GORDON Brown yesterday imposed tough new sanctions on Iran in a bid to force it to abandon its nuclear ambitions.
The Prime Minister announced that the overseas assets of Iran's biggest bank would be frozen, and said he was seeking European Union agreement later this week to increase restrictions on investment in Iranian gas and oil.
But hours earlier, Tehran announced it had already taken pre-emptive action by withdrawing about $75 billion of Iranian assets from Europe on the orders of its president, Mahmoud Ahmadinejad.
Mr Brown, appearing alongside George Bush, the US president, at the Foreign Office in London, made clear he wanted to force Iran into accepting a deal offered by six world powers to divert it away from its programme of enriching uranium, which is assumed to be a precursor to building a nuclear bomb.
Mr Brown said: "Our message today to the Iranian people is that you do not have to choose the path of confrontation.
"If Iran continues to ignore (UN] resolutions and our offers of partnership, we have no choice but to intensify sanctions. Today Britain will urge Europe, and Europe will agree, to take further sanctions.
"We will take any necessary action so that Iran is aware of the choice it has to make to start to play its part as a full and respected member of the international community or face further isolation."
The EU's foreign policy chief, Javier Solana, visited Tehran at the weekend to offer the country an economic partnership and help with building "civilian" nuclear power stations.
With no response forthcoming from President Ahmadinejad, Mr Brown announced the freezing of the overseas assets of Bank Melli, which the US has accused of providing services to Tehran's nuclear and ballistic missile programme.
But he appeared to have got there too late, as Mohsen Talaie, Iran's deputy foreign minister in charge of economic affairs, said: "Part of Iran's assets in European banks have been converted to gold and shares and another part has been transferred to Asian banks."
Mr Bush made clear that he had not ruled out the use of force against the rebel Islamic state, saying "all options are on the table" and praising Mr Brown for his tough stance.
Mr Bush said: "It was a clear statement, it was a strong statement and it was a necessary statement, because the free world has an obligation to work together in concert to prevent the Iranians from having the know-how to build nuclear weapons.
"Hopefully the Iranian leadership will take a different position than the one they have taken in the past, which is basically, 'Who cares what the free world thinks? We will go our own way.' They have faced serious isolation and the people who are suffering are the Iranian people.
"We want the Iranian people to thrive. But the Iranians must understand that all options are on the table."
Iran has faced three sets of United Nations security council resolutions since 2006 because of its refusal to halt uranium enrichment. Mr Ahmadinejad says Iran has an "inalienable right" to produce nuclear fuel.
Mr Bush agreed that Iran had a "justifiable demand" to build nuclear power stations. "You bet you have a right," he said. "But you don't have the trust of those of us who have watched you carefully when it comes to enriching uranium. You have declared that you want to destroy democracy in the neighbourhood."
How the talk took on a new tone of toughness
What is Gordon Brown trying to achieve by increasing sanctions on Iran?
Britain and the United States lead six world nations – the others are France, Russia, China and Germany – who are extremely concerned that Iran is concealing its attempts to construct a nuclear bomb by claiming it merely wants its own nuclear power stations. Sanctions are a way of increasing political pressure while avoiding the need for military action – though the US president, George Bush, did say yesterday that "all options" remained on the table.
Who is Iran a threat to?
Primarily Israel – and therefore stability not just in the Middle East but across the western world. Iran's ultra-conservative president, Mahmoud Ahmadinejad, has denied the Holocaust and called for Israel to be "wiped off the map".
How serious is Mr Brown?
His determination to warn Iran about the need to abide by United Nations resolutions was made in unequivocal terms as he stood alongside Mr Bush – whose total backing he received.
Have previous sanctions had much of an effect on Iran?
Not really. The country has been able to prosper due to its oil wealth – it has 9 per cent of world reserves. Russia has been helping to build the nuclear power station but its supplies have been impounded by the International Atomic Energy Agency, the UN's nuclear watchdog. The agency last month cast doubt on the peaceful nature of Iran's plans and found Iran had produced 320 tonnes of uranium since 2004.