US President Bush said Saturday that Iran has further isolated its own people by rejecting an offer from world powers to accept incentives in exchange for halting its uranium enrichment program.
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The United States and Western allies fear Iran is pursuing a nuclear bomb. Iran insists its intentions are peaceful.
"I'm disappointed that the leaders rejected this generous offer out of hand," Bush said. "It's an indication to the Iranian people that their leadership is willing to isolate them further. Our view is we want the Iranian people to flourish and to benefit."
Iran says it is enriching uranium to generate electricity, not to build nuclear weaponry - a claim the West doubts is true.
But Iranian officials and the EU's top diplomat Javier Solana still agreed in meetings in Tehran to press ahead with efforts to find a diplomatic solution to a standoff that has helped push oil prices to record highs, sources said.
"A new diplomatic path has been opened ... This will be a basis for fresh nuclear talks," one Iranian official said. A European diplomat said, "Both sides agreed to remain in contact and continue working."
Earlier in the day, Solana presented Iran with a modified package of economic, technological and political incentives on behalf of the United States, Germany, Britain, France, Russia and China. Iran immediately rejected the deal because it requires suspending uranium enrichment.
"Iran's view is clear: any precondition is unacceptable," government spokesman Gholamhossein Elham said when asked about the package."If the package includes suspension it is not debatable at all," he told reporters.
The repackaged incentives were agreed on last month in what diplomats called mainly cosmetic changes to the original 2006 offer, while maintaining the threat of further UN sanctions. So far, three sets of sanctions by the United Nations have failed to bring about any change.
French President Nicolas Sarkozy took the same approach as Bush. He said the Iranian people "deserve better than the impasse into which some of their leaders are leading them."
Bush also gave a stern message to Syrian President Bashar Assad on Saturday, saying the Syrians should stop working with Iran to destabilize the Mideast. "My message would be `Stop fooling around with the Iranians and stop harboring terrorists,'" Bush said in a news conference with Sarkozy.
Reuters and the Associated Press contributed to this report
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