As Obama told CNBC in an interview this week, "The difference between Ahmadinejad and Mousavi in terms of their actual policies may not be as great as has been advertised." While that might be substantively true — on, for example, the subject of Iran's nuclear program — Mousavi has, in his rhetoric, signaled that he would bring a less belligerent tone to Iran's foreign relations. And that could have offered Obama political cover here at home for his policy of diplomatic engagement with Iran.

A clear and undisputed electoral result in favor of Ahmadinejad, meanwhile, would have kept Obama's overt and back-channel diplomatic efforts on their pre-(Iranian)election course, for better or for worse.

But now Obama must negotiate a course that is tricky not only in its domestic, political dimensions, but also in its implications for unfolding events in Iran and relations between the U.S. and Iran going forward.

Obama has come under criticism from some politicians and commentators for not speaking out more forcefully about the dubious election results and the Iranian government's crackdown on postelection protests. But as the president has noted, for the U.S. to be seen as meddling in Iranian affairs, particularly now, carries a high risk with little potential reward. The Iranian government has already complained that the U.S. is doing just that; if Obama were, with highly charged statements, to add fuel to Tehran's attempts to start that particular fire, it could serve to discredit Mousavi's supporters in the eyes of many Iranians, while giving Ahmadinejad and the ruling mullahs a foreign enemy around which they might rally the populace.

And if Iran's electoral results ultimately stand, any vociferous statements emanating from Washington could and probably would be used by Ahmadinejad as a further pretext for turning away from diplomacy. It's more complicated than that, though, for anyone who leads a nation that likes to see itself as a beacon for the forces of freedom and democracy around the world.

Obama now finds himself having to walk the always-difficult line between the American ideal and the reality that the U.S. must sometimes deal with oppressive, undemocratic regimes — the age-old debate between human rights and realpolitik. If Ahmadinejad holds on to the Iranian presidency, there will be enormous pressure on Obama to suspend diplomacy with Iran, at least for a time. To do otherwise would be unseemly; but would doing so also endanger attempts to curb Iran's nuclear program?

Obama's policy of diplomatic engagement may or may not be the right one for averting a nuclear-armed Iran, but it is the policy he ran on and with which he was elected. His actions so far show him seeking to stick to that policy with logic and an understanding of U.S-Iranian history. But history can change quickly. And democratic passions — those expressed abroad and those met with sympathy by American eyes, ears, and hearts — have a way of trumping logic. The Iranian election presents Obama with a true challenge at home and abroad, one that comes with a great degree of difficulty and in which the stakes couldn't possibly be higher.