What is the Obama administration’s response to the Iranian plot to assassinate Saudi Arabia’s ambassador in Washington? To “work closely with our international partners to increase Iran’s isolation,” according to Secretary of State Hillary Rodham Clinton, and unite “world opinion” against Iran, according to Vice President Joseph R. Biden.

There’s only one problem: Iran’s leaders don’t fear Barack Obama or the kind of “isolation” his administration promises.

President Obama thought that softening criticism of Iran and backing off support for Iranians’ democratic aspirations would make the regime more cooperative. Instead, the regime used this policy to ease international pressure over Iran’s nuclear program and ratchet up repression at home. It responded to Mr. Obama’s belated and muted criticism of its crackdown on pro-democracy demonstrators in 2009 by rounding up, torturing and killing dissidents, and by accelerating uranium enrichment for nuclear weapons.

The administration tried sanctions, but the current crop poses no immediate threat to the regime. The Iranian people, sectors of the economy and even some government factions bridle at them, but not enough to force AyatollahAli Khamenei, the “supreme leader,” to change policies. And though the U.S. bans trade and investment in Iran, others trade with it to varying extents and buy its oil that bankrolls the regime.

Tehran no doubt thinks Mr. Obama can't get heftier sanctions approved. It expects Russia and China to block any attempt at the U.N. Security Council. It doesn’t expect countries to ban its oil in this tight market. Without international unity, proposed sanctions to strangle its international financial transactions and destroy its currency won’t work. That unity, promised by Mr. Obama’s friendlier outreach to Iran, never materialized.

Iran’s leaders don’t expect military force either. Washington already indicated reluctance to exercise that option, despite recent claims it is still “on the table.”

Most of the “hard power” pressure on Iran is believed to have come from the Israelis. The Stuxnet cyber-attack is mainly responsible for the Iranian nuclear program’s difficulties, but all it did was slow its advancement. The amount of enriched uranium the Iranians have today is greater than before the attack. Sanctions may have restricted imports of specialized steel for centrifuges, but they have not stopped progress in the overall program. If U.S. intelligence supported the Stuxnet attack, it was likely the result of work done in George W. Bush’s presidency.

What the Obama administration never understood is that Iran’s leaders never wanted his brand of engagement. The last thing they want is to open up to the West and allow Americans in to bolster democratic opposition. Iran’s leaders fear their own people more than Barack Obama, who in the past made it clear that he was reaching out to the mullahs, not the Iranian people.

Now that none of these policies has worked, the administration is flipping to a position of overt hostility. It is caught between what it doesn’t want to do (threaten force against Iran) and what it can’t do (arrange true international diplomatic isolation). About the only way to get the regime’s full attention - short of attack - is to immediately cut off the money flow and bring the Iranian people back to the streets.

Unfortunately, the administration’s policies make this difficult, if not impossible, to achieve. Undercutting friends like Egypt’s former President Hosni Mubarak has reduced the willingness of other Middle Eastern allies to support U.S. initiatives of any kind. Its “reset” policy toward Russia has not gotten Moscow to cooperate on Iran, and China still resists tough sanctions. And its “engagement” policies toward the regime have diminished the Iranian people’s trust in America and their ability to organize and mount a resistance.

It’s a far cry from the heady days when Mr. Obama spoke to the Iranian people about a “new day,” putting aside three decades of “strained” relations, and building “constructive ties.” There was no new day in Iran. Only more time for the regime to work on its nuclear program and repress its people.

Kim R. Holmes, a former assistant secretary of state, is a vice president at the Heritage Foundation