U.S. military wants dialogue to solve Iran tension

WASHINGTON (Reuters) - The top U.S. military officer saidon Wednesday he favoured more dialogue with Tehran to avoid aconfrontation as a senior Iranian leader indicated his countrywas open to negotiations over its nuclear program.

Adm. Mike Mullen, chairman of the Joint Chiefs of Staff,said a war with Iran would be "extremely stressful" on the U.S.military. But he made clear the United States would act toreopen the Strait of Hormuz if Tehran tried to block the keyoil transport route in the Gulf.

Tensions have flared in recent days amid reports Israel isplanning for a possible strike against Iran's nuclearfacilities. That has sent crude oil prices near record highsand led U.S. officials to publicly criticize the reports.

"My position with regard to the Iranian regime hasn'tchanged. They remain a destabilizing factor in the region,"said Mullen, recently returned from a trip to Israel.

"But I'm convinced that the solution still lies in usingother elements of national power to change Iranian behaviour,including diplomatic, financial and international pressure," hetold reporters at the Pentagon.

"There is a need for better clarity, even dialogue at somelevel," he said.

President George W. Bush reiterated that diplomacy was thefirst option to address Iran's nuclear program, but he repeatedthat Washington had all options on the table.

The United States and other Western powers charge thatIran's nuclear program is aimed at developing a nuclear weapon.

Despite three rounds of U.N. sanctions, Iran has refused tostop enriching uranium, arguing it is for a civil energyprogram. Western powers last month presented Tehran with apackage of economic and diplomatic incentives aimed atconvincing Iran to halt its program.

"The best way to solve this diplomatically is for theUnited States to work with other nations to send a focusedmessage and that is that 'you will be isolated and you willhave economic hardship if you continue trying to enrich,'" Bushsaid at the White House.

His comments came as Iranian Foreign Minister ManouchehrMottaki indicated his country was open to talks with Westernpowers over the incentives package.

"We saw the potential for the beginning for a new round oftalks," Mottaki said, according to the Washington Post.

On Wednesday, Mottaki said he saw a "new sort ofatmosphere" in the nuclear talks and expected to reply to theincentives offer soon.

At the Pentagon, Mullen reiterated the United States wouldnot allow Iran to block the Strait of Hormuz. About 40 percentof seaborne oil trade passes through the strait, according tothe U.S. government. Iran is the world's fourth-biggest oilproducer.

Mullen said Iran could block the strait in retaliation foran Israeli or U.S. strike on its nuclear facilities only for alimited time.

"The analysis that I have certainly indicates that they(Iran) have capabilities which could certainly hazard theStraits of Hormuz," he said.

"I believe that the ability to sustain that is not there."

Oil rose above $142 a barrel on Wednesday, below the record$143.67 hit on Monday.

(Additional reporting by Jeremy Pelofsky and ArshadMohammed, editing by David Alexander and Frances Kerry)