests of the world that there be a nuclear program in Iran.

BOB WOODRUFF
(Voice Over) Although the US and Europe have not agreed on how to stop that program, Iran's leaders have responded with defiance. President Khatami warning that an attack would result in a "scorching Hell." Some Iranian analysts worry that the rhetoric has created a dangerous situation in which a minor misunderstanding could escalate into violence.

PROFESSOR NASSER MADIAN-SAEY, UNIVERSITY If an accident happens somewhere, that it will be really hard to contain it because the chances of misreading the other side's intention is very high.

BOB WOODRUFF
(Voice Over) Complicating the problem are the lack of official diplomatic relations and decades of mistrust that began with the hostage standoff 25 years ago.

BOB WOODRUFF
(Off Camera) There are still anti-US slogans all around Tehran. Here, an image of the 1979 seizure of the US Embassy. Behind me, a sign that says, "we will make America face a severe defeat." But the truth about how Iranians view Americans today is far more complex.

BOB WOODRUFF
(Voice Over) Although many Iranians are highly critical of US policies, they have generally warm feelings for the American people. Of the 2.5 million Iranians living abroad, a million of them live in the US. When Iran's hard-line leaders talk about a possible American attack, most don't believe it.

SIAMAK NAMAZI, POLITICAL CONSULTANT
When you walk in the streets, it's not the conversation of the day, doesn't revolve around, are the Americans going to strike?

BOB WOODRUFF
(Voice Over) But the government continues its war of words. And on Iran's state television today, the military showed off some new torpedoes, just in case.