The United States and the European Union warned Iran today they are ready to supplement UN sanctions with further measures if Tehran continued to shun demands to curb sensitive nuclear work.
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," Mr 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," Mr Bush said.
A joint communique after his final summit with the 27-nation EU said both sides were ready to take additional measures on top of three rounds of United Nations sanctions - an implicit recognition that tougher Security Council action might be difficult due to Russian and Chinese resistance.
Mr Bush 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.
The president later arrived in Germany where he will hold talks with Chancellor Angela Merkel on Iran, climate change and oil prices at Meseberg, north of Berlin, before heading to Rome, France and Britain as part of a week-long European tour.
Mr 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," Mr Bush said.
All agree Iran should not be allowed to acquire nuclear weapons. Tehran insists its programme is for civilian purposes.
But it remained unclear how far the Europeans, who rarely echo Mr 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 said further EU steps could entail a freeze on Iranian bank assets.
An Iranian newspaper said Tehran was withdrawing assets from European banks and converting some foreign exchange holdings into gold and equities to neutralise the impact of sanctions.