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Washington - The United States has slapped new sanctions on Iran and accused its Revolutionary Guard of spreading weapons of mass destruction, actions Russian President Vladimir Putin criticized as forcing Tehran into a corner over its nuclear programme.
Also labeling Iran's Qods military force a supporter of terrorism,
Washington imposed sanctions on more than 20 Iranian companies, banks and individuals as well as the defence ministry in a bid to force Tehran to stop uranium enrichment and curb its "terrorist" activities.
"Today, Secretary Paulson and I are announcing several new steps to increase the costs to Iran of its irresponsible behaviour," said Secretary of State Condoleezza Rice, who made the announcement alongside Treasury Secretary Henry Paulson.
It is the first time the United States sought to take such punitive measures against another country's military. Russia and some other US allies believe dialogue rather than more punishment or military action is the way forward.
"Why should we make the situation worse, corner it, threatening new sanctions?" Putin said in Lisbon.
"Running around like a mad man with a blade in one's hand is not the best way to solve such problems," he told a news conference with Portugal's president.
Iran responded angrily.
"The hostile policies of America against the respectful Iranian nation and our legal organisations are against international regulations and have no value," Foreign Ministry spokesman Mohammad Ali Hosseini was quoted as saying on the state broadcaster IRIB's website.
"Such policies have always failed."
Talk of US military action against Iran has been more intense in recent months, particularly from some conservatives who would like to see US President George W Bush act against Tehran before he leaves office in January 2009.
Rice said the United States was committed to a diplomatic solution and urged Tehran to accept an offer from major powers last year to give up nuclear work in exchange for incentives.
"We will be open to the discussion of any issue. But if Iran's rulers choose to continue down a path of confrontation, the United States will act with the international community to resist these threats," Rice said.
US Defence Secretary Robert Gates characterized any US military planning for a strike on Iran as "routine" to reporters on a flight en route to Washington.
The goal of the financial measures is to deter Europeans and others from investing in Iran. Among the banks affected are Bank Melli, Iran's largest bank, Bank Mellat and Bank Saderat.
Iran expert Karim Sadjadpour said the practical effect of the measures would be limited.
"It's not like the Qods force have been doing deals with (Wall Street firms) Goldman Sachs or JPMorgan and will be financially crippled by this label," said Sadjadpour from the Carnegie Endowment for International Peace.
The Revolutionary Guard Corps has about 125,000 members and is the most important wing of Iran's military. It also has sprawling financial concerns, which US officials say it uses to buy nuclear technology.
Washington accuses the Qods force, the most elite unit of the Revolutionary Guards, of arming and training militants in Iraq who attack US forces. The United States also says the Qods provides "material support" for Hizbollah in Lebanon, the Taleban in Afghanistan and Hamas in the Palestinian Territories.
The Bush administration had been considering new measures for months, but there was infighting over when and how far to go. Some wanted the entire Revolutionary Guard designated a foreign terrorist organisation.
Britain said on Thursday it backed Washington's new sanctions and vowed to take the lead in pulling together a third round of UN sanctions.
Political directors from the five permanent members of the UN Security Council - the United States, Russia, China, France and Britain - and Germany are expected to meet in Europe next week to discuss a new resolution, the State Department said.
The West believes Iran is seeking to build an atomic bomb while Tehran says its nuclear programme is for peaceful power purposes.
- REUTERS
