[Senate Hearing 108-353]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 108-353

                 IRAN: SECURITY THREATS AND U.S. POLICY

=======================================================================

                                HEARING

                               BEFORE THE

                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 28, 2003

                               __________

       Printed for the use of the Committee on Foreign Relations


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                     COMMITTEE ON FOREIGN RELATIONS

                  RICHARD G. LUGAR, Indiana, Chairman
CHUCK HAGEL, Nebraska                JOSEPH R. BIDEN, Jr., Delaware
LINCOLN CHAFEE, Rhode Island         PAUL S. SARBANES, Maryland
GEORGE ALLEN, Virginia               CHRISTOPHER J. DODD, Connecticut
SAM BROWNBACK, Kansas                JOHN F. KERRY, Massachusetts
MICHAEL B. ENZI, Wyoming             RUSSELL D. FEINGOLD, Wisconsin
GEORGE V. VOINOVICH, Ohio            BARBARA BOXER, California
LAMAR ALEXANDER, Tennessee           BILL NELSON, Florida
NORM COLEMAN, Minnesota              JOHN D. ROCKEFELLER IV, West 
JOHN E. SUNUNU, New Hampshire            Virginia
                                     JON S. CORZINE, New Jersey

                 Kenneth A. Myers, Jr., Staff Director
              Antony J. Blinken, Democratic Staff Director

                                  (ii)

  
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                            C O N T E N T S

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                                                                   Page

Armitage, Hon. Richard L., Deputy Secretary of State, U.S. 
  Department of State, Washington, DC............................     6
    Prepared statement...........................................     7
    Response to an additional question for the record from 
      Senator Corzine............................................    81
Cordesman, Dr. Anthony H., Arleigh A. Burke Chair in Strategy, 
  Center for Strategic and International Studies, Washington, DC.    53
    Prepared statement...........................................    56
Einhorn, Hon. Robert J., senior adviser, International Security 
  Program, Center for Strategic and International Studies, 
  Washington, DC.................................................    64
    Prepared statement...........................................    66
Hadian, Dr. Nasser, professor of Political Science, Tehran 
  University and Visiting Professor, Columbia University, New 
  York, NY.......................................................    38
    Prepared statement...........................................    40
Luers, Hon. William H., president and CEO, United Nations 
  Association of the United States of America, New York, NY......    28
    Prepared statement...........................................    31

                                 (iii)

  

 
                 IRAN: SECURITY THREATS AND U.S. POLICY

                              ----------                              


                       TUESDAY, OCTOBER 28, 2003

                                       U.S. Senate,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The committee met at 10:23 a.m., in room SH-216, Hart 
Senate Office Building, Hon. Richard G. Lugar (chairman of the 
committee), presiding.
    Present: Senators Lugar, Hagel, Chafee, Brownback, 
Alexander, Coleman, Biden, Feingold, Bill Nelson, and 
Rockefeller.
    The Chairman. This hearing of the Senate Foreign Relations 
Committee is called to order.
    Let me say at the outset that the committee looks forward 
to hearing carefully and respectfully the testimony of each of 
its witnesses. In furtherance of this goal, the chair will give 
an opening statement, and I will call upon the distinguished 
ranking member, Senator Biden, to give his statement. Then I 
will ask Senator Biden to recess the committee for 10 minutes 
so that members can vote at a time that is now designated at 
about 10:35, as the Chair understands the vote. That way we 
will all be reassembled to hear together Secretary Armitage's 
testimony and hopefully have clear sailing after that point. 
After I give my statement, I will depart and attempt to achieve 
the voting process so that I can return and make certain that 
we are able to truncate the recess as much as possible.
    Today the committee is pleased to welcome Deputy Secretary 
of State Richard Armitage to review United States policy toward 
Iran. Secretary Armitage is a good friend of the committee and 
we always look forward to our discussions with him.
    Despite some signs of reform in recent years, Iran 
continues to pose a serious regional and global security threat 
through its active support for terrorism and its continued 
efforts to develop weapons of mass destruction in direct 
violation of the Nuclear Nonproliferation Treaty.
    Today's hearing is especially timely given the agreement 
reached last week by the Foreign Ministers of the United 
Kingdom, Germany, France, and Iran. This agreement narrowly 
complies with the October 31 deadline set by the International 
Atomic Energy Agency, IAEA, for Iran to fully disclose the 
nature of its nuclear program. By agreeing to accept enhanced 
United Nations inspections of its nuclear facilities and to 
temporarily suspend its enrichment of uranium that could be 
used to make nuclear weapons, Iran hopes to avoid international 
sanctions.
    The Europeans consider this a significant step toward 
ensuring that Iran's nuclear program is benign. Although 
Americans are hopeful that this agreement does represent 
progress, we should not lose sight of the fact that Iran was 
caught red-handed trying to build nuclear weapons through 
several methods over a sustained period in violation of its 
treaty obligations. After years of Iranian delay, deception, 
and denial, this agreement should not lead us to a false sense 
of security about the Iranian proliferation threat.
    In fact, the head of Iran's National Security Council 
reportedly told Reuters that the decision to suspend uranium 
enrichment was temporary and would last only as long as the 
Iranian leaders believe that it fits their purposes.
    It is far from clear that the additional inspections to 
which Iran has agreed will prevent Iran from obtaining a 
nuclear capability, because they rely on Tehran telling the 
truth. The international community must be prepared to take 
more effective action.
    When confronted with a case as blatant as Iran, the United 
States and like-minded allies must use the Security Council of 
the United Nations to demand that the violator cease all 
illegal weapons activities, dismantle weapons-related 
facilities, and submit to super inspections, even tougher than 
those imposed on Iraq. Elements should include unfettered 
freedom for inspectors, unsupervised interviews of nuclear 
scientists and engineers out of the country with their 
families, if necessary, and unrestrained aerial surveillance. 
Iran may object that such intrusive inspections impinge on its 
sovereignty, but this is the price Tehran should be paying to 
convince outsiders that for once it is keeping its word under 
the Nonproliferation Treaty. By demanding that Iran prove that 
it is living up to the NPT, the Security Council would 
strengthen that treaty.
    Some will object that such strong action may force Iran's 
ruling mullahs to walk out of the NPT. But keeping Iran in the 
NPT should not be an end in itself. The treaty is useful only 
to the extent that its provisions are enforced to prevent 
states from acquiring nuclear weapons. If the international 
community were persuaded to work together, we would have 
substantial leverage over Iran. An Iranian withdrawal from the 
NPT would halt the Russian reactor deal and cooperation with 
other nuclear suppliers, expose Iran's naked nuclear ambitions 
for all to see, and stiffen international resolve for tough 
economic sanctions.
    In the short run, our allies may be inclined to give Tehran 
the benefit of the doubt, partly to avoid a confrontation and 
partly to preserve commercial opportunities in Iran. But the 
United States should begin laying the groundwork now for a 
decisive international response to any additional violations.
    Iran's pursuit of nuclear weapons is not the only threat it 
poses to international security. Iran is a major state sponsor 
of terrorism. It continues to support Hezbollah in Lebanon and 
to fund Hamas and the Palestinian Islamic Jihad, who employ 
violence and suicide bombers to frustrate the Arab-Israeli 
peace process.
    Iran remained neutral as the U.S. and coalition forces 
removed Saddam Hussein from power. But Iran maintains close 
ties with several Iraqi Shiite Islamic factions and appears to 
be instigating these groups to undermine coalition efforts to 
rebuild Iraq. In addition, Iran claims to have al-Qaeda 
terrorists in custody. It is unclear, however, if Iran is 
sheltering the terrorists, holding them as leverage to use in 
dealings with the U.S., or pursuing another agenda.
    The United States is also concerned by the political, 
religious, and gender repression perpetrated by the ruling 
clerics on their own people. These struggles were highlighted 
when Shirin Ebadi, a courageous Iranian woman who has brought 
world attention to Iran's human rights violations, received the 
2003 Nobel Peace Prize.
    President Bush has pursued a policy of containing Iran 
while employing selective engagement, as has almost every 
American administration for the last 2 decades. Within this 
context of containment, the challenges before U.S. policymakers 
are how we can change Iranian behavior in key areas, how U.S. 
policy can take advantage of opportunities created by reformist 
elements within Iranian society, and how we can generate more 
support from our allies on issues pertaining to Iran. Our 
response to these challenges will help shape the future of the 
Middle East and will have significant impact on the outcome of 
the global war on terrorism.
    Mr. Secretary, we thank you for your participation in this 
important hearing, and we are anxious to hear your assessments 
in due course.
    The committee is also pleased to be joined today by a 
second panel of distinguished experts. With us will be 
Ambassador William Luers, president of the U.N. Association; 
Dr. Nasser Hadian of Tehran University, who is a visiting 
professor at Columbia University; Dr. Anthony Cordesman, the 
Arleigh A. Burke Chair for Strategy at the Center for Strategic 
and International Studies; and Dr. Robert Einhorn, senior 
adviser for the International Security Program also at the 
Center for Strategic and International Studies.
    We will welcome all of our witnesses during the course of 
the hearing, but I call now upon the distinguished ranking 
member, Senator Biden.
    Senator Biden. Thank you, Mr. Chairman, for convening this 
hearing. It is obviously important and extremely timely.
    Secretary Armitage, it is a pleasure to have you here. I 
always, I know, diminish your reputation when I tell people 
that in all the years I have been here in the Senate, there is 
no one who I have higher respect for because you always give us 
the unvarnished facts as you know them, you say what you know, 
you indicate what you do not know, and you are straightforward. 
And this is a commodity that is very much desired here both 
from the Congress, as well as from the administration.
    Iran poses, to state the obvious, a vexing set of 
challenges to our security. It also holds the possibility of 
evolving in a more positive direction.
    It is hard to argue about the geostrategic importance of a 
country that shares a long border with Afghanistan, as well as 
with Iraq, and sits in the heart of the oil-rich and 
politically turbulent region of the world.
    We have good reason to be suspicious about Iran. It 
continues to actively support, as stated by the chairman, 
Hezbollah, Hamas, and the Palestinian Islamic Jihad. It refuses 
to surrender al-Qaeda members who are in custody. It has been 
developing a nuclear weapons program, as well as long-range 
missile capability, and because it is one of the few countries 
with which we have no diplomatic ties and no regular dialog, we 
have a tougher time understanding its intentions, a problem 
made worse by the obvious internal disputes that are going on.
    Yet over the last several years, the reform movement has 
sought to alter Iran's policy. It has met with only limited 
success because of the hard-line establishment that refuses to 
follow the will of the Iranian people. Just this month, the 
Nobel Committee, as mentioned earlier, awarded the Nobel Prize 
to a courageous Iranian reformer who has been pushing for 
democratic change, especially the rights of women and children, 
within Iran. This has brought joy and hope to millions of her 
fellow countrymen and has raised the question of whether or not 
her view is one that is widely held and whether or not there is 
any democratic prospect within Iran in light of the control 
that seems to be exhibited by the Supreme Leader.
    We do have a profound stake in the outcome of this internal 
dispute, and we should have a policy of hard-nosed and hard-
headed engagement with Iran to do what we can to promote 
positive policies in Iran without kidding ourselves about our 
ability to profoundly affect the outcome.
    When I was in the seat now occupied by the chairman, I 
extended an invitation to meet anywhere, anytime with our 
colleagues in the Iranian parliament, as did my colleague, 
Senator Hagel. We were told that the offer itself generated the 
most intense discussion internally regarding ties with the 
United States and that the discussion got very heated. 
Reformers in Iran welcomed the invitation while hard-liners 
clearly felt threatened and condemned it loudly. I was pleased, 
I might note for the record, that Dr. Rice, speaking for the 
President, has consistently, repeatedly supported the idea of 
this parliamentary dialog and engagement.
    In a speech, when I issued that invitation, I recommended 
five specific steps.
    First, remove regulations that prevent private American 
groups from supporting the struggling democratic movement in 
Iran.
    Second, discuss matters of possible mutual interest such as 
Afghanistan and Iraq with Iran.
    Third, allow Iran to join the World Trade Organization to 
promote positive change.
    And fourth, indirectly help Iran on refugees and narcotics 
matters where we share common interests.
    And fifth, encourage citizens exchange.
    Certainly there is a great deal to discuss with Iran. The 
Iranian reformers tell us that their interests in Iraq are 
identical to ours and that the Iranians were one of first to 
recognize the Governing Council in Iraq. Others in the Iran 
establishment take a more pernicious view of our presence, and 
the question is, should we test Iran to see whether it is 
willing to promote stability in Iraq by engaging in 
discussions?
    In Afghanistan, we can see the same kind of ambivalence. 
Iranians in the elective branch of the government worked 
closely with our officials during and after our military 
campaigns. Others directed their support not to the central 
government but to friendly warlords. With the Taliban 
regrouping and warlordism on the rise, it makes sense to have a 
dialog, it seems to me, with Iran over matters related to 
Afghanistan.
    At the same time, we have to face the matters on which we 
have fundamental disagreement, particularly terrorism and 
weapons of mass destruction. Iran's continuing support for 
terrorism will impede any improved relations, and its vagueness 
about al-Qaeda and the suspects it is holding is downright 
dangerous.
    France, Germany, and the United Kingdom recently gained an 
agreement, as was referenced earlier, from Iran to suspend 
nuclear enrichment activities and to provide much more 
transparency about its nuclear programs. I will not repeat, but 
I concur with the chairman's call for very intense oversight by 
the international community of this agreement. Of course, 
Iran's pledges will have to be tested, and the chairman who 
penned an op-ed piece last week in which he called for super 
inspections I think is the way to go. But that is all 
predicated on the idea that this Bush policy of containment, 
which is not fundamentally different than previous 
administrations--containment requires cooperation. Containment 
requires cooperation with our allies for it to have any 
prospect of bearing fruit.
    So I look forward to hearing from you, Mr. Secretary, on 
what our policy toward Iran's nuclear program is, what 
diplomatic initiatives we have been working on with our allies 
in Europe and Russia.
    Mr. Chairman, there is much more to be said, but let me 
conclude by saying that we do not have the luxury of ignoring 
the very real challenges and opportunities that are presented 
by Iran even as we find ourselves preoccupied with Iraq, 
Afghanistan, and the Israeli-Palestinian situation, the war on 
terrorism, and North Korea. That is a lot to have on your plate 
when any one of those issues could be all-consuming. 
Unfortunately, they are all interrelated and we ignore any one 
of them at our peril. But if we handle Iran well, success there 
could have a very beneficial spill-over to the other challenges 
we face in the region.
    Let me say in closing, Mr. Secretary, that the panel that 
follows you is a group of very enlightened and informed people. 
I hope they are going to be willing to explore with us what the 
possibilities are. We have a tendency these days to be somewhat 
cabined in our view about what we are willing to discuss and 
what kind of chances we are willing to take. I hope we will 
have an open discussion without anyone being fearful or 
concerned that they may be a little bit too soft or not tough 
enough in this era of us having to demonstrate our military 
mettle.
    There only seems to me to be three options.
    One, there is an internal change within Iran that is 
beneficial that we may, on the margins with others, be able to 
help promote.
    Two, we engage in an open dialog with the Iranians and 
raise questions that we are generally reluctant to raise 
publicly.
    Third, we conclude that the only option to a misbehaving 
Iran that becomes more radicalized is ultimate confrontation. 
Although it does not seem to me to be all that complicated in 
what our options are, it is incredibly complicated in what the 
possibilities are.
    So I am told by the chairman, since we are about to vote, 
that I should recess the hearing now for roughly 10 to 15 
minutes. Then we will come back and begin with the opening 
statement by the Secretary.
    Again, Mr. Secretary, it is an honor to have you here. We 
look forward to your testimony and I want to thank the second 
panel for being willing to devote their time. We are anxious to 
hear from you as well.
    We will recess now until the call of the chair, which I 
expect will be within 10 to 15 minutes, depending on whether 
the Senate votes goes off as scheduled.
    [Recess.]
    The Chairman. The committee is called to order again.
    We will be joined by our colleagues, as they complete the 
voting process. Senator Alexander has arrived with me, and so 
at least the audience is two of us, Secretary Armitage, but we 
promise more to come. We are grateful to you, as always, for 
coming today and look forward to your testimony. Would you 
please proceed?

  STATEMENT OF HON. RICHARD L. ARMITAGE, DEPUTY SECRETARY OF 
        STATE, U.S. DEPARTMENT OF STATE, WASHINGTON, DC

    Mr. Armitage. Thank you, Mr. Chairman, and I will not bore 
you with lengthy testimony. With your permission, I will just 
put it into the record.
    The Chairman. Your full statement will be put in the 
record.
    Mr. Armitage. Thank you.
    I just want to make a few comments. First of all, to echo 
what Mr. Biden said in your absence. Your op-ed piece in the 
L.A. Times was spot on as far as I can see. When Mr. Reagan 
used to say about the Russians, ``trust but verify,'' this is 
beyond that now. I think we ought to be skeptical and verify, 
and that is the burden of your super inspections regime. I want 
to tell you that we all took careful note of it.
    I actually lived in Iran during a time which was considered 
the good old days back during the Shah. I worked with the 
Defense Department at the time. I was struck at the time with a 
number of ironies or contradictions that existed in Iranian 
society and with Iranians. As I was preparing for this 
testimony just this morning, I was writing down some of these 
ironies. I will just go through them because they just occurred 
to me this morning.
    The first is that I do not think you could find more 
charming, hospitable people, individually, than Iranians, and 
yet as a group, they can be unbelievably ethnocentric. It is 
one of those ironies.
    They had a revolution in 1979 which was brought about in 
very large measure by women. And yet it is women who now suffer 
the most under that very revolution from repressive practices.
    You have a nation that is awash in natural resources, and 
yet the official rate of unemployment is 16 percent, and we all 
know it is much higher than that, particularly when you 
consider under-employment. The poverty rate is 40 percent.
    You have a nation which is the second largest in terms of 
gas reserves, and yet they are a net importer of gas because 
they cannot or will not make the necessary decisions regarding 
infrastructure.
    You have got a country which has a bit of a democratic 
process, but the neck of that democratic process is being 
throttled by unelected theocracies. This leads to an almost 
unbelievable cynicism if you look at the turnout for the most 
recent municipal elections which was about 30 percent.
    You have got a country now which is speaking openly about 
the problems in their own society, drug abuse, prostitution, 
domestic violence, and yet still has those repressive policies 
against women and denies basic human rights to many of their 
citizens.
    You have got a country which has been, I think, widely 
known as the leading state supporter of terrorism and a 
government which has a hunger for weapons of mass destruction. 
And in that regard, they act as a--pardon the term--rogue 
state. Yet it appears that it was fear of being seen in the 
international community in rogue terms that actually made them 
try to reach out in a recent visit of the three EU ministers 
and try to come, at least verbally, to some sort of open 
declaration about the length and breadth of their programs.
    You have got a country that used to be called Persia, with 
69 million people. Yet Persians are on the verge of becoming a 
minority in their own country as Azeris and Turks and Kurds and 
others increase their own percentage of the population. 
Persians are now 51 percent. You have a country as old as time, 
and yet of those 69 million people, about 70 percent of them 
are under 30.
    Finally, you have the most recent irony, and it was 
referred to by you and by Senator Biden, a woman who thrived 
under the monarchy, was imprisoned under the present regime, 
and just recently was awarded the 2003 Nobel Peace Prize, 
Shirin Ebadi. A woman who is now giving hope and sustenance, I 
think, to the aspirations of the Iranian people.
    So in sum, I very much appreciate the opportunity to be 
here. This is a fascinating, troubled, and troubling country. 
It is full of political and intellectual ferment and 
schizophrenia.
    So I am delighted to be here, sir. Thanks.
    [The prepared statement of Mr. Armitage follows:]

  Prepared Statement of Hon. Richard L. Armitage, Deputy Secretary of 
                    State, U.S. Department of State

    Chairman Lugar, Senator Biden, Members of the Committee, as always, 
I welcome the opportunity to appear before this body to discuss the 
foreign policy priorities and challenges of the day. I particularly 
appreciate this opportunity to discuss Iran, given the high stakes of 
this very fluid situation and the importance and influence of U.S. 
policy on this matter. I look forward to a dialogue with you.
    Iran is a country in the midst of a tremendous transformation, and 
I believe American policy can affect the direction Iran will take. This 
is a complex situation, but if you will allow a simplification: today 
in Iran, there is a struggle between destructive elements of ban's 
society and leadership, who want to keep the country mired in a 
violent, corrupt, and insular past, and a forward-looking popular 
movement, which wants a more engaged and modern Iran to emerge. The 
fact that the Nobel Peace Prize was just awarded to an Iranian citizen 
is no aberration; rather it is a sign of the sweeping desire for change 
across Iranian society. Indeed, all Iranians stand to benefit from a 
modern state, one that draws on the strengths of free minds and free 
markets. American and international security and well being also stand 
to benefit. United States policy is, therefore, to support the Iranian 
people in their aspirations for a democratic, prosperous country that 
is a trusted member of the international community.
    Given the complexities of the situation, it is no surprise that 
there is a range of views--including on this Committee--about how to 
best implement that policy. That is entirely appropriate. Indeed, a 
single, static, one-size-fits-all policy would not be appropriate in 
the circumstances. In order to best protect and advance U.S. interests, 
our policy needs to be flexible, dynamic, and multifaceted. That is why 
the President and this Administration are pursuing a policy that weighs 
the full range of options available to us, both through bilateral and 
multilateral means. We seek to counter the government of Iran's 
negative and destructive policies and actions, while encouraging 
constructive policies and actions and engaging in a direct dialogue 
with the Iranian people about the freedoms they want for their own 
country.
    As President Bush noted when talking about Iran last week, not 
every policy issue needs to be dealt with by force. Secretary Powell 
also noted last week that we do not seek conflict with Iran. We will 
continue to pursue nonproliferation and other such control measures as 
necessary and we must keep all available options on the table, given 
the lack of clarity about Iran's future direction and ultimate 
destination. At the same time, we are prepared to engage in limited 
discussions with the government of Iran about areas of mutual interest, 
as appropriate. We have not, however, entered into any broad dialogue 
with the aim of normalizing relations.
    There is no question that Iran is engaged in a number of 
destructive policies and actions. Our most pressing concerns are Iran's 
poor human rights record, nuclear weapons program, as well as chemical 
and biological weapons programs, support for terrorism, and 
interference in regional politics, particularly in the Arab-Israeli 
peace process. These behaviors, along with the government's oppressive 
and corrupt centralized economic policy, shake the confidence of the 
international community and deny the Iranian people the quality of life 
commensurate with the country's rich human and natural resources. These 
behaviors also undermine regional stability and have ripple effects 
across U.S. and international security. We are taking and will take the 
necessary measures to protect U.S. interests.
    Across the board, the United States is actively countering such 
Iranian activities through a variety of tools, including sanctions, 
interdiction, law enforcement, diplomacy, and international public 
opinion. When necessary, we will act alone. The United States, for 
example, has a broad array of sanctions on Iran. This includes 
prohibitions on a range of exports and assistance, particularly to the 
military and to the oil industry, strict regulations on economic 
transactions, and targeted sanctions against specific entities in other 
countries that aid Iran's weapons of mass destruction programs.
    We believe, however, that international and multilateral 
responses--if sustained--will be especially effective in meeting the 
challenges Iran poses to regional stability, disarmament and 
nonproliferation regimes, and the rights of its own citizens. As 
President Bush said last week, we have confidence in the power of 
patience and the collective voice of the international community to 
resolve disputes peacefully.
    We are working with the international community to effect change in 
Iran's abysmal human rights record, for example. According to our own 
documentation and to international organizations, the government of 
Iran uses torture, excessive and lethal police force, and arbitrary 
detention to repress free speech, freedom of association, and religious 
freedom, among other abuses. We are actively seeking a resolution on 
the human rights situation in Iran in the U.N. General Assembly's Third 
Committee or at the U.N. Commission on Human Rights.
    We believe a united international front is especially critical in 
dealing with Iran's clandestine nuclear weapons program, about which 
there is widespread concern across the international community. We also 
remain concerned about Iran's biological and chemical weapons and 
ballistic missile programs. Our efforts to counter these programs 
include bilateral discussions with allies and friends, such as 
President Bush's meeting with Russian President Putin at Camp David, 
where the two leaders agreed on the goal of an Iran free of nuclear 
weapons. We consistently have urged our friends and allies to condition 
any improvements in their bilateral or trade relations with Iran on 
concrete, sustained, and verifiable changes in Iran's policies in this 
and other areas of concern. We think it is appropriate, for instance, 
that the European Union has conditioned progress in its Trade and 
Cooperation Agreement with Iran on movement in these areas.
    Our international efforts also include the use of innovative and 
established multilateral tools. The Proliferation Security Initiative, 
for example, is a new counterproliferation initiative to interdict 
weapons of mass destruction-related shipments to and from states and 
non-state actors of proliferation concern. The nations involved in this 
initiative have singled out Iran and North Korea as countries of 
particular concern. We are, of course, also working through the 
International Atomic Energy Agency (IAEA) to resolve critical 
international concerns about Iran's nuclear program.
    Indeed, our close cooperation with Russia, the European Union, and 
a host of other countries has led to two very strong IAEA Board of 
Governors' resolutions on Iran. Last week, the French, German, and 
British Foreign Ministers traveled to Iran in support of those 
resolutions. As a result of that mission, Iran declared its intention 
to sign an Additional Protocol to the safeguards agreement with the 
IAEA, provide full cooperation to the IAEA, and temporarily suspend 
uranium enrichment and reprocessing activities. We welcome this 
progress, but as British Foreign Minister Straw said, ``the proof of 
the value'' of the European agreement with Iran will depend ``above all 
on the implementation of what has been agreed.'' We are waiting to see 
if the information Tehran provided the IAEA last week will 
substantively meet the IAEA Board of Governors' October 31st deadline 
for coming clean on its nuclear program. Our consultations with our 
allies on this matter are continuing.
    We are also engaged in bilateral and multilateral efforts, from 
sanctions to direct appeals, to put a stop to Iran's support for 
terrorist organizations, which we believe includes al-Qaida. We believe 
that elements of the Iranian regime have helped al-Qaida and Ansar al-
Islam transit and find safehaven in Iran, despite Iran's official 
condemnation of these groups. Despite public statements that they would 
cooperate with other countries, the Iranians have refused repeated 
requests to turn over or share intelligence about all al-Qaida members 
and leaders they claim to have in custody. As the President made clear 
last week, Iran must change its course on this front; resolution of 
this issue would be an important step in U.S.-Iranian relations and we 
cannot move forward without this step. We will continue to press this 
issue from the highest levels of our government, as well as to 
encourage our friends and allies to press the Iranians.
    In its support for terrorism, including by arming violent factions, 
Iran is interfering in the internal affairs of Afghanistan and Iraq, 
and especially in the fate of the Palestinian people. Indeed, Iran 
continues to be the world's foremost state supporter of terrorism, 
offering financial and logistical support to both Shia and Sunni 
terrorist organizations, including Hizballah, Hamas, and Palestinian 
Islamic Jihad. Through these abhorrent groups, Iran destabilizes the 
region and tries to stymie any movement toward peaceful resolution of 
the Middle East conflict.
    On the other hand, Iran says it wants a stable, unified neighbor in 
both Afghanistan and Iraq and despite significant unhelpful 
interference, has taken a few steps in that direction. This includes 
rhetorical support, by welcoming the end of the oppressive regime of 
the Taliban, which exported drugs, violence, and millions of refugees 
across the border into Iran. Iran also welcomed the formation of the 
Iraqi Governing Council. The Iranians have backed up that rhetoric with 
pledges of material support at both the Bonn and Madrid Donors' 
Conferences and they continue to cooperate with regional counter-
narcotics and refugee repatriation efforts.
    Although we make no conclusions about the nature of Iranian intent, 
we have encouraged such constructive behavior by engaging in direct 
dialogue on issues of mutual and immediate concern. This dialogue has 
been limited in scope and produced some success in the Afghanistan 
context. The last such meeting was canceled after the May 12 Riyadh 
bombings, however, due to Iran's unwillingness to cooperate on the al-
Qaida issue. The Secretary made clear at the time that we canceled only 
a meeting, not the process of discussing these issues with Iran. We are 
prepared to meet again in the future, but only if that would serve U.S. 
interests. Of course, we can remove any country from the list of state 
supporters of terrorism if that country is prepared to take the 
necessary steps. We are always prepared to respond if Iran changes its 
ways, in particular ceasing its support for terrorism and abandoning 
its weapons of mass destruction programs, by making corresponding 
changes in our own policies.
    An important aspect of ongoing U.S. efforts to influence the 
direction of Iranian policy is encouraging the healthy development of 
Iran's civil society. We see many signs that the people of Iran want a 
different life and a more responsive government, and we believe we can 
encourage such developments through direct engagement with the Iranian 
public. An estimated 70 percent of the 68 million people in Iran are 
under the age of 30, and they are far more concerned about Iran's 
chronic unemployment than they are about Iran's past. Iranian displays 
of sympathy after the September 11th attacks and polls showing 
overwhelming desire for improved relations with the U.S. reflect strong 
popular sentiment, as do demonstrations and elections in support of 
reform. The government tries to blame any sign of dissent on outside 
agitators, but it is clear that the agitation in Iran is a genuine 
expression of a homegrown desire for change. Consider that thousands of 
ordinary Iranians spontaneously flocked to the airport to greet Shim 
Ebadi two weeks ago when she returned to Tehran after the announcement 
of the award of the Nobel Peace Prize.
    We believe we can encourage the triumph of public resolve by 
engaging in direct communication with the people of Iran. We are doing 
this through Radio Farda, which operates 24 hours a day, and Voice of 
America (VOA) radio and television broadcasts into Iran. VOA has 
recently instituted a daily Persian television news program to Iran, in 
addition to its two weekly television feature programs. In May, the 
State Department brought on line a Web site in Persian and we continue 
to explore opportunities to incorporate Iran-related projects into our 
broader Middle East Partnership Initiative. Our Education and Cultural 
Affairs Bureau also supports cultural, educational, and professional 
exchanges.
    We know our message is getting through. An average of 3,000 people 
already views our Persian Web site every day, for example. It is 
challenging to come by concrete measures of the audience for our 
television and radio programming inside Iran, but we do have evidence 
of a broad consumer base. The United States has no direct diplomatic 
presence in Iran, but we do have what we call a ``virtual embassy'' in 
the surrounding nations and beyond. Foreign Service Officers talk to 
Iranian citizens living and traveling across the region and around the 
world, collecting and sharing with us their observations. Based on such 
anecdotal evidence and on the direct contacts we get, particularly 
through the Internet, we know we have an attentive audience in Iran.
    I firmly believe that our strategy will succeed in helping to push 
and pull Iran in the right direction, particularly with the close 
cooperation of other nations. But it is not up to the United States to 
choose Iran's future. Ultimately, I am most hopeful for that future 
because it is the people of Iran themselves who are providing the key 
impetus for change. Despite living under a regime that limits or denies 
its people even basic human rights, Iranians are engaged in a very rich 
and lively debate about the kind of society they want for themselves 
and for their children. They have made it clear that they want 
democratic and economic reform, accountability and transparency from 
their government, an end to corruption, religious moderation, and 
reintegration with the international community. The Iranian people 
should know of our support for their aspirations, but also that the 
full rewards of that support will only be realized once their 
government ends its destructive external and internal policies. We look 
forward to the day when the will of the people of Iran prevails.

    The Chairman. Well, Secretary Armitage, you have touched 
upon the population situation. You just said that 70 percent of 
the population is under 30. Commentators in the United States 
point out that many of the people under 30 are often 
characterized as being dissatisfied with their living 
conditions such as high unemployment, which is higher still 
among those who are particularly young and who do not have a 
foothold in the society. Yet, as you pointed out, the 
democratic process has not proceeded very well. A 30 percent 
voting rate indicates the degree of apathy or cynicism about 
the situation. For most Americans, we wonder what gives. Many 
people in the area who are apparently pro-democracy are polled 
with very different reactions.
    Contradictions, as you say, abound, but what is likely to 
happen in this situation with this kind of population, this 
kind of ferment, this desire for democracy, which thus just has 
not worked out particularly well? And now we have international 
scrutiny because of weapons of mass destruction. These young 
people or other adherents for democracy see Europeans, not just 
the United States, but also the United Nations, the weapons 
inspectors coming in saying you are headed toward the 
production of nuclear weapons, and the world does not like 
that. How can you foresee the future given these circumstances?
    Mr. Armitage. Well, my crystal ball is as muddy as yours, 
Mr. Chairman. And I want to apply our standards to this. We 
have not lived with that regime since 1979, and I am not sure I 
am competent of understanding all the hopes and aspirations, 
but I think there are some things we can say. Unless the regime 
comes to grips with becoming more transparent, less corrupt, 
and more open in terms of giving people a voice, over time 
then, this will lead to gigantic dissatisfaction. But I do not 
think we can put a time period on that.
    Second, I agree with the characterization, if poll data is 
to be believed, that people like the United States. I think 
what they like about us is what they lack now, the openness of 
our country. They like the ability to freely express their 
minds on things that peoples in all societies I think, for the 
most part, admire.
    I would not say, however, they want to be like us. I think 
it would be a mistake to say they want to be like us. This was 
not the case during the ``good old days'' of the Shah. But we 
do share some basic characteristics.
    Finally, there are some questions out there that if there 
were a different regime--that I think we need to come to grips 
with. I do not know how quite to do it. It is something that 
perhaps my colleagues here, who will follow me, who are much 
more enlightened on these matters, can say. Even if you have a 
different regime, I would ask two fundamental questions.
    One, is would that bunch, even if democratically elected, 
eschew forever weapons of mass destruction? I do not know the 
answer to that because there is a sense of a sort of destiny in 
what used to be Persia.
    And the second question has to do with our ally Israel. 
This is the thing that you do not hear very often. You hear bad 
news, and we certainly know about the support of Hezbollah, 
Hamas, PFLPGC, PIJ from Iran, but you do not hear generally the 
so-called reformists talking in more moderate terms about the 
right of Israel to exist. These are open questions even under a 
different society, and I do not have the answer to them.
    The Chairman. We, that is, the United States, have issues 
with Iran with regard to weapons of mass destruction and with 
regard to the state sponsorship of terrorism, by Hezbollah and 
Hamas, for example. Now, as you suggest, perhaps even with a 
democratic regime, perhaps even among the young people, they 
would still want to produce weapons of mass destruction.
    Where is the rest of the world in this situation? We have 
had the European intervention, and so obviously they and the 
IAEA have taken this seriously. But is the rest of the world as 
concerned as the United States is about the weapons program or 
about the state sponsorship of terrorism?
    Even though we are sympathetic with the democracy that 
might arise from the aspirations of the young people, as you 
pointed out, at the end of the day, if you still have these 
instruments of terror and weapons of mass destruction, this is 
unacceptable in terms of the United States' security and a lot 
of other people's security.
    How are you coming along with diplomatic efforts with 
European friends or with the people in the Middle East or with 
others who might see a similar threat?
    Mr. Armitage. Yes, sir. Mr. Chairman, on the question of 
terrorism, I think we are the one who is leading the charge on 
that without question. The closer and more involved you are to 
the Middle East, the more concerned you are geographically. Our 
European friends have become much more concerned about 
terrorism and what can emanate from a state sponsor of the 
same.
    On the question of WMD, I am quite heartened for two 
reasons. We had an interesting discussion and diplomatic 
challenge going into the 12 September IAEA Board of Governors 
meeting. There were those in the international community who 
were more accepting of the word of Iran. I am proud that our 
nation hung tough and ultimately got a unanimous verdict out of 
the Board of Governors, which I think was a shocking signal to 
the Iranians.
    Moreover, recently during the trip of the three European 
ministers, which we were involved in from the beginning--it was 
their idea, but they were staying in very close touch with 
Secretary Powell as they moved forward. There were some fears 
on our side that perhaps, wanting to have a successful trip, 
the ministers might settle for 80 percent rather than 100. But 
we voiced those fears with our colleagues. They hung tough, and 
they got at least what appears to be on the face of it a good 
declaration, one that President Bush called a positive step in 
the right direction.
    Finally, right now in advance of a full understanding of 
the over 200 pages of documents which the Iranians turned over, 
we have got my colleague, Mr. Bolton, in Madrid working with 
the Spanish. We have got some of the people who used to work 
for Bob Einhorn out in Japan and other places trying to build a 
coalition, a common understanding, as we approach the 20 and 21 
November Board of Governors meeting, Mr. Chairman.
    The Chairman. Well, is it our intent to pursue the nuclear 
question with the United Nations and the Security Council if 
progress is not satisfactory?
    Mr. Armitage. Well, this is one of those several 
alternatives that--certainly if progress is not satisfactory, 
that is right. But there are questions--you raised them in your 
op-ed piece; we raised them in our internal discussions--about 
noncompliance more generally. And there are many options that 
we could have considered.
    Clearly Iran has been in noncompliance. They should be 
found that way. But whether you would take the noncompliance 
and move them toward to the U.N. Security Council and possibly 
sanctions or put them on probation or give them an ankle 
bracelet, as they do to people under house arrest, those are 
things that we have to consider and consider with our 
colleagues in Europe and the nonaligned movement. I think it is 
the most important thing, having gotten solidarity thus far, we 
have to maintain it.
    The Chairman. Now, how much solidarity are you and 
Secretary Powell having with the Russians on this question? 
This has been an open discussion for a long time. Where do 
things stand now?
    Mr. Armitage. President Bush and Mr. Putin had a very good 
discussion at Camp David. The end result, that is, an Iran free 
of nuclear weapons, is something that our Russian friends sign 
up to. They are not as enamored of the tactics we use. They 
have worked hard to try to make Bushehr more attractive, in 
that they have made an apparent agreement with the Iranians 
that they would provide the fuel and then take back the spent 
fuel so there will not be the possibility of any sort of 
reprocessing. That is a step in the right direction. But our 
affection for Bushehr is still very much under control because 
it seems to me the Iranians have a lot of work to do to prove 
their bona fides in the NPT arena.
    The Chairman. Thank you very much.
    We will have 8 minutes in this round of questioning, and I 
call now on Senator Hagel.
    Senator Hagel. Mr. Chairman, thank you and, Mr. Secretary, 
as always, welcome. I am sorry I missed your formal eloquence, 
but I did peruse your statement.
    The Chairman. It was fairly brief.
    Senator Hagel. Was it? Well, then I am not sorry.
    Mr. Armitage. But I will not subject you to it again, sir.
    Senator Hagel. I wanted the full Armitage projection here. 
But, nonetheless, I have lived with disappoints before and I 
will have to just accept this, Mr. Secretary. Thank you.
    Regime change in Iran. Is that our policy?
    Mr. Armitage. No, sir.
    Senator Hagel. What is our policy?
    Mr. Armitage. Our policy is to try to eliminate the ability 
of Iran to carry forward with disruptive policies such as the 
development of WMD, such as the abandonment of human rights, 
such as repression against minorities, such as religious 
repression against the Baha'is and to try to get them to eschew 
their state sponsorship of terrorism. In this regard, our 
policy is to continue to support openly and publicly the 
aspirations of the people of Iran for transparency, anti-
corruption, and democracy.
    Senator Hagel. I noted in your written statement, which I 
did have an opportunity to look at, you mentioned areas of 
common interest where we need to pursue those. I know Secretary 
Powell has said on various occasions the same thing and talked 
a little bit about possibilities of dialog. And that is the 
question. When, where could you envision some official dialog 
beginning with Iran?
    Mr. Armitage. Let me say that we have had some dialog, 
generally under the U.N. auspices. Of course, we carry on a 
continued exchange of information through the Swiss who are the 
protecting power for us.
    Certainly the three things that come to mind immediately 
are continued efforts in Afghanistan where, to some extent, we 
share some common interests. The second is obviously in Iraq 
where, as we have seen--and I will be glad to go into it 
later--they are somewhat schizophrenic about our activities. 
And third, one that we I think share an almost absolute 
commonality of views, is on the question of narcotics. They 
have a large and growing product. They are the transportation 
route from Afghanistan, or one of them, up through to Central 
Europe, and it is something that at the proper time, when we 
feel it is in our interests, we could engage them.
    Senator Hagel. How would you envision that might happen? I 
know we have had, as you noted, some dialog through a U.N. 
third party, the Swiss, other approaches, vehicles. And you 
might even frame this up a little bit, Mr. Secretary, in recent 
experiences we have had with North Korea, how this might 
develop or is it worthy of pursuit with Iran?
    Mr. Armitage. I think this is an unsatisfactory answer, Mr. 
Hagel. I think it is probably something that will be decided at 
the time and the place, certainly in consultation with the 
President. He is going to want to be involved in this decision.
    I think initially my own view is that it should be somewhat 
multilateral. We have, I think, recently found the 
effectiveness of that approach, and I think we would continue 
that at some point in time. We should deal with them, but that 
is a decision the Secretary and the President will make. I was 
trying to make the point in my opening statement that we are 
not opposed to that. We are not saying no. We realize that 
there are areas in which our interests can be served by dialog.
    Senator Hagel. You mentioned Afghanistan, Iraq, obviously 
common interests there, not always parallel or the same as 
defined by each of those countries and by us, the United 
States. How would you rate the Iranian behavior, cooperation, 
intentions, motives today versus earlier in cooperating with 
the United States in Afghanistan and in Iraq? Are they 
undermining our efforts? Are they playing different tracks? 
There was significant evidence early on regarding Afghanistan 
that they were helpful. So if you could elaborate on those two 
areas. Thank you.
    Mr. Armitage. Yes, sir. On Iraq, it is a mixed picture. On 
the plus side of the ledger I think would be the almost 
immediate acknowledgement and welcoming of the Governing 
Council of Iraq. They have good relations with many of them. 
Twelve, of course, of the Governing Council are Shia. They 
pledged money in Madrid. It is a little confusing how much 
because it looks like a bit of tax credits for their 
businessmen and maybe some swaps in Iraq, but that is not a bad 
thing.
    They share with us one absolute common view; they do not 
want a bordering state to be one of Sunni extremism. And that 
is one that we absolutely share as well.
    They have done some other positive things at our urging. 
They dismantled some Iranian guard posts, for lack of a better 
term, that were on the Iraqi side of the border and moved them 
back to Iran.
    On the negative side of things, they continue to have some 
of their intelligence officers and others come across the 
border from Iran into Iraq. We believe that they are intent on 
liaising with their own favorite Shia group, the SCIRI, and 
they have activities with the Badr Corps, which we frown upon. 
Ambassador Bremer from time to time has publicly called for 
Iran to cease and desist that type of activity. So it is very 
mixed there.
    In Afghanistan, it is also quite mixed. On the question of 
narcotics, they are dead-on with us. They are suffering a lot, 
and they share that view. They did almost immediately, in the 
wake of our attack, disavow the Taliban, and at that time they 
disavowed al-Qaeda. But we have seen over time that al-Qaeda 
has been able to weasel their way back in a bit with the 
Iranians for reasons best known only to the Iranians.
    The question of the Iranian interference in Harat is a real 
one, and the jury is still out on that. I know it is of some 
concern to Mr. Karzai and his colleagues.
    Senator Hagel. Thank you.
    Have we thought through in any long range scenarios, 
strategies the development of regional institutions, the 
President's Middle East Partnership Initiative, things where we 
could bring Iran into those regional institutions, economic 
development, for example, and other common interests that we 
could work off of? Have we gotten to that stage? Do you believe 
we will get to that stage?
    Mr. Armitage. Senator Hagel, I do not think we are at that 
stage because you used the term ``long range'' and at least the 
way I have lived for the past 3 years, that is about 4 days.
    I must say those who want to be in these jobs have the time 
to figure out the long range.
    But we do have exchange programs, small ones, with Iran. We 
do allow students--about 300 of them last year--to come here. 
We issued about 7,000 visas last year, some work-related, some 
family related, to come here. We do intend to use MEPI on 
discrete projects, and we do broadcast quite a bit both via VOA 
with TV and radio, and we have got Radio Farda, which is 24 
hours a day.
    We are quite proud in the Department of State that we have 
a Persian Web site. It gets about 3,000 hits a day. Now, that 
is not the end of the world, but it is not bad. That is 3,000 
people who are interested in what we are having to say. And we 
are not propagandizing. We are just putting out what the 
President says or what you say at this hearing, those kind of 
things, without any editorial comment. And people are getting a 
view that there is a lot going on in the world.
    Senator Hagel. Mr. Secretary, thank you.
    The Chairman. Thank you very much, Senator Hagel.
    Senator Chafee.
    Senator Chafee. Thank you, Mr. Chairman.
    Welcome, Secretary Armitage.
    Mr. Armitage. Thank you, Senator.
    Senator Chafee. Mohammed Ali famously said, when he refused 
induction, ``I ain't got a gripe with the Vietcong.''
    Here as we analyze what is our gripe with Iran, you say we 
seek to counter the Government of Iran's negative and 
destructive policies and actions and then later articulate 
those destructive policies and actions as human rights record, 
pursuit of weapons of mass destruction, also interference in 
the Arab-Israeli peace process. So obviously this is very 
important to our relationship with Iran.
    Can you tell us where we are in the Arab-Israeli peace 
process?
    Mr. Armitage. We have nothing in front of us but the Road 
Map. But I think anybody would have to acknowledge that is a 
very rutted and bumpy map at present. We are waiting for the 
government of Abu Ala to be totally formed. I do not know if it 
will be. November 3 is the date it has to be done. Until that 
happens and until Mr. Arafat empowers that government to 
actually move meaningfully in the security area, then I do not 
think we have much reason for optimism.
    We stay involved. We have John Wolf's colleagues. Mr. Wolf 
is back here consulting with us, but his colleagues are still 
active and present for duty, hoping that things will get a 
little better. We continue our discussions with the quartet. 
This is of enormous interest not only to our President but 
also, of course, to our friends in Europe.
    Senator Chafee. From the Iranian point of view, obviously 
they would be concerned. Nothing is happening. We have no 
involvement from what you just said. Ambassador Wolf is not 
there. Meanwhile in today's news Prime Minister Sharon is 
OK'ing the provision of services to some illegal outposts, a 
new break. The Palestinians are naturally objecting 
vociferously that this is a break in the Road Map process. Do 
we have a position on today's news and what Prime Minister 
Sharon is doing? Are we involved at all?
    Mr. Armitage. Yes, we are involved in fairly intense 
discussions with Israel, with the Prime Minister and his 
colleagues, both with the Secretary, who is in very often 
contact with his Foreign Minister colleague, as well as Dr. 
Condoleeza Rice, who is involved, as you would know, with her 
counterparts and colleagues.
    We find some of these activities, such as provision of 
services to outposts and the development of the so-called 
fence, to be very problematic, and it is making it somewhat 
more difficult. Having said that, Israel in 2\1/2\ years of 
living frightened, and the very real specter of deaths and 
horrible maimings of women and children, I think it is 
understandable why they are so neuralgic on the issue. If it 
were easy, it would have been solved quite a while ago.
    If I might, I do not want to leave you with a 
misimpression. I think of Iran not only as a present supporter 
of terrorism--on the 23rd of October we passed something that 
meant a lot to me and that was the Beirut bombing, the Marine 
barracks bombing of 1983. People often forget. There are also 
embassy bombings that Imad Mugniyah, sponsored by Iran, was 
involved in. There are sanctions. There are prices to pay for 
that kind of behavior in my view, sir.
    Senator Chafee. Yes, I agree with you and I think it would 
be naive for anyone to think it would be easy. Of course, not. 
It is not going to be easy. The perception I think here and in 
the Arab world--and it is not tangential. We are having a 
hearing on Iran security. I think it is important. As you say 
in your written statement, these are the gripes that we have 
with the Iranian Government. They are interfering with the 
peace process. But when you look at it from their point of 
view, the peace process is disintegrating, and even from your 
testimony here, Condoleeza Rice may be over there talking, 
Ambassador Wolf's people are there. He is not even in the 
region. He is our point person for the Road Map. He is not even 
there, and I do not believe that there are any plans to send 
him back. It is disintegrating and it is relevant to what is 
happening in Iran and the region, Iraq also.
    Mr. Armitage. You know, sir, just a technical 
clarification. Mr. Wolf is head of the monitoring mission. He 
is not the point person for the Road Map, but that is, for 
better or worse, Secretary Powell.
    I am not sure I understood the thrust of your question. If 
the Iranians do not see any motion either--it is the Iranians 
who are disrupting through terrorism the ability to have a 
meaningful dialog between a government, the Palestinian 
Authority, and the Israelis. So if they would cease their 
support for Hezbollah who lobbed 60 or 70 mortar rounds in 
yesterday, Hamas, PIJ, and PFLPGC, I think that you would 
immediately see that a relative quiet would descend on the area 
and perhaps we could have the dialog. At least those who are so 
keen to have movement toward the Palestinians would then have a 
much better leg on which to argue their point of view.
    Senator Chafee. I would not dispute what you said about our 
abhorrence of some of what is happening on the other side. But 
meanwhile, nothing is happening, they might argue, on the side 
of Israeli agreements to the Road Map. That is my question to 
you. What is happening? What are we doing on that side? From 
what I have heard so far, absolutely nothing.
    Mr. Armitage. I would respectfully dispute the ``nothing.'' 
But I think, as I have said, we have had some problematic 
actions by the Government of Israel in the wake of no action 
and no ability to have the Palestinian Authority unleashed, the 
security forces unleashed against those who would conduct 
terror.
    Senator Chafee. One last question. Is the administration in 
favor of a Palestinian state?
    Mr. Armitage. Yes, sir. But if I may, it is a state living 
side by side in peace and security with Israel. So we are in 
favor, but there are some obligations for that Palestinian 
state as well.
    Senator Chafee. Thank you, sir.
    The Chairman. Thank you, Senator Chafee.
    Senator Biden.
    Senator Biden. Thank you very much.
    Mr. Secretary, Iran is a hard nut and we have a whole lot 
on our plate with Iran. My observation has been that sometimes 
the policy of states takes a lot longer to adjust to changes 
that have taken place around them than, when viewed from 
hindsight, it should have taken.
    We have somewhat limited options relative to Iran, although 
the options are real and at least one of which is very lethal.
    So one of the things that I have been trying to discern is 
how much of, in an international sense, the antisocial behavior 
of the Iranian Government is the consequence of their feeling 
isolated, and from a purely self-interest point of view, the 
conclusion is reached that they have to do certain things.
    For example, I can remember--I hate to admit it. I was here 
when the Shah was there--from the Shah on, Iran has been 
seeking nuclear weapons. The idea that the continued pursuit of 
nuclear weapons--and I am not saying you are suggesting this--
is part of an extremist Shia Muslim clerical leadership that 
somehow is different than has been the instinct of every 
government that I have been aware of since I got here in 1973 
is somewhat misleading. Now, they may have different designs on 
the reasons why they want a nuclear capability.
    And one of the things we do not often examine, at least out 
loud, is whether or not there is any potential for a grand 
security bargain with the Iranians that might serve their 
purposes as well as ours. When I say ``their,'' that is even 
problematic. Who is ``they''? Because there is this internal 
dispute. But one thing everybody seems pretty well set on, from 
the ``democratic'' reformers to the ayatollahs, is the desire 
for Iran to have weapons of mass destruction, including nuclear 
weapons.
    So I am wondering. I do not expect a specific answer but a 
generic answer. Are there folks at State and Defense, the 
National Security Agency that have examined this in the overall 
context of U.S.-Iranian relations as opposed to specifically 
their initiatives on weapons of mass destruction, their 
initiatives with regard to terrorist organizations, their 
initiatives with regard to Iraq, Afghanistan, et cetera?
    Because if you were sitting in Tehran, whether you are a 
democratic reformer or you are the supreme leader, for whom 
democracy is antithetical to everything that you believe, there 
are certain imperatives. They are at the moment surrounded by 
forces that seem somewhat hostile to them. Our assertions have 
been very straightforward about the threat we think they pose 
to the region and to us. I am not suggesting that justifies any 
of their actions.
    I am just trying to figure out what are the broad policy 
prescriptions that have been debated internally within the 
administration other than what seems to be essentially one of 
two options: Their first option is to contain them, but 
containment only works if we have really wide international 
support for that containment. Obviously, the Europeans have 
concluded that it is better to take a shot at trusting but 
verifying, to use Reagan's phrase, and we will see how tough 
that verification is. And in this setting I do not quite 
understand what containment, absent their support, gets us.
    On the other side of the equation, we always have the 
option of the hammer, which is what we did in Iraq, which I 
think would probably not generate a lot of U.S. public support 
right now.
    So what are some of the other dynamics that are in play 
internally about--what are some of the big questions you guys 
are raising? I am not even looking for the answers. I want to 
get a sense as to how you are trying to get your arms around 
the problem. And I should say, I do not think a single one of 
us up here would suggest, if we were making the decision, we 
would know with any degree of certainty exactly how to proceed 
either. But I am trying to get a sense of what the nature of 
the debate is internally and what questions are being raised.
    Mr. Armitage. The nature of the debate, if I may--that is a 
great question. I think you have to take each of the elements 
separately, first of all. Then you come back to them.
    On the question of WMD, I think many of us are informed. 
Personally from my own experience, I served in Iran during the 
time of the Shah when you were first coming up here, sir, or 
right after that. Even at that time, as you correctly point 
out, not only were they aspiring to have a nuclear weapon, but 
they were trying to have an overwhelming conventional 
capability. And they were not surrounded by threats. They were 
not. The Russians were working in the north. They were not 
surrounded by threats to their society. I believe that many us 
feel that there is sort of an innate grandeur still in the 
dreams of Persepalis and all of that. So that informs part of 
the debate. So the WMD question might be harder than it seems 
because it might be more broad in their society.
    Now, the question of terrorism is not. This is very, I 
believe, sui generis to post-revolution. At the time I think 
the Iranian revolutionaries started on this in Lebanon and 
through Syria. The Quds force and the IRGC have just gained in 
power. In a way they are almost on automatic pilot and very 
detrimental. But that is not innate, I think, to Iran or to 
Persian society.
    Then there is the question of human rights, which is very 
interesting, because at the time of the Shah when many people 
would say it was the golden era, there was something called 
SAVAK. And it would be a very rare Senator, indeed, at the time 
who did not vociferously criticize the activities and the 
violations of human rights of SAVAK. So those are kind of the 
questions we wrestle with.
    We find that there is nothing inherently contradictory 
about Shia Islam and democracy, and that appears to be what the 
Nobel Prize winner is saying as well. So that also informs the 
debate. So that is where we are coming from.
    The idea of a grand bargain I do not think that is on yet 
because I think each one of these questions is answered in a 
different way.
    Senator Biden. Well, my time is up.
    I begin to question how much of their support of terror 
relates to keeping us off balance in Iraq and Afghanistan and 
the region and how much of it relates to not wanting to see the 
emergence of a peace agreement in Israel and an Israeli state 
that is secure. But I will come back to that later, if we have 
time.
    I thank you for engaging that question.
    The Chairman. Thank you, Senator Biden.
    Senator Brownback.
    Senator Brownback. Thank you, Mr. Chairman, and thank you, 
Mr. Armitage, really for your wisdom and your insightfulness 
and your great knowledge over years of service. It is quite 
instructive. Your answers really give us a lot of history and a 
lot of knowledge.
    I also want to congratulate you. The President had a great 
trip into Asia last week on the issues dealing with North Korea 
and building that broad coalition on issues of proliferation. 
Hats off. That is a tough issue to pull together, and you guys 
really seem like you are getting it moving in nice fashion.
    I would say, maybe contrary to some others, on Israel it 
looks to me like you are doing what you can in a very difficult 
situation where you have heightened terrorist attacks taking 
place on the people of Israel that really seek to live in peace 
in the region. That is just a very difficult situation.
    I am not sure if this model of land for peace that we have 
been on now for 10-15 years is the right model to move us 
toward peace, but that is a discussion for another day.
    I also want to congratulate you on the Sudan, what is 
taking place there, where you are very close, it appears, to be 
to getting peace on a war that has taken a couple million lives 
and has been going on for more than 10 years, and where you 
have got religious factions in each area, where you are pretty 
close to getting that done, which would be a remarkable thing 
in the region and in the world. So you have got a number of 
things taking place.
    On Iran, I have tracked the Iranian activity on terrorist 
activity for the period of time I have been in the Senate, 
traveled throughout the Central Asia mid 1990s, late 1990s. The 
Iranians were very active in spreading terrorist cells up in 
that region at that time and continue to be. I would go into a 
number of countries coming out from the former Soviet Union 
that had a significant Islamic population, if not majority, and 
they were citing to the Iranians and the Saudis as planting 
community centers, mosques there, which were fine by them, but 
then out of that would come a radical element that would be 
organized. They have been at this for some period of time and 
continue to be.
    There are a number of Iranian democracy advocates in this 
country and around the world. I have worked with a good portion 
of them. They would note very clearly to you Iran is not a 
democracy. You have got a ruling Guardian Council that all the 
candidates have to go through. You have, in essence, a 
religious ruler over the country. They support a referendum on 
Iranian governance and what is taking place within the Iranian 
society, and you are hearing more and more calls for that 
within Iranian society.
    I would hope that we could support as well that call for a 
referendum within the Iranian society and note clearly Iran is 
not a democracy. We believe in democracy and human rights. I 
would hope you could speak to that on the support for a 
referendum internally by the Iranian people on the future of 
Iranian governance.
    Mr. Armitage. Like I think most Americans, and certainly 
all of my colleagues at the Department of State, we were 
mesmerized by the vision of Shirin Ebadi receiving the Nobel 
Prize. We were fascinated by the spontaneity of the 
demonstration that greeted her when she returned to Iran.
    But I was even more interested in what she had to say. What 
she had to say about developments in Iran and democracy--and I 
am paraphrasing. I cannot do it with the eloquence--was 
basically that if we are going to have meaningful change, it 
has to come from within. I think she is on to something. It has 
to be something the majority of the people who live under the 
system embrace and see as a better way forward for them. If it 
is a referendum, then that is fine. But I am not able from the 
outside to determine what the proper path exactly is to 
transparency, elimination of corruption, whether it is 
political corruption or fiscal corruption, et cetera.
    I think our best path and our best policy is to be very 
forthright in our views about transparency and governance and 
human rights, et cetera, not to propagandize, but put out the 
information, put it out, put it out constantly because we are 
finding, from what I think I called in my testimony virtual 
embassies, Iranians who travel around coming in and telling us 
they are getting the message. They are hearing it. Rather than 
trying to pick winners or losers in this, I do not think that 
is something we can do very well from the outside. But I think 
our duty, as well as our right, is to put the facts on the 
table and call things as we see them about the need for 
civilized behavior in the world, et cetera.
    But whether it is a referendum or not, I think if that is 
what the majority of people want, I am all for it. But I do not 
know where they are in their own development. We know there is 
intellectual and political ferment. There has not been, other 
than those student demonstrations of the summer which were so 
horribly and brutally put down, a sort of political activism 
yet. I think they have got to come a ways internally before we 
will know which direction they want to go.
    Senator Brownback. We do know that Iran is a lead sponsor 
of terrorism.
    Mr. Armitage. The leading.
    Senator Brownback. The leading sponsor of terrorism. And 
you note, which I found interesting, that that is an aberration 
from historical Iranian Persian society. So that is really with 
the mullahs that they have decided to go this route. That is 
something we find abhorrent and just stand completely against.
    Mr. Armitage. Yes, sir.
    Senator Brownback. I would also note there is a number of 
outside Iranians broadcasting inside and into Iran that are 
having their signals jammed at times. I hope the State 
Department and our governmental apparatus are working with them 
to try to stop the places where that signal is getting jammed 
and help them because it strikes me that one of the key things 
we can and should provide is information, and that information 
helps provide an organizational flow internally in Iran where 
they cannot communicate.
    I have seen and heard of some of these operations where 
they are getting calls from inside Tehran to the radio station 
in the U.S. or another place of here is where we can organize 
to talk about right now and then broadcasting it back into Iran 
because they cannot internally organize without disruption, 
violation of human rights, or risking really life and limb 
themselves. I would hope we could help more with that 
broadcasting and communication ability inside Iran.
    Mr. Armitage. My understanding is that--I will not go 
through the complete laundry list of what we as a government 
broadcast, but it is VOA. I saw some of the correspondents 
here. They have got a roundtable with youth, all these kind of 
things that we send in. Radio Farda, which is 24/7, a mixture 
of news, music, pop, to kind of keep people interested.
    The question of private groups broadcasting in, I think our 
preference on that is on a case-by-case basis we will support 
under the MEPI getting that information in. I am not expert in 
these matters, but I know at one time years ago with VOA, we 
had to be very careful about who was broadcasting into whatever 
country and who might be broadcasting for the diaspora in our 
own country. There were at least regulations and I believe 
rules about that.
    So I got the message and I will look into it for you and 
respond.
    Senator Brownback. I appreciate that because to me Iran is 
a critical country in that region where we are on a stated 
policy of trying to drain the swamp and to provide open and 
free societies that can grow and prosper. You have got one here 
that has an economy that is less than it was during the period 
of the Shah over nearly 25 years ago. Clearly I think Iran will 
make a vibrant, open, democratic society with quite a 
contribution to the world once it throws off the tyranny that 
sits on top of it. I hope we can be as supportive as possible 
in that process.
    Mr. Chairman, thank you.
    The Chairman. Thank you very much, Senator Brownback.
    Senator Nelson.
    Senator Nelson. Thank you, Mr. Chairman.
    Thank you, Mr. Secretary, for your public service. You are 
one of the best that we have.
    I would like to get you to opine. Given the recent 
agreement by Iran to suspend their development of nuclear 
weapons, an agreement with the Europeans, what appears to be in 
exchange for European economic help for Iran, I would like for 
you to interpolate that as to whether or not it would work if 
we were to offer economic help in the same vein that the 
Europeans have.
    Mr. Armitage. I kind of look at this, Senator, as sort of 
who needs to go first and who has been hiding the ball. As the 
chairman indicated and Mr. Biden indicated, the Iranians have 
been caught lying and hiding the ball several times and most 
recently during a visit of the IAEA, when there were some 
traces of highly enriched uranium found, that gave lie to many 
of the things that the Iranians were saying.
    So my own view is we are the United States. We are not like 
everybody else, and we need to be very cautious and careful 
when we make decisions about economic assistance, et cetera, 
because you are sending a signal absent some rather basic 
agreement on other elements of policy with Iran with which we 
have vehement objection, such as the terrorism and things of 
that nature that Senator Brownback was saying. So I think I 
would be pretty careful.
    Regarding the apparent agreement, it appears that the 
Iranians have agreed to all the elements of the September 12 
Board of Governors' resolution. It is not just an agreement 
with the three ministers, though they were the ones who went to 
Tehran and received it. The proof of that will be in the 
pudding, and we will see.
    Dr. ElBaradei will issue a report after he has pored 
through the pages, the voluminous documentation. Then we will 
be consulting with the international community about the way 
forward as we go to the 20th and the 21st of November Board of 
Governors meeting.
    Senator Nelson. You were talking to Senator Brownback about 
the jamming. There was a report that the Cuban Government was 
jamming broadcasts into Iran at a time when students were 
protesting the oppression by the ruling clerics. What do you 
know about that?
    Mr. Armitage. We approached the Government of Cuba about 
some jamming that was emanating from Cuba. It was not the 
Government of Cuba. It was another entity. And it has ceased.
    Senator Nelson. Since Iran is such a sponsor and benefactor 
of Hezbollah and Hezbollah is clearly an impediment to the 
interest of the United States in reaching a peace accord in the 
Middle East, plus the fact that there is a substantial presence 
of Hezbollah here in the United States, what contacts, if any, 
have been with the Government of Iran about their sponsorship 
of Hezbollah? And if none, what do we plan in the future?
    Mr. Armitage. First of all, there is no need on this issue 
for someone to send a private message. Everybody from the U.S. 
Senate to successive Presidents have been very clear from the 
time of Ronald Reagan on about the Hezbollah-Iranian marriage.
    We try to complicate and constrict the ability of Iran to 
provide aid and comfort to Hezbollah. We try this by stopping 
overflights or trying to jawbone countries into not allowing 
overflights when weapons are going to be delivered through 
Syria or something of that nature. We do it by trying to stop 
flows of money, which is a much more difficult thing because it 
can go 360 degrees and still find its way back to Hezbollah. We 
work with the terrorist financing resolution at the U.N. to try 
to constrict and control Hezbollah's access to funds. It is a 
pretty difficult thing.
    Senator Nelson. Thank you, Mr. Chairman.
    The Chairman. Thank you very much, Senator Nelson.
    Senator Coleman.
    Senator Coleman. Thank you, Mr. Chairman.
    Mr. Secretary, thank you for your service. It is pretty 
inspiring for somebody new like me to be able to listen to 
someone like you who has been there a long time, but you are 
never talking about yesterday. You are also talking about 
tomorrow.
    Mr. Armitage. Thank you. You are making me feel like I have 
a lot of moss on my tusks.
    Senator Coleman. First, if I may, I just want to followup 
on the Middle East situation with Israel and terrorism. I share 
the opinion of my colleague from Kansas. This is a difficult 
situation, and I am sure my colleague from Rhode Island, when 
he was discussing concern about what is happening with the 
building of some barriers, that there is not an equivalency 
between Iran supporting Hezbollah, which is supporting killing, 
killing of Israelis, killing of Americans, of allies of 
America. I am clear there is no moral equivalency there. Iran 
is supporting terrorism. There is no question about that.
    The second piece of that then, just to finish the 
discussion about the Middle East for a second, that portion of 
it, in terms of U.S. policy, our policy is the establishment of 
a Palestinian state, but the precondition of that still stands 
to what the President said on June 24, that an end to terrorism 
is a precondition. Is that correct?
    Mr. Armitage. Yes, sir.
    Senator Coleman. If I can just followup with a comment that 
Senator Nelson raised about the jamming of the signals to Iran. 
I had a chance to be in Cuba and the Cubans are very 
forthright. They said we did not do it and others did it. You 
said other entity. Can you identify who that other entity was? 
Was it Iranian officials?
    Mr. Armitage. Yes, it was.
    Senator Coleman. So the Iranians were jamming the ability 
of folks----
    Mr. Armitage. And it has ceased.
    Senator Coleman. OK. I appreciate that.
    Just one other question then. We know about the efforts for 
democracy in Iran--the students rise up and they get crushed. 
They were crushed brutally a number of years ago. They continue 
to be crushed. How do you support democracy? What is it that we 
are not doing today that will be more helpful in supporting a 
more democratic Iran?
    Mr. Armitage. The student riots to which you refer, 
Senator, as I understand it, actually came about not in a 
search for democracy, but they were demonstrating against the 
fact that the universities were going to be privatized and the 
tuition would dramatically rise. That developed over some time, 
a couple of days, into the need for more openness in society 
and democracy, et cetera. Of course, as we indicated, it was 
brutally crushed.
    I think our job in this, we cannot force something on 
people who want it less than we do. As I say, I was very moved 
by Ms. Shirin Ebadi's comments about meaningful change has to 
come from within. The intellectual and political ferment I 
think has to be translated into louder and more demands for 
freedoms.
    We have heard--it is not a state secret--that recently the 
Parliament has passed laws having to do with more judicial 
openness, et cetera. Now, these laws were contravened by the 
unelected body, the Council of Guardians. But that kind of 
expression I think speaks to what is underlying most peoples in 
the world, that is, a basic desire to run their own lives.
    Our job in this I think is to make, first of all, the facts 
available. The facts are both positive facts and negative 
facts, positive facts about how countries around the world are 
developing their own democracies. For instance, some of the 
countries of the former Soviet Union who in relative terms have 
come quite far in 10 or 12 years. Also, the negative facts, 
that is, how Iran is perceived in the world, why Iranians have 
difficulty getting visas, those who are able to travel, when we 
talk about corruption, just who is doing what to whom, those 
kind of things. So I think that is our job right now, and that 
would allow, I think, the political ferment to take hold.
    Senator Coleman. Last question, if I have the time, just to 
touch upon the issue of Iran and its developing nuclear 
capacity. In U.S. policy toward an arming Iran, how do we avoid 
the pitfalls of our policy toward North Korea in 1994? How do 
you avoid the situation where somebody says that they are going 
to negotiate, they are going to sign an agreement, they are not 
going to go down this track but then they don't abide by their 
agreement? When they have the record that they have had, when 
they have certainly, as you indicated, the record of support 
for terrorism, we cannot afford to have what happened with 
North Korea happen with Iran. How do we avoid those pitfalls?
    Mr. Armitage. My own view, it is a good lesson. It is 
something that we need to keep our eyes on. I go into this 
saying our enthusiasm for Bushehr, for instance, the so-called 
civil nuclear reactors, is very much under control, because the 
Iranians have not demonstrated their bona fides in terms of the 
NPT. The Iranians would say to you that we have an inalienable 
right as an NPT signatory to civilian nuclear use. Well, that 
is not quite right. They have an inalienable right if they are 
living up to all the criteria in the Non-Proliferation Treaty, 
which has to do with eschewing nuclear weapons and enriched 
uranium and plutonium reprocessing for weapons, et cetera. So I 
think we have got to spend some time calling them, making them 
live up to their bona fides.
    Second of all, I think unlike North Korea, this is a nation 
awash in energy, the fourth largest reserves of petroleum, the 
second largest in gas. So for them to say they need civilian 
nuclear reactors seems to me to be a bit incredulous, and I 
think we need to point that out. If there was some interest in 
developing the infrastructure of oil and gas and terrorism had 
ceased and all that, then that would be a different situation, 
and that ought to go ahead at some point in time. But our 
enthusiasm for this whole civil nuclear thing is very much 
under control for the reasons I mentioned.
    Senator Coleman. Thank you, Mr. Secretary. Thank you, Mr. 
Chairman.
    The Chairman. Thank you, Senator Coleman.
    Senator Feingold.
    Senator Feingold. Thank you, Mr. Chairman.
    Mr. Secretary, it is good to see you again.
    Mr. Armitage. Thank you, sir.
    Senator Feingold. Given the close relationship between 
powerful elements of the Iranian Government and several 
terrorist organizations, it obviously seems to me that Iran is 
among the most likely states, if not the most likely state, 
that could transfer weapons of mass destruction to terrorist 
organizations. I would like you to comment on that.
    Why is it we heard so much about this issue with regard to 
Iraq and relatively little with regard to Iran?
    Mr. Armitage. I think we have in play several different 
things. I think they are the leading state sponsor of terrorism 
in the world. Their need for the hard currency might be 
slightly less than North Korea, something we have discussed up 
here more. Some might argue that would make North Korea more 
inclined to trade weapons for money.
    Having said that, we have both the international regimes, 
the NPT and other things, that we apply. We have got also the 
Proliferation Security Initiative, in which 11 countries are 
now participating, which is a regime that, following 
international law, would try to block and stop shipments which 
we believe are suspicious in nature or WMD or related 
materials. As I say, 11 countries have signed up for that. We 
recently exercised it in the Coral Sea.
    I think on the question of Iran, as I understand it, their 
ability to acquire this weapon--their desire there was no 
question of. How far along in their process, in terms of 
nuclear, sir, there were some real questions about. I think we 
felt that there, first of all, was more time. Second of all, we 
were able in the case of Iran to develop an international 
consensus. In the case of Iraq, we had a limited international 
consensus. But we have had much better luck thus far, and that 
is why the President has moved to say that it is not a one-
size-fits-all. We are making some progress, he feels, in 
multilateral diplomacy, and we will continue to do so.
    Senator Feingold. Has the rift that has developed between 
the United States and other Security Council members relating 
to our policy in Iraq affected the prospects for international 
cooperation and pressure on Iran? And in connection with that, 
if you could talk about what specific proactive steps will the 
administration be taking in the near term to foster that 
cooperation and strengthen multilateral cohesion.
    Mr. Armitage. Senator Feingold, thanks to a lot of hard 
effort by my colleagues at the Department of State, United 
Nations, and the President's jawboning, we got 1511, U.N. 
Security Council resolution, unanimously. I think in the first 
instance, that is a good sign, that the past is the past and we 
are going to move forward.
    On the question of Europe, it is quite interesting. I think 
many of our European friends--and that is where the trouble was 
in the Security Council--find that the prospect of Iran with a 
nuclear weapon and, as we know, the delivery systems they are 
developing--one, the Shahab, which I think on an unclassified 
basis has about a 1,300 kilometer range--is something that 
makes the problem theirs as well as ours. I think that is a 
good sign.
    Now, I indicated earlier, Senator, that my colleague, John 
Bolton, and some of his colleagues, Acting Assistant Secretary 
Susan Burk and others, are right now out internationally. Mr. 
Bolton is in Spain and Ms. Burk was meeting with the Japanese 
to try to make sure we keep consensus as we move forward to the 
20th and 21st Board of Governors meeting of the IAEA.
    Senator Feingold. Thank you.
    Finally, the administration reportedly signed a cease-fire 
with the MEK in April, and then it changed its mind. Can you 
explain why the administration changed its policy toward the 
MEK in such a short period of time?
    Mr. Armitage. We should not have been signing a cease-fire 
with a foreign terrorist organization. My understanding--and I 
think it has been written about--is this was done tactically in 
the field by a soldier who was faced with an immediate problem. 
Given the fact that this is an FTO, we are in the business of 
disarming them from their major weapons, which I am told has 
been done, containing them in a rather large area, which takes 
a certain amount of person power from the U.S. Army, and we are 
classifying them, going through them person by person, to see 
those who may have terrorist connections. In my understanding, 
a certain number of those do, and we could talk about it in a 
closed session. That process is ongoing now.
    Senator Feingold. Well, I am pleased to hear your comment 
about the impropriety of our signing a cease-fire with a 
terrorist organization, something I raised at the time.
    Does the ambiguity surrounding U.S. policy toward the MEK 
complicate our efforts to demand that Iran act against 
terrorist organizations? And what exactly is the status of the 
members of this group who are operating in Iraq?
    Mr. Armitage. They are contained, as I understand it, by 
the U.S. military, primarily the Army, and they have been 
disarmed of their major weapons. I do not think all of them 
have turned over their sidearms. They are not allowed, as I 
understand it, free access in and out of their own camp. There 
have been speculations about making these swaps with Iran, et 
cetera. As you know, although we may have some real complaints 
against terrorists, we also have some real strong views about 
how people should be treated. So I think that impedes any 
possibility of swaps, et cetera, with Iran because we cannot be 
sure of the way they would be treated. But if we find that 
people qualify as terrorists under our definition, then they 
are going to have to be dealt with in a legal manner.
    Senator Feingold. Thank you, Mr. Chairman.
    The Chairman. Thank you very much, Senator Feingold.
    Senator Biden.
    Senator Biden. Thank you.
    You indicated, Mr. Secretary, that the way to support 
democracy in Iran is to make the facts available to the Iranian 
people. How do you do that if there is not direct engagement 
with them? How does that get done? We do it through radio 
messages?
    And did your counterparts in France and Britain and Germany 
convey to you any request for steps that would help them arrive 
at last week's agreement? In other words, if so, did we take 
any steps? Did we convey via the Europeans or through any other 
channels any steps? Was there any discussion about security 
assurances? Are our fingerprints on any of that? I do not mean 
that as accusatory. I mean in a positive way.
    So the first question is, how do we communicate this? And 
second, were we contemporaneously informed? Did we have any 
input?
    Mr. Armitage. We were informed before the trip. When the 
political directors went to Iran to sort of set the stage, 
Secretary Powell had discussions with some of his colleagues. 
John Bolton and I met separately with various German and French 
interlocutors--and with the British, we are cheek by jowl 
anyway--to make our point clear that we hoped the ministers 
would not settle for the 80 percent solution, that they would 
settle for 100 percent solution because we felt the only reason 
we were at the point where the Iranians were willing to talk 
was because of unanimity of views on the Board of Governors.
    So to that extent, we were informed. And immediately upon 
the completion of the mission, Secretary Powell--his colleagues 
informed him. Then laterally we got it through diplomatic 
communications as well. We did not offer, to my knowledge, in 
any way any sort of security guarantee.
    Senator Biden. I will conclude with this, Mr. Chairman. Are 
the Europeans asking us for any assistance from us in this run-
up to the IAEA November meeting?
    Mr. Armitage. Not to my knowledge. We are, as I indicated, 
however, reaching out to them as we develop our own 
understanding of what is in those pages to give them the 
benefit of our views.
    You had another question, Senator.
    Senator Biden. How do we get the ``facts''--I think we all 
agree--to the Iranian people without engaging them?
    Mr. Armitage. Well, we have got about 6 hours a day VOA and 
a couple of hours a day TV that goes in. We have got a Web site 
and we have got a 24/7 operation called Radio Farda, which we 
are told is quite popular because it mixes popular and 
contemporary U.S. and Iranian music with news broadcasts, et 
cetera. It is not propaganda. It is straightforward.
    Senator Biden. Thank you.
    Mr. Armitage. I was asked even here today by the VOA would 
I sit for a one-on-one discussion that just goes to the Iranian 
people and just tell them what we think.
    Senator Biden. Thank you.
    The Chairman. Thank you very much, Secretary Armitage, for 
your testimony and for your response to our questions. As 
always, it was great to have you.
    Mr. Armitage. Thank you very much, Mr. Chairman. It is a 
pleasure as always.
    The Chairman. The chair would like to call now our second 
panel: the Honorable William Luers, Dr. Nasser Hadian, Dr. 
Anthony Cordesman, and the Honorable Robert J. Einhorn.
    Gentlemen, we thank you for coming and we thank you for 
listening to our first set of questions to the distinguished 
Deputy Secretary of State. Each of you have been with us 
before, and we appreciate your coming today.
    Let me suggest, first of all, that all of your statements 
will be made a part of the record, so you need not ask for 
permission that that be done. If possible, if you could 
summarize your statements in 5 minutes or so, that will allow 
for more questioning and dialog with the panel and with 
Senators. So I will ask you to proceed, if you can, in that 
fashion in the order in which I introduced you, which would be 
Mr. Luers first, then Mr. Hadian, then Dr. Cordesman, and 
finally Dr. Einhorn.
    Mr. Luers.

 STATEMENT OF HON. WILLIAM H. LUERS, PRESIDENT AND CEO, UNITED 
NATIONS ASSOCIATION OF THE UNITED STATES OF AMERICA, NEW YORK, 
                               NY

    Mr. Luers. Thank you, Mr. Chairman. I am pleased to be back 
and I am particularly pleased to see you in the Chair. I have 
long had a great respect for your work and I think you----
    Senator Biden. Now, wait a minute.
    I like you too.
    Mr. Luers. I am coming to you, Joe.
    I think your decision to have these hearings is very 
important and I welcome them. I also have had a lot of 
conversations with your two colleagues and have a great respect 
for both of them, including Senator Biden in his former 
chairmanship.
    Senator Biden. Thank you.
    Mr. Luers. I will be brief. The first thing I would like to 
say is I am not an Iranian expert, as the three of you know. My 
credentials come today from the fact that I have led a series 
of discussions we have been holding in a European country with 
Iranians over the last year. They have been regular 
discussions. We have had four-plus meetings.
    On the U.S. side, participants include former diplomats, 
former government officials, and in fact, a number of people 
who are real experts on Persia and on Iran. It is a nonpartisan 
group.
    I would welcome you, Mr. Chairman, Senators Biden and Hagel 
or indeed any of the Senators to join these meetings. I think 
you would find them enlightening, and you would be more than 
welcome.
    I will do three things: summarize some of the attitudes 
that would be helpful for this hearing, outline a few 
particular problems that might be resolved, and then come to a 
few recommendations.
    First on the attitudes of the Iranians. One of the major 
blocks from what we hear, to movement from the Iranian side on 
policy is that no matter what the issue, whether it is Iraq, 
nuclear, Hezbollah, or a whole range of bilateral issues having 
to do with U.S.-Iranian relations, the blockage comes from the 
fact that they believe that the United States is not interested 
in changed policies, but changed regime. Until they are 
satisfied that there is a decision on the part of the United 
States to work with this Iranian government in some form, it is 
going to be difficult for them to find ways to cede on some of 
the issues that are very important to us.
    Having said that, I think it is important to say that the 
Iranians are also concerned about their own country, the 
stagnation, the inability to resolve problems and all the 
things that we know about. Yet nobody that I have talked to on 
the Iranian side or in the intelligence community in this 
country believes that Iran is about to implode. We are going to 
be dealing with it for a long time, as it transforms itself. We 
have got to decide how to deal with Iran.
    Second, the Iranians that we have talked to over the last 
year feel more confident about themselves and their stature in 
the world community than when we began the discussions. Much of 
it has to do with the fact that the United States eliminated 
their two principal enemies, the Taliban and Saddam Hussein. 
They find themselves also possibly getting a twofer. We 
eliminate Saddam Hussein and the Taliban and we so tie 
ourselves down in Iraq that we can no longer be a threat to 
Iran. That is at least under consideration in their thinking. 
Nonetheless, there is the concern about U.S. intentions.
    On the nuclear issues, I think what I would say principally 
is that I agree with Bob Einhorn. Bob has been a very 
professional and really quite brilliant participant in our 
discussions, and he has essentially led the discourse we have 
had on nuclear questions. I think he will be far more eloquent 
on the subject than I can be, and you have his testimony.
    I would say one thing, however, on the subject of nuclear. 
If we follow your policy line, Mr. Chairman, as laid out in the 
Los Angeles Times--and there is strong argument for it--it 
seems to me it has to be structured in the context of an 
overall strategy. If we end up, as you hint at the end of that 
article, that we may have to resort to military force, it seems 
to me that doing that outside of the context of everything else 
we want from Iran or what we would like to achieve in the 
region would carry us in the wrong direction. By taking a firm 
stance opposing support for the IAEA's Western European 
beginnings of this new discussion on nuclear issues it would 
make it very difficult to even have a broad strategy to address 
other issues with Iranis.
    On Iraq, the Iranians over and over again have indicated to 
us a desire to have official discussions with the United 
States. Discussions were broken off last summer by the U.S. 
Government over concerns that al-Qaeda terrorists operating 
from Iran might have been involved in the action against U.S. 
targets in Saudi Arabia. I think it was a mistake to have 
broken them off, and it is going to be difficult to reinstate 
them.
    Whatever we learn from the Iranians about Iraq, we will 
learn more than we know now. We have had no discussions with 
them about Iraq--the most critical element in U.S. policy that 
we have had in the last 20 years. They are part of this 
neighborhood. They live on the border of Iraq. They are deeply 
involved, and for us not to probe officially consistently and 
directly what their intentions are, what they know, how they 
will work with us I think is a grave mistake and a deeply 
flawed policy.
    Secretary Armitage in his quite excellent presentation did 
discuss all the commonalities of U.S.-Iranian policies within 
Iraq. One of the matters that I would like to go further on is 
the question that was posed by Senator Feingold on the MEK-al-
Qaeda relationship.
    We have heard that the U.S. proposed to Iran last March, 
before the war, that there be a linkage of some sort between 
our handling of MEK and the Iranian handling of al-Qaeda. 
Whether that is true or not, that is at least what we hear from 
the Iranians. The fact is there became a link and the Iranians 
thought there was one. In the final official meetings that they 
had that were held in Geneva in June before they were broken 
off by the U.S., I understand that there was some specific 
discussions of what the Iranians would do that would be more 
forthcoming with regard to al-Qaeda.
    Following that, the United States took actions against the 
MEK, but up to very recently there are continuing reports in 
Iraq that the Defense Department is continuing to associate 
with the MEK. Whether this is Iranian misinformation or whether 
it is an Iranian device to forego this presumed arrangement for 
them to be better behaved on al-Qaeda, the Iranians believe 
that there is continuing Defense Department interest in holding 
the MEK in abeyance as a potential for undermining the Iranian 
Government.
    Now, I think the MEK issue has to be addressed in some 
forum. We are also persuaded that the Iranians, if we have 
direct discussions with them, would at least explain what they 
have done with those over 2,000 al-Qaeda representatives whom 
they have reported to the U.N. they have managed. We strongly 
believe that discussions in some form would be possible in this 
area.
    Finally, on Hezbollah and al-Qaeda, the Hezbollah issue is 
huge. It is the terrorist organization with probably the 
largest reach of any in the world. It is not as active as al-
Qaeda, but it certainly is more broadly reaching. As one 
develops a strategy toward Iran that makes some sense for us 
and for U.S. interests, one has to relate that to how we 
develop the strategy toward Hezbollah. A strategy toward 
Hezbollah like the one we have toward al-Qaeda will not work. 
There has to be an effort to try to recognize the fact that 
Hezbollah does have a dimension to it that al-Qaeda does not 
have, which is their political and social work in Lebanon.
    I have already talked about al-Qaeda.
    Finally, let me go to our several recommendations.
    First, the United States must develop a strategy on how to 
handle Iran that will allow the United States to associate the 
multiple questions--the multiple problems we have with Iran in 
a coherent strategy. Obviously, I am an engaging person and I 
want to see us engage Iran. It seems to me that over time that 
is the only strategy. The alternative strategy of taking it 
piece by piece will result in us falling into a trap that will 
define the rest of our strategy, which I think is a mistake.
    Second, the confrontational approach, as Senator Biden 
said, seems to be taking us nowhere right now. The likelihood 
of us undertaking an ultimately military strategy begun by 
sanctions perhaps is not high, given our involvement with Iraq.
    We recommend now that there be strong support for the IAEA 
and Western European involvement in discussing the nuclear 
issues. When the discussions begin with the Western Europeans, 
we should be involved in those discussions and we should try to 
encourage, as much as possible, the Iranians to pursue a course 
that will have their suspension of enrichment and processing be 
a long-term suspension. It could go on indefinitely.
    Third, we believe that we need to set up an environment in 
which to discuss with Iran the issue of Iraq. We think that the 
setting could be the five permanent members of the Security 
Council plus the United States and Iran. The issue would come 
up about the other neighboring states, but we think this is an 
appropriate setting. And the U.N. Secretary General could 
arrange for that.
    In that discussion, we believe there should be a return to 
the issue of al-Qaeda and some firm assurances given and 
demonstrated that the MEK will be completely disassociated from 
U.S. interests.
    We believe that small steps should be begun in other 
aspects of the U.S.-Iranian relationship, which have already 
been mentioned by most of you.
    Congressional exchanges should be pursued. We think there 
is still that opportunity. We know some of you favor such 
exchanges.
    And I recommend that we begin planning for a U.S. interests 
section in the Swiss Embassy in Tehran. I happen to have 
negotiated the opening of the U.S. staffed U.S. interests 
section in Havana when I was Acting Assistant Secretary for 
Inter-American Affairs, I do not believe there was any 
suggestion at the time that it reflected an approval of that 
Cuban Government. We must have access to Iranian society. How 
do you democratize? I have said here that democracy is most 
infectious when it is related to human contact, and that is 
what we must have with Iran. Information alone over the radio 
is not enough.
    Mr. Chairman, that is all I have to say right now.
    [The prepared statement of Mr. Luers follows:]

Prepared Statement of Hon. William H. Luers, President and CEO, United 
   Nations Association of the United States of America, New York, NY

    Chairman Lugar, Senator Biden, distinguished members of the 
Committee on Foreign Relations, it is an honor to testify before you 
today on the subject of Iran. I speak on behalf of a group of Americans 
who have been involved in discussions with Iranians over the past year. 
These informal talks have touched on many of the issues that this 
committee is addressing in this important and long needed hearing. We 
congratulate you, Mr. Chairman, on your efforts to encourage a public 
discussion on Iran and the U.S. interests engaged in our relationship 
with that pivotal nation.
    I am pleased to be back testifying before this Committee nearly two 
decades since I left the Foreign Service. During my career with the 
Department of State I was privileged to have had several opportunities 
to testify on matters related to the Soviet Union, Cuba and Latin 
American--regional issues in which I was professionally involved. I 
come before you today, therefore, not as an Iranian expert--and there 
are precious few of them given our twenty-year gap of official 
relations with that country--or as an expert on the Middle East. My 
credentials flow from: * Decades in helping to engage U.S. relations 
with the former Soviet Union including arms control, negotiations, and 
cultural exchanges. I served as Ambassador to Czechoslovakia.

   Over a decade of engagement with Latin America including 
        issues of political and economic development and cultural 
        exchanges. I served as Ambassador to Venezuela.

   Over 13 years as President of The Metropolitan Museum of 
        Art, during which time I became even more appreciative of the 
        essential role of cultural understanding in international 
        affairs.

   Discussions with Iranians that a group of Americans have 
        been holding regularly over the past year.

                              INTRODUCTION

    The United Nations Association of the USA (UNA-USA) began to lead 
these discussions with a group of Iranian policy experts following UNA-
USA's involvement in the United Nations effort to begin ``A Dialogue 
among Civilizations,'' which was first proposed by Iran's President 
Khatami. President Khatami and U.N. Secretary General Kofi Annan 
thought it worthwhile for an international effort to be undertaken to 
discuss and explore the opportunities that might be available to avoid 
the ``Clash of Civilizations'' predicted by Sam Huntington in his 
prescient article and book of that title. The culminating report of the 
``Dialogue Among Civilizations'' was presented to the U.N. General 
Assembly in November 2001, only weeks after September 11th. President 
Khatami, who spoke at the General Assembly on the topic, chose that 
moment to denounce Al Qaeda and Osama bin Laden directly, underscoring 
that the terrorist attacks were in no way representative of Islam. Let 
me remind you that the United Nations system is the only setting in 
which Western nations deal regularly with Arab states and with the 
numerous states where the one billion followers of Islam live. That is 
one more reason why the United Nations is an important place--it offers 
a place in which the United States can work to develop greater 
understanding and reduce tensions with Islamic states over the years to 
come.
    The discussions that UNA-USA has been conducting began almost a 
year ago. They have been held in a multilateral setting and have 
involved a group of Iranian academics and policy advisers acting in 
their individual capacities. During this period we have had access to 
official Iranian thinking. These talks have been off-the-record and 
included representatives of at least one other nation. We have met four 
times over the past year. The Rockefeller Brothers Fund and several 
other prominent American foundations have been the sponsors of these 
talks. We have met in Europe and have not met either in the United 
States or Iran for any of these conversations. We understand from the 
Iranians and from our American colleagues that, although there had been 
many informal efforts at policy dialogues with Iran in the decade 
before the current administration, virtually all of those efforts have 
dried up. Also, there are some continuing rich academic interactions 
with Iran on the part of a number of individual American scholars and 
there are journalists who still have unusual personal access to Iranian 
society. We understand that this UNA-USA set of discussions is the only 
one today that is seeking to carry out a broad policy discussion on 
U.S.-Iranian relations.
    The U.S. side has been composed of prominent former diplomats and 
officials and representatives of the private sector. It is a non-
partisan group in its approach and composition. The President of the 
Rockefeller Brothers Fund, Stephen Heintz, one of the initiators of 
this set of discussions, has essentially co-chaired this effort from 
the American side and has participated in all of the meetings.
    Our intentions are to continue these informal discussions over the 
coming months and years with the following objectives:

          (1) To expand the number and variety of Americans exposed to 
        these important issues;

          (2) To extend our access to the Iranian policy community and 
        society;

          (3) To continue to encourage the United States Government and 
        the Iranian Government to undertake direct official 
        conversations; and

          (4) To offer suggestions on ways in which the United States 
        might better handle the potentially serious threats to U.S. 
        security interests in the Middle East that could result from 
        the current deeply flawed policy direction that the United 
        States Government is taking toward Iran and its engagement in 
        the region.

                           IRANIAN ATTITUDES

    The Iranians have expressed very informally their concerns about 
stagnation at home in Iran, the inability of the current Iranian 
governing structure to carry out political and economic reforms, and 
the potential instability in their neighborhood, including grave 
concerns about Pakistan, which is one reason they have been seeking a 
strategic alliance with India. At the same time, they make clear that, 
whatever their concerns are about the current Iranian governing 
structure, it is not about to collapse. The U.S. intelligence community 
agrees with that assessment. No one we have talked to in the U.S. 
intelligence community believes that the troubled and cleric dominated 
Iranian system is on the verge of any sort of implosion, even though 
one hears such claims on occasion from U.S. policy makers.
    Most importantly, the Iranians have expressed concern about U.S. 
policies toward Iran. They say that Iranian officials believe that 
dealing with the United States is particularly difficult for Iran since 
the U.S. does not seek ``policy change'' on the part of the Iranian 
government but ``regime change'' and nothing short of ``regime change'' 
will satisfy the U.S. From public official U.S. statements and the 
general impression they have had from the few direct talks with U.S. 
officials, Iranians claim that they are discouraged from making any 
steps toward ameliorating some U.S. objections to Iranian behavior 
because the U.S. will always require more ``concessions'' until the 
Iranian government is overthrown or removed. The Iranians say that the 
U.S. does not seem prepared to make comparable steps to encourage 
movement toward resolution of some of the core issues. They would be 
far more ready to discuss the core issues between the two nations and 
engage in negotiations with the United States if they believed that 
U.S. policy was committed not to the overthrow of the current Iranian 
system, but to working toward mutually beneficial steps.
    At the same time, the Iranians say they are feeling more confident 
today than perhaps during any time since the Iranian revolution due to 
the U.S. elimination of Iran's two neighboring enemy regimes--the 
Taliban and Saddam Hussein--and an Iranian perception that the U.S. 
will be preoccupied with Iraq for some time. This sense of confidence 
can obviously be a mixed blessing for American interests in the region. 
We believe that the U.S. should try to play to this confidence rather 
than fight it as a strategy moving forward. If Iran, for its own 
economic and security reasons, wants to return gradually to playing a 
more constructive role the international community, the U.S. should 
take some steps to enable this to happen since that will offer the best 
available opportunity to reduce Iran's support for terrorism and other 
troubling activities in the region.
    We recognize that it is difficult to know who speaks for Iran and 
whether the U.S. government would be able to deal with an Iranian group 
that has the authority to make the decisions the U.S. would seek. 
Nevertheless, based on our discussions, we believe that this moment 
offers an important opportunity to seek some movement from the Iranian 
government on issues of great significance to U.S. interests in the 
region. Most particularly, we think the Iranians are now intensely 
focused on how best to preserve their own national security as the 
environment in their neighborhood is changing dramatically. If both 
governments do not undertake mutually reinforcing steps to ease the 
differences, we believe that the uncertainty about each other's 
intentions could heighten tensions and lead Iran away from potential 
cooperation with the U.S. toward more confrontational policies and 
perhaps toward taking further steps to acquire nuclear weapons. This is 
an appropriate time to respond to Iranian overtures and to try to 
dissuade Iran from pursuing such strategies.

                    TALKING ABOUT THE NUCLEAR ISSUES

    On the nuclear issue, we have heard the official Iranian line that, 
despite the IAEA's findings, Iran still has no intention to build 
nuclear weapons, but needs a nuclear capacity for power (citing similar 
nuclear power facilities in the U.S. and Russia which have substantial 
fossil fuel energy resources) and for scientific work. The official 
line also maintains that nuclear weapons would be unlikely to increase 
Iran's security and that the Supreme Leader opposes the development of 
nuclear weapons on moral and religious grounds. Yet in private 
conversations, the Iranians have told us that there is a serious debate 
in policy circles about nuclear weapons. They also say that there is 
probably an intention on the part of some elements of the Iranian 
governing structure to have at least the capacity to build such 
weapons, but that Iran does not have the capability yet and has not 
taken a firm decision on this matter. We have been told that the 
Iranian government would reject any offer of a package of agreements 
(such as is being discussed in connection with North Korea) that would 
link proposals regarding Iran's security to discussions of 
discontinuing the nuclear fuel cycle since such an approach would 
implicitly suggest that Iran was seeking its nuclear capacity for 
reasons of national security, i.e. nuclear weapons.
    We welcome Tehran's announcement that it intends to sign and ratify 
the additional protocol agreement under the Nuclear Nonproliferation 
Treaty and temporarily suspend uranium enrichment activities. We 
believe that these hopeful steps are in the right direction and are in 
line with the recommendations we have been making to both governments 
over the past several months. We remain concerned that, should these 
current promising indicators not result in a longer term shift in the 
approach on both sides, Iran and the Western countries will remain on a 
course that will result in the IAEA referring the Iranian violations to 
the U.N. Security Council, with the possibility of sanctions being 
brought against Iran. We do not believe that UNSC sanctions, even if 
strongly supported initially by all of the European powers and China, 
will help to change Iran's still ambiguous intentions with regard to 
the capacity to build nuclear weapons. Indeed, prolonged sanctions 
would more likely lead them toward an increased sense of isolation and 
toward a decision to acquire nuclear weapons. From what we have heard 
from the Iranians, the perception that the U.S. is mobilizing world 
opinion against Iran makes it less likely that admonishments by the 
U.S. will have positive results. Indeed, we have strongly recommended 
that the United States Government remain in the background of 
negotiations with Iran on nuclear issues and that these discussions 
should be conducted primarily in the context of the IAEA and with key 
European governments.
    In this connection, it would be useful to consider a phased course 
of action to address the nuclear issue. I understand that Robert 
Einhorn, who has participated in UNA-USA's discussions with the 
Iranians, will be providing further thoughts on this matter in his 
testimony today before the Committee. In addition, we have been told 
that Iranians might agree to permit Western technical personnel and 
specialists to remain in Iran indefinitely to monitor the Iranian 
nuclear facilities. In return for opening up their country to a 
permanent monitoring presence from the West, the Iranians, we are told, 
would want Western support in the development of Iran's peaceful uses 
nuclear program. We have no assurance that these initiatives will be 
successful, but we believe that the United States should continue to 
support Western European expansion of such discussions with Iran at 
this time.
    If the British, French and Germans, together with the IAEA 
(supported quietly by the U.S.), are able to work out an arrangement by 
which Iran is encouraged to step back from a full fuel cycle in 
connection with its peaceful nuclear program, then U.S. discussions 
with Iran on Iraq in a multilateral context could be even more 
productive.

                           TALKING ABOUT IRAQ

    Throughout the course of our discussions over the past year, the 
Iranians reiterated their interest in engaging in talks with the United 
States at an official level on key issues of concern, especially with 
regard to Iraq. In fact, the Iranians stated that Iraq has the 
potential to become a constructive bridge-issue that could enable 
discussions on matters of broader mutual interest to the U.S. and Iran. 
They said that the more the U.S. begins to learn about the Shia through 
dealing with Iraq, the more the U.S. will understand Iran and the Shia. 
They also characterized this as a momentous time for security in the 
region and suggested that the U.S. will come to understand that the 
Shia and Iran itself are moving toward a more moderate stance on 
regional and religious matters. We are well aware that over the past 
decade Iranians have offered to have official discussions with the U.S. 
Government on a variety of subjects, but when the time has come for 
such talks, obstacles appear. We believe that it is in U.S. interests 
to persist in testing these Iranian offers to have discussions since 
the U.S. can only benefit from such discussions, particularly given the 
new situation in Iraq.
    We have been impressed by several aspects of Iran's policies toward 
Iraq. The Iranians claim that Iran was the only country in the region 
to strongly endorse the Governing Council in Iraq. They say that the 
Governing Council in Iraq was well selected and will be able to form 
the basis of an interim Iraqi government. While strongly critical of 
the U.S. ``occupation'' of Iraq, our Iranian counterparts say they 
realize that the U.S. will be in the neighborhood for a long time and 
that Iranian and U.S. interests in Iraq generally coincide as they have 
often coincided in Afghanistan. They claim that there is general 
agreement among the various Iranian governing entities on a policy 
toward Iraq that reflects a desire for cooperation with the U.S. in 
Iraq. Yet, despite official U.S. government stated policies and 
actions, the Iranians continue to be deeply concerned by the support 
that the U.S. is giving in Iraq to the Mujahedin-e Khalq Organization 
(MeK).
    We expressed much skepticism about this U.S. and Iranian 
coincidence of interests in Iraq and the Iranians did not deny that 
individual Iranian organizations, such as the Revolutionary Guard or 
some conservative clerics, might well be carrying out activities that 
are unhelpful to U.S. efforts. One Iranian participant said that Iran 
was ``pre-positioning itself'' in Iraq just in case the U.S. were to 
try to use Iraq as a platform for launching attacks against Iran or to 
destabilize the Iranian regime. There have been occasional menacing 
observations in the otherwise cautiously supportive attitude on the 
part of these Iranians. For instance, they have warned that we should 
know that Iran has the means to make it very difficult for the U.S. in 
Iraq.
    Yet despite their disappointment about the decision last May on the 
part of the United States to cut off the Geneva discussions with Iran 
on Iraq, it is our understanding that the government may be prepared to 
respond favorably to a U.S. initiative to renew such talks in an 
appropriate multilateral setting such as the 6+2 talks that were held 
on Afghanistan.
    On a related note, the Iranians continue to underscore with us 
their willingness to consult on Afghanistan. If no other forum can be 
found, they would welcome a reconvening of the ``6+2'' mechanism--
including Uzbekistan, Turkmenistan, Tajikistan, Iran, Pakistan and 
China, plus the U.S. and Russia. The aim of such a meeting would be a 
reinforcing of President Karzai's ability to get the job done.
    other issues: israeli-palestinian conflict, hezbollah, al qaeda
    While our discussions in recent months have concentrated on the 
nuclear and Iraqi issues in view of their immediacy, we have dealt 
regularly with U.S. concerns over terrorism and the Israeli-Palestinian 
conflict. We believe that this set of issues is the most difficult and 
it is unlikely that we can anticipate change in Iranian policy and 
behavior in these areas until there is some positive movement on the 
Middle East peace process. However, we see some possibility for Iranian 
movement on the Al Qaeda issue.
    Israel. Iran's official policy against Israel has not changed, 
although its line on the peace process changed some time ago. It did 
not oppose the road map per se, but expressed strong doubts about its 
success. The official position remains that if Palestine should reach a 
two-state agreement with Israel, Iran would be supportive. The Arab-
Israeli conflict is on the lower end of the list of priority issues for 
Iran because the domestic political context is not ready for a retreat 
on this issue and because Israel is not today seen as an existential 
threat to Iran. Moreover, it is unlikely that the Iranians will become 
helpful on this issue. The most the U.S. can hope for at the present 
time is to reduce their motivation to be harmful. In sum, a substantial 
change in the Iranian position on this issue is not likely.
    Hezbollah. Iran's support of Hezbollah is a critical source of 
U.S.-Iranian tension. Hezbollah is viewed, particularly within U.S. 
intelligence circles, as an international terrorist organization whose 
global reach equals or extends beyond that of Al-Qaeda. In addition, a 
major U.S. concern continues to be Hezbollah's implacable opposition to 
any two-state solution to the Israeli-Palestinian conflict. With Iraq 
in a state of instability and the continuing bloodshed between the 
Palestinians and Israelis, Hezbollah could well be tempted to expand 
its terrorist activities in the region. We have no special knowledge 
from the Iranians about Hezbollah and suspect that those we are talking 
to do not have extensive information about the extent of Iranian 
support for Hezbollah. Yet, from our discussions and general sense of 
the region today, Hezbollah, while a large potential threat, has been 
more restrained than might have been anticipated. But more importantly 
we share the view of Daniel Byman in his article in the current issue 
of Foreign Affairs that ``a campaign against it similar to the U.S. 
effort against Al Qaeda will probably fail and might even backfire.'' 
The purely military option against Hezbollah will not work. As Byman 
suggests, the role of Iran will be key to any more complex alternative 
strategy toward reducing the threat of Hezbollah.
    The Iranians say that Hezbollah, very much like Iran itself, has 
been going through a significant transition over the past decade that 
the U.S. has not understood. Moreover, the Iranians we have talked to 
argue that with careful political management and with some future 
improved prospects for a return to a Middle East peace process, the 
Hezbollah threat in the region could decline if handled wisely. They 
argue that there is a strategy that the U.S. could develop that would 
both diminish external support for Hezbollah and move it more in the 
direction of pursuing the social and political work that is 
increasingly defining its primary role in Lebanon. Our Iranian 
counterparts pointed out that during his visit to Lebanon earlier this 
year, President Khatami made a conscious effort to address Hezbollah in 
the context of Lebanese politics and stated that Hezbollah is becoming 
a legitimate political organization.
    Based on our discussions, we have become more convinced that 
Hezbollah cannot be treated strictly as a military problem. Its reach 
and potential for action is too great and buried in so many different 
societies. The U.S. must begin to understand and manage relationships 
with the various Shia groups in the region and worldwide and develop 
multiple strategies to manage this large Hezbollah network. Iran, as a 
major supporter of Hezbollah, would also be a key player in any broad 
U.S. strategy to reduce the Hezbollah threat.
    Al Qaeda. Iran's inability to control Al Qaeda operatives within 
Iran and its failure to turn them over for prosecution is a source of 
continuing concern to the U.S. Government. Indeed, discussions on Iraq 
that had begun between some U.S. and Iranian officials in Geneva were 
broken off by the U.S. over a belief that senior Al Qaeda operating 
from Iran carried out the terrorist attacks against U.S. targets in 
Saudi Arabia last May. The Iranian side considered that the U.S. was 
seriously mistaken to have called off those potentially useful talks on 
a matter of deep mutual interest. They also claimed that the U.S. had 
faulty information on the role of Al Qaeda allegedly working from Iran 
in Saudi Arabia.
    In many conversations about Al Qaeda, we have found the Iranians 
consistently surprised that the U.S. does not understand the degree to 
which Iranians are opposed to Al Qaeda. They say: that they have 
already returned many (over 500) Al Qaeda prisoners to their countries 
of origin; that there are some Al Qaeda who are in Iran and cannot be 
located such as in many other nations including throughout Europe; and 
that of those who are still held in Iran, many more could be turned 
over. We have reported to the U.S. Government on several occasions that 
the Iranians have linked the U.S. continued practical support for the 
MeK in Iraq to the U.S. effort to get more cooperation from Iran on Al 
Qaeda. The Iranians say that, despite the fact that the MeK is declared 
a terrorist organization by the U.S. and, despite repeated U.S. 
statements of intentions to disarm and control the MeK in Iraq, there 
is continuing evidence that the U.S. Defense Department seeks to keep 
in reserve the possibility of deploying the MeK terrorists in Iraq 
against Iran as part of a latent plan to destabilize Iran. The Iranians 
we talked to say there is a deal possible with regard to Al Qaeda, but 
they want something in return which will be responsive to Iran's own 
fears about terrorism, i.e. solid action to eliminate the MeK as a 
threat to Iran.
    We cannot estimate the number of Al Qaeda in Iran or the degree to 
which there are dark alliances between Al Qaeda and some components of 
the complex Iranian governing structure, but we do believe that, 
through direct discussions and mutually reinforcing actions between the 
two governments, progress could be made on the Al Qaeda issue with 
Iran. Just as the U.S. is reluctant to talk to Iran until the Al Qaeda 
question is dealt with, the Iranians are not prepared to be more 
forthcoming with Al Qaeda until there is a clear and consistent U.S. 
policy toward MeK.
    The MeK-Al Qaeda issue is a metaphor for the overall relationship 
between Iran and the United States. One side places preconditions 
before beginning discussions and before taking constructive actions, 
and the other side holds back possible actions and concessions as 
bargaining chips. It is time that this cycle that has blocked forward 
movement be broken and that each side consider small steps that can be 
undertaken to send signals, build confidence and engage officially in 
order to determine whether, over time, significant steps would be 
possible to reduce tensions.

                            RECOMMENDATIONS

    We have several specific recommendations that flow from our 
discussions:

   The U.S. Government should support, as a critical first 
        step, the agreement reached by the three European governments 
        and Iran, under which Iran would adhere to the IAEA Additional 
        Protocol and temporarily suspend its uranium enrichment and 
        processing activities. In addition, Iran should cooperate fully 
        with the IAEA and provide to the Agency all the information 
        about its nuclear program requested by the IAEA Board in 
        September.  In the longer term, Iran, the IAEA, the Europeans, 
        the United States, and other interested parties should seek to 
        put in place a more durable solution that would provide 
        confidence that Iran is not pursuing a nuclear weapons 
        capability.

   Based on our discussions, we believe that an American 
        initiative to renew the diplomatic conversations on Iraq would 
        be well received by Tehran. We believe that a new group--like 
        the ``6+2'' group that met on Afghanistan--should be organized 
        by the U.N. Secretary-General. This new grouping might be 
        composed of Iraq's neighbors plus the permanent five members of 
        the U.N. Security Council. Whether this or another forum is 
        organized, we believe that an opportunity for renewed direct 
        conversations in some multilateral setting would be welcomed by 
        the Iranian government and lead to at least a better 
        understanding of each other's role and intentions in Iraq

   In the context of renewed U.S. official discussions with 
        Iran on Iraq, we believe that a first priority should be direct 
        exchanges on Al Qaeda. These would lead toward a better 
        understanding of what steps the Iranians would expect the U.S. 
        to undertake with regard to the MeK or other potential threats 
        against Iran that might be causing concern to the Iranians and 
        that might lead to further Iranian and even joint U.S.-Iranian 
        action against Al Qaeda.

   We also believe that there is a range of small steps that 
        each side could take over the coming months that could be seen 
        as confidence building measures for each side to move forward. 
        These steps would begin with the way each side speaks of the 
        other--language is one of the most important signals at the 
        early stage. For example, language in speeches and public 
        statements that suggest that the U.S. is expecting regime 
        change in Iran or is not prepared to deal in any way with the 
        current government of Iran undercut opportunities to have 
        serious discussions and reinforce the impression in Tehran that 
        the US is not serious about any negotiations with Iran.

   We recommend that exchanges between Congressional 
        representatives and members of the Iranian Parliament should be 
        pursued as a way to build confidence and dialogue between our 
        two countries. We are aware that a number of members of 
        Congress have been seeking such exchanges and would be willing 
        to participate. It appears that the Iranians have delayed 
        moving forward, even though they have indicated that they are 
        favorably disposed.

   We recommend that the U.S. begin planning for the 
        establishment of a U.S. presence in Tehran in the form of an 
        American-staffed ``U.S. Interests Section'' at the Swiss 
        Embassy--similar to what we have in Havana. This would mean a 
        comparable presence of an ``Iranian Interests Section'' in 
        Washington, D.C. Such planning should not be considered 
        unthinkable now, in view of our deep long term commitment to 
        the region and our need to know much more about the 
        neighborhood. In the Department of State in the mid-1970's I 
        oversaw two years of planning for such a step toward Cuba. 
        Then, as Acting Assistant Secretary for Inter-American Affairs, 
        I negotiated with the Cuban government the establishment of the 
        U.S. diplomatic presence in the ``U.S. Interests Section'' in 
        Havana in early 1976. Such an act does not imply approval, in 
        any way, of a regime, but allows the United States direct 
        access to the society and provides a vital means for our 
        understanding of a changing and distant culture, such as Iran.

                               CONCLUSION

    We see Iran as very different from Saddam Hussein's Iraq and North 
Korea--the other two members of the ``Axis of Evil.'' The option of 
direct military action against Iran or even the option of prolonged 
intensive covert efforts to bring about ``regime change'' should be 
discarded. Such actions would threaten other U.S. interests in the area 
and likely increase Iran's interest in seeking nuclear weapons and 
openly opposing all U.S. activities in the region. Given the fact that 
Iran borders on and is deeply engaged in two nations which represent 
some of our most important interests in the region--bringing peace and 
stability to Iraq and Afghanistan--we do not want Iran to be an 
implacable, isolated, and even more determined enemy. Engagement with 
Iran could serve to advance other U.S. interests, including: a better 
understanding of the Shia Movement; stability in the Middle East; 
stemming the proliferation of WMD; and addressing drug trafficking in 
the region.
    The negative effects to U.S. interests of a long-term strategy of 
isolating Iran should be recognized. Such a strategy would deprive the 
United States of the knowledge and ability to relate to one of the most 
important nations--arguably the ``pivotal'' nation--in the region and 
potentially one of the most troubling. We are placed at a disadvantage 
by having no direct knowledge of them, often times having to depend on 
flawed intelligence from ``technical means'' to evaluate what are 
deeply human cultural, economic, and political issues in this young and 
dynamic society.
    Formal U.S. conversations with the government of Iran or the 
establishment of some form of relations with that nation through a 
diplomatic presence should not in any way reflect approval of Iran's 
domestic or international behavior. The U.S. has close relations with 
Pakistan and Saudi Arabia, yet these are two nations, which at a 
certain level arguably have done or could do great harm to U.S. 
interests in the region. The U.S. certainly does not approve of all of 
the internal actions of these two governments. Nor does it approve of 
many of the domestic actions of the government of China or many other 
governments whose political and economic systems are so vastly 
different from ours. The U.S. does not bestow legitimacy on a 
government by talking to it. On the contrary, such discussions would 
provide the most powerful nation in the world the ability to increase 
the varieties of influences it can bring to bear on a region of vastly 
growing importance to U.S. interests. The U.S. can promote its 
democratic values much more effectively by expanding contacts and 
opening up societies through direct contact over a prolonged period of 
time. If our objective is to ``infect'' nations with the ideas of 
democracy, direct contact works best.
    The U.S. is likely to be militarily, politically and economically 
involved in the Middle East for decades to come. American involvement 
there could conceivably reach the scale of its involvement in Europe 
during the Cold War. Yet we knew Europe. We know little about the 
Middle East. As the cultural, political, national and religious 
elements of the Middle East evolve over the next generation, the U.S. 
will have to develop direct expertise, knowledge and appreciation of 
the trends in the area. The current course of U.S. policy makes it 
virtually impossible for the most powerful and information-based 
society in history to understand the basic elements of Iranian society. 
The U.S. is without the personnel, the tools, the language and the 
knowledge to make informed decisions or to conduct the appropriate 
diplomatic efforts that can further U.S. interests. This should not be 
the approach of this great nation.
    Terrorism has become a fundamental threat to American society. Yet, 
should the U.S. Government persist in dealing with all perceived 
terrorist threats in purely military terms, it will surely fail and 
indeed could polarize the nations of the world ever more frighteningly. 
There is an opportunity today to begin to devise a strategy of 
engagement with Iran that would be part of a new, more astute political 
approach to the nuclear and the terrorist threats. This engagement 
strategy is more likely over many years of determined effort to produce 
a far more constructive outcome than the course of confrontation, 
imposing isolation and military action that currently characterizes 
U.S. policy. Even though the U.S. military has fought well and bravely, 
Americans over the long run are better in engagement than in war. 
Engagement certainly suits better the American traditions and 
instincts. Engagement also contributes better toward providing the 
world with a beacon of the United States as a strong nation determined 
to spread its insights on democracy and liberty.
    Mr. Chairman, it is now within the U.S. Government's capacity to 
set a new course that will reduce Iran's threatening posture and 
gradually encourage them to pursue a more cooperative role in the 
region. This process could take years, and there will be setbacks, but 
the time to begin is now lest our actions push them dramatically in the 
opposite direction toward further endangering our interests and those 
of the entire region.
    I hope that these hearings give impetus to the efforts of so many 
in this country who believe that the time has come for the United 
States to directly engage Iran, one of the most important and 
influential nations in the Middle East.

    The Chairman. Thank you very much, sir.
    Dr. Hadian.

STATEMENT OF DR. NASSER HADIAN, PROFESSOR OF POLITICAL SCIENCE, 
TEHRAN UNIVERSITY, AND VISITING PROFESSOR, COLUMBIA UNIVERSITY, 
                          NEW YORK, NY

    Dr. Hadian. Thank you very much, Mr. Chairman. I wish also 
to express that this is a very good idea to have the hearing 
about Iran, and again that is very timely.
    Also, I wish to mention that I have been benefited by being 
educated here tremendously in the U.S., and in fact, Senator 
Alexander was the President of my university, the University of 
Tennessee, at the time at which I was graduated, and that is an 
honor and privilege, in fact, for me.
    There are a number of points which I would like to discuss. 
Of course, I have extensively elaborated on them in my paper, 
but briefly I would love to mention the ones which I consider 
are very timely and important.
    First of all, unfortunately, I would like to characterize 
the relationship between the U.S. and Iran predominantly as a 
mutual failure since the revolution. I hope we change the 
course, we change the paradigm, and try to go for a much better 
relationship which is in the best interests of both countries 
and very much a possibility.
    To me the Iran-U.S. cold war is over. We are for all 
practical purposes in fact neighbors. Iran is facing the U.S. 
in Afghanistan. It is facing the U.S. west of Iran in Iraq and 
also in the south in the Persian Gulf. For all practical 
purposes we are neighbors, and I believe we just cannot 
continue any further to have a sort of a cold war. Either we 
have a choice of confrontation or reconciliation, which my 
argument would be basically we are much better off to go for 
reconciliation rather than confrontation which I am not sure 
would serve any one of our countries' interests.
    There are a number of important common interests which are 
just mentioned, but I am not going to elaborate on them. We 
have a huge interest in Afghanistan, narco-terrorism there, 
terrorism, and the problem of refugees for Iran. Also, having a 
stable and strong government in Kabul is in the interest of 
both Iran and the United States.
    In Pakistan, we have both, in fact, a very important 
interest there to see a not-failed government there. Extremism 
on the rise there, and Pakistan is a nuclear power. Pakistan is 
our neighbor. Thus, to see a prosperous and stable Pakistan I 
believe is in the interest of both countries again.
    The same thing is Azerbaijan. In fact, the coming to power 
of now President Aliev and the unresolved dispute with Armenia 
there and the possibility of instability there and having a 
large minority of Azeris in Iran, to see a stable Azerbaijan 
again is in the interest of both of our countries.
    In the Persian Gulf, the same thing. It is very important 
to have a safe and stable Persian Gulf, particularly the safe 
passage of oil.
    The next issue is Iraq. On Iraq, I would like to elaborate 
more. I would emphasize a little bit on the issue of the 
nuclear programs in Iran, on Iraq, and the idea of regime 
change. These are the three points which I would like to 
elaborate a little bit more.
    In regard to WMD or basically the nuclear weapons, I would 
like to say that you have to be a little bit considerate of the 
domestic situation in Iran. We have five major views in Iran 
which are debating with one another.
    The first view which would not be fundamentally different 
from the American view is those who would argue that Iran in 
fact even needs not to have nuclear energy and we do not need 
to acquire extensive nuclear knowledge and technology. The 
powerful Deputy Speaker of the Iranian parliament, Behzad 
Nabavi, in fact has supported this view. He is a very important 
reformist as well. But this is a very teeny minority view.
    The second view is the view that Iran is entitled to have, 
in fact, nuclear energy and also acquire nuclear technology and 
nuclear knowledge. In fact, the very point that Iran signed the 
NPT is because of access to this technology. Many people would 
support this view. In fact, 500 students from Sharif University 
which is the most important and prestigious engineering school 
in Iran, incidentally the same type of students which have 
protested against the Iranian Government and which have been 
welcomed by many here, the same students have publicly stated--
they have published in a statement in support of having access 
to nuclear knowledge and nuclear technology. In fact, they have 
called those who--if the government officials want to prevent 
Iran from such access, they have called it this is treason.
    The third group is a group which would say that we have to 
have access but different from the second one, but they argue 
against, in fact, nuclear weapons. They would say that would 
not increase and enhance Iran's national security environment, 
that would lead to a sort of arms race in the region, and that 
would not serve Iran's best interests. This is a third group.
    And the fourth group is the one which would say that we 
have to have nuclear weapons capability. The first three do not 
link the nuclear technology to security, but the fourth group 
would link it to the security issues. There are two major parts 
in this fourth group.
    One would argue for the fuel, even if the fuel is being 
somehow provided for us. They would like some sort of 
assurances that somehow those countries who are providing the 
nuclear fuel for Iran is not going to be persuaded by one part 
or another to stop providing Iran's nuclear fuel. Thus, they 
are somewhat concerned about that. That is a security issue, 
but a different kind of security issue.
    But there is another major portion of them which would 
think that because of Iran's national environment, because of 
Iran's vulnerability, because chemical weapons have been used 
against Iran, we need to have nuclear capability and that would 
be very much a deterrent factor for Iran and that would provide 
sort of a deterrence. Many people would support this view too.
    And the fifth view is the one which is supportive of, in 
fact, withdrawing from the NPT and going altogether for having 
the weapons.
    The first and the last view are among the minorities, but 
there are a lot of supporters for the other three. I believe 
the international community in general and the U.S. in 
particular is much better off, rather than emphasizing the 
first position, emphasizing the second position, recognizing 
Iran's right to access knowledge and technology and nuclear 
energy, but also addressing the legitimate concerns of the 
fourth group which is the security and fuel through sort of 
assurances for the fuel and a sort of exploring the idea of how 
the insecurity, which is being perceived by the supporters of 
that group, can be addressed and can be provided for. I believe 
that is the only way you can convince a determined nation not 
to follow the path for nuclear weapons. If Pakistan 30 years 
ago with limited resources could develop nuclear weapons 
because they were determined, for sure Iranians if they are 
determined, if they are being confronted with possibly--there 
are people who would argue that we have to follow the other 
way.
    Since my time is up, I wanted to discuss about Iraq and 
about the regime change, but I probably have to stop here, and 
in the question and answer I will try to do that.
    [The prepared statement of Dr. Hadian follows:]

    Prepared Statement of Dr. Nasser Hadian, Professor of Political 
Science, Tehran University and Visiting Professor, Columbia University, 
                              New York, NY

  IRAN'S EMERGING SECURITY ENVIRONMENT AND RELATIONS WITH THE UNITED 
                     STATES: DYNAMICS AND PROSPECTS

                             INTRODUCTION:

    The objective of this paper is to provide an overview of Iran's 
security environment, challenges and opportunities with specific 
consideration to the critical nature of U.S.-Iran relations and its 
current dynamics and future prospects. The paper initially will provide 
a background on the evolving nature of Iran's security environment and 
the historical factors affecting Iranian perceptions and policies. The 
paper then will address factors shaping Iran's decision making process 
and thinking on national security. The paper then will address the 
U.S.-Iran relations in the context of common interests and areas of 
contentions and concerns. The final section will be devoted to several 
key observations on issues concerning Iran and the debate on Iran.
The Background:
    Iran is a country that borders seven other nations, and it is 
located in one of the most crucial and strategic locations of the 
world. It connects the Middle East to Central Asia and Southwest Asia 
and is located between the oil rich and strategically significant 
Persian Gulf and the Caspian Sea.
    Iran maintained a border with the former Soviet Union, and it 
played an important role for the West during much of the Cold War. 
Because of its strategic location, its geopolitics and large oil 
reserves, Iran drew the attention of both East and West during this 
period. Its domestic stability along with its alliance with the West 
was very crucial to the maintenance of Western interests. As an 
extension of its strategic significance, it became one of the pillars 
of the United States' twin pillar policy for the preservation of 
stability in the Persian Gulf. The events of the 1979 Iranian 
Revolution changed the geopolitics of Iran, an overnight transformation 
from being one of the closest and most strategic allies of the U.S., to 
being one of its most vehement opponents. Iran's threat perception and 
foreign policy priorities changed with respect to its immediate 
environment and the larger world at this pivotal juncture.
    The Iran-Iraq war (1980-1988) left a deep imprint on the minds of 
ordinary Iranians and policy makers alike. Iran felt alone in its war 
with Iraq, going from a Western client to fighting an Iraq who had the 
full support of important countries of the Arab and Western world. The 
most relevant factor in this analysis for this discussion is the use of 
WMD (chemical weapons) against the Iranians and Iraq's indigenous 
Kurdish population. According to Robin Wright, Iran lost about 50,000 
individuals during the course of the war as a result of the use of 
chemical weapons. The West and Arab world supported Iraq in its 
endeavors, providing military hardware, trainings, sometimes manpower, 
credits, and satellite imagery to a hostile and WMD-toting Iraqi force. 
The Iranians believed that the usage of WMD was a ``red line'' in 
combat that would not be crossed. To their dismay, they found out that 
international community in general and the West in particular either 
supported or ignored the use of chemical weapons in Iran. Witnessing 
such horrible facts Iranian elites reached a definite conclusion that 
Iran had to rely on its own resources for providing security for its 
citizen. They also concluded that the leaders of most powerful nations 
could easily be persuaded to ignore the crossing of a ``red line'' for 
shortsighted interests and the hatred of a regime in Tehran.
    The next important event, which impacted Iran tremendously, was the 
collapse of the former Soviet Union. A new geo-politics emerged which 
changed the equation of threat and opportunity for Iran. Iran found 
itself bordering three new land neighbors, and two new states vying 
independently for the Caspian Sea access. A new geopolitics emerged: 
the increased chance to use the opportunities to cooperate with these 
countries was balanced by the immediate regional and the great power 
decision to isolate Iran, especially in area of energy, and the new and 
quickly erupted regional ethno- territorial conflict between new 
neighbors, namely Azerbaijan and Armenia. In Afghanistan, due to the 
withdrawal of Soviet forces, there was a period of internal war between 
various Mujahideen factions which led to instability and a serious 
refugee issue for Iran. Iran also became a significant transit route 
for narcotics at this time.
    These momentous events were synonymous with the coming to power of 
President Rafsanjani. Iran tried to play a more constructive role in 
the region and internationally as well. Iran's relations with its 
Persian Gulf neighbors improved, and Iran's relations with the 
Europeans and the East Asians also enhanced.
Relations with the U.S.:
    The U.S. coup de tat of 1953 in Iran and its subsequent support of 
the Shah during his quarter of a century dictatorial regime was an 
important factor in shaping the perception of Iranians toward the U.S. 
In post-revolutionary Iran, many were still suspicious of U.S. 
intentions and some Iranian university students stormed the U.S. 
Embassy, taking the Americans hostage for 444 days. The hostage crisis 
left a negative image of Iranians in the minds of most Americans. Later 
in mid 1980s during the Reagan administration some attempts were made 
to improve relations with Iran; those attempts were buried with the 
Iran--Contra affairs.
    President George Bush also noted in his inaugural speech in January 
1989, clearly having the American hostages in Lebanon and the possible 
role that Iran might play in their release in mind, indicated that 
``good will begets good will''. The message was received well in Iran; 
Tehran facilitated the releasing of hostages in Lebanon. While 
officially neutral in Second Persian Gulf War, Iran supported the 
Operation Desert Storm. Rather than the reciprocal promise of good 
will, Iran became a target of the U.S.'s ``dual containment'' policy. 
Containment of Iran became an official doctrine during the Clinton 
Administration and economic sanctions and toughening of visa 
restriction and cultural exchanges followed. With the election of 
President Khatami in 1997 in Iran, a new opportunity emerged for 
improving relations between the U.S. and Iran. Positive exchanges 
between the leaders of both countries was followed by the U.S. and Iran 
open expression of regret for the events of 1953 and the 1979 hostage 
crisis respectively. The positive atmosphere of the late 1990's, 
however, did not lead to concert actions. The hopes were that the 
United States and Iran would ultimately normalize relations within a 
few years.
    With the election of President Bush and the horrible events of 
September 11th, a new security environment emerged which impacted both 
the U.S. and the Muslim World, Iran in particular. Immediately Tehran 
released an official condolence. Soon after the tragic event, Iranian 
citizens poured out into the streets to show solidarity with Americans, 
Iranian firefighters expressing regret for their counterparts in the 
United States. Across the Iranian political spectrum, including from 
the President Khatami himself, there was a strong condemnation of the 
attacks and terrorism in general. Nonetheless, ``The War on Terrorism'' 
became the motto by which Bush approached his presidency, and it became 
the primary objective of his administration. During the U.S. war 
against Afghanistan, Iran was instrumental in supporting the Northern 
Alliance and defeating the Taliban and Al-Qaeda. Iran and America both 
played an important role, cooperating in the constituting of a new 
government in Kabul during the conference in Bonn. Expectations were 
raised at this time that finally the end of the road of hostility was 
reached. Light could be seen at the end of the tunnel for a workable 
relationship once again between these two once allies.
    Unexpectedly, Iran was accused of supporting Al-Qaeda, and Iran was 
included in President Bush's State of the Union speech as a member of 
the ``axis of evil''. In the minds of Iranians, this created an image 
of the Bush administration as one driven by ideology and intent on 
reshaping the entire region. Diverse forces with different political 
persuasions in Iran opposed the inclusion of Iran in the ``axis of 
evil''. They were convinced that U.S. intentions would be detrimental 
to the national interest of Iran. The U.S. war in Iraq generated a 
debate in Iran again. What should Iran's policy be toward the U.S. and 
the war? There were calls for neutrality or implicit support from a 
majority of the Iranian political spectrum. With the eventual 
dismantling of the Ba'ath regime, a new security environment has 
emerged which has created both opportunities and threats for Iran.
    One of the most important impacts of U.S. policy toward Iran has 
been the securitization of politics in Iran, and the external 
negativity towards Iran. Everything in Iran became a matter of state 
security. Newspapers were closed down, political activists, along with 
academicians, were put in jail, and political parties were controlled 
or banned many on charges of being agents of the U.S. Externally, 
especially in the region, an informal U.S.-inspired international 
``reward structure'' emerged that promoted hostility towards or 
distance from Iran. Regional actors used this opportunity to receive 
U.S. support in their presumably unified effort to contain the Iranian 
fundamentalist threat. Nations are calling for U.S. concessions to 
contain Iranian-style fundamentalism. A sense of mutual obsession which 
cut on both sides domestically and internationally became the enduring 
characteristics of the U.S.-Iran relations after the 1979 revolution. 
Occasional attempts at realistic assessment of the relations and hopes 
of possible rapprochement could not survive the intensity of the past 
and recent legacy of hostility and mutual frustration. Will the 
immediate or long-term future be the repetition of the past 25 years, 
or one should expect and hope for a different and better alternative?

   IRAN'S NATIONAL SECURITY: THE ENVIRONMENT, POLICY SOURCES AND THE 
                      DECISION MAKING INSTITUTIONS

The Environment: The Center of Regional and Global Storms:
    Three times in the last 25 years events of great historical 
significance have transformed Iran's national, regional and global 
setting. The 1979 revolution, the collapse of the Soviet Union, and the 
tragedy of 9/11 and the U.S. response to it. The revolution changed not 
only the prism through which the external world was received and 
interpreted, but also how Iran was perceived and treated; Saddam's 
aggression and the disruption of relations with the U.S. were the most 
consequential results. The collapse of the Soviet Union, changed Iran's 
geopolitics, removed the limited umbrella of cold war, and added both 
opportunities but mostly vulnerabilities by exposing Iran's northern 
frontier, compiling the problems of an already border/neighbor-
saturated country. The 9/11 tragedy changed, one more time Iran's 
regional if not very national security environment.
    One doesn't have to be sympathetic to the Iranian regime to see the 
incredible array of security challenges facing Iran. A simple look 
might tell the basic sketches of Iran's regional complex. In the north 
the stability of the Soviet time has been replaced by an intense new 
``great games'' over the resources of the Caspian Sea, largely to the 
territorial and, political, economic, and environmental detriments of 
Iran. In the East first it was Soviet occupied Afghanistan, replaced by 
a hostile Taliban-led, and now run by the United States. Another 
neighbor in the East, Pakistan, while ``friendly'' on diplomatic face, 
supported Taliban, harbored the anti Shi'/anti Iranian regional 
extremist movement, and it is armed with nuclear weapons. The Eastern 
front has also been the source of grave national security as the bulk 
of socially devastating drug trafficking to Iran's young population is 
generated from there. To the West is, Turkey, a NATO member, with 
strong military ties to the U.S. and until recently a vocal champion of 
the theme of ``the Iranian threat''. And, Saddam's Iraq with his 
aggression and the use of WMD against Iran. Post Saddam Iraq is run by 
the United States, a country that considers Iran a member of axis of 
evil and openly talks about its regime change. In the South, where Iran 
national and strategic resources are located, the country again faces 
the United States.
    Thus a true example of an international system that is based on 
``self help'', Iran's ``anarchical'' regional environment has all the 
ingredients of an strategic nightmare: Too many neighbors with hostile, 
unfriendly or at best opportunistic attitudes, no great power alliance, 
a 25 years face-off with greatest superpower in history, living in a 
war infested region (5 major wars in less than 25 years), a region ripe 
with ethno-territorial disputes on its borders (Iran has been a major 
regional refugee hub), and with a dominant Wahabi trans-regional 
movement which theologically and politically despises Iran, and finally 
a region with nuclear powers; Pakistan, Israel, and India. Iran is 
located at the center of the ``uncontrollable center'' of post-Cold war 
and post-9/11 world politics.
    Two points are worth emphasizing in understanding Iran's national 
security environment. First, that assessing Iran's intentions and 
policies, must out of rationality and not sympathy, take this taxing 
environment into serious consideration. Second, that in spite of this 
challenging security framework Iran has been able to maintain its 
territorial and political integrity, stability and considerable 
infrastructural development and an stable society, without external 
support.

The Policy Sources and Decision Making Institutions:
    A detailed discussion of Iran's decision-making process is beyond 
the scope of this presentation, but two points are worth emphasizing. 
First, the decision on major issues is not made by one person, or a 
particular group; no body and no institution, in real world, has such 
authority. Second, Iran's deacons on key issues are made through 
consensus. Iran's defense and security policies and decision-making are 
articulated by and developed in a composite of complex processes. A 
number of formal institutions, informal networks, personal 
relationships, and individual initiatives play a role in the formation 
of Iranian policy. From the outside, it may seem very chaotic and it is 
often difficult for outsiders to know who makes what decisions and how. 
However, the output of the system is consensually based. While the 
consensually driven process provides policy stability, it nevertheless 
makes reaching decisions more difficult and arduous. On major national 
security decision, while the elites have been too eager to factionalize 
and politicize the issues including relations with the U.S., but at the 
end great decisions are made through consensus. A consensus that is 
borne out of a painstaking process of give-and-take, public and private 
maneuvering, and at the end a ``democratic'' process in its own 
context, within a maze of incredibly complex labyrinth of interest 
groups and factions. The conservatives have significant power, but 
their rhetoric is both checked by their own sense of reality and 
serious challenge within their own ranks, and by the reformers. The 
ironic and positive role of the conservatives in charge should not be 
overlooked; they control the ``real believers'' and hot headed 
radicals; something that the reforms are not capable of doing. The 
difficult and so publicly made debate and struggle over the nuclear 
issue last week was made in such a complex environment.

Policy Sources:
    The Iranian national security policies are influenced by and are 
made at the intersection of ideological factors which in addition to 
revolutionary and reformist Islam, it includes Iranian nationalism. 
Consideration over the economic prosperity of a very demanding 
population, the multi ethnic character of Iran and finally the 
geopolitical consideration play very significant role in informing and 
framing Iranian national security decisions and policies. A critical 
point that needs underscoring here is that all these factors in one way 
or the other involves or affected by U.S.-Iran relations. Four 
important facets are influential in the formulation of Iran's defense 
and security policies:
    1. Ideological Sources: Three important ideological orientations 
are influential in shaping the security and defense policy in Iran: 
Revolutionary Islam, Reformist Islam, and Iranian Nationalism. 
Depending on the particular issue and the constellation of political 
forces, along with the international community, any of these three 
orientations can have a bearing on policy more or less. If there isn't 
consensus among these three camps, as is often times the case, there 
arises a serious problem in implementation.
    2. Economic Prosperity: Iran's 70 million people have expectations 
of a better standard of living. A quarter century has passed since the 
time of the revolution, and the citizens of Iran are expecting better 
economic performance and government policy. Thus, the Iranian 
government is under serious pressure to perform. Iran has improved its 
economic relations with the rest of the world and also created 
infrastructure for foreign investment with the hopes of increasing 
domestic prosperity. On the whole, economic issues are exercising more 
and more influence on Iran's security and defense policies.
    3. Multi-Ethnic Character: Iran is comprised of different ethnic 
and religious minorities. Many of these minorities have an affinity to 
their people on the other side of the geopolitical border. This has an 
important impact on the defense and security policies of Iran. Whoever 
presides in Tehran and wants to form a coherent policy must be wary of 
the multi-faceted nature of society.
    4. Geopolitical Considerations: More and more, Iran's security and 
defense policies are being influenced by geopolitical issues. 
Instability in Afghanistan and Iraq, uncertainties in Azerbaijan and 
Pakistan, and Iran's maintenance of good relations with the Persian 
Gulf countries all have a bearing on Iranian policy. A wide U.S. 
presence in many of these areas poses a problem: there is no buffer, or 
physical space between Iran and the U.S. anymore; they are literally 
neighbors to the South, East, and West.

Decision Making Institutions:
    A number of formal and informal institutions and organizations are 
additionally important in shaping security policy in Iran. Highest 
among the formal institutions include Iran's armed forces (both regular 
and revolutionary), intelligence, interior, and foreign ministries, 
Islamic propagation organizations, the expediency council, the office 
of the President and the Supreme Leader, the Supreme National Security 
Council (SNSC), and the Foreign Relations and Security Committee of the 
parliament. A number of informal organizations and individuals also 
have input in security policy issues. Depending on the nature of the 
issue, the interplay between these different organizations and 
institutions are different and their impact on policy differs as well. 
The ultimate outcome is a product of debates and negotiations between 
these groups.
    The Supreme National Security Council of Iran plays a very 
important role in initiating, debating, aggregating and helping reach a 
consensus on security issues. All major players in the security 
apparatus of Iranian government have a representative in the Supreme 
National Security Council. Typically, decisions of the SNSC are abided. 
To violate a decision of the SNSC is usually associated with paying a 
heavy cost. This process was displayed last week, when the SNSC played 
a pivotal role in making decisions with regard to Iran's nuclear 
program. Though a number of hardliners and conservatives disagreed with 
the decision, and expressed concern with the decision, they ultimately 
abided by the decision. It is interesting to note that usually in the 
United States, the Secretary of State is perceived to be a more 
powerful individual than the National Security Advisor. However, in 
Iran as we saw recently, the role of the General Secretary of the SNSC 
was perceived as more central than that of the foreign minister. The 
General Secretary sat among the three European Foreign Ministers during 
the interview process, which indicates the power of the SNSC in making 
ultimate security decisions.

          U.S.-IRAN RELATIONS: ISSUES OF TENSIONS AND CONCERNS

    There are several critical issues that have been at the center of 
U.S.-Iran tensions especially since the early 1990's, namely Iran's 
nuclear program, terrorism and radicalism, the Palestinian Israeli 
conflict and the peace process, and finally the issue of human rights. 
While the degree of significance and relevance of each might differ, 
they have collectively become important issues of concerns in U.S.-Iran 
relations.
    1. Iran's Nuclear Program: Iran began its nuclear program in 1974 
during the Shah's regime with the perception that oil is a finite 
resource that would ultimately be exhausted. Ironically, the U.S. 
supported that initiative. The statements that are being heard today--
that Iran doesn't need nuclear energy due to its vast oil and gas 
reserves, were never made before 1979. This inconsistency is still a 
confounding issue in the minds of many Iranians. They are surprised 
that with a population twice the size of pre-revolutionary Iran, and 
oil consumption exponentially higher, the U.S. would argue this point 
of contention at this point in time. Simply put, this argument is 
viewed as politically motivated argument particularly in the context of 
today. Five domestic views can be identified with regard to Iran's 
nuclear program.

          a. Small numbers of people argue that due to environmental 
        and economic reasons, nuclear energy is not a necessity for 
        Iran. Arguments have been that the cost of investment for 
        generating a kilowatt of electricity is more expensive using 
        nuclear energy than it is with other means. Behzad Nabavi, the 
        powerful deputy speaker of parliament and one of the 
        influential leaders of the reformist movement, is a supporter 
        of this view (ISNA, 15, 08, 2003). This seems to be the 
        American position as well.

          b. A much larger group argues that Iran needs nuclear energy 
        and should acquire nuclear knowledge and technology. They argue 
        that this is an economically wise decision (investing in 
        alternative forms of energy) and in terms of pride and 
        prestige, many would like to acquire that knowledge and 
        technology. It is seen as technology of the future, and no 
        country should be deprived of having access to such knowledge 
        and technology. They argue that the very point of Iran's 
        joining the NPT was to have this access and technology. Many 
        university students, hundreds of faculty members of 
        Universities, and officials and elites Iran wide are supporters 
        of this policy. The European, Japanese, and Russian governments 
        support this position.

          c. Some hold the conviction that Iran should have access to 
        nuclear technology and be able to use nuclear energy for 
        civilian purposes but it should develop neither nuclear weapon 
        capability or nuclear weapons. Because they will not enhance 
        Iran's national security; violate Iran's international 
        commitments; contribute to regional proliferation and will be 
        detrimental to Iran's relations with the other states. They are 
        in favor of Iran's signing of Additional Protocol, are 
        supportive nuclear disarmament and are critical of the U.S. 
        overlooking Israel's nuclear weapons which works against 
        creating a nuclear free zone in the Middle East. The possession 
        of nuclear weapons by other states, including Pakistan and 
        Israel tend to weaken the proponents of this view in Iran.

          d. Some would argue that we should not only have nuclear 
        technology for alternative sources of energy and a source of 
        knowledge, but would also argue that the capability for nuclear 
        weapons should also exist. For the supporters of this outlook, 
        the security environment of Iran considering the usage of 
        chemical weapons against it with no complaint from the 
        international community, and Iran's threat perception 
        necessitate that this capability exist. There is a nuance that 
        should be considered in this perspective. Some argue that the 
        capability to produce fuel for the reactors must exist. Their 
        main concerns are not typical security per say, but rather that 
        they may have to be dependent on others for fuel if they are 
        not self sufficient. This rises from the uncertainty of having 
        access to the necessary fuel for the reactors. The other 
        portion of the group would argue that it is in fact important 
        for Iran to have all the necessary elements and capabilities 
        for producing weapons. Of course, they only want the 
        capability, not the weapons. The capability alone is an 
        important strategic deterrence in their view, and can have a 
        positive contribution to Iran's defense and national security 
        policies. There are quite a few influential people who support 
        this perspective.

          e. A small number of people argue that Iran should withdraw 
        from the NPT and move to develop weapons as soon as possible. 
        They believe that Iran should pay the price of international 
        sanctions if necessary. They cite the hostility toward Iran and 
        Iran's security environment, and say that the weapons would 
        make an ideal deterrence. It would preserves its territorial 
        integrity, provide reliable security and enhance Iran's status 
        in the region and the world.

    The first and last groups have few supporters in Iran. They are 
seen as extreme positions. A majority in Iran supports b, c or d views, 
including the elites and governmental officials. It would be very 
unwise of the U.S. to press for the first position, because that would 
be perceived by a majority of ordinary Iranians and elites alike as 
indicative of hostile intentions of the U.S. In other words, the U.S. 
would want to deprive Iran of achieving knowledge and technology to 
help better itself. An insistence on this position will serve to unify 
diverse forces in Iran against the Americans.
    The U.S. has already applied severe economic sanctions to Iran in 
order to change the behavior and attitude of Iranian officials in 
regards to terrorism, WMD and Arab-Israeli conflict, but as we are 
witnessing, none of the objectives of these policies have been 
achieved. According to the State Department, Iran is still at the top 
of the list of terrorist supporters, Iran still opposes the peace 
process as the U.S. sees it in the Middle East and according to the 
IAEA, Iran has also had vast improvement in its nuclear infrastructure 
and capability. Some would argue that much tougher sanctions by the 
international community would force Iran and those who support 
weaponization of Iran's nuclear program to quit, but if indeed Iran is 
determined to achieve nuclear weapons (although this author does not 
believe that Iran is), it has the capability to do so. Their resources, 
for example, are significantly better than that of Pakistan to achieve 
this objective. Thus, additional sanctions will more than likely be 
unsuccessful in convincing those in Iran who would like to see a 
weaponization of Iran's program.
    It should also be pointed out that the surgical military attack on 
different nuclear sites in Iran (either by Israel or the U.S.) would 
only enhance and strengthen the will of the Iranians in going forth 
with full nuclear weaponization.
    Additionally, Iran has sufficient resources in Iraq, Afghanistan, 
Azerbaijan, the Persian Gulf, Lebanon and other places to escalate the 
tension. Iran's capabilities in these areas, policy makers in Iran 
believe, should have enough deterrence for those contemplating a 
surgical attack on Iran's nuclear facilities. Such a surgical attack, 
also, would have to be unlimited and total for it to be successful, 
which poses dangers that could be unimaginable. With the coming 
presidential election in the United States, and the U.S. difficulties 
in Iraq and Afghanistan, this seems an unlikely option. Iran's sense of 
pride and independence and their capabilities and the lack of support 
for such action by even the most hostile anti-Islamic Republic forces 
would make this action further unrealistic.
    A related issue is Iran's missile program. Asking Iran to stop or 
dismantle its missile program would simply not work. Considering the 
missile attacks by Iraq in the course of Iran-Iraq war, and missiles 
importance and roles in defense policy, Iranian military planners were 
convinced that it is imperative for Iran to invest in missile research 
and development. Iran has successfully tested mid-range missiles-Shahab 
3. As a part of comprehensive solutions to problems between the U.S. 
and Iran, Iran may be persuaded to stop developing longer-range 
missiles and also can be persuaded to deploy the already tested Shahab 
3 from a particular point in its territory, which cannot reach 
sensitive areas in Europe and Israel. A verifiable regime can be agreed 
upon to check these deployments. These would be important confidence 
building measures.
    2. Terrorism: Two kinds of terrorism can be distinguished: 
Politically oriented terrorism and ideologically oriented terrorism. 
Politically oriented terrorism is an extension of politics. A cost 
benefit analysis is present in a calculation of politically oriented 
terrorism. Thus, if in someone's calculation the benefit of politically 
oriented terrorism outweighs the costs, the possibility of action 
increases. Suicide bombs in Israel can be included in this category. 
Hence, it is very much possible that if a ``reasonable'' offer is 
proposed to the Palestinians, suicide bombing can be stopped. It is 
much easier to deal with this type of terrorism than the other kind. 
Ideologically oriented terrorism is inherently and fundamentally a 
different kind of action, though the consequence of action and the 
outside appearance of such acts may seem the same. In this type of 
terrorism, the actor performs a duty regardless of consequences. 
Consequences are part of the calculation of those who partake in 
politically oriented terrorism, while in ideological terrorism 
consequences are secondary in importance. By performing these acts, the 
actor has been promised true victory no matter what the specific 
outcome of that event might be. Though it has been said that 
politically oriented terrorism is easier to deal with, ideological 
terrorism is more difficult particularly in fighting extremist Islamic 
terrorist actions.
    Islamically oriented radicalism is on the rise in Islamic 
countries. It seems that the Muslim masses, elites, and intellegencia 
have come to the conclusion that the Islamist alternative to secular 
ideas is more promising. There is introspection in Islamic countries as 
to why they are behind the West in a number of important areas of 
social life, and they feel that their lifestyle and belief system is in 
danger by the imposition of sets of alien values through globalization 
or their Western supported governments. They believe a return to Islam, 
to an idealized past or an Islamically constructed utopian in the 
future is the solution. There is a belief that this idealism can be 
brought to the here and now. They are willing to fight with whatever 
force they deem is an impediment to the realization of their 
objectives. If these forces were their governments, or supporters of 
their governments, they would fight with them. Their commitment to this 
cause is not a rational cost/benefit analysis. The only way you can 
fight with them and deconstruct these ideological underpinnings is 
through an alternative reading of Islam which seems both modern and 
authentic. Tanks, missiles and other state of the art military hardware 
are not appropriate weapons for fighting these kinds of wars. In other 
words there is no military solution for this kind of terrorism. In 
Iran, reformists' construction of Islam is the antidote to that radical 
construction. In fact, a successful reformist government in Iran and a 
reformist construction of Islam--which has already been articulated--is 
the best prescription to fight with the radical ideological 
construction of Islam. In the hearts and minds of many Muslim 
intellectuals and intellegencia, it is the Reformist Islam--a reading 
of Islam which is compatible with modernity--that appears very native, 
authentic, and appealing. The West like the Muslim world has an 
interest in seeing the victory of reformist Islam in its battle with 
extremists Islam.
    Al Qaeda, Hezbollah, Hamas, and Palestinian Islamic Jihad: It is 
wrong to lump different organizations of different stripes together, 
and to try to prescribe the same course of action in dealing with them. 
Iran's relation to each one of these four organizations is different. 
Iran's relations with Hezbollah in Lebanon are much closer than to the 
others. Across the political spectrum in Iran, there is support for 
Hezbollah. To them, Hezbollah is not only a force which fought for an 
end to Israeli occupation of Lebanon, but also a representation of 
Shiite rights in Lebanese society. Iran is a predominantly Shiite 
country, which feels a strong affinity with the Lebanese Shiite 
community. In Hezbollah, we also find differences of opinions like we 
do within Iran itself. There are hardliners, conservatives, and 
reformers that preside within the party of Hezbollah. Thus Iranian 
reformers feel closer to reformers in Hezbollah, and conservatives to 
their counterparts in Hezbollah as well. In the eyes of the Iranian 
reformists and popular supporters of the reformists, there is the view 
that Hezbollah is not involved in acts of terrorism. If Hezbollah were 
to engage in more radical acts that would be easier to distinguish as 
acts of terrorism, the Iranian reformers would react accordingly.
    There is generally support for the Palestinian cause among 
Iranians, but approaches vary. With regard to Hamas, there is a 
different type of relationship. Though conservatives and hardliners 
support Hamas, this support manifests itself rhetorically and 
psychologically. Certainly, the sympathy that exists between 
conservative Iranians and Hamas is weaker than that between many Arab 
countries and the latter group. With regard to Islamic Jihad, Iran has 
a slightly closer relationship (hardliners in Iran). However, Iranian 
reformers perceive both Islamic Jihad and Hamas as radical 
organizations, which hurt the Palestinian cause. For the Iranian 
reformers, the Palestinian Authority represents the Palestinian people. 
In other words, they support the PA. Iran can play a very constructive 
role should they be asked seriously to take a positive role in the 
Israeli-Palestinian conflict. They might be able to exercise some 
influence on various groups, for example.
    With regard to Al Qaeda it should be noted firstly that Iran has 
never supported this group. In fact, for the past 5-6 years, they have 
been engaged in a proxy war with Al Qaeda and the Taliban in 
Afghanistan. Al Qaeda's actions are in fact considered extremism even 
in view of the Iranian radicals. Even before September 11th, Iran 
policy makers across the political spectrum condemned Al Qaeda's 
actions and its naive construction of Islamic ideology. Post 9/11, 
Iranians have continued to vehemently condemn Al Qaeda's actions. After 
the U.S. overthrow of the Taliban and their fight with Al Qaeda, quite 
a few Al Qaeda members escaped to Iran. Many of them have been 
arrested, some of them being sent to their countries of citizenship. 
Still, quite a number of them are in custody in Iran.
    Since the U.S. invasion of Iraq and overthrow of Saddam however, a 
peculiar relationship between the U.S. and the MKO (Mujahideen Khalq 
Organization) has emerged. The MKO is an Iranian opposition group which 
has fought violently with the Iranian government since the early days 
of the revolution. They have killed many Iranian officials and non-
officials along the way. Throughout the Iran-Iraq war, the MKO 
cooperated with Saddam in fighting with Iran, and also it is widely 
believed it was used as a suppressive apparatus by Saddam against 
Shiite and Kurdish forces. On the one hand, the Mujahideen has been 
listed as a terrorist organization on the State Department's list. 
However, some forces in Washington have argued that the MKO can be used 
as an instrument to apply pressure on the Iranian government, be a 
counterbalance to the Bath Brigade, collects intelligence for the U.S., 
and participates in possible acts of sabotage against Iranian interest. 
Iran is receiving mixed signals from Washington with regard to the 
status of the MKO. Sometimes, it is claimed that they have been 
disarmed. At the same time, there are reports that they are in a 
position to be rearmed if necessary. Thus, the issues of Al Qaeda and 
the MKO are tied together in a sense. Iranians would not accept the 
U.S. on the one side preaching moral clarity in the fight against 
terrorism, while finding an interest in supporting an organization that 
they themselves label terrorist on the other hand.
    3. The Peace Process: Although Iran's official position is a one 
state solution in Israel and Palestine, Iran has publicly announced 
that it is ready to accept a two state solution if the Palestinians do. 
Although Iranian leaders have publicly opposed the peace process and 
verbally attacked Israel, they have repeatedly said they would not do 
anything to sabotage the peace process in practice. For sure, there is 
a dispute in Iran with regard to dealing with this issue. A majority of 
Iranian reformers have already publicly announced that they support a 
two state solution, and they oppose extremism of both Israelis and 
Palestinians. These reformers have been accused by the conservatives 
that by making such statements they are betraying the Palestinian 
cause.
    4. Human Rights: The issue of human rights is very much alive in 
the Iranian domestic political scene, and Iranians are debating and 
fighting among themselves on this issue. A number of debates have 
emerged reconciling human rights and Islam, which has significant 
impact on the Islamic World. Many individuals and institutions have 
been engaged in supporting human rights issues. Thus, there is an 
important constituency inside of Iran that demands its government 
respect and promotes human rights and vehemently opposes the violation 
of those rights by any institution. There are many different NGOs in 
Iran, which directly or indirectly deal with this issue. The recent 
reception of the Nobel Peace Prize by Iranian Shireen Ebadi, a human 
rights activist, has strengthened the morale of human rights supporters 
in Iran.
    The U.S. has not been consistent in its demand for the observation 
of human rights in Iran. At times, it has emphasized human rights, and 
other times it has used it as a means for pressuring Iran. For sure, a 
double standard of U.S. application of human rights issues to Iran and 
not its allies with worse human rights records has served to politicize 
the issue. Support for human rights, if not used as a means to pressure 
Iran, can be a genuine objective of U.S. foreign policy toward Iran. 
The U.S. should be sensitive of domestic issues, and pay attention to 
debates within Iran instead of superimposing its own standards 
inconsistently on Iran.
    If U.S. policy makers are truly interested in non-proliferation of 
nuclear weapons, a bold and new initiative should be adopted in dealing 
with Iran. The U.S. should also be supportive of the second Iranian 
position on nuclear issue like the Europeans, but should also address 
the two most important considerations of the third position. Iran 
should be assured of reliable source of fuel and legitimate national 
security concerns of Iran should be addressed. A Middle East free of 
nuclear weapons, and a collective security arrangement, which can 
include the U.S. and others, and bilateral security assurances to Iran 
all should be explored. In general the nuclear issue can be part of a 
comprehensive approach to solving Iran-U.S. problems. None of the 
Iranian requests are outside the bounds of the NPT. We have lost many 
opportunities in the past, and we have both paid the cost of these 
blunders. Both Iran and the U.S. have important common interests. The 
issues of concern to both sides should be addressed in a bold and 
comprehensive way.
    Through engagement, and not containment or intensification of 
hostility, the U.S. can address its legitimate concerns and interests. 
This would be welcomed by Iran. In return, for cooperating with the 
U.S. on these points, Iran has some concerns and demands as well. The 
most important of these would be the recognition of its revolution and 
perceiving Iran as a normal state and supporting Iran's legitimate and 
constructive regional role. Again it should be repeated that this may 
seem symbolic, but it indeed plays a very important role in the minds 
of Iranian policy makers. As an indication of such a changed perception 
by U.S. policy makers, a number of major measures should be adopted by 
the U.S: For one, sanctions should be lifted. As it was stated before, 
they do not have the intended outcome anyway, but they pose a 
psychological barrier for Iranian policy makers. Second, U.S. should 
not be an impediment toward Iran's ascension to the World Trade 
Organization. Last week, the U.S. again prevented Iran from initiating 
the process of joining the WTO. Third, the unfreezing of Iranian assets 
is also very important. Fourth, changing rhetorical dynamics of 
demonization will have a major impact. And finally, a preliminary move, 
which will have a major positive impact in Iran especially among the 
public is the easing of visa restriction for family visits, academic 
purposes and cultural exchanges. This will not be a costly measure but 
its impact will be very significant. After all no Iranians were 
involved in 9/11 or any terrorist activity in the United States; the 
pouring of sympathy for the U.S. on this tragedy in Iran was and 
remains constant. A collective punishment that actually has been 
unusually tough on Iranians who try to visit the U.S. has been very 
damaging.

             U.S.-IRAN RELATIONS: AREAS OF COMMON INTERESTS

    While the relations between Iran and the United States have been 
signified by hostility and lingering issues of concern, the two 
countries, ironic as it may appear, have significant common interests 
with considerable countervailing potential and the weight to overcome 
the differences and the tensions. These common interests are most 
significantly expressed in the desire of both countries for regional 
stability in the Middle East, the Caspian Basin and in Southwest Asia. 
A common desire which has given a new and urgent impetus in post-9/11 
era and the subsequent U.S. military intervention in the region.
    1. Afghanistan: Iran has a long and porous border with Afghanistan, 
and the security and stability of Afghanistan are very important to 
Iran and America alike. Having a large number of Afghan refugees in 
Iran, having lost more than 3000 Iranians in fights with Narco-
Terrorists, and the presence of cheap narcotics in Iranian streets have 
made Iranian policy makers determined in seeking a stronger and stable 
central government in Afghanistan. The United States also has an 
interest in a stable and secure Afghanistan because of its fight 
against terrorism. Narcotics are also a problem for the U.S. and more 
notably Europe. Rather than competing with one another, and perceiving 
one another as a threat which can jeopardize the entire situation in 
Afghanistan, it is imperative to cooperate for the sake of the 
prosperity and improvement in Afghanistan. Depending on U.S. posture 
toward Iran, Iran has the ability to either use its infrastructure to 
play a constructive role in Afghanistan or do otherwise.
    2. Azerbailan: With the coming to power of Ilham Aliev and his 
deficit of legitimacy the possibility of subsequent instability in 
Azerbaijan is high, yet unresolved disputes with Armenia, and a large 
population of Azeris in Iran, Iran has an interest in seeing a stable 
and prosperous Azerbaijan to its North. The U.S. also has similar 
interests in Azerbaijan. Both nations therefore must help ease tension 
between Armenia and Azerbaijan. Rather than making it a point of 
contention between two countries, and adopting exclusionary policies, 
Iran and the U.S. should cooperate and would benefit greatly from 
mutual respect. Any U.S. support for an Azerbaijani irredentist 
movement in Iran, discretely or indiscreetly, will be perceived by an 
overwhelming majority of Iranians as a hostile act.
    3. Pakistan: Both Iran and the U.S. have interests in seeing a 
nuclear Pakistan not turn out to be a failed state. The rise of 
extremism in Pakistan and the multiethnic nature of Pakistani society, 
the prevalence poverty, and its contention with India can lead to a 
situation which will pose a danger to the region and to the world. 
Stopping narcotic traffic through Iran, maintaining secure borders, the 
Baluchistan minority problem, and the preservation of the rights of 
Shiites in Pakistan are very important issues for Iran. Included among 
these is the safety of Pakistan's nuclear weapons. The U.S. has an 
interest to see an extremist controlled and democratic Pakistan which 
does not place nuclear weapons in the wrong hands as well. Both the 
U.S. and Iran would like to see control of extremist elements within 
Pakistan.
    4. The Persian Gulf: Iran and the U.S. both have an interest in the 
safe passage of oil in a stable and secure Persian Gulf. Stability of 
world energy markets through cooperation and coordination between 
producers and consumers is in vital interest of both countries and 
world community as well.
    5. Iraq: While all major U.S. regional concerns and preoccupations 
somehow involve Iran, none has the immediacy, weight and far-reaching 
regional, global and domestic implications of the future of Iraq. The 
enormity of the U.S. stakes in Iraq needs no explanation; what is not 
often acknowledged or appreciated is Iran's role in Iraq's future. 
Beyond the U.S., Iran is and will be the most influential and relevant 
state actor in Iraq. Not only Iran's proximity, but significant though 
until now suppressed, historical, institutional, personal, and 
religious ties, in addition to Iran's knowledge of Iraq and its 
intricacies, underscore its significance and relevance. A hostile U.S.-
Iran relationship, especially one with built-in coercive military and 
economic measures, will make a successful reconstruction in Iraq very 
difficult if not impossible. One can easily assume the same in 
Afghanistan.
    Since Iraq is a pressing issue at this point in time, I would like 
to expand on it in more detail. Overthrowing the Saddam regime was the 
easier part of the Iraqi crisis. Establishing peace and security, 
winning the terrorism war and convincing the Iraqi, Arab and Muslim 
masses that America is not an occupying force and is not planning to 
plunder Iraqi oil and wealth, and it does not have a grandiose plan for 
reshaping the Middle East map are much harder tasks to achieve. 
Radicalism in the form of terrorism and suicidal bombers will certainly 
increase against Americans and would be considered as few remaining 
options for Arab and Muslim who perceive the exercise of U.S. power 
very unjust and detrimental. Over the course of the last few decades, 
Saddam's Ba'ath party apparatus destroyed every feasible form of civil 
society and prevented the emergence of any autonomous associations and 
institutions. He ruled through terror and fear.
    The resemblance with pre-revolutionary Iran is striking. The only 
remaining autonomous institution in 1970s Iranian society was the 
clerical network. Mosques were an important public space available to 
masses and elites for debating and adopting goals and objectives for 
their collective actions and designing strategies to achieve them. This 
is the case in today's Iraq. The Shiite clerical network, in Iraq as 
well as in Iran, is relatively hierarchical, with the Supreme 
Jurisprudent at the top, learned Ayatollahs in the middle, and the 
lower ranking clergy among the people in the rural areas and small 
towns. The pinnacle of the hierarchy expands from Qum to Najaf (the two 
main centers of learning in Iran and Iraq respectively) and consists of 
deep relationships between the clerics of the two cities. The 
structure, content and language of their training are almost identical. 
Intermarriage between them further solidifies their relationship. This 
establishment has influence both within Shiite villages and towns in 
Iran and Iraq. Even withstanding the rivalry that exists between these 
two centers of learning; substantial influence can be transmitted from 
the Qum's clergy to Iraq, and from the Najaf's clergy to Iran. 
Historically, this has indeed been the case. The return of a relatively 
large number of senior clerics who have been residing in Qum as a 
result of Saddam's repression, along with the Bath Brigade and other 
Iraqi exiles, will seriously influence the course of events in Iraq. It 
is reported that a number of Shiites who have returned from Iran are 
already in positions of governance in Iraq.
    This powerful clerical network presents an organized force with the 
ability to set objectives, and ultimately set an agenda for society. 
Given the current power vacuum in Iraq, the clerics are best positioned 
to organize and mobilize the masses. This is the case, not only among 
the Shiites but also among the more religious Sunnis. Mosques are 
excellent resources at the disposal of the clerics' for facilitating 
these processes. The potential exists for a very powerful socio-
political movement to be generated by this force under the slogan of: 
``No to occupation, yes to democracy.'' A review of recent events in 
post-war Iraq underscores the potential power of this idea. 
Demonstrations under this slogan are indeed becoming the most visible 
expressions of ``homegrown'' empowerment.
    Iran is in the position to influence greatly the tide of events in 
Iraq. It can, if it chooses, complicate the situation in Iraq by 
fueling the anti-American mayhem, or it can play a constructive role in 
containing extremism. The initiative of calling for Iranian cooperation 
is now in the hands of the United States. Iran and the U.S. share a 
number of crucial interests (territorial integrity, stability, fair 
representation for Shiite majority and WMD disarmament) in Iraq. The 
current climate of U.S.-Iranian relations does not lend itself to such 
a bold initiative. However, with the future of Iraq and the final 
verdict on the utility and legitimacy of U.S. intervention in the 
balance, this opportunity should be taken not only to improve relations 
with Tehran, but also to lay a more solid foundation to manage the 
ever-complex socio-religious and political fabric of the Iraqi polity 
and move towards a stable and prosperous Iraq.
    The significance of Iran-U.S. relations in Iraq must also be 
understood in the larger context of the perhaps unintended consequence 
of the invasion of Iraq and the overthrow of the ``Sunni minority'' 
rule and the eventual dominance of Iraq, in one form or other, 
benevolent and democratic as it might and should be, of Shiites in 
Iraq. The georeligious and geopolitical map of the Middle East will 
never be the same. The two most powerful Muslim states of the Persian 
Gulf/Middle East, Iran and Iraq, will be controlled by Shiites. While 
some people in Washington may argue for an American policy based on the 
emergence of an intra-Shi'i rivalry between Iran and Iraq, that 
tempting paradigm, lacks, appreciation of the transnational and 
translocal nature of relations between Qum and Najaf, the clergy in 
Iran and Iraq, and the depth of historical, personal, and blood ties 
between the two sides. One should not underestimate, in addition, the 
centrality of Najaf and Karbala for the entire edifice of Iranian 
worldview, emotion and identity. A closer or normalized Iran-U.S. 
relationship means not only better bilateral ties, but rather a much-
improved situation in the larger social, ideological and political 
milieu of the Muslim world that includes millions of Shi'is spread 
throughout not only in Iran and Iraq, but also in Afghanistan, the 
volatile Indian sub-continent, Africa, Lebanon, and the rest of the 
Arab world including Saudi Arabia.

 OBSERVATIONS: IRAN'S DOMESTIC AND REGIONAL CONDITIONS, AND RELATIONS 
                         WITH THE UNITED STATES

    Several key observations could result from an overview analysis of 
Iran's strategic conditions, its domestic prospects and its relations 
with the United States; issues that have been subject of discussions in 
both countries and especially in the United States. Consideration of 
these issues will be essential in the understanding of Iran, and the 
contemplation over the future prospects of her relations with the 
United States.
    1. Iran's Centrality and the Myth of Isolation: Iran is the most 
important linkage state in the Middle East. For the reasons of its 
geography, its revolution and ambitions, and its peculiar and jealously 
guarded sense of independence and thus centrality, all issues of 
importance in the Middle East from the Palestinian-Israeli conflict, 
proliferation, terrorism, future of Iraq, stability in Afghanistan, 
future of relations between Islam and the West, regional political 
change and reform, Persian Gulf security, to access to secure energy 
both in the Persian Gulf and the Caspian, etc., either by default or 
design, run in one way or the other, through Iran. Isolation of Iran is 
not an option. What underscores this centrality is the significance of 
U.S.-Iran relations in shaping Middle East dynamics; no other factor in 
the last 25 years has had a more transformative impact on this region 
than the Iranian revolution and the hostile nature of U.S.-Iranian 
relations.
    2. Iran's Loneliness and Independence: A key characteristic of 
Iran's external condition is its essential strategic loneliness. Partly 
the result of the revolution's character and nature, and partly self 
inflicted, this loneliness, which was most dramatically displayed 
during the 8 years war with Iraq where all major regional and global 
powers including the United States supported the ``Butcher of Baghdad'' 
and his gas making and gas using machine, has resulted in a national 
and elite-shared psychology that favors self sufficiency in defense, 
lacks trust in the efficacy of international institutions and great 
power alliances, and thus emphasizes reliance on its own resources, 
both mental and physical for national protection and defense. While the 
real and opportunity cost and damages of this imposed or selected self 
reliance have been enormous, it has nevertheless also interjected and 
infused a sense of confidence, pride, ability for crisis management, 
and internal development of native recourses unparalleled in the 
region. This combination of loneliness, independence, and self-
sufficiency underscores both Iran's cautious attitudes towards regional 
conflicts on the one hand, and its bold, and even tough style on issues 
of principle and national significance. You are dealing with a seasoned 
elite that while displaying idiosyncrasies of its own in loosing 
opportunities is quite capable of maneuvering in real crisis, not only 
with regional states, but also with great powers like the United 
States. Do not underestimate Iran's power; a power that is not 
necessarily nor primarily physical. The subjective staying power is 
considerable, especially in times of crisis. This is particularly all 
the more true as Iran, thanks partially to the United States which 
surgically removed Iran's enemies in Afghanistan and especially in 
Iraq, is currently in its most favorable geopolitical position since 
the revolution in 1979.
    3. The Myth of the Regime Chance: There has been a lot of talk and 
conversation about ``regime change'' in Iran especially after President 
Bush's ``axis of evil'' speech, and more so after the victory in Iraq, 
in Washington; a conversation that has been heavily influenced by 
certain elements of Iranian expatriate community and some of the 
influential think tanks. I think, such analysis is primarily driven by 
politicized information, tainted and self serving opposition-supplied 
knowledge. The regime in Iran has many difficulties for sure, and even 
more serious shortcomings and flaws, many of which are in open display 
in peoples' daily life, thought and conversations in the country, but 
it is a regime firmly in control, and is not about to and will not be 
overthrown by a few declarations in Washington. Discussion of the 
domestic condition in Iran is too complex of a subject to be treated 
here, but a few fundamental facts are worth mentioning.
    First, although the conservatives in Iran are a minority, they are 
in control of many resources. They have leadership and organization, an 
ideology that binds them together and commits them to the cause, 
control of coercive apparatus', economic and political resources, and 
they have social and cultural propagation means. They are also well 
linked with their constituency. All of these characteristics and 
resources make them a very potent force. Reformers, many of them the 
former radicals, who additionally control important resources, are also 
not supportive of externally engineered change in Iran.
    Second, the real, organized impetus and energy, both intellectually 
and politically for reform and change is generated from within the 
ruling elite itself, and not from outside of the regime; 
notwithstanding the presence of others in the struggle for reform. 
There is a real, and serious ideational struggle within the regime 
itself over the very identity and substance of the Islamic Republic 
which is not subject to simplistic wishes and dictates of outsiders. 
The reformers are neither pro-U.S. nor anti-U.S.; they have a much 
larger and historical agenda in mind which is the establishment of 
democracy in Iran in harmony with its cultural and religious 
traditions; an experiment with far reaching ramifications not only for 
Iran but for the post-9/11 Muslim world in general.
    Third, the elite, both conservatives and reformers, and the public 
at large are quite intense if not ``paranoid'' about the sense of 
independence and dignity of the country and thus very sensitive about 
outside interference and meddling, especially in the case of the United 
States, which has not had so bright a record with Iran in this regard. 
U.S. meddling, especially attempts of few people in Washington at 
manufacturing ``regime change'' through expatriate oppositions, covert 
plans, etc., will weaken the reform efforts, will unify the elite and 
will signal a beginning of real confrontation with the United States in 
the region. Iranians want a peaceful change and through nonviolent 
means. It should be a domestically driven change, and they would like 
to bring change within the established framework of the Iranian polity. 
Any foreign induced radical change will not be well received by the 
population. Among a ten million-person population in Tehran, less than 
10,000 people participated in last summer protests because they were 
largely perceived as externally inspired or manipulated. The debate on 
nuclear issue for example, among others, underscored also the important 
caveat that Iran's domestic scene does not lend itself to simplistic 
analysis; hundreds of the same students who protested in the summer, 
and praised by the United States for their anti-regime demonstrations, 
strongly and openly warned against Iran's acceptance of demands beyond 
the IAEA additional protocols and inspection, while many of the 
conservatives who forcefully had denounced the students' movement, 
eventually lined up for the approval.
    Fourth, while there is real frustration in Iran and outside about 
the pace of reform in Iran, the reality is that there have been 
significant and irreversible changes in Iran; frustration over unmet 
and justifiably high expectations should not overshadow that fact.
    Finally, the real subjective and objective check on Iran's elite, 
both reformer and conservative, is the looming fear of lack of domestic 
legitimacy. An imperfect Republic, the pride and the asset of the 
regime for the last 25 years, in spite of external loneliness, however, 
has been that it has sufficient popular support, that it is not lonely 
at home. The public frustration over the unfulfilled promises of the 
reform movement, not the fear of U.S. attack, is the number one worry 
among the ruling elite. This concern for sure is not felt universally 
and equally among all, but it has certainly become, in immediate years, 
if not months ahead, will remain, the most important preoccupation of 
the regime. This is not a regime, that though capable objectively, can 
rule for long without a sufficient sense of public legitimacy.
    4. Domestic Reward Structures and the Mutual Demonization: To a 
large extent and in both countries, Iran-U.S. relations have become 
domestic political issues and hostage to its intricacies and dynamics. 
A reward structure has been established in the United States, which 
supports anti-Iranianism, irrespective of merit. Anti-Iranianism is 
cost free; yet calling for dialogue can be costly. A number of 
congressional bills have been introduced in the U.S., which under 
normal circumstances should have not been passed by Congress, but they 
pass with overwhelming ease. Similarly, in Iran the same reward 
structure exists for anti-Americanism. In Iran, those who have called 
for rapprochement with the U.S. have paid a heavy price, being labeled 
publicly and sometimes have lost their job. The mutual language of 
denouncement and name-calling, while reflects the burden of historical 
mutual mistreatment, it has acquired a life of its own; the changing 
realities on the ground and real interests of both sides has little 
bearing on the intensity and serious damage of public denouncement and 
mutual demonization. Words have enormous consequences; they form 
perception and cultural and mental straightjackets, which impedes 
considerations of real and rational mutual interests. For the sake of 
the interests of both countries, this reward structure should be 
dismantled.
    5. Iran and the U.S.: The Losers?: The biggest losers of the 25 
year old U.S.-Iran hostility have been the Americans and the Iranians 
themselves. While both have scored tactical gains against each other, 
but one can make the argument that both have suffered strategic loses 
in the process. Regionally, many countries, ranging from those with 
secular claims of identity including Saddam Hussein's Iraq, to other 
Arab dictatorships in orthodox clothing, to more recently emerged post 
communist dictatorships in Central Asia tapped into the U.S.-made anti-
Iranian ``reward structure'', which in the pre-Alqaeda world also meant 
anti-Islamism. Distance from or hostility towards Iran/radicalism, was 
perceived to be the prerequisite for being in line with the U.S., and 
became the justification for policies such as domestic repression and 
development of alternative and harmless Sunni fanaticism; ironically 
one of the hidden dynamics that gave rise to Saddam's. regional 
ambitions as champion of secularism and later under-the radar 
development of a region-wide Islamic extremism. In the realm of 
geopolitical space of great power involvement, regionally Russia seemed 
to be the winner, by simultaneously milking and using its relations 
with Washington and Tehran cross-currently against the other, having 
strategic partnership with both and limiting the maneuverability of the 
United States and Iran. Also critical has been the emergence of Europe, 
the EU, as perhaps the most important player in the global position of 
Iran; a role which has only increased after the encounter with the 
United States in Iraq, and underscored by the high drama display of 
Europe's diplomacy last week on Iran's nuclear issue. European, 
Russian, and even Chinese, economic and political gains have been and 
would be significant, mostly at the expense of the United States and 
not necessarily to the benefit of Iran.

                               CONCLUSION

    This is the most critical time in U.S.-Iran relations. A quarter 
century of U.S.-Iran cold war is almost over and the two countries, 
having exhausted all the space for proxy war between them, have now 
entered into a new cycle of direct proximity and relations that is 
qualitatively different from the past 25 years; the prospects and 
options are increasingly limited to either a direct confrontation, or a 
major reconciliation. Iran and the United States, after the U.S. wars 
in Afghanistan and Iraq, are not only virtual but real physical 
neighbors. The direct and over-the horizon U.S. presence in the Persian 
Gulf and Central Asia and the Caucasus, is being complemented by the 
U.S. physical presence in Afghanistan and Iraq. For all practical 
purposes the borders of Iran with those two states are the borders of 
Iran with the United States.
    The result of this real contiguity is that any qualitative 
intensification of the conflict will lead to a physical clash, the 
consequences of which are extremely serious for the national interest 
and security of both countries. Iran is for sure very vulnerable to 
U.S. military and coercive measures; a target reach country with a very 
demanding population Iran will be significantly hurt. But so will, 
though to a lesser degree, the United States. If people in Washington 
are now worried that the U.S. is not doing well in Iraq against 
Saddam's supporters or disgruntled Iraqis, and the future of the U.S. 
global interest and even its very security is dependent on success in 
Iraq and Afghanistan, one can imagine the level of difficulty the U.S. 
will experience, especially in Iraq in case of an intense confrontation 
with Iran. Iran is well pre-positioned, perhaps given the typical 
trepidation on such a confrontation with the U.S., to make life for the 
U.S. in Iraq very difficult; a democratic Iraq ala post-war Germany, as 
a showcase of U.S. success will be out of the question; a Lebanon after 
Israeli invasion will be a better metaphor.
    While the prognostication for the disastrous impact of the 
confrontation is obvious one can also assume the positive revolutionary 
impact of U.S.-Iran reconciliation and rapprochement. A normalized 
U.S.-Iran relationship is the missing link in the geopolitical, 
geoideological, and geoeconomic structure of the Middle East and global 
politics. The United States and Iran while ideologically constructed to 
become enemies, in reality are unusual and in a sense unnatural and odd 
enemies. This oddity is reflected in the fundamental reality that 
neither has gained anything but insecurity and political headaches and 
setbacks from this hostility, the enemies of one turn out to be the 
enemies of the other (remember Iran went through an 8 year war and half 
a million casualties trying to remove Saddam Hussein and almost went to 
war with the Taliban--its sworn enemy--in 1998!). This oddity is also 
reflected in the appreciation of the fact that resolution of most 
issues of concern for the United States, as mentioned before, 
significantly and directly involves a better relationship with Iran.
    It is high and urgent time, that a new concerted effort be made on 
both sides to move away from confrontation, and instead to engage in 
real, open, equitable, and serious dialogue for reconciliation; the 
national interests of both great nations and international security 
demands it.

    The Chairman. Well, thank you very much, Dr. Hadian. Your 
views, of course, are in the statement, and this will be 
available to members and for the record, but perhaps we will be 
able to get back to it in the questioning.
    Dr. Hadian. Thank you.
    The Chairman. Dr. Cordesman.

 STATEMENT OF DR. ANTHONY H. CORDESMAN, ARLEIGH A. BURKE CHAIR 
 IN STRATEGY, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES, 
                         WASHINGTON, DC

    Dr. Cordesman. Thank you, Mr. Chairman, and thank you for 
the opportunity of testifying here. Like the other witnesses, I 
feel this is a very important subject to cover but I would like 
to touch on only a few issues in my written testimony.
    Let me begin by saying that I agree with the previous 
witnesses that Iran is a country where we have some real 
options and possibilities. However, I may be less optimistic 
about internal developments in Iran. I have sat through quite a 
number of informal discussions with Iranians and Iranian 
officials. I am struck by the fact that over the years I do not 
see that those who I would regard as moderates or the 
supporters of President Khatami becoming more confident.
    I think there is great concern about the tensions within 
Iran on the part of many of those that I have dealt with. I am 
very uncertain as to whether Iran is prepared to full, formal 
dialog with the United States today. It may be. But time and 
again, Iranians have privately said that--until the issues and 
tensions between the various factions in Iran are resolved--
there are many things we might do to move toward an informal 
dialog but they are not prepared to confront the issues of a 
formal dialog.
    I too, like Deputy Secretary Armitage, served in Iran in 
the early 1970s. I too watched the Shah engage in a nuclear 
program, and I watched the Shah lie about it. And I watched 
reports emerge in the U.S. of imports of technology ranging 
from laser isotope separation technology to other weapons 
oriented technologies that bore no resemblance to a peaceful 
nuclear program. As a result, I do not believe that getting 
today's Iran to stop an overt program will really stop its 
nuclear program, and I think we can count on Iran to try to 
obfuscate and lie about that.
    Now, Mr. Chairman, you talked about super inspections. I am 
not sure what those really are. I am not sure that it is easy 
to do more than UNSCOM and UNMOVIC did in Iraq, and they 
obviously failed. They could not characterize that effort.
    I think we are learning that there are deep problems in the 
U.S. intelligence effort and in our coverage of proliferation. 
Iraq is only a case example, and I would hope at some point 
either the Senate Intelligence Committee or this committee 
fully examines our capability to characterize proliferation.
    I do not believe that we will ever have the capability to 
be able to determine whether Iran pursues a research and 
development strategy as distinguished from an overt production 
of fissile material. Looking at the IAEA reports, I believe 
Iran could conceal R&D efforts in the development of reactor 
technology, that they could create a mature centrifuge 
capability far more sophisticated than the one they have in 
terms of centrifuge design, that they could proceed with many 
aspects of nuclear weapons design, and that no amount of 
inspection or intelligence coverage could, with confidence, 
detect that effort if it was dispersed and concealed and did 
not go into advanced development.
    I would also note that this is a country that has stated it 
has chemical weapons and which may well have biological 
weapons. A focus on one form of proliferation may be dangerous, 
particularly when it is far from clear to what threat Iran's 
long-range missiles could pose with conventional warheads, 
except as psychological weapons. The Shahab frankly has to have 
a motive other than dropping 1,000 kilograms of high explosives 
as an area weapon on an enemy. Having said that, I do agree 
that we should move toward dialog and toward discussion.
    I would also have to reinforce a point that has been made 
in this hearing. I was in Iran when the MEK murdered American 
officials. One of the people I was working with, Colonel Louis 
Hawkins, was shot down in front of his family by the MEK. I 
have followed their actions over the years. They are a 
sophisticated lobbying body with many democratic fronts. They 
also were a tool of Iraq, a cult of their leaders, and they 
pursued a policy of murdering and assassination against Iranian 
officials, which is well documented in the State Department 
reports. I do not believe this is a movement we can tolerate or 
encourage.
    I would also have to say that whatever we do we should stay 
as far away from the Shah's son as possible. I saw little 
redeeming about his Imperial Majesty when I was in Iran. If the 
Bunyaads are corrupt today, I can remember my wife going to an 
orphanage supposedly supported by the Pahlavi Foundation and 
finding out the Pahlavi Foundation took the money and kept it, 
and it was the wives of American and British diplomats who kept 
the orphanage going with their money. This is not in any sense 
the successor regime that is needed in Iran.
    Now, let me make a few final points about recommendations. 
We must not forget that whatever we do, we have to maintain a 
strong military position in the gulf to contain Iran. It is one 
of the ironies of our action in Iraq that it has not altered 
the need for containment and possibly not even altered the 
level of containment that is required.
    I would also say that labeling Iran as the leading nation 
supporting terrorism, or part of an ``axis of evil,'' is the 
worst possible way to influence the Iranian people. If we have 
things to say about terrorism, identify specific actions, 
identify specific groups, and seek specific goals. I think our 
rhetoric on Iran illustrates a broad problem in American 
policy. We speak in terms of domestic politics to American 
audiences in ways which undermine our credibility in Iran, in 
the Middle East, in Europe, and in the rest of the world.
    As we deal with Iran, I also have to strongly endorse what 
Senator Biden said about the need for as much informal dialog 
as possible. I would also endorse the point that we had a semi-
official dialog with Iran and we broke it off in dealing with 
Iraq. That was a mistake. It served no interest of our own, not 
only in dealing with Iran, but with Afghanistan.
    I would be cautious, however, about the nature of European 
cooperation. I have had many discussions with Europeans and 
many have criticized their own approach to the problem, as well 
as ours. Perhaps one of the best statements about Europe's 
approach to critical dialog was that, ``we have a tendency to 
be all dialog and no critical.'' If we are going to rely on 
Europe to deal with the problem of nuclear weapons in Iran, it 
is going to require intense pressure.
    Let me also say that this committee should, as it moves 
forward, also reconsider the sanctions policy we have. I 
thought the legislation that led to ILSA was stupid in terms of 
the original proposal. I thought it was stupid when it was 
passed, and I think it is stupid now. Its net effect is not to 
alter proliferation or the military buildup. It is to ensure 
that American business and American commerce cannot work with 
Iranians to create barriers to contact with people who are 
moderate Iranians. The end result is precisely what we do not 
need, to reinforce the views of extremists and hard-liners. If 
we need sanctions, they should lie in dual use technology and 
limits on arms sales. The sanctions we have today are precisely 
the sanctions we do not need.
    Finally, in terms of the Arab-Israeli issue, if we are ever 
to reach a modus vivendi with Iran, if we are to get them to 
stop support of Hamas or the Hezbollah, we have to demonstrate 
that we have an unremitting support for a peace process so 
strong and convincing that every possible effort is being made 
regardless of delays, problems, and reversals. If the United 
States cannot demonstrate it is doing that, I frankly do not 
know how we go to the Arab world and Iran and say, stop 
supporting Hamas, Hezbollah, and the Palestinian Islamic Jihad.
    Thank you.
    [The prepared statement of Dr. Cordesman follows:]

Prepared Statement of Dr. Anthony H. Cordesman, Arleigh A. Burke Chair 
     in Strategy, Center for Strategic and International Studies, 
                             Washington, DC

    Iran presents one of the most complex security problems the US 
faces in dealing with the threat posed by proliferation, in securing 
world energy supplies and the global economy, and in bringing stability 
to the Middle East and the Gulf region. Iran is located in an area with 
more than 60% of the world's proven conventional oil reserves and some 
35% of its gas. It has borders on two nations where the US is still at 
war: Iraq and Afghanistan.
    Iran is a major proliferator. It plays an indirect role in the 
Israel-Palestinian conflict. It has carried out direct terrorist 
activities in the past, and it tolerates and supports terrorist 
movements today. At the same time, Iran offers opportunities as well as 
a threat. Political change is taking place, some forms of informal 
dialogue have been possible, Iran has moderated some of its actions, 
and the US has been more able to work out at least a partial modus 
vivendi in dealing with some aspects of the problems posed by 
Afghanistan and Iraq.
    Moreover, the US cannot divorce its treatment of Iran from its 
overall strategic posture in the region and the world. The US war in 
Iraq is still underway, and it is not a popular conflict. The US lacks 
the military resources for a major intervention in Iran, and limited 
strikes might do as much to encourage Iranian proliferation and support 
of terrorism as discourage it. While the EU has been more supportive 
recently in pressuring Iran over proliferation, the US lacks allies in 
its present approach to Iran at a time when it has more overall 
tensions with its traditional allies than at any time since the war in 
Vietnam.

                 THE RANGE OF POSSIBLE IRANIAN THREATS

    The US faces a wide range of policy challenges in dealing with the 
security threats posed by Iran. Nuclear proliferation is only one of 
these challenges, and the US cannot afford to look at only one problem 
and ignore the others. In brief, the challenges the US must deal with 
may be summarized as follows:

   The US faces a wide range of potential threats in terms of 
        proliferation. Iran has admitted it has chemical weapons and is 
        testing ballistic missiles. It may well be developing 
        biological weapons and cruise missiles. The unclassified 
        reporting by the US intelligence community on Iranian 
        developments is necessarily limited, and does not address many 
        of the most recent issues affecting Iran's nuclear program, but 
        a recent CIA report describes the range of Iranian activities 
        as follows:

          Nuclear. Despite Iran's status in the Treaty on the 
        Nonproliferation of Nuclear Weapons (NPT), the United States 
        remains convinced Tehran is pursuing a nuclear weapons program. 
        To bolster its efforts to establish domestic nuclear fuel-cycle 
        capabilities, Iran has technology that also can support fissile 
        material production for Tehran's overall nuclear weapons 
        program.
          Iran has continued to attempt using its civilian nuclear 
        energy program to justify its efforts to establish domestically 
        or otherwise acquire assorted nuclear fuel-cycle capabilities. 
        Such capabilities, however, are well suited to support fissile 
        material production for a weapons program, and we believe it is 
        this objective that drives Iran's efforts to acquire relevant 
        facilities. We suspect that Tehran is interested in acquiring 
        foreign fissile material and technology for weapons development 
        as part of its overall nuclear weapons program.
          Despite Bushehr being put under IAEA safeguards, Russia's 
        provision of expertise and manufacturing assistance has helped 
        Iran to develop its own nuclear technology infrastructure. In 
        addition, facing economic pressures, some Russian entities have 
        shown a willingness to provide assistance to other nuclear 
        projects within Iran. For example, an institute subordinate to 
        the Russian Ministry of Atomic Energy (MINATOM) had agreed to 
        deliver in late 2000 equipment that was clearly intended for 
        atomic vapor laser isotope separation, a technology capable of 
        producing weapons-grade uranium. As a result of US protests, 
        the Russian Government has halted the delivery of some of this 
        equipment to Iran.
          Chinese entities are continuing work on a zirconium 
        production facility at Esfahan that will enable Iran to produce 
        cladding for reactor fuel. As an adherent to the NPT, Iran is 
        required to accept IAEA safeguards on its nuclear material. The 
        IAEA's Additional Protocol requires states to declare 
        production of zirconium fuel cladding and gives the IAEA the 
        right of access to resolve questions or inconsistencies related 
        to the declarations, but Iran has made no moves to bring the 
        Additional Protocol into force. Moreover, Iran remains the only 
        NPT adherent with a full-scope safeguards agreement that has 
        not adopted a subsidiary agreement obligating early declaration 
        of nuclear facilities. Zirconium production, other than 
        production of fuel cladding, is not subject to declaration or 
        inspection.
          Missiles. Ballistic missile-related cooperation from entities 
        in the former Soviet Union, North Korea, and China over the 
        years has helped Iran move toward its goal of becoming self-
        sufficient in the production of ballistic missiles. Such 
        assistance during the reporting period continued to include 
        equipment, technology, and expertise. Iran, already producing 
        Scud short-range ballistic missiles (SRBMs), is in the late 
        stages of developing the Shahab-3 medium-range ballistic 
        missile (MRBM). In addition, Iran publicly has acknowledged the 
        development of follow-on versions of the Shahab-3. It 
        originally said that another version, the Shahab-4, is a more 
        capable ballistic missile than its predecessor but later 
        characterized it as solely a space launch vehicle with no 
        military applications. Iran's Defense Minister has also 
        publicly mentioned a ``Shahab-5.'' Such statements strongly 
        suggest that Tehran intends to develop a longer-range ballistic 
        missile capability.
          Chemical. Iran is a party to the Chemical Weapons Convention 
        (CWC). Nevertheless, during the reporting period it continued 
        to seek chemicals, production technology, training, and 
        expertise from Chinese entities that could further Tehran's 
        efforts at achieving an indigenous capability to produce nerve 
        agents. Iran already has stockpiled blister, blood, and choking 
        agents--and the bombs and artillery shells to deliver them--
        which it previously has manufactured. It probably also has made 
        some nerve agents.
          Biological. Even though Iran is part of the Biological 
        Weapons Convention (BWC), Tehran probably maintains an 
        offensive BW program. Foreign dual-use biotechnical materials, 
        equipment, and expertise--primarily, but not exclusively, from 
        Eastern Europe--continued to feature prominently in Iran's 
        procurement efforts. While such materials do have legitimate 
        uses, Iran's biological warfare (BW) program also could benefit 
        from them. It is likely that Iran has capabilities to produce 
        small quantities of BW agents, but has a limited ability to 
        weaponize them.
          Advanced Conventional Weapons. Iran continued to seek and 
        acquire conventional weapons and production technologies, 
        primarily from Russia, China, and North Korea. Since Russia 
        announced in November 2000 that it was abrogating the Gore-
        Chernomyrdin Agreement, the Russian and Iranian Governments and 
        firms have engaged in high-level discussions on a wide variety 
        of military services and equipment--including air defense, 
        naval, air and ground weapons, and technologies. In October 
        2001, Tehran and Moscow signed a new military-technical 
        cooperation agreement, which laid the groundwork for 
        negotiations and created a commission for future arms sales, 
        but did not itself include sales contracts.
          Contract negotiations, which may take years to complete, 
        continued in the following months and at least one sale--
        apparently for helicopters--was concluded. Various Russian 
        officials and academicians have suggested that sales under this 
        new agreement could, in the next few years, make Iran Russia's 
        third-largest arms customer, after China and India. Until that 
        agreement is concluded, Russia will continue to deliver on 
        existing contracts. Estimates of conventional arms sales to 
        Iran of $300 million per year would put Iran's share of Russian 
        sales worldwide at roughly 10 percent, compared to more than 50 
        percent going to China and India.
          To facilitate new arms agreements, Russian oil enterprises 
        entered an agreement with the Russian state arms trading firm 
        Rosoboronexport to promote arms exports. Russian and Iranian 
        arms dealers are to include such firms as Lukoil to coordinate 
        ``commercial conditions'' and participate in projects proposed 
        by the customer.
          Outside the Russian market, Iran's search for conventional 
        weapons is global. In particular, Iran capitalized on the 
        specialized weapons services and lower prices that China and 
        North Korea offered. Elsewhere, Iran sought out products, 
        particularly weapons components and dual-use items, that are 
        superior in quality to those available from Russia or that have 
        proven difficult to acquire through normal government channels.

   The US cannot afford to focus on one form of proliferation. 
        Iran can pursue a wide range of proliferation strategies, and 
        this includes different approaches to nuclear weapons 
        development. Iran could, for example, give up any efforts to 
        produce fissile material using reactors and known centrifuge 
        facilities, while concentrating on covert research and 
        development of weapons, compact or ``folded'' high capacity 
        centrifuges, laser isotope separation, and warheads. It could 
        build more reactors as part of a ``peaceful power generating'' 
        programs, appearing to conform to IAEA standards but preparing 
        for the day it was no longer dependent on imports and could use 
        its own fuel cycle. The recent IAEA reporting on Iran leaves 
        major questions unanswered regarding Iran's fuel cycle efforts, 
        but also regarding its research and development programs in 
        both laser isotope separation and centrifuge technology.

   Iran can wage a number of forms of asymmetric warfare 
        against the US and its allies without ever being at war in any 
        overt sense. It can support hard-line and extremist elements in 
        Iraq, Afghanistan, Lebanon, Gaza, and the West Bank using 
        proxies to attack US interests without ever directly conducting 
        acts of terrorism. Here, Iran can also use organizations as 
        proxies that have a civil role or which cannot be identified 
        solely as terrorist groups. These include the Hezbollah, 
        Shi'ite movements in Afghanistan and Iraq, and Islamic 
        charities or political causes that fund or act as covers for 
        extremist groups. It can create ambiguous sanctuaries and 
        operating/training areas in Iran for organizations like Al 
        Qaida or simply turn a blind eye to low-level activities that 
        are difficult to detect or prove.
      Iran can use more direct forms of terrorism, as it may well have 
        done in supporting the attack on the USAF barracks at Al 
        Khobar. The most recent State Department report on terrorism 
        describes Iran's role as follows, and this report was issued 
        before the full scale of Iran's relations to Al Qaida and 
        support of Hamas and the PIJ became a major issue:

          Iran remained the most active state sponsor of terrorism in 
        2002. Its Islamic Revolutionary Guard Corps and Ministry of 
        Intelligence and Security were involved in the planning of and 
        support for terrorist acts and continued to exhort a variety of 
        groups that use terrorism to pursue their goals.
          Iran's record against al-Qaida has been mixed. While it has 
        detained and turned over to foreign governments a number of al-
        Qaida members, other al-Qaida members have found virtual 
        safehaven there and may even be receiving protection from 
        elements of the Iranian Government. Iran's long, rugged borders 
        are difficult to monitor, and the large number of Afghan 
        refugees in Iran complicates efforts to locate and apprehend 
        extremists. Nevertheless, it is unlikely that al-Qaida elements 
        could escape the attention of Iran's formidable security 
        services.
          During 2002, Iran maintained a high-profile role in 
        encouraging anti-Israeli activity, both rhetorically and 
        operationally. Supreme Leader Khamenei referred to Israel as a 
        ``cancerous tumor,'' a sentiment echoed by other Iranian 
        leaders in speeches and sermons. Matching this rhetoric with 
        action, Iran provided Lebanese Hizballah and Palestinian 
        rejectionist groups--notably HAMAS, the Palestine Islamic 
        Jihad, and the Popular Front for the Liberation of Palestine-
        General Command--with funding, safehaven, training, and 
        weapons. Tehran also encouraged Hizballah and the Palestinian 
        rejectionist groups to coordinate their planning and to 
        escalate their terrorist activities against Israel.
          Iran also provided support to extremist groups in Central 
        Asia, Afghanistan, and Iraq with ties to al-Qaida, though less 
        than that provided to the groups opposed to Israel.

      Iran can use the Israeli-Palestinian conflict as a proxy war to 
        gain support from Arab nations, and put pressure upon the US 
        and Israel.

   Iran lacks modern conventional forces, and is modernizing at 
        a slow rate compared to most Gulf and Middle Eastern countries, 
        but its conventional warfighting capabilities cannot be 
        dismissed. It did sign some $1.7 billion worth of new arms 
        agreements during 1995-1998, and $1,000 billion worth during 
        1999-2002--primarily with Russia, China, and Europe, and signed 
        $200 million worth of new agreements in 2002. It took delivery 
        on $2.1 billion worth of arms during 1995-1998, and $700 
        million worth during 1999-2002.
      Iran has some 513,000 men in its armed forces, some 325,000 in 
        its army, 125,000 in its Revolutionary Guards Corps, 18,000 in 
        its navy, and 45,000 in its air force plus some 40,000 
        paramilitary forces and 300,000 in its Basij or Popular 
        Mobilization Army. These forces include some 1,600 tanks, 1,500 
        other armored vehicles, 3,400 artillery weapons, and 283 combat 
        aircraft--roughly 180-200 of which are operational. It has no 
        modern tanks, combat aircraft, or surface-to-air missiles, but 
        it can certainly pose a far better organized and more popular 
        resistance to any US or other outside military attack than 
        Iraq, and its conventional forces will improve with time.

   Iran lacks any modern surface ships but geography gives Iran 
        a strategic position that commands the tanker routes through 
        the lower Gulf and the Strait of Hormuz. The Strait is the 
        world's most important oil chokepoint. Some 13.6 million bbl/d 
        or so of oil transit the Strait of Hormuz each day and go east 
        to Asia (especially Japan, China, and India) and west via the 
        Suez Canal, the Sumed pipeline, or around the Cape of Good Hope 
        in South Africa to Western Europe and the United States. 
        Moreover, the EIA reference case indicates that exports through 
        the Strait must nearly double by 2020, reaching around 42 MMBD. 
        This implies that up to three times more tankers will transit 
        the Strait in 2020 than at present. Alternative routes cannot 
        move anything close to current export levels, much less the 
        much higher production levels forecast by DOE.
      At its narrowest, the Strait consists of 2-mile wide channels for 
        inbound and outbound tanker within the Omani side of the 
        Strait, and a 2-mile wide buffer zone. The exits on both sides 
        of the Strait are close to Iranian waters and air space.
      Iran and the UAE have also long quarreled over sovereignty over 
        three islands on the Western side of the Strait that are near 
        the main tanker channels. These islands include Abu Musa, 
        Greater Tunb Island, and Lesser Tunb Island, Reports that Iran 
        had fortified the islands seem to be untrue, but Iran has 
        steadily increased its numbers of smart mines. It has bought 
        three relatively modern Kilo-class conventional submarines with 
        long-range torpedoes and minelaying capability from Russia. It 
        has bought anti-ship missile equipped patrol boats from China, 
        has land based anti-ship missiles, and can deliver such 
        missiles from aircraft, including maritime patrol aircraft and 
        long range fighters. Over time, it can steadily improve its 
        capability to threaten Gulf oil traffic, and while the US can 
        certainly defeat Iran in any open attack on such traffic, 
        Iran's ability to intimidate its neighbors, disrupt such 
        traffic, or conduct low level raids give it the ability to 
        conduct asymmetric wars of intimidation as well as actual 
        military operations.

   Iran has large asymmetric forces in its Revolutionary Guards 
        Corps, including some 20,000 men in the IRGC naval branch. 
        These can do more than attack Gulf shipping. South Gulf states 
        have vulnerable offshore oil and gas facilities, highly 
        vulnerable oil and gas loading facilities on their Gulf coasts, 
        and have become totally dependent on large-scale coastal 
        desalination plants for water. Once again, threats and ``wars 
        of intimidation'' can substitute for overt military action.

   Finally, Iran can put pressure on the Southern Gulf and 
        other states by funding, training, and arming Shi'ite groups in 
        nations like Bahrain and Saudi Arabia, by disrupting the 
        pilgrimage in Saudi Arabia, and by funding local liberation and 
        religious groups that are not Shi'ite but are hostile to such 
        states. These are not theoretical options. It has carried out 
        all of these activities at some point since the Iranian 
        revolution in 1979, and while it has chosen improved diplomatic 
        relations since the death of Khomeini, it can resume such 
        actions at short notice.

                    AN UNSTABLE AND CONFLICTED IRAN

    The US cannot afford to ignore these potential threats. At the same 
time, it also cannot afford to ignore the fact that Iran is a deeply 
conflicted nation and one where no one can now predict whether it will 
evolve towards moderation, move towards overt civil conflict, or come 
under the control of its extremists and hardliners.
    Iran is a partial democracy, but one where its religious leaders 
and hard-liners control the choice of all candidates, can veto any 
action by the President or Majlis, and have control over much of the 
media, the justice system, the military and security forces, and 
intelligence. The balance of power between reformer and hardliner is so 
close that many Iranian officials that would like both to focus on 
national development, and create a more moderate state that has 
improved relations with the US, fear that clashes with the hard-liners 
could lead to open conflict. Many have already been arrested and 
imprisoned for such views, as have many Iranian religious leaders, 
citizens, and students.
    It is clear that the Iranian people want a more moderate 
government, and many--probably most--are potentially friendly to the 
US. At the same time, it is a proud and highly nationalistic nation and 
one that has memories of a US role in the coup that destroyed a 
previous secular Iranian democracy and brought back the Shah. If the US 
has memories of a long hostage crises and Iranian terrorism, Iran has 
memories of long periods of imperialism and US interference in Iranian 
affairs.
    This situation is complicated by the fact that the outside 
opposition does have elements that support true democracy, but also 
consists of a largely ludicrous effort to restore the monarchy and one 
of the most vicious terrorists movements in the world: Mujahedin-e 
Khalq Organization (MEK or MKO). This organization is designated as a 
terrorist organization and is known under other several other names, 
some of which lobby the US Congress: The National Liberation Army of 
Iran (NLA, the militant wing of the MEK), the People's Mujahedin of 
Iran (PMOI), National Council of Resistance (NCR), the National Council 
of Resistance of Iran (NCRI), Muslim Iranian Student's Society (front 
organization used to garner financial support).
    The MEK claims to be democratic in the West, but its actual 
structure mixes the cult of personality with political beliefs that 
mixes Marxism and Islam. It was formed in the 1960s, opposed the Shah, 
and murdered a number of Americans, including men like Colonel Louis 
Hawkins. The organization was expelled from Iran, after which support 
came from the Iraqi regime, and it was based primarily in Iraq, where 
the remnants of its military forces remain.
    The State Department describes the organization as follows:

          The MEK's history is studded with anti-Western attacks as 
        well as terrorist attacks on the interests of the clerical 
        regime in Iran and abroad. . . . The worldwide campaign against 
        the Iranian Government stresses propaganda and occasionally 
        uses terrorist violence. During the 1970s, the MEK killed US 
        military personnel and US civilians working on defense projects 
        in Tehran and supported the takeover in 1979 of the US Embassy 
        in Tehran. In 1981, the MEK detonated bombs in the head office 
        of the Islamic Republic Party and the Premier's office, killing 
        some 70 high-ranking Iranian officials, including chief Justice 
        Ayatollah Mohammad Beheshti, President Mohammad-Ali Rajaei, and 
        Premier Mohammad-Javad Bahonar. Near the end of the 1980-88 war 
        with Iran, Baghdad armed the MEK with military equipment and 
        sent it into action against Iranian forces. In 1991, it 
        assisted the Government of Iraq in suppressing the Shia and 
        Kurdish uprisings in southern Iraq and the Kurdish uprisings in 
        the north. Since then, the MEK has continued to perform 
        internal security services for the Government of Iraq. In April 
        1992, the MEK conducted near-simultaneous attacks on Iranian 
        Embassies and installations in 13 countries, demonstrating the 
        group's ability to mount large-scale operations overseas. In 
        recent years, the MEK has targeted key military officers and 
        assassinated the deputy chief of the Armed Forces General Staff 
        in April 1999. In April 2000, the MEK attempted to assassinate 
        the commander of the Nasr Headquarters--the interagency board 
        responsible for coordinating policies on Iraq. The normal pace 
        of anti-Iranian operations increased during the ``Operation 
        Great Bahman'' in February 2000, when the group launched a 
        dozen attacks against Iran. In 2000 and 2001, the MEK was 
        involved regularly in mortar attacks and hit-and-run raids on 
        Iranian military and law-enforcement units and government 
        buildings near the Iran-Iraq border, although MEK terrorism in 
        Iran declined throughout the remainder of 2001. Since the end 
        of the Iran-Iraq war, the attacks along the border have 
        garnered almost no military gains and have become commonplace. 
        MEK insurgent activities in Tehran constitute the biggest 
        security concern for the Iranian leadership. In February 2000, 
        for example, the MEK launched a mortar attack against the 
        leadership complex in Tehran that houses the offices of the 
        Supreme Leader and the President, and assassinated the Iranian 
        Chief of Staff.

                       THE OTHER SIDE OF THE HILL

    The US cannot afford to ignore the fact that while Iran may be a 
potential threat, it also feels threatened. Iraq--the main threat to 
Iran is no longer under the control of Saddam Hussein--but Iran fought 
one of the most bloody wars in recent history against Iraq and one that 
involved the massive Iraqi use of poison gas. The US was seen to be 
Iraq's ally in that war, and the US fought Iran in a low-level tanker 
war between 1987 and 1998. The US now has forces on two of Iran's 
borders, and if the US sees Iran as unwilling to engage in a meaningful 
official dialog, Iran sees the US as unwilling to engage in a 
meaningful unofficial dialog.
    The US sees the Israel-Palestinian conflict largely as an Israeli 
war on terrorism, but Iran's regime and people see it as an asymmetric 
war between Palestinian and occupier. If Israel sees Iran as a major 
potential threat because of its search for long-range missiles and 
nuclear weapons, Iran sees Israel and the US as current threats with 
both nuclear weapons and massive conventional capabilities. Iran has 
little confidence--if any--in the future stability of Iraq and points 
to proliferation in Pakistan and India. It also sees a Gulf in which 
the Southern Gulf states have cumulatively imported $83.3 billion worth 
of arms since 1995 versus $2.9 billion for Iran--a ratio of roughly 
30:1

                      THE CONSTRAINTS ON US POLICY

    The United States thus faces an extremely difficult situation. It 
must contain any Iranian adventures, help to protect its allies, do as 
much as possible to prevent Iranian proliferation and the support of 
terrorism, and help ensure the security of Gulf energy exports. At the 
same time, it must seek to find ways to support peaceful internal 
change and the move towards a moderate democracy that the Iranian 
people clearly want. It must seek to limit the actions of Iran's 
extremists and hardliners, but it must avoid being seen as intervening 
in Iranian affairs in ways that could provoke a nationalist reaction or 
civil conflict, tie the US to terrorist groups like the MEK, and unify 
Iran around a more aggressive and hostile posture towards the US.
    The US must also act in ways that recognize that its approach to 
Iran is virtually unique, and does not have the support of any European 
ally of the US or any friendly Gulf state. Rightly or wrongly, all have 
chosen dialogue and trade over the US effort to isolate and sanction 
Iran. This is particularly important at a time when the US face growing 
hostility to its operations in Iraq and has problems with many of its 
traditional allies over both Iraq and the Israeli-Palestinian conflict.
    More materially, the US cannot ignore the fact that the Department 
of Energy and International Energy Agency project a steady increase in 
global economic dependence on Iranian energy exports as part of a 
projected increase in Gulf exports. It estimates that Iran's production 
capacity must increase from 3.8 MMBD today to 4.9 MMBD by 2025, as part 
of an increase in total production capacity that will allow the Gulf to 
increase its total exports from 14.8 MMBD in 2001 to 35.8 MMBD in 
2025--a more than 140% increase.

                    DEALING WITH THE IRANIAN THREAT

    Given this background, there are several ways the US should 
approach Iran, both in terms of threat and opportunity:

   It should make it clear that the US will react to any 
        Iranian military threats and deter and contain them. It is as 
        dangerous to romanticize Iran, as it is to demonize it. Iran 
        may evolve towards a stable form of moderation. It has not done 
        so as yet. It must be made clear to Iran that any course of 
        action it pursues will be met with a reaction that does not 
        leave it any viable military options and that any major 
        military action would lead to the destruction of its present 
        regime.
      The US should also be prepared to react decisively to any overt 
        Iranian deployment of nuclear weapons, biological weapons, and 
        long-range missiles. Deterrence and containment should not be 
        static. The US should be prepared to provide missile defenses, 
        and improved defenses against other forms of attack. The US 
        should also be prepared to extend a conventional deterrent 
        umbrella over its regional allies. It should never threaten 
        Iran with nuclear retaliation--which would only provoke more 
        problems in the region--but it should never renounce such an 
        option as long as there is any risk of Iranian proliferation, 
        leaving the issue in doubt.
      It should be stressed that this does not mean adventures in areas 
        like preemption unless massive improvements can be made in US 
        intelligence and targeting capabilities, and unless it is 
        either clear that Iranian strikes are both imminent and far 
        more threatening than seems likely for some years to come. 
        Retaliation is the ultimate option, and the US cannot afford to 
        carry out strikes that miss their targets or which only succeed 
        in making an enemy out of the Iranian people while force Iran's 
        government to create more covert means of proliferation.

   Demonstrate US will and capability responsibly: Deterrence 
        and containment are best done quietly and by deploying a ``big 
        stick.'' Harsh and over-simplistic rhetoric plays into the 
        hands of Iran's hard-liners and America's opponents. In 
        contrast, US military deployments and exercises, and military 
        cooperation with friendly Gulf states, provide a quiet and 
        tangible message. Similarly, US reporting and statements that 
        provide clear and validated public descriptions of threatening 
        Iranian actions persuade both regional and other allies, where 
        sweeping and vague charges simply undermine US credibility.

   Pursue arms control without relying on it: It is highly 
        unlikely that Iran will abandon a major research and 
        development effort in every aspect of proliferation until major 
        changes occur in its regime and perception of the threat. The 
        US must assume this is the case until it has far better 
        intelligence collection and analysis regarding proliferation 
        than it now has on any country, and it must not forget that 
        nine years of UNSCOM and UNMOVIC inspection of Iran, and months 
        of postwar US efforts, have still failed to provide an 
        understanding of such efforts in Iraq. Even if Iran does fully 
        comply with its agreements with the British Foreign Minister 
        and gives the IAEA all of the access called for under the NNPT 
        protocol, major uncertainties will remain.
      Iranian compliance in arms control may well, however, prevent any 
        overt acquisition and deployment of nuclear weapons, and the 
        creation of major fissile material production facilities. Other 
        arms control efforts may limit the scale of Iran's chemical 
        weapons programs. The will still leave Iran with no meaningful 
        constraints on its missile and biological programs, but even 
        imperfect arms control can be far better than none provided 
        that the US is proactive in ensuring that every possible 
        violation is dealt with honestly and with suitable inspection, 
        and the US firmly seeks to enforce those treaty provisions that 
        could cut off the flow of nuclear, chemical, and possibly 
        biological technology.

   Continue to put constant pressure on Iran's suppliers: The 
        US cannot cut off Iran from dual-use and direct technology for 
        proliferation, or block all purchases of advanced weapons, but 
        it should continue to make every effort to try. One possible 
        step would be to move beyond quiet dialogue with allied 
        governments over transactions and suppliers that appear to aid 
        Iran in proliferating and acquiring advanced arms and to 
        aggressively name and sanction such suppliers in the way that 
        has been done for some Russian and Chinese firms.

   Pursue counterterrorism systematically and in a focused way: 
        The US should make it unambiguously clear to Iran that it will 
        do everything possible to check any Iranian support or 
        tolerance of terrorism against the US or any of its allies. Far 
        too much of the public US effort, however, again involves 
        sweeping and careless rhetoric, rather than carefully focused 
        efforts with detailed charges and credible demands for Iranian 
        action.

   Make every effort to maintain an informal dialog with Iran, 
        and create formal official relations, without concession or 
        preconditions: Dealing with the Iranian threat requires more 
        than sticks. The US must demonstrate that it will do everything 
        possible to improve relations with Iran, that it is not hostile 
        to Iran's moderates or its people, and that the burden of the 
        failure to create formal relations lies solidly with Iran's 
        hard-liners and extremists. This does not mean concessions, but 
        neither does it mean demanding Iran change its behavior as the 
        price of the formal relations that are the key to allowing 
        meaningful security negotiations to begin.
      The US dialog with Iran over Afghanistan is a model of how the US 
        should approach this issue; the sudden decision to break off a 
        dialog with Iraq over Iraq before the US and British invasion 
        of Iraq is a model of how not to deal with the problem. The US 
        negotiated and traded with far more threatening opponents 
        throughout the Cold War, and gained much of its eventual 
        victory by doing so.

   Use the European and Gulf efforts at dialog and improved 
        cooperation constructively without compromising the US 
        position. The US has no chance of either persuading or 
        compelling its allies and other nations to join it in isolating 
        Iran unless a clear case can be made for doing so in ways that 
        actually change Iranian behavior. The reality is also that the 
        European dialog with Iran, and the efforts of the Gulf states 
        to normalize relations, have accomplish a great deal and offer 
        the only practical means at this point to change Iran's 
        behavior and directly influence its internal behavior. This 
        does not mean the US should not pressure Europe, the Gulf 
        states, and other nations to react to Iranian actions that 
        threaten the region or support terrorism. Europe, for example, 
        has sometimes only remembered the ``dialog'' part of ``critical 
        dialog.''

   Do everything possible to support internal change in Iran, 
        but avoid adventures and efforts at regime change. The US 
        should use every diplomatic tool available to encourage 
        political moderation in Iran. The should include every effort 
        to help those Iranian's who call for real democracy, to improve 
        human rights, and encourage cultural exchanges and every other 
        way of both showing the Iranian people the US is on their side 
        and will act on their behalf. The problems and weaknesses in 
        the Iranian opposition outside Iran are so grave, however, that 
        they make the Iraqi opposition seem a tower of strength by 
        comparison. The MEK is beyond change and too contemptible to 
        deal with,

   Consider major revisions to a largely failed sanctions 
        policy. It is one of the ironies of the post Cold War era that 
        the primary threat to the US no longer truly consists of 
        foreign power, but is rather the mistakes made by its Executive 
        and Legislative branches. The only nation that can defeat the 
        US is itself. The present US sanctions policy is a good example 
        of such self-defeating actions. It does not stop Iran from 
        proliferating. If anything, it makes proliferation and 
        asymmetric warfare Iran's only military options, and reinforces 
        Iran's hardliners in arguing that the US is hostile and a 
        threat. The US should consider lifting those Executive Orders 
        that cut US business off from their Iranian counterparts, which 
        block Iranian energy development without halting or limiting 
        Iranian proliferation, and which impede an unofficial cultural 
        and political dialog for no apparent reason. This does not mean 
        tolerating any transfer of critical technologies or offering 
        some kind of carte blanche in trade and investment that would 
        given the Iranian government large amounts of hard currency it 
        could use for weapons programs. This, however, is very 
        different from the present hollow sanctions policy that serves 
        no purpose other than posturing for domestic political 
        constituencies.

   Pursue an Arab-Israeli Peace and the ``Road Map'' in the 
        face of all obstacles: The US cannot enforce a peace on Israel 
        and the Palestinians, and should not. Iran is, however, only 
        one example of the need to convince the people of the region 
        that the US is both serious in seeking an end to the Arab-
        Israeli conflict, and that it will put pressure on Israel to 
        limit its settlements and restrict its military actions to 
        those action truly needed to protect its people and halt 
        attacks and terrorism. This in no way means relaxing US 
        pressure for Palestinian action and reform, for a halt to 
        Iranian support of extremist and terrorist organizations, and 
        for Arab and Iranian support of the peace process. A strong, 
        visible, and continuing US-led Arab-Israeli peace effort is 
        vital, however, to any effort to deal with Iran--as well as to 
        every other aspect of US security interests in the Middle East.

    Finally, the US needs something it has badly lacked in recent 
years: patience. There are no instant solutions or good options for 
dramatic action. Poorly chosen rhetoric and political posturing aids 
those forces in Iran that threaten the US and its allies, it does not 
compel Iran or threaten it in productive ways. Most important, the US 
needs to finish the job in Iraq and in dealing with Afghanistan and Al 
Qaida before it even contemplates new confrontations that are not force 
upon it be events, and the US needs to rebuild its relations with its 
allies and adopt policies that can win international support. 
Deterrence and containment have their risks and limits, and they only 
succeed with time. Wandering off in search enemies, however, has never 
made strategic sense and is only likely to further alienate Iran, other 
regional allies, and the world.

    The Chairman. Thank you, Dr. Cordesman. We appreciate, as 
always, your testimony and your suggestions.
    Dr. Einhorn.

     STATEMENT OF HON. ROBERT J. EINHORN, SENIOR ADVISER, 
   INTERNATIONAL SECURITY PROGRAM, CENTER FOR STRATEGIC AND 
             INTERNATIONAL STUDIES, WASHINGTON, DC

    Dr. Einhorn. Mr. Chairman, thanks for the opportunity to 
appear before the committee.
    In your earlier remarks, you talked about the agreement 
that was reached last week between Iran and the three foreign 
ministers. I will not repeat the elements of that agreement. I 
think the Europeans deserve a lot of credit for skillful 
diplomacy, but this agreement last week would not have been 
possible without a U.S.-led campaign of diplomatic pressure 
that gave Iran a stark choice between cooperating or being 
brought before the U.N. Security Council.
    Last week's agreement was potentially a very useful step, 
but its value is going to depend on how well it is implemented. 
A key question will be how broadly the suspension of enrichment 
and processing activities is defined. If, for example, it is 
defined as covering only enrichment operations, it will not be 
very meaningful. But if it also covers such enrichment-related 
activities as the construction of enrichment plants, the 
manufacture of centrifuge machines, the processing of 
enrichment feedstock, then the suspension could put a very 
significant break on Iran's fissile material production plans.
    Importantly the declaration reached last week in Tehran 
does not excuse Iran from meeting the requirements of the 
resolution passed by the IAEA board last month. If Iran does 
not meet those requirements, it will face very strong pressures 
at the November board meeting for a finding of noncompliance 
and for sending the matter to the U.N. Security Council.
    There may be some interest in finding Iran in noncompliance 
and sending the matter to New York even if Iran does show good 
faith in meeting the IAEA's demands and the requirements of 
last week's declaration. The rationale for doing that would be 
that Iran has committed past safeguards violations and that the 
IAEA statute requires that any such violations be sent to the 
Security Council.
    But if Iran actively cooperates, it would be a mistake in 
my view to make a finding of noncompliance in November. Sending 
the matter to New York would undermine support for further 
cooperation in Tehran where the decision to suspend enrichment 
and sign the additional protocol has come under very strong 
criticism from hard-liners. If Iran genuinely cooperates with 
the new agreement, its past violations can and should be 
reported to the Security Council but at a later date. There is 
precedent for that, and I could explain later.
    Mr. Chairman, at best, last week's agreement in Tehran is 
only a temporary arrangement. Before long, it would have to be 
replaced by a more durable solution to the problem. Under such 
a solution, Iran should be required permanently to foreswear 
nuclear fuel cycle capabilities, especially enrichment and 
reprocessing. Existing facilities and facilities under 
construction would have to be dismantled. In exchange, Iran 
would receive a multilateral guarantee that as long as it 
complies with its various nonproliferation commitments, it 
would be able to purchase fuel cycle services, including the 
supply of fresh reactor fuel, and the take-back and storage of 
spent fuel for any power reactors that it decided to build. The 
U.S., Europeans, and Russians might join together in offering 
such a guarantee. The combination of a ban on fuel cycle 
activities and the additional protocol would provide confidence 
that Iran was not engaged in clandestine fissile material 
production.
    While some would prefer that Iran not even be allowed to 
possess nuclear power reactors, a ban on power reactors in my 
view is neither achievable nor necessary. The risks associated 
with large safeguarded nuclear power reactors are manageable. 
This is a controversial point and we can explore this later.
    The multilateral fuel services guarantee would address the 
Iranian concern that they would be vulnerable to fuel supply 
cutoffs, but it would not address their main reason for 
pursuing nuclear weapons, and that is their national security. 
The ouster of Saddam Hussein has eliminated one major threat to 
Iran, but now Iran's principal security preoccupation is the 
United States and the fear that the Bush administration may be 
intending to undermine the regime. As long as this perception 
exists, it will be very hard to get Iran to give up its nuclear 
weapons capability altogether.
    Ending the longstanding estrangement between the U.S. and 
Iran may, therefore, be a necessary condition for getting Iran 
to move beyond the interim arrangements that are now taking 
shape and to accept a permanent solution to the nuclear 
problem. For this and other reasons, the U.S. and Iran should 
begin a step-by-step engagement process in which the two 
countries can raise a range of issues of concern to them and 
explore whether a modus vivendi between them is really 
possible. Such an engagement process would provide the most 
promising context for ending Iran's nuclear weapons program.
    Mr. Chairman, we do not know whether last week's agreement 
was an indication that Iran may now be prepared to abandon its 
nuclear ambitions or whether it was simply a tactical maneuver 
aimed at dividing us from the Europeans and dodging U.N. 
sanctions, or perhaps a deeply divided Iran is simply keeping 
its options open. It would be naive for us to act on the 
assumption that Iran has already decided to throw in the towel 
on its nuclear weapons program, but it would also be a mistake 
to assume that an Iranian nuclear weapons capability is 
inevitable.
    In the period ahead, we must do everything possible, 
working with the Europeans, the Russians, and the IAEA, to 
bring Iranian leaders to the conclusion that continuing their 
efforts to acquire nuclear weapons is too risky, too subject to 
detection, too damaging to Iran's reputation and broader 
national interests. Continued pressure will be essential, but 
pressure is not going to be enough. A crucial incentive for 
Iran is likely to be the prospect of a new and more promising 
relationship with the United States. Indeed, U.S. willingness 
to explore such a relationship with Iran may be the key to 
resolving the nuclear issue.
    Thank you, Mr. Chairman.
    [The prepared statement of Dr. Einhorn follows:]

 Prepared Statement of Hon. Robert J. Einhorn, Senior Adviser, Center 
        for Strategic and International Studies, Washington, DC

                         THE IRAN NUCLEAR ISSUE

    Mr. Chairman, Members of the Committee, thank you for giving me the 
opportunity to speak with you this morning about the challenge of 
heading off an Iranian nuclear weapons capability.
    This hearing comes at a critical time in Iran's decades-old quest 
to acquire nuclear weapons. Just last Tuesday, on October 21st, Iran 
and the foreign ministers of France, Germany, and the U.K. issued a 
declaration in which Iran accepted some of the key demands of the 
international community with respect to its nuclear program. That 
declaration was, in the words of President Bush, a ``very positive 
development.'' But it was only a first step and hardly an indication 
that Iran has abandoned its hopes of having nuclear weapons. Achieving 
a durable and verifiable termination of Tehran's nuclear weapons 
program will require sustained, unified efforts by the United States, 
the Europeans, the Russians, and many other interested parties in the 
months and years to come.
    Iran has pursued its nuclear weapons objective in the guise of an 
ambitious civilian nuclear power program that, despite abundant Iranian 
oil and natural gas reserves, Iran claims is necessary to augment and 
diversify its sources of energy. Its nuclear plans call not just for 
the construction of a significant number of power reactors (including 
the Russian-supplied reactor at Bushehr), but also for the acquisition 
of a full range of facilities capable of processing uranium and 
producing fuel for those reactors. But it is precisely those sensitive, 
dual-use ``fuel-cycle'' facilities--mainly enrichment and reprocessing 
plants--that would enable Iran to obtain the fissile material needed to 
build nuclear weapons. In the last few years, Iran has made substantial 
progress on those fuel-cycle capabilities, especially in building a 
large uranium enrichment plant at Natanz. Some experts believe Iran is 
now only one to two years from having the capability to enrich uranium 
to weapons-grade.

Iran's plans exposed
    Iran had hoped to have its cake and eat it too--the reputation of a 
law-abiding member of the international community and an active, 
clandestine nuclear weapons program. But a little over a year ago its 
plans began to unravel. An Iranian opposition group publicly disclosed 
information about two fuel-cycle facilities that Iran had previously 
tried to keep secret, including the Natanz enrichment plant. When the 
International Atomic Energy Agency (IAEA) investigated these and other 
leads, it discovered that ``Iran had failed to meet its obligations 
under its Safeguards Agreement with respect to the reporting of nuclear 
material imported into Iran and the subsequent processing and use of 
the material.'' In the course of several site visits, it found a 
considerable amount of incriminating evidence, including particles of 
highly-enriched uranium (HEU) in environmental samples taken at Natanz 
and elsewhere. The Iranians claimed that their enrichment equipment had 
been contaminated with HEU before Iran imported it from foreign 
brokers. But this explanation only generated more suspicion because it 
contradicted an earlier claim by Iran that its enrichment program did 
not rely on imports--one of several glaring inconsistencies in Tehran's 
responses to IAEA inquiries. Throughout the IAEA's investigation, Iran 
alternated between stonewalling and belated, grudging cooperation.
    By the time of the IAEA Board meeting last month, Iran found itself 
largely isolated. The Europeans, who had previously showed much less 
concern than the U.S. about Iran's nuclear intentions, had become 
alarmed and ready to take strong measures, including making a pending 
European Union trade and cooperation agreement with Iran contingent on 
resolving the nuclear issue. Even the Russians, who had gone ahead with 
the Bushehr reactor project in the face of a decade of U.S. protests, 
had grown wary about proceeding to complete and fuel the reactor while 
serious questions remained about Tehran's nuclear plans. Prompted by a 
vigorous U.S. diplomatic campaign, the September Board adopted a strong 
resolution calling on Iran to cooperate fully with the IAEA in 
resolving outstanding issues, to adhere unconditionally to the 
Additional Protocol (requiring Iran to provide more extensive 
information and to accept more intrusive inspections), and to suspend 
all further uranium enrichment-related activities and any reprocessing 
activities. Moreover, it set the end of October as a deadline for Iran 
to meet these requirements.
    The September IAEA resolution produced a strong public reaction in 
Tehran, with leaders across the political spectrum denouncing foreign 
attempts to pressure Iran. But the confrontation with the IAEA's 
members also exposed sharp differences within Iran on the nuclear 
issue, with moderate voices supporting cooperation with the 
international community and conservatives advocating resistance, even 
withdrawal from the NPT.

The European initiative
    It was in these circumstances, and with less than two weeks 
remaining before the deadline, that the French, U.K., and German 
foreign ministers visited Iran and produced the October 21st 
declaration. In that declaration, Iran pledges ``through full 
transparency'' to meet all of the IAEA's demands and ``correct any 
possible failures and deficiencies.'' It agrees to sign and ratify the 
Additional Protocol and, significantly, to act in accordance with the 
Protocol pending its ratification. And most positively (and 
unexpectedly), Iran commits ``voluntarily to suspend all uranium 
enrichment and processing activities as defined by the IAEA.'' For 
their part, the European ministers express the view that, once 
international concerns about the nuclear issue are fully resolved, 
``Iran could expect easier access to modern technology and supplies in 
a range of areas.''
    The three European countries deserve a great deal of credit for 
their timely and skillful diplomacy. But their initiative would not 
have been possible without the strong pressures placed on Iran by the 
United States, other members of the IAEA Board, and the IAEA itself. 
Those pressures confronted Tehran with a stark choice--it could 
cooperate and meet IAEA requirements or it could defy the IAEA 
resolution, be found in non-compliance with its NPT obligations, see 
the nuclear issue sent to the United Nations Security Council, and 
eventually become the target of Security Council sanctions. Unlike 
North Korea, Iran minds being branded an international outlaw. It 
recognizes that its plans for a better future depend on re-integration 
into the world community--and that becoming an international pariah 
would not be consistent with those plans. The prospect of being hauled 
before the U.N. Security Council, therefore, was presumably an 
important factor motivating Iran to accept last week's declaration.
A first step, but not a solution
    While the declaration has been acknowledged almost universally as a 
valuable step, it clearly does not resolve the Iranian nuclear issue. 
In the first place, the meaning of some of its crucial elements--
especially the suspension of ``all uranium enrichment and processing 
activities as defined by the IAEA''--is not yet clear. If the IAEA were 
to define the suspension as covering only enrichment experiments and 
operations (permitting, for example, continued construction of the 
Natanz plant), its value would be minimal. Instead, the IAEA should 
look to the September Board resolution's appeal that Iran suspend all 
``enrichment-related activities'' and ``any reprocessing activities,'' 
which presumably would cover not just the actual enrichment of uranium 
but also further construction at Natanz or any other enrichment 
facilities, manufacture of additional centrifuges and related 
equipment, processing of uranium to make feedstock for enrichment, and 
a range of other fuel-cycle activities.
    The duration of the suspension is also unclear. Hassan Rohani, 
secretary of the Iranian Supreme National Security Council, said that 
``it could last for one day or one year; it depends on us.'' In light 
of strong opposition to the suspension by some in Iran (presumably 
because they recognize that once a moratorium begins, it may be 
politically difficult to end), it is understandable why Rohani chose to 
reassure Iranian audiences in this way. However, to have any value, the 
suspension must be more durable, along the lines anticipated by the 
September Board--at a minimum, it should last until the Protocol has 
been fully implemented and concerns about Iran's program have been 
resolved.
    However the elements of the October 21st declaration are defined, 
the value of the declaration will depend on how conscientiously it is 
implemented. The text makes plain (and the European authors have 
emphasized) that the declaration is no substitute for Iran meeting the 
demands of the September Board resolution, including the requirement to 
turn over to the IAEA all information needed to resolve outstanding 
questions about its nuclear program. Apparently, Iran turned over 
substantial documentation to the Agency late last week, but that 
information will take some time to evaluate and will become the subject 
of a report by the Director General to the Board before its November 
meeting.

A finding of non-compliance at the November Board?
    The Iranians may assume that last week's agreement means that there 
will be no finding of non-compliance at the November Board and no 
referral to the U.N. Security Council. But the European authors have 
asserted clearly that the declaration does not excuse Iran from meeting 
the requirements laid down by the September Board. So the decision the 
Board takes at its November meeting will depend on Iran's behavior 
between now and then.
    If Tehran doesn't show the necessary cooperation and transparency 
or drags its feet on the suspension or Protocol, it could well face 
strong pressures for a tough finding and for sending the matter to New 
York. However, if it clearly demonstrates good faith in meeting the 
demands of the September resolution and the terms of the declaration, 
the Board would probably decide to hold off on making a definitive 
finding or referring the issue to the Security Council. It would 
neither be found in non-compliance nor given a clean bill of health. It 
would, in effect, be put on probation and would be called upon to take 
a variety of concrete steps to resolve the issue fully. The IAEA would 
remain actively engaged, including in monitoring the suspension and in 
implementing the Protocol, which Iran has agreed to abide by 
provisionally pending its ratification. At the following Board meeting, 
progress would be evaluated and further decisions taken.
    It might be argued that, regardless of Iran's behavior going 
forward, its past violations warrant a November finding of non-
compliance and referral to the Council. According to this view, 
reporting of violations is a statutory responsibility of the IAEA, and 
failure to fulfill that responsibility would reduce Tehran's incentives 
to end its nuclear program (because it would conclude that the threat 
of punishment was hollow). But a stronger case can be made that, if 
Iran begins fully and actively to cooperate, the better course would be 
to hold off, for the time being, on a compliance finding.

   There is little time between now and the November Board to 
        assess and further investigate the claims contained in the 
        documentation Iran has recently submitted. There is also not 
        enough time to evaluate properly Iran's readiness to follow 
        through on its commitments regarding suspension and the 
        Additional Protocol.

   Given the emotionally charged atmosphere surrounding the 
        nuclear issue today in Tehran--where foreign pressures to stop 
        the nuclear weapons program are portrayed as attempts to 
        humiliate Iran, undermine its sovereignty, and deny it its 
        lawful right to acquire advanced technologies--there is a risk 
        that a finding of non-compliance and referral to the Security 
        Council, especially following concrete steps by Iran to meet 
        IAEA demands, could fatally undercut the case in Tehran for 
        cooperation with the IAEA. Supporters of Iran's weapons program 
        would argue that a decision to bring the matter to the Security 
        Council, especially after Iran had made significant concessions 
        on suspension and the Protocol, proved that the U.S. would not 
        stop at the nuclear issue, but would continue until it had 
        undermined the Iranian regime.

   If the November Board decides to defer making a report to 
        the Security Council, it still can--indeed, under Article XII.C 
        of the IAEA Statute, must--report to the Council at a later 
        date on Iran's past safeguards violations and any additional 
        non-compliance. But the content of the eventual report would 
        depend on Iran's behavior in the period ahead. If Iran truly 
        ``comes clean,'' suspends enrichment and other processing 
        activities, adheres faithfully to the Protocol, and otherwise 
        scrupulously abides by its nonproliferation obligations, the 
        report can follow ``the Romanian model,'' under which the IAEA 
        Board in 1992 reported to the U.N. Security Council and General 
        Assembly on certain past Romanian safeguards violations and 
        noted that corrective steps had been taken by Romania. Given 
        the absence of continuing concerns about Romania's activities, 
        no action was taken by the Council. If Iran decides to 
        cooperate and comply, such a precedent would be available.

   But if Iran does not cooperate and comply--if it is 
        discovered in the future to be pursuing activities inconsistent 
        with its nonproliferation obligations--it can at any time be 
        found in non-compliance and brought before the Security 
        Council, whether or not the IAEA Board decides to hold off on 
        making a compliance finding at its meeting next month. To the 
        extent that Iran is motivated by a concern about the nuclear 
        issue going to the Security Council, this would remain a 
        continuing disincentive.

Has Iran abandoned it nuclear ambitions?
    A key question is whether agreement between Iran and the Europeans 
last week signifies that Iran has made a fundamental decision not to 
have nuclear weapons--or whether it has simply made a tactical move, 
hoping to divide the U.S. from the Europeans and dodge U.N. sanctions 
while continuing, albeit more carefully and surreptitiously, to pursue 
the goal of becoming a nuclear weapons power. Or perhaps there is a 
third possibility: that an Iran deeply divided on nuclear and other 
issues is keeping its options open and will proceed in the future on 
the basis of an evolving calculation of benefits and risks, with its 
domestic struggle playing a major role in the outcome.
    We cannot at this stage know which of these explanations is most 
accurate. It would be naive, given the tremendous commitment Tehran has 
made to its nuclear program over the years, to act on the assumption 
that last week's declaration marked the end of Iran's pursuit of 
nuclear weapons. But it would also be a mistake to assume that an 
Iranian nuclear weapons capability is inevitable and that there is 
nothing we can do to influence Tehran's choices. Instead, we should do 
everything we can to bring Iran's leaders, over time, to the conclusion 
that continuing their efforts to acquire nuclear weapons will be too 
risky, too subject to detection, and too damaging to Iran's reputation 
and broader interests--in short, a losing proposition.
    Bringing Iran to that realization may take considerable time. It 
will certainly require the international community to speak with one 
voice in sending the message to Tehran that it has much to lose by 
continuing down the path toward nuclear weapons and much to gain by 
reversing course. It will be essential for the Europeans not to declare 
victory on the basis of the October 21st declaration and return to 
business as usual. Their recent firmness was indispensable to achieving 
last week's result and must be maintained. It will be crucial for the 
U.S. and the Europeans to develop a common approach toward the November 
IAEA Board meeting and beyond. The Russians too will be critical. 
Rather than taking last week's agreement as a green light to accelerate 
the completion of Bushehr and the delivery of fuel for the reactor, 
they should maintain the deliberate approach they have adopted in 
recent months and await an indication of whether Iran is proceeding 
responsibly and expeditiously to meet the requirements of both the 
declaration and the IAEA Board. The IAEA must continue its 
investigations with the same thoroughness and professionalism it has 
exhibited over the last year, while adding to its responsibilities the 
tasks of defining and monitoring the suspension of enrichment and 
processing activities and working with Iran to implement the Additional 
Protocol.

A more durable solution to the nuclear issue
    Together, the September IAEA Board resolution and the October 21st 
Iranian-European declaration prescribe a useful intermediate step 
toward resolving the Iran nuclear issue. But some of the elements of 
this temporary solution will raise questions over time and cannot 
provide confidence in the long run. For example, the U.S. and others 
will not be comfortable with simply suspending Iranian fuel cycle 
activities and will worry that Iran could re-activate its nuclear 
weapons program by unfreezing those activities at some future date. For 
its part, Iran will not be content for long with the vague promise in 
the October 21st declaration that, if international concerns about the 
nuclear issue are fully resolved, ``Iran could expect easier access to 
modern technology and supplies in a range of areas.'' It will want 
greater assurance that its plans for a nuclear power program are 
sustainable.
    Before long, therefore, it will be important to replace the interim 
arrangement with a more permanent and stable solution. Such a solution 
might include the following key elements:

   In addition to faithfully implementing the Additional 
        Protocol and complying with its other nonproliferation 
        commitments, Iran would permanently forswear nuclear fuel cycle 
        capabilities, including enrichment, reprocessing, uranium 
        conversion, and fuel fabrication. It would agree to dismantle 
        existing fuel-cycle facilities as well as any under 
        construction.

   The U.S., Europeans, Russians, and perhaps others would 
        provide a binding multilateral guarantee that, as long as Iran 
        met its nuclear nonproliferation commitments, it would be able 
        on a commercial basis to receive fuel-cycle services (including 
        fresh reactor fuel supply and spent fuel take-back and storage) 
        for any nuclear power reactors that it builds.

    This approach would meet essential U.S. requirements. The 
combination of the Additional Protocol and the prohibition of any fuel 
cycle capabilities should provide sufficient confidence that Iran was 
not pursuing a clandestine fissile material production program, 
especially since any detected foreign procurement efforts associated 
with fuel cycle capabilities would be a tip-off of noncompliance. 
Moreover, while the U.S. would prefer that Iran not build any nuclear 
power reactors, the risks associated with such reactors--especially in 
the absence of fuel-cycle capabilities in Iran--are manageable. In this 
connection, there is broad agreement that the likelihood of undetected, 
clandestine diversion of plutonium from the spent fuel discharged by 
such large, safeguarded power reactors would be minimal. Opinion is 
somewhat more divided about the risk that Iran might in the future 
withdraw from the NPT, kick out IAEA inspectors, and reprocess the 
plutonium from the power reactor's spent fuel for weapons. While this 
scenario is theoretically possible, it assumes: (a) that Iran will have 
available a fairly large, illegal reprocessing plant that has escaped 
detection by the Additional Protocol, (b) that Iran would be willing to 
sacrifice its power reactors as generators of electricity (because once 
Iran left the NPT and used its reactors to produce plutonium for 
weapons, it would no longer receive foreign fuel), and (c) that Iran 
would be prepared to accept the international opprobrium and the 
resulting penalties that this brazen approach to achieving a nuclear 
weapons capability would entail. Most experts believe the chances of 
Iran pursuing this scenario are very limited.
    The solution outlined above would enable the Iranian government to 
claim that it had not given up its right to benefit from the peaceful 
uses of nuclear energy, an issue that has taken on great symbolic and 
political importance in the domestic debate. At the same time, Iranian 
leaders could say that they had reached the conclusion (as many other 
advanced nuclear energy countries had done) that the most cost-
effective way to enjoy the benefits of nuclear power is to rely on 
foreign-supplied fuel-cycle services and that the main reason Iran had 
been interested in producing its own fuel (i.e., concern about the 
reliability of foreign supply) had been taken care of by the 
multilateral assurance on fuel-cycle services.

Creating a more promising context for resolving the nuclear issue
    While the solution described here may give the Iranians confidence 
that their nuclear power program would not be vulnerable to capricious 
supply cutoffs, it may not be sufficient to address the real reasons 
they have been pursuing their own fissile material/nuclear weapons 
production capability--primarily, concerns about their national 
security. Until recently, the main security motivation for Iran's 
nuclear and other weapons of mass destruction programs was Saddam 
Hussein's Iraq, the arch rival with which Iran fought a long, bloody 
war in the 1980s, which was known to have pursued ambitious WMD 
programs of its own, and which had used chemical weapons against 
Iranians on a large scale. However, Saddam Hussein is no longer in 
power and, at least for the foreseeable future, Iraqi WMD programs are 
no longer a threat. Now Iran's principal security preoccupation is the 
United States and the fear that the Bush Administration may be 
intending to coerce and undermine the present Iranian regime. As long 
as this perception exists, it will probably be difficult to get the 
Iranians to move beyond the interim arrangements that are now taking 
form and to accept a more durable and reliable solution to the nuclear 
problem.
    Ending the longstanding estrangement between the U.S. and Iran and 
beginning to rebuild bilateral ties could therefore help create 
conditions in which such a lasting solution could be found. But 
movement toward an improved relationship will be difficult, especially 
given the many grievances that have accumulated on both sides, the 
continuing high levels of mutual suspicions and mistrust, and the 
domestic political risks in each country associated with dealing with 
the other.
    In these circumstances, consideration might be given to a 
relatively informal, step-by-step engagement process between the United 
States and Iran in which the two countries would raise issues of 
concern to them and explore whether a modus vivendi between them would 
be possible. In addition to the nuclear issue and other WMD-related 
concerns, the U.S. would presumably wish to raise such matters as the 
disposition of al-Qaeda operatives under detention in Iran, the 
question of Iranian activities and objectives in Iraq, and the support 
by Iran for Middle East terrorist organizations. Iran would have its 
own agenda, including alleged U.S. support for Iranian opposition 
groups, Iran's legitimate interests in a post-Saddam Iraq, the 
relaxation of U.S.-led economic restrictions against Iran, and concerns 
about Bush Administration intentions toward the Iranian regime.
    The objective of this engagement would not be a ``grand bargain,'' 
a written agreement covering a wide range of issues. Rather, it might 
be a series of coordinated, parallel steps that would be discussed and 
tacitly agreed by the two sides. An entire ``road map'' need not be 
developed and agreed at one time. Instead, individual steps could be 
agreed, carried out, and monitored before moving to additional steps. 
Proceeding incrementally in this way would be designed to give each 
side an opportunity to evaluate whether the other was both willing and 
able to deliver on its commitments.
    The goal of this step-by-step process would be the eventual 
normalization of U.S.-Iranian relations. Neither side would be forced 
to take normalization steps before it was ready. But the agreed premise 
of the process would be that, if the key concerns of the two sides were 
satisfactorily dealt with, the end point would be normalization.
    At any point during this step-by-step process when the two sides 
were ready, they could seek to convert an interim arrangement on the 
nuclear issue (e.g., including the temporary suspension of uranium 
enrichment and processing activities) to a permanent solution along the 
lines outlined above. Because such a solution would be a multilateral 
arrangement, they would bring in other parties, including the IAEA.

Conclusion
    The October 21st declaration--the product of a skillful European 
initiative and a U.S.-led multilateral diplomatic campaign--is 
potentially a very important milestone in the effort to dissuade Iran 
from obtaining a nuclear weapons capability. Building on that 
declaration and bringing Iran to the conclusion that its interests are 
best served by giving up the nuclear weapons option will require 
persistent, unified efforts by the international community, especially 
the U.S., the Europeans, the Russians, and the IAEA. But while 
disincentives will play a critical role--demonstrating that continuing 
on the path toward nuclear weapons would be a risky and ultimately 
losing proposition--Iran will also have to see positive reasons for 
abandoning a course that it has pursued with so much determination over 
so many years. A large part of that positive incentive will be the 
opportunity to be re-integrated, economically and politically, with the 
broader world community. But a crucial ingredient is likely to be the 
prospect of a new and more promising relationship with the United 
States. U.S. willingness to explore such relationship with Iran could 
well be the key to arriving at a durable and reliable solution to the 
nuclear issue.

    The Chairman. Well, thank you very much, Dr. Einhorn. Let 
me suggest that we have questioning and maybe 5 minutes each 
for each Senator. I will defer to other Senators if they appear 
or reappear.
    Let me just start the questioning by saying that I agree 
with you, Dr. Cordesman, that the super inspector idea that I 
suggested may or may not be possible. The basic question you 
have asked with regard to our intelligence in terms of 
nonproliferation questions is a very serious one here in the 
Iranian case. We are having public discussion about 
intelligence in Iraq and even in North Korea or elsewhere. 
Ultimately this may be a question that can never be resolved.
    On the other hand, I am curious as to whether there are any 
parallels between the North Korean and the Iranian situation. I 
do not want to stretch that possibility. The North Koreans 
apparently have declared that not only are they working on 
nuclear weapons, but that they may actually have already 
produced one or two. The world questions whether they do or do 
not have these. Once again, a very grave intelligence problem 
has come on an issue that is that difficult. In Iran no one is 
making a claim that they have produced anything to date. The 
claims on our part are that they have an intent to do that, and 
we have been tracing from the Shah onward some type of national 
enterprise in that regard.
    Should our objective as a nation now be to work with as 
many other nations as we can? In the case of North Korea, five 
others have been identified. Perhaps a good many could be 
identified with regard to Iran so that we might have what might 
be an nonaggression pact or a nonaggression piece of paper in 
which we simply assure North Korea and assure Iran we do not 
intend to overthrow their regimes, and we do not intend to 
attack them if in fact they stop their nuclear programs. At 
least that is apparently the intent in North Korea. They may or 
may not be prepared to do that. To take Dr. Cordesman's point 
with regard to Iran, it may be equally valid in North Korea. 
How will we know in some cases? What are the inspector regimes 
that finally ferret out whether somebody is keeping their word? 
So maybe that policy works, maybe it doesn't. But for the 
moment, we seem to be headed on that course in North Korea.
    I am just curious with regard to Iran. Perhaps you would 
employ softer language here rather than having a six-member 
group sort of hovering around Iran. The suggestion is really 
dialog of various sorts, informal, but constant on many levels. 
A thought that somehow or other that relationship might work, 
if not to a friendship, at least to a much greater mutual 
respect and maybe mutual involvement.
    Does anyone want to have a comment about overall policy? 
Well, first of all, Mr. Luers, then Dr. Cordesman.
    Mr. Luers. Two things on that, Mr. Chairman. First, in our 
discussions with the Iranians on that subject, we hear from 
some of them that a connection of a sort of nonaggression 
agreement a la Korea with Iran would not be appropriate because 
the Iranians maintain officially they have no intention of 
getting nuclear weapons. Therefore, if we linked in any public 
or direct way such a nonaggression pact, it would suggest that 
the Iranian nuclear capacity is only for the purpose of 
national security.
    The second point I would make is that as a result of the 
recent agreement that was reached with the West Europeans on 
nuclear issues, there will not only be the IAEA process which 
will be undertaken right away, but there will be meetings 
between the three Western European Governments and Iran on an 
overall look at this nuclear question. My understanding is the 
Iranians would agree to have the United States participate in 
those meetings.
    In that context, there could be a discussion of a nuclear-
free zone in the Middle East, which has been discussed quite a 
bit I am sure. Mr. Cordesman knows much more about that than I 
do. Such discussions would provide the context in which non-
aggression or regional security might come up. But the Iranians 
at this stage refuse, unlike the Koreans, to say they have any 
intention of having nuclear weapons.
    The Chairman. Dr. Cordesman.
    Dr. Cordesman. I think that, Senator, you raise one of the 
most critical issues in nonproliferation, that compellance by 
itself will never succeed. You have to remove or ease the 
motive to proliferate.
    Bob Einhorn raised the critical issue, that if you can 
control the fuel cycle, you greatly limit the ability of a 
country to proliferate. Even today folded centrifuge systems 
are going to be relatively large and visible. While laser 
isotope separation presents a different problem, it is far from 
clear that countries can actually develop that technology in 
the near term.
    I think that you can have success if you can couple changes 
in their motive to proliferate with controls on the most overt 
acts--the fuel cycle, the testing of a nuclear weapon, and the 
deployment of vehicles designed to carry weapons of mass 
destruction, like long-range missiles, particularly systems 
which make no military sense unless they have weapons of mass 
destruction, than you can address the most visible signs.
    But we need to be honest, and perhaps this is an area where 
the committee might wish to seek a classified response. With 
today's technology, it is becoming easier and easier to develop 
relatively sophisticated nuclear weapons designs without overt 
testing. Basic research for laser isotope separation is in my 
opinion undetectable, and moving it forward to the possibility 
of industrial scale development would probably also be 
undetectable. Advances in centrifuge design could be dispersed 
and concealed and brought to the point of a breakout capability 
in ways I do not believe we can detect. As long as these 
realities exist, you cannot really talk about preventing 
proliferation. What you can talk about is altering the path in 
intensity of proliferation, and that is a different thing.
    The Chairman. I thank you. I am going to defer.
    Senator Biden. Take whatever time you want.
    The Chairman. Let me just carry on.
    The dilemma here in terms of our foreign policy is what the 
President has often talked about, that is the intersection of 
weapons of mass destruction with terrorism. On the one hand, we 
have discussed with regard to Iran today that there has been 
state-sponsored terrorism. Now, the suggestion is perhaps if 
the conduct of Israel and the Palestinians and the Road Map and 
what have you had worked out, this might now be less intensive 
and less developed. On the other hand, maybe not. It appears 
that the terrorism is a part of the current regimes, not the 
same sort of thing that existed during the Shah's days. The 
SAVAK and the Secret Service were there, but they were not 
overt terrorism. So this poses quite a dilemma.
    As you point out, Dr. Cordesman, if some program moving 
almost to the point of breakout is undetectable ultimately--and 
the terrorism is still there, we are on the horns of a dilemma 
perpetually. The answer to that--I think you or someone 
suggested--is that we better keep a lot of military forces in 
the area because they might have to come into action. Now, that 
then leaves the Iranians to feel that in fact we are after them 
and we want to overturn their regime.
    How can we finally sort out some sort of a situation here 
in which there is even a minimum of mutual trust? Of course, as 
Dr. Hadian has said, after all, the self-respect of Iranians is 
that, by golly, if they want to have nuclear weapons, nuclear 
power, all the rest of it, that is their given right. Well, at 
least the power part of it is understandable, even if Iran has 
all sorts of other resources. And who are we to determine you 
should not be doing that sort of thing?
    I am just trying to come to grips in my own mind's eye with 
how we divine some degree of American security out of all of 
this without at the same time having everybody out of sorts 
perpetually, with no possibility of moving on except in these 
informal contacts in which we sort of keep in touch sort of 
looking for better days.
    Dr. Cordesman. Senator, could I just make two quick points? 
First, my own dialog or discussions with Iranians do not 
indicate that the presence we have in the gulf, assuming we are 
out of Iraq, is by itself something that they cannot live with. 
I think it is something they would like to get rid of, but they 
can accept it and they expect it to continue. The problem lies 
in U.S. rhetoric which talks about regime change and 
preemption, which is not backed by dialog, compromise, or 
efforts to move forward. That we can change.
    But the second thing that bothers me is that because a 
nation supports groups we do not like, it somehow is going to 
be a high risk in terms of the transfer of weapons of mass 
destruction.
    I think the problem is different and more serious in many 
ways. Terrorist groups already know how to make crude chemical 
weapons. Fourth generation technology will ease the burden with 
time.
    The proliferation of biotechnology, the components for 
biological weapons, additional knowledge of genetic engineering 
is not an urgent or immediate threat, but the anthrax problems 
we saw in the U.S. show that the advanced technology for 
building anthrax already exists and no terrorist movement is 
not going to be able to build crude biological weapons.
    It does not need Iran or anyone else. Radiological weapons 
are probably not very effective, but all you need to do is buy 
the agent. So the idea that weapons of mass destruction can be 
kept out of terrorist hands or that it takes a state sponsor to 
provide these weapons to terrorists is one for which I can see 
no technological base.
    The Chairman. Dr. Hadian.
    Dr. Hadian. I wish to make a couple of points. First of 
all, in regard to North Korea and Iran, there are a number of 
important differences. First of all, as I said, in Iran there 
are differences of opinion. There are different groups. There 
is a public opinion which makes it much harder in fact what 
should be done.
    Also, from the outside the decisionmaking process, because 
of many institutions, many informal networks, many individuals 
are involved, may seem very chaotic, but in fact usually 
important decisions are very much consensually made and you can 
trust those decisions which have been basically made 
consensually.
    But in regard to terrorism and Iran's link with terrorism, 
I very much agree with Dr. Cordesman also that we have to 
distinguish between different kinds of terrorism. Just putting 
Hamas, Hezbollah, Palestinian Islamic Jihad, and al-Qaeda as 
one category, calling them terrorism and prescribing some 
policies to containing them I believe is not going to work. 
Iran's relationship with each one of these organizations is 
very different. In fact, I can say Iran can play a very 
important, constructive role in dealing with or in fighting 
with terrorism.
    I would make that terrorism, at least for the sake of our 
discussion, in two main categories: ideologically oriented 
terrorism and politically oriented terrorism. Ideologically 
oriented terrorism, which is much harder fight with, is the al-
Qaeda type. They are performing a duty or a task. They are not 
very much concerned about the consequences of their acts, 
unlike the politically oriented terrorism, which is like an 
extension of politics. There is a cost/benefit analysis of the 
center of that activity. In other words, you can deal much 
easier with the politically oriented terrorism than dealing 
with ideologically oriented terrorism.
    To me, Iran can be really helpful in dealing with this 
second kind over the ideological one. In fact, dealing with it 
or fighting with terrorism, you need an alternative ideology to 
fight with that. For fighting with Islamic radicalism, you need 
a reformist Islam to fight with it. You have to deconstruct the 
main tenets of that ideology. And Iran is very much well 
equipped because of the experience of radicalism. We are well 
equipped to fight with that kind of terrorism. In fact, that is 
an area which is in the common interest of both Iran and the 
U.S. to explore, and Iran really can support the U.S. in its 
fight with ideologically oriented terrorism. But, of course, 
with the political as well, but I would describe it a little 
bit later.
    The Chairman. Let me just pass over Mr. Luers for a moment 
because I want Senator Biden and Senator Nelson to come into 
this, and then we may get back to Mr. Luers.
    Senator Biden.
    Senator Biden. Well, gentlemen, first of all, thanks for 
the testimony. There is a thread of agreement that runs through 
what all of you have said, which is basically that, to use an 
old term that no longer has much meaning, we have to engage 
more here.
    Let me be the devil's advocate for a minute here. First of 
all, to the best of my knowledge, none of you have met with any 
Iranians, nor have I. I have, but none of us has met with any 
Iranians that make any decisions, that have the power to make 
any decisions. Is that correct? Have any of you met with 
anyone, in any of the meetings you have had, who you think has 
the ability to affect events in Tehran? I am curious. I just 
want to know whether you have.
    Dr. Hadian. Oh, yes. I mean, for sure. I can say that a 
number of my colleagues have for sure have been involved with a 
number of the people who can make a decision.
    Dr. Cordesman. I think, Senator, if I may say, one of the 
problems here is that a number of times people are encouraged 
to have informal dialog with Iranian officials, but they are 
also encouraged not to discuss it in any way. So we have a----
    Senator Biden. No, I understand that. But look, I have been 
doing this for 31 years like you.
    Dr. Cordesman. I think some senior Iranian officials have 
talked to Americans outside the United States.
    Senator Biden. Yes. I have talked with senior Iranian 
officials outside the United States as well, but the bottom 
line is those senior Iranian officials are people who can only 
wield influence in the margins if events begin to move in a 
direction that they can impact on. I do not want to pursue it. 
I am not saying this to be critical. I just want to make sure 
there is a sense of the type of person to whom we are speaking.
    The second point I want to make is that, being the devil's 
advocate again, I view this in terms of priorities with the 
Iranians. Obviously, a long-term and important priority is our 
hope, expectation, desire, and resolve not to have Iran as a 
possessor of nuclear weapons, particularly with a long-range 
delivery capacity. But no one that I have spoken to indicates 
that that is a realistic possibility within the very near term, 
meaning in the next year or several years. I have not found 
anyone who has told me that. It does not mean that it is not an 
incredibly important concern.
    My concern, in the meantime, is if our relationship with 
Iran continues to deteriorate, there are an awful lot of things 
that can happen in the near term which are of incredible 
consequence to us, starting with Iraq, moving to Afghanistan, 
impacting upon our relationship indirectly our European allies, 
with whom we have a very tenuous relationship now at best.
    So I am wondering whether we shouldn't be encouraging the 
Europeans to continue their dialog and agreements with the 
Iranians relative to the IAEA and inspections, but move more 
rapidly on trying to figure out whether or not there is a 
common ground we can find with the Iranians, the U.S.-Iranian 
dialog, on very specific, immediate, and serious concerns?
    We have all been doing this a long time, some of you with 
greater expertise than me and others on this committee. But the 
idea that we can eliminate the capacity of Iran to acquire 
nuclear weapons sometime in the future is extremely doubtful.
    And when the tipping point comes, if they decide to move 
from capacity to the reality of acquiring and producing a 
nuclear weapon we will be left with a very, very stark decision 
to make. But it seems to me that our ability to impact that 
outcome, moving from capacity to reality, depends upon our 
relationships with the rest of the world at the time. If we 
have further fractured our relationships with our NATO allies 
and with the European Community and with the Security Council 
and with Russia and with China, et cetera, as we seem wont to 
do, we will have much less leverage in impacting upon that 
decision, if it is reached, of moving from capacity to 
possession of nuclear weapons. So I put a high premium in the 
coming weeks and months in trying to get on the same page with 
regard to Iran as the Europeans are, as the Russians are, as 
the Security Council may be.
    If you look at the Iranian interests relative to their 
neighbors, relative to their long-term future and security, 
they are not at all inconsistent with U.S. interests. 
Obviously, to have a non-threatening and stable regime in Iraq 
and in Afghanistan is as much in our interest as it is in 
Iran's interest. Obviously, having a stable and not teetering 
and/or radicalized Pakistan is as much in the interest of Iran 
as it is in the interest of the United States of America, and 
so on.
    So what do we do near term to get beyond the point where we 
are literally unable or unwilling to discuss very specific 
things where there is a common interest? Should we be sitting 
down? Should we have, as I raised about a year ago in a hearing 
when some of you were here, be talking and should we have 
talked to in advance and should we be talking now very 
specifically with the Iranians about our plans in Iraq? 
Specifically, not generically. Should we be prepared to give 
assurances relative to our presence in Iraq?
    Similarly with regard to our plans and commitments in 
Afghanistan, should that discussion be taking place? Or does 
that pollute the possibility of getting other things going?
    Is there any one thing that would make any of you suggest 
that we should not be talking one on one with the Iranian 
Government; i.e., if they fail to be more accountable on the 
al-Qaeda or if they continue to support Hezbollah or Islamic 
Jihad? Are these issues a reason in and of themselves that we 
should not be talking to them about other things? Or does it 
need to be this grand sort of negotiation to take place before 
we discuss anything?
    Dr. Einhorn. Senator, I think we should sit down and talk 
to them. I do not think that we should focus on one particular 
area of misbehavior that we are concerned with today and use it 
as the reason why we should not sit down. If we have a kind of 
dialog, it should not be designed to come up with some mega-
deal in the near term. That is going to be too complex----
    Senator Biden. I agree.
    Dr. Einhorn [continuing]. Too politically difficult for 
either side to do. Imagine entering into negotiations whose 
objective over the next 6 months was to resolve all of these 
issues as a package. It just would not happen. But we should 
begin bilaterally to sit down with the Iranians quite 
informally and to deal, to talk about the range of common 
interests. And we have identified a number of them.
    Senator Biden. Bob, I know that this is not your, quote, 
``brief,'' but you have been there. Would this administration 
be able to politically, in terms of international as well as 
domestic opinion, initiate a high-level contact with the 
Iranians to discuss specifically the circumstances on the 
ground and the future of Iraq? Politically would that be able 
to be done?
    Dr. Einhorn. I am sure politically that would be 
sustainable. Earlier in the administration, there were 
discussions. They were in a multilateral context in Bonn over 
the future of Afghanistan. Cooperation between the U.S. and the 
Iranian delegations was very good during that period. Now we 
have a clear common interest in talking about the future of 
Iraq and our respective interests in Iraq. I cannot imagine 
that this would not be politically sustainable for this 
administration.
    Mr. Luers. Let me make a different point. When we have 
suggested that to the government on that issue----
    Senator Biden. I am sorry. When you?
    Mr. Luers. When we have suggested to the U.S. Government 
that we undertake discussions directly with the Iranians on 
Iraq, the answer from U.S. officials was, ``no, because we 
believe in democracy.''
    Senator Biden. That is heartening.
    Mr. Luers. The point being that by discussing directly with 
the Iranians, the U.S. Government risks providing legitimacy to 
a government that is illegitimate.
    Senator Biden. I guess we are going to stop talking with 
China then. Right?
    Mr. Luers. Senator you asked the question, ``do I think it 
is possible.'' I think the only discussion that is possible 
during this administration is in some multilateral setting in 
which we are part of a group in which the United States and 
Iranian representatives go off to the water cooler and talk in 
this international environment about problems we have in 
common. That has worked. As Bob said, that has worked in the 
past, but as far as I know, the discussions have only worked in 
a multilateral environment. That is what Secretary Armitage 
said, and it seems to me that is the limit to what this 
government right now will be able to do.
    Senator Biden. Able or willing?
    Mr. Luers. Willing. I agree, as you know, with virtually 
everything you have said on how important it is, to talk with 
them. You too, Senator, in your outline, said we are going to 
have a military presence in that part of the world for a long 
time. I agree with Mr. Cordesman on that. There is no question 
about it. It is going to look almost like our involvement with 
NATO in Western Europe. We are going to be the only big force 
in the region for a very long time. The fact that we do not 
know anything about Iran, except through technical means and 
occasional conversations, is unacceptable.
    Mr. Cordesman and a few others of his generation are the 
last remaining Iranian specialists we have. They were there 
during the Shah. We need a whole new generation of people who 
have lived in Iran, who have worked there, who understand the 
country, and can reflect the reality. And we are not dealing 
with realities today. We are dealing with reflections.
    The Chairman. I am going to recognize Senator Nelson at 
this point.
    I have to offer parenthetically, as Senator Biden has 
mentioned his history with Iran, mine is more limited. But I 
went with Secretary Blumenthal on the last mission to see the 
Shah, and we did see the Shah. It was a very unpleasant 
meeting. We saw SAVAK. We saw lots of people in those days and 
stayed in the embassy which was taken over fairly shortly 
thereafter. But that is then. This is now. But the need for 
engagement was true even then, and that was why that 
extraordinary mission was undertaken.
    Senator Nelson. Mr. Chairman, I will be brief. Since I am 
the cleanup hitter, let me just offer some----
    Senator Biden. Florida cleanup hitters have done very well, 
unfortunately, lately.
    Senator Nelson. Yes, sir, we have.
    I will just offer some observations here.
    I have listened very closely to what you have said, and I 
appreciate what you have imparted to us. I listened very 
carefully to what the Secretary said. As you heard my comments, 
I think he is one of the best in business.
    But he also very carefully did not answer a number of my 
questions, and I did not press him purposely because I think 
there is a divergence of opinion from his office and the White 
House. It sounds to me--my observations are from what I have 
heard here today are that the U.S. Government has engaged in 
exactly the wrong policy with regard to Iran. We call them the 
axis of evil. We imply that we are going to invade them. We do 
not engage them. And we do not have any plan for assisting the 
Europeans, with our own economic assistance program. Now, that 
is what I have concluded from this.
    Does anybody want to--yes, Dr. Cordesman.
    Dr. Cordesman. Senator, I do not have an idealized picture 
of Iran. It is a nation where our relations do require pressure 
and the presence of a big stick. I think that we have to be in 
a position to keep that up. But I would have to agree with you. 
I think we have provided recently the wrong kinds of pressure, 
that we have tended to demonize Iran rather than to try to 
influence it or to create a dialog. We have made it into a 
political symbol which has weakened its moderates and 
strengthened its hard-liners rather than influenced and changed 
its behavior. A lot of that is a matter of posture and rhetoric 
rather than things which we could not have avoided.
    I do have to say, incidentally, if I may go back, that it 
is my impression that we had not multilateral but de facto 
unilateral dialog with Iran on the issue of Afghanistan, that 
U.S. officials met with Iran on the issue of Iraq, and were 
instructed to halt those negotiations before the war, and that 
we have been able to talk about narcotics, and that we have not 
been unable to discuss some of the issues that Bob raised on a 
bilateral basis, but that we have reinforced just the problems 
you mentioned at the cost of constructive dialog and with 
almost universally negative results.
    Senator Nelson. Thank you, Mr. Chairman.
    The Chairman. Are there other comments? Yes.
    Dr. Hadian. There is also one important point which I would 
like to mention, and that is in regard to the myth of regime 
change because I believe probably that is the operating 
assumption of a number of people in the administration that 
somehow the Iranian regime is on the verge of collapse or we 
are in a pre-revolutionary state.
    To me, as a 25-year observer of the Iranian revolution, the 
reality cannot be farther away from this myth. In fact, 
conservatives are in full control. They have a lot of resources 
at their disposal. They have an ideology which binds them 
together and makes them committed to their cause. They have 
leadership. They control all the coercive resources, and they 
have a lot of political economic resources. In fact, if you 
look at what happened a few months ago in the summer in the 
student demonstration, considering the population of Tehran, 
which is about 10 million, only probably 7,000 to 8,000 people 
participated, not a large number, considering the level of 
discontent which exists in Tehran and among the universities. 
In fact, the regime did not use massive force to contain them. 
That was relatively easy with the police. No tanks were there. 
No Revolutionary Guard were in the streets. So they could 
contain it easily. Thus, conservatives are in full control.
    Second, the real organizing impetus, both intellectually 
and politically, for reform and change is generated from within 
the ruling elite itself and not from outside of the regime, 
notwithstanding the presence of others in the struggle for 
reform.
    Third, in fact, the elite, both conservatives and 
reformers, and the public at large are quite intense if not 
paranoid about the sense of independence and dignity of the 
country. So it is very important to take into consideration 
this sense of independence. In fact, it has begun more than 100 
years ago. It will be very crucial that once we are, as 
Secretary Armitage said, presenting the fact or promoting and 
provoking this sort of action, many of these TVs and radio 
stations in Los Angeles are not just displaying information or 
disseminating information. These are basically provocation for 
a sort of action. And I doubt any country would allow another 
country from the other places call the people come and take 
hostile action against another government. So it is very 
crucial once we consider how to deal with these TVs and ex-
patriots, Iranian, in Los Angeles.
    Also, the fourth one, there is a real frustration in Iran 
and outside Iran about the pace of reform in Iran. The reality 
is that there have been significant and irreversible changes in 
Iran. Frustration over unmet and justifiably high expectations 
should not overshadow the fact. In fact, yes, it is true we 
wanted much more. We expected much more, and we want much more. 
There is no doubt about it. But how to get there is very 
important issue. These facts should not overshadow what we have 
already achieved in the reform movement. It is a painful, long-
term process, but that would serve, I believe, Iranian 
interests best and possibly the others as well.
    Senator Biden. Can I make one concluding point? I am sorry 
to trespass on your time so much.
    Iran is almost 70 million people. And 70 percent or more 
are under the age of 30. None of you have, but there are those 
who talk about a military option. It seems to me there is no 
doubt that we could militarily, quote, defeat Iran. But what in 
God's name do we do next in Iran? What is there that would lead 
anyone to believe that there would be a coalescence of this 
great democratic middle that would rise up in the military 
defeat? The President is not suggesting a military defeat, but 
there are some, if you read the op-ed pages and the like. Is 
there's any reason to believe that if--it was not us, anyone--
somehow there was an overthrow from the outside of the Iranian 
Government, that there would be a quickly emerging democracy in 
Iran?
    Dr. Cordesman. No, Senator. I do not know if all of us 
would agree with that, but I think the problems we have in Iraq 
would be an order of magnitude greater were we to attempt a 
military adventure in Iran. Not only that, if we were to 
actually do that in yet another country, in the face of no 
support from within the region or from our allies, the 
reputation and status of the United States as a world power 
would be in jeopardy for reasons that go far beyond the 
military problems in Iran.
    Mr. Luers. Let me make one clarification on the subject of 
how we have negotiated in the past with Iran. It is still my 
understanding that even though we had off-line bilateral 
discussions, it was always in the context of a U.N.-organized, 
multilateral meeting. As far as I know, to your question, 
Senator Biden, would this government be willing to state they 
want direct discussions now with Iran to begin the process of 
engaging that country, I do not think they would be willing to 
do that. That is what you asked.
    Senator Biden. No, I do not think they would be willing. I 
was asking the question of whether or not it would be wise.
    Mr. Luers. I think it would be wise, and I think it would 
be wise to do it. I also agree with Mr. Cordesman and others 
that this is not easy, that you cannot be romantic about Iran. 
They are going to be a threat in that region for a long time 
probably no matter what happens internally. But we know nothing 
about the Iranians and have no contact with them, we have to 
depend on the types of information that we have, which I think, 
as Mr. Cordesman also said, is terribly flawed. I think all of 
us would support a recommendation from you, Senator, Mr. 
Chairman, that the administration begin the process, however 
they have to do it, of engaging directly on some of these 
really critical issues with the Iranian Government.
    The Chairman. Well, we appreciate that counsel and we 
appreciate the testimony from each one of you. You have been 
generous with your time and your thoughts have stimulated our 
thinking.
    Having said that, why, the hearing is adjourned.
    Senator Biden. Thank you, gentlemen.
    [Whereupon, at 1:21 p.m., the committee adjourned, to 
reconvene subject to the call of the Chair.]
                              ----------                              


           Response to an Additional Question for the Record


Response of Hon. Richard L. Armitage, Deputy Secretary of State, to an 
 Additional Question for the Record Submitted by Senator Jon S. Corzine

    Question. What strategies is the U.S. using to curb Iran's 
Jerusalem Force and other Iranian factions and units that support 
terrorism? Does the list of al-Qaeda names that Iran recently gave the 
U.N. Security Council include the al-Qaeda operatives whom the hard-
line factions are suspected of harboring?

    Answer. To curb Iranian support for Hizballah, Hamas, Palestinian 
Islamic Jihad, and other terrorist groups, we employ a number of 
strategies, including implementing a variety of economic sanctions, 
pressing other countries and regional blocs to recognize these groups 
as terrorist entities and to work with us to block the flow of money to 
them. The EU recently added Hamas to its terrorism list, but has not 
yet included Hizballah. We continually press the EU, and other states 
with which Iran seeks enhanced commercial ties, to leverage their 
influence by conditioning any discussion of expanded trade on cessation 
of Iranian support for terrorism. We also press countries to deny 
overflight clearance for suspected resupply flights to these groups. 
The FBI has issued a warrant for Imad Mugniyeh and other Hizballah 
terrorists, wanted in connection with crimes committed against American 
citizens. We are engaged in ongoing diplomatic efforts with Syria to 
shut down completely the offices of Palestinian terrorist organizations 
in Damascus, and with both Syria and Lebanon to rein in Hizballah.
    Iran claims to have a number of high-level al-Qaeda operatives in 
detention but has to date refused to turn them over to the U.S. or to 
their countries of origin. It now says it may try them in Iran for 
suspected crimes committed on its territory. We and other countries 
have made clear to Iran that this is not acceptable. Other countries 
need access to whatever intelligence these people may have. We do not 
believe the list that Iran submitted to the U.N. Security Council 
contains the names of those high-level al-Qaeda officials. In fact, 
Iran has said publicly it would not release those names for reasons of 
national security.

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