BIDEN: Consequently, it's understandable that while we're focused on Iraq, other problems remain, if not on the back burner, not getting full attention. But now some of those pots are boiling over, starting with the nuclear program in North Korea and Iran, the dangerous backsliding of democracy in Russia, and genocide in Sudan, and the lack of focus on public diplomacy, which I hope and I expect you'll talk about. Over the past few years, North Korea has increased its nuclear capacity by as much as 400 percent and now may have as many as eight nuclear weapons, which it can test, hide or sell to the highest bidder. You have said, quote, It is unacceptable, end of quote, for North Korea to have nuclear weapons. What does that mean? And what do you propose to do to stop this growing threat? Over the past few years, the reform movement in Iran has been literally crushed in front of the whole world. Surrounded by about 200,000 forces, it very openly just reached out and crushed the democracy movement. So much for the notion of leveraging power. Over the past four years, things have gotten considerably worse in Iran, and it has accelerated its own nuclear program. There may be nothing we can do to persuade Iran not to develop weapons of mass destruction. But our European allies are trying, through a combination of carrots and sticks. They believe they cannot succeed unless the United States engages in this effort. And in my view -- and it may not be true; I'm anxious to hear what you have to say -- we seem to be sitting on the sidelines. What do you propose to do to defuse or, if necessary, defeat this emerging danger?

. . .0

NELSON: Madam Secretary-designate, you can make a difference. If you'll jump on that horse and ride it and keep on it over the next four years of your tenure, it'll start to pay huge dividends. And nobody's done that. We go in and we fix a problem, then we turn around and we leave it, and so do the other nations, and then Haiti just goes back into chaos. Let me shift to the other side of the globe: Iran. What specific steps will you advocate to stop Iran's nuclear program? And I'm talking about beyond the noise that we hear from Europe. This senator doesn't think that's going to cut it.
RICE: Well, Senator, this is a problem that we're trying to approach both multilaterally and through some bilateral pressure. And we were the first to really put the Iranian nuclear program on the table when the president did his speech, his State of the Union speech, and identified the Iranian nuclear program. I can remember back in the early days, Senator, people didn't take nearly as seriously that Iran was actually trying to, under cover of its nonproliferation treaty access to civilian nuclear energy, to build a nuclear weapons program. I think people now, because of Iranian behavior, are very skeptical and suspicious of what the Iranians are doing.

NELSON: Are you ready for sanctions?

RICE: Well, we already have an awful lot of sanctions on Iran unilaterally. There's really not terribly much more we can do. But I do...

NELSON: How about getting Europe to go along?

RICE: Well, Senator, I would take as a first step that if the Iranians do not show that they're going to live up to their international obligations, that we refer them to the Security Council. That has been our policy, that when you're in violation of your obligations under the NPT, that you get referred to the Security Council. And the IAEA has been, I think, documenting that the Iranians have not been serious about their obligations. So at some point, that may be exactly where we need to go. We are making some progress in unifying people's view of what the Iranians are doing and putting pressure on the Iranians. We do work with the E.U.-3 to try to help them formulate a strategy that would really hold Iran accountable, not just take Iran's word for it. And we've made some progress in getting people who engage in bilateral assistance with Iran to be more cognizant of some of the proliferation risks. For instance, the Russians who have a civilian nuclear power program with Iran and their reactor at Bushehr, now say to the Iranians that you will have to return the fuel, in other words, close the fuel cycle and sign the additional protocol. Those are all positive steps. We need to continue to take those. But Senator, the spirit of your question is that, at some point, Iran has to be held accountable for its unwillingness to live up to its international obligations. And I could not agree more.

NELSON: Hopefully sooner than later.

. . .

OBAMA: I know that Senator Lugar is going to be presenting an amendment that gives your office more flexibility in this area. I'm hopeful that I'm going to have the opportunity to work with him and my colleagues on this piece of legislation. I guess my question is: How are you going to use this flexibility? Number one, are you going to be seeking full funding? Number two, beyond the existing mechanisms to lock down existing nuclear material, what else are we doing, for example, to make sure that Pakistan has a mechanism in place to ensure that those nuclear weapons or that technology is no longer drifting off into the hands of hostile forces?

RICE: Thank you. First of all, on nuclear proliferation, let me just say that broadly, our strategy has been really threefold: first of all, to be very concerned about the loopholes in the Non-Proliferation Treaty. The Non-Proliferation Treaty is in trouble, because there are countries that have signed onto it and then are using the access to civilian nuclear power to really pursue nuclear weapons programs. Iran is a prime example of that. The president has made a number of proposals -- Senator Lugar has -- we've talked about this -- to close the fuel cycle, to make it not possible for countries to enrich uranium or other fuels to the point that they're left with the fuel, but rather to get a fuel supply from the fuel suppliers that are out there. And it's a proposal that has met with some resistance, but it's something that we're continuing to work on. Clearly, we have to make the proliferation problem somewhat easier by not having countries that are suspect with access to the fuel supply.

OBAMA: Can I interrupt just real quickly?

RICE: Sure.

OBAMA: Is the resistance on those reforms coming simply from countries that are in the midst of development or are we also seeing resistance from allies like France and Germany and others that already have existing nuclear capacity?

RICE: The resistance really is coming from countries that we think have no intention of building a nuclear weapon but who want to maintain the access to their entire civilian nuclear cycle.

RICE: So we've had to talk with some countries about the fact that, yes, under the Non-Proliferation Treaty countries have access to this, but when you get a country that is cheating under that access, that maybe for those countries you shouldn't have the access. So this is a discussion. We got a one-year moratorium on enriching and reprocessing, and we'll try to keep pressing forward. Secondly, we've been very aggressive on what is a really bad problem, which is nuclear entrepreneurship, the kind of A.Q. Khan factor, these black market entrepreneurs who are selling nuclear secrets, selling, in fact, the whole little kit, if you will. And the takedown of the A.Q. Khan network is really one of the most important things that we've done. It will give us information on how this works. We have to put this one out of business, and we have to work to see if there are others. This has all been helped by what happened in Libya, where a country voluntarily gave up its weapons of mass destruction in hopes of a better relationship with the international community. And we have to try and incent that kind of behavior on countries that have pursued weapons of mass destruction. And then, finally, you mentioned -- I should also mention the Proliferation Security Initiative, which, of course, helps us to interdict dangerous cargo. So it's a broad program. But the Nunn-Lugar piece of this is very important. As I said, as an old Soviet specialist, I know a good bit about the dangers there. We have tried to fund it at levels that are adequate to do the work at hand. And you mentioned the securing before 2001 and the securing afterwards. Some of that is exactly as you mentioned, low- hanging fruit. Some of it is that there's a kind of schedule for which sites get secured when. What we have done is to go to the Energy Department and ask them to prioritize, to try to get the most important sites secure in the earliest time. And the timetable has been collapsed to one where, if we keep to schedule, we should be able to secure all materials within the next four years. So we're making some progress. We need to work harder on the bureaucratic impediments to this. There are impediments on both sides.

. . .

LUGAR: Well, as you take hold, would you just take under advisement the need maybe for a more explicit plan and, perhaps through the appropriate departments in the Department of State, work with the subordinates that you will have? Because it just seems to me something here is going to be required beyond the hope, eventually, for an energy plan or the various contingencies that we have thus far. I just wanted to touch on Iran briefly, to indicate that there has been enormous, not only press comment, but among academicians, about the extent of our participation with the Europeans in negotiations with Iran or with the IAEA. And from time to time, (inaudible) it appeared that the Europeans or Ambassador Baradei negotiate various things and then we make, sort of, an editorial comment about it, but are not exactly around the table at the same time, are not lifting in the same way. I'm just wondering: Are you examining, really, what our role ought to be in these ongoing negotiations so that, in fact, they are more successful, that they have greater staying power, and the Europeans, as well as the U.N., have greater confidence that our heft is behind this situation?

RICE: Well, we're certainly working very closely with the Europeans. And with the IAEA, we're full participants as members of the board in the processes that the IAEA is going through. Obviously, we need to keep reviewing the situation. But I think that we believe at this point that there is a path ahead. If the Europeans are unable to get satisfactory understanding with the Iranians about their international obligations, I think we have to go back and look at the process that was prescribed, which is that this would go to the Security Council and we would go from there.

RICE: Nobody is saying that there have to be sanctions right away or anything of the sort, but we are saying that Iran has to be held to account for its international obligations.

LUGAR: Well, indeed that has been our policy. I once again just am hopeful, and I see an opportunity, with the Europeans here, as we begin to meld together perhaps strategies for the future in the Middle East, some possibilities for more cooperation, for more mutual assistance in this process, in addition to, as you say, our thought that responsibility means they've got to do this or that or face the U.N.

Ultimately, they might face the Security Council and not much might come of it. And so the importance of the negotiations I think you understand better than any of us.

Now, I just see (inaudible) once again possibilities of working with Great Britain, with France, with others who have been doing more heavy lifting here.

RICE: Thank you.

LUGAR: Now, finally, in May the Non-Proliferation Treaty review conference is going to take place in New York. May is at least four months away, but what sort of preparations will the administration be making for that conference and what sort of objectives will we have at that point?

RICE: Well, we will try at that conference to work with others to try and address some of the loopholes that are there in the NPT. And I think the big one, of course, is this issue of civilian nuclear use being used to cover...

LUGAR: This loop that you mentioned earlier.

RICE: ... nuclear programs, this fuel cycle loop.

LUGAR: Yes.

RICE: And we have some proposals we're working. There's a proposal for a special committee on compliance, which I think is a good proposal, and we probably can work that out. But the NPT needs some repair, and we will try and press this agenda at the conference.

I have to say that the leadership of the IAEA has also been interested, when I've talked to Mr. ElBaradei about this, in trying to pursue some of these problems, too, because they know that without a sound NPT, we have one hand tied behind our backs.
. . .
BIDEN: Iran: Seymour Hersh wrote in the New Yorker that the quote, hawks in the Pentagon, in private discussions, have been urging a limited attack on Iran, because they believe it could lead to the toppling of the religious leadership, end of quote.

I'm not asking you whether there's any discussion about an attack. But do you believe that it is possible to topple, quote the religious leadership in Iran, and by any short-term military action? And is that a goal, not militarily, is it a goal of the United States to change the regime in Iran?

RICE: The goal of the administration is to have a regime in Iran that is responsive to concerns that we have about Iran's policies, which are about 180 degrees antithetical to our own interests at this point.

That means that the regime would have to deal with its nuclear weapons obligations, deal with the fact that there are Al Qaida leaders who have been there, deal with the fact that they're supporting Hezbollah and terrorism against -- and Palestinian rejectionists against the Middle East peace process. That's what we're seeking.

I do want to say that the Iranian people, who are among some of the most worldly, in a good sense, that we know, do suffer under a regime that has been completely unwilling to deal with their aspirations, and that has an appalling human rights record.

BIDEN: One of the things -- if I can stick on the nuclear side of this equation for a minute -- one of the things that I've found -- I may be mistaken, but I think Senator Hagel may have found when we were -- there were a lot of feelings coming out, we talked to you about it in detail, from the Majlis and members who were viewed as at least modern and not clerical, not necessarily pro-Western -- was I didn't find a lot of distinction between, quote, Iranian democrats, with a small d, and the ayatollahs on the issue of whether Iran, quote, was entitled to be a nuclear power.

The arguments I would get would be -- even from people we would not consider hardliners -- was that, We're in a dangerous neighborhood. We believe Israel has nuclear weapons. Russia has nuclear weapons. Pakistan has nuclear weapons. India has nuclear weapons. Others are seeking nuclear weapons. Why are we not entitled to nuclear weapons? And there's no umbrella or guarantee coming from any nuclear power for us.

So do you think if there was a regime change, that is, assume that the reform movement had been successful, assume that instead of toppling of those elected officials in genuinely held democratic elections, assume instead of them being thrown out, assume that they had prevailed and the religious leadership had been defeated politically in Iran, do you think Iran would forego its nuclear aspirations?

RICE: I really don't want to speculate. I think it's the kind of thing that we don't know.

I do think that we're sending a message, the world is sending a message to Iran that Iran cannot be a legitimate participant in the international system, in international politics, and pursue a nuclear weapon. And I would hope that that would have an effect on whatever regime there is in Iran.

BIDEN: And you did it very successfully, along with our European friends who had initiated it, with regard to Gadhafi.
But as I said earlier, there were significant carrots in the Gadhafi, quote, deal. And I fully supported what you did, and I think it was a great success.

Now, the E.U.-3, the European Community, has approached this in a slightly different way than we have, with a slightly different emphasis.

And I asked you about that in my questions to you, written ahead of time. And you said, In answer to the question about our participation with the E.U.-3, you said, among other things, The United States government is not a part of the E.U.-3's ongoing dialogue with Iran. We believe that additional bilateral and multilateral pressure, including reporting Iran's noncompliance to the U.N. Security Council, will be required to persuade Iran's leadership to end its sensitive nuclear fuel cycle. We will continue to consult with our friends and allies toward that end.

Now, my question is: Why do you think it is not, or is it that we are not welcome, or is it we think it's not profitable to be actually engaged with the E.U.-3 as they proceed now?

Because the likelihood of the U.N. Security Council -- maybe you have more faith in the U.N. Security Council than I do -- but the likelihood of them concluding that Iran is in noncompliance and imposing broad sanctions -- we're already sanctioning the heck out of them -- I wouldn't want to bet my -- I wouldn't want to bet anything on that.
So I'm confused. Why are we not prepared to engage in the process and talk about what carrots we may be willing to offer in return for a cessation of their nuclear program and their missile program? Is there some philosophic reason for that, or is there a practical reason? What's the reason?

RICE: We do have a number of other problems with Iran, not just the nuclear problem. I think that the future of Iranian relations -- U.S.-Iranian relations rests not only on the nuclear issue, but a number of other issues, too: terrorism, our past, their human rights record.

RICE: The way that we've chosen to do this is that the Europeans worked very closely with us. And we're trying to see if, indeed, the process that they're engaged in is going to bear any fruit.

BIDEN: I understand that. And I think you've given me a straightforward answer. And I want to make sure I don't misunderstand you. When I talked to our European friends, who are the three, their foreign ministers and/or their parliamentarians who are engaged in this, they what they say to me is essentially what you just said. I think the Europeans would be willing to cut a deal with the Iranians now, relating to economic help, if there was a verifiable forswearing of production of nuclear weapons and a missile program. But the truth is -- and I'm not being (inaudible) you understand it -- even if they did that, as long as they were continuing to support Hezbollah, as long as they were exporting the destabilization of Israel -- efforts to destabilize Israel -- as long as they were engaged in human rights abuses, then the administration's position would be, even if the Lord almighty came down and said, We guarantee you we can verify this, guarantee we can verify a compliance with no nuclear weapons and no missile technology, we still wouldn't go for that deal, would we?

RICE: Well, I think we would have to say that the relationship with Iran has more components than the nuclear side. But let's see how far the Europeans get and take a look at where we are.

BIDEN: I appreciate that. I would just suggest we have a real relationship with China, and their human rights abuses are terrible. The watch group looking at Russia has now put Russia in the category -- I can't find the exact quote. My staff has it -- of being non-democratic. We continue to have relationships with them. And my worry is -- I'll be very blunt with you, with regard to both Iran and Korea -- is that I'm not sure we're ready to take yes for an answer. I don't know whether they would go forward. But I do believe one thing firmly, that there's no possibility of any fundamental change in the nuclear program in Korea or Iran, absent the United States, actively, deeply engaged in a negotiation. We're the 800-pound gorilla. We're the outfit, they want to know where we are.

BIDEN: And it concerns me that we say the single most dangerous thing -- as my friend from Illinois said, that both candidates agree -- in the world is the spread of nuclear weapons and their access, possible access, by the bad guys, beyond the nation states. And so, we seem to be able to delineate when we deal with Russia. We seem to be able to delineate when we deal with China. I would argue the human rights abuses in China are not fundamentally different than the human rights abuses in Iran. And so, anyway -- and it was -- by the way, I'll end -- Freedom House who has categorizations. I know you guys know this, I couldn't remember the outfit, that now labels Russia as, quote, not free. So anyway, I think, as my grandpop used to say, the horse may not be able to carry the sleigh that you all are insisting on. But, anyway, thank you very much.

. . .

SEN. KERRY: Thank you. Thank you very much, Mr. Chairman. Thank you, Dr. Rice, for your patience and hanging in here.

I've got a few areas of inquiry that I'd like to pursue, if I can. Number one, have you read this article in the New Yorker by Sy Hersch? Are you familiar with it?

MS. RICE: I'm familiar with it, but I've not read it, Senator.

SEN. KERRY: "The Coming Wars." Just to quote from it for a minute, he says -- he talks about the administration conducting secret reconnaissance missions inside Iran at least since last summer. He talks about the administration looking at the region as huge war zone, and next we're going to have the Iranian campaign. This is a quote from the Bush administration former high-level intelligence official, quote: "Next, were going to have the Iranian campaign. We've declared war and the bad guys, wherever they are, are the enemy. This is the last hurrah. We've got four years, and want to come out of this saying we won the war on terrorism."

There's one particular -- I'm not going to ask you to comment on anything classified, but I am going to ask you to comment on this. "A former high-level intelligence official told me, quote, 'They don't want to make any WMD intelligence mistakes as in Iraq. The Republicans can't have two of those. There's no education in the second kick of a mule.' The official added that the government of Pervez Musharraf, the Pakistan president, has won a high price for its cooperation: American assurance that Pakistan will not have to hand over A.Q. Khan, known as the father of Pakistan's nuclear bomb, to the IAEA or to any other international authorities for questioning."

Do you know whether or not that's accurate?

MS. RICE: I will just reiterate what was said about that article by the Defense Department. It is filled with inaccuracies, and it's credibility is sorely lacking.

The --

SEN. KERRY: But on that specific point.

MS. RICE: Let me -- let me just speak to the handling of A.Q. Khan. What we have been concerned about is that we are able to get the information that we need to break up the network. We have not made any deals about what happens with him.

SEN. KERRY: I'm sorry.

MS. RICE: We have not made any deals about what happens with him, but we have been concerned with the Pakistani government to get access to as much information as we possibly can. This is a matter that's being handled by the Pakistanis. It is not our place to talk about what should or should not happen with the IAEA, and we have not.

SEN. KERRY: So what about our own interests and our own efforts with respect to A.Q. Khan?

MS. RICE: Our own interests are being very well served by the fact that A.Q. Khan is now off the market, that we are working with the Pakistanis to get information about what he knows; very well served by cooperation on several -- with several other governments about members of his network. Several of them are in custody, some will be prosecuted. And so our interests are very well being served in this regard.

SEN. KERRY: Are they being served if we don't have direct access to them?

MS. RICE: We believe that we have a working relationship with Pakistan on dealing with the A.Q. Khan matter. At this point, we are getting cooperation from Pakistan on what we need with A.Q. Khan.

SEN. KERRY: But are they being served if we don't have direct access to them?

MS. RICE: They're being served at this point.

SEN. KERRY: Adequately?

MS. RICE: We are getting the information that we need to deal with the A.Q. Khan network.

Senator, I don't know what we will need to ask in the future, but at this point, we have a good working relationship with Pakistan on this matter.

SEN. KERRY: And with respect to Iran, are you also denying or discounting any of the allegations in this article?

MS. RICE: The article has -- it is inaccurate.

SEN. KERRY: With respect to Iran?

MS. RICE: The article is, as Defense said, inaccurate.

SEN. KERRY: With respect to Iran?

MS. RICE: Senator, the article does not represent our policies toward Iran or our expectations of policy toward Iran.
. . .
SEN. KERRY: And how do you distinguish that from Iran, the --

MS. RICE: From Iran?

SEN. KERRY: Yeah. And the possibilities there.

MS. RICE: Well, we -- well, for one thing, I think with Iran we're dealing with a country that is not nearly as isolated as North Korea. The Iranian people are not going to eat bark, as the North Koreans do. And so I think that we have some other instruments of pressure, if we are willing and able to mobilize them on Iran. We're also in a somewhat earlier stage with Iran. And the IAEA I think is starting to try to function there in an effective way. We have some bilateral ways to try and deal with the Iranian nuclear program. I mentioned earlier that the Russians and their requirement with the Iranians that they sign the additional protocol and bring back the spent fuel. We simply have different tools with Iran than we had with North Korea, and different tools with North Korea than we had with Iraq. That's the nature of dealing with these very different regimes.

SEN. KERRY: Do you believe that we would be better advantaged with respect to Iran if we were to be either leading or at least joined into, more directly and openly, with the British, French and Germans in their initiative?

MS. RICE: I think the British, French and Germans know that we are coordinating with them, that we -- we're skeptical that this going to work, but we certainly hope that it's going to work, and we will see how far the Europeans get.

Someone needs to test the Iranian willingness to live up to their international obligations, and that's what the EU is going to be doing.

SEN. KERRY: Why -- why not be part of it?

MS. RICE: I think it's always very important, Senator, that the Iranians know that the United States is not prepared at this point to take away the possibility that the real course ought to be here to declare them in -- not in compliance and take them to the Security Council.

SEN. KERRY: Don't you always have that option anyway? Isn't the option of sanctions and greater action always on the table?

MS. RICE: I think we think the best course right now, Senator, is to let the EU Three see if they can get this agreement. We -- we're skeptical about it. We've --

SEN. KERRY: I mean, is this a "good cop/bad cop" routine, or is it something more thoughtful than that?

MS. RICE: Well, I think it's probably not a good thing for us to be involved in negotiations about which we're skeptical. And let them -- let's let them explore with the Iranians, and we will see what steps are needed by the United States.

SEN. KERRY: Is it possible that your own skepticism breeds a failure?

MS. RICE: I don't think so. I think if the Iranians are going to live up to their international obligations, the EU Three have given them plenty of reason to do it.