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Rice: U.S. faces 'no greater challenge' than Iran

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WASHINGTON (CNN) -- Secretary of State Condoleezza Rice told senators Thursday that the United States faces "no greater challenge from a single country" than from Iran.

Testifying before the Senate Appropriations Committee, Rice said the Iranian government seems "determined ... to develop a nuclear weapon in defiance" of the international community.

She called the regime a "central banker" of terror, saying it plays roles in Iraq, Lebanon and the Palestinian territories. She also criticized its "terrible human rights record."

Rice appeared at the Senate hearing in support of an emergency spending bill that seeks $68 billion for the wars in Iraq and Afghanistan, including $75 million to promote democracy in Iran. (Watch how the rhetoric is intensifying between the U.S. and Iran -- 1:49)

She said the money would help the United States broadcast messages more effectively to Iranians and do innovative outreach, including developing Web sites.

Regarding the standoff over Iran's nuclear programs, Rice said the Iranian government "will be isolated if it continues down" its militant road, but that it was important the Iranian people not be cut off.

Also there to testify were Defense Secretary Donald Rumsfeld; Gen. Peter Pace, chairman of the Joint Chiefs of Staff; and Gen. John Abizaid, head of U.S. Central Command.

Meanwhile, Iran's supreme leader, Ali Khamenei, said the U.S. focus on Iran's nuclear programs was a "pretext" for what he called its "psychological war" against Iran and its Islamic system of government.

"Whenever the U.S. pretext lost its effect for any reason, immediately it brought up another one, given its belief that continued psychological war ... is the best way to confront the Islamic system," Khamenei said, according to the state-run Islamic Republic News Agency.

Khamenei's remarks came a day after talks began among the five permanent members of the U.N. Security Council following a report by International Atomic Energy Agency chief Mohamed ElBaradei critical of Iran's nuclear programs. (Full story)

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