TEHRAN, Iran (CNN) -- President Bush insisted Thursday that "there must be consequences" for Iran's defiance of demands that it stop enriching uranium.
He said "the world now faces a grave threat from the radical regime in Iran," demonstrated by the war between Iranian-backed Hezbollah militants and Israel.
The U.N.'s nuclear watchdog agency on Thursday issued a report saying Iran has not suspended its uranium enrichment activities, a United Nations official told CNN.
The report by the International Atomic Energy Agency opens the way for U.N. Security Council sanctions against Tehran.
Facing a Security Council deadline to stop its uranium enrichment activities, Iran has left little doubt it will defy the West and continue its nuclear program.
"They should know that the Iranian nation will not yield to pressure and will not let its rights be trampled on," Iranian President Mahmoud Ahmadinejad told a crowd Thursday in a televised speech in the northwestern Iranian city of Orumiyeh.
In front of his strongest supporters in one of his provincial power bases, the Iranian leader attacked what he called "intimidation" by the United Nations, which he said was led by the United States.
Ahmadinejad criticized a White House rebuff of his offer for a televised debate with President Bush.
"They say they support dialogue and the free flow of information," he said. "But when debate was proposed, they avoided and opposed it."
Iran insists enrichment activities are intended for peaceful purposes, but much of the West, including the United States, believes Iran is pursuing nuclear weapons. (Watch how Iran is showing its defiance -- 2:5
Thursday's deadline calls for Iran to comply with U.N. Resolution 1696 and end its nuclear activities or face the possibility of economic sanctions.
The United States believes the council will agree to implement sanctions when high-level ministers reconvene in mid-September, U.S. Undersecretary of State Nicholas Burns said.
"We're sure going to work toward that [sanctions] with a great deal of energy and determination because this cannot go unanswered," Burns said.
"The Iranians are obviously proceeding with their nuclear research; they are doing things that the International Atomic Energy Agency does not want them to do, the Security Council doesn't want them to do. There has to be an international answer, and we believe there will be one."
But Ahmadinejad said Thursday that sanctions "cannot dissuade Iranians from their decision to make progress," according to Iran's state-run IRNA news agency.
"On the contrary, many of our successes, including access to the nuclear fuel cycle and producing of heavy water, have been achieved under sanctions."
Iran has been under IAEA investigation since 2003, with inspectors turning up evidence of clandestine plutonium experiments, black-market centrifuge purchases and military links to what Iran says is a civilian nuclear program.
John Bolton, the U.S. ambassador to the United Nations, said he expected action to impose sanctions to begin immediately after the deadline passes, with meetings of high-level officials in the coming days, followed by negotiations on the language of the sanctions resolution.
Bolton said that when the deadline passes "a little flag will go up."
"In terms of what happens afterward, at that point, if they have not suspended all uranium enrichment activities, they will not be in compliance with the resolution," he said. "And at that point, the steps that the foreign ministers have agreed upon previously ... we would begin to talk about how to implement those steps."
The five permanent members of the Security Council, plus Germany, previously offered Iran a package of incentives aimed at getting the Islamic republic to restart negotiations, but Iran refused to halt its nuclear activities first.
Incentives included offers to improve Iran's access to the international economy through participation in groups such as the World Trade Organization and to modernize its telecommunications industry.
The incentives also mentioned the possibility of lifting restrictions on U.S. and European manufacturers wanting to export civil aircraft to Iran. And a proposed long-term agreement accompanying the incentives offered a "fresh start in negotiations."
Iran responded to the demand last week, offering to return to the negotiation table but refusing to end enrichment. (Full story)
Gholam Ali Hadaeadel, speaker of Iran's parliament, said Wednesday that Iran had the right to "peaceful application of nuclear technology and all other officials agree with this decision," according to the semi-official Iranian Students News Agency.
"Iran opened the door to negotiations for Europe and hopes that the answer which was given to the nuclear package would bring them to the table."