By Jeremy Pelofsky and Zoran Radosavljevic
Pair say they are ready to go beyond latest UN sanctions if Tehran does not halt nuclear programme.
The United States and the European Union sought on Tuesday to turn up the pressure on Iran to drop its nuclear enrichment programme by saying they were ready to go beyond a latest round of UN sanctions.
But President George W. Bush acknowledged the limits of US influence over Tehran and, in the twilight of his presidency, appeared resigned to leaving the standoff to his successor.
"I leave behind a multilateral framework to work on this issue," Bush said after a US-EU summit at a Slovenian castle.
"A group of countries can send a clear message to the Iranians, and that is: We're going to continue to isolate you... we'll find new sanctions if need be, if you continue to deny the just demands of the free world, which is to give up your enrichment programme," he said.
He stopped short of repeating the US position that all options, including military action, remain open. "Now is the time for there to be strong diplomacy," Bush said.
He met Slovenian leaders, who hold the EU's rotating presidency, as well as European Commission President Jose Manuel Barroso and EU foreign policy chief Javier Solana, who has led efforts to get Iran to scrap its enrichment programme.
Solana is due to travel to Iran at the weekend to present a new offer by major powers of incentives for it to suspend the programme but he has played down prospects of a breakthrough.
"Iran with a nuclear weapon would be incredibly dangerous for world peace," Bush said before setting off for Germany.
He is also due this week to visit France, Britain and Italy. A summit statement said the United States and EU were ready to deploy measures against Iran beyond existing UN sanctions.
All agree Iran should not be allowed to acquire nuclear weapons. Tehran insists the programme is for civilian purposes.
But it remained unclear how far the Europeans, who rarely echo Bush's harsh rhetoric against Iran and have sometimes been reluctant to get tougher, would be willing to go.
The UN Security Council has imposed three rounds of sanctions on Iran. Washington has pressed the EU to deny some Iranian banks access to the world financial system.
European External Relations Commissioner Benita Ferrero-Waldner told reporters after the summit: "We want to indeed show to Iranians that we mean it very seriously... [We are] particularly thinking of asset freezes."
An Iranian newspaper said Iran was withdrawing assets from European banks and converting some foreign exchange assets into gold and equities to neutralise the impact of sanctions.
Bush was accused by critics of "cowboy diplomacy" during his presidency, largely due to the 2003 US-led invasion of Iraq.
But the rancour has eased somewhat after Bush took a more cooperative approach in his second term.
Now many Europeans are looking increasingly past Bush to his successor who will be chosen in the November election.
Bush acknowledges he is unpopular in Europe, as well as at home. "A lot of people like America. They may not sometimes necessarily like the president," he told Slovenia's Pop TV.
On climate change, EU policymakers say they have given up trying to get Washington to join with the bloc in signing up now to binding cuts of greenhouse gas emissions.
Bush repeated on Tuesday that the United States would not agree to cuts until big developing nations such as China and India made commitments too. But he said a global climate change deal could still be reached during his presidency.
C. Boyden Gray, the US envoy to the EU, later explained to reporters that Bush hoped the outline of a deal could emerge from a meeting of the G8 rich countries in Japan in July.
That would pave the way for the next US administration to engage quickly in negotiations in 2009 for a new treaty for when the first round of the Kyoto Protocol expires in 2012. Bush confirmed his strong-dollar policy, despite the currency's slump to new lows against the euro recently.
"We believe in a strong dollar and that the relative value of economies will end up setting the valuation of the dollar," Bush told Tuesday's news conference. (Reuters)