MR. MCCORMACK: Good afternoon, everybody. Don't have any opening statements, so we can get right into your questions.

QUESTION: I wonder what you -- U.S. expects to come out of the London talks. The Russian Prime Minister in Beijing said we cannot isolate Iran or is there pressure on us -- on it? It's a diplomatic issue. So do the Chinese agree with him? Sounds like there's still a great chasm between the U.S. and the Europeans, on the one hand, and China and Russia on the other. What are you hoping to accomplish with that kind of intransigence?

MR. MCCORMACK: Well, Barry, I'm going to let the diplomacy take place in private. The concerns of the Russians and Chinese about potential resolution and what this package might comprise are well known. We are making progress in the consultations. Nick Burns is our point man in terms of the diplomacy, working with his colleagues at the other political directors from the P-5+1.

What we're looking for, Barry, is what the Secretary and others have talked about. We're looking for a package. And what this package would do is provide the Iranian regime a choice. We present them with a crossroads, so they can choose to continue down the pathway of intransigence, of noncooperation, of obfuscation which will lead to the increased isolation of the Iranian people or they can choose a pathway of cooperation. They can walk back from where they are in terms of their enrichment program and they can choose to engage the international community in a serious constructive manner. And we have made clear that working with our partners in the EU-3 and other members of the Security Council, that we are prepared to support these efforts and we're working very closely with the EU-3 as they develop this package.

At this point, I don't have the details for you. I've seen the various newswire reports about elements -- what might constitute some elements of the package, light-water reactor. I'm not going to get into picking out various pieces of what a package might entail before we have final agreement on it. I think what you'll see, Barry, is that we and our partners in this process are going to present a package as a whole because that's what's intended here. It's intended to provide the Iranian regime with a choice.

QUESTION: Could you describe, I mean, if you can't specify the elements, is it fair to call this concessions? How would you describe what is going to be proffered to -- if all goes well, to Iranian regime?

MR. MCCORMACK: They're -- you can choose your words, Barry. People have used carrots and sticks. People have used incentives and disincentives, incentives and penalties. You can choose the -- whatever the AP style dictates on that one. But basic --

QUESTION: But you refuse to go into details.

MR. MCCORMACK: Refuse to go into detail. But basically, what it fundamentally does, Barry, is it's intended to provide the Iranian regime with a choice and two very distinct pathways.

QUESTION: What is the U.S. view on light-water reactor as one of the incentives --

MR. MCCORMACK: I preempted you. (Inaudible) my answer before --

QUESTION: -- in principle, in principle.

MR. MCCORMACK: In principle, it gets to a specific news story that's out there seeking to dissect various parts of what a package might be. I'm not going to get into that. What we're going to do is we're going to talk about this as a whole and what the elements of that package are. As I said, Under Secretary Burns is in daily contact with his counterparts, the political directors. I think just today he's spoken with the Russians, with the Chinese and some of his European counterparts. So it's a process. It's ongoing. They will have an opportunity to sit down together to go through exactly what the details of it are, but I expect once they have an opportunity to sit down that it will be pretty well formed up. I wouldn't imagine it would be final at that point, but they'll have a pretty good idea of what would be in it.

QUESTION: But you said previously that you would not be opposed to Iran having a, you know, nuclear power capabilities. So this would help them with their power capabilities, such a light-water reactor.

MR. MCCORMACK: I'm not going to try to speculate as to what may or may not be helpful in terms of their peaceful nuclear energy program. As a matter of principle, however, you are correct that we have no problem with the Iranian regime having peaceful nuclear energy. There have been various offers on the table in that regard. The Russians have made an attractive offer to them. The EU-3 has talked about that very principle. They want to argue about -- the Iranian regime would like to make this an issue of whether -- an argument over principle about whether or not they can have peaceful nuclear power. That's not the issue. The issue is that they, through their actions and decade's worth of obfuscation and lying to the international community have eroded the trust down to zero with the international community concerning what exactly they are doing with respect to their nuclear energy program.

They say it's a peaceful nuclear energy program. Much of the rest of the world doesn't believe them in that regard. So what the world is saying, okay, you can have a peaceful nuclear energy program, but we want to have objective guarantees, guarantees that we trust, that we can have confidence in that you're not going to use that peaceful nuclear energy program to develop a nuclear weapon. And from our perspective, part of that means that you're not going to do enrichment on Iranian -- enrichment or reprocessing on Iranian soil. We, and others, do not want the Iranian regime to have the ability to master those critical pathways to a nuclear weapon. And one of the most critical pathways is to be able to know how to, and have the means to, enrich uranium or to do reprocessing.

Saul.

QUESTION: So as you present Iran with a choice, as long as you stick to the point that they can't do enrichment on Iranian soil, does it matter at all what incentives you might give them because they're not going to accept that, right?

MR. MCCORMACK: Well, we don't know. We don't know, Saul. I mean, I think at this point we want to explore whether or not the stated position of -- they are hard and fast on doing enrichment and reprocessing on their soil. Is this a negotiating posture? Is this really where they are? We have made very clear from our perspective that we do not support any -- we do not support any element of a package that would allow them to do reprocessing and enrichment on Iranian soil and I've talked about the reasons why.

Essentially it boils down to the world doesn't trust them. And the world doesn't trust them because time after time the IAEA has posed questions to them about their nuclear program, and time after time, the Iranians have either refused to answer or come up with answers that are insufficient. We've just seen recently news reports about some potential activity at the Lavizan site. Now, I can't get into confirming those news reports -- that would be something that the IAEA would have to do. But I would just point out to you that the Lavizan site is a military site and the Iranians have said that they haven't done any nuclear activities at a military site. Well, if this, in fact, turns out to be true, then once again we have another data point that raises questions, questions for them.

But, Saul, we would hope, we would hope, that the Iranian regime would choose the pathway away from further isolation of the international community. The Iranian people have real economic needs. There is economic hardship in Iran. The low estimates of unemployment in Iran run 15 to 18 percent and underemployment is probably much greater than that. At a minimum, at a minimum, you have 500,000 new people entering the workforce without work, and estimates on that will vary.

So this is a regime that has real troubles at home in terms of its economy and we would hope and we would expect that they would want to become more engaged, they would want to become more a part of the world, rather than to try to go down the pathway of isolating the Iranian people more because, frankly, that will only cause greater hardship for Iran. And we have no desire to impose hardship on the Iranian people, but we do want the Iranian regime to make a choice.

Yes.

QUESTION: Sean, if Nick is in touch with his counterparts on a near-daily basis, isn't it pretty inconceivable that the EU would get so far as to make a proposal that you wouldn't support? Wouldn't that have come up a lot earlier? Why can't you say that you would support this light-water reactor?

MR. MCCORMACK: Well, a couple of things. One, I made the point we're not going to talk about this unless we talk about the package as a whole. The second point, in terms of the news reports, I've only seen anonymous sources talking about this. So what I'm going to do is I'm going to let the diplomacy play out. We're going to do that as we have in the past; we're going to do it through our diplomatic contacts and have those contacts in private. We try to share with you generally where we're going, outline some of the parameters of the discussion; but as for the details, we'll talk about those when we're prepared to talk about the package as a whole.

Elise.

QUESTION: A few months ago in Iran, or when Iran first started talking about the fact that it was going to enrich uranium and it had enriched uranium, you said that you were taking the Iranians at their word; if they said they were going to do it, they were going to do it. So if they're saying now that they won't accept a proposal that doesn't include uranium enrichment, why wouldn't you take them at their word now?

And also, is this a negotiation with the Iranians or are you offering them a take-it-or-leave-it package that's not subject to negotiation?

MR. MCCORMACK: Well, a couple of things. One, we would hope now that they are confronted with a wider consensus with respect to their actions on the nuclear front and increased pressure that they would reconsider those positions. And we'll see and we hope by the very fact that the international community is coming together to talk about this issue and to present to the Iranian regime a package that is backed by a large number of the international -- by a large number of the members of the international community, that they would see their way to cooperating, to negotiate in a serious manner. Again, I stand by what we have said at this point: We can only take them at their word that that is not something that they're willing to do, but we would hope given the choice that they would come around, that they would change their mind.

QUESTION: On the negotiation, is this -- are you offering them a package as take-it-or-leave-it or is there anything that they can negotiate into it that might make them --

MR. MCCORMACK: Let's take first steps first. Let's see what the package comprises and then we'll make it known to them in some form. We'll keep you up to date on how that is and then we'll see what their reaction is.

QUESTION: What is the location for this presentation? Is the UN Security Council a part of this approach or do you know --

MR. MCCORMACK: We'll work out the modalities, Barry. At this point I -- at this point I don't think that we have an agreement on that. I'm not sure that it's really an issue that people have explored in depth, frankly. I think we're focused on the substance right now.

QUESTION: Okay.

MR. MCCORMACK: Yes, Libby.

QUESTION: You talk about the fact that Iran is further isolated and, just today, Sergey Lavrov, the Russian Foreign Minister, said we cannot isolate Iran or exert pressure on it. So how united is this front if Iran -- is Iran ready to feel isolated if you've got foreign ministers out there saying that, you know, hey look, we can't put pressure on them in this way?

And also, it looks like Ahmadi-Nejad will be attending a summit next month in Shanghai with leaders from Russia and China, so how isolated should the Iranian President feel if, you know, such overtures are being made towards him?

MR. MCCORMACK: Well, I think if you look back, you look what has happened, I think that in terms of the IAEA vote, the UN Security Council statement, they do find themselves isolated. And those are things that, at a minimum, the Russian Government has abstained on. They haven't stood in the way of those things. So I think de facto Iran is more isolated than they were six months ago, nine months ago.

And it is really -- it's not the international community that is really doing the isolating. It's the Iranian regime that is isolating themselves, through their actions, from the rest of the world.

As for the potential attendance at this summit, I had seen the press reports about it. This is something that we're seeking some clarification on.

QUESTION: But does it really send a strong message to the Iranians if, you know, Russia and China, which are supposed to be aligned with the U.S., the UK, France, Germany, you know, overtures like that are made towards the Iranians, I mean, what are they supposed to --

MR. MCCORMACK: Okay. So on the Shanghai Cooperation Organization summit, let me -- we're looking into that. It's a question that we have and we're going to raise that with, I believe, the Russian Government.

QUESTION: Can you say a little more about seeking clarification?

QUESTION: Yeah.

QUESTION: Are you saying that we don't think it's a good idea or are you saying you're trying to see if it actually is an invitation out there?

MR. MCCORMACK: I think that before I get to answering the first part of that, I want to get an answer to the second, and I don't have the answer to the second part.

QUESTION: Okay.

MR. MCCORMACK: Charlie.

QUESTION: Sean, just a kind of a point of clarification. You used a figure a few minutes ago of 500,000 unemployed in Iran?

MR. MCCORMACK: Yeah. New people. New people.

QUESTION: And how do --

MR. MCCORMACK: It's basically --

QUESTION: How do you come to that number?

MR. MCCORMACK: It was a number that I've gotten here from the State Department. I'm happy to look into the sourcing, post the sourcing.

QUESTION: I'm curious because there's no diplomatic reporting coming out of there, in theory.

MR. MCCORMACK: It's a number that I talked about with my colleagues here at the State Department. It's the number of new people -- it's an estimate, it's an estimate of new people, basically the remainder of young people who are coming into the workforce who don't have jobs.

QUESTION: You mean each year?

MR. MCCORMACK: Each year. Yeah, each year. Yeah, yeah, yeah.

Teri.

QUESTION: Another subject?

QUESTION: One more on Iran, kind of tangentially. Venezuela said today that --

QUESTION: That was my question. You stole it. (Laughter.)

QUESTION: Oh. Please.

MR. MCCORMACK: Whoa.

QUESTION: It has an Iranian segue, go ahead.

MR. MCCORMACK: This has nothing to do with ratings coming up...

QUESTION: Go ahead.

QUESTION: I'll do it on behalf of Teri and myself.

MR. MCCORMACK: Sure.

QUESTION: Venezuela said today that it plans on selling U.S. jets to Iran.

QUESTION: F-16s.

QUESTION: F-16s.

MR. MCCORMACK: Right.

QUESTION: Is it -- it's a tag-team effort. Is this allowed? Are there any laws governing this and what's your reaction to it?

MR. MCCORMACK: Well, the answer to your first part is no, not allowed. And anytime you have the sale of military equipment to a foreign government, U.S. military equipment to a foreign government, there are clauses in there and agreements that are signed and part of those agreements are that without the written consent of the United States, you can't transfer these defense articles, in this case, F-16s, to a third country. And I would expect that even if such a request were made that it would not be forthcoming from the U.S. Government.

QUESTION: Well, why do they care anymore*?

MR. MCCORMACK: Look, you know, they just found themselves on the list of countries not cooperating with U.S. terrorism efforts. I'm not sure that they want to add to that list breaking international agreements.

QUESTION: What's your recourse for that if they go ahead and sell?

MR. MCCORMACK: We'll cross that bridge when we come to it, if we do.

QUESTION: Okay. Can I continue on Venezuela? Thank you. The Venezuelan Foreign Minister has put out a statement this morning that says that the reason -- the real reason you guys cut off their arms sales yesterday was because you're planning an attack on them and you're trying to compromise their defenses -- very sneaky.

MR. MCCORMACK: Yeah, I saw the statement and it seems like we struck a nerve, didn't we? Look, you know, it's just an attempt to sort of obscure the issue and what they should instead be focusing on is cooperating in the war against terrorism. There are UN resolutions that guide -- should be a guide for every country's efforts in that regard. So I think that they should instead of throwing up sort of diversionary rhetoric and overheated rhetoric they might focus instead on actually taking steps to fight terror.

QUESTION: Can I go -- going back to the previous question, what could you really do? I mean, if Iran doesn't have relations with the United States and Venezuela's are on a downward spiral, how could you physically stop Venezuela from transferring F-16s to Iran? I mean --

MR. MCCORMACK: Teri, like I said, if we come to that point, then we'll talk about it.

QUESTION: Well, how do you know you'll come to that point if they don't write you a letter and ask?

MR. MCCORMACK: Again, Teri, if we come to that point, then we'll deal with it at that point.

QUESTION: What do you think of the credibility of these statements? On the one hand, they're saying America's about to attack to them and they're going to sell their warplanes to another country so they wouldn't have -- as good a defense. (Laughter.)

MR. MCCORMACK: Well, there's a certain contradiction in that, isn't there. Look, you know, like I said, I think that this is just -- this is overheated rhetoric. You know, we've seen this from the Venezuelan Government before. They like to use the United States as a foil, when in fact we have no problem working with a democratically elected government that governs democratically.

Our problem with the Government in Venezuela is the various actions that this government has taken over the course of time that undermine democratic institutions. I'll give you the example of other so-called left-of-center governments in the hemisphere with which we work very closely: with the government of President Lula in Brazil, the government of President Bachelet in Chile. We have no problem working with so-called left-of-center governments. I would point out or note the fact that sort of the -- even within this group of countries that describe themselves as left-of-center governments, there is certain tensions right now just between the Government of Brazil and the Government of Bolivia. So we have no problem working with these governments. Our problem arises when they engage in behaviors that are -- do not promote democracy, do not strengthen democracy.

QUESTION: Could you be more explicit about what you're not doing in the counterterrorism field? Are they harboring people in Venezuela? What is the nature of the relationship between Iran and Venezuela and Cuba and Venezuela in this regard?

MR. MCCORMACK: Well, they have -- in our judgment, George, and I can't get into all the details of it. In our judgment, they have over the course of the year developed a much closer and stronger intelligence-sharing relationship with the intelligence agencies of Iran and Cuba. We also have concerns about their failure to stop transit of certain individuals through Venezuela. We also have concerns about Venezuela serving as a transit point for types of arms. We have concerns about their links to the FARC and to the ELN, so there's a broad menu here of concerns that we have.

Like I said, I can't get into all the details of it, but these are not decisions that we take lightly. Venezuela is, in fact, the only state that is on the list of states not cooperating with the United States on fighting terrorism and is not on the state sponsor of terrorism list.

QUESTION: You can't talk more about transit of individuals to Venezuela? Who are these people?

MR. MCCORMACK: I can't get into any other details at this point, George.

Elise.

QUESTION: I'm sorry if people asked this yesterday, but is this designation of Venezuela on the list kind of the first step before naming them as a state sponsor of terrorism, or are you saying that they're just not cooperating?

MR. MCCORMACK: It's just to highlight the fact that this is not a step that we take lightly. I wouldn't read anything into it one way or the other regarding the state sponsor of terrorism list. There are two separate judgments that you have. In terms of the state sponsor of terror list you have to meet a standard of repeated acts of supporting terrorism. That is, in getting yourself on the list of states that aren't cooperating with the United States on fighting terrorism is a different judgment and they're made separately and independently.

QUESTION: Yeah, but you're (inaudible) developed over two days --

MR. MCCORMACK: Mm-hmm.

QUESTION: -- you've said more negative things of Venezuela that go beyond not cooperating. Not cooperating could be, you know, don't bother us. We've got other things to think about. You're talking about their active program of being -- now you've got the F-16, you've got them palsy-walsy with Iran, with Cuba, so it isn't a benign position, is it? Doesn't that begin to sound like maybe they're a candidate for the --

MR. MCCORMACK: I'm not trying to lead you in a direction one way or the other, Barry.

QUESTION: No. But it's a misnamed thing, not cooperating. It's more than that isn't it?

MR. MCCORMACK: That is the designation under the law, Barry.

QUESTION: All right.

MR. MCCORMACK: And I'm not going to try to go beyond that. I've tried to provide you as much of the material as I can that went into the decision to put them on that list, but I'm not trying to lead you in another direction here in terms of state sponsor of terror list.

QUESTION: Is that a long list, the non-cooperators?

MR. MCCORMACK: The non-cooperators? Well, it's the state sponsor of terror --

QUESTION: -- Iran.

MR. MCCORMACK: -- plus Venezuela.

QUESTION: Period.

MR. MCCORMACK: That's it. No, there are more actually. Venezuela -- I'll give you the exact number, Barry. I'll give you the exact number.

QUESTION: They're not alone?

MR. MCCORMACK: They're not alone on it, no. At the very least, you'll have state sponsor of terror countries.

. . .