Yesterday Walter Laqueur, the distinguished historian of the Middle East and a lot else, reminded me of a saying ascribed to Israeli General Moshe Dayan. Dayan said, "We have to act like crazies—but only up to a point." Iran has been following this prescription. But if the announcement by the Obama administration about an Iranian terrorist conspiracy is accurate, then Iran has passed the point of craziness and moved into full-blown lunacy.

Had its plot to kill the Saudi ambassador to the United States succeeded, and included murdering dozens of American citizens, Iran would find itself enmeshed in an all-out war with America. During World War I, the German military attaché Franz von Papen was expelled for creating a terrorist network and for his role in blowing up an installation at Black Tom Island in New York Harbor on July 30, 1916—the blast shattered windows on Wall Street. Soon enough America entered the war. Although other factors drove America to war, no American president could countenance a state-sponsored act of terror, one carried out in the heart of the nation no less, that resulted in the deaths of American citizens.  Many questions are unresolved about the plot revealed yesterday. Was it actually sponsored by high-level Iranian officials? Or are there rogue elements inside the government who are using the Islamic Revolutionary Guards Corps to foment war between Tehran and Washington?

For an American president, however, it doesn't really matter that much. It's a distinction without a difference. If it were a rogue force, then Tehran would have to demonstrate that it has control over its forces. Either way, the plot is precisely what the Bush administration was claiming it would help stamp out by going to war in Iraq. But all along Iran has been the real heavy in the region.

For Saudi Arabia, the plot is a wake-up call as well. That Iranians, with apparent sanction from elements within the Iranian government, would go to the lengths of establishing contact with the Mexican Zetas drug cartel in order to assassinate a Saudi official serving in America suggests that new pressure must be exerted on the Tehran mullahs. The Saudis will be even less disposed to object to an Israeli assault on Iran's nuclear facilities. This action has opened the door another crack to such an action, which suggests further that the Tehran regime may not be entirely rational.

The central conundrum about Iran has always been whether it is a rational power, in the mold of Communist China, or a revolutionary one, along the lines of Napoleonic France or even Hitler's Germany. This nefarious move suggests that the latter may be the case. In her book Assassins of the Turquoise Palace, Roya Hakakian has shown how the Iranian government sent out death squads in the early 1990s to murder dissidents living in Europe, to the extent of bombing a restaurant in Berlin.

If Iran proves to be a truly revolutionary power—and out of control—it may prove difficult for the United States to avoild open hostilities. No U.S. attack on Iran seems likely at this point, and there is no sound reason to carry one out. The risks are substantial. But if Tehran remains intractable, confrontation may well be inevitable. In any event, the battle against terror seems to have entered a new and more dangerous phase for both the United States and Saudi Arabia.