By Matt Spetalnick and Dan Williams
WASHINGTON, Sept 30 (Reuters) - Israeli Prime MinisterBenjamin Netanyahu urged President Barack Obama on Monday tostep up sanctions on Iran if it pursues its nuclear drive evenas Tehran exchanges overtures with Washington and restartsnegotiations with the West.
Seeking to reassure Israel about the emerging U.S.diplomatic engagement with Iran, Obama said Tehran must proveits sincerity with actions, insisted that Washington would notease sanctions prematurely and reaffirmed U.S. readiness toresort to military action if all else fails.
Netanyahu visited the White House three days after Obama andnew Iranian President Hassan Rouhani spoke by telephone in thehighest-level contact between the countries in more than threedecades. The call fueled hopes for a resolution of Iran'sdecade-old nuclear standoff with the West.
Signs of U.S.-Iranian rapprochement have rattled Israel,which accuses Iran of trying to buy time and get out from undertough international sanctions while it seeks to develop nuclearweapons. Iran denies it is working toward an atomic bomb.
Netanyahu, whose aides had said he would warn Obama inprivate not to trust Rouhani's charm offensive, signaledgrudging acquiescence to Obama's outreach to Iran. But heappeared to demand that Tehran offer immediate concessions bysuspending sensitive nuclear projects or else face even greaterinternational pressure.
"It is Israel's firm belief that if Iran continues toadvance its nuclear program during negotiations, the sanctionsshould be strengthened," Netanyahu told reporters a day beforehe was due to address the United Nations General Assembly in NewYork.
Netanyahu brandished a cartoon time-bomb in his U.N. speechlast year to illustrate his view that time was running out tocurb Iran's nuclear arms ambitions. Israeli sources predict hewill opt for a less flashy approach due to the delicate natureof the outreach with Iran but will still stress skepticism.
Obama said he was entering negotiations with Iran"clear-eyed" and was ready to test Rouhani's overtures."Anything we do will require the highest standards ofverification in order for us to provide the sort of sanctionsrelief that I think they are looking for," he said.
U.S. LAWMAKERS BACK SANCTIONS
Obama stopped short, however, of agreeing to Netanyahu's newcall for tighter sanctions if Iran continues work on nuclearweapons. Existing international sanctions have done seriousdamage to Iran's economy, including its oil sector.
Even as Netanyahu called for a "credible military threat" topressure Iran, Obama insisted: "We take no options off thetable, including military options, in terms of making sure thatwe do not have nuclear weapons in Iran."
Israel has threatened unilateral strikes on Iran's nuclearsites but appears unlikely to go ahead any time soon asWashington, its chief ally, tests the diplomatic waters. Israelis believed to be the Middle East's only nuclear-armed power.
Obama and Netanyahu, who have had strained relations in thepast, showed no signs of tension. They sat side-by-side in theOval Office and exchanged smiles. Including a working lunch, thetwo spent more than 2-1/2 hours together.
Obama's engagement with Iran could be limited by theinfluence of the pro-Israel lobby in Washington and lawmakerswho share Netanyahu's suspicion of Rouhani. They could block anyWhite House effort to ease major sanctions on Iran and evenimpose new ones.
Netanyahu went to Capitol Hill late on Monday and met withsmall groups of lawmakers, several of whom insisted afterwardthat they would continue tough sanctions on Iran over itsnuclear program and push for even stricter measures in thecoming months.
"Our resolve to prevent Iran from achieving a nuclearweapons capability remains unchanged and we will not hesitatefrom proceeding with further sanctions and other options toprotect U.S. interests and ensure regional security," SenatorRobert Menendez, chairman of the Senate Foreign RelationsCommittee, said after the panel sat down with Netanyahu.
Before Monday's talks, a Netanyahu aide said he did not careif he were perceived as "spoiling the party," referring tooptimism over ending decades of estrangement between the UnitedStates and Iran.
Netanyahu wants the Obama administration to demand specificsteps by Iran, including shutting its uranium enrichment andplutonium projects and shipping out fissile material.
The Obama administration has been vague on what concessionsit wants. Obama did not specify what would constituteverification, but he may have been referring to steps that wouldgive the U.N. nuclear agency wider inspection powers to ensurethat Iran is not hiding nuclear activities.
The Israeli leader went out of his way to praise Obama forapplying economic and military pressure that he said had broughtIran to the table. "I appreciate deeply that you have made clearthat you remain committed to this goal (of preventing Iran fromgetting nuclear weapons)," Netanyahu said.
Rouhani, a moderate cleric who took office in August, wasthe focus of attention at the United Nations last week.Signaling Netanyahu's aim to counter Rouhani's public relationsblitz, aides said the U.S.-educated Israeli leader would extendhis visit by a day to conduct a series of media interviews.
Obama has focused on Iran outreach in recent days, but hisattention has been divided by the looming threat of a U.S.government shutdown just after midnight on Monday if a stalematewith congressional Republicans is not resolved.
Obama and Netanyahu have a history of difficult encounters,including a blowup in the Oval Office in 2011 when Netanyahufamously lectured the president on Jewish history.
Having secured a second term, Obama visited Israel in March,where he eased the rift and offered reassurances that he wasdetermined to deny Iran the means to make an atomic bomb.
But different clocks tick for the two allies. While theyagree that Tehran could make its first nuclear device in monthsif it were intent on doing so, Israel warned last week this gapcould shrink to weeks due to new Iranian uranium centrifuges.
Israel would prefer that the U.S. superpower take themilitary lead against Iran if diplomacy fails. Yet Israeliswatched worriedly as Obama stumbled in his bid to musterdomestic support for attacking Syria as reprisal for Damascus'ssuspected use of chemical weapons on Aug. 21.
Further complicating matters is Obama's reinvigorated pushfor a peace deal between Israel and the Palestinians. ThoughMiddle East diplomacy was overshadowed by Iran in Monday'smeeting, Obama thanked Netanyahu for entering into "good faith"negotiations but said there was limited time to reach an accord.
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