Mr. Chairman, distinguished members of the subcommittee,

I welcome this opportunity to appear before the subcommittee to discuss U.S. policy toward Iraq and Iran. We continue to view these two governments as the chief threats to security in the Middle East as well as to U.S. interests in the region. Over the past two years the Administration has led the world in applying substantial pressure on both countries -with a great measure of success. Both countries have ranked at the top of our foreign policy agenda. We have devoted enormous political, economic and even military resources to achieve our goals toward Iran and Iraq. We do not, however, treat the two countries in the same fashion; each poses different challenges. Therefore, the tools we use are different. This is what we mean by dual containment.

U.S. policy toward Iraq remains constant: we seek full compliance with all relevant UN Security Council resolutions passed after Iraq's invasion and occupation of Kuwait in 1990. The U.S. has argued to the Security Council that the Council must be assured of Iraq's long-term peaceful intentions, which to date are demonstrably anything but peaceful. President Clinton recently dispatched Ambassador Albright to Security Council capitals to demonstrate his determination to maintain sanctions as long as Iraq remains out of compliance. We are absolutely opposed to modifying sanctions until Iraq demonstrates overall compliance with its obligations under the resolutions. As a result of Ambassador Albright's discussions, we have confirmed that a solid core within the Council concurs with us. We fully expect that the sanctions will remain intact when the Council again reviews the issue on March 13. We believe Iraq still harbors the intention and the means to rebuild rapidly its weapons of mass destruction. The UN Special Commission has worked diligently to establish a regime for monitoring Iraq's weapons producing capability but official Iraqi cooperation has been begrudging. There remain worrisome gaps in UNSCOM's information base, particularly regarding Iraq's refusal to account for its very significant biological weapons program. On other requirements imposed by the Security Council resolutions, Iraq still comes up short. It has finally, after four years, recognized Kuwait's sovereignty, but it has failed to cooperate fully in its other obligationstoward Kuwait such as accounting for Kuwaiti missing-inaction. Iraq has also failed to return vast amounts of Kuwaiti property-- including military equipment--as called for in UN Security Council Resolution 687.

Iraq continues heinous and reprehensible repression of its own citizens, which is not only contrary to the demands of the Council in UNSCR 688, but is ultimately destabilizing to the region, as we saw during the massive Kurdish refugees flows in 1991.

The UN Special Rapporteur on Iraq, Max van der Stoel, has just released a report to the UN Human Rights commission outlining in gruesome detail the systematic torture and mutilation of political opponents, military deserters and petty criminals. Moreover, the report states that the Iraqi government has failed in its obligations as a signatory to the UN Charter and its various conventions to provide food and medicine for its own people. Iraq also uses terrorism to intimidate opposition figures at home and abroad.

Calls by some governments for modification of the sanctions regime rest on the perception that sanctions deny basic humanitarian requirements of the Iraqi people. While it is true that Iraqi people are suffering, it is false that sanctions are the cause. That responsibility falls squarely on Saddam Hussein's shoulders. The sanctions regime permits the importation of basic humanitarian goods such as food and medicine and contains a procedure for approval of materials and supplies for essential civilian needs.

We also note that the Security Council in 1991 adopted Resolutions 706 and 712 which provided for the sale of $1.6 billion worth of Iraqi oil which could be used to finance the purchase of food, medicine and humanitarian supplies. Baghdad refused to implement those resolutions. We strongly believe that monitoring is essential if we are to be assured that proceeds from any 706/712 sale are used as provided in the resolutions. The U.S. is prepared to explore ways within the sanctions regime to respond to the humanitarian plight of the Iraqi people.

Our policy toward Iran is to pressure Tehran to abandon specific policies that we find abhorrent and a threat to vital American interests, including its pursuit of weapons of mass destruction, its sponsorship of terrorism and violence designed to undermine the Middle East Peace process, its attempts to destabilize countries of the region, and its record of human rights abuses. It is apparent that Iran will not be convinced to change its behavior until the world community exacts a sufficiently high economic and political price.

President Clinton's efforts to ensure that the United States leads the world in pressuring Iran have never flagged, and Secretary Christopher is personally at the forefront of that campaign. Last summer, we secured a statement at the G-7 summit in Naples condemning Iran's support of terrorism. At the United Nations, our delegations have countered Iran's efforts to scuttle extension of the Nuclear Non- Proliferation Treaty and ensured the extension of the mandate of the UN Special Representative on Human Rights in Iran over Tehran's objections. Secretary Christopher places Iran high on our bilateral agenda in discussions with his counterparts in key capitals such as Moscow, Tokyo and Bonn. Two years ago, he created a specialized working group with the European Union and Canada, that continues to meet regularly on Iran. Moreover, the Secretary has used the bully pulpit of his office to ensure that there is no public misunderstanding about U.S. policy toward Iran. Following the wave of anti-Jewish and anti-Israeli bombings last summer, he condemned Iran's role as the foremost sponsor of state terrorism . At Harvard University in January, he reminded the world of Iran's crash program to build weapons of mass destruction and its efforts to kill the chances for Middle East peace.

There are no UN or other multilateral sanctions directed against Iran -- and there is no detectable international sentiment to apply any. Nevertheless, the United States enforces the strictest unilateral trade regime against Iran of any country, as established by U.S. law and regulation. Iranian exports to the U.S. are banned, with limited exceptions such as those related to settling claims under the Algiers Accords and to refined petroleum products that might have been derived partly from Iranian crude oil. We also maintain a stiff and comprehensive embargo against U.S. exports to Iran of military and dual-use items. We deny any U.S.G. export credits, loan guarantees, or export insurance for Iran, and we have led efforts to stop all lending to Iran from international financial institutions such as the World Bank since 1992.

Implementation of our Iran policy also seeks the close cooperation of other governments. Thanks to U.S. leadership, nearly all of our industrialized partners cooperate in our effort to prevent Iran from acquiring arms and items controlled under multilateral non- proliferation regimes. In particular, most nuclear suppliers, including our major allies, have assured us that they will not engage in any nuclear cooperation with Iran, even under safeguards. Russia and China are notable exceptions. Even these two governments agree with the objective of denying Iran nuclear weapons, but they have not agreed as yet to forego civilian nuclear cooperation under normal IAEA safeguards.

Effective economic pressure on Iran in particular requires allied collaboration. We continue to view Iran's involvementin the use of terrorism and violence against the peace process, its pursuit of nuclear and other weapons of mass destruction, its miserable human rights record and its intimidation and subversion of its neighbors as ample reason to deny the Iranian government the kind of economic relationships that would be part of normal state-to-state relations. Our view is that Iran's behavior places it outside the realm of normal relations and requires focussed, collective pressure if we are to be successful in obtaining a change in Iranian actions. We stress with our allies at the highest levels the importance we attach to coordinating the international community's approach to Iran, and to seeking pressure for change in Iranian policy. Although there are differences among industrialized countries on the best tactics to use, there is general agreement on the need to bring about a change in Iran's unacceptable behavior. We continue to work hard to persuade our allies not to extend new official credits, guarantees or aid to Iran. We have had successes:

-- Tehran has not been able to obtain aid or significant new credits since 1993. And where our allies are actually considering Iranian requests for help, we have substantially diminished the pace and amount of that assistance.

-- Our efforts with the allies blocked Iran's access to a multilateral Paris Club rescheduling of its official debt in 1993, and delayed subsequent bilateral reschedulings. The bilateral terms Iran obtained were less favorable than they would have been absent our efforts.

-- Japan has still not released the second tranche of its development assistance loan to Iran, now pending for over a year. We appreciate Japan's continuing close consultations and cooperation with us on this issue.

-- At the September 1994 summit in Washington, President Yeltsin agreed that Russia would not conclude any new arms contracts with Iran and only service their existing contracts.

-- Our opposition to World Bank lending for Iran has prevented World Bank consideration of proposed loan packages for Iran. In 1993, for example, the U.S. forced the World Bank to shelve plans to provide funding for a $1 billion major offshore gas development and injection project.

Successfully containing Iran requires that we continually seek ways to increase pressure on Tehran. The Administration is looking at a range of ways to turn up the heat on Iran and to persuade our allies to join us. This includes approaches currently being discussed in Congress. Any approach must serve the goal of changing Iranian behavior by raising the price for misbehavior. We must ask hard questions about actions whose practical effect is not to hurt Iran at all, but merely to ease the way for others to deepen their financial stakes in Iran, at the expense of U.S. companies and U.S. jobs, thus giving them greater incentive to resist U.S. calls for collective pressure.

The Administration is now engaged in a comprehensive interagency review of the tools available to us to intensify pressure on Iran and to demonstrate our determination to send the clearest possible message to Iran that the American people reject its policies of violence and terror. This review includes the possibility of proposing new legislation, and other steps on both the unilateral and multilateral levels. We will be prepared to discuss our strategy in the weeks ahead. As a final point regarding U.S. policy toward Iraq and Iran, I wish to address concerns that U.S. efforts to contain these states may ultimately drive them together. This is a questionable prospect. The historical enmity between these two societies is more than 1,000 years old. Despite a certain coincidence of views on specific issues, their mutual enmity remains. The appalling human toll of the Iran-Iraq war is still fresh in people's memories on both sides. POWs from each side are still being held by the other. From time to time these two enemies will cooperate in limited ways. Iran and Iraq maintain diplomatic relations, occasionally exchange official visits, and conduct low- level trade. But, we do not expect this will lead to any meaningful, long-term alliance or overcome the long-standing mutual suspicion, mistrust and enmity that characterizes their relationship.

As I have stated, the success of our policies toward both of these countries requires not only firm US unilateral action, but the collaboration of other influential governments and a willingness to stay the course of constant pressure on both regimes. It must be recalled that our efforts have prevented Iraq from acquiring any new weapons system or upgrading their current arsenal since the end of the GUlf War four years ago. Iran, too, has had tremendous difficulty finding suppliers of arms -- the amounts they have acquired have been nowhere near their desiderata. In effect, the threat levels in the Gulf now are significantly lower than where they were only a few years ago. Mr. Nye will point out that it is also essential that we maintain an effective military presence to be in a position to respond quickly in the event either Iraq or Iran actively threatens other countries in the region. I look forward to receiving this Committee's views on the our current policies toward Iraq and Iran and in responding to any questions the members may have.

Thank you Mr. Chairman.