Cheney warns of Iran's nuclear ambition

By Caren Bohan

SYDNEY (Reuters) - Vice President Dick Cheney said on Saturday that the United States and its allies must not allow Iran to become a nuclear power and raised concerns about Tehran's actions and "inflammatory" rhetoric.

The stern comments from Cheney, who is known for his hawkish views, followed Tehran's refusal to heed a U.N. deadline to halt uranium enrichment and a vow by Iranian President Mahmoud Ahmadinejad to stand up to the rest of the world and not show weakness by acceding to the West's demands.

"They have made some fairly inflammatory statements," Cheney said of Iran at a joint Sydney news conference with Australian Prime Minister John Howard. "They appear to be pursuing the development of nuclear weapons."

"We are deeply concerned and have made it very clear we're deeply concerned about Iran's activities," he said.

Iran insists that it is not trying to acquire nuclear weapons and its enrichment activities are for peaceful purposes.

In addition to Iran, the two leaders touched on issues ranging from the Iraq war to China and Australian Guantanamo Bay inmate David Hicks.

Howard pressed his insistence on a speedy trial for Hicks.

The prime minister also offered warnings about Iran, saying that a sudden withdrawal of U.S. forces from Iraq would only bolster Iran's clout and influence in the Middle East.

"I can't think of a country whose influence and potential clout would be more enhanced in that part of the world than Iran's would be," if the United States and its allies were to be forced to exit Iraq, Howard said.

"That would be a nightmare scenario," he added.

Cheney said he was concerned about Iran's "fairly aggressive" role in the Middle East, not just its decision to ignore the U.N. deadline.

"ALL OPTIONS"

He said "all options are on the table" on Iran. The Bush administration has long maintained that it is focused on diplomacy but tacitly acknowledges that the military option has not been ruled out.

Still, the administration's tough comments on Iran have been met with concern by some in the U.S. Congress and have even rattled financial markets.

Cheney said that a peaceful resolution to the nuclear standoff with Iran was "still our preference".