. . .

QUESTION: On Iran, it would seem to me that the last few months has been a really sharp deterioration in the situation between the U.S. and Iran, particularly since the President made his speech on January the 10th.

SECRETARY RICE: I feel a little differently. I think there's been a rebalancing.

QUESTION: A rebalancing?

SECRETARY RICE: Yes.

QUESTION: What does that mean?

SECRETARY RICE: Well, it means that I think after Lebanon, perhaps there were questions about whether and how the United States could defend its interests. I think there were -- apparently the Iranians questioned whether or not it was possible for the world to come together concerning its nuclear program.

And in recent months, meaning since the President's speech, I think we've established first of all that indeed we will defend our interests and our allies in the Gulf, which is frankly the reason for the carrier strike group and the PAC-3s. I think we've demonstrated that we are going to engage in force protection and not permit Iranian personnel who are engaged in activities that are harmful to our soldiers to simply go unchecked.

And I think the Iranians have learned that indeed the international community could come together on not just one but in pretty rapid succession two Security Council resolutions, Chapter 7, 15-0, with a variety, an array of states, that make it very difficult for the Iranian Government to argue that this is a problem between the United States and the West, much less a problem between the United States and -- between -- I'm sorry, between Iran and the West, much less between Iran and the United States.

And I frankly think it was a bit of a shock. I think that the collateral effect of that has been that particularly in the private sector people are making assessments of the reputational and investment risk associated with Iran and you are seeing, to my mind, for the first time, real debate or criticism or searching in Iran for whether or not some of their policies are leading to exactly the kind of isolation that they hope to avoid.

QUESTION: On the ground you have events like a sharp increase in violence in Iraq, you have the Iranians taking the British sailors and marines hostages, and recently there's an American citizen in Kish, you have more evidence of Iranian weapons and movements into Iraq and also recently into Afghanistan, the Iranians have actually increased the number of centrifuges that they've installed rather than decrease, so wouldn't you agree that while you may call this a rebalancing on the U.S. side (inaudible) responding to Iran with stepping up the pressure, actually the events on the ground are contributing to a general escalation? It's not that the Iranians have stepped back in response to your efforts.

SECRETARY RICE: Well, it may well be that Iran will again try and defy the circumstances in which it finds itself, but we will see. I think it is a little too early to tell on some of this and we'll see whether or not more reasonable heads prevail in Iran.

In terms of what's going on on the ground in Iraq, I think it was to be expected that when the Iraqi Government and the coalition, principally the United States, started a more aggressive plan to try and bring population security that you would have a reaction to that by hostile forces.

QUESTION: Including Iran?

SECRETARY RICE: Well, I don't -- well, possibly, although I'm really talking now more about what you're seeing in the suicide bombings and which have -- I can't tell you definitively, but which have the hallmark of al-Qaida. And that's perhaps not surprising. And the inputs for the Baghdad security plan have been going well, but they are not yet complete, including an additional two brigades of American forces that are due.

So I think we have to not try and judge the balance of forces on the ground on a kind of day-to-day basis, but we have to have a little time to look at the trend lines.

QUESTION: Do you think there's a chance that Mottaki will come to Sharm el-Sheikh and to the meeting?

SECRETARY RICE: I don't know.

QUESTION: They haven't confirmed that they are coming?

SECRETARY RICE: No, they haven't. It'll be a missed opportunity if he doesn't, but obviously it's up to the Iranian Government.

QUESTION: Are you going to try to resolve the nuclear issue within Iran -- with Iran before the end of this Administration? Have you set any notional timetable?

SECRETARY RICE: No, but we -- obviously it would be very important to try and do it as quickly as possible. I wouldn't even say to the end of the Administration. I would say as quickly as possible.

And there is a way to resolve it. The Iranian Government tells its people that we want to deny Iran nuclear technology and a civil nuclear program. That's simply not true. The United States and the Europeans have been supportive of Bushehr, for instance. We were supportive of the idea of a joint venture, which was a Russian idea, as long as the enrichment and reprocessing would be done outside the country. There has been discussion of assured fuel supply for countries that will forego the enrichment and reprocessing fuel cycle -- part of the fuel cycle.

There are all kinds of ways that Iran could develop civil nuclear power without the proliferation risk that is concerning to everybody, and we have been completely committed to a diplomatic course, supporting Javier Solana in what he's doing, saying that once enrichment and reprocessing stop and are halted by the Iranians -- the suspension, that there would be -- I would come to the table, too. It would reverse 27 years of policy. We can talk about anything. We didn't say we'll come and we have to talk about these little things. Thus far, Iran has chosen not to take up that path.

QUESTION: Why not go for a multilateral forum in which you could have, if you like, some bilateral contacts within the forum rather than Solana doing a lot of legwork?

SECRETARY RICE: Well, if --

QUESTION: I mean a la North Korea.

SECRETARY RICE: Yeah. No, if in fact Iran were to suspend, it would be - (inaudible) six plus one, because it would be the Permanent Five plus -- and the European three -- Germany, plus Germany, and Iran. And of course, in that context, within the context of those, I wouldn't rule out that there might be some reason for bilateral discussions within that context. But we haven't been able to get to that context because the Iranians won't suspend.

QUESTION: Could security guarantees be part of an overall package --

SECRETARY RICE: Well, I --

QUESTION: -- that you dispel this notion that the United States wishes to attack Iran?

SECRETARY RICE: Well, if Iran is after civil nuclear power, I've never understood what the security guarantee argument was, frankly. But I think that the -- it is probably not on the table certainly at this point, but we can talk about whatever is on anyone's mind and we should hear what's on the Iranians' minds. But we can't have a situation in which we're talking and they're perfecting centrifuge technology at the same time.

QUESTION: If I just to follow up on this. I mean it was the case that certainly important members of the Bush Administration in the first term certainly were actively talking about regime change in Iran. Is that still something that you would --

SECRETARY RICE: Well, it wasn't the policy of the U.S. Government. The policy of the U.S. Government was to have a change in regime behavior, and that's the policy of the U.S. Government. And look, the President has made very clear that we want every human being on the face of the earth to live in a society and in a political system in which political freedoms are respected, and Iran is no different.

QUESTION: So let's be clear, Madame Secretary. As far as you're concerned as Secretary of State, American policy is for a change in regime behavior --

SECRETARY RICE: American policy is --

QUESTION: -- not regime change?

SECRETARY RICE: American policy is very clear on what -- and it was clear in the May remarks that I made -- that we are seeking the regime to change its behavior. It is very clear in the package of proposals that were put forward by the six that that would open up some possibilities of economic and political dialogue, even advantage. We removed our WTO objection so that Iran could apply for WTO membership. I think it's perfectly clear.

Now, I want to be -- I also want to be clear on another fact. We do believe that the Iranian people deserve the freedoms that everybody deserves. But I think our policy line here has been clear.

. . .