The apparently successful launch of an Iranian satellite looks very different from Washington than it does from Tehran.

For the Iranian government it is an important milestone along the road to reclaiming Persia's ancient claim to major power status, which it feels the jealous west is trying to deny it.

It is also enormously significant in Iranian internal politics. President Mahmoud Ahmadinejad got elected promising economic benefits for the common man and modernisation. He has made a complete mess of the first part of that mission. Delivering the second is important for his prospects of re-election in June, in the eyes of both the average voter and – even more importantly, given the controlled nature of Iranian democracy – the supreme leader, Ayatollah Ali Khamenei.

From Washington, London and some other western capitals, the launch is seen primarily through the prism of Iran's nuclear project. The capacity to put an object into space, together with the feared capability to build a nuclear device, spells – for some at least – the eventual threat of an intercontinental ballistic missile (ICBM) that could reach the US.

"There are dual applications for satellite launching technology in Iran's ballistic missile programme. As a result we think this sends the wrong signal to the international community, which has already passed five successive UN security council resolutions on Iran's nuclear and ballistic missile programmes," Bill Rammell, the minister of state at the Foreign Office, said today.

For that reason the satellite launch has a direct and immediate bearing on the debate over the US missile defence scheme. Barack Obama's team has hinted the scheme could be reviewed. That hint brought immediate dividends in the relationship with Moscow, which felt threatened by the deployment of missile interceptors in Poland and a radar system in the Czech Republic. The Bush administration insisted the system was a shield against Iran; the Russians saw it pointing at them.

The Russian government said that in return for Obama's change in tone it would review its own plans to put tactical missiles in its western enclave of Kaliningrad. The diplomatic thaw, which is only a week old, generated hopes of a more productive bilateral relationship. All that is now under greater threat as a result of the Omid satellite launch by Iran, if it pushes the missile defence argument back in favour of the hawks.

Mark Fitzpatrick, a specialist on the Iranian nuclear programme at the International Institute for Strategic Studies, said: "It's almost as if the Iranians are in league with ballistic missile defence adherents in the United States."

From a purely technical point of view, the advances represented by the satellite launch are incremental. The ballistic technology is basically the same as Iran's Shahab-3 missile, which was tested to great fanfare last year. That technology demonstrated Iran could reach Tel Aviv, Cairo or Riyadh with its missiles.

The Omid satellite launch confirms that Iranian scientists have mastered the separation of payload from missile in space and placing a payload into the right orbit, both useful skills for an ICBM. It does not imply Iran is on the brink of targeting Washington with a nuclear warhead.

"The Iranians have shown a very rudimentary capability in a technology that requires far greater sophistication," Christopher Pang, an analyst at the Royal United Services Institute, said.

Fitzpatrick argues that a more significant missile test took place in November. The Sajjil missile launched then has about the same range as the Shahab-3, about 1,250 miles (2,000km), but it uses solid fuel rather than liquid. That is militarily significant because it is less volatile and can therefore be launched with shorter notice.

The Iranians have certainly shown a lot of interest in projecting their military strength far beyond their region. However, they are probably still some way away from deploying long-range nuclear missiles.

By this summer Iran will probably have produced enough low-enriched uranium to produce a bomb, if it was turned into highly enriched uranium (HEU). But that process would be hard to carry out without the UN's nuclear watchdog, the International Atomic Energy Agency, noticing.

Then the HEU would have to be crafted into a warhead small enough to put on top of a missile. That too is very difficult. According to the most recent estimate by the US intelligence community, the Iranians gave up trying to do that in 2003.

The Israelis have rubbished that estimate, and will be telling the Obama administration: "We told you so." The launch does not directly affect Israel, as Iran has already shown it can reach Tel Aviv with the Shahab-3 missile. But the Omid satellite launch will inject more anxiety and urgency into the international debate on Iran, at a time when the new US government is trying to create some breathing space with friendly overtures to Tehran.