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Discussion over authorization for such a strike arose after Vice President Joe Biden told ABC news earlier this week that the U.S. would not stand in the way of an Israeli attack on Iran. "Israel can determine for itself - it's a sovereign nation - what's in their interest and what they decide to do relative to Iran and anyone else," Biden said.

The sources said the Israeli leader feels there is no point in seeking American acquiescence at this stage givenObama's stated intention to pursue a policy of diplomatic engagement with the Tehran regime, The Washington Times reported. "There was a decision not to press [for U.S. approval of a strike] because it was probably inadequate for the engagement policy and what we know about Obama's approach to Iran," a senior Israeli official told The Washington Times.

The chairman of the U.S. Joint Chiefs of Staff said on Tuesday that a preemptive military strike against Iran should be avoided "if possible," but emphasized that all options are still on the table. "I worry about a nuclear arms race in the Middle East region; I don't think any one of us can afford it," said Admiral Michael Mullen, during a conference at the Center for Strategic and International Studies. "I don't see a lot of space between where Iran is headed and the potential of where that development might lead. All options are certainly on a table, including certainly military options."

My concern is that the clock continues ticking," Mullen said. "I believe that Iran is very much focused on getting that capability. This a very narrow space we have towards that objective." Nevertheless, Mullen added, a preemptive strike is "really not a place we should go if possible."

"If the threat from Iran's nuclear and ballistic missile program is eliminated, the driving force for missile defense in Europe will be eliminated," Obama said in remarks prepared for delivery to graduates from Moscow's New Economic School.

"America wants a strong, peaceful and prosperous Russia," Obama said. "On the fundamental issues that will shape this century, Americans and Russians share common interests that form a basis for cooperation," the U.S. President went on to say.

And noting the unrest in Iran since the disputed June presidential election, she added: "We have seen in the last weeks that Iran has not respected its own democracy.""It has taken actions against his own citizens for peacefully protesting," she said, referring to street demonstrations challenging the re-election of President Mahmoud Ahmadinejad.

"I think it is not a very smart position to ally with a regime that is being rejected by so many of their own people," Clinton said in the interview.The administration of President Barack Obama, Clinton added, thinks "it is not in the best interest" of the world to be doing business with Iran that would "promote the regime... that is not smart."

Clinton also expressed renewed concern at the political and economic alliance between Venezuela and Iran, although she noted Washington was attempting to "lower the temperature" in the country's often tense relations.

The South American country's strongman leader Hugo Chavez, a fierce US critic, is Iran's main ally in the region. Chavez has defended Ahmadinejad numerous times in recent weeks."We call on the world to respect Iran because there are attempts to undermine the strength of the Iranian revolution," Chavez said last month after the election.

The United States has returned its ambassador to Caracas after almost a year without official diplomatic relations between the countries."We are trying to lower the temperature," Clinton said. "We want to make it clear that there are ways for us to have a conversation with people we don't agree with on many issues."

Obama has already expressed a readiness to have face-to-face diplomatic contacts with Tehran, a major shift from former President George W. Bush's policy of trying to isolate a country he once branded part of an "axis of evil".

Mohammad Hassan Khani, assistant professor of international relations at Tehran's Imam Sadiq University, described Obama's appeal as a positive gesture but noted it came only a week after the extension of US economic sanctions. "This is somehow conflicting and making people here confused," he said. President Mahmoud Ahmadinejad has demanded Washington say sorry for decades of "crimes" against the Islamic Republic. Tehran also says it cannot let down its guard as long as US troops are posted on its borders in Iraq and Afghanistan. Analysts have said that Iran is setting tough conditions for dialogue with the United States to buy time for its ponderous and opaque decision-making process, which is facing a dilemma on whether or not to open up.

European Union foreign policy chief Javier Solana said he hoped Iran would pay close attention to Obama's appeal. "I hope that that will open a new chapter in relations with Iran," he told reporters before going into an EU summit. To stress the seriousness of Obama's overture, the White House distributed the videotape with Farsi subtitles and posted it on its website to coincide with Iranian observance of the ancient festival of Nowruz, celebrating the arrival of spring. But his appeal was not shown nor mentioned on Iran's main 2pm state television news, although it was reported by Iranian news agencies including the official agency IRNA.

But Mr Obama warned: "This process will not be advanced by threats. We seek instead engagement that is honest and grounded in mutual respect." "The United States wants the Islamic Republic of Iran to take its rightful place in the community of nations. You have that right - but it comes with real responsibilities."

Mr Obama's message was distributed to news outlets in Iran with subtitles in Farsi, and posted on the White House's official website.

Shortly after coming to office in January, he said "if countries like Iran are willing to unclench their fists, they will find an extended hand from us". But earlier this month he extended sanctions against Iran for a year, saying it continues to pose a threat to US national security. In another possible move towards engagement, the state department is said to be considering an overture in the form of a letter to Iran's Supreme Leader Ayatollah Khamenei before the Iranian elections this summer.

Mr. Netanyahu says he wants to give Palestinians freedom to govern themselves, but won't grant them all the powers of statehood, such as an independent army that could pose a threat to Israel. "We do not want to govern the Palestinians," he said. "We want them to live in peace and govern themselves absent a handful of powers."

Mr. Netanyahu has said he is ready to resume negotiations immediately on three parallel tracks dealing with political, economic and security issues, but the Palestinians have said they won't resume negotiations until Mr. Netanyahu accepts their right to statehood.

"By failing to endorse the two-state solution, Benjamin Netanyahu missed yet another opportunity to show himself to be a genuine partner for peace," Mr. Erekat said after the meeting. "Calling for negotiations without a clearly defined end-goal offers only the promise of more process, not progress."

Mr. Obama spoke out against Israel's expansion of Jewish settlements. Construction of settlements in the West Bank has continued despite pledges to halt such building by former Prime Minister Ariel Sharon. "Settlements have to be stopped in order for us to move forward," Mr. Obama said.

Mr. Netanyahu said after the meeting that Israel would halt settlement expansion as part of a mutual process in which the Palestinians also made concessions, such as cracking down on militants.

Though Israel has shown little interest in the Arab peace initiative, Mr. Netanyahu appears to share the belief that, in the face of an ascendant Iran, there is a new window of opportunity. "In the life of the Jewish state there's never been a time when Arabs and Israelis see a common threat like we see today," he said.

On Iran, Mr. Obama said the U.S. will give talks more time, but that there must be a "clear timetable at which point we say, these talks aren't making any progress."

Mr. Netanyahu has been seeking clear timetables for U.S. diplomatic outreach toward Tehran, and assurances that sanctions would follow if negotiations fail. Israel fears Iran is within months of producing enough fissile material to produce an atomic bomb, though Israeli and U.S. intelligence officials believe it could take Iran years to assemble one.

Speaking of the development and deployment of a nuclear weapon, he said, “We’re not going to create a situation in which talks become an excuse for inaction while Iran proceeds.” Mr. Obama added that he intended to “gauge and do a reassessment by the end of the year” on whether the diplomatic approach was producing results.

He said he expected international talks with Iran, involving six nations including the United States, to begin shortly after the Iranian elections in June, with the possibility of “direct talks” between the United States and Iran after that.

“The logic of Netanyahu’s argument is, ‘What do you do if your power of diplomacy and toughened sanctions doesn’t work?’ ” said Aaron David Miller, a former Middle East negotiator in both Democratic and Republican administrations. “Anyone who was expecting a major rift in the U.S.-Israeli relationship is going to be disappointed.”

Mr. Netanyahu did not explicitly embrace a two-state solution, as Mr. Obama had hoped. Rather, he said, “I want to make it clear that we don’t want to govern the Palestinians; we want to live in peace with them.”

Mr. Obama, meanwhile, pressed Mr. Netanyahu to freeze the construction of Israeli settlements on the West Bank. “Settlements have to be stopped in order for us to move forward,” Mr. Obama said. “That’s a difficult issue. I recognize that. But it’s an important one, and it has to be addressed.”

Mr. Miller, the former Middle East negotiator, characterized the session as “President ‘Yes We Can’ sitting down with Prime Minister ‘No You Won’t.’ ”

Mr. Moussavi, the defeated candidate who embodied the hopes of reformers, posted a notice on his Web site of a late afternoon rally in front of the Parliament, but he distanced himself from the action, saying it was not organized by the reform movement. It is not clear how far Mr. Moussavi, a former prime minister who is essentially an insider thrust into the role of opposition, would go to defy the system. He has not been seen since Thursday. So as the crackdown infuriates protesters, there is a greater gap with their ostensible leader, political analysts said.

Those arrested include officials who served from the founding of the Islamic republic in 1979, until Mr. Ahmadinejad’s election in 2005: Behzad Nabavi, a former deputy speaker of Parliament; Mohsen Aminzadeh, a key figure at the Intelligence Ministry for many years; Mostafa Tajzadeh, a deputy interior minister during the presidency of Mohammad Khatami; Mohammad Ali Abtahi, a vice president under Mr. Khatami; and Abdullah Ramezanzadeh, Mr. Khatami’s spokesman. They were all close to Mr. Khatami, then threw their support behind Mr. Moussavi.

A lower court in Frankfurt refused to try the case on the grounds that it was unlikely that Iran had a nuclear program at the time of the defendant's activities in 2007, citing the NIE report as evidence. That's why the Supreme Court judges had to rule first on the question of whether that program exists at all. Having answered that question in the affirmative, the court had to rule next on the likelihood of the defendant to be found guilty in a trial. The supreme court's conclusions are unusually strong. "The results of the investigation do in fact provide sufficient indications that the accused aided the development of nuclear weapons in Iran through business dealings."

The case itself sheds light on how these networks function. According to the supreme court judges, the businessman has brokered "industrial machines, equipment and raw materials primarily to Iranian customers," for Iran's nuclear weapons program. According to the same decision, the defendant's business partners in Tehran "dealt with acquiring military and nuclear-related goods for Iran and used various front companies, headquartered for example in Dubai and the United Arab Emirates, to circumvent existing trade restrictions." According to the judges, Mohsen V. also tried to supply to Tehran via front companies in Dubai "Geiger counters for radiation-resistant detectors constructed especially for protection against the effects of nuclear detonations."

BND sources have told me that they have shared their findings and documentation with their U.S. colleagues ahead of the 2007 NIE report -- as is customary between these two allies. It appears the Americans have simply ignored this evidence despite repeated warnings from the BND.

Rights activists have said some 2,000 people detained after the June vote may still be held across Iran, including leading reformers, academics, journalists and students.

Appearing on ABC's current affairs programme This Week, host George Stephanopoulos asked Mr Biden whether the Israeli position was the right approach. The vice-president replied: "Israel can determine for itself - it's a sovereign nation - what's in their interest and what they decide to do relative to Iran and anyone else." He added that this was the case, "whether we agree or not" with the Israeli view.

Asked whether the US would stand in the way if the Israelis decided to launch a military attack against Iranian nuclear facilities, Mr Biden said Israel, like the US, had a right to "determine what is in its interests".

Alaeddin Boroujerdi, chairman of the Iranian parliament's national security and foreign policy commission, responded to Mr Biden's remarks while on a visit to Tokyo. Iran would respond "in a very full-scale and very decisive way" to an Israeli attack, he said. "I think that America and Israel are fully aware what kind of result such a wrong judgement will entail," he said in remarks quoted by AFP news agency. "Israel showed its military power sufficiently in the 22-day war [in Gaza]. That kind of erroneous judgement poses a threat to the entire Middle Eastern region and the world."

Iran has so far reacted cautiously to U.S. overtures since Obama took office in January, saying it wants to see a real shift in Washington's policies rather than a change in words. Ahmadinejad said on Wednesday Iran sought "interaction and negotiation based on honor, justice and respect."

Analysts say Iran may be setting tough conditions for dialogue in a bid to buy time. Adding to uncertainty, it holds a presidential vote in June in which Ahmadinejad faces a challenge from a moderate politician seeking detente with the West.

One Iranian analyst said he expected Ahmadinejad to say in Isfahan, where Iran has a uranium conversion facility, that it has perfected the last of several phases of fuel output, with the production of uranium pellets and fuel rods for reactors.

The Mullen-Ashkenazi axis, like similar axes between heads of the two countries' intelligence communities, allows the Americans to sense the genuine atmosphere beneath the public propaganda disseminated in Israel and to understand the extent to which Israel is really concerned about the Iranian nuclear threat. It also affords them the opportunity to reassure, to delay and, at the very least, to walk the hidden line between the desire not to officially know in advance, in order to safeguard the ability to shrug off responsibility, and the need not to be surprised.

Make no mistake about the Obama administration, when it comes to Iran: Its policy differs from that of the Bush administration only in style, not in content. Its officials express themselves in positive terms, cloaked in an expression of conciliation, as opposed to the angry face worn by president George W. Bush - but the conclusions are similar, as are the results. Gary Samore, who Jones put in charge of coordinating the issue of weapons of mass destruction, said often, before his appointment, including during a speech at the Herzliya Conference in 2007, organized by Uzi Arad (today Benjamin Netanyahu's national security advisor), that the Iranians will continue their efforts to obtain nuclear weapons and that economic and diplomatic pressure will not help.

Ashton Carter, recently nominated by the president to be under secretary of defense for acquistion, technology and logistics, offered a similar analysis for the Bush administration, when he outlined three alternatives to confronting Iran. Plan B3, the military option, also entailed a possible bombing of Iranian oil installations, which are not protected and concealed like components of the nuclear infrastructure. The prevailing balance of power within the Obama administration tends to favor attacking Iran's nuclear installations, or to tolerate an Israeli attack. A prominent opponent of using military force against Iran, Charles Freeman, who had been slated to head the U.S. National Intelligence Council, was dropped under pressure of Israel's American supporters.

Obama will wait - not only for Iranian elections, scheduled for June (and those in Lebanon, that same month), but also for September's elections in Germany, and for Britons to vote at more or less the same time (elections have yet to be scheduled), in order to know who will stand by his side in the trenches. In that way 2009 will pass without a decision, but not all of 2010, because come that November, Congressional elections will be held, immediately after which the Democrats will begin organizing Obama's reelection campaign. The summer of 2010 will be critical, because by then the evacuation of most of the American forces from Iraq will be completed and fewer exposed targets will remain for Iranian revenge attacks.

The development of the Iron Dome system for intercepting Katyusha rockets, whose first battery will protect the environs north of the Gaza Strip (Ashkelon, Sderot), is expected to be completed by the summer of 2010. That will make it difficult for Hamas to open another front to harass the IDF on Iran's behalf. In the coming months, the tests of the Arrow missile defense system will continue, in a scenario that simulates an attack by a long-distance Iranian missile. The tests will be carried out in cooperation with American systems, including the large radar facility at the Nevatim air base. Preparations for defence against a radioactive attack will also improve, at an event to be staged at either an Israeli or an American port, as will preparations for a plague of smallpox, in a joint exercise involving Israel and one of NATO's important European member states.

In the Pentagon's most recent report about the strengthening of China, Israel receives a pat on the back, of the kind given to a well-behaved child: It has been cured of the habit of providing air-to-ground Harpy missiles to China, which extend the Chinese air force's operational range, and has also enforced stricter export supervision. The Americans are displaying a false naivete: Nothing has changed except for two offices having been moved around administratively. The decision to launch a military operation against Iran, particularly using American-made planes (such as the F-16, whose supply was suspended after Israel's 1981 attack on the Iraqi nuclear reactor), will have to be preceded by feelers to discern where Obama stands exactly on the continuum between approval and opposition. Apparently Israel wants Obama to emerge sufficiently strengthened from this week's NATO summit, but still too weak to say no to Israel.

Fars, a semiofficial news agency, reported the confession of a Newsweek reporter, Mazaiar Bahari, that he had done the bidding of foreign governments, as well as a confession by the editor of a newspaper run by Mir Hussein Moussavi, the opposition leader. And at Friday Prayer, Ayatollah Ahmad Jannati said the government planned to put on trial several Iranian employees of the British Embassy — after confessions were extracted.

In addition to Mr. Abtahi, other prominent reformers being held include Abdullah Ramezanzadeh, Mr. Khatami’s spokesman, and Mostafa Tajzadeh, a former deputy interior minister.

Ayatollah Khatami is not regarded as a high-profile figure, so it was not clear how much weight his words carried.

At Friday prayers at Tehran university, Ayatollah Ahmad Khatami referred to the demonstrators as rioters and declared, “I want the judiciary to punish leading rioters firmly and without showing any mercy to teach everyone a lesson.” Reuters quoted him as saying demonstrators should be tried for waging war against God. The punishment for such offenses under Islamic law is death, Reuters said.

The authorities have repeatedly dismissed the opposition complaints. In remarks quoted on the official IRNA news agency on Friday , Abbas-Ali Kadkhodaei, a spokesman for the 12-member Guardian Council charged with vetting elections, said the panel had “almost finished reviewing defeated candidates’ election complaints” which the council said earlier numbered in excess of 600.“The reviews showed that the election was the healthiest since the revolution,” Mr. Kadkhodaei said. “There were no major violations in the election.”

on Friday, at a meeting of foreign ministers from the Group of Eight in Trieste, Italy, a joint statement said they “deployed post-electoral violence which led to the loss of lives of Iranian civilians” and urged Iran to respect human rights, including freedom of expression.” Along with Japan and Russia, the G-8 includes the United States, Canada, France, Germany, Italy and Britain.It called on Iran to “guarantee that the will of the Iranian people is reflected in the electoral process” but it said the door must remain open to dialogue with Tehran in its contentious nuclear program, news reports said.

The joint statement was a compromise between some European countries seeking a hard line, and Russia, whose foreign minister, Sergey V. Lavrov, was quoted as telling a news conference in Trieste that while Moscow wanted to express its “most serious concern” over use of force in Iran, “we will not interfere in Iran’s internal affairs.”

In another indication of the depth of divisions that remain, a senior cleric, Grand Ayatollah Nasser Makarem-Shirazi, called for “national conciliation.” “Definitively, something must be done to ensure that there are no embers burning under the ashes, and that hostilities, antagonism and rivalries are transformed into amity and cooperation among all parties,” he said in comments posted on the state-run Press TV Web site.

Commander of the armed forces, General Hassan Firuz Abadi said, "Because of this group's (European Union) involvement in the riots following the elections, it has lost the capability of holding to talks with Iran on the nuclear issue."  Abadi added, "Until they apologize for their large mistake, they have no right to talk about negotiations."