SEN. JOSEPH R. BIDEN, JR. (D-DE): The hearing will come to order.

Let me begin by explaining to our visitors that the reason why this hearing has begun so late is that there were a series of unexpected votes on the floor of the United States Senate. And every time we came back over to begin the hearing, there were a series of procedural votes. And I apologize to our distinguished witness, Secretary Burns, who is someone who is listened to with real interest and viewed with overwhelming respect by all members of this committee. He said he had time, and I pointed out I'd rather him be out negotiating than in here. I -- and I appreciate his being here.

This testimony that Secretary Burns is about to give and hopefully the exchange we'll have with him comes at a very important moment. Tensions with Iraq are rising. Its government refuses to release 15 British service members it illegally detained last week. And in Iraq, the Iraqis are accused of supplying deadly weapons to militias who have attacked our troops. We've arrested some Iranians in Iraq who we believe are part of that process. The president has dispatched two aircraft carrier battle fleets to the Persian Gulf, and they are currently in the midst of extensive military exercises, as we see and Americans see when they turn on their television sets. And President Ahmadinejad's incendiary threats to wipe Israel off the map and his denial of the Holocaust, combined with Iran's nuclear ambitions, have led to a very legitimate concern not only here, but in the region and around the world of the intentions of the Iranian president.

Iran's perceived expansionism, including its support of Hezbollah and Hamas, has sparked deep fears not merely in Israel, but across the Arab world. Iran and Saudi Arabia -- Iran and the Sunni Arab states are on opposite sides of a growing Sunni-Shi'a rift that extended from Lebanon through Iraq to the Gulf States and into south Asia. One of the things we're going to be asking -- I'm going to be asking the secretary today is to help sort of quantify some of these things, give a sense of how close to the edge some of these concerns I'm raising are. All of this contributes to a regional tinder box that could, with the wrong move, ignite a physical conflict and an otherwise minor incident has to the potential to spiral out of control. I'm not suggesting that will happen, but I'm suggesting we should talk about it.

My dad used to have an expression, and I'll alter it slightly. "If there's anything worse than a poorly planned intentional war, it's an unplanned unintentional war." And he used to just say, "The only war worse than one that's intended is one that wasn't intended." So we need very cool heads to prevail, and we have one of the coolest heads and best negotiators and most talented man in the State Department before us today. My view is, I think we have to be patient and we need some hard-headed diplomacy -- not based on any naive assumptions, but just hard-headed diplomacy. And that is what you have pursued at the U.N. Security Council, Mr. Secretary.

Last May, the administration -- I would have characterized it as reverse course, but maybe that's not fair -- reemphasized and joined forces with out European allies. Since then, you personally have secured two unanimous U.N. Security Council resolutions, which have not been easy to do, sanctioning Iran for its defiance on its nuclear program. And although the critics say they are -- been modest, the point is they have been modest but incremental. You've kept the world on board. One of the discussions you and I had a long time ago was the -- I think one of the objectives is to make sure that Iran is viewed as the world's problem, not us viewed as the problem. And keeping the world on board has not been easy.

The sanctions, in my view, have highlighted Iran's international isolation, and I think they have helped reveal some severe cracks in Iran -- in their political establishment. Ahmadinejad is no longer riding so high in my observation. I'm going to ask you about that. He's increasingly constrained as other power centers in his country criticize him for his diplomatic and economic failures. There is -- I won't call it an economic meltdown, but there is not an -- there's not happy times in Iran right now. Your efforts and the efforts of the administration and the president have had some positive impacts on making it clear to the Iranian people and to the business community that there are prices to pay for irresponsibility. There are more open challenges of the regime. In recent weeks, Iranian women bravely took to the streets to challenge the government's discriminatory policy. And in short, Mr. Secretary, I support what you've been doing and I applaud you for what you've accomplished thus far.

But Mr. Secretary, after all that has happened in Iraq and with everything that's happening here at home, with notable exceptions the administration has -- let me put it more diplomatically -- has considerably less credibility and goodwill than it started with several year ago, or five years ago. Many people here and abroad are skeptical that the administration, whether it's actually made a fundamental break with its past policies and that it's really focused on results as opposed to ideology. I know you too well. I don't want to hurt your reputation to the administration, but you're the furthest thing I know from an ideologue. You're an incredibly well-informed and tough-minded diplomat who seeks objectives and is pretty good at achieving them. So I hope you can answer a couple of questions relating to the administration's strategy going forward.

The first is is the administration's goal in Iraq regime change or behavior change? Now some would argue they're not inconsistent, but I would argue there is a distinctive difference between regime change and seeking behavior change. Your counterpart in Korea, who's been given what seems to me a pretty wide berth, has made similar progress. But it seems to rest in my view on having moved off of the insistence on regime change and focusing more on behavioral change. No one likes this regime, but I hope we keep our eye on the first prize -- that's preventing Iraq from developing nuclear weapons. And so how can we tell Iran not to go nuclear but then, in the next breath, say, "After you commit to not go nuclear, we're going to change your regime?" So the second question I'm going to -- I'd like you to talk about as well when it comes my turn is the pressure we're applying. Is it aimed at improving our position and weakening Iran in any future negotiations, or is it designed to prepare the battlefield for war? I realize that's always an option any president has to leave on the table, but these are central questions which I know our constituents are being -- are asking us, and I'd like an opportunity to have you discuss.

I would ask unanimous consent, in the interest of time, the remainder of my statement be put in the record and conclude by saying I have no doubt in my mind, Mr. Secretary, there are those in Iran who prefer confrontation to cooperation. But it seems to me it's pretty important for the Iranian people to -- beyond their government -- the Iranian people to understand that our hand is extended, that we're not the ones standing in the way of peaceful coexistence and possibly even fruitful cooperation. So I compliment you for what you have accomplished thus far. I think the government in Tehran has a fundamental choice to make. As Iran's New Year begins, I hope they begin to make the right choices with the proper prodding from you and our diplomatic corps.

Senator Lugar.

 

OPENING STATEMENT OF

RICHARD G. LUGAR
A Senator from Indiana, and
Ranking Member of the Senate Foreign Relations Committee

 

SEN. RICHARD G. LUGAR (R-IN): Well, thank you, Mr. Chairman. I join you in welcoming Secretary Burns back to the committee.

We appreciate his efforts on many diplomatic fronts and look forward to his testimony on the critical topic of American policy toward Iran. In testimony before our Committee last September, Secretary Burns outlined the administration's policy of supporting an international dialogue with Iran, while backing up their willingness -- backing up that willingness to negotiate with the prospect of U.N. sanctions. Six months have passed and Iran's leaders have thus far rebuffed the international community's offer to negotiate an acceptable arrangement for their nuclear program. As a result, thanks in part to U.S. leadership, the U.N. Security Council has voted twice to impose sanctions, and may do so again should Iran continue on the path of defiance.

This multilateral approach to the problem, I believe, has directly bolstered the United States' efforts to encourage foreign governments and banks to curtail commercial benefits to Iran, thereby enhancing the impact of the United Nations sanctions. The task for American diplomats must be to sustain international will and solidify an international consensus in favor of a plan that presents the Iranian regime with a stark choice between the benefits of accepting a verifiable cessation of their nuclear program and the detriments of proceeding along their current course.

The United States has in place extensive unilateral economic sanctions against Iran. And some have suggested that the Congress should pass legislation targeting additional unilateral sanctions against foreign companies that invest in Iran. I understand the impulse to take this step. But given the evident priority that the Iranians assign to their nuclear program, I see little chance that such unilateral sanctions would have any effect on Iranian calculations. Such sanctions would, however, be a challenge to the very nations that we are trying to coalesce behind a more potent multilateral approach in Iran. We should not take steps that undermine our prospects for garnering international support for multilateral sanctions, which offer better prospects for achieving our objectives than unilateral measures.

Iran poses challenges to U.S. interests in the region beyond the nuclear program. Iranian policies in Iraq, Lebanon, and in the Israeli-Palestinian arena threaten our interest in a stable Middle East. Iran's expansionist foreign policy and the bombastic rhetoric of its president have also fed concerns among its neighbors that it seeks to dominate the region and interfere in their internal affairs.

As with the nuclear issue, an effective U.S. strategy for Iran should leverage the concerns of other governments in pursuit of a united front toward objectionable Iranian policies. While enlisting the support of regional governments is critical, we should avoid any calls to exploit Shi'ite-Sunni tensions. The spread of sectarian conflict from Iraq to other parts of the Middle East is decidedly not in the interest of the United States or the people of the region.

As the United States pursues sanctions at the United Nations, it is important that we continue to explore potential diplomatic openings with Iran -- either through our own efforts or those of our allies. Even if such efforts ultimately are not fruitful, they may reduce risks of miscalculation, improve our ability to interpret what is going on in Iran, and strengthen our efforts to enlist the support of key nations. In this regard, the U.S. decision to participate in the conference of Iraq's neighbors earlier this month was a welcome step forward.

Secretary Rice's personal effort in pursuit of peace between Israel and the Palestinians also is a welcome development that could help diminish the appeal of extremists in the region, backed by Iran, who calls for confrontation with Israel. History has demonstrated that progress on this difficult issue rarely is achieved without sustained and active U.S. diplomacy.

Therefore, it is a special pleasure, Secretary Burns, to have you with us today. We look forward to your insights and your progress report on these matters.

I thank you, Mr. Chairman.

SEN. BIDEN: Thank you very much.

Mr. Secretary, we welcome you. And -- (audio break) -- to hear what you have to say. And take as much time as you want, but as you know, your entire statement -- if you choose not to read it all -- will be placed in the record.

It's a pleasure to be before you again to discuss United States policy towards Iran and to be with all of your colleagues. I did submit my testimony yesterday. I will not read it. I'll spare you that.

SEN. BIDEN: No, no, it's very --

 

STATEMENT OF

R. NICOLAS BURNS
Undersecretary of State for Political Affairs,
U.S. Department of State

 

MR. BURNS: But I thought, Mr. Chairman, with your permission what I'd do is just comment -- make a few comments on what you and Senator Lugar have just said to get us started, and that by -- that might also give you a sense of the basic thrust of our strategy on this priority issue of Iran.

I agree with both of you -- and I've had a chance to talk to many other members of this committee individually -- that next to Iraq, next to the challenge of success in Iraq, there's probably no other issue that's so important to American foreign policy and to our future than dealing successfully with the challenge posed by Iran.

And we would see four interconnected challenges in the Middle East. The Middle East certainly is now the area of priority attention for our foreign policy the way Europe was in the last century. Four challenges posed by Iran: First, the obvious attempt by Iran to seek a nuclear weapons capability. Nobody doubts it. I have been the American liaison now for two years with Russia and China and the Europeans, and no one has ever told me from any of these governments that they think that there's a benign intention here on the part of the government of Iran. Everyone's convinced that this supposedly peaceful nuclear research program is actually intended to produce a nuclear weapons capability.

Second is the problem that Iran and Syria and Hezbollah are trying now to unseat the democratically elected government of Prime Minister Siniora in Lebanon.

Third, Iran is the leading opponent of Israel in the region, the leading opponent of the attempts by the United States and others to establish a peace between Israel and the Palestinians.

And fourth, as you know, the Iranians have not played a positive and useful role in Iraq. They have enormous influence there. Many of the current Shi'a leaders in the Iraqi government took refuge in Iran during the Saddam years. They know the Iranians well. The Iranians could be arguing for a policy that would unite the various warring factions in Iraq, but they're not. They're actually taking sides. And as the president said in the early part of January, we know that they're providing -- the Iranians -- sophisticated EFP technology, explosive technology to Shi'a militant groups and that those groups are using that technology to target and wound and kill American soldiers.

So the challenge posed by Iran goes right to the heart of our most vital interests in the Middle East. So we're right to focus on it, and this committee is, as well.

On the issue of Iran's nuclear ambitions, the policy of our government is to deny Iran nuclear weapons capability. And we are trying to exact multiple points of pressure on the Iranians in an effort to convince them that the preferred way to deal with this problem is not through confrontation and certainly not -- certainly not through a military conflict but through diplomacy and through peaceful negotiations.

And so what we've tried to do over the last two years -- and it was about two years ago this month that President Bush made the decision that for the first time, we'd actually support the international negotiations with Iran on the nuclear issue. Multiple points of pressure should be applied from different perspectives to convince the Iranians there's a cost to what they're doing and that the cost is going to rise, and there will be ever-increasing pressure if they refuse to go to the negotiating table.

And you -- Mr. Chairman and Senator Lugar, you've referred to the primary point of pressure. Iran is now one of 11 countries of 192 in the U.N. General Assembly subject to Chapter 7 sanctions, and the U.S. has led in December and again last Saturday by 15 to zero votes -- very forceful, united votes -- two increasingly tough sanctions resolutions against the Iranians.

Iran is not like North Korea. It's not a country that can or would like to live in isolation. It wants to be integrated economically and politically with its neighbors in the Arab world and with Europe, and these sanctions would increasingly isolate and distance Iran from those profitable relationships. We think that's a good start.

Secondly, we have used -- the Treasury Department has used our 311 Authority in the Patriot Act to impose additional U.S. economic sanctions on Iran. So you've seen Treasury sanction Bank Saderat and Bank Sepah. Bank Sepah is the fourth largest bank in Iran. It is the front company by which the Iranian government funnels money to fund its ballistic missile and WMD activities. So it's a very important set of sanctions that we've applied.

Third, Secretary Paulson and Secretary Rice have used their influence with corporate and financial leaders around the world to essentially give the message to European, Arab and Asian bankers that Iran is not a good credit risk and that if Iran is going to be subject to international sanctions and national sanctions, companies and financial institutions ought to think twice about long-term investments. We've seen three major European banks in the last eight months shut down all lending to Iran, and 20 others begin that process, and the Iranians are beginning to feel that pinch.

Fourth -- and Mr. Chairman, you referred to this -- we do have two carrier battle groups in the Gulf. They are not there to provoke any kind of conflict with Iran. We have had American Naval forces in the Gulf since 1949. But the message is, we have 170,000 troops in Iraq; we have obvious security interests throughout the Gulf region; the Gulf is not an Iranian lake -- it is an international waterway, and we will protect, as we have since the late 1940s, the right of companies and nations to use the Gulf for international commerce and for it to be a peaceful region, not a violent region.

And of course -- Mr. Chairman, you referred to this as well -- we have pushed back against the Iranian attempts to use the KUDZ force, which is an arm of the Iranian Revolutionary Guard's corps command, to funnel this explosive technologies to Shi'a militant groups in Iraq. The president said back on January 10th that he has a fundamental responsibility to protect American men and women in Iraq, our soldiers, and he does. And so we have detained several Iranian military and intelligence figures who were caught red-handed in this network providing this technology to the Shi'a militant forces.

So these combination of pressures that we've deployed -- economic and political and diplomatic and some military in Iraq -- are all impinging upon the Iranians. They're increasing the pressure on the Iranians to do one thing -- not to lead to confrontation with us, but to lead to negotiations, because we're convinced that diplomacy is the way to proceed. We are most definitely on a diplomatic track, and we believe diplomacy can succeed, and we do not believe that conflict with Iran is inevitable.

For diplomacy to succeed we're going to need to be patient as well as persistent. I was intrigued, Mr. Chairman, to read The Washington Post's lead editorial today, which said some nice things about the administration's efforts in Iran, and then said, "But they're not -- they haven't yet been successful in convincing the Iranians to give up their nuclear weapons." I guess my answer to The Washington Post would be, "If you want to pursue or support a diplomatic path, you have to have the patience and perspective to allow diplomacy to play out." And we have some time to do that. There is no reason for us to choose a confrontational path now. We have time to pursue diplomacy, and President Bush and Secretary Rice have been doing that.

We also, I think, are trying to leave exit doors for the Iranians. And what I mean by that is, in any negotiation or prospective negotiation, you don't want to corner your negotiating partner and leave that country with no options. And so about a year ago, China and Russia and the Europeans and the United States got together and we offered two choices to the Iranian government. We said, "We want to negotiate with you." We offered then an economic and scientific and technological incentives package. We offered to help create a civil nuclear industry in Iran without access to the fuel cycle -- this was President Putin's idea. And we all supported this and said, "Please come and negotiate with us."

And of course, the Iranians took about four-and-a-half months to consider that offer, and they finally answered and they said, "No, we're not going to negotiate."

And so we said, "If you're not going to negotiate, there's another path, and that path is that you're going to be increasingly isolated in the world and pressured and sanctioned." And what's, I think, very powerful about this diplomatic coalition that we've built over two years -- it's not just the United States versus Iran. It's all of the European Union; it's China and Russia; it is South Africa -- one of the leading members of the Non-Aligned Movement; it's the largest Muslim country in the world, Indonesia. They voted last week to sanction Iran. It's Qatar, an Arab state in the Gulf. India and Brazil have now enacted sanctions legislation against Iran because of their U.N. obligations. So I know that sometimes people get frustrated with multi-lateral diplomacy, but when you pull everything together, you have this very powerful multiplier effect of every big country in the world speaking -- singing off the same sheet, saying, "The Iranians shouldn't develop nuclear weapons, and we're all going to act together to prevent that."

This last resolution, Mr. Chairman, was especially important. For the first time, we were able to say that Iran shall not be able to export or transfer or deliver arms to anyone. That includes Hezbollah -- it includes Hamas -- it includes Syria. We won that in the sanctions resolution voted upon successfully last Saturday. We have a specific sanction by the United Nations against Bank Sepah -- the bank that I refer to. We have a specific sanction again the Iranian Revolutionary Guard Corps Command. This organization that in the 1980s sponsored the terrorist attacks against our Marines in Lebanon -- in 1983 -- in 1996, against our housing facility at Dhahran at Khobar Towers, and the organization that sponsors the Qud force, which is the force trying to strike indirectly through Shi'a militants at our soldiers in Iraq -- there are now international sanctions against the IRGC, and we led that fight.

And finally, we opened up the door in the resolution towards further international effort to diminish export credits. This is important because as recently as 19 -- as 2005, there were $22 billion in export credits made available by European companies to their firms to do business with Iranian firms. And our message to the Europeans has been it can't be business as usual with Iran -- please reduce those export credits and the resolution just passed encourages countries to do that. So we think this diplomatic path is a powerful one. We think it is beginning to show results. I would judge that the last time I appeared, Mr. Chairman, before this committee was in September of '06. At that time, the Iranians were riding high. They had just sponsored the Lebanon war against Israel. They were behind Hezbollah in that war. They instigated it. There was no apparent impediment to their nuclear progress. But if you fast-forward to today, they now have lots of impediments before them, and they have a wider international coalition against them. So we need to be successful in this diplomacy. We need to be tough-minded to push back against their attempts to use terrorism against our friends in the region.

And finally, Mr. Chairman -- my last point -- we need to engage with the Iranian people. For -- it's been 27 years since the hostages were released, and in those 27 years we've produced the most unusual diplomatic relationship of any country in the world. We have no relationship with them, we have no embassy there, we have very few American businesses there -- very few American journalists. There literally has been no contact between our countries. And so while we are opposed to the Iranian regime, we ought to be open to increased contacts with the Iranian people.

And the irony here is that the public opinion polls in the Middle East consistently show, as is very ironic, that the Iranian people are among the most pro-American of all the people in the Middle East. So Congress was good enough to give us last year $75 million to expand our Persian language VOATV -- to expand our Persian language radio into Iran -- to allow us to create websites that are keyed to each of the regions of Iran and we can talk to people, and more importantly to bring Iranians here. We brought a group of medical professionals here in January. We're bringing in the near future a group of disaster relations experts, and they'll go around to our cities and states and meet average Americans and build connections. And we sent the U.S. national wrestling team to Iran in January because wrestling is the Iranian national sport, and our team was received with thunderous applause in the arena. They spent a week competing, making friends. One of our wrestlers actually won his weight class, which is also an added benefit.

But we're convinced that as we oppose the regime we need to build up bridges to the people of Iran, and Congress has been good enough to enable us to do that. And I just wanted to advertise that we're asking for an additional $108 million for all of these efforts in fiscal year '08, and I hope that will have some agreement here on Capitol Hill.

So, Mr. Chairman, that's -- I just wanted to respond to your basic points. And you have my testimony for the record and I'm very pleased to answer whatever questions you may have.

SEN. BIDEN: Well, thank you very much, Mr. Secretary. You've just in a very short time made the case, in my view, why I think you're one of our superior diplomats. I don't think I'm misrepresenting -- I think you've expressed a view that has been shared by at least the senior members of this committee for some time. And I say it's about time, and I would say to those who suggest that you are -- you haven't, quote, "accomplished it yet" -- that dealing with their nuclear program -- that this is a process, and it's the only rational process. Let me -- and I just -- we should start the clock. I'm sorry, Bertie (ph) -- thank you. We'll do seven minutes if we can, each round here.

And let me get right to it. We had a very brief discussion, Mr. Secretary, in the anteroom before you came in, and if every American, in my view, could hear what you just said -- there is such a logic to it -- I suspect you -- we would dampen down concerns about the motives of the administration and their -- it's not a secret to suggest some question the motives -- what the intention is -- whether this is a prelude to another circumstance similar to Iran (sic/Iraq). You've laid out clearly a strategy which, at least speak for myself, I fully embrace. But one of the -- a key phrase you used I think is the phrase that I'd like you to elaborate on, off of which everything else pivots, and that is you said, quote, "We have some time".

If you listen to some quarters within the administration as well as here in the Congress -- as well as in the think tank community -- as well as from some of our friends abroad, is -- the argument is we have no time -- we have no time as it deals with the nuclear program. And as a consequence, we have no time to focus on anything else because that's the -- that is the 800-pound gorilla. That is the gigantic issue. That is the ultimate objective of the Iranians to pursue it and us to stop it. And one of my -- one of the things and I -- I think in a sense maybe we're a little responsible for this not being clear -- is that I don't think the American public nor the majority of our colleagues have a really sort of unvarnished clear- eyed view of Iranian capability and Iranian present circumstance. Everyone's sort of still in the mode that they are riding high -- that they are 10 feet tall -- that they're on the verge of being able to mount a nuclear warhead on top of a missile -- that they have an economic -- they're an economic juggernaut -- that all of their oil puts them in a position where they are impervious to sanctions -- that -- and the list goes on and on and on, when the reality is when I say to constituents, "You know, look -- the Iranians import most of their refined oil," they look and they go, "Huh? I didn't know that. If you listen to what's going on out there, these guys are this gigantic juggernaut -- that the only thing that can stop them is physical power."

And so without going into all those areas and before my time expires, I'd like to ask you to speak to two things, Nick, if you would. There is again, and that I think a sense among many of our colleagues in both houses -- in both parties -- as well as the public at large that the Iranian president is in total control of the Iranian government -- that he controls all the security apparatus -- that he calls all the shots. And he is obviously someone who is viewed by a lot of people as not being particularly stable. His denials of the Holocaust, his talks about wiping Israel off the map, his absolute insistence about the way he's going to proceed with nuclear capability I think feeds a sense that we don't have time. And when people think we don't have time, then they say, "Well, there's not much time for diplomacy." So I think these are connected. Would you speak a little bit for the record about the relative power and position as best we know it of the Iranian president versus the supreme leader versus political opposition that exists within Iran? And the last point I'll make is, the most important point I think you made today is the way we're viewed by the Iranian people. My greatest criticism of the administration is we've basically pushed a mute button when it came to discussions. Now, you pointed out you're going to be looking for $180 million I think your number was.

MR. BURNS: One hundred and eight -- 1-0-8.

SEN. BIDEN: One hundred and eight.

MR. BURNS: Yes.

SEN. BIDEN: I think -- you will have no trouble with this chairman, and I think you'll have no trouble with this committee, getting that and possibly more, which, if you fold in to my question about Ahmadinejad, why is it, if you're reaching out, why does the administration continue to oppose our proposal to expand American NGOs, exempt them from sanctions, that, without -- with those sanctions in place, it makes it very difficult, if not impossible, for them to be engaged in supporting democratic movements in human rights activities within Iran.

Are they inconsistent? Is it inconsistent to propose, as I have, that the NGOs be able to engage in Iran and engage the human rights community, engage the democratic movement within Iran, and what you're calling for? So I'll yield the floor with a minute or so left here and ask you to respond, if you would, generally to those two points.

MR. BURNS: Thank you, Mr. Chairman. I'll be happy to.

On the subject -- maybe I'll just reverse them, if I could, and just start with Ahmadinejad. He's an odious figure. If you try to trace, you know, history over the last 40 to 50 years and find a world leader who calls for the destruction of another country, who denies that the Holocaust existed, whose whole foreign policy seems to be negatively oriented, you can find few people like Ahmadinejad.

We take him seriously, and we have to take him seriously. He's the president of Iran. And so we follow what he says and we try to oppose, as best we can, what he does.

But it's also true that Iran, as you suggest, Mr. Chairman, is not a monolithic political entity. In fact, it's a cacophonous sea of disputation right now between various power centers. And what's remarkable about the politics of Iran over the last half-year is how much infighting there is on this issue of the nuclear posture of Iran.

The supreme leader, Ali Khameini, whom almost everyone believes is the most powerful person in the country, the newspaper associated with him was very critical of Ahmadinejad about a month ago, publicly, and for his stewardship, or lack thereof, of the nuclear issue and for the fact that Iran had become so isolated because of its uncompromising nuclear weapons ambitions.

So Ahmadinejad is a powerful figure, but the supreme leader, Ali Khameini, Ali Akbar Rafsanjani, the former president -- there are many others who can balance his power. And our handicap is we don't have an embassy there. We don't have a lot of -- as much expertise in our own government on Iran as we would like because, for a generation, we haven't been able to send anyone to that country. But we're rapidly building up our capacity to understand Iran.

And I think what I've just told you probably reflects most international opinion about Ahmadinejad. We take him seriously, but he also is now under some strain within the Iranian system as well for these nuclear policies and also for his disastrous economic policies that have been very injurious to the Iranian people.

I think your -- I just wanted to address your point about NGOs. We very much want American NGOs to be able to work inside Iran. Here's the problem, and Congress has given us money to try to promote civil society in Iran. If we -- if an American NGO tries to have a direct relationship, or the American government, with an Iranian NGO or democracy activist, those people will be harmed by that association.

And so what we have done with the money that Congress has given us -- and we've issued reports to you to let you know how we think we've done -- is try to support international efforts, multilateral efforts, sometimes European and Arab efforts, because those organizations can work with a greater degree of flexibility and sometimes credibility inside Iran itself.

SEN. BIDEN: Nick, are American-based NGOs able to work with NGOs based in other countries as not the front, but participating in efforts to promote human rights and democracy and other laudable efforts within Iran? Or are they permitted, as you read the law now -- prohibited from being able to do that?

MR. BURNS: There have been some legal prohibitions under OFAC, the Office of Foreign Asset Controls, and others that we have built up through the unilateral sanctions that we've deployed over the last 27 years that Senator Lugar referred to. There have been some prohibitions.

But since we agreed with the Congress about a year and a half ago that we would try to help stimulate civil society, we've been able to give some exceptions to that. And we are quite willing to do that and quite flexible. But I think it's more of a political barrier right now inside Iran itself than anything else.

SEN. BIDEN: Well, I would hope we could work out an arrangement whereby we would reduce the legal barrier to the extent that it requires a sign-off. But anyway, my time is up. I appreciate your answer. And I yield to my colleague.

SEN. LUGAR: Thank you very much, Mr. Chairman.

Secretary Burns, in the past two weeks Iran has taken the action which you described, arresting the United Kingdom sailors. And the Russian government has indicated that nuclear fuel would not be available for Bushehr.

Characterize, if you can, these developments as to how they are helpful in terms of your diplomatic track. By this I mean, in the past, criticism would be that unilaterally the United States was attempting to sanction Iran, that we did not cooperate till a couple of years ago with European allies who had been visiting with the Iranians. But nonetheless, we determined that it would be in our best interest and in theirs to move on this multilateral front. And now, in the United Nations, the successes you've reported are apparent.

It's curious to me why the Iranians would deliberately provoke another country, other than the United States. And furthermore, what have they done to provoke the Russians to the point that they're unwilling to send the fuel?

MR. BURNS: Senator Lugar, thank you very much. On the first issue, I think there's been universal condemnation of the Iranian government for having taken prisoner the UK personnel, the 15 people, 14 men and one female, a couple of days ago. I was at NATO at the earlier part of this week, and all the NATO countries agreed to be supportive of the United Kingdom. I believe you'll see that also occur at the U.N. Security Council today.

So we hope -- obviously all of us hope that Iran will make the right decision and release these people, because they're entirely innocent. And they were operating under United Nations authority as part of the multinational coalition, and they were clearly inside Iraqi waters.

The Russian example, I think, is very instructive of what's been happening around the world. About a year or two ago, there weren't many countries around the world that felt that they were in a coalition trying to limit the Iranian government. In fact, I think there was widespread indifference to the fact that Iran was making this buildup towards nuclear weapons, with the exception of the European countries. But you've seen this rapid development now of a major international coalition.

The only countries that I can find that are actually speaking up on behalf of Iran, so the friends of Iran, would be Syria and Belarus and Sudan and Venezuela and Cuba, the gang of five. And that's a pretty notorious group of countries. Everyone else, including all that I mentioned in my opening remarks, including some of the non- aligned leaders -- India, Brazil, Egypt, Argentina, South Africa, Indonesia -- are now all on record supporting sanctions against Iran, tough sanctions.

And I think it's because the Iranians have essentially miscalculated. They've not given anyone hope that they're going to negotiate. Listen to Dr. ElBaradei, the chairman of the International Atomic Energy Agency, or the U.N. Security Council, and they seem just to be going full-bore towards a nuclear weapons capability. And the world doesn't want that.

And I think you put your finger on it. The most instructive has been what Russia has done. Russia has delayed delivery of fuel to Bushehr. Russia has clearly indicated publicly in the last few weeks its frustration with Iran. And we worked very well with Russia over the four weeks in the lead-up to last Saturday's vote for the Chapter 7 sanctions resolution. In fact, we went to Russia first. Secretary Rice had a conversation with Minister Lavrov. And then she asked me to go and meet the Russian government in London, which I did, and we drafted this resolution with them.

So Russia is fully part of this effort to sanction Iran and to squeeze Iran and to show Iran that there are consequences for not being willing to negotiate.

SEN. LUGAR: Well, I think this is a very important development, and it offers perhaps another opportunity for our diplomacy with Russia. The Russians have shared our views about nonproliferation and the dangers of nuclear power in the hands of others, and for a period of time, as a business transaction, were prepared to help the Bushehr situation. It may do so again at some point.

But, it seems to me that one of the productive features of your diplomacy may be a new opportunity for an avenue of discussion with the Russians -- about not only Iran, but other situations that may arise and that are often threatened. You know, the thought is often that if somehow Iran continues to develop, so will a host of other countries in that region if not elsewhere.

And a view of Russia and the United States -- plus our allies in the United Kingdom, and others, coming together on those issues -- may speak to the criticism you mentioned in the Washington Post this morning. They applaud diplomacy, but nevertheless, they would like to have seen, by this time, Iran advocate its program -- an unrealistic view, I think, but I applaud the innovations in diplomacy that we are employing. And, likewise, our working with persons that we might not have anticipated would be helpful at this point.

Let me just follow the Chairman's question a little bit. Clearly there's a big break from two years ago, in which we simply did not have much to say to Iran one way or the other -- and, as you say, really for a generation. Now how can we come to, really, a full-court press by the State Department, or by our government, in which we think of all sorts of ways -- not that we flood Iran with students, businessmen, scholars, preachers, whoever, but nonetheless -- as opposed to, sort of, one by one, trying to think through whether this NGO will pass muster, and who we might ally with, and so forth, your answer may well be, "Well, the Iranians just simply won't tolerate this." "They won't offer visas, they won't let these people in the country, and what have you." Maybe so, maybe not. You know, I think there is certainly evidence that as Americans who have been innovative -- have attempted to get the know the Iranians better and have been going into the country and so forth -- there have been productive results.

And I appreciate that this is such a broad switch from a couple of years ago. People in diplomacy may not quite assimilate this, but it just seems to me critically important that we get to know Iran better -- a lot of us; that there be more press reports, better information about the economy. We talk from time to time that the economy is faltering, that the president of Iraq isn't understanding the needs of poor people in the rural areas, and so forth. Perhaps, but it's awfully hard to find that, except anecdotally, and maybe once a month in some report. And this is too critical to leave, at least, out in the base path.

SEC. BURNS: Mr. Chairman, I'm in full agreement and it's what -- it's what our administration has tried to do. And it's nice to see that -- I think we have bipartisan support for this because Congress has been good enough vote the funds that allow it to happen. But look at it this way, I think it -- and I agree with your perspective, if we cannot have a normal relationship with the Iranian government -- and we don't one right now and there's no hope of an early resumption of diplomatic relations, surely we can open up connections to people in Iran. So we've done that through our athletes; we can do that through scientists; we can do it by bringing Iranian students. We've all seen the huge, long-term impact of having someone study in our country and get to know the American people and what that means 30, 40 years -- when that person is in a position of some influence in their society.

There are some in the Senate and House who want to establish connections with the (match lists ?), and we support that. We think that would be a very positive contribution if some in the Congress could break down some of the barriers that we're currently unable to break down as in the executive part of the government.

And we've tried to get smarter ourselves. When Secretary Rice came in as secretary of state more than two years ago, we had about -- we had one person, I was tempted to say one-and-a-half, working full- time in Iran. We now have an Iran Desk of more than eight people and its director, Barbara Leaf (sp) is seated directly behind me. And they're doing a great job -- they're focused solely on Iran.

We've constructed an office of six people in Dubai, whose job -- they're all Farsi speakers, is to talk to the thousands of Iranians in Dubai. We have Iran watchers - people who are focused on Iran in Kabul, and in Baghdad, and Frankfort and London -- places where the Iranian diaspora congregates. And it's very reminiscent to what we did in the 1920s. During the period between Versailles and when Franklin Roosevelt was inaugurated. We had no diplomatic relationship with the Soviet Union, and so we established what called (regestation ?) -- which is where, which was the diplomatic outpost designed to look into the Soviet Union, understand it, and try to connect with it. And we sent people like (Chip Bowen ?) and (George Kent ?) in there as young diplomats.

And we had (regestation ?) in mind when we designed our office in Dubai. And so I think we in government need to be smarter about Iran and we're attempting to do that.

And I think we need to unleash the power of our private sector and the American people the create the kind of bridges that ultimately can bring, in the long-term, these two societies more closely together.

SEN. LUGAR: And I would applaud those efforts.

Thank you, Mr. Chairman.

SEN. ROBERT CASEY (D-PA): I want the ranking member, Senator Lugar, to know I'm here temporarily. (Laughing.) Senator Biden will be back shortly.

I'll exercise my own prerogative as temporary chair to start my questions now. I don't see anyone outranking me over here.

(In progress after audio break) -- and thank you for your great public service -- especially when it comes to the threat posed by Iran. And I appreciate the testimony you gave.

I want to ask you a couple of questions about intelligence. I think you'd agree with me, wouldn't you, that when we're talking about any kind of successful effort in the area of diplomacy that one of the underpinnings of that, one of the foundations of that -- or to use another analogy, one of the pillars to hold that up -- would be a credible and an effective set of intelligence data. And there have been questions.

We know the questions that were raised -- serious questions about intelligence failures in the lead up to the war in Iraq. And just in February, a Los Angeles Times story calling into question U.S. intelligence as shared with U.N. nuclear watch -- the U.N. nuclear watchdog agency, IAEA. The assertion made by diplomats -- and this story was out of Vienna -- is that that intelligence was inaccurate and serious questions raised about it.

So I ask you, do you have full confidence that the intelligence that our government is producing with regard to Iran, generally, but specifically the nuclear threat and the detail and the data that under girds those intelligence conclusions or estimates, do you have full confidence in American intelligence efforts in this question?

MR. BURNS: Senator Casey, thank you for your question.

Let me just say that I do have full confidence in our intelligence community. I think that they are objective. They work extremely hard. They understand that one of our primary foreign policy challenges is Iran, so a tremendous amount of resources are being devoted to the question of trying to understand the society, its politics, but in particular to focus in on the nuclear question and to look at some of the questions that we've got to answer about the pace of work at the nuclear complex at Natanz.

Most of -- I can only speak in generalities because we would have to go into a classified session to speak in specifics. So I'll just refer to the generalities by saying I'm very well acquainted with the individuals leading this effort in our intelligence community. And I have every reason -- every confidence -- that they are objective, that they are calling them as they see them, and that that's our obligation as federal civil servants.

And this is such an important issue for our country. The threat of a nuclear-armed Iran -- it would change the balance of power of Europe in negative terms for the United States, for Israel -- our friend and ally. And we need to get this right and we're all dedicated to getting it right. And I think I can say, as someone who works with them day to day, that I have every reason to believe that they're approaching this with the degree of seriousness that you would want and you would expect.

SEN. CASEY: And based upon your answer, from what you can tell us that's obviously not classified, what has our intelligence indicated to us in terms of the duration of time from the present until -- we hope this doesn't come to pass -- but sometime in the future where Iran, in fact, develop a nuclear weapon?

There are all kinds of estimates that are on the record -- there are all kinds of opinions -- but from what you know today, and based upon our intelligence, what can you tell us about that?

MR. BURNS: Senator, I just want to be very clear in stating the obvious. I'm not an intelligence official. And I think there has to be a clear line between those who are responsible for intelligence predictions and those who are in the policy community. I'm in the latter community, so I have some degree of humility in trying to answer your question. And I would refer you to Director McConnell's testimony before the Senate in February where he, I think, addressed a question from Senator Hillary Clinton and gave a very specific answer as to what he believed was the timeline -- the answer to the question you posed.

I would just say to -- just to add to that -- is there's no more serious threat. We have to take it very seriously and be tough minded about that threat. We have to, of course, watch the intelligence, but keep this issue -- the question you asked: so how many years will it take for them to produce either the capacity to produce fissile material and a nuclear warhead, or actually to have an industrial process that could do that at an accelerated rate? And we have to keep that under constant review, because there are so many variables that go into that process that the Iranians are engaged in. You need to watch all of them individually and in combination and that is what our government is attempting to do.

So I think there has been a very clear intelligence estimate made by Director McConnell. And I think it's best for me, as a policy official, to leave the intelligence to them. But as a policy official, it has to be under constant review because there's nothing more important to us.

SEN. CASEY: My time is short. I just want to try to get one or two more in.

The whole question of refining capacity. We know that's -- the ability of the Iranians to have the consumption of gasoline at a level where they can sustain their economy. I know that's an advantage we have, I guess, in terms of negotiations. But because of their lack of domestic refining capacity, what can you tell us about strategies that we might employ because of that disadvantage that they have in terms of short-term or long-term negotiations? Is that something that you think is viable as a point of leverage? And is it something that you've already employed or begun to think about?

MR. BURNS: Thank you, Senator.

I think, actually, that's a really pertinent point of our negotiations. The irony is that for one of the largest oil and gas producers in the world, they import about 40 percent of their gasoline and they have not been able to build up their refining capacity to the degree they'd like. They keep the price of gas artificially low, which has all sorts of negative effects on their economy. And the streets of Tehran -- I've never been there, but I understand that it's impossible to drive there because there are so many cars on the road because gasoline is so cheap.

But you're right to suggest that this is a point of leverage to us. And as we look at all these points of leverage -- and I have listed five of them in my opening remarks that are diplomatic, economic and military -- most of us believe that what we can do economically is probably, in the short term, the most effective leverage we have against the Iranians, because I think the most -- the important thing we can say about their motivations as a country, as a government, is they don't want to be isolated. They don't want to live the way the North Koreans have lived. They want to integrate and they want to invest in the capital and they want trade from Europe and the Arab world. They see Dubai as their banking capital, for instance.

And the more that we can convince countries not to do business as usual -- for instance, for Japan to reduce its export credits -- Germany, Italy and France. The four of them have done that. For us to see more international financial institutions shut down lending to Iran. I think you were right to suggest that that's the point of vulnerability. And the whole point of this is not just to be needlessly punitive, but to drive up the cost to Iran of its behavior and to increase the chance that we can get it to the negotiating table, resolve the nuclear conflict peacefully rather than militarily.

The president has many times "we keep all options on the table." And he's right to say that, but there's no question that we are focused on a diplomatic solution. And that's where the great majority of our energies should be.

SEN. CASEY: Thank you. I'm out of time.

Senator Hagel.

SEN. CHUCK HAGEL (R-NE): Mr. Chairman, thank you.

Mr. Secretary, welcome. As you noted, you have had over the course of the last few years many discussions with a number of us on this committee about this issue. Most of those have been off the record and we have always noted and appreciated your candid exchanges. And I share Chairman Biden's appreciation of your abilities and leadership, as well as what Senator Lugar said.

And I also wish to associate myself with both Senator Lugar's comments and Chairman Biden's of putting a focus on the efforts with the NGOs, as you noted, widening our exchange efforts. As you noted, we have some opportunities here with the younger generation in Iran and you and I have talked about that at some length. You also appeared before the Senate Banking Committee two weeks ago on this issue. And we appreciated your comments then.

And I also would like to acknowledge the efforts that Secretary Rice is making, as well as yours and others in the State Department, to what I perceive to be a refocusing of our priorities using some new diplomatic initiatives. It is my opinion that that is going to be the most important leverage we have within the arc of our instruments of power -- military, economic and diplomatic.

And a wise use of each in a coordinated, comprehensive way is what's going to be required and I believe that you and Secretary Rice and others are focused on that. And you should be recognized for that, and I think it's important that Congress acknowledge that.

You know, Secretary Burns, that this week the Senate has been consumed with Iraq, specifically the Supplemental Appropriations Request from the president. And as you have noted as others have, we cannot separate Iraq from Iran. They are woven into the same fabric, as is the Middle East in general, specifically Israel -- the Palestinian issue. And it is, in my opinion, not only appropriate and responsible to have this debate and have the Congress involved, but it's essential. And as we look at the papers this morning, strikes in Baghdad's Green Zone increase -- six of the last seven days, rockets have hit inside the Green Zone, killed one American solider, wounded another -- contractors. Papers continue to be full of other headlines like "Gunmen Go on Rampage in Iraqi City." This is Talifar policemen loose on the streets assassinating people. This is the same city that President Bush talked about as a model city, how peace -- tranquility had come to Talifar. The president said, "It gives me confidence in our strategy."

Other headlines about what the king of Saudi Arabia said, calling the United States' involvement in Iraq -- I believe his exact quote was "an illegitimate occupation of Iraq." And then on the same page, headline "Iran May Skip Talks on Iraq If U.S. Keeps Six Detainees." You have addressed that issue generally. Now with all of that playing out -- and that, Mr. Secretary, is reality. That's not an abstraction. That's not a political statement. That is reality as to what's happening in Iraq. And we can have all the verbiage about supporting our troops and all the other debate points that have been made, but what I have just inventoried here -- and we could continue for some time -- are realities. Things aren't getting better. They're getting worse. Now in Iraq, as you have noted, the Iranians have considerable influence. Let's start with the fact that the Iraqi prime minister and the Shi'a senior government of Iraq -- our allies, our friends, those we helped put in office -- are closely associated with the Iranians. You and I have talked about this. Most were exiled in Iran during the reign of Saddam Hussein.

And my question is, does this enhance, does this inhibit -- how does it factor in to our relationship with Iran, what we are attempting to do with Iran through the United Nations, through our partners and all the pieces -- not just the nuclear piece, but the Hezbollah piece? Are we working with the Iranians and the Iraqis together? Are we working with our allies, the Iraqis? The Iraqis are in and out of Tehran at a fairly regular interval. How are we using that relationship, or are we using that relationship between the Iraqi government and the Iranian government?

Thank you.

MR. BURNS: Thank you, Senator.

We're seeking, and we hope to see a change in Iranian actions and behavior in Iraq. And more broadly, that's the focus of our policy towards Iran, to see a change in behavior -- a change in the actions. Now we have tried to connect with them. As you know, on March 10th, Zal Khalilzad, who was then our ambassador to Iraq, met with the Iranian deputy foreign minister, the Syrian deputy foreign minister, with the Iraqi foreign minister in that first international meeting. And we agreed at that meeting to attend additional meetings both at that ambassadorial level, but also at the ministerial level. Secretary Rice would hope at some point to sit down with her Iranian and Syrian counterparts to talk about Iraq, and we're trying to manage that schedule now with the Iraqi government. So it is true that we understand the need to deal with the reality of Iraq, and that is that Iran and Syria have some influence. But our point to them is that they're not using that influence in a positive or productive way. I mean, look at the actions of Syria to allow foreign fighters to fly into the Damascus Airport, go over land across Syria right across the Iraqi border and then to direct their attacks against American soldiers. We can't countenance that.

And look what the Iranian government was doing. As I said before, they're in a privileged position. Most of the Shi'a leadership of the Iraqi government now took refuge in Iran. There is a degree of personal knowledge and familiarity with the leadership in Tehran, the leadership of Baghdad that ought to give Iran a perch from which to be influential. But they've not used that power. They've used it (positively ?). They've used it negatively, and so our beef with the Iranians on the subject of Iraq is instead of just supporting a narrow group of people -- Shi'a militants and giving them explosive technology to attack American soldiers -- they ought to be arguing for the unity of Iraq and they ought to be arguing for an end to the violence between Shi'a and Sunni. But they're not. And so you can believe that when we got to the table with them as Zal did -- as Ambassador Khalilzad on March 10th -- and when we see them again in the month of April, we have an agenda, and it's to ask the Iranians to play a more productive role in Iraq itself. And I would also just say, Senator, we're seeking to sit down with them on the nuclear issue, and they're avoiding us. We have a Perm-5 offer to negotiate and they've avoided us now for eight months. So it's not for lack of trying that there isn't much of a conversation these days between the government in Iran and the government of the United States.

SEN. HAGEL: Part of the question revolved around whether the Iraqi government was attempting to use this, or how were they attempting to use the relationship with the Iranians in Iraq? Not just us. And if in fact, if I understand it, the secretary says that unless there is a verifiable suspension in Iran's enrichment program, then she will not go to the ministerial meeting. Is that correct?

MR. BURNS: Actually, we separated the two issues. On the question of Iran's nuclear weapons ambitions, we, the Chinese, the Russians and the Europeans have said together, "We will only negotiate if you suspend your enrichment programs." Now suspend the programs for the life of negotiations, and the reason is if we went to negotiations with them -- the five of us, and -- but allowed Iran to continue its nuclear research, that would be every incentive for them to keep us at the negotiating table for years and they'd just proceed with their nuclear research. They'd have it both ways. But we have -- apart from the nuclear issue, we've said that we're willing to sit down and talk to them about Iraq in this multilateral setting that the Iraqi government made available back on March 10th, and we've said that we're willing to go to future meetings with them. We've made that very clear. But we want there to be -- we're going to insist on a change of Iranian behavior because right now they're not adding to those -- to the -- they're not adding their voice to those who are arguing for a peaceful resolution to disputes inside Iraq, as opposed to the violence that you correctly say is dominating our news today.

SEN. HAGEL: So the secretary would in fact -- would go to the ministerial, including the Iranians without a verifiable enrichment agreement or suspension commitment from the Iranians.

MR. BURNS: Well, she and our other representatives are willing to have future meeting on the issue of Iraq with the Iraqi government -- with some of the other neighbors. You know, Egypt's been involved -- with some of the European countries, perhaps, yes.

SEN. HAGEL: So she would.

MR. BURNS: She's -- yes, and we are willing to do that. But what we're not willing to do is change our policy on the nuclear side, which is not just a U.S. policy. It's a Russia/China/U.S./European policy, which is quite strongly felt by all of us.

SEN. HAGEL: Thank you.

Mr. Chairman, thank you.

SEN. BIDEN: Senator Feingold.

SEN. RUSSELL D. FEINGOLD (D-WI): Thank you very much, Undersecretary Burns, for your testimony today and for being here.

And thank you, Mr. Chairman, for holding a hearing on this subject.

There are few higher priorities than getting our policy toward Iran right. We must be realistic, both about the very real threat from Iran and about the consequences of different courses of action. We got it wrong in Iraq and are suffering the consequences -- an overworked military, mountains of debt and an increase in the negative perceptions of the United States overseas. We cannot afford to get it wrong this time around. The stakes are too high. Mistakes could cause the situation in the Mid East to spin out of control and before we know it, we could be faced with even greater security threats than we're facing now. But I do thank you for the hard work you've done so far, and first I'd like to ask you -- I note, Mr. Burns, in your testimony you state that, quote, "If we continue our skillful diplomatic course and have the patience to see it play out over the mid- to long-term, I am confident that we can avoid conflict and see our strategy succeed," unquote. What kind of a timeframe are you talking about?

MR. BURNS: Senator, thank you.

It's hard to be precise about that but because it does get the question of when we think the Iranian government will have the capacity to produce fissile material and nuclear weapons. And that's a -- our intelligence community watches that as you know. And they've given their own assessment as to the Congress, which is the right thing, independent of the policy community. And we need to keep it under urgent review and constant review because there is so many variables that fit into that question. And you have to try to measure, sometimes from a distance, how well the Iranians are doing.

One of the problems we have now, for instance, just to illustrate this, is that the Iranians have begun to kick out some of the IAEA inspectors. They began this several months ago; they've downgraded their relationship with the IEA because, they say, of their anger over these two security councils sanctions resolutions.

And so we rely a lot on the International Atomic Energy Agency and Dr. Mohamed ElBaradei to give us a sense of the pace at which they're proceeding on a scientific basis at -- (inaudible) -- at the enrichment and reprocessing issue. So it's under constant review and, frankly, I don't think it would make sense for me to say, "Well, we've got "x" number of months or "x" number of years" because I think that might be a misleading answer.

So what I have said in my testimony, and when I repeated it earlier today, is that I'm confident that we have some time with which to work. And that the key thing about diplomacy is you've got to have a little patience, and you have to be willing to be persistent and let diplomacy play out. And -- so I was -- before you came in, I was taking advantage of this microphone to say I read the Washington Post lead editorial today and they gave us some compliments for our strategy -- then they said, but they haven't stopped to nuclear weapons program. And I thought to myself, that's a little ambitious. We've only been at this now -- in the perm 5 -- for a year. But we've built this major international coalition. And when you have Russia and China and Indonesia and South Africa and Brazil on our side, and you have Syria and Venezuela and Cuba on Iran's side, that's a pretty good line up for us. And we --

SEN. FEINGOLD: Speaking of that, and I want precede that a little bit because I -- when I was in Indonesia last year, I asked President Yudhoyono about why -- I believe at the time, Indonesia was one of five countries that had not voted to refer Iran to the security council and he indicated it was a question of timing, and now I note that, in fact, Indonesia was as I understand it, supportive. And I think this is critical because I think sometimes people think of this in terms of the five permanent members of the Security Council, but Indonesia is the largest Islamic country in the world; it has a real relationship with Iran.

So tell me a little bit about how we're going about enlisting countries like that and indicating to them that this is at our very highest -- one of our very highest priorities we want from our relationship with them.

MR. BURNS: We'd actually -- this has been a high priority for us in our relations with Brazil, India, South Africa, Indonesia, Egypt -- just to name five leading member of the nonaligned movement -- and what we said to them is, "Look, we're not trying to deny Iran -- Iranian people a nuclear -- a civil nuclear power -- because under the nonproliferation treaty all counties have that right -- but we are trying to deny them nuclear weapons. And there's a big distinction; and we get to keep the two separate; and we had a lot of success."

When I was in Brazil in the month of February and the Brazilians were just debating in their parliament the implementing legislation for the first U.N. Security Council sanctions. That's a powerful instrument when it's not just the United States or France saying to the Iranians you can't have nuclear weapons -- it's all of their brethren from the developing world, countries that they respect, counties with which they have diplomatic relations and some economic ties -- and so it's been very effective for us to see these countries step forward. And, frankly, we had very tough negotiations at the Security Council over the last two weeks, but to see South Africa, Qatar, Indonesia join the rest of us, that was a powerful --

SEN. FEINGOLD: How tough was it? How challenging was it to get Indonesia to come on board here?

MR. BURNS: Well, I think that those countries rightfully -- what happened was the countries of the Perm 5, including the U.S., came to the rest of the Council and said, "We have this resolution; it's a Chapter 7 sanctions resolution, and we'd like you to vote for it." And I, quite rightfully -- a lot of them Indonesia and (Gutar ?) and South Africa said, "Okay, wait a minute, let's not rush into this, let's talk about it" -- and so we spend eight days, about 20 hours a day, talking in New York, talking between capitals. Secretary Rice got on the phone and talked to President Becki (sp); the president talked to the president of Indonesia.

And we took the time to try to help them understand what was motivating us and why their climbing on board would really reinforce efforts toward peace and a peaceful resolution, that we we're trying to somehow use this to try and have a military confrontation.

SEN. FEINGOLD: Well, I congratulate you on that approach and I'm glad it's bearing some fruit.

You said in our opening statement that an active and focused diplomatic strategy is the best way forward in dealing with Iran, and I'm pleased to hear your comments today and also those of Secretary Gates yesterday, which signaled the possibility of higher level diplomatic engagement. Will you outline for me what these higher level engagements would look like?

MR. BURNS: Yes, sir. On the nuclear issue, we think the only way we're going to resolve this on a diplomatic front is to get the negotiations to a very high level. So what we proposed is, if the Iranians would agree to negotiations, Secretary Rice has said she would be there personally. It would be the first time since the hostage crisis of '79-'81 that we would have had such a high level interaction with Iranian officials.

But, all of us have said -- Russia, China, France, Britain, Germany, the United States -- there's just one part of the price of admission, you've got to suspend your nuclear efforts. And we've said we'll suspend our sanctions implementation if you'll suspend out enrichment program -- so it's suspension for suspension. We think it's a pretty fair deal. And the Iranians have not yet said yes, but what we have asked Javier Solana to do on our behalf -- he's the European foreign policy chief -- we've asked him to make contact with the Iranians. And he called Ali Larijani on Monday, the director of the Security Council in Tehran -- and say, "Okay, now that we've sanctioned you again, is there a way for us to work with you, to get you to the negotiating table? And since the United States does not have diplomatic relations with Iran, and it wouldn't be in our best interest to lead those kinds of direct talks, Mr. Solana will lead them for us and for the rest of the Perm 5 countries. And we hope that Iran will know that this offer that we made to negotiate with them is on the table, we haven't taken it off, is the best way forward.

SEN. FEINGOLD: Thank you, Mr. Burns. Thank you, Mr. Chairman.

SEN. BIDEN: Senator Coleman.

SEN. NORM COLEMAN (R-MN): Thank you, Mr. Chairman. Thank you, Secretary.

I'm pleased to hear you talk about needs to reengage with the Iranian people. I think sometimes there is a confusion as we focus on the comments of Ahmadinejad and his threats to destroy Israel and the danger of Iran having a nuclear weapon, that -- that's a separate issue from the Iranian people -- as you indicated by public opinion polls say that they're still pro-American and about 70 percent of the population of Iran is under 30 -- so there's, I think, tremendous potential there.

And I hope that we provide the resource -- and I was pleased to hear the chairman say that he'd be supportive of that -- those resources that would allow us to extend our engagement and contact with the Iranian people. I think it's pretty important. I should also note when I was in Dubai, I found it fascinating that the language of choice among a diplomats seemed to be Farsi. And the need to understand the language issue was critical. And so I think that's also very positive. Engagement is absolutely critical.

Let me -- I read in the paper that the comments or at least description of the comments of the Saudi king. And it's been my understanding dealing with the Saudis, dealing with the Egyptians, they want us in Iraq. They don't want us leaving Iraq. They have deep concerns about the Iranian influence in the region.

And so could you help me understand the perspective on the comments of the Saudi king that describes -- apparently describes our presence in Iraq as an illegitimate foreign occupation? Is that a -- somehow a change in the perspective from the Saudis and others in the region?

MR. BURNS: Senator, thank you very much.

I will admit we were a little surprised to see those remarks. We disagree with them. We're under -- the United States military forces are in Iraq under United Nations authority. And the United Nations votes every year to authorize that mission -- it's international coalition sanctioned by the U.N. -- and at the invitation of the Iraqi government and of the Shi'a, Sunni, and Kurd leaders of that government, and so obviously we'll see clarification from the Saudis. You know, in these instances, you never know, it could have been an interpretation issue; it could have been misreported, so I think we have to allow for that. And I'm sure this is not going to disrupt the very good work that we've been doing with Saudi Arabia of recent months on this particular issue.

SEN. COLEMAN: And my concern goes not just to the nature of our relation with the Saudis, but I'm looking at the -- one of the things I find frustrating is that the Iranian efforts to destabilize the region -- Iranian efforts to use Hezbollah as a proxy to support Hamas to, you know, provide deadly IEDs, EFPs -- whatever they're called now -- it's not just a concern for us, but I've always understood that the Egyptians, the Saudis, the UAE, others within the region -- particularity by the way, Sunni governments -- have a -- should have a deeper interest in supporting efforts at stability. And I don't see that interest and so I don't see the fruits or the action that would somehow correspond with what appears to be a real interest.

They got a dog in this hunt, the Egyptians and the Saudis and others. And so I guess my question is, you know, what can be done to somehow facilitate others in the region -- Sunni governments in particular -- from playing a more active role in dealing with Iran and challenging Iran's efforts to destabilize and cause conflict in the region?

MR. BURNS: Senator, I think you're right to focus on this aspect. We give so much attention to the nuclear problem, as we should, but the other big problem with Iran is it's essentially become the central banker of Middle East terrorism. It's the leading funder of Hezbollah, Hamas, Palestinian Islamic Jihad and the PFLP General Command. And if you think about the Iranian agenda, it is contrary to the Arab agenda in the Middle East, and there's a lot of concern among the Gulf Cooperation Council countries about increased Iranian influence. Ahmadinejad has said -- he says that the destiny of Iran is to be the most powerful state in the Middle East. And we see a country with an entirely negative regional agenda.

I mean, think of it this way: They opposed the moderate Palestinians; they oppose and are the sworn enemy of the state of Israel, our ally; and they're using their influence very negatively inside Iraq and also in Lebanon against the democratically constituted government. And so we're very concerned by this regional role.

Secretary Rice has had four meetings of the Gulf countries plus Egypt and Jordan together as a group since the month of September, and there's a real regional effort beginning to push back against the Iranians. And I think you've seen us begin to do that with our deployments in the Gulf, with our actions in Iraq. And I can tell you, behind closed doors, those Arab countries do not wish to see Iran become the dominant country in the Middle East.

SEN. COLEMAN: And that's clearly the sense I have. I would suggest -- and I think it's pretty obvious -- that the Iraqi government plays a role in this, that the fear among some others in the region is that -- of the Maliki government or -- I don't think a tool or pawn of Iran, but perhaps so closely aligned and not showing the kind of resolve to deal with Iranian influence and perhaps obviously not showing resolve to reconcile and deal with the Sunni- Shi'a divide. And so I would suggest perhaps the obvious, that the Iraqi government by its own actions and showing and commitment -- and certainly that's the hope with this surge and changing rules of engagement, taking on Shi'a extremism -- will play a role in perhaps convincing some of the others in the region that they have a stake in stability in Iraq and they have a stake in that government surviving.

MR. BURNS: Well, I would agree with you. And I -- you know, our new ambassador has arrived. Ryan Crocker was sworn in yesterday, and I think we all recognize that the Maliki government faces an extraordinary number of challenges, and we have a great deal of sympathy with them.

My sense, very respectfully, would be that they're not beholden to Iran -- there are natural ties there, personal and institutional, from the anti-Saddam coalition -- but that the Maliki government understands that they have to have a unified national effort that includes Sunni and Kurd if they're going to be ultimately successful. And we think they do understand that.

SEN. COLEMAN: One last question: Do you believe that we have shut down the flow of these -- the most deadly kind now of IEDs? I think they're called EFPs. But -- when I was in Iraq, I had discussion with our troops, and the ability of shooting projectiles from the side with devastating impact -- if we know they're coming from Iran, they're killing American and coalition forces -- have we shut it down? And if not, what else do we have to do to shut it down?

MR. BURNS: I think it might be best to ask our military to give you an assessment of that, but what I can tell you is I don't believe we have shut it down, unfortunately. We saw an alarming rise in the number of these attacks -- this is armor-piercing explosive technology -- in the latter months of 2006, and that's why we chose to push against them in detaining the two groups of Iranian operatives on December 20th and 28th of 2006, and that's why we're still -- have detained several of those individuals.

And what the president said on January 10th stands. We will -- you know, we will not allow these Iranian networks essentially to give the capacity to Shi'a militant groups to take aim at our soldiers. And they understand that. And we will push back against them, as we have done.

SEN. COLEMAN: Thank you.

Thanks, Mr. Chairman.

SEN. BIDEN: Senator Obama?

SEN. BARACK OBAMA (D-IL): Thank you, Mr. Chairman.

Mr. Secretary, it's good to see you again, and I am encouraged for the most part by your testimony and the progress that's been made on the diplomatic front.

I want to pick up on an issue that at least is related to the previous question, and that is the expression on the part of this administration -- at least in the press -- of Iranian influence in financing or encouraging destabilizing activities inside Iraq. There are a lot of Americans who are concerned that there is the potential at least for backing into military action in Iran, not based on concerns with respect to -- not solely premised on incapacitating their nuclear capabilities but under the guise of expanding the theater of war in Iraq.

Now obviously we're going to defend American troops and personnel if they're attacked in Iraq or anywhere else in the region, and we want to give the administration some flexibility in making sure Americans and American facilities are safe and secure -- you know, imminent attacks, hot pursuit, there might be certain intelligence collection activities. So let's stipulate up front that those actions would be fully supported by the American people and Congress.

But I want to get to the heart of the question. Senator Webb and Senator Byrd have offered an amendment that would require the administration to get congressional authorization before using force against Iran, with the -- some of the exceptions that I just mentioned. I personally believe it would be a mistake for us to back into a military conflict with Iran. So I'm interested in what the administration's position is in terms of having to obtain authorization before using force in Iran.

MR. BURNS: Thank you, Senator. I'm happy to respond to your question.

I guess I would say this: that I want to assure you, as I know Secretary Rice has done, that we are not seeking a military confrontation with Iran. The whole thrust of our efforts has been diplomatic for roughly the last two years, on the nuclear issue as well as on the other issues concerning Iran's regional capacity.

SEN. OBAMA: And as I said, I'm encouraged by the progress that's been made at least recently. I think some time was lost, but that's water under the bridge. I think the actions you guys are taking now are constructive.

But I do want to get to sort of the central issue that I asked, and that is if we were to -- if the administration made an assessment that military action in order to preserve the integrity of Iraq might be required, is it the administration's position that authorization would be needed to do that?

MR. BURNS: Senator, I'm well aware of why you're asking the question. I know Senator Webb, in fact, directed this in writing to Secretary Rice after the January 11th testimony, I believe, and we responded to Senator Webb. So I'll be happy to respond to you. It's an important issue.

I guess I'd say three things: First is, it's not our intention -- I just want to repeat that -- to seek a military conflict with Iran. We believe that diplomacy has a possibility of succeeding and we ought to try it. And we're doing that.

Second, as a matter of the president's constitutional authorities, I'm not a constitutional lawyer, but I know it's the position of -- it's the position of our government that the president obviously has the constitutional duty to protect the American people and protect the United States, and as commander in chief has to be able to exercise that authority as he sees fit.

SEN. OBAMA: I just want to amend that. I think you meant "it's the position of our administration" as opposed to "our government." The --

MR. BURNS: When I say government, I mean the executive branch.

SEN. OBAMA: Okay. I just wanted to --

MR. BURNS: -- so I'm happy to amend it and say "the position of the executive branch."

SEN. OBAMA: All right.

MR. BURNS: I'm used to talking to foreigners about our government, which is to them the executive branch of the United States. (Laughter.)

SEN. OBAMA: I understand. Right.

MR. BURNS: And so I -- we have given -- we sent to Senator Webb a letter essentially making that argument that there's a constitutional issue here, and I would just say there's a policy issue, as well. And I'm much more I think able to address the policy issue as opposed to the constitutional and legal issues.

Third, I would say -- and I don't mean to disregard your question or kind of not answer it by saying this -- but it's hard to answer hypothetical questions because you never know what your interests will be at the time. You don't know what the balance of forces will be at the time. And so it's a little bit -- it's not really possible for me to say, "In Hypothetical Situation A, the president would do this," because it's really his decision and his authority as opposed to anyone else's in the executive branch.

I'd be happy to make available to you the letter that we did send, which does represent the considered views of the State Department and White House from a legal perspective on Senator Webb's question.

SEN. OBAMA: I will -- I will let Senator Webb pursue this question further since he's done a lot of work on it. I just wanted to get the ball rolling since we all -- we had some limited time.

Let me shift to the issue of economic sanctions. I think we obviously made progress with the most recent vote in the Security Council. I am still trying to figure out what the status of European financial interactions are. Are we seeing moves to tighten financial sanctions, limit export credits, reduce trade, et cetera, across the board? Which countries are being helpful; which countries are -- we wish were more helpful on this issue?

And since we only -- I only have a limited amount of time, why don't I tack on just a couple of other questions to that. What kind of progress are we making in actually impacting the Iranian economy on issues like for example their gasoline imports? It strikes me that's obviously someplace -- a point at which you could end up having significant influence on domestic views of Ahmadinejad's policies.

And one final point, I guess: There has been some talk about the possibility of -- some states have talked about the possibility of divestment as a strategy of leveraging -- applying leverage on Iran, and I'm curious as to whether the administration or the State Department has any views on that.

MR. BURNS: Thank you very much, Senator. I'll -- I'm happy to address these questions.

We're trying to produce multiple points of pressure on Iran so that they'll have a greater incentive to negotiate with us. So those are political, diplomatic, military, and economic. And I think the ones that you've focused on are probably the most important. Most people who know Iran well think that they're most vulnerable to economic sanctions and economic leverage, so we put a lot of attention there.

In the last Security Council resolution passed Saturday, we were able to convince the other countries to sanction Bank Sepah. It's their fourth largest bank. It's the bank that funds their WMD and ballistic missile program. That was positive.

Second, we opened up in that resolution for the first time that countries should now begin to watch -- with "vigilance" and "restraint" are the two words used -- their export credit relationship. In 2005, the OECD figures showed $22 billion worth of export credits made available by European companies -- countries for their companies to stimulate trade with Iran. And our message to the Europeans is, "If we want to pressure the Iranians, we've got to do it through economics, not just through diplomacy. And so you need to reduce the level of those export credits."

In the last three or four months -- and we've been at this -- arguing this for about six or seven -- we've seen Italy, France, and Germany, the three largest countries with a real economic relationship with Iran, reduce -- begin to reduce their export credit levels -- not enough to our satisfaction, but the trend is good. Japan has done more. The Japanese state lending agencies have dramatically reduced their exposure in Iran.

So we think this is important. We're trying to push on this. In fact, I was in Brussels on Monday and Tuesday, and talked to Javier Solana and said, "Is it now possible for the EU to begin to take stronger collective measures?" in this area that you suggest of economics and finance. And we hope it will.

There are other countries, like Russia, with a business-as-usual attitude. You know, Russia sells arms to Iran. They just sold 2 RM1 missiles, air defense missiles, and we are strongly opposed to that. China -- and its state corporations -- is really open for business with the Iranians, and we've told the Chinese, "You better be aware of -- there is a U.S. law, Iran sanctions law, that prohibits a certain level of oil and gas investment, and if you pass -- if you cross that threshold, you may be subject to that law." So I think the presence of that law is positive for us as a deterrent effect.

Now finally, you've talked -- you've asked about divestment and other options. I guess I'd say this: I know there's a bill in the Senate that would toughen up the Iran Sanctions law, and there's two in the House -- that we would be open to supporting bills that would turn the attention to tighten pressure on Iran. But if we choose tactic that will essentially focus most of the efforts of our country on the Europeans, then we end up disrupting this major coalition we've build, and it becomes a U.S. fight against the Europeans rather than an American-European fight against Iran. And so we've said very respectfully to Chairman Lantos and Congresswoman Ros-Lehtinen in the House that we could not support their bill that would effectively take the waiver authority of the law away from the president and that would turn most of our attention towards our own allies. We want to see the heat turned up on the Iranians as a general proposition.

SEN. OBAMA: Thank you.

MR. BURNS: Thank you.

SEN. BIDEN: Senator Webb?

SEN. JIM WEBB (D-VA): Thank you, Mr. Chairman.

And Secretary, appreciate your testimony -- very valuable today.

With respect to the question that Senator Obama asked and the letter that was sent to me, I'd just like to make sure that Senator Obama understands that the letter that was sent in reply to my question did leave open this whole issue of the federal system -- division of responsibilities between the executive and the legislative branches, which is why I decided to introduce the legislation that I did. So I just wanted Senator Obama to understand that.

The key question really constitutionally is whether general operations in Iran as opposed to specific reactions to tactical situations would be considered the commencement of a war rather than an extension of the president's powers that were already granted to him by other congressional authorization, and if not, whether he has that power as the commander in chief. And it's a -- it is a very complicated area. It's probably -- very difficult are to answer in a letter, which is why I decided to put something in legislation just to clarify from the view of the Congress -- if the legislation passes -- where we believe one set of authorities end and another begin.

I would like to go into a couple of other areas in the short time that I have here. The first is, watching your exchange with the senator from Minnesota, I was sitting here remembering that 20 years ago when I was secretary of the Navy, I was present at the creation of this whole attempt to develop a strategy when people were looking at the future of Iranian potential expansion under this regime.

There were a number of people in the government at that time who were talking about what they were calling a Pan-Arab strategy -- sort of a desire to, in effect, contain Iran. And that resulted in the tilt toward Iraq during the middle of the Iran-Iraq war. And I think I may have been the only member of the Reagan administration who opposed the tilt toward Iraq in writing -- for many of the same reasons that I had great concerns about the notion of invading Iraq rather than attempting to deal with that situation in a lot different way and allowing us to focus more heavily on international terrorism.

And I feel compelled to say this, because of the exchange that was going on with the senator from Minnesota. I strongly believe that the occupation of Iraq has basically worsened this concern with respect to Iran, not alleviated it. I think that, as many people predicted, we've seen Iran empowered as a result. And so the question becomes, what do we do from here? Where do we go? How do we deal with this situation?

And I have been very gratified over the past few months about how Secretary Rice has stepped up -- and I know the administration wouldn't say this -- but has, I think, begun to take the level of diplomacy to a higher instrument of concern in terms of policy. And my view on -- my concern about where the executive power ends in terms of use of force does not reduce the concern that I and other people have about the situation in Iran.

I've been following, as best I can, the impact of the sanctions that have been put on Iran. I think The Economist did a really fine job outlining the strong impact of these sanctions in an article that they had in the February -- one of the February issues. And to me, the worst thing you can do in these kinds of situations is to rattle the saber to the point that an authoritarian government can use it to bring people inside the country to its side where otherwise they would not be.

The proper use of sanctions does two things. One is that it isolates the leadership from its own people -- and we tend to forget that. And the second thing is that it can isolate a regime from most of the rest of the world. And you know, your testimony talking about thinking people in the Iranian government not wanting to end up in the situation in North Korea, I think, is right on point. But would you care to comment on that?

MR. BURNS: Senator, thank you.

I think you're right to suggest that there's a very delicate balance of tactics here between sanctions and diplomatic pressure and military exercises on the one hand, and the threat of force on the other. And it's my view that the president is absolutely right not to take any option off the table. I think in the Middle East it's understood.

But the balance of our efforts are clearly focused on the diplomatic side --

SEN. WEBB: If I may on that -- we don't have a lot of time. The concern that I and a number of people have is that the option of a general strike against Iran is not, in the view of many people in the Congress, an option that this president has without coming to the Congress. And this is the -- sort of the dividing line where we continue to have this debate.

MR. BURNS: I understand we're having that debate. And you know, we did our best to send our response to you when you received a letter from our assistant secretary.

But I would say from a diplomatic perspective that all these options remaining possible strengthen the position of the United States, strengthen our hand in dealing with the Iranians, and is not an expected in that kind of environment in the Middle East.

SEN. WEBB: You would agree that these sorts of sanctions tend to isolate this type of government from its own people. I think it's important for Americans to understand that.

MR. BURNS: Yeah. I agree with you wholeheartedly that the objective here should be not to wage an offensive against the Iranian people, but to show the Iranian people we have high regard for them, but the problems with their government. And sanctions enable you to do that.

SEN. WEBB: Well, I've been watching words -- I'm a writer and I've been watching words. And we keep talking about Iran, Iran, Iran. And I think if you watched what the Chinese did in the early 1970s they were very smart in talking about the American government and the American people. I mean, let's just accept the fact that they were very smart about it and we need to start doing that as well.

I'm running out of time. I would like, in brief form, to get your thoughts about the results of the indirect multilateral talks that occurred in Baghdad as it might impact confidence building and a new approach to relations with Iran.

MR. BURNS: Thank you.

You're right. We are very careful to almost always say in our pronouncements, Iranian regime versus people. I just wanted to agree with you on that.

On the second question, I think it's too early to tell much about the promise of these talks -- the Baghdad talks that started on March 10th. We had an initial meeting. It was mainly a process-oriented meeting. It lasted a couple of hours to determine, will we meet again at what level?

We would want to use that forum to try to see a change of actions and behavior on the part of both Syria and Iran. It's obvious that that should be our focus and that's the Iraqi government focus as well. So we're open to these conversations. But I think I'd mislead you if I said that somehow this presents the opportunity for a breakthrough. I'm not sure we know that yet until we see more of what they do on the ground, because the basis of our policy is to see a change in actions --

SEN. WEBB: But a useful confidence builder.

MR. BURNS: I think -- we thought it was the right step to take to open up this channel and to talk to them, yes.

SEN. WEBB: Thank you.

Senator Lugar, I believe I have the chair. Is there other business to be conducted -- oh, I'm sorry. Senator Voinovich. I did not see you.

SEN. GEORGE VOINOVICH (R-OH): Yeah, thanks very much. I apologize for not being here for the other part of the hearing. I had the head of the Social Security Administration to come in and talk about the gigantic backlog that they've got in appeals there.

And I want to welcome you here and thank you for the great service that you have provided our country in many capacities. And congratulate you and the secretary of State on a team effort to involve many more people in decision making in terms of some of the problems that we're confronted with -- great success in North Korea. I'm not so sure -- the 1701 in-between Lebanon and Israel, I want to talk a little bit about that. And of course, you've gone into the detail about the sanctions in terms of Iran.

I'd like to start with Iran's involvement in places in the world. And let's start off with 1701 that's been entered into between Israel and Lebanon. It's my understanding that the provisions of 1701 are not being fulfilled. That, for example, the representation was made that Israeli -- two Israelis would be returned. They haven't been returned. It's my understanding that the infrastructure that was in place in Lebanon was supposed to be destroyed. It's not being destroyed. It's my understanding that weaponry that's supposed to be not coming into Lebanon is continuing to be brought into Lebanon.

And I'd like to know, just what is the role that Iran is playing right now in Lebanon? I know, for example, that the Saudis are finally working to help out that government there, but what is Iran doing to prevent the provisions of 1701 being carried out? And beyond that, how in the world can anyone think that you're going to get any kind of settlement between the Palestinians and the Israelis if the commitments made in that agreement aren't fulfilled?

MR. BURNS: Senator, thank you.

We still believe that 1701 was a positive step, because it helped us to end the war last summer between Hezbollah and Israel.

But you're right to say that there have been some severe problems in implementation. UNIFIL has done a good job. UNIFIL's done a better job than, I think, many people have suggested. And there's a significant number of countries doing good work there.

But it's true that on those crossing points, on the Syrian- Lebanon border, there was such a problem last summer. There still is trafficking of arms between -- from Iran and Syria to Hezbollah -- through those crossing points. The border is porous, it's not being monitored as effectively as it should be under 1701. We are constantly working at that, but we don't -- it's not within our power to produce that kind of effective mediation, that's the job of the United Nations.

It is also true that Hezbollah is beginning -- is trying to solidify its position. There's one I'd --

SEN. VOINOVICH: What involvement is Iran actively -- how actively are they involved in frustrating the provisions of 1701 from being carried out?

SEC. BURNS: One of the reasons we insisted in the U.N. sanctions resolution passed last Saturday on an arms ban from Iran outward, was because we're still concerned by this re-supply relationship between the Iranian government, the IRGC, and Hezbollah -- through Syria and into Lebanon. We're very concerned about it. Israel's concerned about it -- as they should be.

So it's an issue of great attention. And it's now a sanctionable act -- it's illegal under the United Nations resolution for Iran to transfer arms to anybody, including Hezbollah.

SEN. VOINOVICH: Well, I was up to see the new secretary-general three weeks ago and I had tried to emphasize to him how important it was that they make sure that the provisions of that 1701 are carried out.

And one of the easiest things -- let's return those soldiers, that's an easy one. I mean, that's a -- talk about a PR thing, they're foolish -- they ought to be doing that right away.

The other issue is have you really ascertained what involvement Iran is having in Iraq? You made reference to it, and people have been reluctant to speak about it because they don't want to make statements because they want to make darn sure that the information is good, so we're not portraying them as we should not be portraying. But my feeling is that they're very involved. And the real question I have is, who are they involved with?

And I have this theory, and maybe it's wrong, but I really believe that Sadr wants to become the next Ayatollah of Iraq (sic). I think he wants to end up running that place. And the issue is what's the relationship between the people in Iran and Mr. Sadr?

SEC. BURNS: Thank you, Senator. There's no question in our mind -- we're absolutely certain that Iran has been providing this EFP explosive technology to Shi'ite militant groups.

SEN. VOINOVICH: Which Shi'ite group is it -- are they getting it to? Are they giving it to Sadr, or his competitor there?

SEC. BURNS: I would want to go back and give you a written answer on that so I can be completely accurate but there have been more than one. And I'd be happy to provide a written answer to that --

SEN. VOINOVICH: Would Sadr be one of them that would be the recipient of it?

SEC. BURNS: I don't know the answer to that question, but I will look at it and get back to you.

SEN. VOINOVICH: The question was asked by Senator Webb -- do you think that this sitting down with them will cause them to reevaluate their involvement in Iraq?

SEC. BURNS: It remains to be seen. We'll have to test the proposition. The Iranians say they want to be a positive influence in Iraq. We disagree -- we don't think they are. One way to evaluate that is to talk to them directly as we have begun to do -- but also to bring other countries into the picture with us, so that a lot of countries will be sending that same message to the Iranians simultaneously around one table.

SEN. VOINOVICH: Will they listen to the Saudis and others that are non-Shiite?

SEC. BURNS: We'll continue to judge the Iranians by their actions, not by what they say.

SEN. VOINOVICH: But are they -- but are the Sunnis really trying to talk with them about -- explaining that if this thing blows up, it's going to not be good for them or for anyone else?

SEC. BURNS: Oh, I think there's been a major effort made by the major -- by the Sunni states, by Saudi Arabia, and many of the Gulf states, to try to communicate to the Iranians how destructive and negative their whole policy has been in the Gulf region -- in Iraq and also in the Gulf. And there's a lot of concern in the Gulf about Iran these days -- about what countries perceive to be an increasingly powerful Iran. And there is a great appreciation, I can tell you, for the role -- on the part of these Arab countries -- for the role that the United States is playing militarily in the region, including the fact that we continue, as we have since 1949, to deploy our fleet in the Gulf itself.

SEN. VOINOVICH: One thing -- I'll just finish on this note, that I didn't discover this until I started reading the history of that region. That back during the days of Franklin Delano Roosevelt, we made an agreement with the Saudis that we would protect their ability to transport oil in consideration of their being our good friend. And we have spent billions of dollars in that region over the years, and I don't think the American people have ever been aware of how much involvement. You know, we get this idea -- well, we're going to get out of there, but the truth of the matter is we've been there for a long, long, long time. And the fact is, even though Iraq may -- we may do something there, we're going to continue to be in that region for a long, long, long time.

SEC. BURNS: I very much agree. There was a famous meeting between President Roosevelt and King Saud at the end of World War II that cemented our relationship with Saudi Arabia. And we have been an active participant -- probably the leading participant in providing for security in the Gulf since the close of the second World War. And you've seen that -- a very constant through Democratic and Republican administrations -- a very constant theme of American interests in the region, and we're right to continue it.

SEN. VOINOVICH: Thanks for your service.

SEC. BURNS: Thank you.

SEN. VOINOVICH: Secretary Burns, thank you for your patience. Thank you for your service to our country. Let me just make a observation and ask for your comments.

Whether we're dealing with the Iranian position as it relates to Iraq, their border issues, their financing of terrorist organizations, of Hezbollah, or whether it deals with their nuclear program -- all that is very much dependent upon the effectiveness of our sanctions, the effectiveness of international diplomatic efforts, our effectiveness of getting more and more nations to join us -- and Iran believing that we can, in fact, isolate their policies.

So you've answered several questions about specific countries. But, if I could -- if you had to give us a short list of the countries that are of greatest concern -- in order to have effective policies as it relates to Iran, where we could improve the cooperation -- which countries would you, would come to mind?

SEC. BURNS: Senator, I would say that Russia and China are particularly important because both have trading relationships -- major trading relationships. Both actually sell arms to Iran and both have a degree of political influence, which is important.

And so we have been working with Russia and China for about a year-and-a-half now -- in a coalition, to give the same message and to try to actually sit down together with the Iranians to resolve this nuclear dispute. And I think both those countries are important. I would also say the Gulf Arab states and Saudi Arabia are important -- they're immediate neighbors. There's a degree of commerce and diplomatic relations that exist, but there's also a great concern by the Sunni-Arab world about Iran.

And lastly, I'd say Israel. We have a fundamental obligation to help protect Israel, and we are a very close partner with the Israelis in trying to pursue this effective diplomacy to safeguard Israel's interests, as well as ours, from Iran.

SEN. VOINOVICH: Well, let me first start with Russia and China, the first two countries that you mentioned. We have so many issues with those two countries today -- well beyond just Iran. My question is -- is it a high enough priority within the administration to elevate the issue of Iran with Russia and with China -- that it gets the attention it needs? Because I agree with you, I think those two countries are absolutely essential to have effective policies in regards to -- diplomatic policies in regards to Iran.

So I know there are multiple issues -- including some that I've raised, unrelated to this issue, that are important. But clearly this is one that needs to be a priority. Is it a priority?

SEC. BURNS: Yes, it is. In fact, I can safely say that, you know, of all the issues we deal with -- with the Russian leadership and the Chinese leadership, we have put the Iranian issue at the very top.

So when President Bush talks to President Putin, President Hu Jintao and Secretary Rice talks to her counterparts in both capitals, we let them know that for us, what they do in Iran with us is at the very top of our relationship with both Russia and China. They're -- that's not misunderstood. That's understood.

SEN. BIDEN: I think Senator Voinovich handled the Saudis well in your comments, and let me just (with ?) Israel for one moment. I wasn't exactly clear - I agree with your position, what you said. Is there something specifically more than we need in regards to our relationship with Israel as it relates to Iran?

MR. BURNS: I included Israel in answer to your question because I think if you talk to most Israelis these days and the political issue I've been -- just average Israeli citizens, this has become an existential question for them. Here you have a president, Ahmadinejad, who says it's the policy of his country to wipe off -- wipe out Israel. Wipe it off the map of the world. And he's also the leading Holocaust denier and has held conferences to deny the historical accuracy of the Holocaust. So I was in Israel in January, and I talked to Prime Minister Olmert and I talked to the Foreign Defense Ministry, but just some average people, too. And there's a degree of concern there, which is quite palpable. And so we keep very close to the Israelis. We talk to them frequently. I had a whole strategic dialogue with the Israelis in January on Iran, and we'll continue that because we want to assure the Israelis that we think we can cope with this challenge through the strategy that I suggested to this committee today.

SEN. BIDEN: Well, I agree with your comment there. I mean, the statements of -- by the Iranian leadership in regards to Israel -- and by the way, in regards to the United States -- is quite frightening, and we need to take those issues very, very seriously. I come back to the point that you have raised over and over again. It's absolutely critical that we get the international support and that Iran understands that it will be isolated if it does not move forward with -- in a constructive way in regards to the borders or Iraq or dealing with supporting terrorism or their nuclear program.

We will -- if -- Senator Voinovich, anything further?

SEN. VOINOVICH: (Off mike.)

SEN. BIDEN: Okay.

We will keep the record open for three business days for any additional statements and questions. And once again, Mr. Secretary, Mr. Ambassador, I want to thank you very much for your appearance here today but your extraordinary record of public service to our country. Thank you very much.

The hearing will stand adjourned. (Gavel sound.)