Obama used a speech in South Korea's capital, Seoul, to warn that the lesson of dealing with neighbouring North Korea was that Tehran must meet a deadline for complying with international demands and would face unspecified "consequences" if it did not.
The president's remarks came a day after Iran appeared to definitively reject a proposal put forward in Vienna last month for sending enriched uranium to Russia and France for further processing, leaving negotiations at an apparent dead end.
"Iran has taken weeks now and has not shown its willingness to say yes to this proposal ... and so as a consequence we have begun discussions with our international partners about the importance of having consequences," Obama said at a news conference with the South Korea's president, Lee Myung-bak. "Over the next several weeks, we will be developing a package of potential steps that we could take, that would indicate our seriousness to Iran." Obama added that he hoped Iran would change its mind. The two leaders also pressed North Korea to return to dormant nuclear talks.
Iran's foreign minster, Manouchehr Mottaki, speaking in Manila, dismissed talk of further sanctions. "Sanction was the literature of the 60s and 70s," he said. "I think they are wise enough not to repeat failed experiences."
On Wednesday Mottaki had appeared to reject the so-called Tehran nuclear research reactor (TRR) package but said Iran was ready for further talks.
The next diplomatic steps will be discussed tomorrow at a meeting in Brussels of the E3+3 – Britain, France and Germany, along with the US, UN and Russia – though diplomats said no decisions were expected. Britain is represented by Geoffrey Adams, a former British ambassador to Iran.
Obama failed to win assurances on his visit to China that Beijing would support fresh sanctions against Iran. Russia and France have been more supportive
The Foreign Office said it was "very disappointed" by Iran's failure to respond positively to the proposal by the International Atomic Energy Agency (IAEA) that Iran should send 75% of its low-enriched uranium to Russia and France, where it would be turned into fuel for medical research. "Iran must act now to restore confidence in its overall programme," a statement said.
Gala Riani, an analyst at thinktank IHS Global Insight, said: "The deal has been viewed as an important exercise in confidence building, given in particular that it is the product of the first direct negotiations including Iran and the United States for some time."
Iran says it wants nuclear energy solely for peaceful purposes but its history of secrecy and restricting UN inspections have raised suspicions of a quest for nuclear weapons. Israel, which wants to preserve its nuclear monopoly in the Middle East, has threatened to attack Iran's nuclear sites if diplomacy fails.
Earlier this week the IAEA expressed fears that Iran may have other secret nuclear sites following the discovery of a hidden facility near the holy city of Qom.
British officials had privately doubted Iran would accept the TRR proposal, not least because of divisions in Tehran in the wake of last June's disputed presidential elections. Diplomats reported initially surprising signs that Iranian negotiators were considering a deal but these vanished once they returned home. Sanctions are unlikely to directly target Iran's energy sector due to opposition from Russia and China. But sanctions would likely target Iranian banks and companies, affecting project financing, the development of the hydrocarbon sector and limit foreign investment — bad news for an already weak economy.
The US secretary of state, Hillary Clinton, meanwhile condemned death sentences imposed by Iran over unrest after the elections. "It is a very unfortunate, distressing development to see these sentences handed down … imposing the death penalty on people who participated in expressing their opposition to the government," Clinton said.
Mazes of Obama
Barak Obama Maze Portrait- 2009
Portrait Maze of Barak Obama, profile view - 2009