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SECRETARY RICE: ... Obviously, I'm spending a lot of time here, too, talking to the states that have been a part of the coalition against the Iranian nuclear program, the so-called P-5+1. It's the permanent five plus Germany. It began as an EU-3 negotiation project. We, China and Russia joined their efforts. But so far, the Iranians have not suspended their enrichment and reprocessing. But I can tell you that we are stepping up our activities and our pressure on Iran to do so. Not only are we determined to press them in Iraq when we find them doing activities that endanger innocent Iraqis and endanger our forces, but we are, in addition to the UN Security Council track, the - I'll call them informal or collateral financial measures that people are taking - many of them, by the way, the private sector just deciding that the reputational and investment risk of dealing with a country that's under Chapter 7 resolutions isn't worth it - that's having an effect. A lot of the big banks have pulled out. A lot of - several governments have diminished - they've downgraded their investment credit with - investment credits with Iran. And so I will have a meeting with the P-5+1 in a couple of days and we'll try to move forward on keeping the Security Council track moving.

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But the biggest problem, to my mind, for proliferation in the Middle East would be if Iran gets a nuclear weapon or even the technologies, technological knowhow, to create a nuclear weapons program. Because you're going to set off a competition for other states in the region to do the same, and that's a big proliferation threat as well as a general security threat. So those are some of the ways that we're dealing with what has been a very high priority for the President.

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QUESTION: What's the fear of - we seem focused on Iran and the fact that if they get nukes they can hand them off to terrorists. It seems to me that North Korea would do that today and that maybe what the Syrian thing is all about, but is that a greater threat? Because clearly, they have them and they don't care.

SECRETARY RICE: When they exploded the device, we had a two-pronged policy. Because I went out to Asia shortly after that, two days after testing, and I talked to people about strengthening our alliances and reaffirming our commitment to defend Japan and South Korea, just in case the North Koreans had any nutty notions about launching something. But I also said that the principally big concern here is the transfer, somehow, of materials of (inaudible). And that is then an issue in the six-party talks, because you've got to shut down that program. Now there - we have to shut down, that's a good thing. The next step is it's got to be disabled so that they can't build it back easily.

Then we're going to have to account for whatever it is that they've made in the meantime and what happened to it. If we can get through that series of steps, I think we'll be far better off on the proliferation side. We won't be completely free because you're never going to know everything that you need to know about this regime, but we will be in much better shape on the issue that (inaudible).

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QUESTION: Madame Secretary, then how great a concern is a sharper rivalry between Iran and Saudi Arabia? It sounds like a lot of these issues that you're talking about could involve proxies (inaudible).

SECRETARY RICE: Well, so far, I would say that what you've had is Saudi Arabia taking a more active and largely - not wholly, but largely positive role in being the kind of front leadership for this more responsible set of policies, whether it's in Lebanon or with the Palestinians now - the problem when Hamas - when you had the unity government and there was some hope in parts of the Arab world that this was going to unite the Palestinians. Quite clearly, Hamas and Fatah are never going to live in the same body, so that was something of a - well, it backfired.

But so far, I think what you've got is that Saudi Arabia and, to a certain extent, Egypt are providing pretty good leadership on these issues and it provides a counter to Iran. They're not really very rhetorically aggressive about Iran, but the policies that they're pursuing are clearly policies that help to checkmate Iran and some of its activities. So I don't think it's likely to become an open, rather hot rivalry, but I do think you're going to continue to see these Sunni-Arab states challenge Iran.

And we need to help them challenge Iran by - as we did when Bob Gates and I went out to the region, reinforcing our security relationships, reinforcing their capabilities in the Gulf, as I said, removing some of the troubled spots that the Iranians can play in, and also convincing these long-term allies of the United States, in the Gulf in particular, but also Egypt, Jordan, others that we're not going anywhere in the Middle East.

I think there was a great fear that maybe - we're in September now, so prior to the President's speech in January, that the United States might precipitously leave Iraq; if we precipitously left Iraq, we would most certainly be forced out of the Middle East in general and that Iran would fill the vacuum. And frankly, Ahmadi-Nejad, who, to a certain extent, is the gift who keeps on giving rhetorically saying if the United States leaves Iran, it is prepared to fill the vacuum?

QUESTION: Yeah.

SECRETARY RICE: I couldn't have said it better myself. So now, with the United States having made a stand that we're staying, we're going to complete our work there, and what is more, as the President said in his speech, we're going to have a long-term relationship with Iraq, you think about it in the following terms: long-term relationship with Afghanistan, long-term relationship with Iraq, reinvigorated security relationships in the Gulf, good relationships in Central Asia with places like Tajikistan and Kyrgyzstan, maybe not a great geo-strategic picture from the Iranian point of view, but a good geo-strategic picture from the point of view of our allies.

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QUESTION: And speaking of Ahmadi-Nejad, two questions for you.

SECRETARY RICE: Yeah.

QUESTION: There's been so much criticism of this visit and Lee Bollinger, the president, said it's America at its finest. (Inaudible) university president at its stupidest. What do you - what's your reaction to it and what do you think Ahmadi-Nejad is actually up to? What do you hope - think he hopes to gain?

SECRETARY RICE: Let me say first about Ground Zero, that would have been a travesty. It just, flat, would have been a travesty. The idea that this president of the biggest state sponsor of terror would have gone and laid a wreath at the site of our largest terrorist incident where 3,000 Americans died, I think that would have been a travesty and I'm really glad New York (inaudible).

I'll tell you what concerns me about his going to Columbia. I'm actually not so worried that it gives him "legitimacy" here, because undoubtedly, he will say something that will just remind people who he is. But I am worried that it could give him greater legitimacy at home. He's not very popular in our - among a lot of the (inaudible) and I can guarantee you that the coverage of him will not be of the protests and the coverage will not be of the "difficult questions" that he's asked. The coverage of him will be at a - one of America's finest universities giving a speech and I just hope that the - there will be some way, and surely, we will try and others will try, that the Iranian people will know that he was not received here as a hero[.]

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SECRETARY RICE: I think we could break through, if we could break through, with the message that we don't want to deny Iran's civil nuclear technology. Because this has become inside Iran, from what I'm told, an issue of the West "trying to deny Iran becoming a great technology power." And that's what we're really about and that's what the regime says. They don't say, "We're seeking enrichment and reprocessing capability because we want to build a nuclear weapon." They don't say that. They say, "We, the great Iranian people, culture, have a right to the highest forms of technology."

Now that's a very popular argument, very appealing argument. And we've tried, in most ways that we can think of, to break through --

QUESTION: You offered to build them a nuclear power plant.

SECRETARY RICE: You know, we've even said if you give us your enrichment and reprocessing capability and are prepared to enrich outside the country, ship the fuel rods back outside the country, we're prepared to consider nuclear cooperation with Iran. But because we've said that, the Russians have said that, the Europeans have said that, you know, I suspect what I've always suspected; they don't really want that. Of course, they want the --

QUESTION: They want the bomb.

QUESTION: Isn't Russia making trouble for us? They're not really pulling on this?

SECRETARY RICE: They've been better than I thought we could get them to be, particularly in the last year and a half or so, two years maybe - a year and a half. Russia knows that a nuclear-armed Iran is a real problem for them and their south is as vulnerable to terrorism as anybody and they also don't want a nuclear Middle East. We may disagree sometimes on tactics when, how tough a nuclear - or how tough a resolution might be. But on balance, the reason we've been able to get two unanimous Security Council resolutions is the Russians have been willing to go along.

And we've had to - we've had to press the Chinese increasingly because there is some - with the Chinese, the conversation always turns to, well reliable energy supply and so forth. And China just surpassed Japan as the leading trade partner of Iran because Japan has been cutting back. So we have some work to do there with China, but on balance, we've had pretty good cooperation on Iran. It's not fast enough and the problem is the Security Council resolutions are both slow and they - because they're negotiated, they're never as harsh as we would want them to be.

That's why what's going on outside the Security Council in the financial world and in companies making their own choices is so important to keep going and (inaudible) I think are going to be even better.

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QUESTION: Madame Secretary, can I ask about France for a second? Since the leadership changed, what impact has that had for us? Is there strong language about Iran helping us or how is that all working out?

SECRETARY RICE: It is helping us because it's going to kind of unnerve the Iranians, which is a good thing. The French --

QUESTION: Because being threatened by the French was never a big threat. (Laughter.)

SECRETARY RICE: The French are - they're out there and they're doing a really good job. They are with us in Lebanon and now on Iran. It's a much more activist French Government and Sarkozy has been - so it's - France and the United States are always going to have a relationship that has its puts and takes just because it's France and the United States. But Sarkozy has made very clear that he wants to be a partner for the United States. The first thing he said when I walked into his office for the first time was, "What can we do to help."

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