"We need to ratchet up tough but direct diplomacy with Iran," he said in an interview aired Sunday on NBC program "Meet the Press."

As president from January 20, Obama said he would make clear to Tehran that the nuclear program was "unacceptable," along with its support of militant groups such as Hamas and Hezbollah, and its "threats against Israel."

Obama, whose offer of direct talks with Iran represents a break with three decades of US foreign policy, promised a "set of carrots and sticks in changing their calculus about how they want to operate."

Carrots would include economic incentives to the cash-strapped oil producer and greater access to the international trading system, he said.

Sticks comprised enlisting Iran's trading partners such as China, India and Russia "to agree that in order for us to change Iran's behavior, we may have to tighten up those (UN) sanctions."

"But we are willing to talk to them directly and give them a clear choice. And ultimately let them make a determination whether they want to do this the hard way or the easy way," Obama said.

Israeli Defense Minister Ehud Barak spoke on Saturday to Obama's incoming secretary of state, Hillary Clinton, and defense secretary, Robert Gates, asking them to cooperate in facing up to Iran.

The United States and Israel say Iran is bent on developing an atomic bomb. Tehran insists the program is solely for civilian energy purposes, and has continued to enrich uranium in defiance of UN Security Council sanctions.

All rights reserved. � 2005 Agence France-Presse. Sections of the information displayed on this page (dispatches, photographs, logos) are protected by intellectual property rights owned by Agence France-Presse. As a consequence, you may not copy, reproduce, modify, transmit, publish, display or in any way commercially exploit any of the content of this section without the prior written consent of Agence France-Presse.