By Paul Reynolds
World affairs correspondent, BBC News website
Iran said it launched a rocket capable of carrying a satellite last August
Iran's successful launch of its own satellite by its own rocket shows how it is slowly but surely mastering the missile technology that the West and Israel fear one day might be available as a delivery system for a nuclear weapon.
It also shows, as Iran itself has triumphantly proclaimed, that the UN sanctions against Iran, which include sanctions against its missile programme as well as its nuclear activities, have not stopped this event.
The satellite launch by itself, however, does not fundamentally change the equation over Iran's potential development of a nuclear weapon.
Iran continues to state that it has no intention of building a bomb and the International Atomic Energy Agency has reported that all Iran's declared nuclear enrichment activities are under its inspection.
Western governments and Israel are worried that Iran might one day use the expertise it is gaining in nuclear fuel enrichment to enrich to the higher level needed for a nuclear explosion.
The key element here is that Iran is steadily building up its knowledge of missile technology.
"This launch represents another technological advance for Iran," says Mark Fitzpatrick, nuclear watcher at the International Institute for Strategic Studies in London.
"One concern is that the rocket used this time, the Safir 2, is basically the same as Iran's ballistic missile, the Shahab 3, so each launch increases its accuracy and reliability.
"However, this is not as worrisome as the launch last November of a solid fuel rocket, the Sajjil. Solid fuel missiles are more mobile and less vulnerable to pre-emptive attack."
The satellite announcement came as Iran is celebrating the 30th anniversary of its revolution.
The link between the launch and the revolution is no coincidence.
The Iranian government uses technology as a symbol of national pride.
It claims that the effort to stop it from enriching uranium is an attempt to stifle its technological progress.
Western governments have offered Iran a guaranteed supply of nuclear fuel if it will give up its own enrichment but Iran has turned down this offer.
Obama policies awaited
The next stage in the confrontation is for the Obama administration to develop its policy toward Iran.
President Obama has already metaphorically held out his hand but we now have to see the practical policies being developed and to watch for the Iranian response.
On Wednesday, senior diplomats from the United States, Russia, Britain, France, Germany and China are to meet in Frankfurt to discuss the new moves.
Israel has been making it clear for some time that it will not tolerate an Iranian nuclear weapon
One option for Washington is to drop the demand for an Iranian freeze on nuclear enrichment as a pre-condition for talks. Alternatively the so-called freeze-freeze option could be advanced, freezing enrichment in exchange for a freeze on further sanctions.
The head of the IAEA, Mohamed ElBaradei, has suggested that Iran be allowed to enrich small amounts under strict inspection.
Iran however does not seem ready to negotiate on any kind of freeze and has regarded abandoning its enrichment as tantamount to surrender.
This issue therefore remains a very serious one.
Israel has been making it clear for some time that it will not tolerate an Iranian nuclear weapon, though in the absence of any actual weapon, the question is whether it would attack on the assumption that one might be built.