The two "bad options" for Iran — letting the country develop nuclear weapons or using force to destroy its nuclear capabilities — are closer than they were a year ago, Israel's U.N. ambassador warned Tuesday.

Gabriela Shalev told journalists at the U.N. Israel still hopes diplomatic engagement and sanctions will halt Iran's push to become a nuclear power, but warned: "our intelligence tells us ... that Iran is racing towards this kind of nuclear capability, and it's not a matter of years."

She pointed out that Iran is already admitting that it's enriching uranium and that the level of enrichment is higher than needed for civilian use.

Shalev said high-ranking Israeli and U.S. government and military leaders both in Washington and Jerusalem are currently discussing whether a military strike could stop Iran's nuclear program.

Israel's chief of staff is visiting Washington, while U.S. Vice President Joe Biden is in Jerusalem.

Shalev said she was encouraged that Biden said Iran poses a threat to the United States.

"I say even more — Iran is a threat to the whole world," she added.

The United States and key Western powers have circulated proposals for a fourth round of U.N. sanctions to step up pressure on Iran to suspend uranium enrichment and start negotiations on its nuclear program.

Iran insists its nuclear program is peaceful, aimed solely at producing nuclear energy. But the West's concerns were heightened by a recent report by the International Atomic Energy Agency that said Tehran may be making nuclear bombs.

Shalev said that China and Russia — both veto-wielding members of the Security Council — still believe there's room for diplomacy.

"They still believe — and I respect it — that you have to exhaust all diplomatic efforts before you have these kind of sanctions that will affect the economy," she said. "They do not want to inflict any harm on the Iranian people."

Israel, on the other hand, believes that diplomatic overtures have been exhausted because "the Iranians are mocking them and defying ... the formal resolutions of the Security Council," she said.

Israel would like the council to approve "crippling" sanctions, but Shalev conceded "the chances now seem grim."

If the council doesn't act, she said, Israel will urge the United States and the European Union to impose tough measures.

In Washington, the House passed legislation last December that would bar U.S. export of technology to help Iran develop its petroleum capacity, but the Senate has not acted. Congress previously barred American investment in Iran's energy programs.

Kenneth Katzman, an Iran analyst, told a conference in Washington Tuesday at the Atlantic Council, a prominent think tank, that the mood in Congress appeared to be favorable to imposing U.S. sanctions.

"Congress will work to find every which way to squeeze Iran," he said.

But Flynt Leverett, a former CIA, State Department and White House official, dismissed U.S. sanctions on Iran as "a policy of feeling good" that would open the door for China and other countries to take up the slack.