Washington - Senator Barack Obama, fresh from capturing the final delegate pledges for the Democratic presidential nomination, Wednesday pledged tough carrot-and-stick diplomacy against Iran in order to defend Israeli and US interests.

Speaking to the American Israel Public Affairs Committee, or AIPAC, Obama said there was "no greater threat" to Israel than Iran.

He said he wanted to correct misunderstandings that he would be soft on Iran, and threatened consequences if Iran refuses to stop nuclear development, stop supporting terrorism in the region and above all, stop threatening Israel.

Obama became the presumptive Democratic nominee Tuesday night, with the final primary votes in Montana and South Dakota and new pledges from undecided super-delegates.

"I will do everything in my power to prevent" the Iranian threat, Obama said.

He said a two-step approach was necessary to corral Iran and its expanding threat to the region: intense diplomacy with Iran, and US demobilization out of Iraq, where he said the continued US presence served to feed Iran's and terrorist influence.

"We will pursue this diplomacy with no illusions about the Iranian regime," Obama said.

If they cooperate, there will be rewards, he said.

If "Iran fails to follow course, it will be clear to people of Iran and the world that the Iranian regime is the author of its own" demise.

As reprisals, Obama cited "cutting off loan guarantees, to banning export of refined petroleum to boycotting firms associated with the Iran Revolutionary Guard."

Obama criticized US President George W Bush for "outsourcing" diplomacy on the Iran issue to Europe, and said as president, he would put Washington back at the forefront of negotiations.

"I will always keep the threat of military action on the table to defend our security and our ally Israel," Obama said. (dpa)