MS. MALONEY: Before we begin, I'd like to remind you that today's session will be considered on the record. I'd also like to ask you to please turn off your cell phones or silence them so that we can have a conversation that's both interesting and uninterrupted.

And one quick announcement: If anyone has left a pair of glasses in the front room previous to the meeting, Francesca in the corner has them and can return them to you immediately.

We're here almost 25 years to the day after Iranian students seized the American embassy in Tehran, igniting a standoff that lasted 444 days and forever changing the nature of the Iranian Revolutionary state, the American-Iranian relationship, and some might argue, politics across the Western world.

Since that time, the Islamic Republic of Iran has confounded American policymakers and analysts alike. To decipher the conundrum that is Iran, we could have no better guest with us here today than Dr. Kenneth Pollack, research director at the Saban Center of the Brookings Institution and author of the new book entitled "The Persian Puzzle."

I apologize that we don't have copies on sale up front here today, but I'm told there's a bookstore, Shakespeare's, just a few blocks away -- (laughter) -- and you could all find it at amazon.com or barnesandnoble.com.

You have before you Ken's bio, which lists some of his experience at the Central Intelligence Agency, the National Security Council, and of course here at the council, but as some of the conversation before today's meeting reminded me, Ken is perhaps best known for his previous book, entitled "The Threatening Storm," released just about two years ago, that analyzed the threat posed by another Middle Eastern regime antagonistic toward Washington and embroiled in conflict with the international community over allegations of weapons of mass destruction development. "The Threatening Storm" made a very compelling case in favor of the use of force to contain Saddam Hussein's Iraq.

So in order to open our conversation today, I'd like to ask a question that I think is probably on a lot of people's minds here today and ask Ken just to speak to us a little bit about the differences that he sees between the challenges posed by Saddam Hussein's Iraq and the challenge posed by the Islamic Republic today, and to explain a bit about the set of policy proposals that you outline in your new book to deal with Tehran.

MR. POLLACK: Thank you, Suzanne.

Before I answer the actual question, let me start by saying what a pleasure it is to be back here at the council. It's always a treat to be in front of such an informed and important audience as this, and also say what an honor it is to be sharing the stage with Suzanne. Most of you probably don't know Suzanne, but you will. She is one of my generation's best Iran experts, and it really is a treat to be up here on stage with her.

So with that thoroughly disarming remark -- (laughter) -- let me answer your question. I think it is a very important one, because I think superficially it's easy to make comparisons between Saddam Hussein's Iraq and the Iran that we face today. Both were in some way, shape or form trying to acquire weapons of mass destruction, although obviously Saddam didn't turn out to be nearly the threat that I and virtually everyone else believed him to be. Both were supporters of terrorism, although in point of fact, the Iranians are far worse in that category than Iraq ever was. Both have pretty bad human rights records, although there Saddam took the cake compared to the Iranians. Both of them pursued an anti-American policy. So there are some broad similarities.

For me the most important difference though between the two countries right now is what we understand about their intentions, why the Iranians are trying to acquire nuclear weapons as compared to with what we knew about Saddam, what we should expect them to do with them.

In the case of Saddam Hussein, we had a ruler who wanted nuclear weapons to enable aggression. This is what we understood about him, and everything that we've learned since he's been in captivity seems to support this. He believed that once he had nuclear weapons, this would deter the United States and allow him to do whatever he wanted in the region.

In the case of Iran, as we understand their thinking, they have a different set of incentives. Now these are not entirely alien to Saddam's thinking either, but the Iranians, as best we understand it, don't have that key goal of acquiring these weapons to enable aggression. As best we understand it, their goals are principally twofold.

First, defensive. The Iranians are paranoid. Now, in many cases the paranoia is justified. That said, in many cases the paranoia is justified because they've created the very enemies that they're now afraid of. That said, they do have great concerns. First, at the top of their list is the United States. They believe that we are their implacable foe, that we will stop at nothing to destroy their government, to take over their country, to do all kinds of other nefarious things to them.

And think if you were an Iranian. Right now they are surrounded by the United States. There are U.S. troops in Afghanistan, in Pakistan, in Iraq, in Central Asia, and the 5th Fleet sits off their southern coast in the Persian Gulf. It's not hard to sit in Tehran and see yourself as surrounded by an enormous American military machine.

Second is Israel, but here I'd put Israel a very distant second. The Iranians rhetorically make a great deal about Israel, but in practice Israel is much lower on their list of concerns. That's not to say they haven't done some terrible things to Israel over the years; there's no question. They support Hezbollah. They support Palestinian Islamic Jihad. They have been instrumental in derailing the peace process at different points in time. But for them, Israel is a secondary threat compared to the United States.

There are other threats out there. At some point, they will once again be worried about Iraq, with whom they have fought a long war in the 1980s, about whom they still have residual concerns. And then of course there's also Pakistan, nuclear-armed and unstable government, a Sunni government as opposed to Shi'a Iran. There are some lingering fears there as well.

In addition to these strategic concerns that Iran has, there is also an element of prestige. The Iranians are not exactly shy and retiring. They believe that they are the heirs to a great civilization, which is undeniably correct. They also believe that they ought to be one of the foremost powers in the world, and they see nuclear weapons as being a critical element in obtaining the prestige that they desire. They want to be a member of the nuclear club because they want to be a first-rank power.

So that's why they're trying to get them.

That said, just to kind of finish up, that sounds like a fairly benign list of reasons on Iran's part, and I think for the most part it is. And that leads me to one of my conclusions, which is while I'd really prefer the Iranians not have nuclear weapons, I think at the end of the day if we are forced to do so we probably can find a way to live with them. That's a driving element in my own thinking about Iran. But let me temper that by saying -- reinforcing the "I really would prefer that Iran not get nuclear weapons," and let me give you two reasons why.

First, while this regime in Tehran has not demonstrated the same degree of recklessness as Saddam Hussein, they are aggressive and they are anti-American. They define their foreign policy frequently in opposition to the United States. Oftentimes, whatever it is that we want, they reflexively want the opposite, and they have not been terribly bashful in pushing it. They have mounted terrorist operations against us in the past. They have tried to overthrow governments who we supported in the region. They have tried a whole series of really nasty tricks to try to undo whatever it was we were trying to do, drive us out of the region, hurt our friends.

And what's more, you can't be entirely certain what this group will do once it acquires nuclear weapons. As I said, the track record with this group is pretty good. What we've seen from them over the past 15 years, since the death of Ayatollah Khomeini, is a group that is, as I said, aggressive and anti-American, but prudent. Whenever we've pushed back, they've given ground. Whenever there was a real threat against them, they would reverse course. All of that suggests a prudence which wasn't there in the case of Saddam Hussein.

But the problem is, nuclear weapons have a bad habit of changing things. Sometimes nuclear weapons change things all for the good. Sometimes reckless governments get nuclear weapons and suddenly they change and they become much more responsible. You could make that argument about, for instance, Russia, for instance about China. On the other hand, we've seen other occasions where governments became more reckless when they acquired nuclear weapons, where they believed that once they had nuclear weapons they were effectively invulnerable, and therefore they could embark on more aggressive behavior.

Pakistan, I think, is the best example of that, where the Pakistanis wanted the nuclear weapons to deter India, but once they go them they suddenly decided that they now had the ability to deter either an Indian nuclear or conventional attack, and that allowed them, in their own minds, to be much more aggressive at the non- conventional level. And there was a straight line between Pakistan's nuclear test in 1998 and the 2000 Kargil crisis with India, which almost led to nuclear war between the two. That's why, as I said, I'd really prefer that the Iranians not get the weapons.

MS. MALONEY: Let me just test you a little bit on this idea of living with a nuclear Iran, which you've suggested both here and in the book as something that we can at least envision, of course. President Bush has said that we cannot and will not tolerate Iranian crossing of the nuclear threshold. Do you think, in fact, we can prevent this? And do you think, for example, the arrangements possibly negotiated this weekend or certainly on the verge of being negotiated between the Europeans and the Iranians is one step in the process of actually precluding the Iranians from crossing that nuclear threshold?

MR. POLLACK: A lot in there. Let's see, where to start? I think probably the easiest place to start is with the recent developments, and let's take that and blow that up beyond that.

I think the devil is very much in the details with the Iranians, and I am very much waiting to see what it is that the Europeans have agreed to.

I do believe that there are probably ways that we might get the Iranians to turn off their nuclear program, and maybe even get them to diminish or conceivably even discontinue other things that they do that we dislike, like their support for terrorism, like their violent opposition to the Middle East peace process.

That said, it's going to be very difficult. In many ways, these are core elements of Iran's foreign policy, and we shouldn't kid ourselves that this is going to be something easy to do.

That said, Iran has a number of different priorities. For many Iranians, nuclear weapons are important. In fact, if you polled most Iranians, in the abstract, most Iranians will tell you yes, they would like to have nuclear weapons, because they do see themselves as threatened and because they do believe that they ought to be a first- rank power and that nuclear weapons are part of that. But they'll also tell you that the country's economic health and its political stability are also crucial to them. And different Iranians rank those in very different orders.

And in fact, today, unlike in totalitarian Iraq, in Iran, there is a real debate as to which the priority to be, whether nuclear weapons are more important than economic rehabilitation.

And they recognize that one of the most important things that Iran needs is greater connectivity with the rest of the world. They desperately need to be integrated into the international economy. They need aid, they need trade, all of that, so that they can stabilize their economy, help deal with their massive problems in terms of unemployment, in terms of inflation, all of the other attendant problems that go with it.

So there is a real debate out there, and the fact that you do have Iranians who will say, "The economic issue is more important to us" opens up the possibility of moving Iran in a different direction.

I think what the Europeans are doing is trying very hard to appeal to that, to say, "We're going to give you all the economic benefits that you want if you move in this direction." And I think that that can be part of a larger approach to Iran.

The problem with the European approach has been that they have never, ever indicated to Iran, they've never, ever made it clear to Iran that if they go in the wrong direction, they will be denied all of the benefits that they look for and that in fact the Europeans will be willing to join us in putting pressure on Iran in the economic arena. And this, to me, is the great tragedy of the 1990s, which was that the United States had a policy of all sticks, no carrots. Whatever it was, we just beat the Iranians, and when they did something we didn't like, we just beat them harder.

The Europeans had a policy of all carrots and no sticks. Whatever it was the Iranians did -- good, bad, indifferent -- the European response was always the same: give them more aid, give them more trade. The theory behind it, which I honestly could never really believe that the Europeans believed, was that at some point, the Iranians would be so fat, dumb and happy, they wouldn't bother to continue with these policies that we found abhorrent.

Now of course the problem was that by moving in these two completely different directions, it allowed the Iranians to play one against the other. They were able to play us off against the Europeans, and as a result, neither ever took traction. And my own feeling is that what the Europeans are doing -- it's mostly more of the same -- it could work, though, I'd like to believe.

I think the best chance that we have is if we were actually willing to sit down together and to work out a combined policy, carrots and sticks, where we gave the Iranians two difficult opportunities: one, a positive path, a path toward greater economic connectivity with the rest of the world, toward greater political and economic integration, where each positive step that they took was rewarded in some way, to show them the benefits that would accrue, and all of this laid out ahead of time, so that there was no doubt in Iranian minds that there was going to be a pot of gold at the end of this rainbow; at the same time, the Europeans need to be able to sit down with us and say, "If the Iranians aren't willing to move in this direction, if they do continue to move in this path that none of us want them to move in, toward pursuit of nuclear weapons, toward continued support of terrorism, that there will be incremental punishments, that we will slow turn up the heat on the Iranians to show them that there is a price to be paid for moving in this direction."

At the very least, I think that doing so will help influence the debate inside of Tehran and give some ammunition to those who are saying, "Going in this negative path is going to cost us. Going in this positive path is going to benefit us."

MS. MALONEY: One last question, from me, at least, on the nuclear issue. I'd like to just read a statement from the book that I found both interesting, compelling and potentially somewhat controversial. And this was in light of some of the issues that you were talking about between the U.S. and Iran, both the nuclear program, the support for terrorism, the question of human rights within Iran. And you stated that a new American policy toward Iran should address all these issues, but it must address Iran's pursuit of nuclear weapons. "If there are trade-offs to be made, they should be made in favor of emphasizing the need to deal with the nuclear program, even at the expense of other concerns."

Can Washington realistically implement such a hierarchy of interests? And can we really make progress on the nuclear issue if we're not making progress on the question of terrorism and some of the other concerns about Iranian conduct?

MR. POLLACK: Yeah, a great question. As with all things dealing with U.S.-Iranian relations, I think it is possible, but it will definitely be difficult.

Iran is, now that the Taliban is gone, the leading state sponsor of terrorism in the world, arguably. That makes it hard to say that nuclear weapons should come ahead of terrorism.

That said, the problem that we have with Iran ultimately is the problem of the nuclear weapons and what the nuclear weapons might mean. For the moment, Iran's terrorism is -- dare I use this word? -- restraint. The Iranians use terrorism instrumentally. They are not al Qaeda, who simply wants to kill as many Americans as they possibly can. Iran uses terrorism to advance its foreign policy. They support Hezbollah for a whole variety of strategic reasons. They support Palestinian Islamic Jihad for a whole bunch of reasons. They supported other groups, like the Kurdish Workers Party against Turkey, for a whole bunch of instrumental reasons. When they kill people, they do it for a reason.

And what's more, what we've seen from the Iranians is, as I suggested before, a degree of caution. They push as hard as they can; they are aggressive. But when the meet resistance, they pull back. And that's very important. As long as we know that we can resist them, that we can push back and that the Iranians recognize our ability to push back, that gives us an opportunity to curtail their use of terrorism.

The real problem lying out there is the combination of the nuclear weapons with the terrorism. The real problem is if Iran acquires nuclear weapons and if the hardliners in Tehran believe that the United States will be so frightened of getting into a nuclear confrontation with them that they then conclude that they really don't have to worry about the United States opposing them by conventional force.

A good example of this. In 1996, Iran put Lebanese Hezbollah -- actually, operating under the guise of Saudi Hezbollah -- up to the Khobar Towers attack. We now have very good information indicating that Iran was fully behind the Khobar Towers attack. This was part of a long-standing policy developed in the 1990s in trying to drive the U.S. out of the Gulf.

Well, immediately after the Khobar Towers attack, the Iranians realized that they had overstepped themselves. There was all kinds of talk in the U.S. about launching some kind of a massive retaliatory raid against the Iranians, and Tehran pulled back. They realized that they had gone a step too far; they were inviting a massive U.S. retaliation that was not something they wanted. And as a result, they really dampened their involvement in terrorism. They stopped doing a whole bunch of other things that had greatly concerned us over the course of time.

That suggests that as long as the Iranians recognize that we have a conventional deterrent, that they can be restrained and that their terrorist operations will be restrained. And that's why for me the nuclear weapons are the most important, because of the fear that once Iran has them, that you might have the hardliners in Tehran saying, "Okay, now we don't have to worry about an American conventional strike. We can do anything we want. Let's gear up those terrorist operations."

MS. MALONEY: The context of all of your answers today, and I think really comes through very clearly in the book, is this whole domestic political ferment in Iran. And given how important the question of reform and liberalization in the Middle East in general is for U.S. policy moving forward, I'd like to ask you both to look retrospectively at American policy over the past decade or so, and also looking forward, about the situation in Iran. Because it did appear for a period, certainly in the late 1990s, that Iran was moving along a path of reform and liberalization largely of its own volition, thanks to this domestically generated reform movement. And yet, the fortunes of that movement have largely waned in the past three to four years.

I'd like you to just think a little bit about both your experience in the Clinton administration, the Bush administration's first term, and what we may see forward in the next term. Is there anything that Washington can actually do, both to strengthen the movement that exists in Iran today and to do more to strengthen in the future the forces of democratic change that might change these policies that we have so much concern about in terms of Iran's international orientation?

MR. POLLACK: My painful -- regretful conclusion is I don't think there is much that we can do. I think there are some things I can talk about in a second. But one of the reasons that I wrote the book the way that I did -- much of the book is history leading up to the section that talks about what are our options going forward -- is that once you get to look at the history, once you see it laid out for you, you realize how difficult it is for the United States to influence internal Iranian affairs. We've tried on a whole variety of occasions since the revolution and, unfortunately, our experience has been extremely painful. Typically, whenever we've tried to help one group or another inside of Iran, we've usually wound up hurting them.

I know that there is a school of thought out there right now that says the Iranians are wildly pro-American, they want a very different form of government -- both of which I think are absolutely true. But then it goes on to say they are chomping at the bit to launch a revolution, and all they want is a high sign from the United States to launch that revolution. I fundamentally disagree with those last two points. I do think Iran wants -- or most Iranians want a different form of government. I do think most Iranians are actually very pro- American. And for me, it's one of the most painful paradoxes of the Middle East, is that the Iranian people, the people of our greatest adversary now, are probably the most pro-American in the entire region. Whereas the people of some of our greatest allies in the region -- Egypt, Saudi Arabia, go across the board -- are often very anti-American.

But the problem is that the United States is still a very big chip on the shoulders of Iranians. And we, unfortunately, play into Iranian domestic politics in very pernicious ways. And my fear is that if we did try once again to reach out and find someone in Iran we could help -- and we tried this, as I was suggesting.

During the Clinton administration, I was one of the people who led the charge saying Mohammed Khatami is a different kind of cat, he wants something very different, he is a true reformer, he wants good relations with the United States, this is someone we should try to help. And we tried very hard to help Khatami. We made 12 different unilateral gestures to Khatami in hope of actually being able to help him within Iran's internal power struggle. And what we wound up doing was simply hurting him, helped undermine his cause, led to the -- I think it provoked the crackdown probably even sooner by the hardliners. I think that that is a very informative lesson. Our ability to help Iran change its government in the short term is extremely limited.

What I will say is I think perhaps over the longer term, we may be able to help. And here I have something in mind along the lines of what we did with Eastern Europe. We never tried to mount a revolution in Eastern Europe. We never tried to overthrow the governments of Eastern Europe. But when you talk to Eastern Europeans, what they will say is the mere presence of the United States, the fact that the United States was on the other side of the Iron Curtain, always there as a beacon showing them that a different world was possible, was critical to them in terms of maintaining their hope and providing an alternative that they could strive for. And in the end, bringing down the Berlin Wall was to some extent helped by that residual hope.

Now, that's not a recipe for short-term change in Iraq. At the most, I think it will help over the long term. But unfortunately, I think that's the cards that we have been dealt. Our ability to help Iran's internal politics, I think, is extremely limited. As I said, I think this is probably the best we're going to do.

MS. MALONEY: Let me just ask one more question and then I will turn it over to all of you, who I can tell are also chomping at the bit to ask Dr. Pollack a few things about both Iran and his other thoughts on the region.

I thought one of the great contributions of this book is the long scope of Iranian history that it deals with, and also the authoritative way it goes through the American-Iranian relationship, particularly over the past 50 years, and the extent to which the perceptions of both sides and the historical baggage that exists really continue to dominate the way in which we see one another, the way in which policy plays itself out.

And I wonder if you can, again looking forward, talk a little bit about how we might overcome some of this historical baggage. How important is it today? And to what extent -- what policies can we actually take that will help us to overcome some of the issues that continue to confound our two governments?

MR. POLLACK: It's a heck of a good question, Suzanne. And I know Gary Sick is sitting over there, someone who has experienced that animosity firsthand, so I'm going to temper my remarks with that in mind.

I think it is one of the most important elements of our relationship, the emotional baggage that both we and Iranians still have after 25 or 50 years, whether you're an American or an Iranian, of problems between the two countries. It is going to be extremely difficult to overcome, and I'm not certain that there is a policy solution.

For the Iranians, it is the sense that for at least 25 years between the overthrow of the Shah in 1953 and the -- I'm sorry, the overthrow of Mossadeq in 1953 and the overthrow of the Shah in 1978, there was this belief that the United States was not just a backer of the Shah, but that we were in some sense pulling the strings behind the scenes, that the Shah was our puppet in some sense, and that therefore the repression and the other depredations that they felt under the Shah's regime were somehow caused by the United States.

And as a result, you've seen many Iranians say that they demand an apology. And in fact, during the Clinton administration, both President Clinton and Secretary of State Albright made a form of an apology to the Iranians. They weren't quite willing to get down on their knees and beg for forgiveness, as I think some Iranians may have wanted, but they went as far as it was possible to, I think, in diplomatic language to do so.

For many Americans, you know, the tragedy is 1979. And I think that if we went around another time, I don't think you could possibly persuade another American to make such a -- another gesture, another apology, because I think most Americans would say -- and I would actually agree with this -- if we're going to apologize for 1953 again, they need to apologize for 1979.

As for what we can do, for me the answers do lie in the policy realm. My feeling is this. If we could ever get the two countries to the point where at the policy level they could agree to a solution to these problems, where they could actually sit down and deal with the problem and say, "Here's what we're going to be willing to do for you if you're willing to do this for us," something that we've had enormous difficulty doing over the last 25 years, if we could do that, then I think it will be up to both governments to sell their own populations.

And that's going to be very hard. You know, one of the things that we found in the Clinton administration was that it was very difficult to take these steps moving forward because there is simply just an axiomatic anti-American -- sorry, anti-Iranianism within the American body politic. No congressman wins votes by standing up and saying, "Let's be nice to Iran." But it's real easy to garner votes by standing up and saying, "By God, the president is being weak on Iran and we need to do more."

It's just one of those emotional hot buttons because of the legacy of 1979 and all that has transpired since. And I think for any American administration, if they are really serious about engaging Iran, I think they are going to also have to be willing to stand up to their own constituency and say, "This is in the best interests of our country, and we need to bury those hatchets." And I think the Iranians are going to have to do the same. And honestly, I actually think it's going to be harder in some ways for the United States to do that than for the Iranians because so many Iranians at this point in time have gotten that out of their system and are ready for a better relationship. The problem on our side I think is more at the grassroots level where there is still this lingering hatred of Iran going back to 1979. In the case of Iran, I think the problem is much more at their top level, where their regime is clinging to anti- Americanism, as in some senses the last vestige of the Iranian Revolution; the last element of the Iranian Revolution they're clinging to is this anti-Americanism.

MS. MALONEY: Great. Well, let me open it up to all of you and to hear more from Ken. A couple of ground rules, first. Please wait for a microphone. When you're given the microphone, please stand and let us know who you are and what your affiliation is. And if you would, please, keep it to one question only so that we can get as many people in as possible.

The gentleman in the center here.

Q In view of what Ken Pollack has said, I should tell you about '79. I lost my bid for reelection to a 12th term in Congress in 1980 because of Iran, because of the Iran hostage crisis.

My question. Do you assign any significance to the visit last week to Iran of the librarian of Congress, Jim Billington? Does this hold out any hope for educational exchanges between our two countries? And do you think that those would be a helpful step forward?

MS. MALONEY: Sir, and if you wouldn't mind just stating your affiliation.

Q Oh, I'm John Brademas, New York University.

MS. MALONEY: Thank you.

MR. POLLACK: I thought the visit by Mr. Billington was very interesting. It's one of those things where had it happened five years ago, would have been easy to explain. That was a point in time when Khatami was trying very hard to reach out, was very interested in people-to-people exchanges. There was a great deal of that going on.

That still continues to this day. Even though the hardliners are much more in control, they've not shut all of that down. But it was one of those things that raised -- because he is effectively an official American -- a member of the U.S. government, it did raise the prospect that this was maybe a trial balloon by the hardliners. You know, when you deal with Iran, every nuance matters, every possible interpretation matters. I always tell people, you know, most people who have never had anything to deal with government assume that there's a great deal of subtlety and reverse psychology that goes on. Of course that's nothing of the case, except with Iran. With Iran it's always the case, it's always reverse psychology, it's always subtlety.

So it is possible to me that this was the Iranians trying to feel us out, maybe trying to send a message that we would like to have some level of exchange. And the Iranians have been, I think, every pragmatic. Again, this goes back to my point about them being anti- American and aggressive, but not imprudent. They've made it clear we're in Afghanistan, we're in Iraq. Their interests in Iraq and Afghanistan are not dissimilar from ours, and they've wanted to have a decent working relationship on those two issues.

Now, in recent months, basically last year or so, that has fallen on hard times because of the revelations about their nuclear program, because of the al Qaeda leaders in Iran who were involved in some way in the attacks in Saudi Arabia. And this may be an effort by the Iranians to say, "You know what, we'd like to move back in that direction." If it is, I think we ought to take advantage of it. I think that the more that we can do -- to me, this kind of falls into my Eastern Europe example. The more that we can expand those cultural ties, those cultural exchanges, I think it can only be to the good for both societies.

MS. MALONEY: If I can take the liberty of adding something. Having been present at the initial start of this contact between the Library of Congress and the Iranians, it has been, as Ken suggested, quite a long time in the making, at least five years, I believe, and was engineered largely by a council member, Jeremy Stone (sp).

The gentleman in the front here. If we can get a microphone up to the head table.

Q Hi. I'm Bob Lifton (sp). You mentioned that the Iranians see Israel only as a secondary threat after the United States. And as you know, Israel sees Iran as its major strategic threat, especially if nuclear weapons are available to Iran. A, do you think Israel is correct in seeing that as a major threat to Israel? And B, do you think Israel would take any kind of preemptive action to reduce that threat that might be dangerous to us?

MR. POLLACK: It's a great question, Bob. I'm glad you asked it.

First, I do think that Israel is probably right to see Iran as a primary threat for a variety of reasons. First, Iran is a much more aggressive sponsor of some of the terrorist groups around Israel than pretty much any other state than you can think of.

x x of. To a certain extent, Israel's other threats have gone away, leaving Iran out there. Iran has shown itself to be much more implacable in terms of its opposition to the peace process.

You know, you look at Syria, which is more involved in some of these groups, but the Syrians have made it clear they're willing to sign a deal with Israel. It's going to have to be on their terms, and obviously we're working out the details still, but that's a very different position from the Iranians.

I don't think that it's unseasonable for the Israelis to be concerned about Iran. And in fact, I think that the argument that I made about Iran and the possibility that they would feel less constrained when they have nuclear weapons applies in greatest strength to Israel. That's something that they need to be afraid of, and I don't begrudge them that for a moment.

That said, I think that Israel is highly unlikely to take preemptive action against Iran, at least in the kind of overt military sense. I think there's no question Israel will do everything it can covertly -- and probably is doing everything that they can -- to sabotage Iran's nuclear program covertly. But on the overt military level, the Israelis have a fundamental problem. They don't have the wherewithal to take out Iran's nuclear program.

I mean, this gets us back to Iraq. In 1981, as you all know, Israel destroyed Iraq's Osirak nuclear reactor. Well, the Iraqis learned a lesson from that, and the Iranians learned it even better. They learned you don't put your whole nuclear program in one place that can be easily bombed by the Israelis.

As a result, they have spread out their nuclear program to maybe as many as a hundred different sites around the country. They are hardened, they are bunkered, they are hidden.

What's more, we found that the Iranians have shown an incredible capability to keep their nuclear facilities secret. Up until 2002, up until one of the Iranian resistance groups, of all people, came forward and betrayed them, we had no idea that these massive facilities at Natanz and Arak even existed. So if you're the Israelis, you've got a huge target set to look at. You don't even know if that's the whole target set. There may be other facilities out there critical to the Iranian nuclear program that they can't even possibly go after.

And the problem the Israelis have is, they have 25 planes that can reach those facilities. There are only 25 F-16 I's in their inventory that can reach those sites. And the problem is, to get there, you're at the extreme range of the F-15 I's, so they have to carry all fuel, very little bombs, and they simply can't maintain, sustain the kind of a bombing campaign that would be necessary to try to get at all of these different targets. And they have to recognize that once they start bombing, the Iranians are not going to take that lying down. They'll wind up taking Shahabs fired at their cities. Again, the Iranians have a tremendous terrorist network. You will see Hezbollah attacks on northern Israel. You will see Palestinian Islamic Jihad attacks. So the Israelis have to ask themselves a question, which we do if we ever contemplate this as well, of what exactly do we gain by mounting this? And what costs will we pay?

I will say to you, having sat with the man who was at that point in time the commander of Israel's F-15 I squadron, he said, "You know, I've gone over this a thousand times. We can't do it. You're going to have to deal with Iran's nuclear program.

Q Hi. I'm Roland Paul. I'm a lawyer. Ken, just first, in passing, one of the good things in your book -- and you've mentioned it -- is this beacon, the United States serving as a beacon. But bear in mind, it helps that beacon if the image is closer, as in Western Europe -- (inaudible) -- and so there are a couple of places around Iran where that would be good.

But my question is, you've also said that you could see deferring the Iraqi operation -- Operation Iraqi Freedom for a year or so. Would it have made any difference? And would you have preferred -- is there anything we could have done to Iran that would have been good, had we deferred Iraq, or not? You didn't seem -- there was no military option or what you called a counterproliferation one, I don't think.

MR. POLLACK: Right. It's a great question, Roland.

For me, the question of Iran and Iraq relate to a much larger issue, which is having a grand strategy for the Middle East. It is a problem that I've seen from a number of different administrations -- and this one I see it in spades, but it's not isolated to this administration -- which is that we've tended to look at Iraq, at Iran, at the Middle East peace process, at reform in the Arab world, at Saudi -- each of these countries or each of these issues as separate and self-contained. And especially when we talk about the Europeans, I think it's critical to think of them holistically, that we can make trade-offs on one to get cooperation on the other.

And in fact, one of the things that we might have -- if we had been willing to defer Operation Iraqi Freedom for another year or so, we might have gone to the Europeans and said, "Okay, you're not ready to go to war in Iraq; we understand that. We'll stand down. We'll let the inspection process work out for another six months or a year, if that's the amount of time you need to bring your population on board. And in return, we expect you to get tough with Iran."

And getting tough with Iran -- all I mean is exactly what I laid out: being willing to apply sanctions if the Iranians continue to move in a negative direction. And that's something which, unfortunately, every time it's been threatened, the Iranians turn on a dime. But the problem is, the Europeans don't want to threaten it, and so they've consistently reassured the Iranians that they know they'd never sanction them. And when the Iranians get reassured, they keep going back to what they're doing.

So yeah, I think that there is a connectivity there.

And as I said, I think we need to see it across the whole region. There are things that we can do on each of these issues where we can, I think, build a -- you know, a coalition with the Europeans, with the Japanese, maybe even with the Russians and Chinese as well because there are things that we want on certain issues and they want on other issues.

MS. MALONEY: Gentleman in the corner.

Q Thanks. Perhaps the major centerpiece of President Bush's administration now is the movement toward freedom and democracy in the Middle East. And we've had elections in Afghanistan, we may have elections in Iraq, and the notion of freedom breaking out in those places, however unlikely some people may think it to be, is clearly a cornerstone of the president's policies. I'd like you to comment, if you will, on that initiative not so much with respect to whether it's going to succeed, but whether you wouldn't agree that if it does succeed, if the issue of democratization is pushed, why isn't that a major threat to the people of Iran who run the place, recognizing that democracy in Iran would probably mean the end of their regime as we know it? So aren't they likely to be against it? Don't they feel threatened? And what will they be likely to do to prevent the president from succeeding?

MS. MALONEY: And, sir, if you wouldn't just mind giving us your affiliation.

Q Oh, I'm Kenneth Bialkin, Skadden Arps.

MR. POLLACK: There actually are two different pieces to that question, and let me tackle each one independently.

First, I am a firm believer in the need for -- transformation is the word that I use -- of the Middle East. I've loved the president's speeches. I think they've been fantastic speeches. I have been concerned in two different directions, though.

First, I haven't seen the administration doing very much to actually support the president's speeches. The MEPI, which they've started, is badly underfunded, it's badly directed. They need a much bigger program. They need to be willing to get tough with our allies as well as our adversaries. There are a whole bunch of things that I would like to see them doing to actually implement the vision that the president laid out.

By the same token, I am very concerned about the idea of rapid change in the Middle East. I think that could be absolutely disastrous for us. As my good friend, Greg Gause, likes to warn, be careful what you wish for. If you want democracy in Saudi Arabia tomorrow, you can have it, and the -- you know, the leader of that government will be a wild-eyed Islamic fundamentalist who will be best friends with Osama bin Laden.

As a result, for me, transformation needs to be a long-term process of change. And for me, it's more like what happened in East Asia, where over a period of 30, 40, 50 years you had these governments slowly move toward democracy because right now the political culture is not where we'd like it to be. It cannot sustain the kind of democratic movements that we think of, and what we're likely to get is just Islamic fundamentalist governments all over the place, as we almost got in Algeria.

So I think we have to be very careful about the idea of transformation. Is that -- I think it's absolutely critical. I think is is essential that we push it, but I think we have to push it very carefully and very correctly.

With regard to Iran and how it fits, I think that your fundamental point is a correct one, which is that the -- those who run Tehran now recognize that true democracy is a threat for them, and that's why they've hit upon what they call their China model. Their China model is very much based on what Beijing did after Tiananmen Square: try to use Iran's oil revenues -- the fact that oil is so high now gives them quite a bit more revenue -- to kind of buoy the economy, deal with that, turn the attention and the energies of their massive youth population into the economy and also into hedonism. And one of the most interesting things you're seeing in Iran these days is a very significant loosening of the social restrictions that Ayatollah Khomeini put in place as a way of allowing the kids to sort of blow off steam by holding hands and in many cases doing drugs and having premarital sex. A whole bunch of stuff that the regime found absolutely abhorrent and tried hard to crack down for many years they're now kind of looking the other way toward. But what that suggests is that, yes, the regime recognizes that true democracy right now is not in their best interest. But the question is, how best can the United States help it?

It's hard for the U.S. to push democracy in Iran, except, as I was suggesting before, the way that we did it in Eastern Europe, rhetorically, by constantly saying this is where Iran should be. Any time the Iranians have an election and it is clearly not fair and free, I think we ought to stand up and say these elections were a travesty. In fact, I criticized the Bush administration for having been so mild in the February 2004 elections in Iran where the hard- liners shamelessly rigged the election and all you got was a kind of halfhearted statement from our State Department spokesman. To me, that's not what saying to the Iranians, "We believe in freedom, we believe in democracy" is about.

That said, I don't think that -- you know, the other measures which people talked about, trying to start a revolution in Iran, I don't think that's going to help us either.

This is the problem with Iran. It is extraordinarily difficult for the United States to influence their domestic politics. I think we can help a little bit at the margins, but mostly we need to let them sort it out themselves.

MS. MALONEY: Ambassador Wisner (sp).

Q Ken, at the beginning of your remarks today, you attributed two reasons to the Iranians and their decision to pursue a nuclear course: deterrence and prestige. Let me return to the first of the two. Europeans, as you noted, are engaged in a discussion with the Iranians right now. That is by necessity a discussion of what Europe can give and Iran receive. It assumes Iranian restraint. It doesn't fundamentally deal with the issue of deterrence. Therefore, I wonder if in the long run if not in the short run, the European initiative is bound to fail, it doesn't deal with the strategic reality, and the only way to deal with the strategic reality, to explore it, at least, to define it is if we join, for we are the only ones with answers to the strategic problem.

Does that observation make sense to you? And does it lead you to the conclusion that to achieve strategic stability, the United States has got to be part of the dialogue?

MR. POLLACK: Absolutely. I would agree with that 100 percent. It is what is most lacking from Europe's dealings with Iran, is the absence of the strategic dimension. There are plenty of Europeans who will say, "We don't want Iran to get nuclear weapons," but when you really press them, it's very hard to find a European government that's willing to do anything about it.

I like Bob Kagan a great deal and I am terrified that he is absolutely right that Europe has effectively divested itself of all strategic interests and left them up to us entirely. As I said, I'm terrified of that. I don't want it to be true. But everything that I have seen from the Europeans over the last 15 years is entirely consonant with Bob's diagnosis of the problem. And that is why I agree entirely with your statement that unless the United States is part of that process, the strategic element will be absent. It's only because the United States recognizes the strategic liabilities out there that we have been willing to try to bring to bear negative pressures on Iran -- sanctions, other threats of force -- to keep them from simply running amok. Left to their own devices, the Europeans would have simply ignored Iranian misbehavior, ignored the instability that Iran can cause in the Middle East and the Persian Gulf region by its pursuit of nuclear weapons, by its support for terrorism, by its efforts to undermine the various governments.

And it's why, as I said before, I want to look closely at the details of the new deal that the Europeans have worked out, but my past experience leads me to be very suspicious. My fear is that, just as they have done every single time in the past, the Europeans will have once again offered the Iranians all kinds of carrots for rather minimal Iranian agreements, and there will be nothing to actually enforce the Iranians. And next time when the Iranians violate those agreements, the Europeans will come back to us and say, "The problem was we just didn't offer them big enough carrots."

MS. MALONEY: The microphone's just behind you.

Q In view of the lack of your confidence in the Europeans' carrot proposal, what do you suggest that the Brookings Institute (sic) and the council and various think tanks that we hoped were going to bring some change in Iran can do with the present administration? Do you have an outlet to them? Do they listen to you? Do they take any suggestions about how to have these cultural exchanges, such as the librarian, which opens up slowly but carefully? I'd like to know that.

MR. POLLACK: Since we're on the record, I'm going to be somewhat judicious in my remarks. I think that some of the ideas that do come out of the think tanks in Washington and in New York do have an impact on this administration. I don't think that they're quite as tone deaf as they're often portrayed in the media. That said, it does seem to take quite some time before many of these ideas actually infuse into the system.

To just give you an example, I and a number of other people were writing all kinds of things about Iraq and the reconstruction of Iraq and pointing out all kinds of problems that were transpiring immediately after the invasion. We were doing this for a very long period of time. I would say within the last three or four months, maybe the last five or six months, basically since April, only then have I actually seen the administration really taking those ideas on board.

Now they are taking them on board to a certain extent, and that, I think, is progress, and it does suggest that they are interested in new ideas. And obviously they listen to other people beyond just think-tankers like myself -- people who work in business; they listen to other governments, they listen to their own pundits. There are certainly other people who they do listen to. But they do have a certain insular quality, which can be very frustrating, because they do have a certain sense of how they want to do things, and oftentime it's hard to get them to correct course. But they do correct course. And it's why I'm hopeful that if I keep shooting off my mouth maybe some of it will sink in.

MS. MALONEY: The patient gentleman in the corner. And if each of you wouldn't mind please introducing yourself and your affiliation.

Q Maurice Tempelsman, Leon Tempelsman & Son. I plead guilty to patience. Let me pick up on two points you made and maybe ask you to develop it a bit further.

The last comment you made in your closing remarks there was really that one should look at the policy structure to try and see between the two governments and then try to build a constituency around it. And then somewhere before that you indicated too that even though the government is pretty well established, they do have some turbulence internally.

Let's move it from the foreign policy point of view to the reality of politicians who stay in power and want to stay in power. If that is the case, aren't we confronting a group of people who really want the problem; they don't want the solution -- not because they don't see the solution, not because they cannot deal with the solution, but in order for them to stay in power without the legitimacy that a democracy would give, that they basically need to maintain this problem and keep it going for as long as they can without blowing themselves up in the process? Could you address that issue?

MR. POLLACK: I think it's a very important point. I mean, it gets to the heart of my own thinking about Iran, which is that ultimately finding a way past the U.S.-Iranian impasse is very much about influencing decision-making in Tehran.

Now, we can say whatever we want to about this administration. At times they have been more receptive to Iranian overtures; at times they have been less receptive to Iranian overtures. The problem we have here is that you did have at the end of the Clinton administration an administration that was highly receptive to Iran, that bent over backwards to try to deal with the Iranians and were entirely rebuffed.

To me it's a little bit like Israel. Israelis basically say how can we ever make a deal with Arafat when he turned down Barak? Well, it's the same thing here. Why should any president stick out his neck for the Iranians if it's the same group that turned down Clinton, and there's no real sign that they're going to approach it any differently.

For me, the question there is this issue of how the Iranian regime sees its future, how it believes it can stay in power. As I suggested to you before, you've got two different things going on.

One, there is an anti-Americanism, which I think many of Iran's leaders simply believe in; for others it is instrumental in the sense that they do see anti-Americanism as being part of their legitimacy, as part of the legacy of the Iranian revolution, and therefore part of why they are in power. But you also have at the same time tremendous internal problems generated by the economic difficulties and the political and economic isolation in the world. And therefore, I think that creates an opportunity where you will ultimately try to say to that Iranian leadership, which do you want more? Are you willing to sacrifice whatever legitimacy you think you get, and this issue of giving the -- so many Iranians are increasingly inclined to take the position of it would be better for them to have better relations with the United States because the people seem to be moving in this direction.

If we were to simultaneously promise them economic benefits if they move in the right direction and at the same time greater economic hardship if they move in the wrong direction, it seems to suggest to me that you could really hit at one of the most important elements of their own control over power, which is their ability to keep Iran's economy moving in some kind of positive direction, the ability to keep Iran's political polity stable. There are ways that we can influence that. They're crude. They're not perfect. That's why I don't think this is a perfect solution, but I think that is our best chance. As I said, there is a debate inside of Iran.

There are people there who are saying what we really need is to deal with our economic and political problems; THAT is what is going to keep us in power, not clinging to this outmoded ideology of anti- Americanism. And those are the people we need to furnish ammunition to.

MS. MALONEY: Directly in front. (Off mike) -- the microphone. Yes, I'm sorry.

Q Mia Bloom, University of Cincinnati. Thanks, Ken. I wanted to play devil's advocate just for a second and cite something that Dick Bullet (sp), a colleague of Gary's, says. He thinks -- and he said publicly -- that there is a possibility, if you want to spin it in a positive, that if Iran goes nuclear, it's a very positive check to Pakistan, just in case the government falls. And so that this would be a way of being able to ensure that another Pakistani government, if it overthrew Musharraf, would not go completely sort of in favor of the terrorists and attack the United States and Western allies because sort of the "enemy of my enemy" school of thought would be able to balance. You'd have these two groups being able to almost mutually assured destruction with one another.

And I was just curious if you thought that that was completely out of line or whether there was some truth to being able to positively spin it? Because I think that you've outlined very well our limitations with regard to being able to check if Iran really wants to pursue a nuclear program, and they certainly have the scientific acumen, as well as people who have studied here and the people who have studied there to do so.

MR. POLLACK: I would strongly disagree with that characterization for a few reasons. First, there is this broader theory that Ken Waltz advanced many years ago that nuclear proliferation is a positive good; the more countries that have it, the fewer wars we will have because countries won't go to war with other nuclear powers. So far, that's held true. The problem is, it only takes one for the whole theory to be -- you know, go to hell.

Again, for me the question is, is that really a risk you want to run? You know, aren't there better ways to handle Pakistan as well, rather than allowing the Iranians to go nuclear? And as I suggested, we just don't know where Iran is going to come down. I think -- my gut tells me that it probably is something that we can live with. And certainly, for that reason, I'm not willing to incur the kind of horrific costs that we would pay if -- you know, for example, to invade the country to prevent them from acquiring it. That said, I think that I'd prefer that they not have them. And as I'm suggesting, I think that there are a number of things that we can try. None of them are guaranteed, but some of them do have a better chance than others of preventing them from acquiring nuclear weapons. And in many cases they are rather low cost, if we're willing to go ahead and try them.

But as I said, you know, you can come up with all kinds of theories about how Iran is going to act once it has a nuclear weapon, and what might happen. And yes, I think you can certainly spin out some positive scenarios. The problem is that there are also quite a few negative scenarios. And, you know, as I'm fond of saying, that's a social science experiment I'd prefer not to run. (Laughter.)

MS. MALONEY: We have just a few minutes left, and with a number of hands still in the air. I wonder if we could get the microphones to two or three individuals, however many microphones we have -- three, I suppose, and perhaps Ken could answer them in rapid fire.

Sir? And this corner over here, and all the way in front.

Q Herbert Levin (sp). You have noted the lack of likelihood that the Europeans would go in for telling efforts against Iran. And you have pointed out the difficulties in our trying to have a realistic negotiating scenario with them, and the weakness of all their neighbors.

Could you outline for us -- not that I'm advocating this -- what would be the minimum conditions for our undertaking violence against Iran?

MS. MALONEY: And perhaps another question to allow Ken to digest that one.

Q Kevin Sheehan (sp) -- (affiliation inaudible). Ken, could you say a bit about what covert and overt role Iran would look to play in the upcoming Iraqi election, both in terms of the selection of Shi'a political leaders and in the role that the Shi'a community could play in a post-election political society?

MS. MALONEY: We have one more in front. My apologies for making the logistics of the microphones difficult.

Q Stanley Weiss, Business Executives for National Security. Something you alluded to earlier, the people that you were dealing with were the so-called reformers, and on the other side they called them -- lumped them all together as conservatives, actually, they're more reactionary than -- (off mike). But it seems to me -- the question I'd like to pose to you -- the conservatives, so-called, are really broken down into the mullahs, and then you have the bazaris, who really want to do business, whether it's Rafsanjani who wants to sell pistachios, or whoever. And we never had these kind of economic sanctions on the Soviet Union or China during the worst of those days. And it seems to me that if you really want to deal, try to make a deal, you don't go to the reformers, you go to that part of the conservative group that want to do business and -- (inaudible).

MR. POLLACK: Okay. Military conditions. First, I think that you have to be certain that what you're going to do is going to end the Iranian nuclear program. Second, I think that you need to make sure that whatever you are going to do is not going to result in a situation that is worse than the situation that we face now. And, you know, one example of that, just to give an example, would be going in and invading Iran without a plan to stabilize and without the willingness to stabilize the country afterwards. A pretty obvious point at this point in time. But I tried to make that a precondition last time. Nobody listened. I'm going to say it much louder this time around.

And a third one, I think, has to be that whatever we are going to do in Iran has got to be something that the American people are willing to pay all of the costs. You need to lay all of the costs out for the American people very clearly, and they've got to be committed to all of that. We cannot try another one of these military operations on the cheap, especially with Iran, who really does have the ability to fight back hard. That's kind of an abstract. If you want to get into scenarios, we can talk scenarios, but in the abstract, that also takes into account the possibility of a disarming strike, which I've talked a little bit about, and the possibility of an invasion.

On the elections in Iraq, I think there's no question that the Iranians are trying to have some influence in Iraq, just as we are trying to have influence in Iraq, and the Saudis and the Syrians and the Turks and every one of Iraq's neighbors are trying to have influence there. So far, though, the Iranians have actually been very cooperative in Iraq. In fact, you know, one of the gray, kind of dirty little secrets of the Iraq war is that we wouldn't be doing as well as we are doing now were it not for the fact that the Iranians are in their own way tacitly supporting our efforts. They have very consistently said to their proxies in Iraq, their advocates in Iraq, the people who look to them for advice, guidance, money, weapons, et cetera, they've said to them, "Go along with what the Americans are doing. If what the Americans are saying they're going to do is what happens and Iraq is stable, independent and pluralist, that's fine with us, because there will be a Shi'a majority, and we think we can get along with the Shi'a majority inside of Iraq." And they are also terrified of chaos inside of Iraq. So the Iranians have actually been quite responsible.

Now, they're in there in force. They have an enormous intelligence network in there, which I usually describe as being this is their plan B. If we don't know what we're doing and we screw everything up and the place comes apart, the Iranians go to plan B. By the same token, if it looks like we're about to build a base for an invasion of Iraq -- Iran, excuse me, I think the Iranians again go to plan B, which is a covert war against us. But I don't think they want to. I think that's very much a secondary option for them.

So will they be in there? Yeah, they absolutely will be. They'll be supporting different groups who they think will be supporting them. But we've not seen kind of wholesale efforts to bugger the elections, we've not seen efforts by Iran to use violence to overturn the elections or to upset them in any way, shape or form. Believe me, we got lots of problems with the elections in Iraq. Iranian involvement is not one of the ones that I am terribly worried about.

And then last, this question of dealing with the people who want to just do business with us. I think that's right. The problem that we've had is those people have not yet gotten themselves into positions of power where they can actually determine Iran's behavior toward us.

You mentioned Rafsanjani. He is by far the most powerful of that group. And Rafsanjani has been quite consistent over 25 years in advocating a better relationship with the United States. And at different points in time, he's maneuvered things to allow for an opening to us. What we've found in every case is usually a combination of the U.S. wasn't ready and he wasn't able to make it stick. So Iran-contra was an effort by Rafsanjani to once again try to reach out a hand to us. The problem was it got exposed, the hardliners were able to quash it.

It's one of the hard lessons we learned from the Clinton administration. Believe me, we would have been glad to speak to hardliners as well. The problem that we had was that the hardliners weren't in control of the government, and you can't make a deal with one part of the Iranian government. Until the whole government is ready to kind of knock this massive chip off their shoulder called the United States, until that happens, I think it's extremely difficult.

And, you know, I'm right there with you, Mr. Weiss, in terms of we've got to make it clear to them what they get if they move down this path, because we want to arm people like Rafsanjani and say there are real benefits to moving in this direction and there are real penalties to keep moving in the direction that we're moving. I think that's exactly what we want to do, is put ammunition in their hands. But the problem is they've ultimately got to fight and win that battle. Our ability to do so is just very limited.

MS. MALONEY: Well, let me wrap up just by thanking Ken for sharing what is obviously his tremendous knowledge of Iran. (Applause.)

MR. POLLACK: Thank you, Suzanne.

MS. MALONEY: And thank you all.

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