Mr. Chairman, thank you for giving me this opportunity to discuss Iran's continuing efforts to acquire weapons of mass destruction and missile delivery systems, foreign assistance to those programs, and the status of U.S. efforts to halt them.

Today Iran is undergoing important political developments. The United States welcomed the Iranian public's clear call for greater freedom and democracy in recent parliamentary elections. We hope that such encouraging developments are a sign of a transition to a more open and democratic society.

However, as in any diverse society, there are many currents swirling about in Iran. Some are driving the country forward; others are holding it back. Despite the momentum toward democracy, freedom, and openness, most of the elements of Tehran's foreign policy about which we are most concerned--including the acquisition of destabilizing weapons systems--have not improved.

Indeed, Iran's pursuit of weapons of mass destruction and ballistic missile delivery systems continues unabated, and has even accelerated in the last few years. Despite its formal adherence to international arms control and nonproliferation treaties, Iran maintains active programs to acquire nuclear, chemical and biological weapons as well as the long-range missiles to deliver them. Iran is seeking aggressively to acquire equipment, material, and technology from abroad in an effort to establish the capability to produce non-conventional weapons indigenously and thereby to insulate those weapons programs from outside pressures.

Even if democracy succeeds in Iran, there is little to suggest that its quest for weapons of mass destruction and missile delivery systems will end. As long as Iran believes that its arch-rival Iraq is pursuing WMD, that U.S. forces in the region constitute a major threat, and that its own non-conventional programs bolster its aspirations for influence in the Gulf region and leadership in the Islamic world, there will be pressures in Tehran, whoever is in power, to persist on the dangerous course on which it is now headed. We will watch closely for any changes in Iranian proliferation policies as Iran's domestic evolution continues. But so far we have seen none.

Iran's WMD and missile programs constitute a serious threat to the region and to U.S. interests more broadly. Impeding those programs has therefore been a top priority of U.S. policy. It is a subject we would like to take up with Iranian officials directly. But in the absence so far of a willingness in Tehran to establish an authoritative U.S.-Iran dialogue, we have had to rely almost exclusively on a strategy of seeking to deny Iran the material and technological wherewithal to acquire WMD and missiles. We have had a few public--and a number of private--successes in that effort. But as with any nonproliferation effort focused primarily on denial of technology, we have managed to slow Iran's programs, but we have not stopped them.

IRAN'S BALLISTIC MISSILE PROGRAM

Iran has one of the developing world's most active and ambitious ballistic missile programs. It is important to recall, in this regard, that Iran was the first victim of Iraq's development of missiles and chemical weapons. But Iran's ballistic missile programs have long since gone beyond responding to Iraq, and now threaten much of the Middle East and soon could threaten locations more distant.

Iran already has deployed hundreds of SCUD missiles and can now produce SCUDs indigenously. Not stopping at short-range missiles, however, Iran has conducted three tests of the 1,300 kilometer-range Shahab-3 missile, once in 1998 and twice this year, including just last month. As National Intelligence Officer for Strategic and Nuclear Programs Robert Walpole testified just two weeks ago, ``Tehran probably has a small number of Shahab-3s available for use in a conflict; it has announced that production and deployment have begun.'' In addition to the medium-range Shahab-3, Iran is working on longer-range missiles. Its defense minister has spoken of Shahab-4 and -5, claiming those rocket systems would be used solely as peaceful, space-launch vehicles (SLVs). But given that any SLV has inherent military missile capability and can relatively easily be adapted to that role, few knowledgeable observers take those claims at face value.

Iran's acquisition of long-range ballistic missile delivery capability, coupled with its continued pursuit of nuclear weapons and other weapons of mass destruction, poses a significant threat to U.S. forces and friends in the region, and to regional stability generally.

Iran's ballistic missile program is heavily dependent on assistance from other countries. North Korea has been a major supplier to Iran, transferring SCUDs, SCUD production technology, and No Dongs. While we do not believe Russia has transferred long-range missiles to Iran, we judge that wide-ranging assistance from Russian aerospace organizations and individuals has enabled Iran to make the Shahab-3 an improved version of the No Dong as well as to make substantial headway on longer-range missile systems. Chinese transfers to Iran's missile programs have largely been intended for tactical systems below the Missile Technology Control Regime control level or have been dual-use items not specifically covered on international control lists. But as we have told the Chinese many times, such transfers can make--and indeed have made--significant contributions to Iran's long-range missile programs.

IRAN'S NUCLEAR PROGRAM

We remain convinced that Iran maintains an active nuclear weapons development program, despite its status as an NPT party. Among the persistent indicators that Iran is pursuing a nuclear weapons development program is the fact that Iran is attempting to obtain capabilities to produce both highly enriched uranium and plutonium--the critical materials for a nuclear weapon. Neither of these capabilities is necessary to meet Iran's declared desire to have a civil nuclear power program to generate electricity, which is itself suspicious in light of Iran's abundant oil resources.

For the time being, Iran's nuclear program remains heavily dependent on external sources of supply. Because of this, the United States has played the leading role in developing and maintaining a broad international consensus against assisting Iran's foreign procurement efforts. We deny Iran access to U.S. nuclear technology and material, and all major Western suppliers have agreed not to provide nuclear technology to Iran.

A number of supplier states have abandoned potentially lucrative sales to Iran's nuclear program. In 1997 China terminated work on a uranium conversion facility in Iran and agreed not to engage in any new nuclear cooperation with Iran after completing two small projects that posed no direct proliferation concern. As a result of efforts by Vice President Gore and Secretary Albright, Ukraine likewise took a major step when it determined that it would not supply electricity-generating turbines originally contracted for by a Russian firm and destined for the new Bushehr nuclear power plant in Iran. The Czech Government also recently made a decision not to supply components for the turbine hall of this plant.

Russia remains the one significant exception to this virtual embargo on nuclear cooperation with Iran. The most visible nuclear cooperation between the two countries is Russia's construction of a 1000-megawatt nuclear power reactor at Bushehr, Iran. We have opposed this project, not because we believe such a light-water reactor under International Atomic Energy Agency safeguards itself poses a serious proliferation threat, but because of our concern that the Bushehr project would be used by Iran as a cover for maintaining wide-ranging contacts with Russia nuclear entities and for engaging in more sensitive forms of cooperation with more direct applicability to a nuclear weapons program.

While refusing to halt the power reactor sale, the Russians have argued that they are just as opposed as we are to an Iranian nuclear weapons capability. At the highest levels, they committed to limiting their nuclear cooperation with Iran to the Bushehr reactor project during the period of its construction.

Despite these repeated assurances, we are aware that Russian entities--most of them subordinate to MINATOM, the Russian Ministry of Atomic Energy--have engaged in extensive cooperation with Iranian nuclear research centers that is outside the bounds of the Bushehr project. Much of this assistance involves technologies with direct application to the production of weapons-grade fissile materials, including research reactors, heavy-water production technology, and laser isotope separation technology for enriching uranium. Russian assistance to Iran's nuclear program has accelerated in the last few years and could significantly shorten the time Iran would need to acquire weapons-usable fissile material.

CHEMICAL AND BIOLOGICAL WEAPONS

Iran's chemical weapons (CW) program is one of the largest in the developing world. Iran began its offensive program during the Iran-Iraq war in response to Iraq's use of CW. By 1987 Iran was able to deliver limited quantities of blister (mustard) and blood (cyanide) agents against Iraqi troops using artillery shells. Since then Iran's CW production capability has grown and become more sophisticated. It has already produced a number of CW agents, including nerve, blister, choking and blood agents. Despite its 1997 ratification of the CWC, we believe Iran's CW program continues and that it possesses a substantial stockpile of weaponized and bulk agent.

Throughout the life of its CW program, Iran has sought the ability to produce indigenously more sophisticated and lethal agents. This trend toward self-sufficiency is worrisome, since it means that Iran could eventually become a supplier of CW-related materials to other nations.

Over the past several years, Iran's procurement efforts have dwindled in countries of the Australia Group, the multilateral export control regime responsible for chemical and biological exports, as that Group's controls have become more effective. Instead, Iran has concentrated on suppliers in countries outside of the Australia Group. As Iran moves to suppliers outside the major industrialized countries and seeks less specialized (and hence less strictly controlled) items, our ability to stop Iran's CW-related procurement efforts has also decreased.

Iran has been in the vanguard of efforts by some countries to weaken multilateral export controls, especially on dual-use commodities. It has instigated attempts to delegitimize and even to abolish the nonproliferation export control regimes. The United States has worked closely with our partners in those regimes to rebut the Iranian arguments and to strengthen those regimes in the face of these efforts to weaken them.

We believe that Iran also has an offensive biological weapons program at least since the Iran-Iraq War, notwithstanding the fact that it has been a party to the Biological Weapons Convention since August 1973. The pace of Iran's biological weapons program probably has increased since the 1995 revelations about the extent of Iraq's biological weapons program.

While we assess that the Iranian BW program is largely still in the research and development stage, we believe Iran already holds some stocks of biological agents and toxins. It has considerable expertise in the infrastructure needed to produce basic BW agents, and can make some of the hardware needed to manufacture those agents. Iran conducts top-notch legitimate biomedical research at various institutes, which we suspect also provide support to the BW program. It appears that Iran is actively seeking to acquire materials, equipment and expertise from foreign suppliers--primarily from entities in Russia and Western Europe.

U.S. POLICY RESPONSES

In view of the serious risks to U.S. interests posed by Iran's WMD and missile programs, we have given high priority to impeding those programs and have sought to do so through a wide variety of means. We have worked to strengthen and tighten the multilateral export control regimes, thereby denying Iran and other proliferators access to most of the world's best sources of sensitive technology and forcing them to resort to elaborate and uncertain covert procurement methods that can result in slowing the pace, driving up the costs, and reducing the quality of their acquisitions. With Iran actively looking for weak links in the chain of control, we have provided substantial assistance to countries that are potential targets of Iranian procurement efforts in order to help them bolster their national export control systems and their border security. When we have received information about troublesome transactions involving Iran's weapons programs, we have been able on a number of occasions to intervene diplomatically and persuade the governments of supplying countries to step in and halt a pending transfer.

To help secure sensitive materials and know-how at their source, we have provided large-scale support for Russia's efforts to protect, store, and account for its nuclear materials and have funded civilian scientific work by over 20,000 former Soviet weapons specialists to reduce their incentives for assisting countries like Iran. We have also sought to strengthen international arms control arrangements to promote our nonproliferation goals--by supporting the International Atomic Energy Agency's strengthened safeguards system, promoting an effective Chemical Weapons Convention inspection system, and pressing for a protocol to enhance confidence in compliance with the Biological Weapons Convention.

Impeding Iranian non-conventional procurement efforts has figured prominently in recent years in our bilateral relations with China, North Korea, and Russia. As noted earlier, China agreed to phase out all of its nuclear cooperation with Iran, even cooperation carried out under IAEA safeguards. We believe the Chinese have made good on this pledge. In 1997 we imposed sanctions on seven Chinese entities for providing dual-use chemicals and chemical production equipment and technology to Iran's chemical weapons program. Subsequently, Chinese authorities took steps to tighten their system of chemical controls, although enforcement remains uneven. Our current efforts with China focus primarily on missile exports. We have held several rounds of talks this year aimed at encouraging Beijing to augment its missile- related export control system and prevent Chinese entities from transferring equipment and technology that contribute to Iranian missiles capable of delivering nuclear weapons. We have made progress, but more work remains.

Halting missile-related exports, to Iran and other countries, is a high priority of our engagement with North Korea. In our several rounds of missile talks with the North Koreans, we have repeatedly sought to gain its agreement to ban all missile exports and we will continue to do so. We have also made clear that continued missile exports would subject them to additional economic sanctions (which we have imposed six times on the DPRK, three for transfers to Iran), and that such sanctions would place a major obstacle in the way of economic normalization between the U.S. and DPRK.

Assistance by Russian entities to Iran's missile and nuclear programs has been a persistent problem in U.S.-Russian relations for over half a decade. Both the President and the Vice President, as well as the Secretaries of State, Defense, and Energy, and numerous other senior Administration officials, have engaged on this issue on an almost continuous basis. Every Presidential Summit meeting, and every meeting of the U.S.-Russian Bi-national Commission, as well as numerous letters, telephone calls, and meetings in between, has placed these nonproliferation concerns at the top of the agenda. The Vice President, in particular, using the institutional machinery afforded by the Bi- national Commission, has played a central role in pursuing such nonproliferation goals as fissile material security, the purchase of high enriched uranium, disposition of plutonium, and the destruction of chemical weapons--all of which are crucial to denying Iran and other states of concern access to these WMD-related materials. These efforts began in the very first year of the Administration, when the Commercial Space Launch Agreement was signed by the Vice President and the Russian Prime Minister as an incentive to Russian aerospace entities to forgo dangerous missile proliferation.

In our bilateral engagement, we have stressed the high stakes involved in resolving the Russia-Iran proliferation issue, both for the stability of the Middle East and the world at large and for the bilateral relationship. We have made clear that stopping highly sensitive cooperation with Iran would expand opportunities for mutually beneficial and potentially lucrative cooperation between the two countries, including in the areas of commercial space and nuclear energy. But we have also stressed that failure to solve the problem would inevitably create obstacles to such cooperation. So far we have used the Administration's executive authority to impose penalties on 10 Russian entities for assisting Iran's nuclear or missile programs.

Our intensive efforts with the Russians over the last few years have produced some significant positive steps. We are beginning to see the emergence of a more effective Russian effort at export control. Russia passed a new export control law in 1999 providing legal authority to control the export of any item that could contribute to a program of proliferation concern. It has reorganized export control responsibilities within the government to make the bureaucracy more effective in implementing Russia's laws and policies. At U.S. urging, it has instituted internal compliance programs in key Russian entities, and so far over 500 firms manufacturing items of proliferation concern have received training in their export control obligations. It has established seven export control working groups with the U.S. in such areas as law enforcement and dual-use licensing to help strengthen the Russian system. It has carried out investigations of problem cases we have brought to its attention and, in a number of those cases, halted Russian entities' cooperation with Iran, enabling us last April to announce our intention to lift U.S. penalties against two of them.

While we have imposed penalties on organizations engaged in sensitive cooperation with Iran, we have also made important headway by holding out benefits for responsible behavior. In this connection, we have used the commercial space launch quota as an incentive to encourage important changes in Russia's legal and regulatory environment, and to make improvements in its export control system and practices. Moreover, our Russian partners in the International Space Station and in the major U.S.-Russian commercial space launch joint venture well understand the value of their profitable cooperation with us, and they are on guard to avoid the kind of interactions with countries of concern that could put that cooperation in jeopardy. It is clear that key players in the Russian government, such as the Russian Aviation and Space Agency and the new Department of Export Controls of the Ministry of Economic Development and Trade, see an important stake in stopping assistance to Iran's non-conventional programs and are working hard to get their arms around a very difficult challenge.

However, Russian enforcement of its export control laws and policies has been very uneven. While some Russian aerospace entities have severed their cooperation with Iran, other individuals and entities have been far too willing to take their place. The situation is even worse in the nuclear area. Unlike in the aerospace field, where many of the entities assisting Iran have little relationship to the Russian government, almost all nuclear cooperation with Iran is carried out by MINATOM or one of its many subsidiaries and affiliates. We have made clear to the Russians that we will not go forward with collaboration on advanced power reactors or other new cooperation in the nuclear area until our concerns are resolved.

Clearly, many of the remaining problems involve shortcomings of the relatively new Russian system of export control. Even with greater resources and the best of intentions, it would be hard for Moscow authorities to detect and stop all attempts to circumvent Russian controls. But equally clearly, part of the problem is a lack of determination in Moscow. We are convinced that, if Russia's leaders gave the matter sufficient priority, Iran's nuclear and missile procurement efforts in Russia could be stopped.

Why does Moscow not seem to give the matter the priority we do? The answer is complicated. Part of the explanation seems to be that Russian entities that no longer receive adequate budgetary support from the central government have strong incentives to export. The number of Russian entities with technical experts out of work is overwhelming, and they will do virtually anything to stay afloat. Russia also believes it has strategic reasons for not wanting to jeopardize bilateral relations with Iran. Moreover, the Russians tend to take a more narrow view of their nonproliferation responsibilities than we do and are more inclined to support transactions we would regard as too risky, especially if they do not violate any Russian international treaty obligations.

Whatever the mix of motives for a less-than-fully-resolute approach to the challenge of stopping dangerous Russian interactions with Iran, we do not doubt the Russians when they say their interests would be harmed at least as much as ours by Iran's acquisition of nuclear weapons deliverable by long-range missiles. But if the Russians believe that the nuclear and missile cooperation now underway will not actually contribute materially to, and accelerate, Iran's acquiring such a capability, they are engaging in wishful or shortsighted thinking.

Recently we have seen some encouraging signs. At their July meeting at the Okinawa G8 summit, President Putin assured President Clinton that he would take personal responsibility for ensuring that Russia's laws and commitments with respect to these nonproliferation matters are faithfully carried out. Subsequently, when provided with information that Russia's Yefremov Institute was providing Iran with laser isotope separation technology for enriching uranium, Russian authorities suspended the transaction pending a thorough investigation of its implications. We hope that this action will be a forerunner of concrete and decisive steps to halt assistance by Russian entities to missile and nuclear programs in Iran.

IRAN NONPROLIFERATION ACT

Recently Congress gave us new legislation intended to impede Iran's WMD and missile programs--the Iran Nonproliferation Act of 2000. The Act establishes new criteria--legal standards and procedures--for evaluating activities of proliferation concern and imposing nonproliferation sanctions. The Administration has made significant progress toward completing the review of the intelligence material necessary to make the report to Congress required by the Act. However, we have found that the information that must be reviewed in order to make the required report is considerably more detailed and voluminous than was contemplated when the bill was passed, and it has therefore been impossible for us to submit our initial report by the dates specified in the Act. A more detailed explanation of where we stand on this matter has already been conveyed to the Committee.

CONCLUSION

In conclusion, impeding Iran's WMD and missile delivery systems will remain at the top of the U.S. national security agenda for some time to come. We cannot predict the direction political events in Tehran will take, but should Iranian authorities accept the U.S. offer of an official bilateral dialogue, nonproliferation will be a key focus. We would seek in those discussions to persuade the Iranians that their legitimate security and other broad national interests would best be served by verifiably and reliably renouncing WMD and the long-range ballistic missiles that can deliver them.

In the meantime, we have no alternative but to continue an active strategy of seeking to thwart Iranian efforts to procure the material and technologies they need for their nonconventional programs. We will use a variety of means to pursue that strategy, including strengthening multilateral regimes, carrying out energetic diplomatic efforts with key supplier governments, and, when warranted, utilizing our legal and other authorities to penalize those responsible for assisting the non- conventional programs of states of proliferation concern.

By the standards one must judge nonproliferation efforts, our policies with respect to Iran have been effective. They have succeeded in slowing and complicating Iran's programs and driving up their costs. They have closed off many of the world's best sources of advanced technology to Iranian procurement efforts, and forced Iran to rely on technologies less sophisticated and reliable than would otherwise be the case. And critically, we have bought additional time. Despite the gains Iran has made, we do not consider it inevitable that Iran will acquire nuclear weapons deliverable by long-range missiles. But avoiding that highly destabilizing outcome will require the continued leadership of the United States and the concerted efforts of the international community, including the cooperation of Russia, China, and North Korea. We will consult closely with this Committee as our efforts proceed.