Bush says diplomacy is 1st choice with Iran.

President Bush, in a new warning to Tehran, said Wednesday he favors a peaceful resolution to the standoff over Iran's nuclear program but has not ruled out the possible use of military force.

Bush spoke at a news conference with German Chancellor Angela Merkel, but his words were aimed at Iran. Bush warned Iran against dragging out the dispute to run the clock out on his presidency. [...]

"German business is not happy," said Julianne Smith, director of the Europe program at the Center for Strategic and International Studies in Washington. "This is going to have political ramifications. She's only going to go so far."

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