Iran offered in 2003 to accept peace with Israel and cut off material assistance to Palestinian armed groups and to pressure them to halt terrorist attacks within Israel's 1967 borders, according to a secret Iranian proposal to the United States.
The Iranian proposal also offered to accept much tighter controls by the International Atomic Energy Agency (IAEA) in exchange for "full access to peaceful nuclear technology". It offered "full cooperation with IAEA based on Iranian adoption of all relevant instruments (93+2 and all further IAEA protocols)".
[I]n 2003, Bush refused to allow any response to the Iranian offer to negotiate an agreement that would have accepted the existence of Israel. Flynt Leverett, then the senior specialist on the Middle East on the National Security Council staff, recalled in an interview that it was "literally a few days" between the receipt of the Iranian proposal and the dispatch of a message to the Swiss ambassador expressing displeasure that he had forwarded it to Washington. Asia Times Online