Ron Paul says that we should negotiate with terrorists and use diplomacy. I agree with him. What is the Secretary of State for if not to negotiate? As always, I like to relate foreign policy issues to a family unit to see what my opinion is. In this case, imagine if someone breaks into your home and tries to kidnap one of your loved ones. Do you not negotiate to get them to release the hostage? Of course you do. You don't just thumb your nose and say that you are too good to deal with the terrorist or criminal.
If we do not negotiate with terrorists, that gives them even more power because there is no check on what they do. They are given no reason to change their most extreme plans. On the other hand, if they are negotiated with, they feel like they are being taken seriously. Negotiation does not imply agreement and if necessary this point can be driven home to the terrorist over and over again throughout the negotiations.
Sanctions are not an effective form of negotiation. As Ron Paul has pointed out so brilliantly, sanctions are isolationist. This means that the average citizen in a country where sanctions are being levied against that country (such as Iran), is going to hate the country issuing the sanctions. It is the everyday people who get hurt by sanctions, not the leaders. Ahmadinejad for example is still getting a nuclear bomb from the sounds of it. Other countries who stand to benefit from his getting a nuclear bomb will still help him achieve that goal financially. After all, we should remember that if we do not negotiate with terrorists, another country might. No country is without allies. America cannot afford more wars. Isolationalism does make a certain amount of sense, except in extreme cases.
People hypocritically say that America should not be isolationist, that because it has so many resources (for now, anyway) it has a responsibility to involve itself in foreign affairs. But they favour sanctions which fundamentally hurt everyday Iranians. These people cannot do business with certain other countries, which hurts the small businessman. It does nothing to thwart the evil intentions of an Ahmedinejad. Punishing everyday Iranians with sanctions is like slapping a child in order to discipline the parent.