"It's our duty to help anyone who likes to present an open opposition against their regime in Iran. If Iran pushes ahead with its nuclear plans it "will have to pay dearly and all the consequences for it," Dagan, who left his post as director of the Mossad last year, told CBS in an exclusive interview Sunday.
"The issue of Iran armed with a nuclear capability is not an Israeli problem; it's an international problem," Dagan said.
An attack on Iran would "ignite, at least from my point of view, a regional war ...," Dagan said.
He said a military strike on Iran could prove ineffective because the Islamic Republic has dozens of nuclear sites.
"You'll have to deal with a large number of targets. No doubt that I have to take into consideration a scenario that a majority of Israelis are going to be killed if they're going to use a nuclear capability against Israel," he said.
Allowing Iran to go nuclear will not only increase its ability to create instability in the region but will also escalate the price of oil, he said.
"They have an interest, a basic interest to raise the prices of oil, [because] this is the most important source of income for Iran. If Iran will be armed with a nuclear capability, their ability to create instability in the region, and by this indirectly to increase the price of oil, that would be much worse than it is now," Dagan said.
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