UPDATE 1-Iran must give clear reply or face sanctions-U.S.

Mon Aug 4, 2008 3:53pm BST

(Adds more from State Department)

WASHINGTON Aug 4 (Reuters) - Iran faces more punitive measures, including sanctions, if it does not respond positively to an offer by major powers to rein in its nuclear program in exchange for incentives, the U.S. State Department said on Monday.

"We agreed in the absence of a clear, positive response from Iran that we have no choice but to pursue further measures against Iran as part of this strategy," department spokesman Gonzalo Gallegos told reporters.

Major powers -- the United States, Russia, China, France, Britain and Germany -- laid down an informal deadline to Iran of two weeks, which expired over the weekend, to respond to an offer of trade and technical incentives to halt enrichment.

"Iran has a clear choice of engagement or isolation," Gallegos added.

He said Washington was disappointed Tehran had not yet responded formally to the offer but he said EU foreign policy chief Javier Solana had been promised by Iran's nuclear negotiator Saeed Jalili that a written reply would be made by Tuesday.

Gallegos said the package of incentives contained "everything" Iran needed to pursue a modern, civilian nuclear power program. Major powers suspect Iran's current nuclear program is aimed at building an atomic bomb while Iran says it is for peaceful power purposes.

"The pressure on Iran to comply with the demands of the international community and its UNSC (U.N. Security Council) obligations will only grow," Gallegos said.

The United Nations has imposed three sets of sanctions against Iran in a standoff over its nuclear program and U.S. Secretary of State Condoleezza Rice has warned of more punitive measures if Iran does not curb its nuclear program.

Washington broke with its usual isolation policy toward Tehran and attended a meeting with Iran's nuclear negotiator in Geneva last month at which the two-week deadline was made over the offer.