Reformists challenge Iranian president

By Parisa Hafezi

TEHRAN (Reuters) - Iranian reformists challenged President Mahmoud Ahmadinejad's hardline nuclear policy on Friday as the United States defended its imposition of tougher sanctions on Tehran for its disputed atomic work.

Washington announced sanctions on Thursday against more than 20 Iranian companies, banks and individuals as well as the Defense Ministry, hoping to increase pressure on Tehran to stop uranium enrichment and curb its "terrorist" activities.

As the financial markets absorbed the implications of the action, oil rallied to a record high above $92 a barrel and the dollar tumbled to a record low.

At a meeting in Tehran, the reformist Islamic Iran Participation Front warned the country's rulers of an escalating crisis with the international community and called for a review of nuclear policy.

"The government should refrain from its adventurous policies," Mohsen Mirdamadi, the party's secretary-general, told an audience of 200 people.

U.S. Secretary of State Condeleezza Rice, speaking on the "Today" show on NBC television in the United States, defended the new sanctions, saying: "The international community cannot just sit idly by until we face unpalatable choices. A nuclear weapon in the hands of the Iranian regime would be deeply destabilizing in the world's most volatile region."

Russian President Vladimir Putin had already criticized the move, saying it would force Tehran into a corner, and both Rice and the White House played down any disagreement with Moscow over Iran.

"We're committed to a diplomatic process in dealing with Iran," White House spokesman Tony Fratto said. "We would never take options off the table, but the diplomatic process is what we want to move forward with."