SEN. RICHARD G. LUGAR (R-IN): This hearing of the Senate Foreign Relations Committee is called to order. We apologize to the audience and to our first witness this morning for tardiness. The committee has been privileged however to have an intelligence briefing on the subject before us this morning with Ambassador Negroponte, and we are grateful for his availability and that of his staff. And members will be moving from S407 to this room quickly.

But before I commence my opening statement, I recognize the distinguished Ranking Member. I would like to recognize the presence of our very important colleague, Senator Santorum, who has authored legislation in this field, and I would like to ask him to make his presentation at this time because he has other duties and responsibilities in addition to his coming before our committee.

We are privileged to have you, and I would like to recognize you at this time.

 

OPENING STATEMENT OF

SENATOR RICK SANTORUM
A Senator from Pennsylvania

 

SEN. RICK SANTORUM (R-PA): Well, thank you very much, Mr. Chairman. I appreciate your indulgence in allowing me to testify and giving me priority status above the chairman and ranking member in being able to present such testimony. So, thank you, and I appreciate you holding this hearing today.

This is, as you are well aware, one of the most important issues facing this country, and what we do when dealing with the national security problem that Iran is to this country. I don't have to remind you, Mr. Chairman, you are very well aware of Iran's track record since its inception of being a supporter of terror and in fact acting on its own people in a terroristic manner. And it is one of the clear countries in the world that is a state sponsor of terrorists. Iran created Hezbollah, actively supports Hamas, the Palestinian Islamic Jihad and the Popular Front for the Liberation of Palestine and general command,

It's been implicated and in cahoots with al Qaeda in the 1996 attack on the U.S. military personnel at Khobar Towers in Saudi Arabia. Troubling of recent note is Iran's continuing implication in Iraq with some very disturbing news as to their involvement with the Supreme Council for the Islamic Revolution in Iraq and the organization's Badr Brigades, which of course leads us to be concerned about the manipulation of the Iraqi's police force and military forces.

In addition to their actions on the terrorist front, they are no less known for their violations of human rights within their country, the State Department's recent report talking about summary executions, disappearances, extreme vigilantism, widespread use of torture and other degrading treatment. We have had numerous people come and talk to me about the religious persecution that occurs. One thing you can say about Iran, they are indiscriminate in discriminating. They discriminated against Christians, Jews, the Bahai, other Muslim sects. This is a very religiously intolerant regime.

Again another troubling aspect to Iran is their now very evident pursuit of nuclear capability. And this has been well documented and I won't re-document it, Mr. Chairman. I have asked that my full statement be made a part of the record, where I provide all that documentation.

SEN. LUGAR: It will be placed in the record in full.

SEN. SANTORUM: Thank you, Mr. Chairman.

The recent 27 to 3 vote by the IAEA board to report Iran to the U.N. Security Council in my mind creates an opportunity here for the U.N. to look at sanctions as to what they can do to provide some chill to the fervent attempt by Iran to pursue their nuclear weapons capability. Obviously it's not clear whether we can get the support of China and Russia and other members of the Security Council to support sanctions. Nevertheless I think we should be pursuing that within the United Nations. And things such as a travel ban on Iranian leaders, a ban on international flights by Iran Air, a ban on receiving cargo carried by Iranian governmental owned ships, and aggressive action to see if the governmental leaders in Iran responsible for human rights abuses and executions are brought to trial.

I think it's important that we stress with the U.N. that actions need to be taken. I would also suggest that the Congress needs to take action to show support for our president's policies with respect to Iran, but also to show that we are willing to take action at this time, that we're not just calling for the United Nations to do something, but that the Congress itself recognizes the threat that Iran poses to the security of the world, and certainly our own national security, and that we should act in support of trying to constrain Iran's aggression.

I, along with 44 other members of the United States Senate, have authored S. 333, which is the Iran Freedom and Support Act. It calls for vigorous support for peaceful change in Iran. The Iran Freedom and Support Act has been referred to your committee and is under consideration, and I would urge you, Mr. Chairman, to report that legislation to the full Senate. The legislation seeks to make it harder for the government of Iran to have access to foreign investment and revenues to support terrorist activities and to pursue nuclear activities.

The bill also codifies sanctions, controls and regulations currently in place against Iran by executive order but doesn't codify them in law. And the bill declares that it should be the public policy of the United States to support efforts for Iranian self- determination, in other words, free and fair elections.

And finally, the bill authorized $10 million for the assistance for democracy efforts, although it is not my intention to modify that in light of the fact that the State Department had come forward with a supplemental, hopefully inspired by this bill and others in the House, to fund pro-democracy efforts in Iran to the tune of $75 million. So, our intention is to actually up the ante even more to $100 million.

Some have asked whether this funding would make a difference in Iran, and I would say the answer to that is really just to look at the composition and the demographics of Iran. A majority of Iranians were born after the Islamic Revolution in 1979. These young men and women have grown up under brutal oppression and conditions in which they hate. These people are the folks that we must appeal to and try to enjoin in doing something about changing the governmental status within the country of Iran. These are folks who listen to Western media and broadcasts for news and they question the authority, as lots of young people do, and they're looking for greater individual freedoms. They're also technologically savvy, and so there are ways in which to communicate and gather support.

The funds authorized in my bill would go towards supporting these elements within Iran who are dedicated to democratic values and respect for human rights, and particularly the rights of women.

So calling for free and fair elections, providing U.S. assistance, combined with the codification of sanctions means that Iran's shaky economy could be exploited to advance the cause of freedom. Abbas Milani at the Hoover Institute notes that the private sector investments have stopped, private banking is in severe crisis, and the government has been lowering interest rates.

Others note that some other regimes of surprising vulnerabilities. Despite its massive oil reserves, Iran has little capacity to produce gasoline or jet fuel. Two important and refined petroleum products. Iran also lacks the ability to develop and exploit its vast natural gas reserves. The international community needs to leverage these and other weaknesses to dissuade Iran's leaders from pursuing nuclear weapons. Together with smart sanctions such as freezing the assets and confiscating the property of the regime's leaders, and overt policy declaration by the Congress that supports pro-democracy movements in Iran to encourage the forces of change within Iran.

Finally, I just want to emphasize that the Iranian Freedom and Support Act is a non-violent way to effect changes in Iran. You hear lots of talk about the military option being left on the table and we can't take it off the table. I would agree with that, but I think that doesn't mean that we are paralyzed to act, that we need to do some things, and the Congress can act to support the pro-democracy forces within Iran. The administration has recognized that. I hope that Congress would step forward with this authorization and support for the Iranian democracy movement.

And I want to thank you, Mr. Chairman, and the Ranking Member, for the ability to come here and testify before your committee, and certainly urge your support for S. 333. Thank you.

SEN. LUGAR: Well, thank you very much, Senator Santorum, for that testimony, likewise for your leadership, and those other members of the Senate who have been speaking out on this issue.

I think that the general consensus among members of our committee in this hearing is the initiation really of a very important study of one of the most crucial problems of American foreign policy as to weigh carefully the elements of S. 333 and other suggestions member may have, including our administration. And we're attempting diligently to stay on the same wavelength with the administration because these are delicate matters in which we all have informed and sometimes strong opinions. But yours is an important one, and I appreciate your introduction of the bill. It has been referred to our committee and it will be given very thoughtful and careful consideration.

SEN. SANTORUM: Thank you, Mr. Chairman.

 

OPENING STATEMENT OF

SENATOR RICHARD LUGAR
A Senator from Indiana, and
Chairman, Senate Foreign Relations Committee

 

SEN. LUGAR: Thank you for coming.

Let me now commence with my opening statement, and I'll recognize Senator Biden. Would the witnesses like to come to the table at this juncture, because you will be recognized immediately after these statements.

The Committee on Foreign Relations meets today to examine the challenges posed by Iran's campaign to acquire nuclear weapons. After more than two years of negotiations, Iran's recent decisions to limit International Atomic Energy Agency inspections and restart uranium enrichment represent a fundamental challenge to global stability and efforts to prevent nuclear proliferation. If the international community cannot muster the cohesiveness and determination to stop the Iranian nuclear drive, we will have undermined the international non- proliferation regime, risked igniting a regional arms race in the Middle East, and allowed a government with close links to terrorist organizations to acquire nuclear weapons.

Iranian leaders deceived the international community about its nuclear activities for more than 18 years. They have rejected compromises, and threatened to cut off oil and natural gas exports should the international community impose sanctions. According to State Department reports, the Iranian government continues to be one of the primary supporters of terrorism in the world. Iran has provided funding, weapons, and training to Hamas, Palestinian Islamic Jihad, Hezbollah, and other designated foreign terrorist organizations.

Shiite dominated Iran continues to infiltrate and harden divisions among the ethnic and religious groups in Iraq, making the consolidation of a unified Iraqi government more difficult. Iran also supports a Syrian regime that has been implicated by United Nations investigators in the death of former Lebanese Prime Minister Rafik Hariri. Iran's President has explicitly threatened the existence of Israel and has denied the Holocaust, among other inflammatory statements. Earlier this year, Iranian leaders incited Muslims to destroy embassies and consulates in response to cartoons published in the Danish press.

These actions have underscored for the world the risks that would be associated with the Iranian government's acquisition of a nuclear weapons capability. When Senator Coleman, Senator Voinovich, and I visited the United Nations in February, I told the Security Council of the United Nations that if Iran does not comply with United Nations resolutions and arms agreements, the Security Council must apply strict and enforceable sanctions. And I emphasized that decisions delayed over the course of months and years may be as harmful as no decisions at all. As options are considered, however, we must assess the effectiveness of various types of sanctions in achieving our objectives. And we will ask our witnesses today if they can prescribe a set of sanctions that could both receive broad international support, but, more importantly, might alter Tehran's behavior.

I am hopeful that our government is thinking several diplomatic steps beyond immediate preparations for securing a positive vote in the Security Council. I look forward to the insights of our witnesses on other diplomatic steps that the United States and its allies should be undertaking. The world does possess economic and diplomatic leverage on Iran. But exerting that leverage will require sacrifice from individual nations -- particularly those who buy oil and natural gas from Iran. For this reason, United States' diplomacy must reach beyond the European nations that have been the primary negotiators with Iran.

Now, our interest in considering sanctions is not in harming the Iranian people. Sadly, they are victims of a repressive regime that is increasingly corrupt and unresponsive. Iranians do not want their country to be an outcast among the world's nations. They deserve a government that is legitimate and devoted to the people's interest.

There are reformers inside and outside of Iran who want to bring change, but we should be realistic about the possibilities for political transformation or internal regime change. We do not have indications that the un-elected regime faces short-term political competition from a popular movement. Nevertheless, we should seek opportunities to speak directly to the Iranian people and to improve our means of communicating with them. We should understand that having lived through a brutal and devastating war with Iraq in the 1980s, most Iranians fear a return to war. This fear is being exploited by the government in its campaign to justify nuclear weapons and to distract Iranians from the economic hardships that they have faced for decades.

Although Iranians are patriotic and proud of their identity, few have invested their loyalties in the un-elected clerics who control power. Our message to the Iranian people, many of whom have a positive view of the United States and the West, should be that we do not want war; rather, we want to see an economically reinvigorated Iran based on increased personal freedoms and interaction with the outside world.

Pursuit of nuclear weapons by the Iranian regime is distancing the Iranian people from this goal.

We are pleased to welcome this morning an outstanding panel with deep experience on Iranian issues. Dr. Ronald Lehman is Director of the Center for Global Security Research at the Lawrence Livermore National Laboratory; Dr. Patrick Claswon is the deputy director for research at the Washington Institute for near East Policy; and Dr. Ray Takeyh is a Senior Fellow for Middle Eastern Studies at the Council on Foreign Relations.

We look forward to the analysis and their recommendations.

Before we proceed, however, I would like to recognize the distinguished Ranking Member of the committee, Senator Biden, for his opening statement; and then I will recognize the witnesses in the order that I have mentioned you. And I will mention at the outset that your full statements will be made a part of the record. You need not ask permission that that be the case. It will be the case. And we will ask you to proceed in any way you can to bring enlightenment to us.

Senator Biden.

 

OPENING STATEMENT OF

JOE BIDEN
A Senator from Delaware, and
Ranking Member, Senate Foreign Relations Committee

 

SEN. JOSEPH R. BIDEN JR. (D-DE): Thank you very much, Mr. Chairman. I will ask unanimous consent that my entire statement be placed in the record because it mirrors -- there's not a single thing you said I disagree with, and I would be somewhat repetitious.

SEN. LUGAR: It will be placed in the record in full.

SEN. BIDEN: And add one point. Gentlemen, thank you so much for being here. We are anxious to hear what you have to say. There is an old expression -- big nations can't bluff. And I am not worried, but I am concerned that as we deal with what is obviously a serious security problem, that we have a realistic assessment as best we can of what the consequences of certain actions or inactions will be.

And I am looking forward to you letting us -- giving us some insight as to not only what options may be available with the prospects of keeping the international community together in this, but what the reaction if you have a sense among the Iraqi people -- the Iranian people will be to certain of the things we may initiate as a nation.

My instinct tells me that we underestimate the support for a nuclear Iran among Iranians of all stripes. They live in a pretty tough neighborhood I suspect. Even the democrats, with a small d, are not necessarily pro-Western. I'd like your assessment as we go along as to what you think beyond the frustration with the clerical domination of all the levers of security power. How do they feel, the Iranians, even those who strongly oppose the present administration and the present government there, about the acquisition of nuclear weapons capability? What do you think the reaction would be if -- to either sanctions that were consequential if we could reach that conclusion internationally, and/or military action of any kind, from air strikes to physically embargoing their export of oil.

So, I hope you will talk about some of those things with us today and I look forward to your testimony.

SEN. LUGAR: Thank you very much, Senator Biden.

The chair now calls upon the Honorable Ronald Lehman for his testimony. We're pleased as always to have you before the committee.

 

STATEMENT OF

RONALD F. LEHMAN
Director, Center for Global Security
Lawrence Livermore National Laboratory

 

MR. RONALD F. LEHMAN: Chairman Lugar, Senator Biden, I'm honored that you have asked me to join you again today.

You have my written statement, and if I build upon what you've said and what Senator Santorum has said, I think I can be relatively brief and leave more time for discussion.

You've asked me to address several issues with respect to an international response to the ongoing Iranian nuclear weapons program. My basic message is, time is running out, but we have to manage the time that's available, and that will require that we keep our focus. More specifically, in the last month the board of governors of the IAEA has voted nearly unanimously to refer the Iranian non-compliance matters to the U.N. Security Council. This is a very important development.

As you know, the Security Council has not yet acted on the issue of North Korean non-compliance. There are however a number of parallel diplomatic efforts underway. The European three -- the U.K., Germany and France -- have been trying to engage with Iran. They reached an impasse, but my understanding is that after Iran was unable to agree to the Russian proposal that was being discussed this week, the E.U. three will meet with Iran tomorrow, and as you know, the next Board of Governors meeting will be on Monday, March 6 -- begin on Monday, March 6, and that additional information will be then forwarded to the Security Council for action.

The United States has been supportive of these actions, but I think your question is, what do we really need to get done. And there I think there's three general points I would make. One is to emphasize what is really at stake, that this is in fact a serious matter. The second is to make clear what does need to be accomplished. And third is to provide viable options that can actually lead to practical solutions.

Iran is not the only challenge to the non-proliferation treaty. And Iran's nuclear weapons program creates dangers to more than the treaty. Still, the issue of NPT compliance is critical. If the international community fails to act now, much more than the NPT could begin to unravel.

Senator Santorum has mentioned some of the problems in dealing with Iran, and the other witnesses are going to discuss some of these issues. So let me simply say that we need to stress to the international community both the importance of the nuclear issue, but also how it fits in with these broader considerations, both political and economic.

The goal must be for Iran to give up its nuclear weapons program, and to do so in a way that gives the international community real confidence that that has been done. Iran has had underway a covert and illegal activity, much of which it has not acknowledge, except under pressure from the IAEA and others. And the IAEA continues to express concern over the lack of Iranian cooperation in resolving these matters.

Now, Iran in particular seeks to develop the ability to produce fissile material that could be used for nuclear weapons. Many people think that the issue is one of quantity -- how much can they produce. But the problem is, if they are permitted to do the research and development on enrichment, it will not only give them the capacity to then quickly move towards industrial production for weapons, but it also will mask activities that could be underway that are covert.

So, the international community -- if I were going to say, what is the most positive technically related thing that has happened in recent months, it's been the almost uniform agreement among the international community that research and development must not be permitted if we are going to put an end to the risks that are associated with the program.

You've me to comment a bit on what could the Security Council do. And I'm going to give you some specifics. I don't want to micro- manage negotiations. This is a complex, dynamic process. But I want to give you some things that I think could be done that would be of some value. One is that I think the Security Council needs to reaffirm its view, expressed at the head of state level by the Security Council in January of '92, that further proliferation is a threat to international security. The Security Council has been silent on this matter for too long.

The second is, I think the Security Council should make clear the existing and essential principal of international law, that a state, in violation of its obligations, cannot escape the consequences of its violation simply through withdrawal. International law cannot survive if withdrawal becomes the get-out-of-jail-free card for violations. This is something that I think that the Security Council needs to make clear. In the case of North Korea and again in the case of Iran, the threat of withdrawal is used to intimidate. We should not be intimidated by it. We should understand that we don't care if they withdraw, they've got to live up to their obligations. And that's an issue.

I think the Security Council should make it clear that if a party withdraws from the NPT, recognizing that sovereign states have a right to withdraw from treaties, that nevertheless, withdrawal from the NPT is a matter of concern for the Security Council and ought to be considered immediately.

And I think the Security Council could make clear that these principles apply, not only to the future, but to the existing cases that we're dealing with.

And I think that it would be in my view inappropriate not to name Iran specifically. And in fact I think they should strongly endorse, at a minimum, the measures that the IAEA board of governors have already called upon Iran to implement. In this case we're talking about a suspension of all enrichment-related activity, including research and development. They need to deal with the fact that they have a research reactor that's moderated by heavy water that could be used for a plutonium approach to weapons. And they need to implement the additional protocol.

And the IAEA has called for additional transparency measures that go beyond the norm. And I'll come back to this question. But I think these are things that the Security Council could and should endorse, to make clear that the Security Council cares and had authority to act in this area. I think that, you know, Iran, in my view, is in violation of its central obligations. I think the Security Council needs to step up to that. I think the Security Council should call upon the members of the U.N. to be supportive of the IAEA and the Security Council conclusions on Iran.

There are a number of points that I just want to make briefly. First, I want to commend the committee for bringing regional specialists here. As you know, one of my particular concerns is that in the post-Cold War era, we have an even greater divide between the so-called functional experts, people who do non-proliferation, as I do, and the regionalists. Everybody was something of a Sovietologist in the Cold War, but now we're dealing with many more different cultures, and I think the questions that Senator Biden raised at the beginning are very much at the heart of how do we understand these cultures so that we can deal with them more effectively?

I want to emphasize again that we can talk at length about all the technical aspects of discrepancies and non-disclosures and things, but I think the important point to remember is that we shouldn't be blinded by the fact that Iran has underway a nuclear weapons program, and we need to look at it from all of its perspectives.

The second thing is that you may remember that when we were working on the North Korean problem, we actually had an agreement that most people have forgotten -- the North-South Denuclearization Agreement. And we were actually rather proud of achieving that. But, as you may remember, one of its provisions went well beyond the NPT. It calls for no re-processing and no enrichment on the Korean Peninsula.

Now, at the time I referred to that as a NPT-plus regime. And the point I tried to make was that Korea is a particularly dangerous place, and business-as-usual in Korea is not adequate, and therefore I thought the North-South Denuclearization Agreement was a very important achievement. Now, interestingly enough, because we caught the North Koreans reprocessing, there was a preoccupation with reprocessing and for a while people forgot that enrichment was also a concern. And then later, as we know, there was concern about enrichment.

Well, in Iran we have the opposite. People are now focusing very, very much on the enrichment issue. And all I would like to say is, don't forget reprocessing. The Iranians are putting a lot of effort into this, and they're pursuing a number of different paths.

Senator Santorum and Senator Biden have mentioned some of the issues, and you have mentioned, Mr. Chairman, some of the issues related to stronger measures, such as sanctions. I've got some of that in my written remarks. I think I agree, we all want smart sanctions. We've got to figure out what smart sanctions are. In the end I think we do have to recognize that there is a chance we will fail. If we do fail, we do have to consider how we strengthen our defenses and how we shape and tailor deterrents to deal with this situation.

My bottom line is this: I think people have not yet internalized how serious it will be if you have a nuclear armed Iran. A whole series of paths will start to be pursued by a wide range of people. Now, some of that will be in the area of proliferation, but I think there will be political consequences, consequences for the international security architecture, how nations relate to each other, and there will be economic consequences. And I would not be at all surprised to see these feed on each other, and the result could be very serious economic downturns, recession, perhaps depression in some parts of the world or on a global basis, increased war and violence in these troubled regions.

So, again, Ben Franklin talked about the horseshoe nail. The IAEA finding may seem like a horseshoe nail, but there is a real war out there and I think we need to recognize this as very serious.

Thank you, Mr. Chairman and members of the committee.

SEN. LUGAR: Thank you, Mr. Lehman, for your testimony.

And I'd like now to call upon Dr. Patrick Claswon, the deputy director for research at the Washington Institute for Near East Policy. Dr. Claswon.

 

STATEMENT OF

PATRICK CLAWSON
Deputy Director,
Washington Institute for Near East Policy

 

MR. PATRICK CLASWON: Thank you very much for letting me appear today and for letting me put my statements into the record.

Given the fiasco about Iraq's weapons of mass destruction, we face an uphill battle in persuading people that threat from Iran is real. And in waging that battle, we would be well advised to under- state our case and not to rely upon what our intelligence agencies tell us is almost certainly happening, but to the maximum extent that we can, to emphasize what it is that Iran itself acknowledges that it's doing.

And here the new president of Iran, President Mahmud Ahmadi- Nejad, helps us a lot by his big mouth. His famous comment about Israel must be wiped off the face of the earth -- or wiped off the map -- excuse me -- was made at an October conference, the title of which is often mis-reported. The actual title was, "The World Without Zionism and America." And those last two words are not idle phrases for President Ahmadi-Nejad, because he really sincerely believes that his co-thinkers were able to bring down one superpower, namely the USSR, and that they will be able to do that again to America. This is a man who regularly says that Islam is not limited to a city or country; if we intend to run the world, we should pave the way for it. He means that.

But there are also a lot of Iranian actions that we can point to. Let me just cite two areas, namely, terrorism and their nuclear program. On terrorism there are many things they do, whether it's in Iran or with al Qaeda, that our intelligence community tells us are reasons for great concern. But I would urge us to concentrate on that which the Iranian leaders themselves openly acknowledge that they're doing, so that we don't have to deal with complaints about, well - or suspicions about how good is your intelligence.

And in particular, Iran openly acknowledges that it provides hundreds of millions of dollars in support for Hezbollah in Lebanon. Now, for a long time Hezbollah enjoyed a lot of good press, but as Lebanon has moved towards democracy and as Hezbollah has blocked those moves and has worked more openly with Syria to prevent Lebanon from achieving its full sovereignty, Hezbollah is finding itself in a more isolated position and therefore more vulnerable to pressure.

I was stuck by the fact that recently the United Nations complained about arms smuggling to Hezbollah, and it's something that the U.S. government for many years has complained about. But to find the U.N. complaining about it, that's a step forward. And similarly, Iran has for a long time openly acknowledged that it is the principle supporter of Palestinian Islamic Jihad. And Palestinian Islamic Jihad is a group that really doesn't have a whole lot of support inside the West Bank and Gaza Strip, and relies upon the Iranians. So, we can say that its terrorist activities are very much the Iranian responsibility. And that's a different situation than with Hamas, which Iran would dearly like to work with more closely, but it has always maintained a certain independence from Iran.

This same approach that I'm suggesting about the terrorism issue, I would also carry over towards the nuclear issue. As Mr. Lehman was explaining, there is excellent reason to think that Iran has a nuclear weapons program. But we don't need to get into that. We can just take Iran's statements at face value, that all it's doing is building a full nuclear fuel cycle. And there's no question about that. I mean, Iran shows to reporters what it's doing. Iran openly acknowledges this. This is openly known.

And then we can point out that people like the Nobel Peace Prize winning director of the International Atomic Energy Agency, Mohamed al-Baradei, says that there should be a global moratorium on these enrichment facilities because they are so dangerous that if they are completed, they would put a country -- quote "a few months away" unquote -- from having a nuclear weapon.

So we can simply say that, look, Iran, even if we will accept all your arguments that all you're doing is building a nuclear enrichment program, that's too dangerous. And in particular, given your track record of lying to the IAEA for 18 years, we cannot accept that you've lived up to your half of the NPT bargain, that bargain being that states are allowed to have dangerous technologies in return for living up to their safeguards agreements and being open and honest about what they're doing. And since you haven't been open and honest, Iran, well, sorry, but you can't have this dangerous technology.

This approach, rather than emphasizing the intelligence information which suggests that Iran actually has a nuclear weapons program, would, I would suggest, be more convincing to people in the region, people in Iran and people around the world.

Similarly, when it comes to the question of a threat that Iran's nuclear program represents, as Senator Biden said, Iran obviously lives in a dangerous neighborhood, and everyone knows that, but we would do well to acknowledge that while at the same time pointing out that in fact nuclear weapons have generally been a doomsday weapon, to be used in an ultimate scenario of great catastrophe.

And it's very hard to see how Iran faces that kind of a security problem. Iran's security problems are failed states around it. And rampant drug smuggling that comes in from Afghanistan, the spillover of terrorism that they're suffering from Iraq, these are Iran's problems. And nuclear weapons are not useful for dealing with Iran's security problems, whereas, no matter what Iran's intentions are, if it acquires a nuclear capability, it will inevitably be a greater player in Middle Eastern politics in a way that would upset many of its neighbors, and therefore could well spark an arms race that would destabilize the entire region.

It is disturbing to me that I have had Pakistani generals describe in considerable detail and accuracy the arrangements that Germany and the United States had during the Cold War about the stationing on German soil of American nuclear warheads that were on top of missiles controlled by the Germans. We took the attitude that that was consistent with Germany's NPT obligations because we continued to control the warheads.

If Pakistan were to store its warheads on Saudi soil on top of the Saudi long-range missiles under a similar arrangement that the United States and Germany had, I certainly wouldn't feel more comfortable, and I suspect that our Israeli friends would feel even less comfortable. So, there are many ways in which we can describe the Iranian threat that under-state the case and I think would be more convincing as a result.

When it comes to American responses -- excuse me -- the international community's responses to what to do about Iran's programs, there as well I think it would be useful for us to under- state the case. So, I would put on the table some instruments of persuasion and not just instruments of dissuasion, some incentives. In particular, during the Cold War we found that confidence and stability building measures were useful for both sides. And there are some confidence and stability building measures which would be in the interests of the United States, and I think we could say to a candid world that these are also in Iran's interests. We might not persuade the Iranians to accept such things as an incidents at sea agreement to prevent episodes in the Persian Gulf or an exchange of military observers, but I do think this would help in the battle for hearts and minds if we at least made an offer of instruments of persuasion as well as dissuasion.

When it comes to the instruments of dissuasion, there has been much talk about the Security Council process, and that is very important. But there are things that we can do parallel to the Security Council process that don't depend upon our waiting for the Security Council to act. And those would be wise measures for us to initiate now. So, for instance, there are a number of deterrence and containment steps that we could take that could help reassure neighboring countries and also affect Iran's calculus.

For instance, if we were to announce that we are prepared to sell to the Arab states in the Persian Gulf more advanced anti-missile systems and air defense systems, that could raise doubts in the minds of the Iranian decision-makers about their country's ability to reliably deliver its nuclear weapons, and that could affect their calculations. It could also affect the calculations of regional states about whether or not they need to proliferate on their own.

Furthermore, Iranian hotheads regularly threaten to close the Strait of Hormuz if the West escalates pressure on Iran on the nuclear question. And I would just remind you that our defense intelligence agents regularly informs Congress that Iran has the capability to temporarily close the Strait of Hormuz. Well, that would suggest to me that we would do well to exercise how would we protect that vital strait, and to move additional assets into the region to protect the strait, and indeed ask some of our NATO partners to also help in that task. A multilateral exercise, showing that the outside world is prepared to deter Iranian escalation of a crisis would again be useful in showing the international resolve about these matters. But all these measures to press Iran and to deter it are stalling tactics because so long as Iran has an Islamic republic, it's going to pursue a nuclear weapons program.

I happen to think that if Iranian reformers come to power, they too would want nuclear weapons, but they would want good relations with the outside world even more. And so I'm confident that the Iranian reformers, if they came to power, would say, well, if freezing the nuclear program is the price we have to pay for better relations with the outside world, then that's something we're prepared to do. So, it's in our interest to promote that kind of reform movement inside Iran. There's not much we can do. There are modest steps we can take. And we have absolutely no idea how successful that's going to be, or on what time scale.

Analysts have not accurately predicted any revolution anywhere in the world in the last 200 years. I do not think that they're going to be successful this time either. When President Regan visited Berlin and said, Mr. Gorbachev, tear down this wall, very few people thought that that wall would be gone within a few years.

We have absolutely no idea about what time scale that change will come to Iran, and it would be unwise for us to assume that change will be successful, but it would also be both the morally right thing and the politically prudent thing for us to do to take the modest steps that we can to encourage that change.

Thank you, Mr. Chairman.

SEN. LUGAR: Thank you very much, Mr. Claswon.

We would like to hear now from Dr. Ray Takeyh.

 

STATEMENT OF

DR. RAY TAKEYH
Senior Fellow for Middle Eastern Studies,
Council on Foreign Relations

 

MR. RAY TAKEYH: Thank you, Mr. Chairman, for inviting me.

I'll confine my comments to the domestic political debates that surround Iran's nuclear issue as I understand them. I would actually suggest that really more than any other issue in the recent years, the nuclear question has exposed the divisions within the Islamic Republic on the nature of this international orientation. I think, as some of the other guests said here today, I think all factions are united on Iran having a robust nuclear program which in due course will give it the option to assemble the bomb. However, the decision to actually cross the threshold and assemble a weapon in defiance of the international community and in violation of Iran's own treaty obligations has generated a subtle yet in my view a robust debate.

I would suggest that the primary supporters of a sort of a nuclear break-out option would be hard-line elements associated with the supreme leader's office, Ali Khamenei, a name which has not been mentioned yet today, curiously enough, through command of key institutions such as the revolutionary guards and the council of guardians. They have inordinate impact on Iran's security issues and security planning.

A very basic aspect of hard-liners' ideology is that Iran is in constant danger from a wide variety of predatory external forces and therefore requires military self-reliance. This is the perception that we molded by a revolution that sought to re-fashion the regional norms. That mission has failed, but the perception nevertheless remains.

Obviously, as has been mentioned, Iran's nuclear calculations have been hardened by the rise of a new president, Mr. Ahmadi-Nejad, and many other Iran-Iraq War veterans who are beginning to assume positions of power. Although Iran-Iraq War ended some almost 20 years ago, I guess, for many within this generation it was the defining experience that condition their strategic assumptions.

Even a cursory examination of Ahmadi-Nejad's speeches reveals that for him the war is far from a faded memory; it's a real historical enterprise. And this had led many, including the president, to perceive that given the West's insensitivity to Saddam's war crime and his use of chemical weapons against Iran, and its combatants and civilians alike, Iran's security, cannot rest on disarmament treaties or global opinion. Given their paranoia and suspicions, the hard-liners insist that America doesn't necessarily object to Iran's proliferation, but it objects to the character of the regime. And the proliferation is the latest issue that the Americans are using to coerce and pressure Iran.

And this argument has some degree of validity at the time when the president is in India blessing its nuclear weapons program, irrespective of its compliance with the NPT. So, that plays in to that particular rhetoric, that particular perception.

Moreover, they suggest even if you give in on the nuclear issue, the Americans would then find another issue to coerce us with, therefore why bother making any concessions at all on what is after all a critical national program.

Beyond such demands, the international community's demands that Iran permanently and irrevocably relinquish what it perceives to be its rights under article 4 of the NPT, namely, to have some sort of enrichment capability, has led the leadership to be nationalistically aroused. A country that has been historically subject to foreign intervention and capitulation treaties is inordinately sensitive to its national prerogatives and sovereign rights. For Iran's new rules, they're not being challenged because of their provocations under treaty violations because of superpower bullying and hypocrisy.

In a peculiar matter I think you begin to see the nuclear program and Iran's nationalism being fused in their imagination, therefore the notion of compromise and acquiescence has a limiting utility to Iran's aggrieved hard-line nationalists.

In the Islamic republic it is nothing if not factionalized, and there are other factions that play into nuclear issues. The Western perception that somehow the nuclear issue is determined by a narrow band of conservatives is in my view flawed. Supreme leader Khamenei has broadened the parameters of the debate and included elites from all the relevant political constituencies. The reformers are out of power, there are pragmatic conservatives struggling against the reactionary brethren. Professionals from the national security establishment are all allowed to have a seat at the table and voice their views.

Given the provocative nature of the nuclear program, Khamenei seems to be hoping that the burden of any ensuing international confrontations would be shared by all political factions alike, as opposed to being the sole responsibility of the conservatives only. Therefore, even a systematic consolidation of power by the conservatives since the February 2004 parliamentary election has not silenced the voices calling for restraint within the decision-making process. Who are they? I think Patrick alluded to some of them.

But in contrast to hardliners, the pragmatic elements within the Islamic republic suggest that Iran's ongoing integration in the international community and the global economy mandates certain restrictions on its nuclear ambitions. It's tempting to see this issue as it divides between the reformers and the conservatives, but it enjoys support from such conservatives as Hashemi-Rafsanjani, the had of the Expediency Council, and many other reformers who are very critical of the conservatives and are associated mainly with the Islamic Participation Fund and other such reformist organizations and parties.

Again this particular faction doesn't call for dismantling of the nuclear edifice and the nuclear apparatus, but it merely calls for development of Iran's nuclear program within the confines of the NPT, which are rather broad.

Given Iran's long-term commitment to NPT, the prevailing international scrutiny, a provocative policy could invite multilateral sanctions and lead Iran's commercial partners, the Europeans, the Japanese and others, to embrace United States' policy of pressing and isolating Iran. Therefore the nuclear issue has to be considered in the wider context of Iran's international relations.

In recent months, as Iran's remarkably reckless diplomacy has led to a series of IAEA resolutions criticizing it and referring it to the Security Council, the members of this group have called for restraint, even suspension of various Iran's nuclear activities. Rafsanjani has taken the lead in admonishing the new president to be cautious, and many of the reformers have already come out and called for actual suspension of the programmed resumption of dialogue with the Europeans as a confidence building measure.

Hovering over this debate, as hovering over all debates in Iran, stands the supreme leader Ali Khamenei. As mentioned, I think his instincts is to support the reactionary elements within the state in their call for defiance and pursuit of the nuclear option. However, in his role as the guardian of the state, he must consider the nuclear program in the context of Iran's commercial and international relations.

Thus far, despite his ideological compunction, he has somewhat pressed the state towards restraint. The fact that Iran continues to negotiate with Russians and others is open to negotiations, and has not resumed full-scale activities despite the capability of doing so, reflects his willingness at this time to suborn ideology to pragmatism. That may change through internal pressures pressing the leadership towards further defiance.

The question then becomes, what is to be done? I proposed this idea in a number of forums and it has a poor reception in almost every one, so I'll try it one more time, with the same degree of confidence, that will be unacceptable here. Today we are where we are. Iran's portfolio is at the Security Council. That's not reversible. But when the portfolio went to the Security Council in February, the administration suggested that we have a one month pause before the Security Council begins those deliberations, which will be some time I suppose in the middle of March.

I would actually extend that pause for another six months, all the way to September. And in the meantime I would establish a contact group to essentially address Iran in the same manner that the six- party talks are beginning to negotiate with the North Koreans. In the end there is no Russian solution, there is no European solution to Iran's nuclear program. Despite our reservations and prohibitions, the United States has to be involved in these negotiations for the proliferation problem to be resolved conclusively.

And therefore this particular seven-party format, which would involve the United States, E.U. three -- Russia, China and Iran -- that makes seven, would approach Iran with its own negotiating template, namely, in exchange for various security dialogues and even commercial and economic relationships, Iran would have to conclusively and irrevocably relinquish its enrichment rights because I think, as other guests have said to you today, an enrichment capability means essentially accelerated weapons capability should a state desire it.

If Iran rejects this concerted last diplomatic effort, then the United States can return after a six-month period to the Security Council with a greater consensus and greater assurances that the United Nations would impose tough multilateral sanctions against Iran.

Examining the past history of countries that have renounced nuclear weapons or a nuclear weapons program, as this one is, the predominant theme is that these renunciations took place only after these countries experienced a substantial lessening of their external security environment and were greater partners in the global economy. And I'll stop there. Thank you.

SEN. LUGAR: Well, thank you very much, Dr. Takeyh.

We'll have a round of questioning now by members of the committee, with a 10-minute, and a second round, if that is required. And I will commence the questioning. Just by following through on your proposal, Dr. Takeyh, that we have a six-month hiatus and talks which now incorporate, in your formula, Iran and China and Russia, and perhaps that's the right size of the group. I suppose you could explore whether there are other parties, but the Europeans certainly represent maybe not only themselves, but others who might be affected by economic relations with Iran. Certainly China and Russia are involved, conceivably India might be a party, if one were sort of brainstorming, largely because of the potential for a multi-billion- dollar and multi-year deal that they have been fashioning with Iran.

But the purpose of my exploring this with you is, as I say, I'm wondering whether your group or committee, anyone represented at the table or elsewhere, has done any systematic research on the economic effects of an attempt to have a total embargo on Iran of its exports. Now, granted there might be questions about the enforceability of that, who really stops all the flow here, there and on, and I grant that. But, nevertheless, let us say hypothetically that the nuclear situation was serious enough that the world said after whatever stage, three months, six months, a year, a year-and-a-half, that we have to do something that is meaningful but at the same time each of the countries, each of the parties involved that you've discussed around the table, will be making a calculation of what the effect might be upon their economies, as well as others who are customers or partners of their situations in trade.

We would certainly be making such calculations, or at least the futures markets on oil and natural gas would be making calculations, as they do whenever rumors begin to flow. And I make this point because it appears to me that each of the countries involved and their publics need to have a certain amount of discussion maybe during this period of time as to the consequences of their economies and everybody else in the world. But in addition, we need to have a more careful analysis of the economy of Iran. That may be harder to come by, but at the same time there's surely people who have thought about those issues and have at least plus or minus assumptions.

And I mention all this because my fear is that, not that people are being glib about sanctions, but at the same time people also may be glib about the fact that this is just not going to happen, that as a matter of fact you go to the Security Council and nations begin to take a look at the deals they've already made or the potential for energy security or lack of it, and so it becomes convenient ultimately to say that this is a bridge too far.

And so if we're going to have the six-month pause that you suggested, that may be a good idea. I would like for this not only to be maybe a parallel to the six-party talks in North Korea which go on and off, at the moment off, we don't know when they'll come on again, but some concerted study and debate in this country as there surely would be. Let us say one estimate would be that the price of oil would go to $150 a barrel, at least temporarily, given disruptions and the close call now of how much reserve there is in the world. And we begin to calculate that, as itinerant politicians going back and forth to our states and visiting with people, and they see gasoline at the tank for $5 a gallon, or whatever it might be at that point, and say, why don't you do something about this? Why are you sitting there?

And they -- well, we are doing something. We're discussing, as a matter of fact, or maybe we've already enacted sanctions against Iran and the oil is not there any more, and as a result these are the consequences.

Now, it may be, as the American people understand the dilemma, that nuclear weapons in the hands of Iran mean to us, whether it be our troops in Iraq, any prospects we ever have in the Middle East helping anybody for that matter, whether we even have a presence in the Middle East after all of that. You know, these are issues that surround this that I don't think are getting much of an airing. And that's one reason for having this hearing, and we'll have some more, to begin to discuss what we are really talking about, what are the consequences to us and others, quite apart from the Iranians.

My question to you first of all is, we're of this committee are interested in having this kind of discussion just among those of us around this table, would we find data, information, estimates, that could lead to an informed debate, as opposed to exaggerations, scaremongering, all the rest of it. Do you have any suggestions where we look?

MR. TAKEYH: Yes. I mean, a lot of this stuff -- actually Iran's budget and so on -- is actually printed and on the various web sites. It's an opaque society but there is some degree of transparency. Iran's economy is vulnerable to rigorous multilateral sanctions, particularly involving its petroleum gas sector, not just in terms of other countries not purchasing Iranian oil, but also in terms of investment in Iran's dilapidated oil industry. I think Iranians estimate they require about $70 billion investment in their oil and gas industry over the next 10 years in order for them to continue to --

SEN. LUGAR: The withholding of that is significant all by itself.

MR. TAKEYH: Yes. In order to continue their level of production and perhaps even increase it. In terms of actually sanctions working on issues other than oil and gas, which I think will be very difficult sanctions for the international community to accept because of the dramatic impact on the global economy. The people -- it's important to recognize that a lot of foreign investors stopped actually going into Iran in June 2005 when President Ahmadi-Nejad was elected. Once he was elected, if you're a German pharmaceutical company or a Chinese company, you're not looking at a president who's disdainful and suspicious of foreign investment and says he doesn't want it, as necessarily a hospitable place to do business.

If you're an oil company, you have to deal with the situation because Iran is an important producer of and has a very rich repository. But much of the foreign investment has already shrank. And a lot of the internal investment is already leaving the country.

Now, Iran is actually, I would say in the long term is in economically bad shape, in the short term is economically good shape. That's the paradox of it. It has a substantial oil stabilization fund which the president of the country is trying to rape and it's being resisted by the parliament. And it has actually -- its projected economic growth for next year I think they figure it will be 7 percent.

But long term of course Iran has demographic problems, it has problems with its oil industry, it has problems managing its situation. So, in the immediate level I don't think Iran is increasingly vulnerable.

The second and the last thing I would say is, I don't actually believe that the international community would accept an oil embargo on Iran. And when administration officials sit in places like this and you ask them what sort of sanctions are you contemplating, they say, oh, we have a menu of options. And so far the United States has been able to get Iran's portfolio transferred from one international organization to another is because we haven't asked the international community -- the Japanese, the French, the Germans and the Indians -- to actually put their economic commercial interests at stake.

We have asked them for procedural acquiescence -- could you vote for us on this issue on the assurance that we're not going to ask for a whole lot.

Now we're getting into a crossroads. Now we're going to the Security Council and we're eventually going to ask our partners, the coalition, that they will have to accept our sanction policy and put their commercial contract and treaty at stake. And it's entirely possible that international unity may evaporate at that stage. I'm not certain, but I wouldn't bet on it.

Now, Patrick is an economist and he's dying to answer this question. Years of training -- (off mike.)

SEN. LUGAR: Well, let me just, before he does, just say that I think you're on track. We are now at a point, we're going to the Security Council on March 6. Now, you're suggesting a bit of a time- out period, a larger negotiation, because when we press the Chinese or the Russians or anybody else, that they might say, with regard to their economic situation, no, this is a bridge too far. Procedure is one thing; actual economic pain is another.

But this is why I want to try to quantify what are the actualities for this kind of thing. What kind of situation do we have in the world if we were to do this, because you're quite correct -- our administration, and everybody else's administration I suppose -- Germany or Britain -- would say all options are on the table, and that includes all kinds of sanctions and military activity and what have you. But as a matter of fact, what are the consequences of any of these things? The long and the short of military activity just often mentions embargos and sanctions. And I think we want to get some facts out here so that we are not glib in talking about options on the table, off the table. Your point is that thus far we've got some procedural acquiescence. But maybe --

MR. TAKEYH: Well, it's not inconsiderable.

SEN. LUGAR: Yes. And maybe that was helpful.

Patrick would you come in at this point?

MR. CLASWON: All right, Mr. Chairman.

The last time that the Iranians thought that the world was acting to stop their flow of oil was back during the Iran-Iraq War in 1988. And the Iranian response was to sprinkle mines throughout the Straits of Hormuz and to threaten shipping. And they have regularly practiced capability to do that again, and their hotheads regularly announce that if we were to impose an embargo, that that's what we should anticipate happening.

If Iran were in fact to try to impede shipping to the Strait of Hormuz, as I mentioned, the DIA director says that they could do it for a period of time, that would have a very considerable impact on world oil markets, even though the director of the International Energy Agency, Claude Mandil, says that our world strategic stockpiles are good enough that we could go through a period like that and be able to stabilize markets. I think he's being very optimistic.

So, the key question is whether or not Iran would take aggressive actions against shipping of other countries in the event of such an embargo.

SEN. LUGAR: Well beyond its own predicament.

MR. CLASWON: Exactly. And that is where the question of whether or not we have in place assets that can protect the straits, not just whether we can move them there in the next couple of months, but are they there already, will become a crucial question.

And the answer, frankly, is that there are not the assets in place to get the Strait of Hormuz open and protect shipping. Yes, we could move those assets there. But, boy, during the couple of months that that would take would be a very interesting time to be in the oil trading business.

SEN. LUGAR: Yes, it would. The reason I ask these questions is not to be provocative but we're coming up to some very difficult decisions, and the American public needs to sort of understand the consequences of all of this. We need to understand that if we have to make choices and votes. And that information you've given is very important about the Straits of Hormuz. It's not just a circling Iran movement perhaps, but Iran has the possibilities to disrupt other trade. And we'll leave it to everybody's judgment as to what kind of surplus oil there is in the world. But every briefing we've had is -- zero, we're right up against it.

This is the reason that even an attack on the Saudis last week sent a spike for a day or two with regard to oil futures markets, just the supposition that such a thing could happen at one very large refinery in Saudi Arabia.

Senator Biden.

SEN. BIDEN: I wish you'd keep going, Mr. Chairman, because, look, this is -- one of the frustrating things about this debate is -- discussion, not debate -- is that we have an awful lot of very bright people with very few answers to anything, not just you at the table, I mean, across the board. Everybody starts off with the proposition that we cannot tolerate a nuclear Iran. Wonderful. That's a great proposition. I agree with that, we can't tolerate it.

And everybody says, okay, well, what are we going to do about it?

And it ranges from -- well, we're going to do what I think the administration is correctly doing, we're going to make sure, at a minimum, we're not the bad guy if anything has to happen, because we've cooperated fully with the Europeans, with the Russians, with the Chinese, with the United Nations, with every agency available, to demonstrate that we're not a bunch of cowboys out there just as gunslingers. And I think that's important, it's not an unimportant thing.

And then say, okay, but, you know, this administration that exists in Iran today, I don't think a single one of you believe there is any possibility it is going to cease and desist from seeking a nuclear capability in the near term, absent some significant hurdle that it faces. And being sanctioned by telling them they cannot -- they're going to cease their assets, which they've already moved, are going to cease their assets, we're going to not let them have passports to travel. Does anybody think that is going to alter the behavior in terms of this march forward that we're talking about?

And so then we get down to, okay, there are two options that may affect behavior. One is a sanction regime; the other is a military option. And then we pursue the military option and we find out that the military option would require a significant -- I understand General Clark is making a speech today, and it putting on, which he has every right to do, as former head as supreme allied commander, and giving his assessment of what would be required, and require x number of sorties, blocking the straits, et cetera, x number of division.

And then we talk about sanctions, the only ones that would reasonably have any impact, most people think, are if you dealt with oil and gas, because the analysis that may people have done, I suspect you have done as well, that if we could unite the world in doing that and we could take the hit, the hit on Iran would be consequential, would be very significant on Iran, maybe more significant on the world, but very significant on them, but there's never been any measure of that. But then everybody says, well, we're not going to be able to get the world to do that. But we're going to stand by the policy; we will not tolerate a nuclear Iran.

And so, let me say that one of the things we said all prior to, and I remember, Ron, we talked about this and your great help with the committee in trying to set up post-reconstruction capabilities within countries, et cetera. We talked at length about -- we have talked at length, you've all been in many discussions about what we talked about before we moved on Iraq. And this is just pure Biden, no foreign policy can be sustained in this country without the informed consent of the American public -- flat out, can't be sustained. And there is no information available to the American public. And what the heck we mean by, we can't tolerate, and what the consequences of either a military option would be for Americans or the consequences of what a embargo of consequence would mean for the Americans.

And so I hope if we do nothing more in this committee, rather that judging whether or not the world community would or would not go along with an embargo, not judging whether or not the world community would or would not accept military action on the part of the United States, what would it entail for the United States of America?

And it may very well be if we really mean what we say, that we will not tolerate a nuclear Iran, that the American public might very well choose the economic hardship over the military confrontation. They should get a choice in this, you know. They should get a say in this. They should have some input in this through their elected representatives.

And so, that's why I think -- and I obviously never speak for the chairman -- but I suspect that's one of the reasons why he keeps pursuing this answer to, if the options were employed, notwithstanding no one thinks the options can be employed.

So, you know, and the irony is, you know, I mean, you may find we have more hydrogen run automobiles in a heartbeat than in Tom Friedman's gas tax. I mean, this would be -- I'm not being facetious. You know, my mother, God love her, she's 88 years old, almost 89, lives with me, and she has said from the time I was a kid, "Joey, out of everything bad something good will come if you look hard enough". All kidding aside. Gas goes to, you know, $5 a barrel. Awful, awful, incredible dislocation, relative terms relevant to the rest of the world, we're relatively no worse off than anybody else in the world. And guess what -- we might have a real energy policy. Not a joke. Not a joke.

Now, I'm not proposing that. So, what I'd like you to do -- and I'm not going to say any more -- I'd like each of you to speak to -- get real with us, will you? Don't be academics with us. Tell us what would the consequence be.

Dr. Claswon, you're an economist. What are the consequences? What do you think would happen if we could convince the world to have an oil and gas embargo? Granted, I wouldn't bet my daughter's graduate school tuition on it, but will it happen? What does it mean?

And if any of you would also respond to the military option. I mean, you know, we're told in various fora, and I'm not revealing anything from any classified briefing we've had, but it is not -- this is not taking out Iraq's nuclear effort like the Israeli's did. But, you know, I could picture, if this were, quote, "an all out war", where would could bring Iran to its knees militarily at least. We could in fact have an embargo, so no ship ever reached their ports. We could do a lot of damage to their various nuclear facilities without taking them all out. We could make it very difficult over the next three, four or five years for them to get to that point.

So I guess what I'm saying is, I worry about the rhetoric. We cannot under any circumstance tolerate a nuclear Iran without knowing what the price we may have to pay if that is in fact the goal to accomplish that end.

So can you, doctor, speak with me a little about the economic consequences to Iran as well as us?

And can the rest of you talk in a few minutes that I have left about the prospects of and the consequences of use of military power to deal with this? Thank you.

MR. CLASWON: I have done a fair amount of work for DOE on supply disruptions, and if we're able to protect the Strait of Hormuz, if we judiciously use our strategic petroleum reserve, if we don't encounter problems from Venezuela, Nigeria or Russia, then we would be able to keep the price $80 a barrel, something like that, and it would be touch-and-go for a few years, but we could -- if all of those conditions are met, we could be staying at $80 a barrel. But we'd be extraordinarily vulnerable to additional oil supply shocks under those circumstances, be it, you know, al Qaeda attacks and uptake in Saudi Arabia, the like.

And it would take several years before Iran would really feel the pinch because, as Ray mentioned, they've got this very large reserve fund at the moment, over $30 billion in foreign exchange reserves, so it would take several years before Iran would feel the pinch, but they would then indeed feel a very profound shock, and that would be a big problem for them.

On the military side, and it's not my specialty, but let me just suggest that the potential for covert action and that if we look around the Middle East, the way in which the Israelis stopped the Egyptian missile program in the early 1960s and the initial Israeli efforts against the Iraqi programs, were to arrange premature deaths of scientists involved and to take other covert actions. And the Iranian industrial facilities are highly complex industrial facilities that have been subject already to lots of industrial accidents. If the rate of accidents rose dramatically and that slowed down the Iranian program, that could have quite an impact.

So, I would hope that if we ever got to that point of military action, the first thing we would try would be things less confrontation, like covert actions, because I worry that if we start attacking them, they're going to attack us back. When the United States' Navy thought that -- it caught Iranians red-handed sprinkling mines in the Persian Gulf in 1988, and so we decided to take action against them. We forgot that they could take action against us, and suddenly we were in the largest surface naval confrontation since the Korean War.

The Navy had not even calculated that the Iranians might react. So the big risk that I would say about any air raids against Iran is, the Iranians are going to fight back.

MR. TAKEYH: I'll just deal with the military option as such. I would actually suggest again that we do not have a military option in terms of destabilizing or I would even say slowing own the program. You always here defenders of the military option or those who articulate it say, well, it won't destroy the program but they will slow it down. I'm actually prepared to contest that. If Iranians are engaged in redundancy, which every determined proliferator does, what does that mean? That means ten plants doing the same thing. You destroy nine of them, you don't necessarily shorten the nuclear timeline.

In order for a military strike to work, United States would require not good intelligence, but perfect intelligence. Now, I was in that Mr. Negroponte briefing, but I don't think I have to be to know that we don't have that sort of an intelligence. Second of all, Iranian nuclear facilities are dispersed, they're hardened, they're urbanized. We have to prepare to civilian casualties. Third of all, some people suggest, well, maybe redundancy is very cost wasteful, maybe Iranians haven't done it. If you're sitting in Tehran and everyday the president of the United States said the military option isn't off the table, I think you're engaging in redundancy.

So we don't really have a military option. Now, we're whacking the scientists. Patrick can speak about that. I think Iranians have enough scientific knowledge and scientific software to be able to continue the program. In terms of Iran's nuclear calculations, I don't believe they're immutable. I'm unprepared to suggest that it is inevitable that Iran will become the next member of the nuclear club. I think we are in a very difficult situation and whichever path you go down to you have to go big.

If you're going to go down the path of coercion you have to be prepared to multilateral sanctions enacted by the United Nations, adhered to by international community over a prolonged period of time. If you're going to go down the road of concessions you have to be prepared to offer American economic, political, security concessions to an unsavory regime. The hour is too late for IAEA resolutions and the hour is too late for pistachios and carpets. It has to be big, whichever direction you go to. But I think both those directions can have an impact on Iran's nuclear determinations.

MR. LEHMAN: I agree that it's not too late, but it's going to be quite a challenge. You focused on the question of the price and I think the price will be determined by how we play the game. I agree it's going to take a substantial price even up front. There are sort of two ways to think about this. One is that it's a sort of pay now or pay me later, and I do think we need to understand the consequences of postponing the action. The price later may be very, very high and we'll wonder why we didn't do something earlier.

But there's another key factor and the other witnesses, Ray and Pat, have mentioned and that is, to a large degree the price is going to be determined by how much others are with us. Now, the good news right now is that much of the international community is with us and, in fact, even on these somewhat arcane issues, such as the R&D on enrichment, they get it. They understand now that there's a real issue here. The chairman asked about the economic calculations. I've seen a lot of data. I haven't seen a good comprehensive study and I would caution that, of course, it's going to be scenario based because the various options play in a dynamic political world. So who's with us, how firm are they, how serious are they, will determine what kind of sanctions you can get, what impact it will have.

Now, all the sanctions history is sort of a subset of the old question of who's got more leverage, the debtor or the creditor, and I would translate that into the carrot and stick issue. So, for example, with Russia and its nuclear activities or China and its oil, on the one hand, that puts them somewhat beholden to Iran. On the other hand, it gives them leverage on Iran. If they're really sincerely going to be with us -- and I have to note that despite all of the efforts to work with the Iranians this week, the Russians have still, at least judging from the press reports, have hung firm on the matter of principle.

So I think you are absolutely right, Senator Biden, if we walked into the world and say here's what we've decided. We've decided cut off all the oil now, there's going to be sticker shock up front. On the other hand, if you build the case and try the options and play the game well, I don't rule out that people will do the calculation and if that becomes necessary, people may well step up to it.

SEN. BIDEN: Thank you, Mr. Chairman.

Dr. Claswon, not now, but for the record, is it possible to get a copy of the analysis you made about oil or is that classified?

MR. CLASWON: Let me find out, sir.

SEN. BIDEN: Or maybe you could just come and talk to you.

MR. CLASWON: I'd be happy to come and talk to you.

SEN. BIDEN: All right. Thank you.

SEN. LUGAR: Thank you very much, Senator Biden.

Senator Nelson. All right. Yield to Senator Obama.

Senator Obama.

SEN. BARACK OBAMA (D-IL): That's very kind of Senator Nelson, I appreciate it. Thank you, Mr. Chairman. Thank you so much for the panelists on what's obviously an important issue.

Let me take the other side of what I thought was a terrific point made by Senator Biden. We have generally across the board said that a nuclear Iran is unacceptable. I happen to share that view. But I think it is worth at least exploring the other side or examining why it is not acceptable. There was an article by Barry Posen last week arguing that you essentially can maintain an containment posture to a nuclear Iran that might not be optimal, but might be preferable to the scenarios in which we have a significant oil embargo or for engaging in military action.

What's clear in this situation is there are no good choices, there are just better or worse choices. I was wondering if you could specifically, any of you, all of you, one of you, specifically address that argument, that in fact when you weight the costs of benefits discouraging Iran, but ultimately if it pursued the same path that North Korea has that that is a manageable process?

MR. TAKEYH: If I can, I actually think a nuclear Iran is really an international calamity. I mean, Barry Posen actually calls himself a realist and makes that argument. That would contest a realist's credentials. Should Iran become the second state that develop as a nuclear weapons capability while being a member nation of the NPT, that would effectively eliminate the nuclear non-proliferation treaty as a means of regulating global proliferation norms. An NPT is a problem in the sense that it is a treaty that requires modernization.

It is a treaty that requires to be brought up to date, but it has served a very valuable purpose in maintaining some sort of nuclear non-proliferation regime and has a limited number of states that have actually crossed the threshold. That would end the NPT. It would no longer be a treaty of any degree of credibility and that will have a dramatic impact, I suspect, for international security. Second of all, an Iran with a nuclear weapons capability or even nuclear weapons, it is not unreasonable to believe that it will be a more aggressive state regionally because it will pursue certain immunities from having such a deterrence and therefore it might be more of a revisionist state.

It might be more of an aggressive state within a volatile region within a volatile sub-aspect of the region, the Persian Gulf, which I think is also disastrous. And there's so many unpredictable consequences about the potential regional arms race. A region that should dedicate its resources to its economic betterment given its democratic problems will divert further resources to military hardware and that doesn't do the region as a whole any degree of benefit. So I think this as an eventuality, this is a proposition that we should try to avoid at all costs.

MR. CLASWON: I would just suggest, sir, that in my short lifetime the Middle East has been racked by so many horrific wars and it would be such an act of optimism to think that if, in fact, the Middle East had a number of nuclear arm states that the nuclear arms would not be used. The cost of that would be extraordinary for the world and extraordinary for the United States. I would just get very, very nervous about a Middle East in which there were a fair number countries that were nuclear ready. Unpredictable changes in government, dictators doing bizarre things, this region excels in fanatics of all sorts. Mr. Posen's proposal is to gamble on where the losses would be counted in the hundreds of thousands of millions of lives.

MR. LEHMAN: To say that it's unacceptable for Iran to have nuclear weapons correctly invites the question, so what do you do about it? I think we just need to recognize, at Pat and Ray have said very eloquently, this will be very, very bad. So the result for us is not to go slice our wrists. The result is we have to do something about it. I just came back from the Gulf and I just want to echo what Ray and Pat have said. The dynamics are so complex there. You're going to have some of the states in those regions that are coming to us and basically asking us to make commitments that this body may not wish to make.

At the same time, if you're not prepared to make those commitments, they're going to go in a different direction, in some cases acquiring their own daddy rabbits, their own protectors or their own weapons or make their own accommodations. This is an incredibly volatile region. So, yes, we shouldn't just make declarations of moral outreach. We've got to recognize, we've got to roll up our sleeves.

SEN. OBAMA: I think the point you've made, the last point, was borne out when I was visiting the region as well. The situation in Iraq obviously heightens the concerns of some of the other states about Iran's growing influence and it's hard for me to imagine that they wouldn't respond in ways that would be very destabilizing for the region over the long term. I just wanted to get that on the record, this part of what I think Senator Biden indicated. It's necessary for us, I think, not to just state these things, but to lay out precisely what the concerns are here.

Dr. Takeyh, given your comments about the NPT, I'm just curious, the president is visiting India, what signal do you think we're sending to the Iranians about whether or not they can get away with something. I mean, there's a general perception, you know, North Korea played this game, haven't suffered dire consequences, now we're looking at a potential deal with India and which they developed it, Pakistan developed nuclear weapons and now, you know, we consider them the strongest of allies.

There's this sense that there's a short-term memory here.

I'm just wondering whether, specifically since there's some indication that the administration may be trying to close this deal so that when he appears with Prime Minister Singh that there's some statement about it. Do you want to give me some sense of --

MR. TAKEYH: Sure. It's a very bad signal. Patrick mentioned in his testimony that we should pay attention to what Iranian leaders are saying and what they are saying is that India/Pakistan model can be applicable to them, namely, after initial international outcry, if you just stand firm, we can regain our commercial contracts. So, in essence, we can keep our nuclear weapons as well as our commercial treaties. In my written testimony I have submitted a number of citations actually by Iranian officials who say this, that steadfastness and strength will eventually lead to evaporation of international unity and then normalization of our commercial relationship.

I would say that absolving Pakistan of its nuclear sins because it is, quote, unquote, "valuable ally on war against terrorism" -- I actually managed to say that without laughing, which is a remarkable degree of self-discipline -- and now most recently the acceptance of India's nuclear program irrespective of that country's snubbing of the NPT for a long time, it is very difficult to make the case to an international community and to Iranians themselves that we are serious about proliferation.

That's why Iranians say you people don't care about proliferation. It's only about the character of the regime and therefore why should we make any concessions and anyway, in due course we're going to regain our international commercial relationship. So this is not a good day for proliferation calls as such.

MR. LEHMAN: This is one where I have a disagreement, having dealt with the Indians, the North Koreans and Iranians all these years. There's almost no relationship we have with anybody in the world that doesn't result in a talking point for them. I agree we have to listen to how they play the game, how they speak to their domestic audiences, how they speak to their international audiences and, frankly, we're not very good often at rebutting what are basically rhetorical devices for covering up what they're doing and all of these parties have done that.

When we tried to engage North Korea, when the Clinton administration tried to engage North Korea onto the agreed framework, the Iranians used that as a major, major attack on why the U.S. was still urging restraint and nuclear dealings with Iran while they were engaging with North Korea which was in violation of the NPT. That's a far stronger argument even though it's still a subterfuge for the fact that Iran is violating the NPT than the argument that we're trying to engage the Indians who are not a party to the NPT to try to get them to move in the right direction in terms of supporting NPT, supporting restraint or at least ending their war on the NPT and supporting a broader approach to the non-proliferation.

Now, I'm no apologist for the Indians, I'm certainly no apologist for the Pakistanis, but I'm not about to give the Iranians cheap arguments.

SEN. OBAMA: I think the question is not so much cheap arguments. Two points. I mean, one is we're actually moving forward. I mean, there is an administration decision that is being made right now with respect to India, so this is not sort of retrospective. I mean, the question is, how does that fit in with our posture towards Iran. The second point, I guess, and it's a broader point -- and then I'll stop because I'm out of time and I don't want to abuse the gracious of my colleague, Senator Nelson -- is, it strikes me that we have some disarray in terms of how we think about the NPT, its structure.

There is not sufficient coherence as far as I can tell in terms of how we're approaching a lot of these problems. It needs to be updated. We missed that opportunity just recently. I think this underscores how important it is for us to think about Iran specifically, but also think more broadly about how do we make sure that the NPT is meeting current challenges and closing loopholes, something that we've been failing to do.

So, thank you, Mr. Chairman.

MR. CLASWON: If I may just make a quick comment on that. It may be a problem for our non-proliferation policy, but the Iranian leaders view that friendly countries to the United States can get away with lots of things whereas hostile countries get penalized. It is, in fact, something which is helping us with regard to the Iranians in that they have concluded that they're subject to particularly harsh penalties because they're unfriendly to us. So that may be a problem for our overall NPT policy, but for solving this particular Iran policy the Iranian conclusion that if you're friendly with the United States you can get away with bloody blue murder, but if you opposed the United States you can't spit on the sidewalk, actually helps us in the relations with Iran.

SEN. OBAMA: What it certainly does is it makes Iran -- they can't anticipate or predict entirely what our intentions are.

SEN. LUGAR: Senator Nelson.

SEN. NELSON: Of course, the big difference between India and Iran is that they have a declared policy to want to eliminate another country and, you know, with a state policy that if you give them the means by which to do that, it's a big difference. You want any comment there?

MR. TAKEYH: In terms of elimination of Israel. Well, if I'm Pakistani I'm sort of concerned about India's nuclear proliferation from an equally existential perspective. I don't believe Iran should have nuclear weapons. I don't believe it should have nuclear weapons capability. I don't think it's inevitable for it to have either. I think there are many things that our international community can do to prevent that. I think that if Iran crosses the threshold it's the failure of American imagination, it's the failure of international resolution, it's the failure of international diplomacy and all those things are avoidable.

I never understood the argument that, well, Iran is going to have these weapons so let's just think about containment. To me that's a profoundly un-American argument. This is a country that built Panama Canal and beat Hitler and we're just going to acquiesce to Iran having weapons capability? I think there are diplomatic routes out of this still. They're hours late, but it's not too late.

SEN. NELSON: Well, I want to ask you about that.

And, Mr. Lehman, if you'd chime in too.

You see a diplomatic route out of this and yet Iran has rebuffed the European negotiations. It's now turned down, according to the morning newspaper, the Russian proposal for the second time, so what is that route through negotiation?

MR. TAKEYH: Well, I would have to offer my seven party talks again, take that hobby horse out for another ride. In my written testimony I have a sort of proposal. As I said, it has poor reception everywhere, it's here today, it draws on a very imperfect model. The six party talk with North Korea, that's almost always difficult. I've heard that, as Patrick said, as a smashing success. But I do think that for these negotiations to work, if they're going to work and they may not -- I'm prepared to accept that they may not work, I mean, I offer no panaceas -- the United States would have to be involved in these negotiations.

If you accept my assumption, you may not, that Iran will like these weapons not for global domination but as a weapon of deterrence against a range of external threats, most essentially, the United States, if you accept the argument that this is a weapon of deterrence as opposed to power project, then lessening of the country's security concerns, security anxieties could diminish as nuclear appetite. And the only country that is capable of doing that at this moment is the United States of America.

The European negotiations that you talked about, what security guarantees can Germany make? The European negotiations took place on the three baskets, the security discussions, economic discussions and technology transfer. The European were incapable of offering what Iran wanted on any of those three. Security guarantees, Iran is not surrounded by German troops, it's surrounded by American troops. Economic concessions, Iran's inability to be integrated in the global economy stems from American prohibitions and its own doing as opposed to European sanctions. Technology transfer, it is inconceivable for Iran to have high level technology without American approbation.

So United States is essential to this process and if it's not involved then these negotiations are inevitably going to fail. They may produce interim suspensions, but they may not resolve the issue in a conclusive manner. Now, should the United States become involved in a seven party format, eight party format, whatever contact groups they want? Would they necessarily succeed? It may fail. That's why I think any negotiations within Iran has to be a very limited timeframe, six months, four months and not beyond that. It shouldn't drag out as the North Korean talks. I'm not saying it will work, but you'll never know if you don't try it.

SEN. NELSON: Mr. Lehman.

MR. LEHMAN: Senator, you asked me to address this question of a path and I will do my best. The biggest problem we have in dealing with the non-proliferation regime and its core, the non-proliferation treaty is that you are trying to apply universal rules and principles to what are different circumstances. So I think Senator Obama is correct. There is a lot of confusion about how you do that. But I would argue there are coherent policies and powers and that we can understand what those are. I think that Iran is a good example of the need to shape the process to deal with the culture, the security conditions, the economic interactions and we've got to do that.

Now, let me say, I am somewhat lukewarm about the contact group proposal myself, but let me explain my thinking and maybe Ray and I will come to a common view. Let me use the example of North Korea. It's a dangerous region. We had a package. It was the NPT plus with the north-south denuclearization agreement, the IAEA safeguards, the South Koreans are going to have inspections in the North and vice versa. It really looked like it was going somewhere. And then what happened? Well, we discovered that despite all of that, the North Koreans were still running the program and, in fact, had developed a very large reprocessing facility which they had just begun to use.

Okay. Everybody seemed united. We just had this great head of state summit, security council resolution that further proliferation was not unacceptable, but a threat to international peace which is the code word for we really mean it. Now, a year later what happens? The security council won't endorse Hans Blix's request to do a special inspection in North Korea. What happens to all of this plea for multi-lateralism? The answer was, turn to the U.S. and say, Uncle Sam, hey, why don't you guys go deal with this? And so we got off track because the international community just basically said, well, isn't this something. They've got to deal with the U.S. The U.S. is central to this, and we lost the support.

We tried again and again by various means, some better, some worse, but all well intended to try to address, as I think Ray correctly says, we have to, the broader security and economic issues in North Korea. In the end, why did we end up in a six party talk? So the answer was that basically the U.S. by itself can't solve the problem. It requires the help of other people and we have to be a part of that. But what we've never done on North Korea is get the international community to stand firm and say this is what it's all about.

So before we go off and get Uncle Sugar to take the heat, I think what we need to do is get the international community to say, all right, are you here or not, and if this is the end of the non- proliferation treaty, if it's over, we know what to do about that, but let's find out now.

SEN. NELSON: But we haven't been able to get the international community to step up to the plate.

MR. CLASWON: I would disagree with that, senator. I actually think that in the current negotiations the French position is tougher than ours. Indeed, I would say that the position being taken by the E3, the E.U. three big countries, Britain, France and Germany, in these negotiations has been pretty darn good and pretty darn tough.

SEN. NELSON: But not Russia. Russia just gives them an excuse to delay.

MR. CLASWON: The Russians, in fact, may step forward and say, look, what you're doing is not good enough and I thought the Russians were just going to play an obstructions role and I was frankly quite shocked when the Russians instead said, all right, we're going to make a real effort. Certainly my discussions in Moscow, there's a broad understanding in the policy elites in Moscow, that a Russian nuclear program is a real problem for them and they are making a real effort to try and solve it and that's surprising. The Russians aren't being so helpful in lots of things these days, but at least they're making a real effort on this one.

So I think it's rather surprising the last few years how much the E3 have stepped forward to try and solve this and taking a tough stance and not giving in. The E3 is refusing to negotiate with the Iranians right now. I mean, that's an unnatural stance for them to refuse to negotiate. They say Iran has to reinstate the freeze.

SEN. NELSON: So, Dr. Claswon, you would endorse Dr. Takeyh's seven nation --

MR. CLASWON: Well, what I find amusing about this is that it already exists and that Secretary Rice after all attended that dinner with the foreign ministers of the six countries that he is talking about that was arranged in London by Jack Straw. It already exists. The foreign ministers of those six countries are already conferring with each other about what to do about Iran in reaching agreement. They are conferring as a collective group.

SEN. NELSON: I like your optimism. It's the only positive thing that I've heard, but, you know, you're talking about the Russians, there's some degree of optimism there, but when it comes to the security council, what are the Russians going to do at the security council meeting? So the picture gets murkier and murkier.

Thank you, Mr. Chairman.

SEN. LUGAR: Well, Thank you very much, Senator Nelson. Let me just add to my colleagues question. I think it's important that we try to consider the Indian agreement has come into the discussion because this is a current event which is very important. Each of you have sort of a different slant on what to occur there. One argument with regard to helping India with missile material and nuclear technology is that this may have a substitution effect with regard to their need for Iranian hydrocarbons, in essence, and that case could be made for a number of nations around the world, if you're serious about lessening the bargaining power of Iran,

We've already talked, without great specifics, about our own country, how rapidly we get into alternative fuels, of hybrid cars, clean coal technology, all the rest of it, you know. Some of us take that very seriously for the very reason that we're talking about Iran today. Essentially, without there being that degree of serious purpose on the part of the American public and the American politicians, why the Iranians make some assumptions from that likewise. So my reason for dwelling on facts for the American public is that ultimately they are the constituency for the actions that our foreign policy has here.

We're talking in academic terms about possibilities, but the president, members of the Senate, the House and some of you will have to discuss with actual constituents. What are the consequences of Iran having nuclear weapons?

Now, Dr. Lehman has discussed these pretty graphically from not only his recent trips, but in the past. The potential for a number of nuclear states in a very small area, given the instability of those regimes or the volatility of leadership and so forth is potentially catastrophic for them, but likewise then we discuss what are the consequences for us? Are there some Americans who would say, well, if that is the nature of those countries and they attack each other, that is very sad in a humanitarian sense, but it's over there, it's not here. That used to be a big tenet of our assumption. Maybe that still is true.

We've had some colloquies with business leaders, a round table once again about energy this week here in this body and many people still do not really assume that the price of gasoline at the pump is not $2, but more like 20 after you factor in the military we have in the area, all the commitments of our national defense budgets and that. What if Americans decided we really are tired of the military involvement in the area, that Iranians are going to have nothing to worry about, we're pulling everybody out? So that's a different set of assumptions. For the moment they can't assume that. We're there and quite a presence, right next door as well as in other situations.

The American body politic would say we ought not to be there or we ought to have a timetable of weeks, months and so forth to be out of there altogether.

So what I'm trying to asses from each one of you is, how we get the kinds of arguments that are going to have to be made about potential actions here that's credible to ourselves, quite apart to our lives, and see some constancy in this, and finally to the Iranians or others who might have designs on nuclear material and nuclear weapons over there? Now, you've been helpful in that respect, but I'm still trying to come to grips, and I'm raising the same questions with members of our administration, as opposed to sort of generally discussing options that are on or off the table, to get very specific about the potential cost.

So that if I go to my constituents in Indiana and I say this is a very, very serious problem. Now, the consequences of our dealing with it in this way or that way are likely to have these ramifications for your lives, for your business, for whether we have growth in Indiana or the United States or not. On the other hand, our failure to deal with them may lead in terms of our world to a seemingly interminable set of destructive activities that will also have an effect upon your business, your lives, whatever may be involved.

In other words, we've got to broaden the conversation in this country because we're coming up to some very difficult decisions. If they are made without constituent support and without broad information, the staying or the credibility of this is not going to be what it needs to be, given the stretching of our armed forces as we now have them, the fact that we're running a $400 billion deficit in domestic trade, in country, 700 billion in terms of foreign trade. These are sort of a backdrop of the world economy, but ours specifically, as we approach really each of these particular steps.

So I don't want to dwell on this excessively, but we appreciate your testimony, try to initiate our own study for the benefit of ourselves, likewise the public that may be interested in the questions we're raising. I want to ask, specifically we talked about the seven power negotiations, the fact that at the foreign ministry level some of this may be proceeding now as it is in North Korea. One of the things we've learned in our committee hearings is that we may not have made great progress with North Koreans, but it's possible American diplomats have made a lot of progress understanding the Chinese diplomats.

The very fact that we have some proximity to other negotiators around the world, we were taking seriously problems together. The assumption that right away we would come to the same national interest is probably naive, but the fact that we are beginning to identify more national interests with the Koreans, both North and South perhaps, the Chinese, certainly with the Japanese and even the Russians on occasions they come into this thing. That might be the case over with Iran likewise. It maybe that it's been healthy -- and I saw a group of people, a comparable group from Great Britain yesterday, their foreign relations committee.

We met over in S116 for a while and talked a lot about Iran as well as other things. The fact is we're coming to a better idea of the parameters of this problem, of the consequences for all of us by having these contacts. I applaud Secretary Rice for her push to get us involved more with the European trade and with all of the examination of this in a way that perhaps we were not as much as we should have been before. So the negotiation route still, I think, has some promise, but only if it's informed by the facts, the consequences that are more broadly understood by us as well as the Iranians and our friends who are involved, and maybe by other interests that come in, ways that we can be helpful to the Indians or the Chinese or the Japanese or anybody who also has a stake here.

It may be our negotiation on other issues in which they have interests may have to enter into this as opposed to the purity of just Iran, Iran specific. I invite you on that final point your thoughts. Are there other interests in the world that are going on presently that in some way might affect our effectiveness in getting this international coordination and getting the votes at the U.N.? As a matter of fact, in being effective, diplomatic as opposed to finally saying at the end of the day we may fail because I'm not sure what that means, you know, what failure at this point means.

Does it mean that we accept the fact that Iran has a program that they're going to eventually proceed to do whatever they're going to do? And if we say, okay, we'll find deterrents as our object and if you do something very bad we will hit you, is that really at the end of the day, and if so, give some final thoughts, if you can, each of you, in sort of summary of how you see this hearing.

MR. CLASWON: Senator, if I may say so, my impression is, from conversations with leaders from most of the countries involved in negotiations, is that their concerns are at least as much the non- proliferation treaty and the non-proliferation system as they are the particular character of the Iranian regime and that one of the reasons that there has been such an active role played by some countries as otherwise you might expect to be much more in the backseat about these matters, is because of the depth of their commitment to global non- proliferation regime.

We, in fact, don't serve our own interests well when we think that it's commercial concerns by countries like Russia and China, much less France, German and Britain that are driving their position on this matter. It really is a genuine concern about solving this global proliferation problem which is at the heart and core of the decision making in all of the countries involved.

SEN. LUGAR: You really believe the public in those countries, quite apart form their leadership, have the same interest in the NPT?

MR. CLASWON: No, I don't think most of the public is engaged in thinking about it. There hasn't been the kind of process that you've described in many of the countries. There has in some. So intriguingly, in a country like Germany there is much more public concern about the NPT than there are in some other countries and so that's one of the reasons why there's considerable German public support for taking a strong stance on this matter.

MR. TAKEYH: I think you're absolutely right in one sense, senator. We have to be honest with our allies and public about the cost of confrontation and the sacrifices that it will involve. In terms of our allies we have to let them know that they will have to put their commercial interest at stake and that's the price we pay if we're going to go down the path of coercion, confrontation and isolation of Iran. We have to be honest with our public that perhaps that confrontation will lead to economic consequences in terms of oil shortages that will have increased level of expenditures for gas and that has all kinds of industrial implications in America, not just in terms of transport services.

We have to also be honest that a confrontation with Iran may play itself out in Iraq. The Iranians have an infrastructure that is capable of extending our casualty rates, retarding the development and reconstruction and rehabilitation of Iraq and, therefore, prolonging the American occupation of that country. So this is a very dangerous road we're going on and everyone has to understand the stakes and everyone has to understand the sacrifices that are involved. I don't believe a confrontation is inevitable, but if you're going to go down that route, then you have to prepare your allies and the public for its consequences and repercussions.

In terms of Iran international community and the United States, I don't believe we should offer concessions to every other country in order to gain compliance, their agreement with us on Iran. I don't believe we should exonerate India of its nuclear proliferation stance in order to gain a vote in the IAEA. I don't believe we should stop criticizing the lack of democracy in Russia and the retardation of any democratic process in order to gain some sort of a Russian leverage. I don't believe we should subordinate all our security and political concerns to Iran, but we should deal with Iran in a more realistic way.

SEN. LUGAR: Just following up on that though, what do you finally mean? In other words, as each of these countries becomes dis- enamored with us or whatever our policy is and indicates that for various reasons, even procedurally, it's not as convenient to vote right now or to move ahead. Doesn't this leave us more and more isolated in the processes as we continue?

MR. TAKEYH: I don't believe at the end of the day we're going to get international compliance with measurable economic sanctions against Iran, the type of intrusive economic sanctions that will make an impression on that country's nuclear deliberations. So these concessions we're making ultimately they're unlikely to be successful in terms of the ultimate objective of the disarmament of Iran anyway.

SEN. LUGAR: Mr. Lehman.

MR. LEHMAN: All of the nations whose actions will be essential to be successful with Iran have multiple interests. They have economic risks, security risks, they're going to balance all of these things. Having said that, I'm struck by not so much the differences in the three witnesses, but the similarities of our views and by the fact that that's what I find if I go to Europe, that's what I find elsewhere, is that more and more at sort of the policy-wonk level there's more and more cohesion about what it is that we need to think about. So I think if the West holds firm we've got a real shot at this.

Now, I've said the West. What I mean is the Europeans, North East Asia, us, North America, but I think that we need to remember that still two key players are Russia and China. We can't pander, but at the same time there are several things that matter to Russia and China that play in the Iranian case. Some of those are related actually to security, but the most obvious and public have been the economic. But I think we also ought to remember that there are political factors. They already have nuclear weapons.

Their status problem is they want to be players and they can decide. Do they want to be players who gain their status by being in opposition or do they want to be players because they can make meaningful contributions to something that everybody supports? And I think that's the theme and the approach that we ought to take. Thank you, Mr. Chairman.

SEN. LUGAR: Well, we thank all three of you for your papers as well as your forthcoming responses. This is an area the committee will continue to explore, as you would hope, I'm sure, and we look forward to consulting with you. Thank you for your appearance. The hearing is adjourned.