NEW YORK - United Nations sources in New York said Friday they believe that a new draft Security Council resolution on Iran will be formulated by the end of March, and will apparently include harsher sanctions against that country over its continued refusal to halt uranium enrichment.

The five permanent members of the Security Council and Germany are becoming increasingly convinced that a new resolution on the Iranian nuclear issue is necessary, although the UN sources stressed that process of formulating the resolution and laying the groundwork in the Security Council for its adoption is still in a "preliminary stage."

The sources said they believe the resolution will be finished and debated in the Security Council toward the end of March, and the consensus in the UN headquarters is that the resolution will likely include stepped-up sanctions against Iran.

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Officials will begin formulating the new resolution next week, and a diplomatic source told Haaretz on Friday that documents that include an outline of the resolution have already been circulated among the five permanent members.

The new resolution is in response to Iran's refusal to comply with UN Security Council Resolution 1737, which was unanimously approved by the Security Council on December 23, and gave Iran 60 days to halt uranium enrichment.

French PM: Military strike on Iran could destabilize region
Any military strike against Iran in the dispute over its nuclear program would risk destabilizing the region, French Prime Minister Dominique de Villepin said in an interview released on Friday.

"For France, a military intervention is not the solution," he said in comments to be published on Saturday in the London-based Arabic-language newspaper Al Hayat.

"I add that a military strike against Iran would have unforeseeable consequences, which would be deeply destabilizing for the whole region," he said.

U.S. Vice President Dick Cheney has said all options are on the table after Iran refused to heed the UN deadline for halting uranium enrichment.

An Iranian deputy foreign minister responded by saying Iran was prepared even for war.

Villepin said Tehran had to choose dialogue and return to the negotiating table.

"If Iran makes the gesture of suspending its enrichment activities, the (UN Security) Council will be able to suspend the sanctions in return."

Obama: Direct engagement with Iran needed to halt nuclear program
U.S. Democratic presidential hopeful Barack Obama said Friday that direct engagement with Iran similar to the meetings with the Soviet Union at the height of the Cold War is necessary in order to stop Iran from acquiring nuclear weapons.

The Illinois senator blamed Bush administration failings in Iraq for strengthening the strategic position of Iran.

"A consequence of the Administration's failed strategy in Iraq has been to strengthen Iran's strategic position; reduce U.S. credibility and influence in the region; and place Israel and other nations friendly to the United States in greater peril," Obama said during a speech to the American Israel Public Affairs Committee.