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MICHELE NORRIS, Host:

From NPR News this is ALL THINGS CONSIDERED. I'm Michele Norris.

ROBERT SIEGEL, Host:

And I'm Robert Siegel.

The U.S. is under increasing pressure from allies to ease its hard line positions on two big foreign policy challenges, dealing with Iran's nuclear ambitions and dealing with the new Palestinian government led by Hamas. Washington's approach in both cases is basically this, isolate and put pressure on Iran and Hamas to change course. A number of experts and allies are now questioning that strategy and the U.S. is looking increasingly isolated itself.

NPR's Michele Kelemen reports.

MICHELE KELEMEN: If it were up to the Bush administration, the U.N. Security Council would have approved a tough resolution by now to demand that Iran suspend its nuclear research or face the possibility of sanctions. But under pressure from European allies, the U.S. has agreed to give the German, French and British carrot-and- stick approach one more try. Germany's former Foreign Minister, Joschka Fischer, says for this to work the U.S. needs to bring something to the table.

JOSCHKA FISCHER: The carrot should be a security guarantee at the end and full relations and the stick must be we are not frightened about an increase in the oil price.

KELEMEN: He's suggesting an embargo on Iranian oil sales, which is not a popular subject for diplomats working out the package of inducements and penalties. Fischer told an audience at the American Society of International Law recently that the alternatives are grim and military action would probably lead to the same spike in oil prices and many other troubles.

FISCHER: It's not easy to sell it to a national audience, neither in the United States nor in Europe, but if you know the grim alternatives I think this should be the offer.

KELEMEN: The only trouble, experts say, is that the Bush administration doesn't seem prepared for a grand bargain.

RICHARD HAASS: I would describe what we've had as diplomacy light.

KELEMEN: That's Richard Haass, a former top official in Colin Powell's State Department and now president of the Council on Foreign Relations. He says the Bush administration should stop treating diplomacy as a gift, but rather part of a strategy. He advocates direct contacts with Iran and he told the Washington Institute for Near East Policy today that the U.S. could start by responding to the letter that Iran's president sent to the White House this week.

HAASS: We should respond, if you will, not to the letter we got, but to the letter we wish we'd gotten. And it's the same way any politician or diplomat responds to a question at a press conference. You're not narrowly confined to answering the question you get. You answer the question you wish you'd been asked.

KELEMEN: The Bush administration is still ruling out the idea of talking to Iran about the nuclear issue, though it did sign off on this new effort to repackage European proposal to get out of the diplomatic stand off. Russia's Foreign Minister, Sergei Lavrov, made clear that the only way his country will stay involved is to offer Iran some practical solutions.

SERGEI LAVROV: Sometimes a big carrot could serve as a stick.

KELEMEN: The U.S. drive to keep the international community united on the Hamas issue is also under threat. Amgad Attallah, a former advisor to the Palestinian Authority, thinks the U.S. will have to moderate its policy, which he describes this way -

AMGAD ATTALLAH: This is kind of "Apocalypse Now" meets "Poseidon Adventure." The idea is you take a boat or you take the country, flip it upside down, shake it and then hope that some heroes emerge to save the day. In Palestine, that's probably not going to turn out as well as it did in the movies.

KELEMEN: Palestinians and Arab states have been warning the U.S. that the international aid cutoff and boycott of the Hamas government is leading to a humanitarian crisis. And they say the U.S. is getting blamed. U.S. officials have played down the possibilities of a crisis, but did slightly moderate their position to ease the concerns of allies. The U.S. agreed to a still vague plan to let the Europeans funnel some aid to the Palestinians.

Michele Kelemen, NPR News, Washington.

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