The Bush administration is playing a waiting game while European allies and others assess how to address Iran's (search) renewed nuclear ambitions. Yet U.S. officials remain convinced that punitive international sanctions will be the only real deterrent.

Iran's decision to resume nuclear activities has made months of careful European-led diplomatic overtures to Iran look fruitless, but neither the United States nor the Europeans have declared the process dead.

A defiant Iran resumed full operations at its uranium conversion (search) plant Wednesday, as Europe and the United States looked for new ways to stop the Islamic republic from pursuing a nuclear program that could lead to a bomb.

The United States would prefer harsh consequences, and swift ones, for what it claims is a long pattern of deception by Tehran over the nature and ambition of its nuclear program. For now, however, the United States is letting European capitals take the lead, and play the hawks.

"What we're trying to do, frankly, is to give Iran a chance to do the right thing," State Department spokesman Adam Ereli said Wednesday.

Iran should immediately suspend its resumed nuclear activities, and return to discussions with the Europeans, Ereli said.

Iran insists its nuclear program is solely for peaceful purposes, but is resisting demands to give up uranium enrichment -- a process that can produce fuel for power plants or material for nuclear weapons.

Privately, U.S. officials doubt that Iran will change its mind and accept a European-led package of aid and economic incentives in exchange for giving up potential weapons-related nuclear activity, or that Iran will return to negotiations at all.

It was left to European officials to say that out loud.

"Everything should be done in the negotiations to achieve a change in Iran's position," said August Hanning, the head of Germany's foreign intelligence service. "On the other hand, I've been skeptical about the outcome of these negotiations, and I don't feel developments have proved me wrong."

After long rejecting carrots such as economic incentives for Iranian cooperation, President Bush agreed to that approach this spring. European commentators welcomed the move as a sign that the United States was turning away from the go-it-alone attitude they ascribe to Bush's first term, and as a way to help heal trans-Atlantic rifts created by the U.S.-led Iraq invasion.

Over the weekend, Germany and France warned Iran that the United Nations nuclear watchdog, the International Atomic Energy Agency (search), was likely to refer the matter to the U.N. Security Council, which could impose sanctions.

The United States has supported U.N. Security Council referral all along, and may ultimately find its position strengthened by the apparent failure of the talks led by Britain, France and Germany on behalf of the wider European Union.

Bush said Tuesday that he remained "deeply suspicious" of Iran's intentions, and that sanctions remained a potential consequence. Out of deference to the Europeans, no U.S. official has pushed publicly for that outcome this week.

Meanwhile, there seems to be little appetite among IAEA diplomats to send Iran before the Security Council immediately.

A draft resolution before the IAEA's 35-nation board of governors in Vienna does not mention the Security Council. Written by the three nations leading the negotiations, the text expresses "serious concern" about the resumption of uranium conversion and urges Iran to cooperate by "re-establishing full suspension of all enrichment-related activities."

The U.S. can afford to wait awhile, and there are other options apart from Security Council sanctions, one senior administration official said.

The threat of sanctions, however, seemed to remain the biggest hammer the United States or other nations could hold over Iran.

"We've made very clear for two years now that our assessment is ... that this should be referred to the Security Council, but we've supported the European process," the senior administration official said. "I don't see that as a contradiction."

He spoke on condition of anonymity because the IAEA is still meeting this week in Vienna.

"The key is to get the right balance and keep the pressure on. When the pressure is put on Iran, when Iran feels the pressure, they back away," the official said. "They clearly don't want this to go to the Security Council."