[Senate Prints 111-19]
[From the U.S. Government Publishing Office]


111th Congress                                                  S. Prt.
 1st Session                COMMITTEE PRINT                      111-19
_______________________________________________________________________
 
                        IRAN: WHERE WE ARE TODAY 

                               __________

                                A REPORT

                                 TO THE

                     COMMITTEE ON FOREIGN RELATIONS

                          UNITED STATES SENATE

                     One Hundred Eleventh Congress

                             First Session

                              May 4, 2009

                                     
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




















                 COMMITTEE ON FOREIGN RELATIONS        

             JOHN F. KERRY, Massachusetts, Chairman        
CHRISTOPHER J. DODD, Connecticut     RICHARD G. LUGAR, Indiana
RUSSELL D. FEINGOLD, Wisconsin       Republican Leader designee
BARBARA BOXER, California            BOB CORKER, Tennessee
ROBERT MENENDEZ, New Jersey          JOHNNY ISAKSON, Georgia
BENJAMIN L. CARDIN, Maryland         JAMES E. RISCH, Idaho
ROBERT P. CASEY, Jr., Pennsylvania   JIM DeMINT, South Carolina
JIM WEBB, Virginia                   JOHN BARRASSO, Wyoming
JEANNE SHAHEEN, New Hampshire        ROGER F. WICKER, Mississippi
EDWARD E. KAUFMAN, Delaware
KIRSTEN E. GILLIBRAND, New York
                  David McKean, Staff Director        
        Kenneth A. Myers, Jr., Republican Staff Director        

                              (ii)        
























                            C O N T E N T S

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                                                                   Page
Letter of Transmittal............................................     v


Iran: Where We Are Today.........................................     1


    How We Got Here..............................................     3


    What It Means................................................     8


    What We Do...................................................    10




                                 (iii)

                                     

                         LETTER OF TRANSMITTAL

                              ----------                              

                              United States Senate,
                            Committee on Foreign Relations,
                                       Washington, DC, May 4, 2009.
    Dear Colleagues: For the first time in three decades, the 
United States and Iran appear to be on a path toward direct 
bilateral talks. President Obama and other administration 
officials are determined to explore areas of mutual interest 
and negotiate the difficult obstacles to an improved U.S.-Iran 
relationship.
    One of those obstacles is the suspicion surrounding Iran's 
nuclear program. Iran's leaders say that its ambitions are only 
to develop a civilian nuclear capacity to conserve the 
country's oil and gas reserves, but the United States and many 
of its allies have deep suspicions about the potential military 
aspects of the program. Resolving the issue will be one of the 
most difficult confronting negotiators for the two countries 
and the international community.
    The attached staff report presents findings from research 
in Austria, Israel and the United States as well as information 
obtained from numerous unclassified reports. The report is 
intended to provide a baseline that will help us understand the 
questions surrounding Iran's nuclear ambitions and the 
challenges confronting negotiators as they endeavor to answer 
them.
            Sincerely,
                                             John F. Kerry,
                                                          Chairman.


                        IRAN: WHERE WE ARE TODAY

                              ----------                              

    Iran's progress toward developing a nuclear weapons 
capability has continued despite restrictions ordered by the 
United Nations, additional economic sanctions imposed by the 
United States and incentives to stop offered by the Europeans. 
The latest landmark was registered in mid-February when the 
International Atomic Energy Agency (IAEA) reported that Iran 
had enriched enough uranium to make an atomic bomb if it took 
the next step in the enrichment process.
    There is no sign that Iran's leaders have ordered up a 
bomb. But unclassified interviews conducted by a member of the 
Senate Foreign Relations Committee staff make clear that Iran 
has moved closer to completing the three components for a 
nuclear weapon--fissile material, warhead design and delivery 
system. While there are open questions about Iran's progress on 
a warhead, we do know that the time frame for substantive 
action by the international community is narrowing and the road 
to a solution could be long.
    Iran's efforts to develop a nuclear weapons capacity carry 
serious implications for the Middle East and for U.S. policy as 
the administration starts down the path toward direct talks 
with Iranian leaders. Senior American diplomats, foreign 
intelligence officials and IAEA officials said in interviews 
with the staff that engagement with Iran needs to reconcile the 
twin goals of stopping Iran's progress short of a bomb and 
avoiding another conflict in the Mideast.
    Efforts to put the brakes on Iran's nuclear program since 
it was uncovered in mid-2002 have had sporadic success, but 
ultimately they failed. The IAEA, which is supposed to make 
sure that peaceful atomic energy is not used for any military 
purpose, has proven unable to persuade Iran to halt enrichment 
or to answer questions about the suspected military dimensions 
of its program. Agency officials acknowledged that they have 
reached a complete impasse with Iran over the possible military 
involvement in its nuclear efforts.
    While parrying IAEA inquiries and shrugging off three 
rounds of UN sanctions, Iran has gone from having no capability 
to enrich uranium six years ago to operating nearly 4,000 
centrifuges at an underground facility near Natanz in the 
central part of the country. The centrifuges are enriching 
uranium to reactor-grade, with 1,600 more machines ready to go 
online. By mid-February, they had turned out roughly a ton of 
low-enriched uranium hexafluoride gas suitable for 
manufacturing fuel rods for a civilian reactor; the total is 
estimated to be even greater now. A foreign intelligence agency 
and some UN officials estimated that Iran could reconfigure its 
centrifuge cascades and produce enough weapons-grade material 
for a bomb within six months.
    Testifying before the committee on March 3, Mark 
Fitzpatrick, a former State Department nonproliferation 
official now with the International Institute for Strategic 
Studies in London, estimated that Iran would need several weeks 
to enrich its stockpile of low-enriched uranium to weapons-
grade. He predicted it would take at least six months more to 
convert the weapons-grade material into uranium metal and 
fashion a weapon from it, the complex process known as 
``weaponization.''
    Natanz is monitored by the IAEA and a shift from producing 
the permitted low-enriched uranium (LEU) to the prohibited 
highly enriched uranium would likely be discovered. The same 
relative confidence does not exist, however, when it comes to 
the research and development under way at known and suspected 
facilities that are off limits to IAEA inspectors.
    The IAEA has been forbidden to visit plants where Iran is 
known to be developing the IR-2, a more advanced centrifuge 
that will enrich uranium two or three times faster than the P-1 
version currently operating at Natanz. Iran also has refused to 
allow the IAEA to inspect the work underway on a heavy water 
reactor capable of producing plutonium for a weapon. Finally, 
the agency has been refused access to workshops where evidence 
provided by the United States and other countries suggests Iran 
was working on developing a nuclear warhead.
    The status of Iran's work on building a warhead is unknown 
to outsiders. In late 2007, the U.S. intelligence community 
said publicly that Iran's military had been working to design 
nuclear weapons, but halted the effort in the fall of 2003. In 
an updated assessment, Admiral Dennis C. Blair (USN, retired), 
director of national intelligence, said in February that the 
U.S. intelligence community has determined broadly that Iran 
``has the scientific, technical and industrial capacity 
eventually to produce a nuclear weapon.'' He said, however, 
that the intelligence services believe that Iran had not 
restarted the weapons design work as of at least mid-2007. He 
added that, since the fall of 2003, Iran has conducted research 
and development projects that could have limited use for 
nuclear weapons.
    Intelligence analysts and nuclear experts working for 
foreign governments agreed in interviews with committee staff 
that Iran had stopped its weapons work in late 2003. Some of 
these officials said in unclassified briefings that by that 
time, however, intelligence indicates Iran had produced a 
suitable design, manufactured some components and conducted 
enough successful explosives tests to put the project on the 
shelf until it manufactured the fissile material required for 
several weapons.
    Many have doubts about whether Iran has a design for a 
workable nuclear warhead. In early March, Defense Secretary 
Robert Gates said that there is still time to persuade Iran to 
abandon its suspected nuclear weapons program. ``They're not 
close to a stockpile, they're not close to a weapon at this 
point, and so there is some time,'' he said.
    One danger associated with the opacity of Iran's program is 
the perception of other countries of how much progress Tehran 
has made toward a weapons capability. Admiral Blair told the 
Senate Armed Services Committee in March that the U.S. and 
Israel have the same basic intelligence about Iran's nuclear 
efforts, but he said the Israelis ``take more of a worst-case 
approach,'' which he suggested could lead to an Israeli-Iran 
conflict.
    Many regional experts say that Iran does not need to 
demonstrate that it has the bomb to change the balance of power 
in the Middle East. Many nations in the region already fear an 
ascendant Iran. Simply producing a large enough stockpile of 
low-enriched uranium for one or more weapons could confer on 
Iran new leverage over the critical region. It also could 
motivate some of its neighbors to seek their own nuclear 
capability. That is why these experts argue that the 
administration, in concert with Europe, Russia and other 
countries, must undertake action to stop Iran's enrichment 
program as soon as diplomacy permits.

                            How We Got Here

    In August 2002, an Iranian exile group held a press 
conference in Washington and disclosed that Iran was engaged in 
a previously secret nuclear program. The organization 
identified two major sites--the planned enrichment facility at 
Natanz, which was under construction at the time, and the site 
near Arak in western Iran, where work was starting on the heavy 
water reactor--as well as several smaller research locations.
    The IAEA sought immediate inspections of the sites, but 
Iran was slow to permit the visit. The agency's director 
general, Mohamed ElBaradei, and a team of IAEA officials did 
not get into Iran until February 2003. They were allowed to 
tour Natanz and a handful of other official facilities, but 
some sites identified by the exile group were declared off 
limits. It was the start of a cat-and-mouse game between Iran 
and the IAEA that is still going on today.
    The essentials of the game can be illustrated by what 
happened at a small complex of buildings on the outskirts of 
Tehran called the Kalaye Electric Company. The exiles claimed 
that Kalaye was the site of advanced research into centrifuges 
and that Iran had used enriched uranium as part of tests there, 
which could violate the Nuclear Non-Proliferation Treaty (NPT) 
created in 1968 to stop the spread of nuclear weapons. Iran 
said the site was a watch factory where no nuclear activity had 
taken place.
    IAEA inspectors tried for months to get access to Kalaye to 
conduct tests for radioactive residue from the alleged 
research. Iran did not let them into the main building until 
August 2003, weeks after a cleanup crew had swept through the 
complex, repainting and retiling throughout and removing tons 
of dirt in an apparent attempt to get rid of evidence. Despite 
those efforts, IAEA inspectors found suspicious radioactive 
particles lingering at Kalaye, which elevated concerns that 
Iran might be further advanced than outsiders knew. Eventually 
Iran was forced to acknowledge that it had conducted research 
at Kalaye on development of centrifuges, the cylindrical 
machines used to enrich uranium hexafluoride gas to produce 
fissile material.
    The pattern would be repeated many times in the years that 
followed: The IAEA would receive evidence of suspicious 
activities at one site or another, but its attempts to carry 
out inspections would be delayed or denied. In fact, the 
complex at Kalaye is once again being used by Iran for research 
and development of centrifuges--this time, the work is being 
done on the advanced IR-2 version and once again it is off 
limits to the IAEA.
    As evidence of deception piled up in previous years, 
Iranian officials maintained steadfastly that their only goal 
was to develop civilian nuclear reactors to supply electric 
power so they could conserve the country's oil and gas. The 
clandestine enrichment work, they argued, was only to develop 
low-enriched fuel for those reactors, not to develop the highly 
enriched version for weapons. They said they had to resort to 
the nuclear black market and suppliers like Pakistan's renegade 
scientist A.Q. Khan in the 1980s and early 1990s because of 
sanctions imposed by the United States after the Iranian 
revolution in 1979.
    The United States accused Iran of concealing a weapons 
program almost immediately after the disclosures in 2002. But 
the failure of U.S. forces to find weapons of mass destruction 
in Iraq after the invasion in March 2003 damaged its 
credibility on the issue.
    As a signatory to the NPT, Iran has the right to enrich 
uranium for civilian uses. But its secret nuclear activities, 
which date back to at least 1987, violated its safeguards 
agreement with the IAEA to declare and allow inspections of all 
nuclear-related sites. The United States, and later the 
Europeans, argued that Iran's deception meant it should forfeit 
its right to enrich, a position likely to be up for negotiation 
in talks with Iran.
    In reports to the IAEA Board of Governors starting in June 
2003, ElBaradei criticized Iran, saying it had concealed its 
nuclear activities and thwarted efforts by the agency to 
determine whether there was a military side to its program. But 
he resisted pressure from the United States to take the next 
step and declare Iran in violation of the NPT because, he said 
repeatedly, the IAEA had no proof of a military program.
    In late 2003, Iran agreed to voluntarily suspend its 
enrichment activities as part of negotiations with Britain, 
France and Germany. The group, known as the EU 3, promised Iran 
access to civilian nuclear technology in return for the 
suspension. At the same time, Iran signed and provisionally 
implemented an Additional Protocol to its safeguards agreement 
with the IAEA; the provision permitted IAEA inspectors to make 
visits on short notice to suspicious sites that were not part 
of Iran's official nuclear program. But the negotiations with 
the EU 3 dragged on for nearly two years without Iran providing 
the assurances sought by the IAEA and the Europeans to clear up 
doubts that its program was completely civilian. As a result, 
Iran was denied access to the civilian technology it sought.
    In August 2005, Iran informed the IAEA that it was breaking 
the seals placed by the agency on its uranium conversion 
facility at Isfahan as part of the enrichment suspension 
because the talks were stalled. Then in January 2006, Iran 
notified the IAEA that it was resuming enrichment activities 
and instructed the agency to remove seals it had affixed to 
equipment at Natanz and the other facilities. Iran also stopped 
the visits to unofficial sites by IAEA inspectors under the 
provisions of the Additional Protocol. The Europeans responded 
by asking the IAEA to refer Iran to the UN Security Council for 
sanctions.
    In February 2006, the IAEA board approved a resolution 
referring Iran to the Security Council. The resolution pointed 
to Iran's ``many failures and breaches of its obligations to 
comply with its NPT safeguards agreement'' and the absence of 
any confidence that its nuclear program was solely civilian. 
Iran responded by further restricting the places IAEA 
inspectors could visit and proceeding at full speed to get the 
Natanz enrichment plant up and running.
    In December 2006, the UN Security Council ordered Iran to 
suspend enrichment and imposed the first round of sanctions. 
Countries were ordered to stop supplying Iran with material and 
technology that could contribute to its nuclear and missile 
programs. The overseas assets of 10 Iranian companies and 12 
people affiliated with the programs were frozen. In the next 
two years, the Security Council approved two more sets of 
sanctions. Each time, Iran rejected the demands that it stop 
enrichment, asserting its legal rights to enrichment under the 
nonproliferation treaty.
    Over the course of dozens of inspections by the IAEA in the 
last six years, Iran succeeded in answering some of the 
questions about the nature of its nuclear program. For 
instance, the radioactive particles discovered at Kalaye were 
eventually linked to second-hand centrifuge components 
purchased from the A.Q. Khan trafficking network and tested at 
the supposed watch factory.
    But for every riddle solved, a new one seemed to arise. The 
most significant questions focus on whether Iran has a separate 
covert enrichment facility where it could produce weapons-grade 
uranium, whether its nuclear activities were or still are aimed 
at building a weapon, and whether the military remains involved 
in the nuclear project. Iran denies any military role in its 
nuclear efforts and so far no one has uncovered proof to the 
contrary.
    There is, however, a strong circumstantial case for 
military involvement, which may or may not have stopped when 
the weaponization work ended in late 2003. Potentially damning 
evidence surfaced in 2004 when U.S. intelligence obtained a 
laptop computer that it said had come from an Iranian engineer. 
The computer contained thousands of pages of data on tests of 
high explosives and designs for a missile capable of carrying a 
nuclear warhead. It also contained videos of what were 
described as secret workshops around Iran where the weapons 
work was supposedly carried out.
    Some of those documents as well as intelligence material 
from other countries were shared with the IAEA, which refers to 
them in its official reports as the ``alleged studies.'' When 
the agency provided copies of some documents to Iran, the 
Iranians denounced them as fakes.
    Senior UN officials and foreign intelligence officials who 
have seen many of the documents told the committee staff that 
it is impossible to rule out an elaborate intelligence ruse.
    But they said the documents come from more than just the 
laptop and appear to be authentic, right down to the names, 
addresses and telephone numbers of the workshops in Iran.
    A senior allied intelligence official said the documents 
contained blueprints for a nuclear warhead that was a perfect 
match--``down to the last millimeter''--with designs his agency 
had obtained from other sources inside Iran. Another document 
tracked the flight path for a missile, with notations that its 
warhead would detonate 600 meters above the ground, according 
to foreign intelligence officials and UN officials. That height 
would render a conventional explosive ineffective, but would be 
the optimum elevation for a nuclear weapon intended to wipe out 
a city.
    Last August, IAEA officials thought that they had achieved 
a major breakthrough when Iran agreed to permit a team of 
inspectors to visit some of the workshops identified in the 
alleged studies. The IAEA thought it would finally be able to 
answer the questions raised in those documents. A specialist 
familiar with the records was flown in immediately from IAEA 
headquarters in Vienna to join inspectors already in Iran. But 
on the day of the promised inspection, the agency was told the 
government had changed its mind and they would not be allowed 
into the facilities. After several days of fruitless 
negotiations, the inspectors returned home empty handed, 
according to staff interviews with UN officials involved in the 
effort.
    The initial approval for the inspections was granted by 
officials from Iran's civilian nuclear agency. UN officials 
said they suspect the permission was withdrawn after either 
military officers or high-ranking officials in the government 
learned of the prospective visits.
    Senior UN officials now say discussion is stalled with Iran 
over the accusations in those documents and over other 
potential military aspects of its nuclear program. Iran refuses 
to answer any further questions. When asked what's next, a 
senior UN official said recently that he saw no new course of 
action to end the stalemate.
    A senior U.S. official monitoring the process said he 
worries that ``Iran fatigue'' has set in among many of the 35 
countries that comprise the IAEA Board of Governors, creating 
the possibility that the agency lacks the political willpower 
to resolve the conflict with Iran.
    While the impasse drags on, Iran has made steady progress 
over the last two years at Natanz and the number of centrifuges 
spinning there increases slowly. The estimated one ton of low-
enriched uranium hexafluoride produced as of mid-February is 
enough for a single nuclear weapon, when converted to HEU 
through further enrichment, according to most estimates. Since 
then, IAEA officials estimate Iran has added another 300 to 400 
pounds of LEU to its stockpile.
    Iran appears to have remained active on the international 
black market. Iranian officials have told IAEA officials that 
the nuclear program is self sufficient, but staff interviews 
with American and foreign officials and intelligence analysts 
found that Iran is operating a broad network of front 
organizations to procure additional technology and material for 
its nuclear projects. Among the most prized materials being 
sought by Iran are carbon fiber used in the more advanced IR-2 
centrifuges under development and maraging steel and specialty 
aluminums for the IR-2 and the cruder centrifuges operating at 
Natanz, according to unclassified information provided to the 
staff.
    ``We know they received carbon fiber and have used it in 
IR-2 rotors, but we have no clue where they got it or how much 
they got,'' said a senior official at the IAEA.
    On the missile front, Iran's launch of a satellite into 
orbit in early February raised concerns that Tehran is 
improving its ability to deploy long-range ballistic missiles 
at the very time it is making progress on its nuclear program. 
Iran is still developing its ballistic missile capability and 
there are ways to delay its progress by tightening sanctions 
and cracking down on the front companies involved in 
procurement.
    Authorities suspect that some purchases for Iran's nuclear 
and missile program may have come through an elaborate ruse to 
avoid U.S. financial sanctions on dealings with Iranian banks. 
In January, a major British bank, Lloyds TSB, agreed to pay 
$350 million to settle accusations that it helped Iranian banks 
conceal hundreds of millions of dollars worth of transactions 
that passed through U.S. financial institutions. The scheme 
began in the mid-1990s and continued until January 2007.
    Banks in Iran are banned from doing business with U.S. 
financial institutions under sanctions imposed by the U.S. 
government. According to statements by the district attorney's 
office in New York City and the Justice Department, Lloyds bank 
employees avoided those prohibitions by routinely removing 
identifying information from electronic wire transactions 
involving Iranian banks. This practice, known as ``stripping,'' 
allowed the transactions to evade software filters within the 
U.S. banking system designed to block money transfers involving 
Iranian banks.
    The statements by the DA and Justice said Lloyds handled at 
least $300 million of Iranian transfers that ended at American 
banks and billions of dollars in additional transactions passed 
through U.S. financial institutions before ending up outside 
the country. The CIA and FBI have started going through the 
hundreds of thousands of individual transactions to determine 
whether the Iranians were buying technology and material for 
their nuclear and missile programs through the scheme, 
according to law enforcement officials.
    In a separate inquiry, New York District Attorney Robert 
Morgenthau charged a Chinese businessman and his company in 
early April with selling tons of sensitive material to Iran in 
violation of the UN resolutions banning trade that could assist 
Tehran's nuclear and missile programs. Tungsten, high-strength 
maraging steel and other exotic metals with military uses were 
sold from 2006 to 2008 to entities affiliated with the Iranian 
Defense Industries Organization. The state-owned defense 
company was already under American sanctions for activities 
related to developing weapons of mass destruction. Since many 
of the transactions were conducted in US dollars, the 
indictment said the Chinese firm used fictitious names and bank 
accounts to evade US financial prohibitions on dealing with 
Iran.
    In mid-April, Canadian police charged a Toronto man with 
attempting to ship devices to Iran that could be used to enrich 
uranium to what Canadian authorities described as ``weapons-
grade product.'' The Iranian-Canadian man was arrested on 
charges of violating the UN sanctions on shipping technology 
with nuclear applications to Iran after attempting to buy 10 
devices known as pressure transducers from a company near 
Boston. Transducers are sophisticated gas-pressure gauges that 
can be used by pharmaceutical and food companies or in 
centrifuges for enriching uranium. While the man told the 
company he planned to ship the items to Dubai, authorities said 
the ultimate destination was Iran.
    If Iran's leaders decide to move forward toward a nuclear 
weapon, they could exercise what's known as the ``breakout 
option,'' following North Korea's example by withdrawing from 
the nonproliferation treaty, throwing out the IAEA inspectors 
and reconfiguring the centrifuges at Natanz to produce weapons-
grade material. As an alternative, Iran might have a parallel 
enrichment program where the conversion and enrichment of 
undeclared uranium is already underway or to which LEU from 
Natanz could be shipped in the event of a breakout scenario.
    American and other intelligence agencies don't know which 
option Iran might choose, but the unclassified portion of the 
National Intelligence Estimate released in December 2007 said 
the U.S. intelligence community believes that Iran would use a 
covert facility to move from low-enriched uranium to weapons-
grade material.

                             What It Means

    Iran embarked on its nuclear program in the mid-1980s when 
it was locked in a devastating war with Iraq. Iran lost 
hundreds of thousands of people in eight years of war, 
including some killed when Saddam Hussein used chemical 
weapons. At the time, Tehran's determination to develop a 
nuclear deterrent was unquestionably a reaction to the Iraqi 
threat.
    More recently, Iran's concerns focused on tough rhetoric 
from President George W. Bush and fears of a U.S. invasion, 
particularly in the months after the start of the war in Iraq 
in March 2003. But motives are rarely black and white. Iran is 
clearly driven to establish its nuclear credentials as part of 
its determination to assume what it views as its rightful place 
as a regional power. It has invested tens of millions of 
dollars--as well as a big measure of its prestige--on winning 
legitimacy for its enrichment program.
    Along with understanding Iran's motives, examining the 
course of Iran's nuclear program since its exposure in mid-2002 
offers lessons in how the administration should proceed if it 
wants to break the current stalemate and resolve the dilemma.
    Publicly available U.S. intelligence reports and published 
reports show that Iran had been running a military nuclear 
program in parallel to the supposedly civilian one since the 
late 1980s when its work was exposed in mid-2002. Critical work 
was being conducted at military facilities on designing and 
testing explosives for a warhead and developing nuclear-capable 
missiles.
    The international community, initially through the IAEA, 
applied pressure on Iran to come clean about its secret nuclear 
history. Iran dragged its feet, drawing out negotiations and 
dodging the tough questions. By the end of 2003, several 
factors had changed and Iran put the military aspects of its 
program on hold and decided to suspend enrichment activities.
    While the reasoning of Iran's leadership is unknown, one 
factor was probably the presence of tens of thousands of U.S. 
troops next door in Iraq. But the public assessment by U.S. 
intelligence says Iran's decision was influenced primarily by 
the increasing international scrutiny and pressure from the 
exposure of its previously secret nuclear work.
    The enrichment suspension lasted until the end of 2005. By 
that time, Iran's leaders had a different assessment of the 
obstacles they confronted. The United States was unlikely to 
attack because it was bogged down in Iraq and rising oil prices 
meant Iran could withstand the expected UN sanctions. So Iran 
announced that it was resuming enrichment activities.
    In his annual threat assessment in February, Admiral Blair 
said that since the fall of 2003 Iran has conducted some 
research and development that has potential military 
applications. He said, however, that the U.S. does not know 
whether Iran currently intends to develop nuclear weapons, 
adding that Tehran ``at a minimum is keeping open the option to 
develop them.''
    What is certain is that Iran has developed a sustainable 
enrichment capacity, from purifying uranium ore and converting 
uranium oxide to the gas used as feedstock for centrifuges to 
churning out LEU at Natanz. About 4,000 centrifuges were 
spinning in February, the last date reported by the IAEA, with 
1,600 waiting in the wings. Piping has been installed for 
another 9,000 centrifuges and Iran has said it intends to 
eventually operate 54,000 centrifuges in the vast underground 
halls at Natanz. Because of its success in mastering enrichment 
technology, Iran believes that it has secured its right to 
continue enrichment.
    Iran's success at Natanz raises the question of whether the 
world can live with an Iran that continues to enrich uranium. 
Some experts argue that enrichment is a fait accompli, so the 
world should focus diplomatic efforts on stopping Iran from 
taking the next step and beginning to enrich to a weapons-grade 
level. Others contend that Iran cannot be trusted after years 
of deception, so it must relinquish its right to enrich 
uranium.
    In one scenario, Iran would freeze enrichment at current 
levels while its parliament ratifies the Additional Protocol, 
which allows the IAEA to make more intrusive inspections on 
short notice. Side agreements might be required to establish an 
even tighter safeguards regime at Natanz, something officials 
at the IAEA refer to as ``Additional Protocol Plus.'' Iran also 
could be required to ratify the Comprehensive Nuclear Test Ban 
Treaty, which prohibits nuclear weapons testing.
    Under this approach, Iran also would be required to answer 
the IAEA's long list of outstanding questions raised by the 
laptop documents and other sources about its weapons work and 
related clandestine activities. Only after implementing a 
tougher inspections regime and getting a clean bill of health 
on the military questions could Iran resume enrichment at 
Natanz at civilian levels.
    This version would offer Iran the opportunity to disclose 
any military aspects of its past program in exchange for the 
right to move forward on civilian enrichment. But questions 
remain about whether this deal would end the suspicion: Each 
time Iran has told the IAEA it has come clean in the past, the 
agency has discovered concealed aspects of its nuclear program. 
And from Iran's perspective, disclosure of incriminating 
details about its nuclear efforts might lead to an 
international outcry that could scuttle any deal.
    A second approach would take a tougher stance, requiring 
Iran to relinquish all rights to enrichment and close down 
Natanz and related facilities. Proponents of this view argue 
that Iran cannot be trusted because of its long history of 
concealing nuclear activities and they do not trust the spotty 
record of the IAEA when it comes to identifying clandestine 
nuclear programs.
    Further, this group believes that allowing Iran to continue 
enriching and stockpiling enough LEU, even without converting a 
gram to weapons-grade, would give Iran greater power in the 
region and could lead neighbors like Saudi Arabia, Egypt and 
possibly Turkey to seek their own nuclear capabilities--a 
cascade certain to increase the risks of a nuclear 
confrontation.
    Neither scenario is perfect because the ultimate solution 
to the conundrum of Iran's nuclear ambitions is not technical, 
but political. In testimony before the committee during two 
days of public hearings on Iran in early March, Karim 
Sadjadpour, an associate at the Carnegie Endowment for 
International Peace, contended that the nuclear dispute must be 
viewed as a symptom of the broader mistrust between the U.S. 
and Iran, not as an underlying cause of the tension.
    Deadlines have come and gone with Iran, and so have 
predictions about when it might have a nuclear weapon. The fact 
that it has enriched a significant quantity of reactor-grade 
uranium gives Iran the option of moving quickly if its leaders 
make a political decision to build a bomb. And even if Iran's 
current leaders do not proceed, the decision is inherently 
reversible as long as it retains its enrichment capability.
    A complicating factor is how Israel might respond if Iran 
continues to increase its uranium stockpile. There have been 
reports that Israel sought American support for an attack on 
Iran's nuclear installations in the last months of the Bush 
administration and was turned down. Israel's public stance has 
been that Iran must give up its enrichment capabilities, so a 
deal which allows Iran to continue to enrich would be expected 
to keep the possibility of an Israeli attack on the table.

                               What We Do

    Unclassified U.S. intelligence assessments and staff 
interviews with government officials and diplomats in 
Washington and foreign countries leave little doubt that Iran 
has the technological and industrial capacity to eventually 
develop an atomic bomb. In the unclassified judgment of U.S. 
intelligence, only a political decision by the country's 
leaders is likely to prevent Iran from someday producing a 
nuclear weapon. And that decision is inherently reversible. At 
a minimum, one goal of the administration's strategy on Iran 
should be to provide the right balance of pressure and 
opportunity to persuade the regime to agree not to take any 
further steps toward enhancing its capability to build a bomb 
and to accept strict verification standards.
    Direct engagement must be part of that strategy, but after 
30 years of distrust and inflammatory rhetoric, providing a 
climate conducive to successful talks will require patience and 
discipline. Even the threshold decisions are complicated: Do 
bilateral talks start at lower levels to promote trust or at 
the top where the decisions will be made? Should negotiations 
proceed slowly and methodically or should a time table be 
imposed to prohibit Iran from dragging out the process while it 
adds to its uranium stockpile? Are preconditions, such as a 
freeze on further enrichment, required? Will the international 
community, particularly Russia and China, back sanctions tough 
enough to persuade Iran that failure to reach an agreement will 
carry severe consequences? Can Iran be permitted to retain its 
capacity to enrich uranium despite its history of deception?
    In its two days of hearings in March, the committee 
explored the status of Iran's nuclear ambitions with two panels 
of expert witnesses. Among the witnesses there was unanimous 
support for the administration's overtures to Iran, a consensus 
that the path to success will be long and difficult, little 
support for tough preconditions to talks, and broad agreement 
that the United States cannot do it alone.
    ``There's no serious unilateral option for the United 
States,'' Richard Haass, the president of the Council on 
Foreign Relations and a former director of policy planning at 
the State Department, told the committee. ``And the goal should 
be to get international agreement on what we want of Iran, what 
we are prepared to do for Iran, but also what we are prepared 
to do to Iran if we can't get that agreement.''
    Developing a regime of tougher sanctions to pressure Iran 
will require that Russia, China and other allies and friends 
accept the need for actions that could cause them economic harm 
because of their trade ties with Iran. Among the proposed 
sanctions discussed at the hearings was curtailing Iran's 
ability to import gasoline and other refined petroleum products 
essential for its economy. Iran could retaliate by reducing or 
even stopping exports of crude oil, which would raise the price 
of oil and have dramatic economic consequences for many 
countries.
    Some analysts argue that setting an advance time table for 
progress in talks is a recipe for failure. Their argument is 
that it will take time for the United States to assure Iran 
that it cannot afford the price of acquiring a nuclear arsenal 
and that Washington recognizes Tehran as an influential 
regional player. For others, however, time is more critical 
because of Iran's progress toward nuclear weapons capacity. 
They contend that Iran should understand, either privately or 
publicly, that substantive progress on negotiations must occur 
within a specific time frame or Iran's failure to abide by the 
UN Security Council resolutions will trigger significant new 
sanctions.
    None of the witnesses proposed removing the possibility of 
military action as a last resort, but there was an overriding 
concern about the consequences of an attack on Iran either by 
Israel or the United States. Two former White House national 
security advisers, Zbigniew Brzezinski and General Brent 
Scowcroft, warned the United States against military action in 
an attempt to destroy Iran's nuclear installations, saying the 
results would be chaotic and dangerous. Former U.S. Ambassador 
Frank Wisner cautioned that an attack by Israel would threaten 
the interests of the United States and other countries in the 
region.
    If negotiations occur on Iran's nuclear ambitions, a major 
sticking point for the United States and its allies may be 
whether to permit Iran to continue to enrich uranium as part of 
a final deal. As a signatory to the NPT, it has a legal right 
to enrich uranium solely for peaceful purposes. The United 
States and other countries have argued, however, that Iran can 
no longer be trusted with that right because of its past 
deception, the evidence that its nuclear program has a military 
dimension and its refusal to abide by UN Security Council 
resolutions demanding that it suspend current enrichment 
activities. For their part, Iran's leaders have maintained 
steadfastly that they will not bargain away their enrichment 
capability, which they say is solely for civilian purposes.
    A few years ago, the United States and its allies thought 
they could stop Iran's nuclear ambitions short of mastering the 
enrichment process. Iran has crossed that line and now expects 
the international community to put the stamp of legitimacy on 
its activities as part of any talks. This would be a highly 
controversial concession, even if it came with strings 
attached. The toughest inspection regime and fullest disclosure 
by Iran about the likely military aspects of its program might 
not ease the anxieties of the Israeli government and some of 
Iran's neighbors. In fact, coming clean about the military 
aspects of its program, even if they are in the past, may 
increase distrust among Iran's neighbors. Despite the potential 
problems of permitting Iran to continue enriching in defiance 
of the UN Security Council, the administration has indicated 
that it is willing to begin talks with Iran without demanding a 
suspension of enrichment, according to senior State Department 
officials.
    None of the hearing witnesses or other experts interviewed 
predicted that it will be easy to engage Iran in meaningful 
negotiations on the future of its nuclear ambitions. Winning 
support from Russia, China and other countries for a united 
front will require difficult diplomacy on several fronts. But 
there is reason for optimism in the administration's 
willingness to talk and the recent overtures toward Iran by 
President Obama and Secretary of State Hillary Clinton. A 
diplomatic solution on the nuclear issue, or even the process 
of engaging Iran, would open the door for more effective U.S.-
Iran relations on issues like extremism in the Middle East, 
smoothing the departure of U.S. troops from Iraq and bringing 
stability to Afghanistan. It could also avoid a nuclear arms 
race in the Middle East.

                                 

      
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