Iran a grave national security concern: President Bush

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 hardline 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 U.N. Security Council, which has the power to impose sanctions, will tackle Iran's case early next week after the U.N. nuclear watchdog sent it a report this week saying it could not verify that Iran's atomic activities were purely peaceful.

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 (IAEA) 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."

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 would discuss the issue, he 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 that if Iran is impervious 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 West.

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."

The EU wants to keep the focus on the widely shared goal of stopping Iran acquiring nuclear bomb technology.

Ambassadors from the Security Council's five permanent members -- the United States, Britain, France, Russia and China -- meet again on Friday to draft a statement the Western powers hope will be adopted by the 15-nation world body next week.

Russia and China strongly oppose sanctions on Iran.

"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 convincing 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 ended a suspension of enrichment. 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 on continuing some enrichment at home.

Russian Foreign Minister Sergei Lavrov this week reiterated Moscow's opposition to hasty steps in the Iran crisis.

"As far as I know, the IAEA general director believes that the agency's role is far from being exhausted," he said in an interview with state-run Rossiya television on Wednesday.