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Sarkozy Threatens Iran With "Severe" Sanctions Over Nuclear Program, Election Crackdown

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PARIS — President Nicolas Sarkozy criticized Iranian leaders for their handling of contested elections and their nuclear program, and pleaded for a new push for peace in the Middle East in a sweeping diplomatic strategy speech Wednesday.

Sarkozy also urged other countries to follow France's example and limit bonuses handed out to bank traders to avert the kind of risk-taking blamed for fueling the financial crisis. French banks agreed Tuesday to change the way they hand out bonuses and penalize traders who lose money for their companies.

Sarkozy floated the possibility of "severe" new sanctions against Iran if it continues its nuclear activities.

"These are the same leaders, in Iran, who tell us that the nuclear program is peaceful and that the elections were honest. Frankly, who believes them?" he asked.

Sarkozy's diplomatic posture remained firm and united with Washington against Iran. His speech included no major policy shifts, but pointed to a desire for a stronger French role in the Mideast and in global decision-making.

Sarkozy says France will support new sanctions and stronger inspection powers for the International Atomic Energy Agency if Iran does not suspend activities, which leading Western powers suspect are aimed at developing nuclear weapons.

"There are more and more tests, there have never been so few negotiations," he said.

Tehran says it is only seeking nuclear energy. Iranian leaders have also defended their handling of June 12 presidential that were marred by allegations of fraud and prompted mass opposition protests.

Sarkozy reached out to Iran's ally Syria, however, proposing to facilitate talks between Syria and Israel "if the two parties confirm their wish to do so."

Sarkozy sought Syria's help earlier this month in winning the release of French researcher Clotilde Reiss and embassy employee Nazak Afshar from an Iranian prison.

Afshar was released on bail, and France specifically thanked Syria for its help. Reiss, too, was released on bail, though neither can leave Iran pending a verdict. The women are among more than 100 people in a mass trial of pro-reform opposition supporters accused of trying to mount a "soft" revolution.

The U.S. lists Syria as a sponsor of terrorism. But Sarkozy and President Barack Obama have sought to improve ties with Syria, which appears to be quietly seeking to improve its image in the West after years of isolation.

Sarkozy reiterated his appeal for a freeze in all Jewish settlement building in the Palestinian Territories, and said he would meet with Palestinian President Mahmoud Abbas in Paris next week.

"The truth is that there will be no peace if settlement is continued," he said.

Sarkozy's annual foreign policy speech to France's ambassadors focused heavily on efforts to overcome the world financial crisis and his agenda for a Group of 20 summit of leading rich and developing countries in Pittsburgh next month.

He said keeping current world governance systems as small as the Group of Eight is a "stupid" idea and that they should be broadened to include poorer nations.

Sarkozy also broached France's role in Afghanistan.

"France remains firmly committed to Afghanistan," he said.

The French president pledged before Afghan presidential elections last week that France will maintain its military and civilian support for the Afghan government "as long as necessary." France has about 3,000 troops in the NATO-led and U.S.-led forces in Afghanistan, but Sarkozy has resisted calls by Obama to send more.

He also stood firm against the terrorist threat from an al-Qaida offshoot based in Algeria that has threatened French interests.

"France will not let al-Qaida install a sanctuary at our doorstep, in Africa," he said.

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