UPDATE 1-Germany urges Iran to make "substantial" nuclear offers
* Westerwelle in Jerusalem for talks
* Says still time for diplomatic solution on Iran
* But deems "talks for sake of talks" with Iran unacceptable
* Israel wants tougher international action on Iran
JERUSALEM, Sept 9 (Reuters) - Germany's foreign minister on Sunday urged Iran to make "substantial offers" to restart nuclear talks with world powers and told Israel allowing the Islamic Republic to get the bomb was "not an option".
Guido Westerwelle's comments, made during a visit to Jerusalem, followed weeks of rhetoric in Israel over a possible go-it-alone strike against Iran's nuclear facilities and calls by Israeli Prime Minister Benjamin Netanyahu for world powers to set a "red line" for Tehran.
Westerwelle, whose country, together with France, Britain, Russia, China and the United States, has held three rounds of inconclusive talks with Iran this year, said there was still time for a diplomatic solution but warned Iran not to try to acquire nuclear weapons.
"Nuclear arms in the hands of the Iranian government is not an option and we will not accept this," he said as he met Netanyahu.
Germany and other countries want Iran to open up its nuclear facilities to international scrutiny and to provide proof that its civilian nuclear programme does not have a military dimension.
"We share the concern in Israel about the nuclear programme in Iran," Westerwelle told reporters in earlier talks with Israeli Defence Minister Ehud Barak on Sunday.
"But it is serious, and it's crucial, and this means that talks for the sake of talks is not what we are seeking," he added.
"And therefore we call on the government in Iran to come back to the table with substantial offers, which is very necessary and very crucial at this time."
At a meeting of European Union foreign ministers in Cyprus on Friday, Germany, Britain and France called for new EU sanctions against Iran.
The ministers did not say what further measures the EU could take. The 27-nation bloc banned imports of Iranian oil and isolated its banking system in the last round of sanctions that came into full force in July.
The sanctions appear to have contributed to a collapse in the Iranian currency which plunged to an all-time low on Sunday. Central Bank Governor Mahmoud Bahmani said: "We are fighting with the world in an economic sense."
"The conditions we are in are war conditions," Bahmani added, according to the Iranian Students' News Agency.
The sanctions are aimed at forcing Iran to curb nuclear activities that the West believes are aimed at developing a nuclear weapons capability, an allegation Tehran denies.
Iran says its nuclear work is for peaceful energy purposes and that it will not bend to pressure from the West.
Israel, believed to be the only nuclear-armed state in the Middle East, views the possibility of Iran developing a nuclear bomb as a threat to its existence and has said it may use military means if diplomacy and sanctions fail.
Addressing his Cabinet on Sunday, Netanyahu hailed Canada's decision on Friday to cut diplomatic relations with Iran over its nuclear activities.
"I call on the entire international community, or at least on its responsible members, to follow in Canada's determined path and set Iran moral and practical red lines, lines that will stop its race to achieve nuclear weapons," Netanyahu said.
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