EU and U.S. seek to turn up pressure on Iran

BRDO, Slovenia (Reuters) - The United States and theEuropean Union told Iran on Tuesday they were ready to imposemore sanctions over its nuclear enrichment programme.

But President George W. Bush acknowledged the limits ofU.S. influence over Tehran and, in the twilight of hispresidency, appeared resigned to leaving the standoff to hissuccessor.

"I leave behind a multilateral framework to work on thisissue," Bush said after a U.S.-EU summit at a Slovenian castle.

"A group of countries can send a clear message to theIranians, and that is: We're going to continue to isolate you... we'll find new sanctions if need be, if you continue todeny the just demands of the free world, which is to give upyour enrichment programme," he said.

He stopped short of repeating the U.S. position that alloptions, including military action, remain open. "Now is thetime for there to be strong diplomacy," Bush said.

A joint communique after his final summit with the27-nation EU said both sides were ready to take additionalmeasures on top of three rounds of United Nations sanctions --an implicit recognition that tougher Security Council actionmight be difficult due to Russian and Chinese resistance.

Bush met Slovenian leaders, who hold the EU's rotatingpresidency, as well as European Commission President JoseManuel Barroso and EU foreign policy chief Javier Solana, whohas led efforts to get Iran to scrap its enrichment programme.

The president later arrived in Germany where he will holdtalks with Chancellor Angela Merkel on Iran, climate change andoil prices at Meseberg, north of Berlin, before heading toRome, France and Britain as part of a week-long European tour.

INCENTIVES

Solana is due to travel to Iran at the weekend to present anew offer by major powers of incentives for it to suspend theprogramme but he has played down prospects of a breakthrough.

"Iran with a nuclear weapon would be incredibly dangerousfor world peace," Bush said.

All agree Iran should not be allowed to acquire nuclearweapons. Tehran insists its programme is for civilian purposes.

But it remained unclear how far the Europeans, who rarelyecho Bush's harsh rhetoric against Iran and have sometimes beenreluctant to get tougher, would be willing to go.

Washington has pressed the EU to deny some Iranian banksaccess to the world financial system. European ExternalRelations Commissioner Benita Ferrero-Waldner said further EUsteps could entail a freeze on Iranian bank assets.

An Iranian newspaper said Tehran was withdrawing assetsfrom European banks and converting some foreign exchangeholdings into gold and equities to neutralise the impact ofsanctions.

MORE COOPERATIVE

Bush was accused by critics of "cowboy diplomacy" early inhis presidency, but the rancour has eased somewhat after hetook a more cooperative approach in his second term.

After clashing with former Chancellor Gerhard Schroederover the 2003 U.S.-led invasion of Iraq, he has forged a closerelationship with Merkel, a pro-American conservative who grewup in communist East Germany.

Merkel has not shied away from criticising Bush over issueslike the U.S. military prison in Guantanamo Bay but, like otherEuropean leaders, she is looking increasingly past Bush to hissuccessor who will be chosen in the November election.

Bush acknowledges he is unpopular in Europe, as well as athome. "A lot of people like America. They may not sometimesnecessarily like the president," he told Slovenia's Pop TV.

On climate change, EU policymakers say they have given uptrying to get Washington to join with the bloc in signing upnow to binding cuts of greenhouse gas emissions.

Bush repeated on Tuesday that the United States would notagree to cuts until big developing nations such as China andIndia made commitments too, but he said a global climate dealcould still be reached during his presidency.

He also reaffirmed his strong dollar policy, even as theU.S. currency traded close to a historic low against the euro.

"We believe in a strong dollar and that the relative valueof economies will end up setting the valuation of the dollar,"Bush told a joint news conference in Slovenia.

(Writing by Matt Spetalnick, William Schomberg and NoahBarkin, additional reporting by Marja Novak)