. . . Dr. Rice, we look at this renewed emphasis on a diplomatic track and then we look at some of the changes that have taken place in the Administration, including on your own staff. And the question arises whether there has been a change in the philosophy that guides U.S. foreign policy or whether there has been perhaps a change in the priorities for that foreign policy.

SECRETARY RICE: . . . If you look at the situation with Iran, why do I now feel that I can walk into a room on a neighbors conference or for that matter if the Iranians were willing to suspend their enrichment process, enrichment and reprocessing activities to walk into a room and join negotiations with the Iranians? Well, because over a period of time, working with our allies and broadening and broadening the base of those states that are committed to a diplomatic process but that are also committed to disincentives for Iran if Iran does not choose diplomacy, we now have a situation in which we are in a position of strength, not a position of weakness.

When I first became Secretary, I remember going to Europe and I was struck by the fact that somehow -- and Sean will remember this -- in the questions it was as if Europe believed it was mediating between Iran and the United States on a nuclear issue. Well, Europe and the United States were on the same side of the nuclear issue vis-à-vis Iran, so how could that be the case? Well, over a period of time, through some proposals that we put on the table, through some flexibility that we showed, we have moved the entire international community to the place that you can get a Chapter 7 resolution in July and then get a Chapter 7 resolution some -- sorry, get a Chapter 7 resolution in December and then get a Chapter 7 resolution in what the UN is lightning speed just a few weeks later that really does put pressure on Iran to say there's both a diplomatic track and a track of isolation. But it takes time to build that kind of coalition. It takes time to build that set of incentives and disincentives.

. . .

QUESTION: Madame Secretary, I think most people notice that one of the ways that we moved forward on North Korea was by finally agreeing to bilateral talks with them, which took place in Berlin. Do you think that the same approach might work with Syria and/or Iran?

SECRETARY RICE: . . . So the important thing is not to get caught in a situation in which it's the United States and North Korea or the United States and Iran, and everybody can say go make a deal with them and, oh, by the way, if you don't make a deal it's the Americans fault.

It's when you have this kind of coalition that is working, then I think to be able to have bilateral discussions not negotiations, but discussions to move forward. The multilateral negotiations make sense.

Now, with Iran, if Iran suspends its enrichment and reprocessing activities and we go to six-party talks -- it would again be six parties, by the way -- plus Iran. In this case it would be seven, I guess, if we go to that and you would never rule out that it might be useful at some point to have a bilateral encounter that moves forward those -- that seven party arrangement. But what you don't want to do, I think, is make this U.S.-Iranian negotiations over the Iranian nuclear weapon because you don't have -- the United States cannot deliver the level of isolation that you have to have on the negative side in order to get Iran to accept the positive side.

QUESTION: I agree with you on the desirability of approaching these countries in a regional context. On the other hand, I think you have to say that there is an element of mutual respect in being prepared to sit down with the representatives of any country on a face-to-face, one-on-one talk.

SECRETARY RICE: Well, but when you expect something to be achieved -- I mean, you never just talk in diplomacy. You don't. You talk with an aim to get some place.

QUESTION: Hmm.

SECRETARY RICE: Well, you know -- (laughter) -- I don't just talk, okay. When I go into a discussion even with my closest friends, I go in expecting to achieve something -- my closest diplomatic friends.

QUESTION: Yeah, yeah.

SECRETARY RICE: Not my friend friends -- (laughter) -- then I can just talk. But I go in and think, all right, what am I trying to achieve. Because you don't want to send the wrong signal, which is that it's okay just to keep talking and not achieve anything. You know, one problem that the Iranians have had with the earlier European negotiations was that they talked and they talked and they talked and they never got anywhere. And so the Iranians walked out, started reprocessing -- enrichment reprocessing and we ended up in a worse situation actually. So I'm all for talking; that' not the problem.

And by the way, I'm not ideologically opposed to talking to people with whom we have adversarial relations. But it is extremely important that it be in a context in which you actually think you can achieve something. And I go back to the fact that any negotiation, any discussion is a matter of aligning properly the incentives and disincentives for behavioral change.

. . .

QUESTION: As to Iran -- Jim Mitchell, Dallas Morning News. As to Iran, it's pretty obvious, I think that the current ruling government is it does not understand the meaning of incentives. Is there a -- absent that, is there a moderate element within Iran who can and that you perceive as a player in the ultimate outcome?

SECRETARY RICE: Yeah. Well, I would not use the word moderate. I think what we're looking --

QUESTION: Comparatively.

SECRETARY RICE: -- for is responsible. (Laughter.) Okay, responsible. But I think the point is well taken. Iran is a country that is in fact quite integrated into the international community. It uses the financial system. It trades, it -- and not just in oil, it trades in products and its people are accustomed to traveling. It's not by any means as isolated as North Korea is. And you would hope that at some point, there would be reasonable people who would say what is the international community offering us? They're offering us a civil nuclear program, in other words, answering the question about civil nuclear energy as long as we don't have the fuel cycle which has a proliferation risk and on top of that offering us all kinds of trade and political relations along the way that would not just embed Iran more deeply and more prosperously in the international system, but would also end its isolation with the United States.

Now, I would say that's a pretty good package to just say stop enriching and reprocessing. And I have to believe that at some point there is a reasonable part of the Iranian political elite that will recognize that that's a better course than they are on. And so that's the goal.

QUESTION: And who might those be?

SECRETARY RICE: I can't put names to them and I'm an old Soviet specialist and I'm extremely aware of how little you know about the internal politics of an opaque political system. And so I don't want to try to opine on who they might be, but I know that there are business interests for instance in Iran that are finding it exceedingly difficult now just to do their financial business because banks are leaving Iran and refusing to deal in Iranian accounts. There is a significant oil and gas segment that is declining and can't get the level of the investment that it needs. So you could speculate on who some might be, but I wouldn't want to say that I had any real knowledge of it.

. . .