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MELISSA BLOCK, Host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block. Over the weekend, the Bush administration signaled that it will seek new U.N. sanctions against Iran. The U.S. and five other world powers had offered Iran a package of incentives if it would freeze uranium enrichment by last Saturday. Iran ignored that deadline, saying it was ready for more negotiations but would not halt uranium enrichment.

Nowhere are concerns about Iran's nuclear ambitions felt more keenly than in Israel. Some Iranian leaders have called for Israel's destruction. Those same leaders support Hamas and Hezbollah, and Israel is within the reach of some Iranian missiles. From Jerusalem, NPR's Eric Westervelt reports.

ERIC WESTERVELT: Israeli officials estimate Iran will be able to process weapons-grade uranium by 2010. Deputy Prime Minister Shaul Mofaz, a former army general and defense minister, calls that unacceptable.

D: We don't want war. We want peace, but we will not let that second Holocaust take place.

WESTERVELT: Like the U.S., Israel has long hinted that a military strike against Iran is an option. A massive Israeli air force training exercise over the eastern Mediterranean earlier this summer was, according to analysts, clearly meant to send that message. Israel's foreign minister, Tzipi Livni, told CNN on Sunday diplomacy and sanctions are the preferred but not the only pressure tactics.

BLOCK: Sanctions can be effective, as long as the Iranians and the entire world understand that all the options are on the table. This is what we need to do today. We cannot postpone it. We cannot wait for the Iranians to decide whether they are willing to talk with the international community.

WESTERVELT: Livni and Mofaz are vying to succeed Ehud Olmert as Israel's next prime minister, and both are talking tough on Iran, which plays well with the Israeli electorate. Their comments nonetheless underscore a fundamental belief in Jerusalem.

D: The general consensus in Israel is that an engagement of Iran - the general consensus is that this is the wrong way to go.

WESTERVELT: Dr. Shmuel Bar directs Israel's Institute for Policy and Strategy. He says Iran is renowned for using diplomacy as a stall tactic.

D: I don't think that anybody really does believe that there is a diplomatic solution. The Iranians are well-known for attrition, at wearing down their opponents with never-ending negotiations that you can go on and on. I mean, this is the strategy and has been the strategy forever.

WESTERVELT: Efraim Halevy, the former head of Israel's foreign intelligence agency, the Mossad, is one of many here opposed to idea of offering new incentives to Iran in return for a freeze of its uranium-enrichment program. Halevy, now at Hebrew University, complains that Israel has not been directly involved in the negotiations and says the package of incentives from the U.S., Russia, China and leading European states poses a threat to Israel.

BLOCK: The incentives are far-reaching. They entail upgrading the status of Iran in the region and internationally. If they accept the incentives, then Iran will be translated overnight from a country which is more or less isolated into one of the major forces in the region, a legitimate semi-hegemon in the region.

WESTERVELT: Tehran insists its nuclear program is for peaceful, power generating purposes, not for weapons, but almost no one in Israel buys that. Israel is believed to have dozens of nuclear missiles but has never acknowledged that. Analyst Shmuel Bar says Israel has every right to fear Iran's nuclear ambitions.

D: Iran is a country which is openly committed to destroying Israel. It is committed to performing another holocaust. I think that what happened in Israel is that the third generation after the Holocaust has sort of gone back to a sort of Holocaust mentality, the sense that yes, this could happen again. The statements coming from Iran have exacerbated that feeling.

WESTERVELT: Despite those fears, some here say there's still a chance of a diplomatic solution to the confrontation. Israeli analyst Mayer Zhavadanfar(ph) is an Iran expert.

BLOCK: Israelis are, despite their skepticism and their pessimism, I think they are hoping that maybe the Americans will be able to pull the rabbit out of the hat, if I can put it that way. If the United States, through direct engagement, can stop Iran's enrichment program, then I think that would receive full support from Jerusalem.

WESTERVELT: But with leadership succession fights now underway in Israel and the U.S., it's not clear whether direct engagement will prevail or how long Israel is willing to wait. As Deputy Prime Minister Mofaz put it recently, it's a race against time, and time is winning. Eric Westervelt, NPR News, Jerusalem.

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