McCain calls for a League of Democracy, which would work together to assert economic sanctions against Iran.
Obama agrees that we cannot tolerate a nuclear Iran. He supports the need for tougher sanctions, but sees a need to have Russia involved. He supports direct diplomacy with Iran.
McCain attacks Obama's alleged position that he'll sit down with Ahmadinejad, Raul Castro & Hugo Chavez, without precondition (quite the dinner party, that!) But then he says "I'll sit down with anyone."
Obama will sit with anyone when he feels it is in the best interests of the U.S. security. Henry Kissinger agrees with meeting with Iran without preconditions. But there must be proper preparations, and the contact and level of contact must make sense. If talking doesn't work, we're in position to impose tough sanctions.
Obama brings up McCain's suggestion that McCain won't even meet with the president of NATO member Spain. McCain says he's not setting his White House appointment schedule yet.
McCain returns to the "Obama doesn't understand" theme, goes into his "Mr. Danger" voice when talking about the threat to the existence of Israel.