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The Institute for National Strategic Studies at Tel Aviv University said in its annual report, released Tuesday, that Iran will possess nuclear weapons unless military action is taken against it, and Israel would be capable of carrying out such an attack

"Time is working in Iran's favor, and barring military action, Iran's possession of nuclear weapons is only a matter of time," the institute said in a statement distributed at a news conference where it released its annual assessment of the Middle East's strategic balance.

Israel considers Iran to be its most serious threat. It dismisses Tehran's claims that its nuclear program is designed solely to produce energy and is worried by Iranian President Mahmoud Ahmadinejad's repeated calls to wipe the Jewish state off the map.

Prime Minister Ehud Olmert has not ruled out a military strike against Iran's nuclear program, but has said he hoped other ways could be found to keep Tehran from becoming a nuclear power. In 1981, Israel destroyed an unfinished Iraqi nuclear reactor in a surprise air attack.

The INSS think tank stopped short of calling for an Israeli military strike to curb Tehran's nuclear ambitions.

Although experts elsewhere have questioned Israel's ability to cripple the Iranian program, which is scattered and built in part in underground bunkers, analysts at INSS said Israel would be capable of carrying it off.

A member of the institute's board, Brigadier General (res.) Giora Eiland said there would not be a military strike without a full "strategic and military" understanding with the U.S.

"Even if, at the end of the day, Israeli jets are going to carry out, or execute, this attack, it might be perceived - and rightly - as an understanding between the United States and Israel," Eiland said.

INSS head Zvi Shtauber, a retired general who also served as Israel's ambassador in London and senior policy adviser to former Prime Minister Ehud Barak, said Israel was "technically" capable of striking alone and would have to do so if it takes action, because no other country would agree to work openly with Israel.

Taking issue with Eiland's assessment that the U.S. must sign off on such an attack, he said, "There are certain things that it's better the U.S. not know about."

Institute analysts, while doubtful that international sanctions would sway Iran from its nuclear ambitions, said the time had not yet come to decide on military action.

"We should do it only when it's clear we've exhausted all other means," Shtauber said.

'Worth exploring Assad overture'The institute also said in its report that although it was skeptical about the Syrian president's recent peace overtures, it was worth exploring.

The report expressed doubts that Assad could "come up with the goods" during negotiations with Israel, in terms of both his ability and his readiness to go through with talks.

Eiland, told reporters at a Tel Aviv press conference Tuesday that the summer war in Lebanon will have serious and far-reaching repercussions on Israel's power of deterrence.

He said that both Israel's neighbors and the United States have taken note of the failures during the war.

"From the perspective of our friends in the U.S., we failed to come up with the goods in an embarrassing way," he said.