Obama also expressed hope that "conciliatory words" by Iran about its nuclear programmes are "matched by actions that are transparent and verifiable."
"We are encouraged that President Rouhani received from the Iranian people a mandate to pursue a more moderate course, and given President (Hassan) Rouhani's stated commitment to reach an agreement, I am directing (Secretary of State) John Kerry to pursue this effort with the Iranian government in close cooperation with the European Union, the United Kingdom, France, Germany, Russia and China," Obama said in his address to the 68th session of the General Assembly.
"So these statements made by our respective governments should offer the basis for a meaningful agreement. We should be able to achieve a resolution that respects the rights of the Iranian people while giving the world confidence that the Iranian program is peaceful," Obama said in his nearly 50 minute address.
"But to succeed, conciliatory words will have to be matched by actions that are transparent and verifiable. After all, it's the Iranian government's choices that have led to the comprehensive sanctions that are currently in place.
The US President however cautioned that there may be roadblocks ahead.
"The roadblocks may prove to be too great, but I firmly believe the diplomatic path must be tested. That while the status quo will only deepen Iran's isolation, Iran's genuine commitment to go down a different path will be good for the region and for the world, and will help the Iranian people meet their extraordinary potential in commerce and culture, in science and education," Obama said.
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