... QUESTION: On Iran. Iran's apparently asked -- blocked 38 IAEA inspectors and the IAEA says that they're still confident, even if they couldn't send those 38, that they'd have enough people to monitor what they need to monitor. Do you have a response to that?

MR. MCCORMACK: Well, we're still looking -- David, we're still looking into the details of this report. But you know, even if the IAEA makes the decision that there somehow is a workaround here where they can send other individuals to perform the functions that these individuals were supposed to perform -- and I -- again, I can't confirm the specifics of this story. I refer you back to the two parties in question, the Iranians or the IAEA -- it's another indication that Iran continues in its defiant attitude towards the international community.

They just don't get it. The international community has put them under Chapter 7 sanctions. Yet, here you have another example of the Iranians trying to dictate the terms to the international community -- in this case, the IAEA. And it just -- it -- I don't know who's providing the leadership their advice, but it doesn't do their reputation in the international system any good and this kind of defiant behavior only adds to that.

They are in a very exclusive club right now. This state under Chapter 7 -- Chapter 7 sanction -- the EU just today made it very clear in public that they were going to fully implement Resolution 1737. The fact that Iran now finds it much more difficult to access the international financial system in the ways that it had in the past in order to facilitate the developments in its weapons of mass destruction programs is again another message to the Iranian people that they find themselves more and more isolated. That's not what we want. It's not our first choice. We've given this regime a different pathway and that pathway certainly is available to them, but they have chosen not to pursue it.

So once again another indication that this regime clearly doesn't get it. They will find -- they continue in this kind of behavior they will find themselves only more and more isolated from the rest of the world. And Iran is -- the Iranian Government is not the kind of government that can function in total isolation from the rest of the world. That's just -- they rely upon the exports of oil. They rely upon the international financial system in order to function. And I'm not saying that we are in any way contemplating or in fact now focusing our efforts on their oil sector. It's just to point out that they -- this is a country that does have a fair degree of integration with the rest of the world. That integration however is dependant on a two-way conversation and there are two sides to it. There's the Iranian side, there's the international community. And in this case, the international community is saying that we are not going to allow business as usual because you are exploiting those international institutions, in this case not a formal institution, but the international financial community, in ways in which we do not agree and there are consequences to that action. So again, the bottom line is, you know, yet another step that really signifies that they're going to find themselves more isolated.

QUESTION: Sean, two separate things here. One is ISNA, the Iranian state news agency, that reported this described it as a first step in curbing their dealings with the IAEA. Do you believe that this presages a further effort to limit the IAEA's operations in Iran?

MR. MCCORMACK: I would hope not. I would hope not. Again, we're working to understand exactly the details here and I would hope that they are not trying to dictate to the IAEA who should be on inspection teams and monitoring teams. I would hope that's not the case because certainly that raises some real questions again about their intent with respect to allowing these monitors in.

Now, I can't speak to what future cooperation they may have with the IAEA or exactly what their intents are. If they do -- I have seen the reports -- they do continue to make various sorts of other threats, but if they don't understand already that that sort of behavior further -- only serves to further isolate them, I guess that they will again have to see that that kind of defiance of the will of the international community will again only be met by their continuing to be isolated more and more from the international community which is not what the Iranian people want.

I would -- just one other point, when I say that we do not want to be isolated necessarily from the Iranian people, we follow through on that. Our -- we had a wrestling team that participated in a tournament in Iran very recently. They've come back. They actually -- they met with -- they had a very warm reception from the Iranian people and I think that's really instructive. Even though this is a regime that spews all sorts of invective about the United States and the others who are seeking to curb their drive for a nuclear weapon, the Iranian people actually desire that sort of contact with the outside world. They desire contact with the American people. We certainly will do what we can to facilitate that but a big obstacle in the way of further developing that is the behavior of this regime and the Iranian people should understand that.

QUESTION: Sean, the second is you raise the issue of Iran's, you know, oil exports. Oil is one of the most precious and scarce commodities in the world and one without which this country doesn't -- you know, can't really function. And why shouldn't one regard the threat or the possibility of somehow the United States not, you know, wanting Iranian oil or other states not -- I mean, why shouldn't one regard that as sort of an empty threat? People need oil. It's a very fungible market. You know, why is -- why do you raise that? It's not as if we're not going to stop needing oil or the rest of the world is going to stop needing oil.

MR. MCCORMACK: Well, I was only pointing out the fact -- and it's an easy example -- for how Iran is integrated in the rest of the world. You could juxtapose it, for example, with North Korea which is quite isolated from the rest of the world. But even in that kind of self-imposed isolation they still do need contacts with the outside world in order to continue to function. It was -- I was just pointing out, using as an example, to show that, yes, the Iranian people -- Iran desires interaction with the outside world. Another example, there are lots of airline flights in and out of Iran. That's another example.

Again, none of this is intended to foreshadow or indicate any particular action on our part. I'm just trying to use them as examples to show that there is that interaction and desire for interaction.

QUESTION: You could regard oil as their ace in the hole, given the world's dependence on oil. In other words, they can do what they want and they know that people will keep dealing with them because people need the oil.

MR. MCCORMACK: Well, again, that gets to the decisions of individual corporations and companies around the world. And they will have to make their own decisions based on their own investment risk assessments, their reputational risk assessments. They will -- businesses will have to make their own decisions. Of course we do from time to time talk to states who have perhaps some influence, some role, some stake in oil corporations about -- questioning, well, is now really the right time to be investing in the Iranian oil sector. We did that, for example, with the Chinese. You heard the Secretary talk about that a little bit.

But again, those are decisions for individual corporations to make. But there are very real factors that are on the table now in terms of investing in Iran, not because of anything in particular that we have done. But it really -- because of the Iranian regime's actions, which has in turn gotten a response from the international community.

So you know, again, when you're talking about and you're sitting there in the corporate offices thinking about making multi-billion dollar bets that return investments over a couple of decades, you have to consider these sorts of things. They're very real factors.

Yeah.

QUESTION: But you've said previously that the U.S. has no plans to target Iran's oil industry with sanctions. That still remains? I mean, that's no something that you're --

MR. MCCORMACK: That's true.

QUESTION: -- contemplating at the moment?

MR. MCCORMACK: You know, that said, we do still have on the books our own national laws, the Iran-Libya Sanctions Act. I think they've dropped -- intend to or are going to drop the Libya from that, which does speak to investment in the Iranian oil sector, the oil and gas sector. But that's the only thing that's on the books and, as we said, we don't at this point have any intention to proposing sanctions that are targeting their oil and gas sector.

QUESTION: But are you speaking on a regular basis with U.S. companies considering investing in --

MR. MCCORMACK: I think U.S. companies under the law are not allowed to invest in their oil and gas sector.

Samir.

QUESTION: The Foreign Minister of Qatar visited Iran on Sunday and assured the Iranians that any threat against Iran will be a threat against Qatar and the region. Isn't Qatar a member of the alliance of the GCC+2?

MR. MCCORMACK: Gulf Cooperation Council, yeah.

QUESTION: That the Secretary met with in Kuwait?

MR. MCCORMACK: Mm-hmm, right. And they issued a statement for all to read.

QUESTION: I mean, what's -- I mean, do you have a reaction on his visit?

MR. MCCORMACK: No. But look, the Gulf states and other states are going to have relations Iran. We would only encourage them to be good, neighborly, transparent relations that have -- that are based on mutual respect.

Charlie, did you have anything?

QUESTION: No, not -- if no one else has, I was going to do my Greek chorus thing. But no.

MR. MCCORMACK: Okay. David.

QUESTION: Is that a message that you heard during this recent trip that they and that the countries of that region did not want to see a military action against Iraq -- Iran? Pardon me.

MR. MCCORMACK: Well, again, it wasn't anything that was being contemplated. You heard from the Secretary that while the United States and the President never take any options off the table, we are seeking to address our differences with Iran on the nuclear issue through diplomatic means. Within Iraq we are also -- we are going to confront any of those networks or individuals who are financing or involved in attempts to harm our troops. And in terms of fighting terrorism, it's well known what our stance is. We are going to take any steps that we believe are prudent in order to protect the people of the United States.

QUESTION: Just a follow-up.

MR. MCCORMACK: Yeah.

QUESTION: You said that wasn't something the U.S. was considering, but was it something that you heard during the trip from the other members of the GCC?

MR. MCCORMACK: You know, I'll tell you, frankly, in the meetings that I was sitting in, I didn't hear it.

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