World powers struggled to agree a common approach to Iran's nuclear ambitions, as US President George W. Bush vowed to pursue diplomacy to resolve the crisis. With Russia and China still opposed to imposing sanctions on Iran, the United States and its European allies were now looking at possible incentives as well as penalties to defuse the nuclear crisis.
Iran has rejected international demands to end its uranium enrichment work, which Washington and its allies believe hides a nuclear weapons drive. Tehran insists its research is for peaceful purposes.
Bush said that even China and Russia agreed that Iran must not be allowed to have a bomb, but that he was determined to seek a negotiated settlement rather than more coercive measures.
"The first option and the most important option is diplomacy," the US president said Tuesday at an appearance in Florida when asked about the Iran dispute.
He refused to comment on whether economic sanctions could be applied.
"I think it's very important for good negotiators to keep their cards close to the chest and at the appropriate time, make it clear what our intentions are," he said. "This is a serious issue, taking a lot of our time as it should."
After talks among top diplomats from the United States, Russia, China, Britain, France and Germany in New York failed to produce agreement, US Secretary of State Condoleezza Rice said Tuesday the group was weighing a package of carrots and sticks to persuade Iran to drop its defiance.
The diplomats however were "very clear that there is a path that if Iran continues down it, is going to lead them to isolation," she said.
French Foreign Minister Philippe Douste-Blazy said the major power ministers reviewed a series of possible incentives and punishments.
Incentives, he said, included "ambitious proposals, first in the area of civilian nuclear energy, then in the commercial domain, in the technological domain and, why not, in the area of security."
The United States has refused to offer Tehran security guarantees, saying military action remained an option to prevent Iran from building a nuclear arsenal.
The United States, Britain and France want a resolution under Chapter 7 of the UN Charter, which would probably start with a warning to Iran that could be followed by economic sanctions and even military action.
China and Russia have spoken out strongly against coercive measures.
"Our position is very firm -- we think that at this stage there is no necessity to discuss Chapter 7," Russia's Interfax news agency quoted Russian Foreign Minister Sergei Lavrov as saying.
Meanwhile Iranian officials said they were waiting for a reply to the surprise 18-page letter President Mahmoud Ahmadinejad sent to Bush on Monday.
The White House said there would be no formal response to a letter that Rice said contained "nothing new" to resolve the nuclear dispute.
The letter was the first from an Iranian leader to a US president in more than a quarter century. Tehran portrayed it as an important diplomatic initiative, though US officials dismissed it as more philosophical treatise than political overture.
In the letter, Ahmadinejad assailed the United States over Iraq, its reaction to the September 11, 2001 attacks, the handling of "war on terror" detainees and even US policy in Latin America.
He suggested that the two countries return to religious principles as a means of restoring confidence. "Will you not accept this invitation?" Ahmadinejad asked.
Ahmadinejad, currently on a visit to Indonesia, remained defiant. When asked about Iran's nuclear program at a press briefing after meeting Indonesian President Susilo Bambang Yudhoyono he said: "The Iranians are capable of defending their own rights and interests."
He continued: "We think that this is the right of every nation: to use modern science and technology, and the right has been enshrined in the previsions of the NPT," he said, referring to the nuclear Non-Proliferation Treaty.
Yudhoyono in turn said that Indonesia believes Iran's nuclear program is peaceful and that diplomacy can resolve the international stand-off over its ambitions.
"We hope that open conflict can be avoided. I also believe that Iran can continue talks and negotiation. All parties must use the opportunity to find a peaceful and diplomatic solution," Yudhoyono said.
Indonesia, the world's most populous Muslim nation, has offered to help mediate in international talks aimed at resolving the standoff over Iran's nuclear program, Yudhoyono's spokesman said.
Dino Patti Djalal told reporters that Yudhoyono suggested to Ahmadinejad that representatives of Islamic nations should assist in the talks.
"In talks on the nuclear issue, Indonesia has proposed the establishment of a larger forum," Djalal said.
