MOSCOW (AFP) — US Treasury Secretary Henry Paulson said here Monday he would discuss with Russia's leaders the possibility of imposing new sanctions on Iran.

Asked on Echo of Moscow radio if he thought additional sanctions were needed he said "yes" and added he would encourage Russia to follow the European Union, which last week imposed new sanctions on the Islamic Republic.

"We believe that multilateral cooperation is the most effective," said Paulson ahead of a meeting with President Dmitry Medvedev.

In comments voiced over with a Russian translation, he added that the United States was hoping to work with the Russian government and banking system in its efforts to tighten the screws on Tehran.

The new EU sanctions on Iran notably ban the country's largest bank, Bank Melli, from operating in Europe.

Russia, a permanent member of the United Nations Security Council, has taken a cautious approach to the sanctions issue.

Washington suspects the Islamic republic of developing a nuclear weapons programme, something Tehran denies.

However in May, Russian Prime Minister Vladimir Putin told a French newspaper he did not think Iran was trying to acquire nuclear weapons, echoing Moscow's long-standing assertion that it has seen no evidence supporting the claim.

The US treasury secretary added he hoped US legislators could make enough progress on legislative changes to allow Russia to join the World Trade Organisation before US President George W. Bush leaves office in January.

"I would very much like to see Russia's accession to the WTO. We're making progress on Russian accession," Paulson said.

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