Unfortunately, the Iranian regime received another pass from the International Atomic Energy Agency last week, as the resolution adopted had no reference to the U.N. Security Council or any further action to hold Iran accountable.

For at least two decades, the Iranian regime has been pursuing a covert nuclear program. It has undertaken a number of efforts for the manufacture and testing of centrifuge components, including at facilities owned by military-industrial organizations.

Concurrently, Iran is pursuing another approach to uranium enrichment that uses lasers, a complex technology rarely used by even the most advanced countries because it is not cost-efficient.

Iran has expressed interest in the purchase of up to six additional nuclear power plants and is pursuing a heavy water research reactor that would be well-suited for plutonium production. This represents yet another path to nuclear weapons, which endangers not only the region but indeed the world.

According to the IAEA report of November of last year, the Iranian regime admitted that it had failed to report a large number of activities involving nuclear materials. This same report noted that Iran's deceptions have dealt with the most sensitive aspects of the nuclear cycle. Further, the IAEA could not disprove that Iran's nuclear program was not for weapons development.

So within this context, Iranian news sources were filled with statements referring to Iran's right to possess nuclear weapons within the current international context. One in particular referenced, quote, "the natural and obvious right of the Iranian nation, and no power, whether government or international assemblies, has the right to cause any restriction or limitation on the exercise of this right in the field of nuclear activities by Iran," end quote.

Move forward to February and March of this year. The resolution adopted by the board enumerated more recent Iranian breaches, including failing to disclose the work that they've done on advanced P-2 centrifuges for uranium enrichment and work on Polonium 210, an element that could be used for nuclear explosions.

Come June 1st, the IAEA reports a series of unresolved issues that strike at the core of Iran's efforts to acquire a nuclear-weapons capability. The response from the Iranian foreign minister and the secretary of Iran's Supreme National Security Council was that Iran was to be "recognized by the international community as a member of the nuclear club and that this is an irreversible path" -- his very words.

The Central Intelligence Agency has warned that even intrusive IAEA inspections may not prevent Iran from pursuing nuclear weapons because Teheran could be using legitimate fuel production to cover up its weapons program.

It is imperative that the international community join forces to deny Iran any and all avenues toward achieving nuclear status, including punitive measures to bring a screeching halt to Iran's progress to this path.

To reiterate, if last week's meeting of the International Atomic Energy Agency's board of governors is any indication, the prospects for success look grim. The board's failure to report the Iran case to the U.N. Security Council sends a dangerous message to other pariah states and potential proliferators.

Further, given the role that certain European countries have played in undermining the authority of the agency, cutting side deals with the Iranians and succumbing to Iranian intimidation, what options do we have in the U.S.? What efforts can be undertaken to delay, to deter and to prevent Iran from achieving nuclear capability?

Undersecretary of State John Bolton will address these and other critical issues. Nevertheless, the urgency of the Iran threat is not limited exclusively to its nuclear intentions. As a senior DOD official underscored during a briefing in September of 2002, Iran is the full ticket. They have medium- and long-range missile programs. They also have a chemical and biological weapons program. And more importantly, Iran remains the most active state sponsor of terrorism in the world.

As Dr. Paul Leventhal, one of the witnesses in our second panel, recently articulated, when you have a nation that actively supports terrorism and seeks nuclear weapons, you cannot rule out the possibility that it could and would collaborate with terrorists to carry out nuclear terrorism.

Therefore, this hearing seeks to address not just the Iran nuclear threat in itself, but the implications for unconventional terrorism among states in the region. On the first issue, it seeks to answer such questions as, would a nuclear Iran enhance the capacity of the terrorist network? If Iran develops a nuclear capability, will it cede its other non-conventional weapons to the terrorist network?

Further, what is the likelihood of terrorists' use of nuclear, radiological, chemical or biological weapons? And while there is no specific evidence or analyses asserting Iran's willingness to become a routine purveyor of unconventional weapons to non-state actors, there is an example of the Karinne A. Iran shipped 50 tons of heavy weaponry to the Popular Front for the Liberation of Palestine general command, which is headquartered in Damascus with bases in Syrian- occupied Lebanon.

The arsenal contained 107 rockets, mortars, rocket-propelled grenades, shoulder-launched anti-aircraft missiles and anti-tank missiles. And with respect to cooperation between Iran and other terrorist nations, former CIA Director Tenet noted in his February 2004 threat assessment briefing to Congress, and I quote, "Iran appears to be willing to supply missile-related technology to countries of concern and publicly advertises its artillery rockets and related technologies, including guidance instruments and missile propellants."

Certainly the interest exists on the part of terrorist groups to secure chemical, biological or nuclear weapons capabilities. It has been reported for some time that al Qaeda has been seeking these weapons. The trial of bin Laden and other al Qaeda operatives for the August 1998 bombings of the U.S. embassies in Kenya and Tanzania shed new light on this. Prosecution witnesses detailed their efforts to assist bin Laden in an attempt to acquire uranium, presumably for the development of nuclear weapons.

On June 13th of last year, news sources reported that authorities in Thailand intercepted a man trying to sell radioactive material that could have been used to make dirty bombs. One may assume that these efforts are limited to al Qaeda, but as some terrorist experts have affirmed, there is increasing evidence that al Qaeda is now cooperating with Hezbollah, which enjoys backing from Iran and Syria.

Hezbollah is not only based in Syrian-occupied Lebanon, but also, according to published report, is in the tri-border region of South America, where Paraguay, Brazil and Argentina meet, and has operational capabilities in Canada.

Thus when we talk about the far-reaching implications of Iran's nuclear efforts, we should not and must not discuss it in a vacuum. It is difficult to assess how aggressively Iran would exploit its nuclear capabilities and how it would behave.

But one thing is clear: An Iran with nuclear weapons could significantly alter the regional dynamics and lead to further proliferation in the region, both from other state sponsors of terrorism such as Syria, or from U.S. allies, which may feel threatened.

Dr. Michael Eisenstadt, who will testify also as part of the second panel, will address some of these issues. Iranian nuclear capabilities would change perceptions of the military balance in the region and could pose serious challenges to the U.S. in terms of deterrence and defense. To answer questions about how this will alter the U.S. defense posture and military strategy in the region, DOD has provided us with Principal Deputy Assistant Secretary of Defense Peter Flory. Ultimately, at the crux of any solution to Iran's nuclear program and to the implications that it bears for the proliferation in the region is the need to deny and deprive terrorists, whether state or non-state actors, the access to the technology, the parts, the materials, to develop an unconventional weapons arsenal.

A positive step was taken on April 28th of this year when the U.N. Security Council adopted a U.S. resolution that underscored the threat of terrorist entities acquiring, developing, dealing in or using these deadly weapons and their means of delivery.

Among other determinations, it committed all states to undertake and enforce measures to prevent the proliferation of nuclear, chemical or biological weapons and their means of delivery. However, as President Bush noted in his speech earlier this year at the National Defense University, there is a consensus among nations that proliferation cannot be tolerated. Yet this consensus means little unless it is translated into action. The jury is still out on the resolve and the commitment of some of our allies. We must not allow our allies to deceive themselves about Iran's nuclear intentions and broad-based support that the weapons program enjoys throughout the government, particularly among the so-called reformist clergy.

Since Khatami's public announcement on February 9th of 2003 that Iran was developing its own means to produce nuclear fuel, senior Iranian officials have made it abundantly clear that the nuclear program in their eyes makes the Islamic republic more secure, reinforcing the regime from real or perceived existential threats to their existence.

We look forward to hearing from our witnesses today on how to address these critical threats to U.S. national security and our priorities. And I am now pleased to yield to Congresswoman Shelley Berkley for her opening statement.

REP. SHELLEY BERKLEY (D-NV): I think Mr. Sherman was here first.

REP. BRAD SHERMAN (D-CA): Oh, but I'm not a member of the --

REP. ROS-LEHTINEN: Thank you, Shelley. Thank you, Brad.

After this was revealed, Iran signed an additional protocol, allowing for inspections, and reached an agreement to suspend their uranium enrichment activities. Unfortunately, this agreement was never carried out. Iran never stopped its illicit activity, and is continuing to assemble parts and materials that can be used to build nuclear arms.

We do not know the status of Iran's nuclear weapons's program exactly, and we do not know their involvement with other nations that are unfriendly to the United States, or the extent of that involvement. Perhaps most importantly, we do not know the extent of Iran's cooperation with terrorist organizations and non-state entities. What we do know is that Iran has close relationships with Hamas, Hezbollah, and the Palestine Islamic Jihad. We also know that it's been involved in major terrorist activities in the past, and that it has within its borders radical and fundamentalist groups. In my opinion and estimation, Iran continues to be, and has in the past posed a far greater threat to this nation than Iraq ever could.

There are obviously a number of areas of extreme concern, and a number of areas that we know nothing about. As I said earlier, I am most anxious to hear what our witnesses have to offer, and specifically hear what steps the administration is taking to combat this emerging threat, and what resources we have to continue this fight. Thank you.

REP. ROS-LEHTINEN: Thank you so much, Ms. Berkley.

I am now pleased to yield, for his opening statement, the vice chair of our subcommittee, Mr. Steve Chabot.

REP. ROS-LEHTINEN: Thank you so much, Mr. Chabot. Mr. Sherman.

REP. BRAD SHERMAN (D-CA): Thank you, Madam Chair. As you know, I'm the ranking member of the Subcommittee on Terrorism and Proliferation. I take a great interest in these issues, and I thank you very much for inviting me to participate in these hearings.

Some of the questions that emerge we don't even need to deal with because -- well, the first case, Is Iran developing nuclear weapons? That's obvious. When will they have nuclear weapons? That's classified, although the answer is within a few years. And how dangerous will it be for Americans if they do have nuclear weapons? Well, let's review the situation.

The Iran government is today sheltering al Qaeda operatives at the highest level, including the son of bin Laden. And it cooperated with al Qaeda in killing Americans at the Khobar Towers. It has been identified as the number one state sponsor of terrorism year after year. It's hostility is not at issue.

What about its capacity? Well, when it has those nuclear weapons, keep in mind a nuclear weapons is about the size of a person, and is quieter than most. It can be smuggled inside the United States as easily as a person is smuggled into the United States -- and that's happened. But we lived through a hostile -- through a whole Cold War where there was hostility and capacity. But with the Soviet Union we had one issue, and that was the Soviet Union was deterrable. Compare that to the regime or regimes likely to hold sway in Teheran over the next dozen years. We could see instability at any time. It's an undemocratic government with many factions. We could see fanaticism in which the faction that holds power doesn't care whether we retaliate or believes that they will be met in heaven as great heroes if they are the victims of such retaliation. We will not have a deterrable nuclear power adversary.

So we can -- with the Soviet Union, the sons of Lenin once commented that capitalists would sell them the rope to hang the capitalists -- probably do so on credit. But fortunately the sons of Lenin were careful and were deterrable, and those terms do not necessarily apply to those who will hold sway in Teheran.

So then the final issue, the real question of these hearings, is: What are we doing about it? What, Madam Chairman, are we doing with regard to the Iranian nuclear program? Well, let's review. Congress mandated the Iran-Libya Sanctions Act. Yet time and time again the administration winks, nods, refuses to acknowledge that our allies' oil companies are investing in the -- millions of dollars in the Iranian oil sector, and just recently Japan, a Japanese company announced over a $2 billion investment, somehow now triggering the Iran-Libya Sanctions Act. You don't have to use the law if you can ignore the facts.

Then, over the last two years, the World Bank has approved loans of over a half a billion dollars. We voted no, as we are required to do by statute, so -- but we did not make it an issue. And we will be called upon in the next few weeks to send hundreds of millions or billions of American tax dollars to the same World Bank that is sending half a billion dollars, one quarter of them ours, to the government that's building those nuclear weapons. Oh, and every year for several years in a row we import $150 million worth of carpets and caviar that the Iranians couldn't sell anywhere else at the same price.

So when we are asked what are we doing with that Iranian nuclear weapons development program, what are we doing about it? -- the answer is clear: We are financing it on favorable terms. We are allowing, encouraging and ignoring our allies as they send money. We are financing and sending more money and more money to the World Bank as they send money to that government. And we are sending money directly from Americans to Iran for what are obviously unnecessary imports into this country. They are not deterrable. they are not careful. We are risking the lives of Americans on whether we can prevent that government from using nuclear weapons against it, smuggling them into the United States -- smuggling them -- and telling them that they've got them and they might blow them up, or just blowing them up? Be afraid. Be very afraid. And be angry that your government isn't doing anything to stop it. I yield back.

REP. ROS-LEHTINEN: Thank you. Ms. Davis. Mr. Tancredo. Mr. Rohrabacher.

REP. DANA ROHRABACHER (R-CA): Well, just a few thoughts before we get into the testimony. I know my colleagues on the other side of the aisle are very animated on this issue, but let us remember that this administration, our administration, inherited this problem from the last administration, which did absolutely nothing but caused the problem to get worse and worse. So I would just admonish the witnesses today, and I hope that you do better -- and we are all rooting for you to do better -- than the last administration did.

Then let us note that our colleagues on the other side of the aisle in this silly political season that it is are always stressing that this administration needs to act multilaterally. And of course you would think by the statements we've heard today that we are calling for a unilateral action. But let us note that -- I am pleased that my colleague has noted the failure of the World Bank and other international institutions and there are many of us on this side of the aisle that favor a strong United States policy that we are not afraid to enact on our own if necessary, but lead the way for the free countries of the world, rather than relying on the United Nations and the other institutions that our colleagues would have us rely on for our security --

REP. SHERMAN: If the gentleman will yield?

REP. ROHRABACHER: Not quite yet.

REP. ROS-LEHTINEN: No, he's just giving his opening statement. We'll let him continue.

REP. ROHRABACHER: That's correct. And let me --

REP. BERKLEY: But he's attributing comments to us that were never made.

REP. ROS-LEHTINEN: Excuse me. Excuse me. Mr. Rohrabacher is recognized for his opening statement.

REP. ROHRABACHER: Thank you. So I am looking forward to the testimony. My only admonition is: Be bold. This -- if we are going to be a free people, if we are going to live at peace, we've got to do more than the last administration did in trying to buy people off, and whether it's Iran or Korea. We need to make sure that we're bold and we act so that the next generation of Americans aren't left with a type of inheritance that the last administration has left us. Thank you very much.

REP. ROS-LEHTINEN: Thank you. Mr. Pitts is recognized for his opening statement.

REP. JOSEPH PITTS (R-PA): Thank you, Madam --

REP. BERKLEY: I'd like to seek recognition for a moment.

REP. ROS-LEHTINEN: No, permission denied.

REP. BERKLEY: All right. When I ask my questions I'm going to bring this up, because I don't like having my comments mischaracterized.

REP. ROS-LEHTINEN: Thank you very much. Thank you. Ms. Berkley, thank you. Mr. Pitts.

REP. PITTS: Thank you, Madam Chair. Thank you for convening this important hearing today on the dangers posed by Iran's effort to acquire and develop weapons of mass destruction. We cannot sit idly by waiting for confirmation that they have transferred WMDs to other state sponsors of terrorism or terrorism groups, and I look forward to hearing the testimony today. I'll submit my statement for the record. I'll submit my opening statement for the record.

REP. ROS-LEHTINEN: Yes. Thank you so much. And, Ms. Berkley, I would like to recognize you to correct the record that you believe Mr. Rohrabacher distorted.

REP. BERKLEY: I appreciate Mr. Rohrabacher's remarks. I can assure you -- and I think I'm speaking for my colleague here -- neither one of us mentioned anything that you were talking about. We believe in a strong America and a strong military, and to suggest that we don't, and attributing continued blame to the last administration is a tremendous affront to those members that are sitting here today. I'm sure you didn't mean that, but that's the way it sounded.

REP. ROHRABACHER: Well, I --

REP. ROS-LEHTINEN: Thank you very much. Thank you. I --

REP. ROHRABACHER: If I could just say --

REP. ROS-LEHTINEN: -- cleared up. No, Mr. Rohrabacher, I thank you. No, thank you.

REP. ROHRABACHER: -- my colleagues here --

REP. ROS-LEHTINEN: Thank you, Mr. Rohrabacher.

I am pleased to introduce our witnesses today. Undersecretary Bolton: John Bolton was sworn in as undersecretary of State for arms control and international security on May 11th of 2001. Prior to this appointment, Mr. Bolton was senior vice president of the American Enterprise Institute. He has spent many years in public service, having served as assistant secretary of State for international organization affairs from 1989 to 1993. As assistant attorney general from '85 to '89; as assistant AID administrator for program and policy coordination from '82 and '83; and as general counsel for U.S. Agency for International Development, USAID, from '81 to '82. Mr. Bolton is also an attorney, having served as an associate at the Washington law firm, and from '93 to '99 as a partner in another law firm locally. We thank you, as always, Mr. Secretary, for being with us and being so accessible. And he will be followed by -- Undersecretary Bolton is joined on this first panel by Mr. Peter Flory, principal deputy assistant secretary for international security affairs at the Department of Defense. Mr. Flory will serve as an accompanying witness and will be available to answer questions. Mr. Secretary, we thank you. You're always accessible, you always say yes, and you're always gracious to take our tough questions, and I think you get a flavor of that today already. Thank you. Your full statement we made a part of the record. Please feel free to summarize.

I want to touch briefly, and my prepared testimony does so at greater length on all of Iran's WMD efforts -- biological, chemical, nuclear, and ballistic missiles -- because all of these -- the pursuit of all of these deadly weapons, despite Iran's adherence to treaties that provide expressly to the contrary marks Iran as a rogue state, and it will remain so until it completely, verifiably, and irreversibly dismantles all of its WMD-related programs.

On chemical weapons, Iran clearly has a covert program to develop and stockpile these weapons. Reports by our intelligence community make that clear, including in the report that's just about to come out, the conclusion that Iran may already have stockpiled blister, blood, choking, and nerve agents and the bombs and artillery shells to deliver them, which they previously manufactured. Now, Iran is a party to the chemical weapons convention, the central obligations of which are very straightforward -- no stockpiling, development, production, and no use of chemical weapons. Most of the states, parties to the chemical weapons convention, abide by their commitments, but Iran has not. We think it is time for Iran to declare the remainder of its chemical weapons program and make arrangements with the organization for the prohibition of chemical weapons to dismantle and destroy its program.

With respect to biological weapons, our intelligence community has concluded that Iran probably has an offensive biological weapons program. It continues to seek dual-use materials, equipment, and expertise that can be used in that program, and that it has the capability currently to produce at least small quantities of BW agents and a limited ability to weaponize them. BW programs are inherently easily to conceal. It's very difficult to make definitive statements about them, but I think, from the intelligence I've seen that, as a policy matter, you can conclude that it would be contrary to our best interests not to assume that they've got a program actively. Responsible members of the international community like the United States should act to head off the threats posed by programs such as Iran's and demand transparency and bring suspected violators to accountability.

Iran's adherence to the biological weapons convention and the 1925 protocol are all being violated by these activities, and we think it's time for Iran to declare its program and make arrangements for its dismantlement.

On ballistic missiles, Iran has a very extensive program thanks to assistance from entities including government-owned entities in North Korea, Russia, and China, to develop a variety of liquid and solid propellant missiles. It's increasing the range of these missiles all the time, and its Shahab-3 missile is already a direct threat to Israel, Turkey, U.S. forces in the region, and other U.S. friends and allies. Iran clearly has programs underway to acquire the means to produce ever more sophisticated and longer-range missiles. North Korea is one of the main suppliers of this ballistic missile equipment and technology and, indeed, foreign assistance, as I mentioned, is a significant factor in Iran's program.

Now, since the Congress passed the Iran Non-Proliferation Act of 2000, we have imposed trade sanctions involving WMD-related transfers to Iran 37 times. This law has been a valuable resource to us. We have imposed sanctions on serial proliferators from China like NORINCO, CPMIEC, Zibo Chemical, and others, and for North Korea's Changgwang Sinyong Corporation. But we've also imposed sanctions on companies from Russia, Taiwan, Macedonia, and Belarus. We're not reluctant to impose sanctions on anybody that comes within the purview of INPA.

On nuclear weapons, we know that Iran is developing uranium mines, a uranium conversion facility, a massive uranium enrichment facility designed to house tens of thousands of centrifuges, numerous centrifuge production workshops, a heavy water production plant, and a laser enrichment facility. We know that Iran has violated its NPT and IAEA commitments by covertly enriching uranium; by covertly producing and separating plutonium; by secretly converting yellow cake into uranium hexafluoride; and by secretly producing uranium metal; and by failing to declare any of these activities to the IAEA.

Iran secretly procured T1 centrifuge components from the A.Q. Khan nuclear proliferation network as well as P-2 components including the means to manufacturer centrifuge components domestically including in military workshops and contrary to its commitments to the IAEA and the three European governments continues to produce components today.

Now, in the testimony, Madam Chairwoman, I lay out at some length what the IAEA has done over the past year. The chairman's statement in June 2003, the September 2003 IAEA board resolution, the November 2003 IAEA board resolution, the March 2004 IAEA board resolution, the June 2004 IAEA board resolution. During this entire period of time, Madam Chairman, the United States has believed and has tried to persuade the other members of the IAEA board that the Iranian nuclear weapons program should be referred to the U.N. Security Council as a threat to international peace and security. We have not yet secured that objective, but I want to assure you and the committee that that remains our objective.

I have laid out in the testimony at some length some of the specifics about Iran's nuclear weapons program. I think it's important to have this on the record in a public way. I won't repeat it here, but I commend it to your attention, because I think when you see the breadth and the scope of this program, it's easy to understand why we conclude that Iran has absolutely no need for this activity unless it's in an aid of a nuclear weapons program.

Now, in the course of the various resolutions that we've had adopted by the IAEA board of governors, the governments of the United Kingdom, France, and Germany have met with Iran and have sought to commit the Iranians to suspending and ultimately ceasing the uranium enrichment and plutonium reprocessing capabilities that the Iranians have sought. They reached agreement with Iran in October of last year to suspend enrichment and reprocessing activities. They reached a clarifying agreement with Iran in February of this year in which Iran committed not to produce uranium centrifuges and uranium centrifuge equipment.

Now, we have been concerned about the effect of this arrangement by the Iranians for some time, and have been working with our three European partners to try and harmonize our policies so that we maintain maximum international pressure on the government of Iran to get it to dismantle its nuclear weapons program. Even from the time last October, when the EU-3, as we call them, and Iran reached this deal, the Iranians have maintained publicly that their suspension of enrichment and reprocessing is purely voluntary, and that they will resume it at their discretion if the Europeans didn't carry through on their part of the deal as described by Iran to provide Iran with highly sophisticated technical assistance.

Now, we find that following the IAEA board resolution last week which, among other things, deplored Iran's continued lack of cooperation and deception of the IAEA, today, as I mentioned a few moments ago, the government of Iran has informed the United Kingdom, Germany, and France, that it is resuming production of uranium centrifuge parts. We believe that Iran never fully suspended this production to begin with, but it has, today, confirmed that it is reneging on the February agreement that it reached with three European countries.

They have not, at least at this point, said that they would resume actual enrichment activities, but it seems to me it's perfectly obvious that Iran is not producing components for uranium centrifuges to use them as knick-knacks in Iranian living rooms. This is an act of defiance of the IAEA board of governors. It is a thumb in the eye of the international community. We will be in close consultation with our three European allies to assess their reaction to this. I want to say again, Madam Chairwoman, it has been our view, it remains our view, Iran's action today confirms our view, that its nuclear weapons program is a threat to international peace and security and should be referred to the U.N. Security Council.

Now, we have undertaken, Madam Chairwoman, and I will try and wrap this up quickly -- we have taken a number of other steps, not confined simply to multilateral diplomacy, to try and stop the Iranian program. The president's proliferation security initiative is a robust, a muscular approach not simply to export control regimes but to using military intelligence and law enforcement assets to break up the international trade in weapons of mass destruction. PSI has had a number of successes, most notably the interdiction of the ship, the "BBC China" in October of last year. The "BBC China" was carrying centrifuge equipment from the A.Q. Khan network to Libya. The interdiction and exposure of that shipment was a significant factor in the Libyan government's decision to give up the pursuit of nuclear weapons and a significant element in the exposure of the A.Q. Khan network.

President Bush has gone further -- you mentioned his speech at the National Defense University -- one of the most, I would say, most wonkish speeches a president of the United States has ever given. I thought it was fantastic. He addressed the principal loopholes in the Nuclear Non-Proliferation Regime. He proposed dramatic programs to close those loopholes. He made great progress at the Sea Island Summit a few weeks ago in bringing the other G8 countries along in attempting to reach agreement on those programs. We're going to be continuing that work as well.

But let's be clear -- our policy is unequivocal. We cannot let Iran, a leading sponsor of international terrorism, acquire the most destructive weapons and the means to deliver them to Europe and most of Central Asia and the Middle East or beyond. That is our policy, Madam Chairwoman, thank you.

REP. ROS-LEHTINEN: Thank you so much. I wonder, did you have a hand in writing those wonderful words that you've delivered?

MR. BOLTON: They were written by the National Security Council and the president and the speechwriters.

REP. ROS-LEHTINEN: And in order to thank and reward Mr. Tancredo for not giving an opening statement, getting us to the first panelist so quickly, he will be recognized first for the set of questions.

REP. TANCREDO: Why, thank you, Madam Chairman, that is very kind of you, and I appreciate the fact that you've allowed me to join you on this committee today.

Mr. Secretary, it is apparent to everyone, of course, that the Iranian government is becoming far more belligerent, far more confrontational, dramatically so in many ways. As a matter of fact, as I understand it, there were reports last week that at the Asharq Al-Awsat Daily in Saudi Arabia reported that Iran was actually amassing troops on its southern border with Iraq for battalions.

That combined with -- I mean -- those reports, true or not, they were then carried in other media here in the United States, but if those reports are accurate and in the past, this particular daily, as I understand it, in Saudi Arabia has been a source of accurate information. Combine that with everything you have just said in terms of the nuclear program that it has been involved with, and we must assume, of course, that a decision has been made by the mullahs that rule that country, that they are going to move forward aggressively in face of whatever opposition we might present to them.

Now you have to ask yourself why. Is this happening -- what is your opinion as to what is driving it? There are two things that come to my mind, and I'd like you to comment on. One is the dissension that, of course, appears in the United States here in the Congress and in the public at large about our role in Iraq, and there is the possibility that they see this weakness here -- sign of weakness -- and want to test it to see just how far they can push it. Because, certainly, if they do have troops on that border, the implication is that they are waiting for something to happen inside Iraq and will therefore be able to take advantage of it quickly if it does sort of come apart.

The other is that something is happening internally in Iraq; that their own position is being threatened; that perhaps the movement toward a democratic -- the position of a democratic government or at least a more democratic government is gaining strength and that therefore, as we have seen many times around the world, governments, dictatorships, handle that by creating confrontation. Are both of those reasonable? If not, what do you think is the major reason behind what they're doing?

MR. BOLTON: Well, you've asked a complex question. Let me see if I can address at least a couple of points. I think there's pretty broad agreement that the more hard-line elements in the government have been increasing their power after the so-called elections to the majilis recently. There have been a lot of signs that hard-liners feel far more confident than they have before. But you know one of the things specifically I think is important on the issue of the pursuit of weapons of mass destruction and longer and more accurate range ballistic missiles is that fundamentally there hasn't been any disagreement that we've seen between the so-called moderates and the so-called hard-liners on the importance of achieving a nuclear weapons capability. That's one of the reasons why, despite the fluctuations of what may be happening in Iraq, or what may be happening in the internal political dynamic of Iran, which is very hard to read from the outside, that the continuing efforts supported across the political spectrum -- at least in the governing class of Iran, if I can put it that way -- in support of the nuclear weapons effort remains so troubling to us. It's one of the issues we have raised with our European colleagues repeatedly as they look at the dynamic between the so-called hard-liners and the so-called moderates, that that dynamic just doesn't exist when it comes to pursuit of nuclear weapons. It's one of the reasons why Iran's persistence in this regard is so troubling, because whatever the ups and downs of the internal politics of Iran might be, this pursuit of nuclear weapons goes on unabated, and that has to be very troubling to the United States and its friends and allies in the region from a long-term strategic perspective.

REP. TANCREDO: I'd like to pursue it -- not enough time to do so, because I have another question dealing with the MEK. This is an organization that is on the terrorist watch list for one reason, as far as I can tell, and it is there because the Iranians want us to keep it there. They are afraid of the MEK. They are afraid of the political power that they may wield, even inside Iran. Do you think that there is still, recognizing now what Iran is doing, do you think that there is -- it still serves a purpose to keep them on that watch list? And would it not be to our advantage to employ the resources that they have, both in the field and politically outside of Iran as a counter force in some way or other?

MR. BOLTON: Well, I think the MEK qualifies as a terrorist organization according to our criteria, and I think the decision was to apply the criteria in a consistent way and designate it as a terrorist group. But I don't think that's prohibited us from getting information from them. And I don't certainly have any inhibition about getting information about what's going on in Iran from whatever source we can find that we deem reliable.

REP. TANCREDO: Thank you.

REP. ROS-LEHTINEN: Thank you, Mr. Tancredo. Ms. Berkley.

REP. BERKLEY: Thank you, Madam Chairman. Secretary Bolton, could you explain to me why -- it's my understanding that the administration has continued to waive the provisions of ILSA. Could you tell me why, and are we going to implement ILSA at some time, and at what point, what would trigger it?

MR. BOLTON: I spoke this morning with some of my colleagues at the State Department who are directly responsible for the administration of ILSA, because I knew from prior hearings on this subject it was a matter of interest to members of the committee. And I think the best answer I could give to that question is they believe they are applying the provisions of ILSA. They believe they have applied it consistently from its date of enactment in the prior administration, and that we are essentially following precisely the same policy that was undertaken during that administration.

REP. BERKLEY: Can you cite any specifics? How are we implementing the provisions of ILSA?

MR. BOLTON: Well, the fact is that we haven't granted any waivers of ILSA, and we haven't deployed any sanctions of ILSA. But, again, the belief of those who are more directly responsible for it is that the provisions of ILSA have been useful to them in discouraging --

REP. BERKLEY: In what ways?

MR. BOLTON: In discouraging foreign investment. That is to say there would have been more foreign investment than there has been already, and it has been useful in the pursuit of the objectives that the ILSA statute sets out.

REP. BERKLEY: Do you think the Russians are selling material and trading with the Iranians?

MR. BOLTON: Yes, they are. There's no question about it.

REP. BERKLEY: French?

MR. BOLTON: They are certainly.

REP. BERKLEY: Then how are we using ILSA?

MR. BOLTON: The -- those charged with it I think have been in active discussion with those countries. And, as I say, part of the mark of the effect of ILSA is not simply looking at the investments that have been made, but the much harder to quantify subject of investments not made. And the --

REP. BERKLEY: How does one quantify those?

MR. BOLTON: That's what I say. I believe it's very difficult. But the -- because there's no readily agreed upon database, and it is the view and it's not something I have personal experience with, but as I say I knew it would be important to try to respond to your questions on the point that investors, particularly in the petroleum field in Europe, Japan and elsewhere, are quite aware of the views of the Congress that have been expressed by ILSA, and that have been communicated to them in the years since the statute was enacted.

REP. BERKLEY: But they continue to do what it is we're trying to stop them to do, stop them from doing. So why haven't we implemented some sanctions to demonstrate that we're serious? I think that they are very aware of how the Congress feels, but isn't the reason that we passed these laws to change behavior?

MR. BOLTON: Well, the -- I think that -- I certainly think there is utility in changing behavior, and that's why we've implemented under the Iran Non-Proliferation Act as many sanctions as we have. I think ILSA is a different kind of statute. It involves different kinds of considerations, and it has been applied I think in the view of those responsible for it in a manner consistent with the statute.

REP. BERKLEY: But you just told me they hadn't done it.

MR. BOLTON: I think what I testified was they hadn't imposed any sanctions; nor have they issued any waivers.

REP. BERKLEY: I see. Could you -- you stated in your opening testimony that it's our view, the United States's view, that the matter of proliferation should be -- Iranian proliferation should be referred to the Security Council - -it sounds like multilateralism to me, but what is the Bush administration doing to facilitate this?

MR. BOLTON: We have had, I can assure you, over the past year extensive consultations with -- particularly with our major Western European allies, with Russia, with China, with Japan, with many of the other members of the IAEA board of governors, because to us the existence of the clandestine Iranian nuclear weapons program in and of itself is a sufficient threat to international peace and security.

REP. BERKLEY: That's what I don't understand. If that's the case, and I believe it is, and the Russians and the Japanese and the French and our European allies are in the same pickle we're in, and they have the same danger posed to them by the Iranians, why is it they continue to violate our wishes and continue to trade and do things with the Iranians that is absolutely not only against our national interests but their own national interests? It makes absolutely no sense to me.

MR. BOLTON: Well, I would say in all seriousness -- I would invite you to come with me on the next trip we take over there. And I really do think it's important. I've said this a number of times privately, and I'm happy to say it today: When members of Congress meet with their counterparts in these Western European nations, in Japan and elsewhere to make precisely that point, it is something that I think will have, if the Iran matter in particular is not resolved, it will have a long-term negative impact on the IAEA, on the nuclear non-proliferation regime, and I might say on the Security Council. If the Security Council can't be seized with what is in combination with terrorism, the proliferation of weapons of mass destruction t he most serious threat we face to our collective national security, it's hard to see what the Security Council is going to address effectively. That's why I say we've been very persistent in our efforts -- not because we have some long-term design against Iran that we are seeking an immediate resolution authorizing sanctions or the use of force or anything else, but because we think that it would change the worldwide political dynamic very substantially to have the matter before the Security Council. And so far, despite our efforts and the support of almost everybody in Congress that I can tell, we have not persuaded them. So more persuasion is needed. And I do seriously believe that in addition to what you do in your legislative sphere that your contacts with foreign governments in this regard can be quite important.

REP. BERKLEY: I've just been called down to the floor to make a floor statement, but I agree that this is a very, very serious issue. I have spoken until I am blue in the face with our counterparts, and until we get serious and the administration does do those sanctions which we have authorized, we're not going to get anywhere. And I think it's time that we start implementing -- the administration starts implementing the laws that this Congress has passed. And thank you very much for being here. I'm sorry I can't hear the rest of the testimony.

MR. BOLTON: Thank you.

REP. ROS-LEHTINEN: Thank you so much, Ms. Berkley. Come back, and maybe we'll get the next round. Thank you so much.

Mr. Bolton, if I could ask a few questions, Mr. Secretary, would you agree that the breaches outlined by the IAEA in the February and the June reports that you talked about, and the announcement this morning, are in violation of the Teheran declaration between Iran and the European Three? And is there any hope that our European allies will consider at least this latest announcement of manufacturing centrifuges as a red line for reporting Iran to the Security Council? Beyond referral to the Security Council, what other efforts are available to us that we are undertaking to prevent Iran from going nuclear?

MR. BOLTON: We don't have at this point a reaction from the EU- 3. As I say, this literally just happened a few hours ago. But certainly we have been in discussion with them about what should constitute a violation by Iran of their own red lines. And I guess I can't say at this point whether the resumption of centrifuge manufacturing would be such a violation. I don't think that it is sustainable for the EU-3 not to recognize, however, that this is a substantial setback to the notion that Iran can be induced to give up the pursuit of nuclear weapons voluntarily.

Now, I think that the Iranians have tried to be careful in revealing this plan to say they continue to adhere to the additional protocol. I am sure they have the politics of the IAEA board of governors in mind. But let me say the notion that the suspension means anything when Iran resumes the full scale capability that it has of turning out centrifuge parts means that these parts are potentially useful to Iran in a massive uranium enrichment program that would give them a nuclear weapons capability. And that's one of the reasons why our efforts through the Proliferation Security Initiative and through sanctions to try and restrain and cause damage to Iran's external procurement activities are so important. We don't judge at the moment that Iran left entirely on its own, if entirely isolated, could sustain the nuclear weapons program that it now has. So cutting off its procurement activities, convincing other nations to apply their export control regimes strictly, and interdicting shipments important to the Iranian nuclear weapons program in international commerce are going to be very important I think in that regard.

We have not confined our diplomatic activities to the IAEA Board. Obviously we've been in intense discussion with Russia, Japan and the others bilaterally as well. But I think the more robust steps of PSI are going to be important here if diplomacy doesn't succeed.

REP. ROS-LEHTINEN: And to follow up with that, would you agree that the fastest way for Iran to achieve nuclear status is through the NPT rather than outside of it? And, if so, if you could elaborate on specific articles and provisions of the NPT that Iran has been using to continue its nuclear activities? And would some of these include Iran's use of research and development justifications to continue its UF6 manufacturing? And do you believe that this i the reason why prior to last weeks IAEA board meeting the Iranian officials only issued threats about not ratifying the additional protocol rather than -- while affirming that they would stay in the NPT?

MR. BOLTON: I think -- this is an important question in understanding of what the flaws are in the NPT and the loopholes that need to be addressed -- some substantial ones of which the president addressed in his NDU speech in February. I would say Iran is the paradigm case of a country seeking to acquire a nuclear weapons capability covertly, while on the surface trying to maintain the appearance of complying with the nuclear non-proliferation regime. Many of the activities that Iran has undertaken are not prohibited by the NPT. Many others would not be prohibited, or they wouldn't be in violation of they had disclosed these to the IAEA. And yet when you add all these programs together, and see the extent of what the Iranians are up to, there is no question but that they were getting very close to a break-out capability to have a full nuclear fuel cycle that would be completely independent of outside pressure, and that they were doing this under the guise of a so-called peaceful program. This goes to the, I think, heart of the problem with the NPT as we now see it. If we knew 50 years ago what we knew now, the Atoms for Peace program would have looked very different, as I think would the Non- Proliferation Treaty. And the notion that the Iranians and others continually say is that the Non-Proliferation Treaty gives them a right to nuclear weapons to -- sorry, Freudian slip -- to a civil nuclear power program while at the same time they are violating the most critical provisions of the NPT, prohibiting them from obtaining nuclear weapons is just logically contradictory. Whatever might be the case for a country that was never in the NPT, and therefore never bound by any of its obligations, Iran is a country that has taken advantage of the provisions of the NPT to get assistance and technological aid, and is violating it at the very same time. It is exactly the sort of flaw in the international treaty regime that this administration has tried to address through things like PSI and other steps to fill those gaps.

REP. ROS-LEHTINEN: Thank you. And, Mr. Flory, one last question: The U.S. already has defense agreements with Kuwait, Bahrain, Qatar, the UAE, many other countries. How are we using our military-to-military contacts to develop multilateral efforts to contain Iran's nuclear efforts? And what has been the response from the region? Have the military establishments of our U.S. allies in the region given any indication of the potential response of their countries to a nuclear Iran?

MR. FLORY: Madam Chairwoman, thank you. As your statement and statements of others on the subcommittee have already said very well and very clearly, if Iran acquires nuclear weapons it will mark a dramatic change for the worse in the security landscape of the Persian Gulf and the broader Middle East. And in particular this would come at a time when the people of the region should be enjoying some respite from the removal of the hammer that's been over their head for decades in the form of Saddam Hussein and his government, and should be enjoying the benefits of having an Iraq that is at peace and does not seek to threaten its neighbors. And the countries of the Gulf have been concerned about the Iranian threat for a number of years. We have, as you point out, relationships with them ranging from -- in degree different levels of military cooperation, political cooperation. A number of them were extremely helpful to us during the Operation Iraqi Freedom, also in Operation Enduring Freedom for that matter. I think what we will do -- the reaction will be to build on and use existing structures and existing relationships. We have now the Gulf Cooperation Council. We also have -- which is a multilateral group -- and we're not a member, but we work with it. And it has activities that focus on dealing with potential WMD threats as well as response efforts.

The exact nature and shape of what we do is going to depend on what happens, and it's going to depend, like our overall posture there is, on events in the region, how things go in Iraq, what the profile is of the development of the Iranian threat, what we see as the actual military threat at a given time. But suffice it to say that these countries are very focused on this threat -- many of them frankly over the last 10 years have been more focused on the threat to Iran, which many of them view as a longer-term threat to their stability than Iraq. I think many concluded at the time that Iraq was to a certain degree contained, and that eventually Iraq was going to get settled one way or the other, and that has indeed happened. So now they're looking around. And while -- as I mentioned earlier, while enjoying the fact that the hammer of Iraq has gone away, they are in fact very focused on Iran, and I anticipate that this will continue to be a subject -- Iranians who at the progress of the Iranian nuclear program, particularly after the news that Undersecretary Bolton gave us today about this sort of break-out from the diplomatic process, I anticipate that as we have military-to-military talks in the course of the next year or so we'll hear a great deal about this, and we'll be working with our friends in the region to come up with responses. Thank you.

REP. ROS-LEHTINEN: Thank you very much.

Mr. Sherman?

REP. SHERMAN: Thank you. It's wise that we're having these hearings close to the fifth anniversary of the student uprising and freedom efforts in Iran -- in effect the Iranian Tiananmen Square. I do need to respond to the comments of my friend from Southern California, Mr. Rohrabacher, who does point out that that trade I complained about, the $150 million that we import from Iran -- that did begin at the last year of the Clinton administration. But I went down to the floor and said there's blood in the caviar, and not even my outspoken friend from Southern California has used such colorful language to describe his own administration. But looking at the '90s and the '80s, yes, Ronald Reagan sent weapons to the government of Iran; yes, the first Bush administration allowed economic contacts; yes, Clinton was asleep and finally allowed trade. But it's one thing to sleep before September 11th. It's another thing to keep hitting the snooze bar after September 11th. If September 11th can't wake up a country, what can? The president correctly identified the axis of evil and the two truly dangerous countries in the axis of evil are now several years more advanced in developing and building their nuclear weapons programs. But we've gone beyond any business as usual that the Clinton administration followed. We decided to kowtow to Teheran by closing down the offices of those who even voice support for the MEK, one of Teheran's more dangerous adversaries, and an entity with a checkered past to be sure. But it was the one concession we hadn't made to Teheran already, so we decided to make it.

As to the $150 million of imports from Iran, Mr. Secretary Colin Powell sat in the very seat you're sitting in now in February, promised me that he would explore whether we should cut off those $150 million. My God, they skilled our people at the Khobar Towers! Apparently that isn't enough to stop business as usual. I won't ask you about the 150 (million dollars) -- because I asked Secretary Powell. He said he'd get back to me. The goods are coming in every day -- I'm sure they're at the ports today.

As to the World Bank, we have since the Clinton administration allowed a doubling and then a redoubling in the amount of money going. Now we're talking well over half a billion dollars in just a couple of years -- way beyond anything Clinton ever slept through.

And then as to the Iran-Libya Sanctions Act. You can't sit there and say there have been no waivers, because if you blind your eyes and cover your ears, and ignore even the reports widely circulated in all of the world economic press, about 1.8 to 1.9 billion dollars, from a whole consortium of Japanese oil companies, are arranged and supported and coordinated by the Japanese government. Then you don't have to make a waiver. A blind man doesn't have to make a waiver. And if you scourge out your own eyes, you don't have to make a waiver.

But some of this fault goes to the American people and the American press, because they seek to judge this administration exclusively on what's happening in Iraq. And so if you're able to get at virtually the same time as we ignore this 1.8 to 1.9 billion dollars of investment by Japan in the Iranian oil fields, if at the same time -- oh, not directly linked as far as I can prove, a few hundred soldiers from Japan into Iraq, then the American people say, Hey, the administration is doing its job -- it's getting a few hundred Japanese soldiers into Iraq, while watching the money flow to those who are building the nuclear weapons that will be smuggled into our cities.

So, Mr. Secretary, is it a waiver or is it just self-imposed blindness that we can ignore what's reported in the economic press of this enormous Japanese investment by several Japanese oil companies? And does it make any sense for the Congress to pass any laws providing for waivers, if you're not even going to bother to exercise the waiver but just ignore the facts on the ground, the facts widely reported in the economic and financial press? Mr. Secretary?

MR. BOLTON: Well, let me just say with respect to the sanctions statute that you didn't refer to, I want to underline again that we have invoked the provisions of --

REP. SHERMAN: Mr. Secretary, if I can just interrupt you, because I did want to get to that --

MR. BOLTON: -- 37 times --Hill.

REP. SHERMAN: And I point out those are sanctions against little tiny companies that don't have much economic relationship with the United States. I can't find even $100 million worth of business from those companies. But also it is very easy for those companies, in the countries in which they do business, to simply stick another company's label on those very few products that they are sending in -- or you're going to say not sending in -- sending in under another label. So imposing sanctions on companies that don't have a huge economic relationship with the United States, and which can easily just get another company in the same country to put -- slap a label on the product, or claim to own a subsidiary, or claim to be a co-venturer in the subsidiary that produces them. That is not much of a sanction, and certainly pales into insignificant compared to 1.8 to 1.9 billion of Japanese investment in the Iranian oil fields. So perhaps you can respond to that.

MR. BOLTON: I would be delighted to. I think that the sanctions under the Iran Non-Proliferation Act have had a more telling effect. I think when we sanctioned serial proliferators including some major Chinese conglomerates, I could tell you that it has gotten attention at the very highest levels in Beijing. It has had a substantial effect.

Now, in terms of the contentions you're making about the administration of ILSA, the impression I have is that you're disagreeing with the implementation of the provisions, and I --

REP. SHERMAN: Mr. Secretary, I'm disagreeing with the deliberate non-implementation of the provisions.

MR. BOLTON: Okay, now I'll finish my sentence. My impression is that you are disagreeing with the implementation of ILSA, but I have not heard in this hearing or in other hearings that people have contended that the policy that was originated in the last administration, which is being followed in this one, is contrary to the provisions of ILSA. So what that suggests to me is that for you and for others who feel that additional sanctions pressure on Iran through ILSA-like statutes are required is that you need to seek amendments to make more in conformity with what you want, and if you're not able to keep them --

REP. SHERMAN: No, no, Mr. Secretary, I'm saying that we have passed a very clear law that your administration is deliberately ignoring. You know, we can pass a law against theft, and the bank robber can just say, "Hey, I didn't see the law. I didn't see the money."

MR. BOLTON: I can assure you that brigades of lawyers at the State Department --

REP. SHERMAN: -- have they even --

MR. BOLTON: -- have been parsing --

REP. SHERMAN: -- have they ignored the $1.9 billion or have they issued an opinion that somehow it's not a violation of ILSA?

MR. BOLTON: And these brigades of lawyers are convinced that we are implementing the ILSA provisions accurately.

REP. SHERMAN: Well, if they don't bother --

REP. ROHRABACHER: Has the gentleman's time expired?

REP. ROS-LEHTINEN: Why don't you just ask that one last question. We'll let Mr. Bolton just finish the sentence before --

REP. SHERMAN: Okay, let me point out --

REP. ROS-LEHTINEN: I think your point is very clear.

REP. SHERMAN: -- that it's not lawyers who say that ILSA doesn't apply to the transaction. The administration has issued no such legal opinion but rather you simply have canceled your subscription to the "Wall Street Journal" and choose to ignore the fact that the transaction is taking place, and then you can say, "Well, we're not failing to violate the law," just as a law requiring a bank security officer to stop a robbery is not violated if the guy doesn't show up for work or when he does show up for work he wears a blindfold.

REP. ROS-LEHTINEN: Thank you, Mr. Sherman, and you're four minutes over your five minutes. I'm going to let Mr. Bolton answer without interruption.

MR. BOLTON: I understand Mr. Sherman's passion on this subject, and I think it's directed at the same objective we're trying to achieve, particularly in the field of stopping Iran's programs to acquire weapons of mass destruction. I will simply say, in an effort to be brief, that we are following precisely the same policy as the previous administration.

REP. ROS-LEHTINEN: I think both of you have made that point very clear. REP. SHERMAN: Before.

REP. ROS-LEHTINEN: Thank you very much. It's a pleasure to have Mr. Rohrabacher, whose equally non-controversial make the round of questions.

REP. ROHRABACHER: Thank you very much, Madam Chairman. I just don't know where all this energy that Brad is exhibiting today was all these years prior to this administration. Hmm.

REP. SHERMAN: Mr. Rohrabacher, you weren't there to hear my speech in the year 2000.

REP. ROS-LEHTINEN: Thank you very much. Thank you, Mr. Sherman. Thank you, Mr. Rohrabacher.

REP. ROHRABACHER: Tell me, Secretary Bolton --

REP. ROS-LEHTINEN: Tell you about the red caviar, so don't give him an opening there.

REP. ROHRABACHER: Now, do you have jurisdiction over ILSA in your --

MR. BOLTON: I do not, no.

REP. ROHRABACHER: Oh, okay. Well, I think that says a lot. Let's ask a couple of questions here. We really aren't concerned about another country having a nuclear weapon. For example, we don't worry about England having a nuclear weapon. We're not worried about, let's say, well, maybe some of us are worried about France having a nuclear weapon, but I won't go into that. But actually isn't the problem the fact that we have the regime in Iran the real problem?

MR. BOLTON: I think that the pursuit of nuclear weapons by Iran clearly extends over a long period of time. This is not something that the mullahs alone decided to pursue, and it's one reason why, as I said earlier, even if you get into the intricacies of hard-liners versus moderates, we never saw, and I don't believe there exists, any fundamental disagreement within the governing religious class in their determination to pursue nuclear weapons, and that's why it's the regime as a whole, whether you call it the moderate faction or the hard-line faction or the moderate-hard-line faction or the hardline- hardline faction -- they all want nuclear weapons. That's what's so disturbing.

REP. ROHRABACHER: Well, if we could get the mullahs back to the mosque in Iran, and we have a lot of young people there who would like to have truly democratic government, I would contend that would probably -- the people who would then take over would not be as committed to turning a nuclear facility into a nuclear weapons facility.

MR. BOLTON: I think if you look at the historical experience in other countries, and I would just think of two particularly apt ones -- in South Africa and Ukraine. At a time when there was massive regime change, the case of South Africa, the overthrow of the Apartheid regime, the coming together of a true national, multiracial government, which made a decision that, among other parts of the baggage that passed it was going to throw out, was the nuclear weapons program. That was an opportunity for the new government of South Africa and made the right decision.

When the Soviet Union broke up and the Ukraine came into existence, they, too, made a determination that they would give back or destroy -- give back to the Russian Federation or destroy all of the strategic weapons and delivery systems that they have. Again, the coming into power of a completely new regime, and Ukraine gave them an opportunity. The same may be true of Iran.

REP. ROHRABACHER: That certainly suggests that -- the point I'm trying to make is that regime change in Iran will help be a solution to the problem -- may be the solution to the problem, rather than trying to just focus on this one activity of that regime.

In terms of -- and let me note for the record here -- this administration's commitment to the defeating of radical forces in Iraq and gangsters in Iraq probably is doing more to deter the proliferation of these weapons of mass destruction than anything that we could do incrementally in other countries. So I would commend this administration for that and realize that if we do cut and run, as some of the nitpickers in this administration are suggesting, that there will be a lot of nuclear weapons programs all over the place among people we don't want to have nuclear weapons.

MR. BOLTON: I think the elimination of Saddam Hussein's regime and the functional redirection of the scientists and technicians who were part of his WMD programs are absolutely critical, and the lesson that other governments are learning, absolutely critical. I think without the overthrow of Saddam Hussein, we never would have seen the decision by Libya to give up weapons of mass destruction.

REP. ROHRABACHER: I think that's a very good example. A few specific suggestions -- I do agree that we could be, for example, eliminating the rugs and the pistachios and the caviar. I think probably the money that's being made from those rugs and that caviar is probably going into the pockets of some corrupt mullah who is likely to be a supporter of their nuclear program.

MR. BOLTON: May I just comment on that so the record is clear for Mr. Sherman as well -- sorry, he's left. The Clinton administration ended restrictions on those imports of caviar, rugs, and various kinds of nuts because the revenues were thought to be going to small businesses in Iran, and that was a very important element in their decision.

REP. ROHRABACHER: Well, it's always important to watch the nuts in Iran, all right. So let me end with this -- I would suggest for the administration, if I have any criticism of the administration, it is that when looking at the challenge of keeping nuclear weapons out of the hands of the mullahs in Iran, that we haven't taken the initiative on positive approaches. For example, with Russia, I think that a long time ago we could have approached Russia and I think, in fact, I talked to some people in the State Department about this -- perhaps giving the Russians an alternative years ago to make their money developing a nuclear power plant in Turkey or in another country that wouldn't be threatening to the United States and the Western World. So I would hope that people hear that. It's maybe not too late to do that.

MR. BOLTON: I think you're on target there, and I can assure you that President Bush raises this with President Putin at every opportunity -- his concern for Russian involvement in Iran. It's a very high priority in the dialog he has with President Putin.HIRC-IRAN-PNL-I-BOLTON PAGE 31 06/24/2002 .STX

REP. ROHRABACHER: Well, we can't expect the Russians to walk away and just eat it when they're in such horrible economic conditions. We should have been able to give them an incentive to make as much money going somewhere else that wasn't so threatening. And, with that, thank you very much, Madam Chairman.

REP. ROS-LEHTINEN: Thank you so much. Mr. Pitts.

REP. PITTS: Thank you, Madam Chairman. Mr. Under-Secretary, is Iran truly on an irreversible path to nuclear status and, if so, is our policy at this juncture merely to delay the inevitable? Or is it the policy of the United States to ensure that Iran does not acquire a nuclear weapons capability and is this view shared by our European or other allies?

MR. BOLTON: Our view is that Iran is still pursuing a strategic decision to have a nuclear weapons capability, and I stress that because this is not something that's accidental. This goes to a core element of Iranian national security policy and, therefore, judged in that light, I think the extent and vigor of their efforts simply underscores why what we have to do is change that strategic decision one way or the other.

Our goal is not simply to delay this. Our goal is to stop it and, as I said in my opening remarks, as we have said in the case of North Korea, what we want is the complete, verifiable, and irreversible dismantlement of Iran's nuclear weapons program and all of its programs of weapons of mass destruction.

With respect to the European allies -- if I can, I think at least some of them do share our view that Iran is, as a matter of its fundamental strategy, pursuing nuclear weapons but not all of them, and I think that disagreement in basic analysis as to what the Iranians are up to is an explanation for part of the tactical disagreement that you see as to how to handle the Iranian program.

REP. PITTS: Mr. Flory, would you speak to the broader regional and global implications of the Iranian program?

MR. FLORY: I touched on this earlier. The immediate regional implication is that Iran, which already -- by its size and population and support for terrorism -- already casts a shadow in the region will cast an even longer shadow and an even darker shadow. That will affect -- and that's when you combine the nuclear program with the aggressive development of ballistic missiles including the Shahab-3, which Under-Secretary Bolton mentioned earlier, which basically can hit any of Iran's neighbors and countries further away that Iran has an animus against, such as Israel.

The effects of this are severalfold -- one of them is it threatens U.S. allies and friends in the region, and it threatens U.S. forces. It deters -- it gives Iran the ability to coerce countries and to deter countries from doing anything about it. Whether that means to deter the United States from moving into the region or -- where the greater leverage may be, in some cases, of deterring other countries from allowing the United States either to use forces in their region or to move forces into their region. So we thought, again, it allows Iran to expand its regional influence considerably.

The impact is not limited to the region, however, because Iran, again, as Under-Secretary Bolton noted in his -- Director Tenet testified in this threat hearing earlier this year -- Iran is continuing research and development on longer-range programs and continues work on a space launch vehicle, which, I once saw it described by a CIA -- an unclassified CIA paper, described a space launch vehicle as an ICBM in disguise. So -- and Iran said, I think, last year it specifically made a statement that it intended to continue research and, of course, if you have something that's an ICBM in disguise, then you're talking about the ability to reach out and threaten the United States itself as well as countries, say, in Western Europe that are not within the ambit of the Shahab-3 but that Iran may have a desire to threaten.

And that's not even touching on another aspect of the threat. In the opening statements, members talked about Iran's support for terrorism, which is probably the single most consistent and implacable element in Iran's foreign policy over the last 30 years. As we saw on September 11th, the ultimate -- the ultimate precision-guided weapon is a human being with a pair of eyes who can put a weapon anywhere within feet or inches of where it needs to be and, of course, with nuclear weapons, you don't need that great a level of accuracy in the first place.

Let me clear, I have not seen evidence that Iran is providing nuclear materials or thinking of providing nuclear materials or any other kind of WMD to terrorists, but the fact of the matter is in a post-9/11 era where nothing is unthinkable, where the -- when you look at what Iran is doing with terrorism now -- I mean -- Iran is supporting Ansar al-Islam and its activities inside Iraq. You have Iranian clerics exhorting Iraqis to blow themselves up like the Palestinians for the purpose of killing coalition forces. You have the ongoing support for the use of -- for terrorist groups that are fighting Israel. Here you have a regime, and this goes back to an earlier question, I think, by Mr. Rohrabacher, on the nature of the regime. The nature of the regime is one of the core elements here.

Here we have a regime that has used terrorism consistently as an element of its policy; that prior to September 11th, I believe it killed more Americans -- it was linked to the death of more Americans through terrorism than any other regime, which is now working very hard and has just basically ignored another stop sign in its efforts to develop nuclear weapons. You add that to ballistic missiles, you add that to potential terrorist threat, you have here precisely what the president discussed in his national security strategy -- the nexus of terrorists and state sponsors of terrorists, and state producers of weapons of mass destruction. So the impact of this program is -- it's immediate, it's severe in the region, and it's potentially even greater.

REP. PITTS: How does the recent political instability in Iran factor into their pursuit of WMDs? Does Iran's instability make their proliferation efforts more dangerous? Does it make their potential nuclear weapons more susceptible to defusion through non-state actors?

MR. FLORY: I think there is a risk. Whenever you have a country that's approaching nuclear weapon status or that has other programs like this, that instability breakdown of the order could lead to the dispersion of those. I don't think in the nuclear weapons area that that's an immediate problem, so that if there were a popular revolution in Iran at this point, I think that the risk of the spread of the nuclear technology would not be a factor. The closer they get to nuclear weapon status, and if they ever achieve nuclear weapons themselves -- that would obviously be a substantial problem.

REP. PITTS: Thank you, Madam.

REP. ROS-LEHTINEN: Thank you, Mr. Pitts. Mr. Schiff.

REP. SCHIFF: Thank you, Madam Chair. Ambassador, I wanted to ask you about the --

REP. ROS-LEHTINEN: Oh and, by the way, he doesn't have anything to do with the ILSA application.

REP. SCHIFF: With what?

REP. ROS-LEHTINEN: With the sanctions -- I've just been --

REP. SCHIFF: Okay. Oh, was this the subject to a debate earlier? Shall we get into the Clinton administration at this point? You'll be happy to know, Mr. Secretary, I'm not going there.

My question is about the nature of the support and the motivation for a nuclear program in Iran. It's my perception that the desire for a nuclear bomb in Iran is a nationalist goal; that it cuts across the spectrum; it's not just a goal of the conservative clerics, but a broadly supported goal even among the reformers that this is tied into Iran's image of itself as a regional power and its equation of the possession of nuclear weapons with being a regional power. Is that an accurate perception, or is there a political component in Iran that does not want the bomb that differs from the more conservatives in Iran?

MR. BOLTON: I think the answer to the last part of your question, in particular, is we really have no way of knowing what the average Iranian citizen really thinks -- that the same to -- in responding to a question from Congressman Pitts that if you had a truly popular revolution as in other cases of regime change like South Africa and Ukraine -- that might well be the opportune moment to say to the Iranian people -- give up the quest for nuclear weapons -- and that you would have an opportunity.

With respect to the distinctions among the current governing class, the sno-called "moderates" versus the so-called "hard-liners," we have not seen any indication that there's any real difference, and that's why part of our diplomacy with our European friends is where they have said, "Well, you don't want to do anything that discourages or undercuts the moderates. When you talk about moderates among the Iranian governing class, you're still talking about people who believe in the pursuit of nuclear weapons. So that whatever the implications internally in Iran, we haven't seen that that has had any effect in terms of diminishing their efforts to acquire nuclear weapons.

REP. SCHIFF: Iran seems to be a much harder case in many respects than North Korea, given that there's less economic leverage over Iran and has a broader-based ability to support itself than North Korea does. Is international pressure, the threat of economic sanctions, sufficient to deter a reasonably self-supporting country like Iran that appears bent on possessing nuclear weapons?

MR. BOLTON: Well, I think what we have, right now, is a long- standing series of American economic sanctions against Iran, but in a number of cases involving Europe, Russia, and Japan, fairly substantial commerce investments, so that our sanctions have not been as effective as they might be.

On the other hand, I do believe that the cumulative effect of the sanctions we've opposed for -- on transactions we've been able to uncover, where Iran has been seeking components for its WMD programs, have had an effect -- not so much in the economic sense but in the political sense, and it's one of the reasons why we have continued to work with Western Europe, Russia, Japan, and others to try to get them to help us, not leverage in the economic sense but leverage in the political sense, to convince the Iranians that it's simply not in their long-range strategic interest to continue to pursue nuclear weapons.

The fact that that has not yet happened is something that allows Iran to slip between ourselves and our friends and allies and continue to pursue nuclear weapons.

REP. SCHIFF: In the broader context, I think Iran is really the classic illustration of the flaw with the NPT, which served us reasonably well for however many years but now is not, I think, up to the task in that a country like Iran can go so far down the path towards nuclear energy, purportedly, and then make an abrupt right turn and develop the bomb. You know, I share the view that as long as we permit, as an international community, nations to enrich uranium, there is no practical way to keep them from getting the bomb. So there has to be some new regimen, some new proliferation structure obtained. I know the president has an initiative in this area, but two questions -- one is, how can we marshal the kind of international support we need, where a coalition of the willing is not enough? You need basically a mammoth coalition, because a small coalition of the unwilling can't proliferate nuclear technology and expertise. It has to be very broad-based. How can we marshal that kind of a coalition while there are concerns around the world with our research into nuclear bunker busters? How can Russia have credibility when it's becoming increasingly reliant on its nuclear deterrent, as its conventional forces erode? The two major nuclear powers aren't well positioned to lead this charge, given some of our own research and other activities. So how can we pursue -- that is the first question.

The second question -- and is it worth it, given that we have such a conventional force advantage over the rest of the world to conduct research and potential development that undermines our diplomatic effort in that respect?

And, two, I wanted to compliment the administration on the Secretary of Energy's initiative of a $450-million initiative to clean out highly enriched uranium around the world. I think it's enormously important -- probably the most prevalent risk we face -- and do you anticipate there's going to be any budgetary difficulty with OMB or elsewhere? What can we do to support the secretary's request and that very important initiative?

MR. BOLTON: Well, if I could address your second question first -- I think that this is something that the president himself has been very supportive of. It was discussed at the Sea Island Summit. I really think this is something that's going to have very broad support within the government, within the Congress, and I don't anticipate difficulties in implementing it. In terms of the reconversion of research reactors that currently operate on high enriched uranium and moving it into low-enriched uranium, I think the broader question of uncontrolled radiological sources around the world is a more troubling one and one that will have longer-range implications but that we're also working on.

The fundamental point that you made, at the outset, about the risk of enrichment and reprocessing technology being too broadly available and therefore facilitating proliferation is something that the president did address in his NBU speech. He proposed a very sweeping and comprehensive limitation on additional transfers of enrichment and reprocessing technology. He gained substantial support, basically, for a one-year cutoff of new transfers at the Sea Island Summit. While we try and work out the -- hopefully -- what will be a permanent set of criteria to accomplish those objectives.

And I would tell you, Congressman, very honestly, in all the discussions I have about this issue -- enrichment, reprocessing, closing the loopholes in the non-proliferation treat -- while there is a certain rhetorical level internationally about research and development in terms of our nuclear arsenal I really don't think that that is a serious problem in carrying our diplomacy forward to stop the so-called "horizontal" problem of proliferation -- proliferation capabilities spreading to more countries. I think that's an issue that obviously we debate here. We think in the administration there are good reasons for it.

But, I would have to tell you, I just don't see it as an impediment on our part to achieving these other objectives.

REP. SCHIFF: Madam Chairman, may I follow up with a question? In the discussions you've had with our allies on this issue, you don't get any pushback on the fact that we're potentially pursuing a new line of nuclear weapons and that impedes our ability to make the case to the rest of the world that they shouldn't pursue them at all? You don't get that feedback at all?

MR. BOLTON: As I think I said, and let me be sure I'm clear, that the argument is raised in the discussions, but if you ask me to rate the seriousness of the arguments, let me give you one example. In the case of Canada, which does not -- which has an extensive nuclear industry but does not currently have an enrichment and reprocessing industry, they are very supportive of the president's efforts to close the loophole, but they don't, at this point, favor the approach that he's taken, which is not to have any country that doesn't currently possess that technology to acquire it, because it would mean that Canada can't acquire it. So in the discussions we've had, that's been the issue to them. It's a serious issue. Other countries have serious issue, too. The president's proposal is very sweeping, and it's generated a lot of controversy. But the controversy has been almost entirely on the economic and, in some sense, the political side of things, not on the question of our nuclear activities.

REP. SCHIFF: If you had to rank in priority, let's say the two were not mutually incompatible but one made the other more difficult -- what's the higher priority? Is it to take potentially available nuclear material out of circulation -- take the technology out of circulation, take the expertise out of circulation? Or is it to pursue the nuclear bunker-busting capability? What would be the higher national security priority? MR. BOLTON: Well, I guess I don't accept the premise of the question that you can rank them one over the other. I think, in fact, they're in really very separate universes, and I think what the administration has proposed in terms of research and development is very, very small compared to the extent of the project that we have to have to plug the loopholes in the non-proliferation treaty and I just fundamentally don't see any reason why we can't pursue both.

REP. SCHIFF: Do you think it makes sense if we have a compelling conventional force advantage over all the other nations in the world to be pressing in the area where other nations might be incentivized to develop their own nuclear capacity?

MR. BOLTON: Let me make two points in response to that, if I could. First, I think it is the inability of the current conventional force capability to achieve what might be achieved after a long process down the road of deep-penetrating warheads. It's the risk that our conventional forces cannot neutralize the targets that we're contemplating for those that leads us in that direction.

But number two, I do not believe, and I don't believe there's any evidence for the proposition -- I've not seen any evidence -- that states that are seeking a nuclear weapons capability are motivated by our research-and-development activities.

I think, as you indicated in your opening question -- and I substantially agree with what I think the direction of that question was -- that Iran's efforts to pursue nuclear weapons are motivated by Iran's own strategic circumstances. That's why sometimes we call it the Persian nuclear weapon.

During the shah's time, his government was pursuing the possibility of nuclear weapons. That is a calculation, a deeply erroneous calculation, in my judgment, on the part of the Iranian government, but not one that has anything whatever to do with the American nuclear capability. REP. SCHIFF: Madam Chair --

REP. ROS-LEHTINEN: Thank you.

REP. SCHIFF: I'm not going to ask any further; if I can just make one last observation.

REP. ROS-LEHTINEN: You're seven minutes and 55 seconds over your five minutes, but go ahead.

REP. SCHIFF: Thirty seconds, promising not to go into Clinton should have gotten me some -- some --

REP. ROS-LEHTINEN: But you're recognized.

REP. SCHIFF: I just wanted to -- I don't disagree with the premise that our pursuit of a nuclear bunker-buster or other technology is unlikely to have an impact on Iran's decision. Iran, I think, wants a nuclear bomb regardless of what we do.

I do think it has an impact on our ability to form a broad, strong international coalition that some of our potential partners in that coalition would be less willing if they don't think that we're moving in the same direction. That's the point I would make. And I thank the chair for indulging me. MR. BOLTON: Could I just address that?

REP. ROS-LEHTINEN: Of course.

MR. BOLTON: I'd be happy to talk to you about this at greater length out of the hearing room, but I really do think that the political obstacles that we face on a variety of these fronts -- and we do face political obstacles, and we face obstacles based on economic self-interest as well -- are far more significant and more difficult to overcome than the question that you've raised.

REP. ROS-LEHTINEN: Thank you so much. We want to thank Undersecretary Bolton as well as Mr. Flory for your testimony today. And we thank you for, as I said, always being accessible to us. Thank you very much.

MR. BOLTON: Thank you, Madam Chair.