By Jeremy Pelofsky and Zoran Radosavljevic
But President George W. Bush acknowledged the limits of U.S. 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 told a news conference after a U.S.-European Union 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 program," he said.
He stopped short of repeating the U.S. position that all options, including military action, remain open, suggesting that no drastic steps were likely before he leaves office. "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 drop its enrichment program.
INCENTIVES
Solana is expected to travel to Iran soon to present a new offer by major powers of incentives for it to suspend uranium enrichment, 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. All have roles on the Iranian issue.
A statement released after the three-hour summit said the United States and EU were ready to deploy extra measures against Iran on top of existing U.N. sanctions.
All agree Iran should not be allowed to acquire nuclear weapons, a possible outcome of its uranium enrichment program. Tehran insists the program is strictly 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.
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 neutralize the impact of sanctions.
MORE COOPERATIVE
Bush was accused by critics of "cowboy diplomacy" during much of his presidency, but has tried to take a more cooperative approach with allies in his second term.
He 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 before setting off from Washington.
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 reiterated on Tuesday that the United States would not agree to cuts until big developing nations made commitments too:
"Unless China and India are at table, unless they agree to a goal, unless they agree to firm strategies to achieve that goal, I don't see how any international agreement can be effective."
Money matters are also figuring in Bush's week-long trip.
He 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.
Reflecting a seeming indifference among locals to a visiting U.S. president with less than eight months left in office, no demonstrators were seen in the heavily guarded streets of Slovenian capital Ljubljana, near the summit venue.
(Writing by Matt Spetalnick and William Schomberg, additional reporting by Marja Novak; Editing by Kevin Liffey)
