Diplomacy and Confrontation for Iran

The world saw two sides of President Bush today as he talked of both peace and possible confrontation. In his speech to the General Assembly, he reassured Muslims that America is not at war with Islam and that it's looking for peace with Iran. Although President Bush said nothing about economic sanctions--let alone the "military option"--if Iran continues to develop nuclear technology, on the sidelines he affirmed that the consequences of continued nuclear development could include such sanctions. Bush also said he won't meet with President Ahmadinejad, who did not show up in the chamber for the President Bush's speech. What are the prospects for diplomacy?