As we said last summer, we are ready to help Iran develop a modern nuclear power industry if it shows that its intentions are peaceful. And the recent sanctions won't affect Iran's construction of a nuclear power station at Bushehr.
In actual fact, we presented Iran far reaching proposals and said that if Iran were prepared to take the steps required by the International Atomic Energy Agency (IAEA) Board, we would hold off further action in New York.
By any standards, our proposals are generous. They offer Iran, in a long-term agreement, everything it would need to develop a modern nuclear power industry, such as help building power stations, guaranteed supplies of fuel and cooperation on nuclear research.
Iran would also get trade benefits that would stimulate the investment it needs to provide jobs for a growing population. In an historic decision, the US said it would join any talks and consider, in a final agreement, lifting sanctions on Iran for the first time since 1979 in areas where Iran's needs are most acute, such as civilian aircraft and IT.
Despite tireless diplomacy by Javier Solana, Iran has chosen not to pursue our proposals. And rather than suspend enrichment - since July, a legal obligation - it has continued on a bigger scale.
Our concern is not about nuclear energy but nuclear weapons.
Iran has failed over many years to meet its obligations and has refused to take simple steps that would help show its nuclear ambitions are peaceful.
At the heart of the problem is Iran's uranium enrichment facility at Natanz. Low-enriched uranium can be used as fuel for nuclear power stations. But the same facilities can produce high-enriched uranium, fissile material suitable for nuclear weapons.
And a heavy water reactor being built at Arak, for which Iran has given no convincing civilian rationale, could be used to produce plutonium.
Iran began building these facilities in secret. The IAEA forced Tehran to admit to their existence in 2003.
Since then, despite the IAEA's efforts, many questions remain. Why is Iran's military involved in a supposedly civilian programme? Why won't Iran give a full account of its dealings with A.Q. Khan's network, which helped North Korea and Libya with their secret nuclear weapons programmes? Why did it experiment on Polonium-210, which has no use in generating electricity, but can set off a nuclear explosion?
The possibility that Iran is pursuing nuclear weapons presents a challenge we cannot ignore. Many countries in the Middle East - including Saudi Arabia and Egypt - feel threatened by Iran's increasingly destabilising influence in Iraq, Lebanon and Palestine.
They wonder how much worse it would be if Ahmadinejad acquired a nuclear arsenal. I find it unthinkable that a man who questions the existence of the Holocaust should ever possess the weapons to repeat it.
Iran's actions also pose a serious threat to the non-proliferation system. If we let Iran cheat its way to a nuclear bomb, how many other countries will try to, or feel they need to, just to counter balance the threat from Iran?
For over three years, the IAEA Board has called on Iran to suspend the most sensitive activities, while we, together with France and Germany, have tried to persuade Iran to agree an acceptable long-term solution.
In August 2005, Iran broke off the negotiations. It first resumed uranium "conversion" and then, last February, enrichment. This year, we have worked closely with China, Russia and the US, encouraging Iran to reinstate the suspension and return to talks.
The measures the IAEA Board and Security Council have asked for would not affect Iran's pursuit of nuclear energy. Iran does not need to enrich uranium to generate electricity. Suspension would however give us confidence that Iran is not seeking the know-how to make fissile material for weapons.
We have little option but to increase the pressure on the Iranian government. The measures the Security Council adopted recently are aimed at constraining activities that could contribute to a weapons programme. They will be frozen if Iran complies and lifted in the event of a long-term solution.
I hope Iran's leaders heed the Security Council's message.
The stock market is down a third since Ahmadinejad was elected. Capital is moving offshore. Foreign traders and investors are staying away. Iranian businessmen are finding it harder to finance deals.
Iran's prosperity depends on oil and gas. But without investment, production from oil fields will decline and the Iranian people will not enjoy the full fruits of their country's fabulous gas reserves.
Meanwhile, the government is isolating Iran internationally thanks to its destabilising actions in Iraq and Lebanon. And while most Iranians want to be known for their distinguished culture and reputation for tolerance, Ahmadinejad has shamed the country by hosting a festival of Holocaust deniers to which he has invited among others the Ku Klux Klan.
The Security Council resolution marks an important moment. Iran faces a choice, between a route that allows it to develop a modern civil nuclear power programme and brings many benefits to its people or further defiance and the costs of isolation. I hope it will choose the positive path.
Margaret Beckett is the Foreign Secretary of Britain.