By Paul Reynolds
World affairs correspondent BBC News website
Iran denies it is planning to make a nuclear bomb
As Mahmoud Ahmadinejad receives the endorsement of Iran's Supreme Leader Ayatollah Khamenei for a second term as president, a new confrontation with Western countries is beginning to gather strength.
The United States is leading an effort to impose sanctions on Iran's oil industry if Iran does not suspend uranium enrichment and enter talks about its nuclear programme.
Ban on refined products
Crucially, these new sanctions could include a ban on sending refined petroleum products and by-products to Iran. This means petrol, kerosene, diesel, propane and butane gas. Despite its oil wealth, Iran still cannot refine enough for its domestic needs.
The US also wants restrictions on buying oil and gas from Iran and on investments in Iran's oil and gas industries.
"Any new sanctions have to be of a different order of magnitude," was how one Western official put it recently.
The timetable is for an assessment to be made of Iran's intentions in the last week of September, when world leaders always gather in New York for the annual meeting of the UN General Assembly. There would also be discussions at a G20 summit in Pittsburgh the same week.
If Iran continued to resist freezing its enrichment activities and failed to agree to discuss its nuclear programme, then sanctions would be imposed, or at least realistically threatened, by the end of this year.
All this follows the offer by President Obama earlier year to offer Iran an "extended hand", if Iran "unclenched its fists". This could mean direct US-Iran talks, a lifting of sanctions and the provision of aid for a civilian nuclear industry in Iran, including a guaranteed supply of enriched-uranium fuel.
The president had indicated that he might wait until the end of the year for Iran's reply. The manoeuvres now under way are designed to have sanctions ready in case the final answer is a clear "no".
Israel has given hints of military action against Iran
In this way, the dual-track approach - offering talks and incentives on the one hand and threatening further sanctions on the other - would be back in better balance.
The US Defence Secretary Robert Gates and the National Security Adviser James Jones have already outlined the proposals to the Israeli government. The hope is that Israel will tone down its hints of military action against Iran while this new diplomatic and economic effort is given a chance.
Plans A and B
Plan A is for the sanctions to be imposed through the Security Council, which has already targeted Iran's nuclear and ballistic missile development. But plan B might be needed if Russia and China, both veto-holding members of the Council, do not agree, as they currently do not.
Plan B is for the US to lead action by itself and its allies - there are already bills authorising such action in the Senate and the House of Representatives, and threatening retaliation on foreign companies if they do not comply.
Iran has already acquired the expertise to enrich uranium
Britain would also urge the European Union to make a stand. However, there is a feeling among some member states that an EU embargo would simply leave the field free for others - China for example - to take up the slack.
As for China and Russia, a new diplomatic effort is to be made to persuade them that their strategic interests would be served by a peaceful resolution of this issue.
Nobody expects a positive reply from Iran. President Ahmadinejad's attitude towards enrichment was seen immediately after he first took office in 2005 when he castigated Iran's then negotiating team for agreeing to a pause in enrichment and immediately ended it. He has not changed his attitude since.
Iran argues that it is simply fulfilling its right to enrich fuel for nuclear power under the Nuclear Non-Proliferation Treaty and that it does not intend to make a nuclear bomb.
The Security Council has called on Iran to show its good faith by suspending enrichment and entering talks on the package of incentives proposed by the US and EU.
And what happens if plans A and B fail to move Iran? The Israelis would probably press for a Plan C, meaning some sort of military action.