[MILES] O'BRIEN [CNN ANCHOR]: The Bush administration still trying to build its case that Iran is meddling inside the borders of Iraq. Whether true or not, it would not seem out of character for Iran's defiant and outspoken president, Mahmoud Ahmadinejad, but he might be just the foil the Bush administration needs. Zain Verjee at the State Department with more this morning. Good morning, Zain.

ZAIN VERJEE, CNN STATE DEPT. CORRESPONDENT, AMERICAN MORNING: Good morning, Miles.The U.S. has a problem with Iran. But both countries may need each other.

(BEGIN VIDEOTAPE)

VERJEE (voice over): Could Mahmoud Ahmadinejad be a neo-cons best friend? Iran's president has been described by some in the U.S. as a gift from God. Experts says his hard nuclear stance, his explosive anti-Semitic rhetoric makes it easy for them to project Iran as a grave danger. And they're successfully pushing for the U.S. to apply more pressure and confrontation with one objective.

SEAN MCCORMACK, SPOKESMAN, U.S. STATE DEPT.: The whole point of our policies are to try to get Iran -- the Iranian regime to change its behavior.

VERJEE: Now the U.S. is cranking up the heat. Vowing to hit at Iranians fueling the Iraqi insurgency, five already in custody. The U.S. is compiling evidence to prove Iran's deadly interference in Iraq. And the second U.S. aircraft carrier is steaming through the Gulf, a reminder to Iran of America's military might. It's all rattling nerves in Tehran.

AFSHIN MOLAVI, NEW AMERICA FOUNDATION: There is serious concern that Iran faces a troubling national security threat, i.e., potential military confrontation with the United States...

For the complete transcript, please visit the CNN website.