TSR: "Iran is using its military strategy to help its political gains."

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WOLF BLITZER: Meanwhile, we are also gauging just what this diplomatic exchange of words between the United States and Iran, what it exactly means.

Joining us now, our correspondent in Baghdad, Michael Ware. Michael, you heard the president raise the ante today, speaking about the possibility of a nuclear holocaust because of what Iran is up to. How do you interpret that?

MICHAEL WARE, CNN CORRESPONDENT: Well, clearly, yes, that is a new rhetorical assault by the Bush administration against Tehran. We are certainly seeing the heat, the pressure rising here in this relationship. Now, clearly, for Iran, the pursuit of nuclear energy is very closely wedded to the situation here in Iraq. They're clearly using Iraq as leverage on the nuclear issue.

However, the Iranian officials that I speak to here in Baghdad are very firm. They defend what they describe as their natural right to pursue nuclear energy. Yet, they once more reiterate, they insist that this does not mean that they are chasing nuclear weapons. So President Bush obviously can raise this as an issue but once more the Iranians will be batting it away.

BLITZER: When I interviewed General Ray Odierno -- the number two U.S. military commander in Iraq -- on Sunday, he suggested, Michael, that in the past 30 to 60 days Iranian involvement in improvised explosive devices, killing U.S. troops -- Iraqis, in effect, whom they oppose -- that has escalated, increased, despite these two rounds of talks that the U.S. Ambassador in Baghdad, Ryan Crocker, has held with these Iranian diplomats in Baghdad. Is that what you're hearing on the ground from other sources as well?

WARE: Absolutely, Wolf. There's clear evidence of that. Western or U.S. military intelligence believes that essentially Iran is surging. They know that the clock is ticking down on America's timeline, for its public mandate here in Iraq. So they are trying to apply the pressure.

Indeed, between those two historic meetings, one in May and one in July, we actually saw an uptick in the attacks by what military intelligence say are Iranian-supplied weapons.

Now, we've had a lot of focus on this particularly lethal roadside bomb, the EFP. But there is another Iranian-supplied weapon the U.S. military had been yet to talk about and President Bush just touched upon. We raised this with the military on the weekend at the last meeting. It is the 240-mm missile. Now, this is being fired almost exclusively at coalition forces, primarily the Brits in the south, but also Americans in Baghdad and just south of Baghdad.

Indeed, this month, we saw one of these massive rockets with a 110-pound warhead slam into an American base and hit the dining hall, wounding at least 25 Americans. This is the biggest, baddest kind of rocket or mortar that's out there in the war. Now, it was introduced in July last year. And we saw an increase in the use of what the Americans say are these Iranian-supplied missiles called the Falaq 1 (ph) in the lead-up to the first meeting of the ambassadors. Then we saw an uptick in the roadside bombs in the lead-up to the second meeting. Obviously, Iran is using its military strategy to help its political gain.

BLITZER: Michael Ware, doing some excellent reporting for us as always from Baghdad. Michael, thanks.

WARE: Thank you, Wolf.