KRANJ, Slovenia (AP) — President Bush and European allies on Tuesday threatened tougher sanctions to squeeze Iran's finances and derail its potential pursuit of a nuclear weapon. Bush said the prospect of a nuclear-armed Iran would endanger world peace.

"They can either face isolation, or they can have better relations with all of us," Bush said of Iran's leaders while capping his final European Union-U.S. summit.

The president and EU leaders embraced new financial sanctions against Iran unless it verifiably suspends its nuclear enrichment. They said Iran must fully disclose any nuclear weapons work and allow the International Atomic Energy Agency to verify that work.