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QUESTION: Secretary Rice, on - on Iran.

SECRETARY RICE: Yes.

QUESTION: There's a report today quoting a senior Iranian official as saying that the Iranians now have 5,000 working centrifuges spinning. One, do you have any reason to believe that that report is true, or do you view it as an exaggeration?

Two, the Obama - President-elect Obama has, during the course of the campaign, signaled a willingness to talk or to engage more with the Iranians and with fewer conditions than the Bush Administration has. Do you see any particular danger in such engagement ahead of the Iranian elections and the possibility that Iranian particular actors could use it for their own electoral or political gain?

And lastly, on an interests section, can you rule out the possibility of an interests section being opened in Tehran by the U.S. Government during this Administration? And if so, can you give us some kind of a feel for what are - what is your hesitance about this? It would give you eyes and ears on the ground for the first time in a very, very long time and would allow you to reach out to the people in a way that is much harder when you don't have people on the ground.

SECRETARY RICE: All right, the three questions that Arshad has asked. First of all, I have actually myself not seen the report that you referenced, but we tend to rely on the IAEA because it's not clear that one gets a clearer picture from - it is clear that one does not get a clear picture from the Iranians on these issues. So we rely on the IAEA.

The point is that they are continuing to pursue enrichment and reprocessing capability. They are continuing to try to perfect the technologies that could lead to a nuclear weapons technology. And that is what the international coalition that we have put together, the P-5+1, is trying to stop. And of course, it's produced Security Council resolutions. It has produced national measures that are putting pressures on the Iranians. It is a country that is more and more isolated, whose economy is in very tough shape, and where there's actually a lot of criticism of the policies of the government in advance of this election. And so I do think that there is considerable pressure on the Iranian Government, and one has to hope that the Iranians will start to - that Iranians will start to emerge who wish to reverse this isolation.

In terms of what the President-elect may choose to do, I'm not going to comment. I will give my advice and analysis to my successor when that person is named, and I'll do so privately, and then you won't hear from me again on it.

When it comes to the interests section, the President took an in-principle decision based on his belief and our belief that in the context of a policy that is firm - and I want to emphasize firm - in the face of Iranian nuclear ambitions, Iranian aggression in the Middle East, and Iran's oppression of its own people, that a presence, an increased presence for the United States that would focus on the Iranian people - that is, the ability to facilitate visas, the ability to be a place to which Iranians could come, much as the interests section acts in Havana - that in the context of a firm policy, this is something that the United States might want to pursue. We have continued to pursue how that might go forward.

But frankly, the point at which we most likely would have done it, we were right in the middle of the Georgia-Russia conflict, and then a number of other international events I think just made it difficult to do. And so I think that within the context of a firm policy toward Iran, something that reaches out to the Iranian people is very important. And you rightly say that eyes on the ground is also very valuable. But it is awfully important that it be understood that the constituency here is not the Iranian regime, but the Iranian people. At this late moment, I think it is probably better that this decision be left to the next administration.

QUESTION: And just so that I'm clear, you began by saying that the President had taken a firm decision in the context of --

SECRETARY RICE: I said an in-principle decision in the context of a firm policy toward Iran.

QUESTION: Okay, just so we're clear, the in-principle decision was conditional that this was something the U.S. Government perhaps should pursue or was that this was something the U.S. Government should do?

SECRETARY RICE: Well, we were - on the basis of his decision, we were actually doing the work that would be needed to do to see how it could be implemented and what it could do. Because the one thing we wanted to be very clear was that it would have to have the capability actually to issue visas.

QUESTION: Right.

SECRETARY RICE: Now, there were intervening events that I think made it not a good time to raise this with the Iranian regime, because obviously we would have had to raise it with the Iranian regime. But in the context of a policy that resists Iranian aggression and that clearly does that so that there are no mixed messages, particularly to regional allies who have great concerns about Iran's hegemonistic ambitions, it's something that one could do.

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QUESTION: Just to be clear, The U.S. did not raise this idea with the Iranians?

SECRETARY RICE: No. With the Iranians, no.

QUESTION: Do you have any sense of whether they are supportive of the idea of having American diplomats in Iran?

SECRETARY RICE: I do not know whether they are. You know, we've seen public statements both ways. But for us, the issue was and always was - and the reason that it took some time to try and figure out how we would implement such a decision - that this would have to be a platform for serving the Iranian people, facilitating their contact with the United States, facilitating the kinds of exchanges that we have done. We've had Iranian basketball teams and artists and disaster relief workers. They have hosted the American wresting team. And this has to be about the Iranian people. And it is not - it's not an uncomplicated matter. And let me not use a double negative. But it is a complicated matter as to how one arranges such an interests section under the conditions that (inaudible) in Iran.

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QUESTION: Also, to follow up on Iran --

SECRETARY RICE: Yeah.

QUESTION: Short of opening an interests section, are there interim measures that you guys would consider suggesting, or at least maybe bringing to the next administration? I was able to talk with some Iranian officials recently, and they talk of things like loosening restrictions on their journalists in the United States or giving Iran credit for an increased security in Iraq. I mean, are those things that --

SECRETARY RICE: Well, let me just speak to the credit to Iran for security in Iraq. I don't think so.

QUESTION: They don't deserve it?

SECRETARY RICE: No. I'm sorry to say that the Iranians cause nothing but trouble in the south. And their allies were defeated in Basra. That's what happened. The increased security in the south is because the special groups that they trained and equipped were defeated by the Iraqi army. Now, if that was a contribution to security, so be it. I think I would characterize it in a slightly different way.

I want to just underscore a couple of things that we have done to prepare our country for the long run concerning Iraq. There was no office of Iraqi affairs in the Department of State, believe it or not, before we came here.

QUESTION: Of Iranian.

SECRETARY RICE: I'm sorry. Of Iranian affairs. Yeah, there were plenty on Iraqi affairs. There was not on Iranian affairs. And we now have an office devoted to that. We put the facility in Dubai to give - to get us closer to the Iranian people, to allow them to have easier access to visa facilitation, easier access to us.

I've mentioned a number of the programs that we have done in terms of exchanges. I remember quite well myself meeting with some Iranian artists. It was a fantastic experience. And I was just talking with David Stern, and the Iranian basketball team was just here.

And so there are a lot of things that we have done to reach out to the Iranian people, and I think to - I should also mention a tremendous emphasis on training our officers in - our Foreign Service officers in Farsi, because the fact is that over almost - well, now it is almost 30 years since the United States left Iran. I do think there was a deterioration in our capability to speak the languages, understand the country. The people who have been in Iran, most of them were - who had Iranian experience, most of them had retired. And so we've been trying to rebuild that cohort. And that is extremely important for the United States to do, is to build its capability on Iran, because it's an important country. It's going to be an important country for a long time.

But our focus has been to try and make clear to the Iranian people that there is a different road than their government is taking in terms of engagement with the international community, that isolation does not have to be the course.

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QUESTION: Madame Secretary, Iran has launched yesterday a new rocket into space. How do you view this new (inaudible)?

SECRETARY RICE: Well, I don't know. And look, the Iranians are launching things all the time. I would hope that they would be instead trying to work toward not being so isolated in the international system. But again, I don't think anybody - I'll say the same thing I said about the Western Hemisphere. I don't think anybody is confused about the balance of power in the Gulf either.

And the United States has had a period of enhancing the capabilities of our allies in the region. You know of a number of the packages, security cooperation packages, to places like UAE, Saudi Arabia, and et cetera. So we have enhanced the - and the Israelis. We have enhanced the capabilities of our allies. The United States has increased its presence in the region. We also have begun to take advantage of the potential of missile defense in the region, and that is probably the best answer to some of these Iranian efforts, is to make certain that we are fully exploiting the technologies and the sophistication that the United States can bring to missile defense into other technological answers to any Iranian buildup.

We also have worked hard to caution states that might sell weapons technology to Iran that it is destabilizing to the region and that it should not be done. And so there's a program for dealing with the Iranian efforts to - aggressive efforts. But I don't think we - I think we want to continue on the course that we're on, which is enhancing the capability of our allies, enhancing our own capabilities, and exploiting the potential for missile defense.

Thank you very much.

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