SCENARIOS: What's next if Iran misses US September deadline?

By Ross Colvin

WASHINGTON (Reuters) - U.S. President Barack Obama has set a September deadline for Iran to respond to his offer of talks, but it seems increasingly likely the Islamic Republic, shaken by the worst unrest in decades, will miss it.

The big question is what Obama will do next. Analysts say he has few options, hardly any of them good. Here are some of the possible courses of action he could pursue.

SANCTIONS

Iran's president, Mahmoud Ahmadinejad, sworn into office for a second term last week, is preoccupied with shoring up his legitimacy, which has been significantly weakened by the post-election turmoil. Responding to Obama's offer of talks is probably not a top priority for him right now, and Washington needs to factor this into its decision-making, analysts say.

Obama has said he will review his policy of engagement toward Iran and consult allies at a G-20 summit of rich and developing nations in late September. His secretary of state, Hillary Clinton, has talked of imposing "crippling sanctions."

The U.S. Senate has passed legislation that would ban companies that sell gasoline and other refined oil products to Iran from receiving Energy Department contracts to deliver crude to the U.S. Strategic Petroleum Reserve.

The House of Representatives has approved a bill that would bar the U.S. Export-Import Bank from providing credit, insurance or loan repayment guarantees to foreign oil companies that supply fuel to Iran or help expand its refining capacity.

The bills have not yet been finalized.

Obama, whose foreign policy emphasizes working with allies, is highly unlikely to impose unilateral punitive measures, but getting broad agreement on new sanctions at this point will be difficult, analysts and diplomats say.

In addition to U.S. measures, the United Nations has imposed three rounds of sanctions on Iran so far, but there appears to be little appetite for a fourth round.

China and Russia, two of Iran's key trading partners, have made clear they will not accept new sanctions at the moment. The 27-nation European Union, meanwhile, is split on the idea of targeting Iran's energy industry.

"The historical experience of prior U.S. administrations makes clear that international willingness to apply rigorous sanctions is inherently limited," Suzanne Maloney, a senior fellow at Brookings Institution think-tank, testified before the Senate banking committee in July.

There is also debate about whether sanctions would have the desired effect. One popular idea is to target Iran's reliance on gasoline imports. Some analysts say it would put domestic pressure on Ahmadinejad by driving up prices at the pump, but others counter the move could backfire by giving him a ready excuse for Iran's growing economic woes. In any case, Iran's porous borders would make oil sanctions difficult to enforce.

MILITARY ACTION

The option that Obama is said to favor least, not surprisingly. While he has said that possible military action always remains on the table, even his own generals acknowledge it could have potentially disastrous consequences.