By Phil Stewart

WASHINGTON (Reuters) - Military action against Iran could have "unintended consequences" in the region, U.S. Defense Secretary Leon Panetta said on Thursday, hours after Tehran warned that an attack against its nuclear sites would be met by "iron fists."

Panetta, who took over the Pentagon's top job in July, said he agreed with an assessment of his predecessor, Robert Gates, that a strike on Iran would only delay its nuclear program, which the West believes is aimed at making an atomic bomb.

Gates also warned it could unite the country and deepen its resolve toward pursuing nuclear weapons. Iran says its nuclear program is peaceful and that it is enriching uranium to power reactors for electricity generation.

"You've got to be careful of unintended consequences here," Panetta told reporters at the Pentagon, when asked about his concerns about a military strike.

He acknowledged military action might fail to deter Iran "from what they want to do."

"But more importantly, it could have a serious impact in the region, and it could have a serious impact on U.S. forces in the region," he said. "And I think all of those things, you know, need to be carefully considered."

Tension over Iran's nuclear program has increased since Tuesday when the International Atomic Energy Agency (IAEA) reported that Tehran appeared to have worked on designing a bomb and may still be conducting secret research to that end.

Speculation has heightened in the Israeli media that Israel may strike Iran's nuclear sites and there is speculation in the Western press about a possible U.S. attack.

Iran has warned that it will respond to any attacks by hitting Israel and U.S. interests in the Gulf. Analysts say Tehran could retaliate by closing the Strait of Hormuz, the waterway where about 40 percent of all traded oil passes.

"Our enemies, particularly the Zionist regime (Israel), America and its allies, should know that any kind of threat and attack or even thinking about any (military) action will be firmly responded to," Iran's Supreme Leader Ayatollah Ali Khamenei said on state television.


Last week, a U.S. military official told a forum in Washington that he saw Iran as the top threat to the United States and its allies in the Middle East, surpassing al Qaeda.

He pointed to concerns over Iran's nuclear program and also to accusations by the United States that Iran plotted to assassinate the Saudi ambassador to Washington, an allegation Tehran denied.

Still, Panetta said military action remained a last resort in the U.S. and Israeli view and stressed U.S. efforts to win tougher sanctions against Tehran.

"It is important for us to make sure we apply the toughest sanctions -- economic, diplomatic pressures -- on Iran to change their behavior," Panetta said.

"And we are in discussions with our allies with regards to additional sanctions that ought to be placed on Iran."

The European Union may approve fresh sanctions against Iran within weeks, after a U.N. agency said Tehran had worked to design nuclear bombs, EU diplomats said on Thursday.

EU sanctions would be a significant part of Western efforts to ratchet up pressure on Tehran. Western governments would prefer U.N. Security Council measures against Tehran, but Russia and China, both permanent U.N. Security Council members with veto power, are opposed.

Asked whether the United States could live with a nuclear Iran, Panetta said Washington has made it very clear that "it's unacceptable for Iran to develop a nuclear capability."

"As to what happens down the road, you know, I think our hope is that we don't reach that point and that Iran decides that it should join the international family," he said.

(Additional reporting by Missy Ryan; Editing by Vicki Allen)

Source: Reuters US Online Report Politics News

Photo by Chairman of the Joint Chiefs of Staff (Flickr: 110911-N-TT977-136) [CC-BY-2.0 (], via Wikimedia Commons.