Mr. Chairman, Members of the Committee, it is an honor to be asked to testify before you on this important subject.

The current American policy toward Iran -- containing it, using economic sanctions against it, and pressing others to join us -- is not rooted merely in disagreement with Iran's foreign policy and the rhetoric of some of its leaders. Even less is the current policy grounded in opposition to Iranians' religious beliefs, or to Iran's being an Islamic state. The United States has cordial and cooperative relations with many countries with whom it has major disagreements. It has close and friendly relations with states where Islam, including Islam of a fundamentalist character, is the predominant, even the governing, religion. Of course we will always strongly promote respect for basic human rights. But unless such are threatened, Iran's internal affairs are its own business.

American policy is heavily driven by a key decision that the government of Iran has made: to be the world's principal state sponsor, encourager, and bankroller of terrorism. It is a shame that George Orwell is not still around to write a second installment of "Politics and the English Language", because until the verdict last Thursday in Berlin in the 1992 Mykonos Cafe killings -- in which the German court forthrightly set out the evidence that terror from Iran emanates from the "highest levels" of its government -- a number of European and even American observers were showing substantial phraseological creativity in subtly disparaging the notion that the Iranian government has actually chosen a terrorist role for itself. These writings and speeches -- urging a "critical dialogue" with Iran and promoting various types of economic and political openings to it -- would have given Orwell a rich array from which to select fresh examples of the lengths to which some people will go to avoid unpleasant political facts.

Until the verdict last Thursday many of these individuals were calling for more "hard evidence" of Iranian government sponsorship of terrorism than had been made public up to that point. Such demands of course run into an obvious problem: some of the convincing detail (hard evidence indeed) must remain in the hands of governments in order to protect intelligence sources and methods. Unfortunately, if governments were to inform the public about a number of details regarding Iranian-sponsored terrorism they would also perforce inform Mr. Fallahian, the head of Iranian Intelligence, who would promptly see to it that we didn't learn any more about how the Iranian terror apparatus does business.

But there is plenty of information available publicly now, despite the absence of some details, to satisfy any unbiased observer. Both former Iranian President Banisadr and a recent important defector testified at the trial of those who carried out the assassinations of four Kurdish dissidents in 1992 that such killings are routinely approved not only by Mr. Fallahian, but also by President Rafsanjani and Ayatollah Khamenei through a "Council for Special Operations." The German court made public many facts about the Iranian government's terror and assassination apparatus. The embarrassment among the Iranian government's apologists in Europe mirrored that of its apologists in Near East last fall when, according to a number of press reports, Mahmoud Abbas, senior member of the PLO's Executive Committee, identified Iranian Intelligence as being involved in an attempt to kill Yassir Arafat, and the PLO consequently found it necessary to dismiss seventeen of Mr. Arafat's bodyguards.

The Iranian government's denials about its responsibility for terrorism should not be credited: Iran controls Hezbollah, funds Hamas, Islamic Jihad, the Popular Front for the Liberation of Palestine-General Command and other violent terrorist groups, and it generally oversees, encourages, helps plan, and provides several different types of support for a wide range of terrorist actions around the world. Incidents of assassination abroad by Iran have substantially increased under Rafsanjani and Khamenei compared to the days of rule by Ayatollah Khomeini. The press has reported some facts which suggest Iranian government involvement in the Khobar Towers bombing in Saudi Arabia. When this choice to use terror is made by a government (as was the case when the former South African government used terror abroad to support its policy of apartheid), such an act legitimately makes that nation subject to ostracism and to the admittedly imperfect but sometimes justified weapon of international economic sanctions. Sanctions are not a silver bullet, nor is Iran the only source of support for international terror. If Iran changed its policy international terrorism would not evaporate. But it would be substantially reduced and crippled.

The policies of the Iranian government, supported by some Iranian clerics, have produced much domestic resentment within Iran both because of repression and because of mismanagement of the economy. The destructive collaboration between the Iranian government and a sub-set of clerics, including in the support of terror, has also drawn articulate dissent from some prominent and brave Iranians, including several leading Shia clerics.

It is a major mistake for Western observers to blame Islam, or Shia Islam, for this state of affairs in Iran today. The problem is rather that a few men, in the government and among Iranian clerics, have chosen terror to be a major tool of the Iranian State. Just as it would be unfair to tar the entire Catholic Church of the time with the outrages of the fifteenth century Spanish Inquisition under Tomas de Torquemada and some of his fellow Dominicans (whose close partnership with Ferdinand and Isabella has some parallel to the collaboration today between the Iranian government and a portion of Iran's clerics), so it would be most unfair to blame Islam, Shia Islam, Iranian Twelver Shia Islam, or the majority of Iran's Shia clerics for the outrages of those who have brought about and who implement the policy of terror.

In her fine recent book, God Has Ninety-nine Names, Judith Miller clearly describes the widespread resentment in Iran today against those who sponsor terror both at home and abroad and the courageous resistance of important clerics and other public figures. Prestigious Ayatollahs, heads of Islamic Institutes in Qum, academics, and others are calling for those clerics who manage and support the government's terror apparatus to abandon that path and to "return toQum", to the traditional role of advising and providing moral guidance to the people and the government. But it would seriously undercut the possibility that this popular resentment and these brave individuals will prevail in moving Iran toward sanity if we were to move now to accommodate the sponsors of terror before they change their ways.

Iran is also involved in a buildup of certain extremely troubling military capabilities. Although the state of its economy -- partially attributable to its own mismanagement, partially to the effect of the various steps that the U.S. has taken and urged others to take -- somewhat limits the resources available to it, Iran has focused on acquiring technologies and systems that pose serious threats to U.S. forces and to friends and allies of the U.S., especially to Israel and the states of the Gulf. In these efforts Iran has been the beneficiary of Russian, Chinese, and North Korean willingness to proliferate these systems and technologies. One of the more dangerous developments in this line has been Russian assistance, since January of 1995, to complete Iran's Bushehr nuclear reactor, begun by Germany in 1974; through the operation of this reactor the Iranians will develop substantial expertise which will be relevant to the development of nuclear weapons.

Russia completed its shipment of three Kilo-class diesel submarines to Iran a little over a year ago. Russia pledged in June 1995 not to enter any new arms contracts with Iran and not to transfer any uranium enrichment or other technology or advice that could assist a nuclear weapons program. The Washington Times reported yesterday, however, in an article by Bill Gertz, that Russia is in the process of selling advanced air defense systems to Iran, including the latest version of a hand-held anti-aircraft missile that will be given to Hezbollah terrorists. And I know from his background and from personal experience that Russia's Foreign Minister, Mr. Primakov (who was head of the SVRR, the successor to the foreign side of the old KGB, during the time I was Director of Central Intelligence), is extremely interested in building a close relationship between Russia and Iran. Clearly we need to stay tuned to the Russian-Iranian relationship.

According to press reports, Mr. Robert Einhorn, Deputy Assistant Secretary of State for Non-proliferation, whom I understand will appear before this committee, testified last week that China has now become the number one supplier of conventional weapons to Iran, replacing Russia. Most serious in this regard are the advanced C-802 cruise missiles that can threaten U.S. naval forces in the Gulf. Iran is also supplying components for chemical weapons to Iran as well as technology and advice to help with missile tests. Although China has promised not to proceed with a 1993 contract to provide two nuclear reactors to Iran and also not to provide a uranium enrichment device, clearly the Chinese-Iranian arms relationship requires constant monitoring. Moreover, like the Russian-Iranian relationship, it requires us to continue to search for leverage to exert against Russia and China in order to dissuade them from at least the most damaging and destabilizing transfers toward which those two nations and their military-industrial firms seem repeatedly to incline.

North Korea has long been in a class by itself in many ways -- in the pathological weirdness of its ideology and its leaders, in the total failure of its economy, in the immediacy of the military threat that it poses to an important U.S. ally, South Korea, and U.S. forces located there, and in its willingness to be a source of proliferation. Press reports earlier this year suggest that North Korea has promised not to deliver Nodong 1 missiles to Iran; the range of these would come very close to bringing Israel within range of Iranian missile attack. Our leverage over North Korea is small, but whatever we have we should use to block such a transfer. We may have some opportunity in the aftermath of the Mykonos verdict in Germany and the European nations' reaction to it to rally support for increased leverage against Iran to discourage its support both for terror and for proliferation of weapons of mass destruction and ballistic missiles. Security Council action to, for example, ban flights to and from Iran, cut its diplomatic representation abroad, or ban exports to it of petroleum-based technology should be considered. But realistically, the almost certain opposition of Russia and China in the Security Council would probably doom such efforts -- not to speak of the even more ambitious (but potentially far more effective) notion of a comprehensive embargo on Iranian oil exports. It may be worth proposing one or more of these steps, even if we are likely to fail in the UN, as a precursor to taking further unilateral steps of our own.

Generally speaking, I believe that secondary sanctions should be a tool of last resort in international relations; in my judgment the stresses they produce with friends and trading partners should mean that they are used only in very extreme cases. But this is such a case. Iran today, by its clear adoption of terror as a consistent tool of the state, has put itself in a different category than any other nation in the world. In my view, this is the key issue. If we were to be able to bring enough pressure on Iran to get it to halt its support for terror, it would be evidence of such a major change in the culture of the government of Iran that I believe other issues -- such as proliferation -- would be considerably easier to deal with. Thus terror is, in my view, at the heart of the matter. Under these circumstances, not only do I believe that secondary sanctions are justified against what it is now clear to any objective observer is the world's primary terror state, I believe it would be worth considering a strengthening of such steps -- for example, by applying sanctions to foreign persons that export energy-related technology to Iran or even to those that conduct a range of commercial relations with Iran beyond the energy sector.

Iran is a wonderful country with a rich history and a talented people who follow a great religion. There are no fundamental strategic, religious, or other reasons why Iran and the United States should not have cordial, even friendly, relations. If those who govern Iran will stop murdering those who disagree with them, the path could and should be open to move toward both the removal of sanctions and progress on other issues as well. But if the United States loses its resolve before the terror stops, it will thereby tell Iran's contemporary Torquemadas that their support of terror is no longer a major issue with us -- it will tell them that, essentially, they've won. As is the case on many difficult security issues, the rest of the world will not act constructively on this matter unless we lead. On the issue of Iranian terror the U.S. government has an obligation to Americans and to the rest of the world to be firm, resolute, unswerving, and uncompromising.