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International News Title: Bush says diplomacy way to tackle Iran WASHINGTON (Reuters) - U.S. President George W. Bush on Friday called Iran a "grave national security concern," but said he sought a diplomatic way to cap its nuclear goals. A hard-line Iranian cleric told a Friday prayers congregation in Tehran earlier that Bush was using the nuclear issue to further his goal of overthrowing the Islamic Republic. The United Nations Security Council, which has the power to impose sanctions on Iran but is unlikely to do so soon, has begun to tackle Iran's case after the U.N. nuclear watchdog sent the 15 members a report on Wednesday saying it could not verify that Iran's atomic activities were peaceful. The five council powers with veto rights were working on a statement they hope the full council can consider next week. The statement is expected to call on Iran to suspend all uranium-enrichment activities. Bush said U.S. concerns were the result of Iran's stated desire to destroy Israel and Washington's belief that Tehran wants to build nuclear bombs -- something the Iranians deny. "You begin to see an issue of grave national security concern," Bush told a newspaper group. "Therefore it's very important for the United States to continue to work with others to solve these issues diplomatically, deal with these threats today," he said. The Security Council will not rush into sanctions. It is likely first to urge Iran to accept International Atomic Energy Agency demands that it halt all uranium enrichment work. Iran, which has fought to avoid being taken to the council, suspects Bush is only using the nuclear issue as a pretext. "Bush talks of regime change or change of its behavior, which is the same. It means no Islamic regime," said senior cleric Ahmad Khatami in a sermon in which he also denounced the European Union as a "puppet of U.S. policies." U.S. Secretary of State Condoleezza Rice said diplomacy must continue, but Iranian leaders should not be allowed to "play for time." "It's time that we take this up in the Security Council," she told reporters traveling with her to Chile. EU foreign policy chief Javier Solana spoke for the first time publicly of possible sanctions against Iran. "I do not rule out sanctions, but it depends on what kind of sanctions they are," Austria's Der Standard daily quoted him as saying. "We certainly do not want to hurt the Iranian people." However, asked if EU foreign ministers meeting in Salzburg, Austria, would discuss the issue, Solana told reporters: "No. We are talking about a gradual approach to give some room still for diplomacy." TARGETED SANCTIONS British Prime Minister Tony Blair vowed to pursue Iran's case through the Security Council, saying a failure by Tehran to meet its global obligations would lead to "a serious situation." European diplomats say if Iran does not respond to U.N. demands, council measures might start with foreign travel bans and asset freezes aimed at Iranian leaders and their families. The United States, which has its own sweeping sanctions in place against Iran, has pressed for tougher international action to isolate the Islamic Republic. Iran has threatened to retaliate by inflicting "harm and pain" on the United States. Bush said he assumed the threat was related to the U.S. need for imported energy resources. "For national security purposes we have got to become ... not addicted to oil," he added. The International Energy Agency said it would be able to plug the gap in global oil supply for several months if Iran, the world's No. 4 oil exporter, halted oil exports. "The IEA would be capable of compensating for a number of months," President Claude Mandil said. "According to my knowledge, OPEC would not be able to compensate in totality." Ambassadors from the Security Council's five permanent members -- the United States, Britain, France, Russia and China -- were to meet again on Friday on drafting a statement. The Western powers would like the statement to call on Iran to suspend uranium enrichment activities and for a report, perhaps in two weeks or a month, on whether Tehran has done so. After the statement, divisions are expected to emerge, with Russia and China strongly opposing any escalation of measures, including sanctions against Iran. The EU wants to keep the focus on the widely shared goal of stopping Iran acquiring nuclear bomb technology. "Our goal is political, not at all punitive," French Foreign Minister Philippe Douste-Blazy said when asked about sanctions. The EU, led by France, Britain and Germany, started talks with Iran in 2003 in the hope of persuading it to scrap uranium enrichment, which can produce fuel for power plants or weapons, in exchange for economic and political incentives. The talks collapsed in August after Iran resumed uranium conversion. The latest bid to revive them failed last Friday. EU External Relations Commissioner Benita Ferrero-Waldner said there was still room for a negotiated solution based on a Russian proposal for Iran to enrich uranium on Russian soil. Iran, which concealed its nuclear work from the IAEA for 18 years, insists it should be able to carry out some enrichment at home. (Additional reporting by Paul Taylor in Salzburg, Francois Murphy in Vienna, Jon Boyle in Paris, Alan Crosby in Prague, Sabina Zawadzki in Brussels, Alireza Ronaghi in Tehran in Moscow and Evelyn Leopold at the United Nations)
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