The BBC reports that Iran made an offer to the US in 2003 that would have given us everything we demand now, in return for normalized relations and the expulsion of a terrorist group from Iraq. Citing "a senior former official" in the State Department, a classified memo details the Iranian offer that Dick Cheney successfully argued against accepting:

Tehran proposed ending support for Lebanese and Palestinian militant groups and helping to stabilise Iraq following the US-led invasion.

Offers, including making its nuclear programme more transparent, were conditional on the US ending hostility.

But Vice-President Dick Cheney's office rejected the plan, the official said.

The offers came in a letter, seen by Newsnight, which was unsigned but which the US state department apparently believed to have been approved by the highest authorities.

In return for its concessions, Tehran asked Washington to end its hostility, to end sanctions, and to disband the Iranian rebel group the Mujahedeen-e-Khalq and repatriate its members.

Later in the report, the BBC said that the source was one of Colin Powell's top aides, which means this had to have come from Richard Armitage. Armitaga has a history of on- and off-the-record attacks on the Administration, and even when defending Powell's boss, he's managed to embarrass him. After watching Patrick Fitzgerald jail Judith Miller for months and attempt to pin the leak of Valerie Plame's identity on everyone in the White House, Armitage finally confessed to being the leaker -- three years later.

This is a bit of old news, though. The story of the supposed offer floated to the top of the news cycle briefly during the last election cycle, complete with the Cheney singlemindedness on "evil", as Armitage -- oops, the "senior former official and Powell aide" told the BBC. Only both the BBC and Armitage miss something about this unsigned offer, which is that it's unsigned -- and it demanded security guarantees and normal relations as a reward for ending its support of terrorism, something Iran shouldn't have been doing anyway. Daniel Freedman notes the same point:

The offer from the Iranians came because the mullahs were nervous -- pressure on their nuclear program was slowly building and American troops were right next door (hardly comforting for theocrats who rely on force to maintain their rule). So cheekily the mullahs asked America for security guarantees in exchange for stopping to do what they shouldn't have been doing in the first place -- funding terrorist groups and pursuing a rogue nuclear program. If the Bush administration would have agreed it would have sent the wrong message to other would-be rogue states -- start funding terrorism and pursue a nuclear program, and then give it up, and we'll guarantee the future of your regime.

And all that is based on the assumption that the mullahs can be trusted to keep their word. The reality is that the mullahs had been caught lying about their nuclear program for almost two decades. Suddenly they could be trusted?

An unsigned note means little. The official Iranian position had not changed, nor would it have after we had normalized relations. Teheran did not conduct terrorism around the world in order to win most-favored-nation trading status with The Great Satan. They conduct terrorism to push Israel into the Mediterranean and to gain control of Southwest Asia as a new caliphate based in Persia rather than Arabia. If they wanted to change their official position, someone in charge would have made clear that the offer was official, and backed by the government, rather than an anonymous note that could have originated anywhere.

However, some people are gullible enough to believe anything that comes from Iran, and it's no great surprise that an inordinate amount of them work at the State Department -- or in this case, used to work at Foggy Bottom.

UPDATE: Glenn at Instapundit notes that I lost my bet. The story credits this to Lawrence Wilkerson. Wilkerson, you may remember, was deeply involved in Colin Powell's presentations on the mobile biological-weapons laboratories presentation at the UN, and who insisted that the CIA never gave Powell or the Bush administration any hint that the Curveball testimony on those labs had come into question.

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