Iran's response to an offer of incentives to halt its nuclear ambitions "falls short" of United Nations demands, the State Department said Wednesday.
The Bush administration's first official comments on Tehran's response sets the stage for a possible U.N. fight if the West pushes for sanctions.
"United Nations Security Council Resolution 1696 made clear the conditions Iran must meet regarding its nuclear program," acting State Department spokesman Gonzalo Gallegos said. "We acknowledge that Iran considers its response as a serious offer, and we will review it.
"The response, however, falls short of the conditions set by the Security Council, which require the full and verifiable suspension of all enrichment-related and reprocessing activities," he said, adding that the United States is "consulting closely" with members of the U.N. Security Council on a next step.
Iran on Wednesday cited "positive and clear signals" in its proposal, which was delivered a day earlier to European diplomats without detailed public comment.
On June 6, the five permanent members of the Security Council — the United States, the United Kingdom, France, Russia and China — and Germany offered an incentives package that included one-on-one talks between Washington and Tehran, and civilian nuclear technology if Iran stops enriching uranium, the central material needed for both nuclear energy and a nuclear weapon.
The Security Council passed a resolution last month calling for Iran to suspend uranium enrichment by Aug. 31 or face the threat of economic and diplomatic sanctions. Iran has rejected as "illegal" the binding resolution, saying it had not violated any of its obligations under the Nuclear Nonproliferation Treaty.
White House Deputy Press Secretary Dana Perino said President Bush spoke with U.N. Secretary-General Kofi Annan on Wednesday about the Iranian regime's response and terms of the Security Council resolution. That discussion came after his weekly meeting at the White House with Secretary of State Condoleezza Rice.
Perino offered no statement from the meeting, but said the Iranian response was getting careful consideration and review, "as it deserves."
"The diplomats are continuing to look at it," Perino said. "We're working with our allies."
Meanwhile, Rice telephoned Javier Solana, the senior European Union diplomat who oversees exchanges with Iran. No account of their conversation, nor of her meeting with the president, was provided.
The Iranians sought Wednesday to portray their counteroffer as a major initiative that could lead to resolution of the yearlong dispute.
"If the Europeans pay proper attention to positive and clear signals included in Iran's response, the case will be solved through negotiation and without tension," state-controlled radio quoted Iranian Foreign Ministry spokesman Hamid Reza Asefi as saying on Wednesday.
Asefi described Iran's response as a sign of his country's good will to resolve the standoff.
The Bush administration has warned Iran that if it fails to comply, the United States will pursue sanctions in the Security Council. These sanctions could range from minor punitive measures to hampering Iran's trade.
By not flatly rejecting the proposal, the administration indicated it may have a basis for dealing with long-held concerns that Iran is developing nuclear weapons — an allegation Tehran denies.
While Russia and China both issued tepid statements about urging dialogue and a negotiated solution, France said Iran must suspend uranium enrichment if it wants to return to negotiations.
Elsewhere, on Capitol Hill, the House Intelligence Committee issued a report that called Iran a strategic threat and a country focused on developing nuclear weapons capability. It also linked Iran to Hezbollah, Hamas and other terrorist groups.
"Iran's support of radical Islamists with weapons and money demonstrates in real terms the danger it poses to America and our allies," said the committee's chairman, Rep. Peter Hoekstra, R-Mich. Iran "will not be satisfied until it poses a threat to the entire world."
The report also cites gaps in U.S. intelligence abilities to track developments in Iran's nuclear program. It recommended hiring more intelligence agents who speak Farsi.
The Associated Press contributed to this report.