The story Porter tells is surprising and absolutely essential reading. Here are the broad outlines of the plot, but you really need to read the entire thing.

Iran experts at the State Department had been working throughout 2001 on increasing relations with Mohammed Khatami's Iran. Post 9/11, they immediately realized the strategic value of working with Iran against a common enemy—al-Qaida.

It was the beginning of a period of extraordinary strategic cooperation between Iran and the United States. As America began preparing for the military operation in Afghanistan, Deputy Assistant Secretary of State for Near Eastern Affairs Ryan Crocker held a series of secret meetings with Iranian officials in Geneva. In those meetings, Iran offered search-and-rescue help, humanitarian assistance, and even advice on which targets to bomb in Afghanistan, according to one former administration official. The Iranians, who had been working for years with the main anti-Taliban coalition, the Northern Alliance, also advised the Americans about how to negotiate the major ethnic and political fault lines in the country.

The Iranian-U.S. strategic rapprochement continued to gain momentum in November and December 2001. In early December, at a conference in Bonn to set up a post-Taliban Afghan government, Iran pressed its allies in the Northern Alliance to limit their demands for ministerial seats and even made sure antiterrorism language was included in the agreement, according to U.S. Special Envoy James Dobbins. Leverett agrees. “The Bonn Conference would not have been successful without [Iran’s] cooperation,” he says. “They had real contacts with the players on the ground in Afghanistan, and they proposed to use that influence in continuing coordination with the United States.”

As we know was the case with Iraq, tragically, cooperation was not going to be allowed.

But neoconservatives had no intention of letting the engagement initiative get off the ground, and they were well-positioned to ensure that it didn’t.

The main drama around Iran policy in late 2001 was played out in the White House, where the drafting of the State of the Union message was under way and where the neoconservatives held sway. The inclusion of Iran in the “axis of evil” was at first opposed by then–National Security Adviser Condoleezza Rice and her deputy, Stephen J. Hadley, because, as Hadley told journalist Bob Woodward, Iran, unlike Iraq or North Korea, had a “complicated political structure with a democratically elected president.” But Bush had already made up his mind; regime change was the goal.

After the invasion of Iraq, however, a second hope emerged:

The effect of the Bush administration’s signals of hostility was to discredit the idea of cooperation with Washington as a means of obtaining U.S. concessions to Iranian interests. Reflecting the mood in Tehran, in May 2002, Supreme Leader Ayatollah Ali Khamenei denounced the idea of negotiations with the United States as useless.

But Iranian calculations were dramatically altered by the impending U.S. attack on Iraq ...  Iranian national security officials were convinced that the Bush administration intended to move against their country once the United States had consolidated its position in Iraq. Trita Parsi, a specialist on Iranian foreign policy at the Johns Hopkins School of Advanced International Studies who has had extensive interviews with officials of Iran’s Supreme National Security Council as well as the Foreign Ministry, says, “They believed if they didn’t do something, Iran would be next.” ...  The only way Iranian officials could head off that threat was to offer Washington things it needed in return for things that Iran needed.

And then comes the bombshell. Iran drafted a massive, concrete proposal, with the direct involvment of Iran's highest authorities, including the Supreme National Security Council and the personal guidance of Supreme Ayatollah Ali Khamenei:

The proposal, a copy of which is in the author’s possession, offered a dramatic set of specific policy concessions Tehran was prepared to make in the framework of an overall bargain on its nuclear program, its policy toward Israel, and al-Qaeda. It also proposed the establishment of three parallel working groups to negotiate “road maps” on the three main areas of contention -- weapons of mass destruction, “terrorism and regional security,” and “economic cooperation.” ...

To meet the U.S. concern about an Iranian nuclear weapons program, the document offered to accept much tighter controls by the International Atomic Energy Agency (IAEA) in exchange for “full access to peaceful nuclear technology.” It proposed “full transparency for security [assurance] that there are no Iranian endeavors to develop or possess WMD” and “full cooperation with IAEA based on Iranian adoption of all relevant instruments (93+2 and all further IAEA protocols).” That was a reference to new IAEA protocols that would guarantee the IAEA access to any facility, whether declared or undeclared, on short notice -- something Iran had been urged to adopt but was resisting in the hope of getting something in return. The adoption of those protocols would have made it significantly more difficult for Iran to carry on a secret nuclear program without the risk of being caught.

The Iranian proposal also offered a sweeping reorientation of Iranian policy toward Israel. In the past, Iran had attacked those Arab governments that had supported the Israeli-Palestinian peace process, and Tehran had supported armed groups that opposed it. But the document offered “acceptance of the Arab League Beirut declaration (Saudi initiative, two-states approach).” The March 2002 declaration had embraced the land-for-peace principle and a comprehensive peace with Israel in return for Israel’s withdrawal to 1967 lines. That position would have aligned Iran’s policy with that of the moderate Arab regimes.

The document also offered a “stop of any material support to Palestinian opposition groups (Hamas, Jihad, etc.) from Iranian territory” and “pressure on these organizations to stop violent actions against civilians within borders of 1967.” Finally it proposed “action on Hizbollah to become a mere political organization within Lebanon.” That package of proposals was a clear bid for removal of Iran from the list of state sponsors of terrorism.

The document appears to have assumed that the United States would be dependent on Iran’s help in stabilizing Iraq. It offered “coordination of Iranian influence for activity supporting political stabilization and the establishment of democratic institutions and a nonreligious government.”

Comprehensive peace with Israel. An end to support for terrorist organizations. Complete nuclear transparency. And what did the Bush administration do when faced with this historic opportunity?

The outcome of discussion among the principals -- Bush, Cheney, Rumsfeld, and Powell -- was that State was instructed to ignore the proposal and to reprimand Guldimann for having passed it on. “It was literally a few days,” Leverett recalls, between the arrival of the Iranian proposal and the dispatch of the message of displeasure with the Swiss ambassador. ...

Nevertheless, within a few days, Rumsfeld and Cheney had persuaded Bush to cancel the May 21 meeting with Iranian officials [to discuss a much narrower proposal exchanging anti-Iranian terrorist information for information about al-Qaeda]. In a masterstroke, Rumsfeld and Cheney had shut down the only diplomatic avenue available for communicating with Iran and convinced Bush that Iran was on the same side as al-Qaeda.