The last thing America needs now is for President Bush to get defensive about a new spy report that says Iran's ability to develop nuclear weapons is a far cry from the threat he had depicted.

It's only been weeks since President Bush raised the spectre of World War III if Iran were allowed to continue its suspected nuclear bomb program.

But a new National Intelligence Estimate, a compilation of assessments by 16 spy agencies, concludes that Iran stopped trying to build nuclear weapons four years ago. That does not mean, the report stressed, that the program could not be restarted.

To decrease the likelihood of that happening, the United States and its allies need to continue applying economic pressure on the Tehran government to drop its nuclear weapons ambitions. Along with that pressure, though, diplomatic measures should be taken that would make it easier for Iran to retreat from the belligerent rhetoric of its president, Mahmoud Ahmadinejad, who has enjoyed having the world think he's making a bomb.

The precedent for diplomacy with Iran was set in February, when U.S. and other negotiators hashed out a pact with North Korea that calls for it to disable all of its nuclear facilities by the end of this year. Was not North Korea (along with Iraq and Iran) part of Bush's "axis of evil"? No one knows how the situation with North Korea will end, but it has responded to a combination of diplomacy and sanctions. Why not try that formula with Iran?

The alternative has yet to achieve the results desired with Iraq. We rushed to war based on faulty intelligence about weapons of mass destruction. Saddam Hussein's regime was toppled, but Iraq has become a quagmire with a voracious appetite for U.S. troops and dollars.

That fact didn't seem to move Bush yesterday as he discussed Iran's nuclear capabilities. Rather than use the new NIE report as a rationale to reassess Iran policy, Bush chanted a familiar mantra that the Islamic republic "was dangerous," "is dangerous" and "will be dangerous" if it develops a nuclear weapon.

There's no denial of that concise assessment. The question, however, is what is the best course to prevent Iran's building a bomb. The answer can be found in the spy agencies' report:

"Our assessment that Iran halted the [nuclear weapons] program in 2003 primarily in response to international pressure indicates Tehran's decisions are guided by a cost-benefit approach rather than a rush to a weapon irrespective of the political, economic and military costs. This, in turn, suggests some combination of threats of intensified international scrutiny and pressures, along with opportunities for Iran to achieve its security, prestige, and goals for regional influence in other ways, might - if perceived by Iran's leaders as credible - prompt Tehran to extend the current halt to its nuclear weapons program."

In other words, use the carrot and the stick. Keep up economic sanctions. (For example, the recent refusal of Chinese banks to extend a line of credit to some of Iran's businesses got its attention.) But with sanctions, try diplomacy. The NIE report suggests a door has been opened, Mr. Bush should boldly take a step toward it.