In his first public comment on a letter from Iranian President Mahmoud Ahmadinejad, President Bush on Wednesday said the world wants to know: "When will you get rid of your nuclear program?"
The United States and other nations agree that Iran shouldn't have a nuclear weapon or the capacity to make one, said Bush, addressing reporters from several Florida newspapers in Orlando. Ahmadinejad's letter didn't address that question but instead it criticized the United States on various policy positions.
The letter also did not alleviate tensions in the dispute over Iran’s nuclear pursuits but was an “attack on American policy,” Secretary of State Condoleezza Rice said Wednesday.
“I didn’t consider it a diplomatic overture. ... This letter had absolutely no effect on the meetings” seeking resolution of the nuclear conflict, nor did it address terrorism, she said in an interview with FOX News.
Ahmadinejad's correspondence to Bush was the first from an Iranian head of state to an American president in 27 years. Bush received the letter on Monday.
European diplomats are expected to present a proposal to Iran outlining the international cost of pursuing its controversial nuclear program, Rice told reporters in Washington.
"Iran can either defy the international community and face isolation and U.N. Security Council action or accept a path with a civilian nuclear program that is acceptable to the international community," she said.
Any attempt to punish or coerce Iran through the U.N. Security Council is on hold while Britain, France and Germany renew diplomatic efforts to persuade Iran to back down, she said.
The European Union's chief diplomat, Javier Solana, met with Rice and told reporters that his organization would take up its proposal for Iran on Monday in Brussels, but added, "We will not finalize it" then.
Ahmadinejad on Wednesday dismissed Western concerns over its nuclear program.
"They pretend that they are concerned about the nature of the nuclear program of the Islamic republic of Iran," he said. "This is a big lie."
Rice reinforced the United States’ and its allies’ stance against the possibility of Iran’s uranium enrichment program eventually yielding a nuclear weapon.
The country already has enriched uranium to a level capable of making fuel for reactors, Iran's nuclear chief, Gholamreza Aghazadeh, said last week.
Enriched to more than 90 percent, it becomes suitable for use in nuclear weapons.
"The latest enrichment percentage carried out in Iran is 4.8 percent," Aghazadeh said at the time.
“Iran cannot have a nuclear weapon,” Rice said on FOX News, adding that European allies who have been trying to negotiate with Tehran's Islamic hardliners want to lay out a clear course in which Iran can have a “civil nuclear program.”
Rice said she is confident the U.N. Security Council will act to ensure Iran does not produce nuclear weapons and that it is held accountable for its continued defiance of the international community on the issue.
“There will be action in the [U.N.] Security Council,” she said. “It is important to let Iran know that there is a price to be paid” for ignoring warnings about its nuclear program. "They can't continue on the path that they're on," she added.
Any penalties would require agreement or a vote to abstain from Russia and China, which have extensive commercial ties with Iran and have said they are opposed to sanctions. As permanent members, they can veto Security Council action.
Russia and China agreed to allow Iran's case to come before the Security Council after the failure of European-led talks that would have given Iran a package of economic incentives and free hand to develop civilian nuclear energy within international controls, so long as it gave up disputed portions of the program. The Council received the referral in March.
Of Bush, Rice said: “He is committed to a diplomatic course. ... The president is going to keep all of his options on the table.”
Seeking Mideast Peace
Bush on Friday said he was paying close attention to threats made against Israel by Ahmadinejad, who repeatedly has said the country should be wiped off the map and who has denied the Holocaust.
In regard to peace between the Israelis and the Palestinians, the new Palestinian government led by Hamas has not recognized Israel’s right to exist or addressed terrorism, Rice said.
Israel will give the Palestinians until the end of the year to prove they are willing to negotiate a final peace deal and will unilaterally set final borders with them by 2008 if they don't, a close associate of Prime Minister Ehud Olmert said Tuesday.
Justice Minister Haim Ramon was the first Israeli official to set a deadline for the Palestinians' new militant Hamas rulers to disarm and recognize the Jewish state.
The United States lists Hamas as a terror group that has carried out numerous attacks on Israelis, but the Palestinian people should not suffer since the United States and European Union have frozen funding to that government, Rice said Wednesday.
“We are going to give aid to the Palestinian people,” she said, adding that financial help will go directly to the people.
The United States on Tuesday agreed to back a program to deliver limited humanitarian aid to the Palestinian people through non-governmental organizations and UNICEF, the United Nation's children's aid group.
A statement by Mideast peacemakers, issued after a day of closed-door diplomatic meetings, did not disclose the nature or amount of aid that would be provided.
The agreement seemed to highlight concern that the Palestinian people are suffering after months of withholding aid from the government — part of an effort to pressure Hamas into a more accommodating stance toward Israel.
Rice said the European Union would take the lead in the new effort. The United Nations and Russia, the other partners in the so-called Quartet peacemaking group along with the United States, also endorsed the program.
"The thrust of this is the international community is still trying to respond to the needs of the Palestinian people," said the secretary of state.
FOXNews.com's Heather Scroope and the Associated Press contributed to this report.