Iran is already under two sets of mild sanctions over its defiance to halt uranium enrichment. Western nations have pushed for a new resolution and more punitive measures against the Islamic Republic, fearing it could use enriched uranium to produce nuclear weapons. Iran insists it needs the technology to generate electricity.
"The draft resolution will be submitted to the Security Council next week or in two weeks, but in any event before Christmas," a diplomat said on condition of anonymity, declining to reveal, however, whether the resolution would include tougher sanctions.
A new U.S. intelligence estimate published on Monday said Iran had stopped its nuclear weapons program in 2003. However, the United States, backed by France, Britain and Germany, said sanctions were still an option to force Iran to be fully transparent about its nuclear program.
The U.S. has also refused to rule out future military action against Iran; President Bush said on Tuesday: "The best diplomacy - effective diplomacy - is one in which all options are on the table."
Russia and China, which have strong business interests in Iran, have the power to veto any new sanctions.
