Rice warns Iran it could face new sanctions

Ahead of the release of a report expected to show that Iran is continuing to deny U.N. experts access to records of its nuclear activity, the two diplomats said Tehran must comply with international demands to halt work that could produce atomic weapons fuel.

Rice said such findings would be devastating for Iran's claim to be fully and transparently cooperating with the U.N.'s nuclear watchdog, the International Atomic Energy Agency.

"One of the strongest parts of our policy has been to require Iran to be fully transparent with the IAEA, which should have the right to the full array of inspections in Iran," Rice said at a news conference with Miliband after a visit to the headquarters of Internet giant Google.

"If Iran has peaceful intent as they say, they should have no problem with the International Atomic Energy Agency having complete, absolute and total access, and the word that is coming out is that that is not being provided to the IAEA," Rice said.

Miliband said the report, which is expected as early as Friday, would buttress the arguments for those demanding that Tehran come clean.

"What's clear is that the IAEA has reached a really important point with the Iranians where they are not getting answers on the outstanding issues," he said.

Rice also said Iran, which denies its programs are arms-related, must accept a package of incentives offered by major world powers that it has yet to agree to receive or face consequences at the U.N. Security Council and punitive measures from individual countries.

"There is no doubt that there are further steps that the coalition of states that are working on this could take within the Security Council framework if Iran is not prepared to accept the really quite favorable and quite generous package that has been offered to it," she said.

Rice said the Iranian economy was already suffering because of existing U.S., European and U.N. sanctions and said those would continue to expand without a change in behavior by Iran's leaders.

"They are already paying consequences and, of course, there are other possible courses available to us," she said.

She added that the United States was looking at new steps to cut off more Iranian banks from the international financial system and could do so at any time over the nuclear issue as well as alleged terrorism financing.

"We will continue to designate entities as we find them trying to use the international financial system for ill-gotten gains," Rice said. "We're going to continue to do it and we are going to continue to do it aggressively because Iran should not be in a position of using the banking system to pass profits made from terrorism or proliferation."

The comments came during on two-day trip to California's Silicon Valley, where Rice is showing Miliband high-tech firms and meeting with venture capitalists who are funding research into clean, sustainable energy projects.