"This is a negotiating process between the Europeans and the Iranians and it's not surprising to hear those statements," Stephen Hadley, White House national security adviser, told Fox News Sunday, in answer to a question about Iran's initial negative reaction to the overtures.

"But I would point out at the same time those statements you were talking about were being made, (Iranian) President (Mohammad) Khatami was also saying that they were open for discussions on the kinds of guarantees and assurances they could give to the world that they were not seeking a nuclear weapon."

"So, the negotiation is still going on," Hadley said.

Britain, France and Germany have been trying to secure "objective guarantees" that Iran will not use its atomic energy ambitions to acquire nuclear weapons, and in exchange they are offering a package of trade, security, diplomatic and technology benefits to the Islamic republic.

On Friday, Washington announced it would help the Europeans put together the incentives by dropping objections to Iran joining the World Trade Organization (WTO) and allowing it access to spare parts for its civilian aircraft.

But Iran played down the importance of such offers, saying it has a right to join the WTO anyway and that sanctions affecting the maintenance of its decrepit civilian aircraft fleet were unfair to begin with.

Hadley insisted that the package of perquisites offered to Iran were not meant to be seen as "concessions."

"What we have done is remove our objection to two elements of a package that the Europeans are putting together that they want to offer Iran in negotiations the Europeans are conducting with Iran to try and get Iran to give up its nuclear weapons ambitions.

"We've talked to the Europeans about it," he continued. "It's clear if those negotiations fail, then we are agreed with the Europeans that the next step is to take the matter to the UN Security Council."

Regardless of Iran's ultimate decision, the cooperation between Europe and the United States is an "important" achievement, Hadley said.

"The Europeans have joined us in our agenda about Iran, which is not only dealing with the nuclear issue but also dealing with Iranian sponsorship for terror, obstruction of the Middle East peace process, and also failure to give freedom and democracy to their people," he said.

He added that the greater cooperation between Europe and Washington should give pause to leaders in Tehran.

"I do not think that the Iranian regime can take much comfort in this, because, as part of this arrangement, the Europeans now for the first time are talking about Iranian support to terror and the need for this Iranian regime to listen to their people and to give them a greater role in the political process," Hadley said.

"On balance, we think that the cause of freedom for the Iranian people has been advanced by the understandings we've reached with the Europeans."

US Secretary of State Condoleezza Rice echoed that view Sunday.

"What we've forged with Europe is a common front, a common approach to dealing with Iran that says Iran must not develop a nuclear weapon, that Iran's international obligations must be upheld," she told ABC television's "This Week" program.

"That means they cannot develop a nuclear weapon under cover of civilian nuclear power," she said. "It says that if Iran is not willing to live up to those obligations, then there will be a supported referral to the Security Council."

When asked by ABC to respond to a report in the London Sunday Times that Israel may launch a unilateral attack on Iran if diplomacy fails, Rice insisted that Washington is committed to following a diplomatic course.

"The United States has now, with the European allies, put forward, I think, a strengthened now diplomatic hand for the European three to play," she said.

"It really is now up to the Iranians to do what they need to do. Obviously, the president of the United States always has his options open, but we really do believe that this can be resolved diplomatically."

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