U.S. Defense Secretary Leon Panetta on Thursday warned of \"unintended consequences\" that could result from military action against Iran. \"You\'ve got to be careful of unintended consequences here,\" Panetta told Pentagon reporters. \"Those consequences could involve not only not really deterring Iran from what they want to do, but more importantly, it could have a serious impact in the region and it could have a serious impact on U.S. forces in the region,\" Panetta said. A report by the International Atomic Energy Agency (IAEA) citing \"credible\" evidence said this week that Iran has been engaged in projects and experiments relevant to development of nuclear weapons. While cautious about military action, Panetta called for tougher economic and diplomatic pressure on Iran. \"It is important for us to make sure we apply the toughest sanctions, economic, diplomatic pressures on Iran to change their behavior,\" he said. \"And we are in discussions with our allies with regards to additional sanctions that ought to be placed on Iran.\" Tehran completely rejected the IAEA report and insisted Iran has no nuclear weapon programs, claiming the report was \"imbalanced, unprofessional and politically-motivated.\" Special Report: Iran Nuclear Crisis