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UNDER SECRETARY BURNS: I am also here to meet on Iran specifically -- on the German leadership with the Russians and the Chinese by speaker phone (inaudible). We will be consulting on our latest offer to the Iranians to come to the negotiating table on the nuclear issue. This, of course, follows in the wake of Secretary Rice's trip to Sharm el-Sheikh last week where she attempted to have some discussions with the Iranian leadership -- and where we did, of course, have some discussions on the Iraq issue. So it is a very active time in our diplomacy.

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On the issue of Iran, we hope the Iranian government will understand that it has a choice now. That choice is to negotiate with the Perm-5 countries and Germany on the nuclear weapons issue. We made an offer 11 months ago in Vienna -- the Perm-5 and Germany. Iran said no to that offer. We now have put that offer back on to the table. Javier Solana has been asked by the six of us to represent us in talks with Ali Larijani and those talks will be continuing in the coming -- at some point in the next week or two. I don't think they have been announced yet, the date and time and location. But we hope the Iranian government will reconsider. We hope they will agree to meet us halfway. We have agreed that we would suspend our sanctions in the Security Council for the life of any negotiations. We would ask Iran to suspend its enrichment programs (inaudible), but clearly negotiations are preferable to confrontation. We seek peaceful discourse, not confrontation. But Iran is rather isolated these days. When you have Germany, France, Britain, the United States, China and Russia all together on one proposal, wishing to negotiate; and when you have South Africa, Indonesia, India, Brazil, Egypt -- all having voted in the Security Council or the IAEA to urge Iran to seek these negotiations; Iran should listen, not just to the Perm-5 and Germany, but also to the leading non-aligned countries of the world, and they ought to come to the negotiating table. So we will be talking about that tomorrow here in Berlin under German leadership. We will be talking to them about that.

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But this is a critical time for Iran. If you think about it, Iran is supported -- who supports Iran? Syria does. Venezuela does. Belarus and Cuba. That's about it. Every other leading country in the world has said, "Please sit down with these six countries and negotiate." And so we don't want to give up on negotiations. We want Iran to sit down with us; Secretary Rice said this just Monday. She said if Iran would sit down at the negotiating table, suspend its enrichment program, sit down and negotiate, she would be there, and she would be available to talk about any issue with the Iranian government. So that surely is the right way forward. We don't seek confrontation and we think it can and should be avoided.

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HANS-JUERGEN MAURUS, GERMAN PUBLIC RADIO: . . .

And the second question is towards Iran. Your assessment is, to quote you, that "Iran is pretty much isolated." You made a convincing argument there, but on the other hand of course you see that members of the European Union, or companies of members of the European Union -- an Austrian company has signed a deal, 3.5 billion with the Iranian government, and there are of course other deals in the pipeline with other countries. I wonder if there are not mixed signals being sent which might lead, in Tehran, to the assessment that they can lean back very comfortably as long as the dollars are rolling in or the Euros or whatever. What makes you so convinced that this is now a critical time that the Iranians even might be ready to move, or is that an expectation?

UNDER SECRETARY BURNS: . . .

On Iran. I think Iran has miscalculated. The Iranians are beginning to see the pressure from the Security Council: we now have two Chapter 7 resolutions; we now have sanctions on the Iranian Revolutionary Guard Corps Command; we have sanctions on Bank Sepa, the fourth leading bank -- international UN sanctions on the fourth leading bank of Iran; sanctions on individuals in the nuclear and ballistic missile industry. We have European banks beginning to shut down lending to Iran. We have European governments diminishing the level of export credits, they tell us, the European governments; they are diminishing them -- that were as high as 22 billion dollars in total in the year 2005. So I think the momentum here is towards greater pressure and sanctions, economic pressure on Iran, should they not come to the negotiating table. And again, like Serbia, what we have very consciously done, we the Europeans, Americans, China and Russia, is say: you've got two paths, Iran.

We prefer the negotiation path. And if you agree with Solana, over the next few weeks, if Iran will agree to this dual suspension, the mutual suspension -- so, we give something up and Iran does. We will be at the negotiating table and we will have a way to discuss this problem. And from an American perspective: any issue. If Iran doesn't say yes to negotiations and continues -- and they are now up to 13,000 centrifuges in the cascade that they have strung together -- they are going to find a third Security Council Resolution in the month of June, a third Chapter VII resolution. They will find, I think more importantly, I'll bet in Japan and in Europe, further efforts to, as the EU has done, reduce economic and political contacts with the Iranian government.

On the question of the Austrian oil and gas investment, we think it's ill-advised, we recommend against it. This is no time for business as usual with the government of the leading supporter of the four major Middle East terrorist groups that Iran is. And a government - Iran - that we think is trying to achieve a nuclear weapons capability; and there is no international disagreement that that is what they are trying to do. And so we think it would be ill-advised to proceed with such an investment.

I have met over the last six to seven weeks with several CEOs of major European and American oil companies and our advice to them is; don't make long-term investments in Iran, it's not a good credit risk. You will be beginning to see international banks constrict or end lending all together. You have UN Chapter VII resolutions -- of 192 in the UN, only 11 are under Chapter VII sanctions, Iran is one of them. And I think, finally, the U.S. Senate and House are considering legislation that would exact severe penalties on any company in the world that proceeds with major oil and gas deals. Now our administration has said that we don't support this legislation in full but we don't make the laws. Congress makes the laws. Congress is speaking very clearly that they want to send a clear signal that companies should not invest in the oil and gas sector. So, I think in all ways, this Austrian deal is extremely ill-advised and should be reconsidered.

RUTH CIESINGER, TAGESPIEGEL: Actually, I think you pretty much answered it but let me just clarify. So if there is not going to be any sign of Iran to come back to the negotiating table until the 25th of May, is there is definitely going to be another Security Council Resolution, a third one? Is this something that you have already agreed upon with the other five?

UNDER SECRETARY BURNS: Yes, we agreed last week in London that should the Iranian government not agree to negotiations, then we will all push for a third Resolution -- and that is implicit, explicit in the 1747, the Resolution of March 21st. We will seek further measures - "measures" is a UN word for sanctions, should Iran not comply. Now I don't think there is anything magical about May 24th. Sixty days runs out then. But if Solana needed a day, or two, or three more, we are not going to quibble. We support Solana. He is representing us. He is representing all of us - all six of us. And we want to make it possible for Solana to succeed, but I think we will know by the first part of June whether or not the Iranians are going to say yes. And Solana will know and he will report to us, and certainly by the G-8 Summit here in Germany, it will be abundantly clear whether Iran has said yes or no. If they have said no, then I think we are going to see - I know we will see - a major effort in New York towards a third sanctions resolution. By the way, that is not our preference. We don't seek to be punitive, just to be punitive. We would rather have negotiations. Secretary Rice said this last week in Sharm el-Sheikh; she said it Monday at the State Department. We want negotiations.

Here is a way to think about this issue. It has been 28 years since the United States had any kind of discussions with the government of Iran - on any subject. And now you have the United States government reaching out in two respects. Last week at Sharm el-Sheikh, our Ambassador to Iraq, Ryan Crocker, sat down with the Iranian Deputy Foreign Minister and talked about Iraq - which we initiated. And there may be further discussions in that channel. Now we are also trying to create a second channel on the nuclear issue of negotiations - and Secretary Rice has said that she will personally be there. So I hope the Iranians understand this is the first time in 28 years that the United States has offered negotiations at such a high level. And we do believe that negotiations are a far better way to proceed internationally than military confrontation. And so, Iran we would think should find it in its interest - with Solana - to find a way forward. And Solana has been - he's a very creative diplomat. And we have given him our full trust over the next several weeks to negotiate with Larijani; and we are all waiting for a response. And we are puzzled that the Iranians seem so ambivalent about this.

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