Capitol Hill Series   |   Briefing Series   |   Special Forums   Unedited Version For a printable version of this transcript, click here. Middle East Policy Council Twenty-third in the Capitol Hill Conference Series on U.S. Middle East Policy   U.S. Policy Toward Iran: Time for a Change?   Speakers: Richard Allen Roth Principal Deputy Assistant Secretary of State for Near Eastern Affairs Geoffrey Kemp The Nixon Center Suzanne Maloney The Brookings Institution Ray Takeyh Washington Institute for Near East Policy Moderator/Discussant: Chas. W. Freeman, Jr., President, Middle East Policy Council 902 Hart Senate Office Building Washington, D.C. Tuesday, December 12, 2000 9:30 – 12:00 A.M. Transcript by: Federal News Service Washington, D.C. MR. FREEMAN: Good morning. I'd like to call us to order, although I know quite a number of other people are struggling to find this place. I'm Chas. Freeman. I'm president of the Middle East Policy Council, among other notorious positions that I occupy. And it's a pleasure to welcome you all here for a discussion of whether it is not now appropriate to rethink our policy toward Iran. I note that many people have been thinking about this topic, and as I review our own activities over the last year or so, I note that in response to quite a bit of interest in this topic, we have gotten into it a good deal ourselves. But I would like to call the attention of everyone interested in this topic to a very interesting statement by Bob Pelletreau, assistant secretary of State for Near Eastern Affairs, in Houston a few days -- well, about two weeks ago, on the subject of U.S.-Iranian relations, and more particularly to the forthcoming report of the Atlantic Council of the United States, of which I happen to be vice chair, on U.S.-Iranian relations, which is, I think, in its very final stages and should be coming out in February. This is the result of two years of very hard work by a distinguished panel organized by the Atlantic Council. Before we get into the topic, let me just take 30 seconds, if I may, for the benefit of those of you who don't know the Middle East Policy Council, to explain who we are and what we do. We are a small, struggling 501(c)3 organization, non-profit, some would say profitless organization, which attempts to raise questions for policy discussion that are neglected or are so politically incorrect or awkward that they do not get adequate attention. We do three things. First, we convene occasional meetings of this sort, Capitol Hill conferences, to discuss the kinds of questions to which I referred. Second, we publish a quarterly called Middle East Policy, which I am proud to say is the most-often cited journal in the field internationally. This is the most recent issue. There will be copies out there. It deals heavily with relevant topics. It begins, as always, with the edited transcript of the last Middle East Policy Council Capitol Hill Conference, this one on the Caspian issue. But this last issue is heavily devoted to Iraq. So we have been spending a lot of time on Iran and related issues. The previous issue, I might note, begins with a question which, alas, is no longer as topical as we thought it would be, namely, if there is peace between Israel and its neighbors, what are the implications for Iraq and Iraq; do we leave them outside the structure of peace or bring them in? Alas, that is, as I said, not as relevant as we had hoped. We're here to discuss a country with which the United States has, in a very brief span of time, within the memory of many in this room, had relationships of vastly different characters. A quarter century ago, Iran was the preferred American "gendarme" of what we then called the Persian Gulf. Now it is officially, I suppose no longer a "rogue state" but a "state of concern," whatever that is, in the Arabian Gulf. And the transformation in this relationship reflects deep grievances on the part of both Americans and Iranians toward each other. We're here today to discuss whether the time may not be ripe to put some of these behind us. On the American side, I think the relationship has been characterized by a sense of grievance at the post-revolutionary Iranian hostility to the United States; concern about Iranian support of Hezbollah and opposition to the now defunct U.S.-led peace process between Israelis and their Arab neighbors; concern, anger about deaths, abductions in Lebanon, in particular, where Iran has seemed to have a hand; and a continuing series of issues arising from Iranian efforts to develop weapons of mass destruction. We also have a very significant Iranian-American population, which is always quick to raise issues of human rights whenever the discussion of U.S.-Iranian relations comes up. On the Iranian side, the grievances are equally complex, although quite different. They begin with the U.S. role in the Iran-Iraq war where the U.S., in the interest of maintaining a balance of power, swung into limited support of Iraq at various points. They continue with the Iranian sense of grievance over the loss of 300 people on an Iran air flight, shot down in 1988 by the USS Vincennes. They continue, importantly, with an Iranian sense that the Iranian responsible behavior during the Gulf War, when Iran had many opportunities to mess up U.S. strategy and did not, was met with U.S. ingratitude or indifference. Obviously American sanctions, which many argue isolate the U.S. from Iran rather than Iran from the world, are another point of Iranian anxiety and anger, as is U.S. opposition to oil slots, pipeline and gas deals involving Iran. And finally, we have a continuing litany of congressional posturing against Iran, and gestures like the creation of Radio Free Iran and other gestures that are interpreted in Iran as efforts to overthrow the Islamic Republic. And we haven't yet, finally, solved the issue of Iranian frozen assets. So there is a lot of accumulated anger, frustration, and concern on both sides. But we are now in a situation where the allies and friends of the United States, without exception, even including Great Britain, have normalized, warily normalized their relations with Teheran. And the sanctions that we impose are demonstrably not effective in constraining Iranian behavior. In fact, we see in the Persian Gulf at present, a very significant erosion in, not just posture toward Iran, but toward Iraq. I would note, finally, before I invite our speakers to address you, that we are -- when we conceived of this topic, we imagined a very different context in the Levant, between Israel and its neighbors, than now exists. It's clear that Israeli attitudes toward Iran bear heavily on the possibilities of American rapprochement with Iran. We are political realists and that is a fact. It is not clear, with Israel now in low-intensity conflict with Palestinians, and in an increasing state of hostility with its other Arab neighbors, whether Israel will, as it seemed to be in an earlier era, rethink its own posture toward Iran and reevaluate its own analysis of Iran. And that will have some bearing on the posture of the new administration in the United States, whoever that may be. I suppose we will find out some time in the course of the next 24 hours, but I have been thinking that for five weeks. So with these few words of introduction, let me turn now to the very distinguished and extremely well-qualified group of people who have agreed to come and address the topic. On the back of the program, you have detailed biographic information, so I'm not going to recapitulate anything in there. The order of the speakers will be Principle Deputy Assistant Secretary of State Richard Roth, first, and then Suzanne Maloney, Ray Takeyh, and finally, Geoff Kemp. And I think Richard Roth, who's agreed to stay for the entire session and therefore will be here for the discussion following the core presentation, is particularly welcome. He is in a bureau which is quietly attempting to rethink things in anticipation of some sort of new administration, whatever that may be. Richard has a very distinguished career in the Foreign Service, including service in many positions related to Arab-Israeli affairs and in Europe and North Africa. And it's a great pleasure to welcome you, Richard, to the podium. Please. MR. ROTH: Thank you very much, Chas. Sometimes it's quite daunting to follow a mentor as wise and as impressive as Chas., somebody who I had the great opportunity of working with while he was in the Foreign Service and somebody who is quite a legend within our building. And it's quite a pleasure to be able to come here today and speak to you. I hope to sort of lay out a framework of where we are currently in our policy towards Iran. And perhaps that framework will then allow for succeeding speakers to fill in some of the details, and then we'll go into a question-and-answer session afterwards. As you can imagine with the uncertainty of our own elections and the fact that our own transition has not even yet begun, we have been in the process, within the department, of writing and rewriting and trying to figure out what are the key issues that the new administration will have to deal with. And each of the geographic bureaus have been trying to put together these lists, and we in the Near Eastern bureau are no different. Clearly, Iran is very, very high on our agenda of issues which we believe a new administration will have to deal with within the first six months. So let me go into some of my prepared remarks, and then during the Q&A session, I'd be more than happy to try and answer whatever questions I can about where the administration might be going. For more than 20 years after its revolution, Iran continues to surprise, intrigue, infuriate and simply to compel the attention of Americans. There has been a great deal of continuity in our policies over these 20 years. Many of the same problems continue to complicate our relations. But obviously the Iran of today is not the same as the Iran we saw 10 or even five years ago, and there have been discernible internal changes which we need to respond to as a government. They include a series of increasingly free and fair elections, more social freedoms and a general trend to strengthening Iran's civil society. The hesitant and uncertain nature of those changes has become all to clear to us over the past six months, and I think most Iran-watchers agree that there is no easy way to predict Iran's short- and medium-term political future. Iran has also moderated in some areas its foreign policies, particularly in seeking rapprochement with Europe and the Gulf Arab countries. In other areas of great concern to the United States, though, such as support against the peace process and for terrorist groups who are dedicated to undermining that process, as well as the development of weapons of mass destruction and long-range missiles, there has been no positive change, and in fact, a trend toward increased efforts in each of these areas by the government of Iran. There are several core issues which have driven U.S. policy toward Iran since the revolution: Iran's implacable opposition to the peace process, particularly its overt and covert support for groups advocating and committing acts of terrorism and other violent means to oppose the peace process; Iran's aggressive pursuit of destabilizing weapons of mass destruction and long-range missile technology; and less-than-full Iranian respect for human rights within Iran, especially the treatment of religious minorities. These core issues and our assessment of their importance have not changed. However, we have not failed to recognize that changes are occurring in Iranian politics, especially, as I said, on domestic policies. We, like our European allies, have tried to view these developments as an opportunity to explore ways to engage Iran on issues of mutual interest and as a new means to pursue long-standing objectives. We have also been able to broaden the way we see our interests with Iran. We have sought to increase the nonofficial and semiofficial people-to-people exchanges between Iran and the United States. We have initiated some adjustments in our sanctions regime to reach out to the Iranian people in areas where the economic and other benefits of trade can most directly affect them. We have supported certain Iranian diplomatic initiatives, such as the Dialogue Among Civilizations and Iran's constructive participation in the Six Plus Two dialogue on Afghanistan. We have also looked for opportunities to begin addressing the historical issues that hinder understanding on both sides, and on this, I would refer you back to the secretary's speech of last March. We have offered to explore a global settlement of all outstanding legal claims between our two countries, often misleadingly termed "frozen assets," and we have sought unambiguously a direct government-to-government dialogue with Iran, without preconditions, to explore how our two countries can push this further. Because while the differences between the United States and Iran on policy issues are fairly clear, there are areas where we could have or should have common interests, and these get much less attention. These areas potentially include policies toward Iraq, the implications for stability in the Gulf, Afghanistan, the security and independence of the states of Central Asia, and global issues, such as narcotics trafficking and the environment. If the United States and Iran ever arrive successfully at direct diplomatic engagement, each side could be expected, at least initially, to defend its own national interests. However, in addition, each side might find a more creative approach in which to address our common interests. We do not believe that this can be accomplished through competing press statements or through intermediaries, no matter how sincere or well-intentioned. Let me take a minute or two to review some of the criticism we hear from the opposing sides of the Iran policy debate. There are those who argue that the United States should lift all economic sanctions on Iran, even if gradually, because they harm American businesses, in addition to causing some damage to Iran. These critics hope that progress on the economic front will open the way for the flag and for productive political relations. In an ideologically driven regime like the current one in Iran, this formula is not apparent. Nevertheless, we are well aware of the opportunity costs of economic sanctions to ourselves, and the new administration should carefully review a package of economic measures that could be identified as incentives to encourage greater political dialogue. While a worthy goal, our European allies too have found this a very difficult path to pursue with much success. On the other hand, we continue to be painfully conscious these days of the active Irani opposition to fundamental U.S. interests in the region; namely, the stability of our friends and the success of the Middle East peace process. We believe Iran has pursued a provocative policy aimed at derailing the peace process and also, consequently, threatening regional stability. Also, Iran's aggressive weapons of mass destruction programs are potentially destabilizing. Our policies, including our economic sanctions, are designed to directly challenge Iran on this ground and to encourage a change in its policies. From the other side of the debate, there are those who claim the United States has been fooled by a sort of phony reform, that we have jumped to support a reformist president who has little real power. I would like to say for the record that we have no favored political leader or faction in Iran. We have undertaken a series of very carefully calibrated and minimalist steps in response to clear political and foreign policy changes in Iran at the macro level. Some of these changes began to develop under a previous leadership, and many of the positive social changes in Iran, such as the yet-to-mature trends toward greater openness and transparency, have been driven from the bottom up by the Iranian people. What we are still waiting for is for these trends to be adopted by Iran's ruling elite and to be instituted throughout Iran's key institutions. Who rules Iran is not nearly so important to us as what rules Iran will be governed by. As the situation evolves within Iran, I expect the new administration will try to be responsive to what rules emerge from the Iranian leadership, as one basis for improved relations. Thank you. MR. FREEMAN: Thank you very much, Richard. That was both admirably clear and admirably brief. We attempt to keep speakers at these gatherings to no more than 15 minutes and preferably 10, and I think you went 12, so that was exactly right. I would now like to invite Suzanne Maloney, who is a student, post-doctoral student, of Iranian domestic policy at Brookings Institution where she's writing a manuscript, in fact, on U.S.-Iranian relations, the topic that we are addressing today to come and speak about the domestic situation in Iran, filling in some of the details to which Richard referred. MS. MALONEY: Good morning, and thanks very much for coming this morning. And I'd like to thank the Middle East Policy Council for inviting me to speak and be part of such a distinguished panel of experts on Iran and on U.S. policy towards the Middle East. Anne Joyce and the people at MEPC asked me to think a little bit about Iranian domestic politics and particularly events of the past six to eight months, since the parliamentary elections that took place beginning in February of 1999. And in doing so, I sort of struck back to all these events. It began with an election that was very bitterly fought, with those who lost at the polls actually contesting the results of the election; with recounts of the votes that went on for weeks and actually even into months; with the courts and the judiciary tainted, as a whole, by accusations of partisanship; fears of a crisis of legitimacy; and in the aftermath, the presidency paralyzed by factional conflict. Politics in Iran are very peculiar, aren't they? (Laughter.) But in truth, it has actually been a very tumultuous year over the past year or so in Iran and for those of us in the Iran-watcher community here in Washington. President Khatami was elected three years ago in a surprise upset of the conservative heir apparent that not only revealed a profound public yearning for change, but also helped to energize and institutionalize it. Today the date of his victory, the 2nd of the month of Hordad, by the Iranian calendar, has become shorthand for a wide-ranging agenda of political and cultural reforms whose proponents now have a majority in the parliament and dominate the apparatus of government on a provincial and local level. However, the reformist trend has not prevailed over some of the most powerful instruments of the state power in Iran, including the military, the state television and radio, vast semi-governmental economic conglomerates, and the religious councils that must approve any parliamentary legislation. And in fact, since the February 1999 parliamentary elections, which delivered Iran's relatively powerful legislative body into the hands of ardent reformists, the Islamic Republic has not reached the turning point that many of us here believed, and, in fact, I think, hoped that it had. Since August, in particular, with most of the reformist newspapers shuttered, with the political leadership of the reform movement largely jailed or otherwise silenced, and the parliament effectively stymied from effecting any meaningful change by the explicit intervention of the supreme religious leader, I think many people here in Washington declared the reform movement dead in its tracks. I would argue, though, that in fact reports of its demise have been greatly exaggerated, and this has been demonstrated in the past weeks by some of the statements of President Mohammed Khatami. President Khatami has been the victim of what many in Iran have called a sort of Khatami fatigue. The halo surrounding the hero of the reform movement has been somewhat tainted by his inability or ineffectiveness in preventing the conservative backlash. About two weeks ago, however, he spoke up and said, quote, "I must admit that after three and a half years in the presidency, I'm aware that the head of state does not have the adequate prerogatives to do his job. I am the guarantor of the Constitution, and to ensure its application, I must have the necessary means." What does this all mean for the reform movement, and what are the implications for U.S. policy toward Iran? I'm probably going to spend the next seven or eight minutes talking solely about the domestic events in Iran, and I hope that you will -- I presume, in fact, that you'll challenge me during the Q&A, because in fact I would argue that U.S. policy should not be based on the domestic politics of Iran; in fact, it should be largely independent of that; and that we have a national interest in engaging in a policy of limited engagement toward Iran that is irrespective of the politics. I think that what the past six months demonstrate, particularly for U.S.-Iran relations, is that in fact the catharsis that many of us hoped, the turning point, the watershed, is not looming on the horizon. We have not passed that point at which Iranian politics have changed wholly and irrevocably. The reform movement is deeply divided and has been largely thwarted in its efforts. This is partly because it was bifurcated from the beginning. It was both a top-down and a bottom-up movement from the start. And its progenitors undertook dual strategies. The strategy for the first year or two was one that they described as pressure from below, as popular pressure, and negotiation from above. The reform has always been a relatively amorphous concept, which expanded and contracted to fit a given set of circumstances. And so in the past six months, we've seen a real clash within the reform movement itself, with some advocating, in fact, bypassing Khatami and going forward beyond some of the things that he's argued for, and others preferring to stay within the strategy of negotiating at the top. It's called quodi (ph) within the Iranian context. It's more a version of inside baseball. To some extent, this reflected some concerns about how powerful Khatami could be as an advocate of reform. He seems wearied by his position, and in fact there are many in the population who are beginning to grow frustrated by the fact that reform was not impacting their daily lives at all. I'd also argue that the stalemate we see in Iran is a product of a very successful strategy by the conservatives. Those of us who counted the conservatives down and out after their routing at the polls in February 1999, I think, have been surprised to see how successful they've been at a three- or four-pronged strategy that has involved keeping the reform movement on the defensive through a period of what they call chain crises, that have involved a number of trials and political persecution of some of the key reform leaders. They have also been more successfully making an argument on an economic basis, that in fact the reform movement is too concerned with the abstract political concerns of its elites and not with the day-to-day issues that affect the average Iranian's life. In recent months, the conservatives have also engaged in a concerted effort to persuade Khatami that in fact it would be in the good of the nation for him to step aside. And finally, through their control of some of the key instruments of state power, they've been able to block any effort by the parliament particularly to change the press law and to put most of the reform newspapers, which have been closed since April of this year, back into publication. But while see this stalemate, I think that we also see that most of the momentum remains with the reform effort. From my perspective talking to Iranians on the streets when I visit there, as long as the balance of hope remains on the side of the reformers, most Iranians are willing to give them the benefit of the doubt. In fact, Khatami's recent statements tell us that he is not prepared to go beyond the parameters of the system as it exists today. He has insisted that in fact democracy and freedom can be realized if we all respect the constitution. And I think that while there are many Iranians, including many of those within the reform movement itself, who have doubts about that possibility, most are willing to continue to give him the benefit of the doubt so long as they see that there is progress on the fringes. And we have seen that, in fact, in the parliament. Since June, the parliament has managed to accomplish a number of things, albeit on the margins of the key issues that concern most Iranians. They've called a number of hearings into the issues that are most politically sensitive, they've begun to restructure the administrative bureaucracy of the state, and they've also more recently, I think, demonstrated some dexterity in dealing with some of the more sensitive issues, such as the establishment of a framework for political parties to operate that would, in fact, probably be more powerful and more effective in institutionalizing a freer and more open system in Iran than the simple issue of reopening the newspapers. The reformers have been in power a relatively short period of time. Their learning curve was abound to be steep. They appear to have decelerated on some of the more ambitious elements of their original agenda, and yet they also appear to be gaining greater consensus with the conservatives themselves. I would argue that Iran is likely to remain in a situation of stasis. There have been many here in Washington, in particular, who have been concerned about the possibilities for chaos in Iran, and I think that that is always within the realm of possibility. However, I was in Iran during July of 1999 and I saw the reaction to the protests from both people on the streets, and clearly from the day-to-day progression of events from some of the key politicians on both sides of the fence. And I think that it was evident to all parties that violence served very little purpose for either the conservatives or the reformists. The demonstration effect of the violence in Palestine and Israel is sure to also condition much of the response. There're small groups of people who have an interest and will continue to try to provoke chaos. But, in fact, both sides have exerted great influence over their most partisan extremists to avoid any provocations. I'm going to jump ahead and just talk a little bit about the prospects for the future. There are presidential elections coming up in Iran in May of 2001. They're likely to engage in fierce partisanship among some of the political factions within Iran. There's already some doubt that President Khatami may not choose to contest those elections. If that were to be the case, there would be a great deal of, I think, uncertainty in the Iranian political system. However, I'd argue that, in fact, President Khatami's declining to in fact commit himself 100 percent to running in those elections is simply a strategy on his part which is entailed to put the conservatives back on the defensive themselves. I expect President Khatami to run in those elections, barring, of course, the unforeseen circumstances that inevitably pop up in Iranian politics. And, in fact, if he runs, I think that there's very little doubt that he will win with something close to the mandate of 20 million votes that he was able to garner in 1997. The bigger question is what 3rd of Hordad, which will be the date of the elections by the Iranian calendar this coming May, mean for the reform movement and mean for the Iranian-U.S. relationship? We've also seen a process by which the conservatives are retooling, and some of the events that have been probably missed by the American press in the past few weeks, but have roiled the Iranian press, from the conservatives are quite interesting. One of the key conservative politicians said only a week or so ago that in fact U.S.-Iran rapprochement was not outside the bounds of what the conservatives were willing to envision. His comment was: "For our national interests, we can even negotiate with Satan at the bottom of hell." (Laughter.) I think this would probably qualify, from Mohammed Javad Larijani's perspective, as the bottom of hell right here. And the question that I have is how willing are we to negotiate with the Iranians? Clearly, American policy has always stated that in fact we have no preconditions and that we're prepared for an authoritative dialogue at any time in any place. And yet there is certainly some doubt in the minds of many Iranians about the signals that they have received. And that's why I would argue that in fact it's time for the end of signal diplomacy. The past three years have been very effective, beginning, of course, with President Khatami's CNN address, in which he talked about his respect for the American people and the American democratic system. Since then, we've engaged in a series of signals back and forth. Occasionally these can be very elegant and very efficient, as they were in President Clinton's remarks in April 1999 when he expressed some concern for Iranian grievances. This was a quote which made the newspapers for about a month or two in Iran on a daily basis, but which received very little attention here. This is the power of subtle and effective signal diplomacy. However, I think we've reached the end of the line in terms of what we can actually accomplish, and the dangers of misinterpretation on both sides are really unfortunate. There have been a number of incidents in which Iranian policies or overtures have in fact backfired or been misinterpreted here. And I think the same could be said of some of the statements from the American government, including Secretary Albright's speech in March of 1999. I think that there's going to be an argument made that in fact we shouldn't involve ourselves in Iranian domestic politics. I agree with that wholeheartedly. A conservative government may be less ideologically akin to American values, but in fact it may be more capable of controlling those institutions and affecting those issues that concern us. Our policy should not be based on which faction controls the Iranian government, and we should be equally prepared to sit down with a conservative as we are with a reformist. We should recognize that in fact the political stalemate within Iran makes reciprocity very difficult in the near term, and makes the long-term effort that much more important. For that, I would argue that a policy based on our national interest would proactively pursue opportunities rather than simply adopt to -- adopt a reactive approach to overtures and to potential changes within the Iranian domestic politics themselves. From there I'm going to turn the microphone over and hope to talk to you some more with the Q&A. MR. FREEMAN: Thank you very much. Very thoughtful and informative presentation indeed, and it lead us directly Ray Takeyh, who kind of has I think a slightly different perspective on some of these issues. Ray is a research fellow at that Washington Institute for Near East Policy. And I'm proud to say that we have published him in Middle East Policy on occasion. He specializes in studying states with good reputations in the United States, like Iran and Libya. Please. MR. TAKEYH: I'd like to refocus the debate a little bit on Iran's international relations, because whenever you talk about Iran, most people talk about some of the dynamic internal changes that take place, but there is an equally compelling international approach. Namely, that what Iranian reforms are trying to do is not just to liberalize the theocracy, but, as we've seen, inject a measure of pragmatism in its conduct abroad in its approach to the international community. And this is a trend that I would argue that didn't begin with Mohammed Khatami, but arguably, one of the more important dates in Iran's modern history was 1989, the year of Ayatollah Khomeini's death. In the aftermath of Khomeini's passing, we see this clerical community lapse into a fundamental debate regarding the direction of the revolution. It's a debate that remains by and large unsettled in terms of Iran's domestic policy. But a relative, rough consensus does emerge in terms of Iran's international approach. Namely, both pragmatists and hard-liners recognize that Khomeini's conduct, as divisive as it was, only isolated Iran, and it was time for a change of approach and a change of strategy. Khomeini's successors, therefore, abandoned the mission of exporting the revolution and began to replace it with a more conventional measure of national interest. Tehran's path would be gradual. It will seek to advance its interests and aspirations less through confrontation than accommodation with its neighbors. This trend reaches its apex with the inauguration of President Khatami in 1997. During the presidential election of '97, and maybe in this one, most people will focus on the internal proposals of Khatami, and neglected in '97 I think his equally compelling call for peace abroad. Khatami's advocacy of civil society, rule of law necessarily entails a different concept of international relations. The president's slogan of "dialogue amongst civilizations" was not a mere slogan, but an appreciation of interdependence of societies, economies and political systems. This recognition is bound to affect Iran's approach to international relations, and I'll focus on three specific areas: Iran's policy in the Gulf; the Arab-Israeli conflict, and U.S., and I'll leave the easier part to Geoff to finish up. From Iran's perspective, the most important set of relationships its can have are those in the Persian Gulf. And in the Persian Gulf, Iran faces potentially its most fundamental security concern: namely the unresolved nature of its relationship with Iraq, the fact that the war has ended, but the peace has not really come about. It is unlikely, as some people suggest, that Iran and Iraq will form a tactical front. That's highly unlikely given the fact the Iraqi destruction of Iranian cities, employment of chemical weapons and continued border tensions. But from Iran's perspective, the two important issues in the Gulf, the two geopolitical concerns are the potential rehabilitation of Iraq and the presence of the United States naval forces. While Iran's relations with Iraq remain problematic and potentially, in the long term, a source of concern, Iraq has uniquely provided Iran an avenue in Gulf politics. I would argue that Khatami's most spectacular diplomatic success abroad has come in the Persian Gulf area. Under Khomeini's leadership, of course, Iran vilified the Gulf rulers, the Saudi rulers, and called on opposition groups to overthrow the Gulf leaders and institute authentic Islamic polity. Khatami's election has fostered a perceptible shift in Iran's Gulf policy, namely, Iran is not trying to overthrow the Gulf rulers, but is appealing to them and suggesting to them that by forming an indigenous alliance network would be the best way of ensuring Gulf stability and containment of Iraq; that you don't really have to rely on the American naval forces, we can pretty much do this on our own, locally and indigenously. Therefore, what Khatami is doing, very cleverly, is appealing to the accomodationist instinct of the Gulf rulers and their historic aversion to rely for their security concerns completely and categorically on Western powers. This policy has already paid dividends. Iran and Saudi Arabia have, to an extent, harmonized their oil policies; expanded diplomatic trade and cultural relations. Since Khatami's momentous visit to Riyadh in 1999, Iran and Saudi Arabia have instituted low-level defense cooperative efforts. Although in my opinion, the Gulf rulers are unlikely to accept any regional defense network replacing U.S. naval presence when such confidence-building measures could further project Iran's power and influence in the Gulf. Well, Khatami, therefore, has introduced important changes in Iran's Gulf policy. His approach to Israel is characterized more by continuity rather than change. For a generation of Iranian leaders, Israel is not only a strategic competitor, but an agent of a pernicious ideology. Khatami's approach to the Arab-Israeli peace process reflects his concern that should the peace process succeed, it could only enhance Israel's ability to influence the regional state system and, therefore, isolate Iran. The Turkish-Israeli alliance, from Iran's perspective, is an ominous indicator full of such possibilities, should the peace process succeed. Therefore, Iran's opposition to the peace process comes at two different fronts. On the strategic front, any effort that obstructs Israel's peace with its neighbors and polarizes Israel's domestic politics is viewed as advantageous. On the political front, through active support for Hezbollah, Islamic Jihad, Hamas and so on, Iran can still claim its Islamic credentials and present itself as a pillar of Muslim resistance to the so-called Zionist entity. The recent events -- the recent mayhem in the West Bank and Gaza has reinforced Iran's strategy and seemingly validated its claim. The troubling aspect of Iran's rhetoric in the recent crisis is to suggest Israel as an agent of attack on Islam's domain. The transformation of the Arab-Israeli conflict from a nationalist one to a concessional one can only exacerbate an already inflamed situation. Therefore, from Iran's perspective, it is unlikely, given its ideological predispositions and its strategic concerns, to acquiesce to the Oslo process, or the process formerly known as the Oslo process. Having stipulated Iran's unhelpful conduct, it is important to note that the current impasse in Israeli-Palestinian relationship is not due to Iran's diplomacy. The peace process will succeed or fail based upon what Israelis and Palestinians do as opposed to what Iranians say they ought to do. Iran will vigorously oppose the peace process, but it will grudgingly, reluctantly, passively accept a peace treaty. Ultimately, the ultimate arbiters of what is an acceptable, equitable peace between Israelis and Palestinians will be Israelis and Palestinians. U.S.-Iran relations are by far the most peculiar of Iran's international relationships. The issue of U.S.-Iran relations has always transcended this strategic plan, and somehow is always based on visceral emotion. The Ayatollahs routinely castigated the United States as evil and satanic, and for Americans, the Ayatollahs were not just misguided, but irrational. At the very basic level, the core of U.S.-Iranian conflict is a conflict between a superpower with global pretensions and a local power with regional ambitions. But somehow, Iran-U.S. relations have always transcended this strategic claim and have taken place in a distinct cultural terrain. Ayatollah Khomeini, and for many other members of the Iranian clerical class, they anguish not only about the American armada in the Persian Gulf, but about the American social order that seemingly and purportedly inflicts Islam's domains with cultural dislocation, moral equivalence, distorted values -- three good things. The election of Mohammed Khatami has ended a very specific phase in U.S.-Iranian confrontation, namely, the cultural phase. As a scholar with an understanding and appreciation of Western political heritage and philosophy, Khatami has suggested that the civilizations can not only interact but learn from one another. Although the phase of cultural confrontation between U.S. and Iran may have ended, Iran's policies still do not coincide with those of the United States in some very important respects. As with his predecessors, Khatami insists that Iran, by virtue of its location, size, demography, history, has earned the right to become the dominant power in the Gulf, and the reason why it is not the dominant power in the Gulf is because the Americans insist on incorporating the Gulf in their own strategic framework. A lessened American presence in the Gulf is a goal that Iran's reformers press, advance, and actively endorse. What's the way out of the impasse? Briefly, I always felt that U.S.-Iranian relations should be modeled on Sino-American relations. The United States and China disagree in some important respects, but also have certain common objectives. Washington and Beijing actively attempt to reach consensus on some of those issues. Iran and the United States have certain important objectives in common. They both have an interest in continued marginalization of Iraq. They both have an interest in the stabilization of Afghanistan. They both have an interest in stopping the drug traffic. They both have an interest in free passage of commerce through the Gulf. These are the goals that they can accede to. Iran and the U.S. should move toward a new paradigm, whereby they compete and cooperate at the same time. In that particular sense, this is a policy neither of containment nor an alliance, but selective partnership on a limited range of issues. For this policy to succeed, there must be diplomatic dialogue and economic interaction between the two states. Should the United States move to modify its economic policies, economic sanctions policies, it perhaps could resume the long-suspended dialogue with Iraq. At the end of the day, in the post-Cold War period -- a trite and often-repeated phase, but nonetheless -- the United States will face not a single global threat but a series of regional challenges. Iraq is such a challenge, a medium-sized power that seeks to determine the political trends in its immediate environment. The best way of dealing with such a challenge is to use a broad array of diplomatic, political, and economic tools. Should Iran become further integrated into the global economy and actively included in the community of nations, hopefully it will voluntarily suppress some of its most intemperate impulses and moderate some of its more problematic conduct. At any rate, Iran, for good or bad, will offer the next administration, whoever that is, both challenges and certain opportunities for new thinking. Now I'll leave guns and bombs to Geoff. MR. FREEMAN: There are many points that I'm sure will excite attention in the subsequent discussion. The challenge to recognize and manage a relationship which combines elements of competition and cooperation -- in other words, a normal sort of international relationship -- would challenge the maturity of whoever it is who comes in as president on January 20th. But I think that was a very useful formula. Geoff -- Geoff Kemp, of course, really doesn't need an introduction. He is the director of research for the Nixon Center, and a man who has studied the Middle East and written on it in many, many of its dimensions, including a couple of years ago a road map for U.S.-Iranian relations. So, Geoff, please, you have the last word. MR. KEMP: Well, I've forgotten what the line is about Zsa Zsa Gabor's fifth husband. I think it's something like "I know what I'm meant to do, but how do I make it interesting?" This is difficult, to pinch-hit on these excellent presentations. Let me just say that when Ray alluded to U.S. relations with Iran perhaps being more like China, I could also add, perhaps, a little like U.S. relations towards France, since I think that is going to be a big item for the new administration. Let me just make a few sort of obvious points. Iran is the only country in the world that refuses to have formal contact with U.S. officials. The North Koreans do. The Cubans do. The Soviet Union did all throughout the Cold War. This is a unique sort of situation. And yet I think we all realize that if the relationship improved, both sides would have considerable benefits. My sort of basic thesis is that the political crisis in Iran is not going away anytime soon, and that until the bitterness between the reformists and the conservatives is more muted, there is unlikely to be any dramatic change in Iran's willingness to talk and deal with the United States because, in my judgment, the United States remains the third rail of Iranian politics. Once we are able to talk to each other, then these what I call "red button" issues, which Chas. Freeman alluded to in his introduction, have to be addressed -- the historic grievances, of course; the issue of terrorism, which everyone has mentioned; the U.S. military presence in the Gulf, which I think is a very ambivalent issue for Iran, since we indirectly protect Iran from Iraq; the opposition to the peace process in Israel; and energy policy, which I happen to believe is an extremely serious issue for the Iranians. And it may well be that because these red button issues are so difficult that when we ultimately do formally talk to the Iranians, it may be better to start with what one might call "green button" issues; those issues where we have more in common and which are less likely to be divisive from day one. And again, I think we all know what that list consists of. We have common interests concerning narcotics, common interests concerning Afghanistan; both countries are very worried about Pakistan's evolution and its relationship with the Taliban; and we do have some common interests concerning Iraq, though I wouldn't overdo that commonality. I think, from the Iranian point of view, the grievances go back of course even beyond the Iran-Iraq War, and the amount of literature that has come out in Iran in the past few months about our role in the '53 coup is still a lightening rod for, I think, all Iranians. And the fact of the matter is that the list of grievances that the Iranians express are those shared by moderates as well as conservatives, so that even if the quote-unquote "moderates" do prevail in the power struggle, the grievances are still going to be there and are still going to have to be addressed. I think the one thing on the list of grievances that does separate out the moderates from the hard-liners is the United States itself. You know, from what one hears and reads and talks, there are groups within the conservative faction who truly do regard the United States itself as an existential threat. It is us as the superpower, the great arrogance, the great Satan, that is the problem. And for that reason, the concept at this point in time of restoring diplomatic relations with Iran and sending an American ambassador or even a senior diplomat back to Tehran, I think, is unthinkable at this point in time, for precisely this reason. There are also issues that I hope Suzanne can talk more about in the Q & A -- enormous corruption in the country, corruption managed by many of the conservatives and, of course, if there were political reform that we would like to see, this would undermine and challenge a lot of the conservative financial interests. So I think we can say that as long as the conservatives control the key instruments of power in Iran -- which are, after all, you know, the judiciary, the armed forces and the intelligence services -- and as long as the conservatives believe that they would be losers if they had better relationships with the United States, then they're going to do whatever it takes to put off the day when the great Satan comes back to Tehran. What we have to hope is that conditions will change in the region and change in Iran and possibly even change here, so that the conservatives do not feel that it is a zero-sum game. So you can see, my perspective right now, as we speak here in December of 2000, is quite pessimistic, seen from Tehran; I think it's also quite pessimistic when viewed from Washington. I don't believe that the new administration will institute major changes towards Iran, first, until the Iranian elections are over, because I think we do not want to meddle in those elections and they are in May -- that's not too far away; but also until the Iranians actually agree to talk to us formally. And three, they have to mute their opposition to the peace process and their deliberate efforts to torpedo it, because let's face it, if the U.S. is the third rail of Iranian politics, Israel is the third rail of American politics. And I would argue that hostility to Israel has done more to harm Iran's image in this country, especially here on Capitol Hill, than any issue since the hostage crisis, since '79 and '80. Now, one way out for the Iranians, they have said, is that they are prepared perhaps to talk to us formally if only we will offer them some gesture, such as, for instance, unfreezing their assets which they believe number in the billions of dollars. I don't believe any new administration, particularly one that comes to power on such a narrow margin of victory as is likely to be the case here, would be prepared, at least early on, to make any gestures or concessions before having talks with the Iranian administration. But this does not mean to say that the new administration can do nothing. I think there are a number of things a new administration can do to improve the environment for eventual rapprochement, especially, especially if Iraq becomes perhaps the most serious Middle East challenge for the new administration, as I think some people believe it will do. There is, I think, a desire to break away from this concept that was fashionable in the early days of the Clinton administration to sort of lump Iran and Iraq together -- dual containment, two rogues out there; isolate them -- and be much more nuanced and much more understanding of the fact that there's been major changes in Iran for the better, and major changes in Iraq for the worst. And, therefore, if Iraq becomes a more prominent issue, there may be more willingness to rethink some of the policies towards Iran. Even without that, there are things we can do. I think the style of U.S. diplomacy can be changed. From what I hear from Iranians -- and this comes not only from Iranians one meets, but these remarks that Mr. Khatami himself made to the Germans on his trip to Germany last year -- earlier this year, is that, you know, we have a tendency to announce our policy through formal speeches of the secretary of State, which are not cleared in advance by the Iranians. We make a few gestures, and then we expect the Iranians to reciprocate within hours or days, and if they don't, we say, "My God, they're not listening to us." And this does not help when we constantly interject into these policy statements praise for Khatami and the reformers, and criticism of Khamenei and the conservatives. This merely becomes a divisive issue which the Iranians resent and which the reformers tell us hamper dialogue rather than help it. So while I understand that from our own point of view we have to distinguish between the groups that we can work with and those we can't, perhaps doing it in speeches by the secretary of State is not very productive. We do have legitimate concerns that we have to discuss in any Iranian regime, particularly WMD and terrorism. I will not discuss terrorism because it's already been alluded to. But the WMD problem, the nuclear, biological, chemical and missile issues are extremely important. But I think we have to have a more complex, more nuanced policy in discussing them. What we say right now, both on the Hill and in the executive branch, is Iran has to get rid of its WMD, as one of our goals. It's not going to. They're not going to, let's face it. Even if the moderates win, they will have genuine national security concerns -- Iraq, Pakistan, India, Israel -- all nuclear powers. I don't believe that the new administration will institute major changes towards Iran, first, until the Iranian elections are over, because I think we do not want to meddle in those elections and they are in May -- that's not too far away; but also until the Iranians actually agree to talk to us formally. And three, they have to mute their opposition to the peace process and their deliberate efforts to torpedo it, because let's face it, if the U.S. is the third rail of Iranian politics, Israel is the third rail of American politics. And I would argue that hostility to Israel has done more to harm Iran's image in this country, especially here on Capitol Hill, than any issue since the hostage crisis, since '79 and '80. Now, one way out for the Iranians, they have said, is that they are prepared perhaps to talk to us formally if only we will offer them some gesture, such as, for instance, unfreezing their assets which they believe number in the billions of dollars. I don't believe any new administration, particularly one that comes to power on such a narrow margin of victory as is likely to be the case here, would be prepared, at least early on, to make any gestures or concessions before having talks with the Iranian administration. But this does not mean to say that the new administration can do nothing. I think there are a number of things a new administration can do to improve the environment for eventual rapprochement, especially, especially if Iraq becomes perhaps the most serious Middle East challenge for the new administration, as I think some people believe it will do. There is, I think, a desire to break away from this concept that was fashionable in the early days of the Clinton administration to sort of lump Iran and Iraq together -- dual containment, two rogues out there; isolate them -- and be much more nuanced and much more understanding of the fact that there's been major changes in Iran for the better, and major changes in Iraq for the worst. And, therefore, if Iraq becomes a more prominent issue, there may be more willingness to rethink some of the policies towards Iran. Even without that, there are things we can do. I think the style of U.S. diplomacy can be changed. From what I hear from Iranians -- and this comes not only from Iranians one meets, but these remarks that Mr. Khatami himself made to the Germans on his trip to Germany last year -- earlier this year, is that, you know, we have a tendency to announce our policy through formal speeches of the secretary of State, which are not cleared in advance by the Iranians. We make a few gestures, and then we expect the Iranians to reciprocate within hours or days, and if they don't, we say, "My God, they're not listening to us." And this does not help when we constantly interject into these policy statements praise for Khatami and the reformers, and criticism of Khamenei and the conservatives. This merely becomes a divisive issue which the Iranians resent and which the reformers tell us hamper dialogue rather than help it. So while I understand that from our own point of view we have to distinguish between the groups that we can work with and those we can't, perhaps doing it in speeches by the secretary of State is not very productive. We do have legitimate concerns that we have to discuss in any Iranian regime, particularly WMD and terrorism. I will not discuss terrorism because it's already been alluded to. But the WMD problem, the nuclear, biological, chemical and missile issues are extremely important. But I think we have to have a more complex, more nuanced policy in discussing them. What we say right now, both on the Hill and in the executive branch, is Iran has to get rid of its WMD, as one of our goals. It's not going to. They're not going to, let's face it. Even if the moderates win, they will have genuine national security concerns -- Iraq, Pakistan, India, Israel -- all nuclear powers. The one problem the Iranians face is that they are bound by international agreements they've signed and, therefore, breaking out of those international agreements, such as the Nonproliferation Treaty, is going to be very, very difficult and tricky for them. One way they could certainly improve their reputation, which right now in the intelligence services is very dismal, would be to agree to these new protocols that the IAEA has come up with for inspecting nuclear facilities, the so-called Program 93 Plus 2. But they say they won't do this unless they are given access to civilian nuclear technology, which we will refuse to go along with. When it comes to their missile program, the only thing the United States can do is slow down Russian and Korean aid, and possibly even Chinese aid at some point in the future. We can't stop the Iranians; they're not bound by any treaty not to build missiles. Those missiles are going to go ahead. We're going to have to live with them. The final point I'd like to make, where I do think a new administration, particularly a Bush administration, will take a new look and that could have a positive impact long term, is to review our Caspian policy, because it is in the Caspian that the Iranians and the Russians have enormous criticisms of our efforts to exclude them from projects in that part of the world. And I think you're all familiar here with the arguments the administration has made why we are insisting in East-West pipelines for both oil and gas coming out of Central Asia and the Caucasus, so I won't repeat those. What I will say is that there is huge disagreements with this policy not only in the region, but also in many of our oil companies. And that the bottom line, from my point of view, is that the Caspian and Central Asia are important areas for American interests, but they're not vital areas for American interests; they're not as vital as the Persian Gulf, whereas for Russia and Iran they are. And therefore, I think there is a case for reviewing our whole policy in the Caspian with the objective of being more flexible about energy projects and Iran's eventual participation in them, because this would help us in two ways. First, it would help defuse the growing rapprochement and cooperation between Russia and Iran, who as I say are reacting to our exclusionary policies. And secondly, we have, I think, in the context of world energy, a lot of reasons for wanting to see Iranian energy resources developed to the full. Now, I don't believe a new administration will end oil sanctions with Iran unilaterally unless the Iranians reciprocate in some way that we can point to. Clearly, the important thing, I think, from the point of view of the Congress and a new administration would be a more muted Iranian behavior concerning the peace process and Israel. But I'm not keeping my fingers crossed on that; I doubt if that will happen. But nevertheless, my last point would be, is that ultimately, as both Suzanne and Ray said, we have to ultimately consider dealing with the conservatives. The conservatives are not a monolithic group in Iran. Some have shown extraordinary pragmatism in the past. And it was, after all, the Ayatollah Khomeini who did the deal with Israel during the Iran-Iraq War to get arms. Absent any breakthroughs like this, there are other things we can do. We can stop fingerprinting Iranians coming to the United States, and maybe if we did that, they would make it easier for us to visit Iran. Thank you. MR. FREEMAN: Thank you very much. I think we've been given a great deal to think about and to talk about. If indeed the era of signal diplomacy has come to the end of its useful life, and we now are moving into a new era as well as a new administration, admitting that the new administration naturally -- especially a new administration that is likely to be as weak in its domestic political base as whichever one we have will be -- the new administration will always address questions like this in terms of what's in it for us, what's in it for them, the administration. Still, I think if we had had this discussion a year ago, we would have had a very different discussion, and it demonstrates the extent to which the question is now open. In that regard, Geoff, I just -- I can't help remarking that if I were an Iranian, I would see a certain difficulty with your prescription that I mute my opposition to something that no longer exists, namely the peace process. But perhaps -- and we're not here to talk about that particularly, but perhaps if whatever replaces the peace process involves actors like Europeans in addition to Americans -- that is if the American monopoly, as many speculate, will have to be the case -- hence, then that may itself have its impact on Iranian willingness to mute opposition. I would like to -- I'd like to note also one point that came through in several of the presentations, which I think is -- and most particularly yours, Geoff, at the end, which seems to me to be fundamental, and that is the Iranian sense that the cultural identity of Iran is somehow in jeopardy when Iran deals with the United States. The supreme interest of any country is its national independence and its identity, and I think you're right, there has been a sense that somehow the very distances of the United States and our global reach constitute an existential threat to Iran. The question is, how do we, as Americans, if that is a problem, what on Earth can we possibly do about that? We already said something that Iranians are simply going to have over. And finally, I'd like to ask -- and maybe this will start the discussion -- what specific actions might replace signal diplomacy? Geoff has suggested a review of Caspian policy, which many in the region would agree is overdue. Others might see oil and gas projects, or relaxation in elements of the American sanctions for example, resumption of civilian aircraft sales, as the sort of step that might lead to introducing some of those elements of cooperation into the competition that has been proposed here. Others might look at military measures, disentangling naval operations in the Gulf, for example, as an option. I hope in the succeeding period we can get down to some rather specific proposals. I know many who have come today do have specific interests. I hope you'll feel free to raise them to the panel. As we move into the question period, or the comment period, I'd ask you please to identify yourselves as you make your comment or ask your question. Try to keep it brief, if you can, and intelligible. Otherwise, I will interpret it and perhaps not do it the justice that I might. Please also come to the microphone, and I invite anyone who wishes to begin this process now to do so. Q I'm Walt Grossman for Dr. Takeyh. I take the point about the Khatami change in policy toward the Southern Gulf States. Much improved security relationships, especially Kuwait, Qatar and Oman. One fly in the ointment seems to be [inaudible] still standing in the way of a similar rapprochement with the UAE, and it's to these three useless bits of rock in the middle of the Gulf that I address your attention. MR. TAKEYH: Addressing useless bits of rock is always intriguing. I have never understood Iran's preoccupation with those three islands. But I also don't think that they stop Iran's fundamental relationship in the Gulf, which is with Saudi Arabia. I think the Saudis have implied and intimated that Iran's peculiar and fascination with these useless pieces of rock are not going to impede some of the more fundamental relationship. I think ideally one would hope that Iran would somehow reach some sort of consensus with UAE, perhaps within the framework of GCC, or something like that. But I just don't think that particular issue is going to impede more fundamental relationships that the Gulf States would like to have with Iran on the entire range of issues which they both find advantageous, not just petroleum policy, passage reform, and so on, but also they all have a common interest, namely the forces in Baghdad. Is this issue going to be resolved anytime soon? I'm not sure. Is this as imperative and relevant to Iran's diplomatic offensive and good neighbor policy in the Gulf? I don't think so. Unlikely. But that's just my take on it. MR. FREEMAN: I think Suzanne has a comment. MS. MALONEY: I just wanted to add something, and that is that this dispute which has been long-standing over -- MR. FREEMAN: Go to the mike. MS. MALONEY: Oh, all right. Trapped in wires here. A very quick comment, which is just that the dispute over these three useless pieces of rock has not in fact impeded a very important economic relationship which has existed particularly between Dubai the port and Iran throughout the past twenty years, and I think overrides the political differences to a fairly important extent. MR. FREEMAN: I think perhaps I might add that this does not -- I agree -- this does not impede the normalization of relations between Iran and Saudi Arabia in particular, but it is a constraint on Saudi policy because the Saudis will always defer to the United Arab Emirates on the extent to which they should normalize relations. But it is a minor constraint, not a fundamental impediment. I agree. Sir? Q -- from Farsi Service of the Voice of America. Thanks very much for your opening statements. And it was mentioned, and I think it's a very important point regardless of what regime is in Tehran for the U.S. and Iran and their relations. But I hear here is basically the talk and approach between the Iranian regime, whoever they are, and the American regime or the American people. But I don't see any mention of -- in this equation mention of the Iranian people and Iranian public opinion, which recently is affected strongly by the student movement in Iran, that they have been a vocal and courageous opposition to the regime, and so on. I would like to see how this can be brought into your equation and paid attention to for the sake of future relations. MS. MALONEY: All right. I always kind of shudder at the notion of Americans trying to interpret Iranian public opinion. We haven't done the best job of that over the past 50 years or so. And even with the opportunity occasionally to get over and speak to Iranians, I think that we don't fully understand the wide range of different opinions both on their own political system and on the future of U.S.-Iran relations and what the best way to proceed is. I agree with your point that, you know, certainly that Iran has a disproportionately young population, three-quarters of whom are under the age of 25 -- all those people born, really, since the -- born and educated since the revolution, highly literate, highly active, with limited and frustrated economic opportunities -- it's an issue of, I think, a great deal of concern for anyone who, from this position, is looking at what the U.S. should do toward Iran. I'd also just like to point out -- it's something I raise fairly often -- which is that I think, as unsettling as the protests were in July of 1999, and as clear as it was that so many young people in Iran are frustrated with both the situation of the government and the position of the government, particularly on cultural issues, on their ability to kind of move freely in society and intermingle between sexes, I think that what was more interesting to me was that about a year and a half earlier there was a much larger protest in Iran of sorts, and that was the reaction when Iran qualified to play in the World Cup soccer tournament. And in that case, about a million Iranians came out in the streets of Teheran, and more in a number of other large provincial cities, to celebrate and to dance. And what this says to me is that young Iranians are frustrated, but they're not ready to go out in large numbers in order to oppose the regime. They're eager for opportunities to engage with their counterparts, and they're eager to make their voices heard. But 15,000 people protesting in July of 1999 versus a million coming out to celebrate a soccer match -- I think it tells you something about the state of mind of young Iranians. But I take your point, and I think that once again this really just mandates the reason why we should be talking to Iranians, because, frankly, we have very little way of interpreting what the opinions of young Iranians are from this standpoint. MR. FREEMAN: Both Ray Takeyh and then Geoff Kemp. MR. TAKEYH: Can I just -- this gives me an opportunity to dissent from some of my panelists, which I think is my statutory role here. So I'll just try to live up to it. One of the things that was said, I think, by Suzanne and to a certain extent by Geoff, is that we should deal with an Iranian irrespective of who's their leadership. See, I actually disagree with that. We do have an interest in who prevails in Iran internally. We get a better deal on all issues of concern, the holy trinity -- weapons, terrorism, and Israel -- from the reformers, who are more pragmatists than the hard-liners. So the notion that you hear from some people, that we should deal with Iranians, there are no reformers, there are no conservatives, there are just Iranians; we can deal with all of them, any of them, at any point, at any time -- I actually dissent with that. There are some factions and people within Iran that we can get a better deal from than others. So Iran is not an undifferentiated concept. There are factions within it that I think are more appealing, and we can deal with them more so than others. I think, should there be -- and I don't anticipate that -- there's sort of a conservative backlash and takeover of power in Iran, U.S. policy toward Iran is going to be measurably altered, and if it's not altered, that's malpractice. So in that particular sense, I'd like to register my dissent and now Geoff is going to register his dissent on my dissent. (Laughter.) MR. FREEMAN: Thank you. Geoff? MR. KEMP: Well, I don't know what you're dissenting on, because I don't disagree with that. I said that, you know, we may have to be prepared to deal with pragmatists on both sides because, after all, U.S. interests are important in this. I would agree that what sort of government you have in Iran is terribly important for the people of Iran, and younger Iranians I talk to are worried that we will sell out aspirations for reform if we can deal with some pragmatic conservative who lays off Israel but cracks down on reform. And to that extent, the analogy which you were the first one who first brought up, Ray, with China, is a very ominous one for a lot of young Iranians. And I think we should bear in mind that the young reformers, the students one meets, improving relations with the United States is not their priority. It's not even their first, second, third or fourth priority. Their priorities are domestic, political and economic reform, and we come way down the list. Q Thank you. MR. FREEMAN: Sir? Q Stan Crawford, Business Week. If the next administration does abandon a policy of containment and tries to move closer to Iran, is it possible that that could used as leverage with the Europeans to get greater containment of Iraq, essentially arguing, If you give us Iraq, we give you Iran, and it may have a long-term greater interest? MR. FREEMAN: Richard, would you like to take that? MR. ROTH: (Chuckles.) I guess I'll have to. It's hard to imagine what greater containment of Iraq would amount to at this point. The sanctions on Iraq are very, very tight. The only things that are going in are humanitarian flights, some quasi-commercial flights. But the control over all the resources that have been generated by the food-for-oil program are totally controlled by the U.N.; who gets the contracts are controlled by the U.N.. There are lots of stories in the press about changes on the margins on our Iraq sanctions policy, but to try and get the Europeans to somehow tighten sanctions on Iraq in exchange for an easing of containment on Iran, there's not much there to deal with. I'd also like to comment on engagement with Iran. I think that it's such a hot button issue within Iran, as described by some of the speakers, that whether we engage with the moderates or with the conservatives, it greatly taints them domestically. And what Susan had said in terms of dealing with what our interests are in engaging with any regime in Iran is what we should be focused on, whether it's conservatives or moderates. And to the extent that there is some reciprocity on the part of the conservatives, as we engage with them, this will have domestic consequences, I believe, particularly in their relationship with the moderates. And therefore they have been very, very, very reluctant to engage with us up to this point, and I think that we're going to have to put a lot more on the table that's attractive to make it worth their while. I also agree with what Geoff said, that it's going to be very difficult to engage prior to the elections being held in May of next year. So it's a tricky formula out there. MR. FREEMAN: I guess I feel obliged to add a question to the question, and why, Stan, do you imagine that the Europeans would pay us anything to allow us to compete with them in the Iranian market? (Laughter.) It doesn't seem to me to be very appealing. Sir? Q I'm George Gedda of AP. Also a question for Mr. Roth. China and North Korea are the major suppliers of missile technology, and increasingly both countries have indicated a willingness to stop such exports to Iran. Is there any analysis that you could us as to how this will affect Iran's missile development program? And one of the reasons I ask this is because we were just told by Geoff Kemp that we can't stop the Iranians -- MR. ROTH: Clearly, China and North Korea see it very much in their own interests, in their relationship with us, to modify their policies towards the export of missile technology to the region. However, with respect to the Iranian missile program, the major assistance is coming and continues to come from Russia, and that has not changed at all. Most of the technical support, most of the technical data still continues to come from Russia, and that's been a subject of a lot of bilateral discussions with the Russians. So with respect to the decrease or elimination of aid from China and from North Korea, it may slow down some aspects of the Iranian missile program, but the continuation towards achievement of Shahab-3, 4, 5, is still very much on track, thanks to Russian assistance. MR. FREEMAN: Geoff, do you want to add something? MR. KEMP: Well, yes; yes, just to agree that it is the Russians that are the real problem. Although, you know, I would not rule out that if our relations with China were to deteriorate, particularly over the issue of Taiwan, I mean China is quite capable of reversing itself on the missile export issue or, indeed, on the export of nuclear materials. They've been cooperative with us because it's in their interests to, but then, you know, U.S.-China relations are going to be a red button issue for the coming administration, and China has growing interests and energy needs in the Middle East. So this is sleeper issue that we should bear in mind for the future. MR. FREEMAN: Just to buttress that, this past summer, the Chinese moved to link their nonproliferation policies much more closely to U.S. arms sales to Taiwan than they had in the past. And many believe that this issue will indeed become a matter of confrontation and difficulty for the incoming administration. I think I recognize you, but would you tell us who you are, please? Q -- from the Washington Institute for Near East Policy. Several speakers referred to the potential for cooperation on the common interests that the United States and Iran have on a variety of issues. On several of those issues, it would seem that third countries also share an interest that the United States and Iraq have. I'm think, for instance, of Afghanistan, where recently Russia and the United States have been cooperating at the United Nations in preparing a Security Council resolution to sanction the Taliban, and at the same time, of course, Russia has quite a good relationship with Iran. And I'm interested in the comments by the speakers, particularly Mr. Roth, but also the others, on what is the potential for asking third-party countries to help improve U.S.-Iranian dialogue on these issues of prominent concern? To be more blunt, does Russia have an interest in seeing U.S.-Iranian relations improve and is it prepared to do anything about it? Does the European Union actually have any interest in seeing U.S.-Iranian relations improve, given the competition thing and how, after all, forcing those relationships gives a commercial advantage to European companies in Iran, of course. And are European nations prepared to do anything to help improve U.S.-Iranian relations? This seems to me odd, and I have seen no such action. MR. FREEMAN: A very interesting question. Richard, would you like to start with it? I suspect others -- Ray, you may, and Geoff in particular; Suzanne, you may also want to comment. MR. ROTH: As I said in my previous remarks, we don't believe intermediaries can have quite the same impact on state-to-state relations as direct contacts. There have been some small, quiet, private efforts, sometimes through the U.N., to find a way to initiate the kind of dialogue Patrick is referring to, particularly on issues of common interest such as Afghanistan in particular. And that's why the secretary participated in the 6-plus-2 meeting on Afghanistan with the Russians and the Iranians back in September. We do have an interest in finding common policy areas of interest, but at this point we prefer very much to do it directly rather than using third parties, believing that we can communicate our message much more directly to the government in Iran as a means of initiating that dialogue. MR. FREEMAN: Ray. MR. TAKEYH: One of the things that you always hear is "direct U.S.-Iranian official dialogue." I'm not quite sure what we're going to say to them if we meet them at a hotel room in Zurich. I mean, they know what our position is and we know what their position is. I mean, it seems to me the dialogue -- direct official dialogue is not helpful unless there is some degree of revision of our policy and some degree of revision of their policy. If an Iranian diplomat and an American diplomat get together in Paris, in Geneva, what are they going to say to each other? The Iranian will say, "Well, we have these objections", which we know what they are, and the American will say, "Peace process, weapons of mass destruction, and this." It seems to me that the third parties can help in one sense, is we say to Iran, for instance, that we will lift our objections to their participation in multilateral financial institution if you modify your assistance to Hezbollah in such a way. There has to be some degree of prearrangement before this mythical dialogue, which is one of the accepted axioms, and I'm not quite sure what purpose it would serve in absence of some degree of revision in our mutual stance. MR. FREEMAN: Geoff. I just note, Patrick, that as the Afghan example demonstrates, finding issues where you do have common concerns and conducting a dialogue in the presence of others who, to some extent, share those concerns, does have the effect of drawing Iran out and offering a less contentious atmosphere in which the two sides can, in effect, indirectly explore their common interests. This might be the case where Geoff's suggestion of a new look at the Caspian has to come about. It might be that such a dialogue with regard to the Caspian or the Caucasus or Central Asia might also engage you as an Iranian interest in not terribly contentious ways. But Geoff. MR. KEMP: Well, I only had one comment on Patrick's interesting remarks. Perhaps because I was born in Europe I have a slight reluctance to lump all Europeans together, and I will guarantee you that there are extremely nuanced differences between France, Germany, Britain, Italy, Denmark -- it doesn't matter who you're talking to, each of these countries have a very different approach to Iran, although there are some common EU concerns. But I think that you're a little too cynical, Patrick. I think that as our chairman pointed out, if indeed the Europeans do become more involved in the peace process, which I think is probably inevitable, they're going to have a greater stake in curbing Iranian excessive behavior, and particularly excessive rhetoric. And whether this will be all the Europeans, whether it will include the French, I'm not sure, but I do think one has to be a little nuanced when discussing the cynicism and commercialism of Europe. I think there are other factors at work here as well. MR. FREEMAN: Suzanne? MS. MALONEY: Very quickly, and that is just that Patrick's cynicism is probably echoed in Tehran, where many people still believe that in fact the British engineered the entire revolution and have continued to manipulate events in order to work to their own commercial advantage. But I'd just like to point out that in fact these issues of common concern, as important as they are and as potentially useful as they can be, I think we also have to acknowledge that we don't necessarily have identical ultimate interests, both in Afghanistan, in Iraq and some of the other areas where both the U.S. and Iran could potentially work together. Both the U.S. and Iran are looking for a more stable Afghanistan, and yet our ideas of what ultimate stability looks like are probably quite different. Moreover, I think that the Iranians could conceivably benefit from a situation in which Afghanistan is not available as a potential transit route for Central Asian or Caspian gas to South Asia. So we have to acknowledge that there are some common interests that in fact create some opportunities for discussion, but not to necessarily presume that our ultimate end goals are identical. Q Davis Robinson. [TAPE CHANGE.] -- ongoing, face-to-face process involving the U.S. and also Iran. And at this time, most of the 2,800 claims have been satisfactorily resolved, except for some of the very large intergovernmental claims, such as the foreign military sales claims. I'd just like to ask the panel, what is the role of this in the overall relationship? And why could it not serve as a useful vehicle at the margins since it is there and there are ongoing relationships on a daily basis? MR. FREEMAN: Richard, I think that question from the Department of State's former legal adviser is for you. MR. ROTH: We have been looking at the claims tribunal as an issue that perhaps could be on the new administration's list of first issues to address. The question, I think, that the new administration will have to deal with is not the piecemeal kind of approach, case-by-case, that we've been practicing, but a global settlement, which could have tremendous political implications for both sides. And whether the new administration would be prepared to enter into a global settlement or even raise that as a prospect with the regime in Iran as an issue to be discussed, I think, could have some promise for opening other avenues of dialogue. We're not there yet, but it is an idea that's under consideration. MR. FREEMAN: Since you have introduced it -- sir, if you would just wait one second -- I'd like to ask other members of the panel to comment on the concept of global settlement as a large package as opposed to an incremental approach. This is an interesting notion. Is it a realistic one? MS. MALONEY: The issue of the claims has been, as you noted, ongoing for some time. And I think that there's been a lot focus, particularly since the secretary's comments in March of this year in which she raised the issue, talked about the need to expedite a settlement. Obviously there are political constraints from both sides. From the U.S. side of course, any appropriation for such a settlement is going to be politically controversial. It's going to evoke some of the lawsuits -- although there have been some mechanisms enacted by which to settle those -- filed by the families of victims of terrorism in Israel and some of the former hostages' families. I presume that there are more of these sorts of lawsuits coming. And as we continue to see what is being called by some in the administration as "diplomacy by trial," I think that we're going to find that this if fairly complicated to enact from our side. From the Iranian side, the difficulty is going to simply be that there are very inflated notions of what in fact this settlement might entail. I've heard numbers that are as large as $32 billion as potential sums that are owed to Iran, and that's if you're calculating interest, which, of course, in an Islamic economic system, you might not. (Laughter.) But the numbers that have been floated from this end have been as low as a couple of hundred million dollars. So I think that inevitably, you know, this is one of the issue that the Iranians recognize is to a certain extent a bargaining chip in their hands, that when they inevitably accept any kind of settlement, it makes it more difficult for them to raise this issue as a potential complaint against the United States and it opens them up to criticism from the factions within Iran. So I suspect there will be some continued stalemate. But, as Mr. Roth said, it would certainly move both parties, I think, very much forward. It would have a tremendous impact in Iran, where, you know, the issue itself is not fully understood and is considered with a great deal of resentment publicly. MR. FREEMAN: Anyone else on this? MR. KEMP: She said it all. MR. FREEMAN: Well, said. Sir. Q -- from the Energy Intelligence Brief. I have a question for this panel generally concerning the Iran-Libya Sanctions Act. It's schedule to expire next year. I'd like to hear the general opinion about the likelihood of that legislation actually being renewed. And secondly, when that legislation expires, the possible policy for eventual melting away of direct U.S. sanctions against Iran concerning the oil and gas industry? MR. FREEMAN: Recognizing the constraints under which Richard must inevitably operate in addressing this kind of question, I'd like to ask him briefly to respond, and then Ray. MR. ROTH: Legislation is still the prerogative of this part of the government. The administration, as of today, has not given consideration to whether to extend or to seek the cessation of this legislation. We are in the process of carrying it out to the letter on the executive branch side. The Hill has not begun to think about this yet, as far as I know, other than to say that it's coming up in August of next year. They haven't even decided who's going to be on what committees yet -- (laughs) -- in the Congress. Therefore I think it's probably premature to even begin asking the question about what's going to happen in August. Clearly, there will be a tremendous amount of consultation between the Hill and the new administration on this issue and how it plays into our overall policy on Iran and to the region as a whole. So we'll get there when we get there, but so far, it's much to early to predict anything. MR. FREEMAN: It might make a difference if the new president has a background in oil and gas. (Laughter.) MR. ROTH: You mean the vice president. MR. TAKEYH: Yeah, I never thought that ILSA was a good idea; I never thought it was a helpful legislation. And I don't think all the lawsuits that are being filed against Libya and Iran are necessarily helpful in terms of expediting relations between these two states. Having said that, I think most of the problems that Iran-U.S. economic relations have have to do with executive order. And I'm not quite sure if they're going to continue, not knowing who the president is. I suspect that given the fact that the issue of Iran is so mired in domestic politics, you may see -- and this is pure speculation -- ILSA lapse. The proponents of ILSA, who never really wanted Iran and Libya lumped together, have a more targeted sanctions against Iran and Libya separately. But, you know, it's an unfortunate legislation, but, you know, most unfortunate things persist in some form. MR. FREEMAN: Sir? Q Thank you. This is for Ms. Maloney. For the last three years I've had this image, or rather a reverse image, that what's happened to the Shah these many years ago was being reenacted in the opposite direction, of course, with the advent of President Khatami. But it looks like the movement is not that strong. It doesn't have the same strength or the same enthusiasm, the same fervor. So my question is, what is the balance of power, not on the political level, I'm not talking politics; I'm talking about the opposition within the Iranian population. MS. MALONEY: Once again, I don't know that I can be necessarily the best interpreter of what the entire Iranian population of 67 million-or-so people are thinking. I think that what you raise is interesting; the parallels between what happened in 1978 and '79 and the current period have been -- there were certainly some -- there was some attention drawn to those parallels in July of 1999 when the protests spilled over into Tehran and also Tabriz University and some of the other smaller university campuses. And I think that we could in fact envision a scenario by which several relatively minor incidents build up a certain amount of -- a cycle of mourning, a cycle of violence which escalates and which engages the political elites at a very intense level. And so I think that's the parallel that I see. In terms of a concerted movement, I think that what's been happening in the past three years, and what happened in the mid- to late-'70s, there are some parallels, but in fact because you have a very different role for the clergy -- in the late '70s they took advantage of a movement, which was begun by students and, in fact, pioneered by people with probably a bit more liberal bias and intentions than what inevitably occurred in the creation of the state itself, but they were well positioned to do so because they had -- to some extent had -- were the only people who were left in a position to talk to all the population. There was not a great deal of civil society developed at that point. I think what you have now is really this enormous generational change in Iran whereby you have most of the population who look at the world very differently with a very different set of understandings of both their own lives and the way that their country ought to be dealing in the world. And so in that sense, I think it's much deeper and much stronger, perhaps, than even that very strong feeling which was felt by so many Iranians in the late '70s. I think it's almost intrinsic that most young Iranians believe that they should have some say in their government; that they should be able to walk freely on the streets without being harassed by religious police or self-appointed guards who tell them what to wear and who they can walk with. In terms of the political movement, I've been impressed, in fact, with how tactically wise the reform movement has been. Obviously, they are completely, I think, flummoxed by the backlash and the well-planned backlash that took place by the conservatives in the past six months. I think what you're seeing over the past few weeks, some of the statements of President Khatami, the attempt to draw, in fact, some attention to the constitutional problems and perhaps some systemic reform, as opposed to mere legislative or political reforms, demonstrates a kind of -- the reform movement is learning from its mistakes. I think you're also seeing that they're being a little bit more judicious in the way that they approach some of the political issues. They went after this press law in August kind of, you know, full forces, and recognizing that in fact the conservatives were never going to allow them to pass such a law. What you're seeing now, and particularly on some of the legislation that's being considered, is that they're going at a much slower pace. They're trying to work with the Expediency Council, with the Guardians Council, some of these bodies that can stymie the legislation. And they're trying to work with conservatives to build some consensus on some of the political crimes and some of the other issues, the ban on law enforcement going into the university dorms. So I think that, you know, this is a long-term phenomenon in Iran. And you know, it's very difficult to necessarily compare it with what went on before. MR. FREEMAN: Ray Takeyh? MR. TAKEYH: One of the most peculiar things about Iran's domestic politics is that you have a very peculiar impasse, in the sense that the reformers have electoral legitimacy and popular mandate, yet the conservatives have an institutional dominance. That, in and of itself, is not news. But I'm not quite sure how long this impasse can persist. I'm not quite sure how long this young Iranian population is going to invest its hopes in a democratic process that doesn't produce palpable results. You know, a potential reelection of Khatami is another mandate for incremental reform and more of the same -- one paper opens, 14 close. I mean, I'm not quite sure how much -- how long this process can persist. Eventually, I fear that this impasse can only be resolved through civil strife. I mean, everybody always says that Iranians don't have an appetite for that, but you have a situation where the popular will is actively obstructed by institutions in Iran, whether it's the Guardian(s) Council, whether it's this, whether it's that. And it's a very peculiar impasse, and I fear this resolution could come through some sort of a midwife, or it could be violent, in the long run. MR. FREEMAN: Thank you. Sir? Q Robert Freeman (ph), Baltimore University. A question for Mr. Roth. You mentioned that despite major American efforts, the flow of missile technology from Russia to Iran continues, the predominant source of this missile technology. A two-part question. Why has the U.S. been unsuccessful? And do you think the key reason that the Russians have been doing it in the face of strong American opposition, which has been going on now for a while, was because the Iranians have paid in coin by not really challenging loudly what the Russians are doing in Chechnya? After all, they've killed many more Muslims in Chechnya than the Israelis have killed in the West Bank or Palestine. MR. ROTH: I'll beg off on both questions. I'm not an expert on Russia. I don't know why the Russians continue to do it. There's been a great deal of effort, as you say, on the part of our Russia experts within the administration to persuade the Russians that it's in their own self-interest to stop providing this technology. Why the Russians continue to do it I don't know. And with respect to whether the Iranians are giving the Russians a bye on Chechnya, it doesn't seem as if the Russians are particularly sensitive to international criticism of their policy on Chechnya, despite much more important countries to them, such as the Europeans, voicing very, very tough criticism and threatening to impose sanctions because of their actions in Chechnya -- certainly far more than what the Iranians might be capable of. So to explain Russian behavior, you're going to have to talk to somebody, perhaps, like Geoff. MR. FREEMAN: Please. MR. KEMP: Well, you know, Bob Freeman knows more about Russia than anybody, so I don't know why he didn't answer the question himself. But let me -- as I understand it, there are three issues that the Russians are extremely angry with the Clinton administration about. One was NATO enlargement, which is still going ahead. Second was Kosovo. And the third is always the Caspian. I mean, as I understand, that is the third-most serious concern of Russian policy, and Mr. Putin is making a deliberate effort to restore Russia's power and prestige in the greater Caspian region. And it would seem to me that their strategy towards Iran is perfectly geared to doing just this, so that when we go into Moscow and put missiles at the top of the agenda towards Iran, I mean, we are in a very weak position, given all the other things we're doing that they don't like. And believe you me, when the new administration comes to grips with national missile defense, that will add a fourth item to the Russian agenda. So we have to give them something. We have to do a deal with them in order to get them to slow down. And it may well be that backing off some of our more strident postures in the Caspian, while perhaps not an ideal policy, is preferable than giving way on either NATO or Bosnia or missile defense. MR. FREEMAN: As a footnote, I, at the risk of offending powerful domestic lobbies, I would note that Russia and Iran have found common cause in the southern Caucasus, in a similar parallel approach to the dispute between Armenia and Azerbaijan. So it is not the case that they are completely divided, however different they may be ideologically and however different their historical roles in the region between them may have been. Q I'm Conrad Ziegler from SCIC. [Question inaudible.] MR. FREEMAN: Conrad, thank you. The Middle East Policy Council is very ingenious at raising money. We collect donations from virtually anyone who is willing to give us a donation, and I invite everyone in the audience, please, to write a check. But I confess, I had not thought of selling condos in the Lesser Tombs (ph) in this context, and I will now ponder that. Three issues that were raised: The Caspian actually I think we've talked about a bit, but Geoff, you might want to elaborate; Iran's nuclear power and weapons programs as a problem or an opportunity -- is Iran prepared to do what North Korea does, which is sell the same nuclear power program to the United States once a month; and finally the issue of conventional armament in Iran and more particularly, how that relates to efforts to contain Iraq under Saddam Hussein, might be usefully address. And who would like to start? Geoff, you were -- MR. KEMP: I will. MR. FREEMAN: And we'll cut off questions with you, sir, at the end of the queue. MR. KEMP: I've already mentioned my position on the Caspian, so I won't elaborate on that. On the nuclear issue, I think this is rather complicated, because if indeed -- if the Iranians on the face of it are honest and they really do want Bushehr for electricity production and they are concerned about the depletion of their fossil fuel reserves, then, you know, the sort of deal with the North Koreans, I think, is quite feasible. However, I think there's huge suspicions in the intelligence community that the Iranians are interested in nuclear weapons, and that therefore they are not going to be influenced by a deal like this. The one circumstance where I think they could be influenced is if there were a real economic downturn in the country, if the social conditions get much worse, if all these demographic numbers lead to riots in the streets and bread fall short because all the prices have fallen. I remember a year or so ago when there was a Middle East Policy Forum where we were discussing the destabilizing impact of lower oil prices. So, you know, things can go round in a different direction, and under those circumstances, and Iranian regime might be willing to consider that type of deal as a way out of its dilemma. I happen to have argued for years that we should be more laid back about Iran's purchases of advanced ground equipment, because A, it costs a lot of money that takes away from other things they could be doing, and B, they have a genuine national security need to rebuild their conventional forces. I would be very discriminatory though in looking at the list. And I would not want them to be able to buy open-ended numbers of advanced Russian fighters, particularly long-range fighters and sort of maritime capabilities that threaten us in the Gulf. But tanks, artillery, I'd be more laid back about that. MR. FREEMAN: Others? Ray. MR. TAKEYH: I'm not quite sure if the North Korean model is a healthy model. I mean, creating another tributary state for the United States. On the issue of nuclear weapons, maybe because I was at Berkeley with Ken Waltz, who used to say proliferation is a good thing, but I don't go that far. But I think we need to understand that there is nothing -- that the nuclear status quo is unlikely to prevail. In the next 10 years or so, other powers are going to join the nuclear club that began with the United States, Soviet Union, France, Britain, and it has just expanded. I think we should, just broadly speaking, conceptually, in war colleges and other modes, we have to understand the fact that eventually we have to go from prevention to containment of additional nuclear power states, and it seems to me Iran is in a strategic neighborhood where nuclear deterrence is most -- makes perfect sense for them. Now, as I said, maybe because I was at Berkeley with Walt, I think a United States that contained Stalin and Chairman Mao with nuclear weapons can contain Iran with nuclear weapons, but, you know, in the future, I believe that there will be more states added to the nuclear club, and that's just the reality of our situation, I think. MR. FREEMAN: Ma'am? Q I'm Nancy Matthews from Meridian International Center. Many of you have spoken there. I thought a woman's voice should be heard here. I would just like to say a few words about another aspect of improving relations, and that's something we do at Meridian also. We are now working on a very large and important project, and we have the support of a number of major corporations in doing this. I've been to Iran four times in the past year, and I'm about to go again. I can say I have met with clerics, I have met with officials, and I've been in the homes of artists from all walks of life, some of whom would support the Shah if they could, those who are conservative. And I have to say that every one of them has been enthusiastic about this sort of exchange. And I think maybe we shouldn't overlook this aspect of ways to get back into Iran, because it really affects the people. And I have found nothing but positive feelings about the United States across the board. [Balance of question inaudible.] MR. FREEMAN: Well, thank you. I think that is a very useful reminder of that dimension of our international relationship and its potential. Thank you very much. Q I'm Lee Slavit (ph) from CNN. This is a question for anybody on the panel. I guess this goes particularly to Mr. Roth. If we can move past the series of overtures between Iran and the United States, most recently in September when President Clinton and Madeleine Albright attended the same meetings as the Foreign Minister and President Khatami, there was no direct contact, and there doesn't seem to be much follow-up since then. So even if we do wait for the next round of elections in May in Iran, whose court is this ball in? Would it be the job of the next administration to reach out perhaps with this global sentiment that you say, or should we just wait for another message from Iran that they might be ready? And is it dangerous for Iran to be dictating the terms of a relationship with the United States? Thank you. MR. FREEMAN: Thank you. Others may want to comment on this very good question. MR. ROTH: I think in diplomacy, the ball is always in everybody's court, and Patrick alluded before to third parties who are interested in initiating dialogue between the United States and Iran. There are clearly people within the administration who also would like to do more than what we have been doing to initiate such a dialogue, and I suspect a similar sentiment as described by Susan also exists within Iran. How that comes about, I think, will be a subject of the new administration in terms of tactics; and then secondly, what such a dialogue might consist of in the early days of the administration. There is a possibility that one could take a minimalist approach, whereby deal with some of the irritants in the lead-up to a dialogue, some of which have been referred to by previous speakers such as the requirement for fingerprinting, cooperation on drug-trafficking, additional cooperation on the 6-plus-2 dialogue on Afghanistan. And then, beyond sort of a minimalist approach, one could even look at a more ambitious menu that would include some kind of adjustment in our sanctions on U.S. energy companies, an expansion of the people-to-people contacts that Nancy spoke about, renewal of trade in non-sensitive consumer goods and services, and even entertain the idea of the possibility of Iranian membership in the WTO. Clearly that would be a far more ambitious agenda, particularly in the first six months of the administration. How those get initiated I think will depend a lot upon the personalities who come into the new administration, and their willingness to use, at least in the first instance, private channels to initiate contacts. MR. FREEMAN: Anyone else? I think I would just comment that in an administration, the Clinton administration, which waited until December 2000 -- that is a month and a half before it went out of office -- to give a speech saying that foreign policy was important -- (laughter) -- the notable fact is that even this administration, with its general disinterest in foreign policy except in cases of crises, was willing to entertain the notion of a rapprochement with Iran. And, notwithstanding the Iran-Libya Sanctions Act and other acts of sabotage up here on Capitol Hill, it has to be said that the opposition to an opening to Iran was not very impressive. That is to say it is not -- what seems to be the legacy of the Clinton administration in its regard for the next administration is the demonstration that the price of doing sensible things that are in the American interest with Iran is not likely to be politically very high. That suggests to me that the next administration, in fact, will have an opening for the kind of incrementalist approach that was implicit in Richard's answer. Geoff. MR. KEMP: I agree with that and I think it's important also to look at the timelines. The new administration will take months, I would think, to get its act together; to do reviews, to get a team in place that's confirmed. This is useful because, in the context of Iran, there's no immediate crisis to deal with. Furthermore, as we've all said, that we should not really expect to do anything productive as long as their election campaign is underway. So I would say, you know, next summer, when ILSA has to be discussed, this would be a very good time for a new administration with a new Iranian leadership, or perhaps Khatami reelected, to consider bold initiatives, but not any time sooner. MR. FREEMAN: Ray, do you want to comment? Sir. Q I'm Jeff Whirl (ph) from the Naval War College in Newport. I have a couple of questions. First, Iran argues that the U.S. destabilizes the region by its presence, which is the exact opposite to what the United States argues, that we are there to stabilize it. And I have some insight from the Iranian press as to why they say that. But I just wondered how you would comment on the Iranian side of this argument that they -- that the United States, by being there in force, is actually destabilizing the region? My second question has to do with economic -- the whole economic setup of Iran today and how that affects political change. And I remember reading that this class calling itself the Bazari (ph) were critical in hoisting Khomeini into power, and I can say that sort of paradoxically. I'm just wondering, who are the Bazari? Are they still around today? What is their role? And also, if you read the transcripts from the Majlis, you can read about the conservatives are always inveighing against consumerism, foreign values and the need for an Islamic economy. I'm wondering, how does that actually play out in Iran today? How are things structured? Is there a real attempt to implant an Islamic economy there? And how is that -- how will that play out differently in relation to, you know, essentially the American economy and the world economy? MR. FREEMAN: Two very interesting questions, which I will ask Ray and Suzanne to comment on, perhaps in that order since the first one was a request that someone explain the Iranian notion that the American presence is inherently destabilizing. MR. TAKEYH: If I can address the second of those questions, the problem with Iran's economy, as I see it, is that it is one of the last places where an anachronistic socialist ideology still has some value. And what's most disturbing is it has value among the reformers. They are the ones that propound a concept of social justice and tend to be dubious of privatization efforts. So those who are -- ironically, are for political liberalization are most insistent on command economy as a means of maintaining their concept of social justice, and so on. And this is where we are in Iran. Khatami -- among his most ardent supporters are the same people that want to maintain their hold to this ideology, which everywhere else has been repudiated. And there are people on the conservative political camp, hard-liners, who are actually more so, more lenient on economic issues. Does the United States destabilize the Middle East? No, I would say. But, you know, I don't have an armada hanging around 60 miles from I live. Actually, I do, but it's a benign one! MS. MALONEY: Thank you for asking about the economy, that's what I do -- I have done a lot of work on, and I think just made reference to it because, of course, the way the economy goes in Iran is very much connected to what will happen to the political future of Iran. It's a complicated and heavily state-dominated economy. As Ray indicated, there is still a very, I think, profound commitment to ideas of social justice that have some roots in a kind of Marxist ideology that was infused with Islamism during the 1970s, but also had some roots in traditional interpretations of Islamic doctrine. There is a countervailing tendency, as you suggested, from Iran's traditional private sector, which is found in the bazaar, which is only to say the market, and that is that in fact Islam is probably as explicit and as protective of any religious environment towards the private sector and towards the operation of a free capitalistic economy. So that for at least the first 10 years of the revolution, in fact, these were some of the major ideological debates that dominated and, in fact, frustrated the ability of the parliament and the government as a whole to accomplish anything. The way that the economy has evolved, however, is perhaps less akin to anything you might find in a classical Islamic situation than it is to a situation of a devolving command economy. And to that instance I would draw your attention to the parallels with Russia, where you have a kind of state elite which -- and a privatization process which has enriched the class of crony capitalists. The same thing has occurred, to a large extent, in Iran with the limited privatization that has taken place, where you have an entrenched number of individuals and institutions. I don't think that I would associate them strictly with the conservatives, although they're people who have a long background and a long history with the Islamic Republic, and so in that sense, they might be considered a bit more conservative. But they're also people who are pragmatists and who have been, in fact, from our interpretation from Washington over the years, been some of the prime people who we considered as potential interlocutors in some sort of a dialogue. These are individuals who have very pragmatic notions of what is in Iran's national interest, and that is simply what is in their own personal financial interest. So one of the difficulties in the whole reform process, which I really didn't get into, but I think is probably the largest and, in fact, the most profound difficulty, and one which really warrants, I think, more American attention, is that any political reforms are in fact incumbent upon making economic reforms. And the same is true -- no economic reforms can really be undertaken without a commitment to the rule of law and to some transparency in the way that the government operates. The difficulty is that the economic reforms are perhaps more sensitive and more painful than even some of the political reforms that get into religious doctrine, and that is, how does one raise the price of bread, raise the price of gasoline, two commodities which are heavily subsidized and consume billions of dollars of the Iranian budget each year, without provoking popular unrest? And this is, I think, the really profound dilemma that Khatami and the other reformers have, whatever their economic ideology. If you begin to undertake those sorts of steps, which are necessary to creating a more efficient economy, you're inevitably going to evoke popular protest, regardless of any political predisposition of the population as a whole. No matter how reformist the people are, if they can't afford to buy bread, if gasoline doubles in price -- and this is a country in which cars have -- dominate -- it makes their lives, their day-to-day lives, very, very difficult. So I think that in all of this, you know, we need to abandon our notions that reform is simply a process of creating a democracy and snapping our fingers and seeing a new Iran overnight. It's going to be a very long and slow process, and that is, again, why I think that a more ambitious American approach might pay dividends. MR. FREEMAN: With that very sound hope, we come to the end of today's program. I would like very much to thank all of the panelists for what I think has been a discussion that has always been thought-provoking and lively and sometimes brilliant. And I would also like particularly to thank Richard Roth and his boss. The assistant secretary of State for Near East is, I believe, traveling. He is the acting assistant secretary. And for a Washington official to devote an entire morning to listening to the opinions of others and the questions of the interested public is to demonstrate a level of humility and curiosity that is all too rare. So I would like to ask all of you to join me in giving a hand to the panelists. (Applause.) And finally, I will note that, as is our custom, the Middle East Policy Council will shortly put an unedited transcript of today's session on our website, which I invite you to view. And of course an edited version of today's discussion, including the very helpful questions which were asked by all of you, will appear as the lead item in the next issue of Middle East Policy. I hope you've found today as stimulatin