Bush won't give up military option on Iran: Rice

DUBAI (Reuters) - U.S. President George W. Bush will keep a military option on the table as he seeks a diplomatic solution to the standoff with Iran over its nuclear plans, Secretary of State Condoleezza Rice said.

"The American president will not abandon the military option and I believe that we do not want him to do so," Rice said in an interview with Al Arabiya television, part of which was broadcast on Tuesday.

Iran is embroiled in a standoff with the West over its nuclear ambitions. The West suspects it is seeking to develop atomic weapons but Tehran says it wants only to generate electricity so that it can export more of its oil and gas.

Rice in remarks dubbed in Arabic said Bush remained "committed to the diplomatic option. If the world remained strong, there would be a chance for the success of the diplomatic option".

Two sets of United Nations sanctions have been imposed on Iran since December and major powers have warned a third, tougher resolution might be needed if Tehran did not halt uranium enrichment.

"I say to the Iranians ... there are two options -- isolation and dialogue," she said.

Analysts say the measures, including arms and financial sanctions, are hurting business and deterring foreign investment in the Islamic state, which despite its oil wealth is struggling with inflation and unemployment.

Iranian officials have repeatedly rejected Western demands to halt work to enrich uranium, which can be used to fuel nuclear power plants or make atom bombs if refined further.

Rice reiterated that Washington would change its policy against Tehran, adopted after anti-U.S. Iranian clerics toppled the U.S.-allied Shah Mohammed Reza Pahlavi in an Islamic revolution in 1979.

"The international community has made its demands through the United Nations; Iran should stop nuclear enrichment, after that there would be a change in the U.S. policy that has been going on for 27 years and then I can talk to them about any issue."

Washington severed its ties with Tehran in 1980 after students seized the U.S. embassy there and held 52 hostages for 444 days.