On November 7, 2006, the Wisconsin Project's IranWatch.org web site spoke with John C. Rood, Assistant Secretary of State in the Bureau of International Security and Nonproliferation. Mr. Rood described international efforts to prevent Iran from achieving a nuclear weapon capability, including Europe's past diplomatic initiative, current discussions at the U.N. Security Council over how to sanction Iran, and U.S.-led efforts outside the Council to thwart Iran's nuclear and missile development.

The following is an edited transcript of our conversation.

Iran Watch (IW): What would the United States like to see happen with regard to Iran's nuclear program?

John C. Rood (JR): Given Iran's nearly twenty year history of a clandestine nuclear weapon program, we are looking for a period of time in which international confidence is restored in Iran's nuclear efforts. So, we are seeking the suspension of Iran's uranium enrichment effort. And, as the Secretary of State has said, if Iran verifiably suspends its uranium enrichment program the United States will come to the negotiating table, with our partners. But suspension is simply one aspect of the effort to eliminate Iran's nuclear weapon program.

IW: What led the United States to support Europe's initiative to negotiate with Iran?

JR: We have had a concern for some time that Iran is pursuing a nuclear weapons program, and we didn't think a diplomatic resolution to this crisis was possible unless key countries in the world had a united view about how to deal with that threat. So, the United States decided to support EU3 [Britain, France, Germany and the European Union] negotiations, and we are now engaged with the EU3 and a broader group of countries, the P5+1. This group [which includes the United States, Britain, France, China, Russia and Germany] has made progress, and we now share a common view of preventing an Iranian nuclear weapon program and the means of doing so, broadly speaking.

Last June this group offered Iran two visions: A very positive vision, outlined in a proposal that included a closer relationship with the rest of the world and substantial benefits for the Iranian people, and then another path, with negative consequences, should Iran choose to persist in its nuclear work. It's important to continue to hold out a positive path, particularly so that the Iranian people to see that there is a choice. That's why the proposal allowed for nuclear energy cooperation with Iran.

At the moment, however, our assessment is that the regime in not disposed to pursue suspension and negotiations. Most people don't believe that the Iranians want to negotiate. And if someone were to make the argument that the Iranians are serious about negotiating, I'd like to see their evidence.

IW: The choice between two visions has been clear to Iran for some time, and, so far, Iran has not chosen suspension and cooperation. So what's next?

JR: We see sanctions as an integral part of diplomacy and in creating the conditions under which diplomacy would be given a proper chance to succeed. Iran needs to see that there are consequences for defying a U.N. Security Council resolution by pursuing a program that they've been called on by the Security Council and the International Atomic Energy Agency (IAEA) to suspend. So that's where sanctions can have an impact: by creating conditions under which the regime feels the consequences of its continued defiance.

In the first instance are restrictions on Iran's nuclear and missile programs. There are a number of things that could be done, in terms of trade and access to technology, travel restrictions or financial restrictions, which would affect those programs and members of the regime, as opposed to some shopkeeper in Tehran. U.N. sanctions would also send a political message. It's unusual for countries to be before the Security Council; it's important for people to see that Iran is being treated differently.

IW: Would you say that the resolution now being discussed at the Security Council would largely serve to send that sort of political message? Are the measures under consideration actually going to change the way the Iranian government pursues its nuclear efforts?

JR: What the United States is seeking at the Security Council is a resolution that will have a meaningful impact on Iran's nuclear program, not simply to make a political statement. We are seeking a resolution that would have meaningful measures attached to it. In that sense, I think that we have a fair amount of work ahead of us. The Russians and Chinese do agree that Iran should be sanctioned. The specific measures and the specific restrictions are something that we still have to work out over a significant period of time. But nonetheless, I think that there is agreement at the basic level, that a resolution needs to pass, that the credibility of the Security Council needs to be maintained, and that Iran needs to see some consequences for its actions.

We've taken, I think, a very judicious, gradual approach to our pursuit of sanctions at the Security Council and to our pursuit of various bilateral measures with our partners. It takes time to build the proper coalition and to establish the basis of support, internationally, to accomplish what we'd like to with regard to Iran.

IW: Going back to the Security Council resolution that was passed in July, which called on states to limit missile transfers and nuclear transfers to Iran: Do you know if the previous resolution has had an impact?

JR: The previous resolution put the Security Council on record as calling on Iran to suspend its enrichment activities, but also, as you say, for states to refrain from trade in these areas. So I think it did have an impact in creating an international environment where countries are discouraged from conducting missile and nuclear trade with Iran. And that's important, because countries do inform their national policies based on Security Council resolutions. Implementation is always uneven, but the July resolution was an important step in this gradual process. It will take time to put these bricks in place.

IW: What role will nuclear inspections continue to play in this process? Russia and China, in particular, have been saying that they want the IAEA to continue to be involved in the process. Could the Security Council compel Iran to allow inspectors broader access?

JR: The degree to which the IAEA is given enhanced inspections authority is something that we will look at as the Iranian issue continues to unfold. If Iran were to adhere to the Additional Protocol, for example, that would give the IAEA significantly greater inspection authority, especially in the areas of concern, such as centrifuge manufacturing, work on the P-2 centrifuge and the document on shaping uranium metal into hemispheres, which has nuclear weapon applications.

So, the IAEA plays a very important role in the process. Their on-the-ground access to Iranian facilities has shed a lot of light on areas where Iran is not in compliance with its obligations. Their continued access and continued on-the-ground presence is important. We want to do our part to give them the tools they need to do their job.

But the key requirement is for the Iranians to cooperate, and to provide information to the IAEA. In the absence of cooperation, even with very strong inspection authorities, you're still limited in what an inspecting authority can derive as to the facts on the ground. If a state is determined to deny the IAEA inspectors information, they can. That said, I think that some sort of enhanced inspection authority is a question that we're going to have to look at. I certainly wouldn't rule out the idea.

IW: What about the prospect that Iran is running a secret, parallel nuclear program? When you are trying to think of strategy for how to approach things in the Security Council and especially a timeline for how long you have, I assume that the possibility of such a program must come into play.

JR: I have a healthy respect for what we don't know about what's going on in Iran. The IAEA says it can't verify the peaceful nature of Iran's program. That's significant. And the language used by the IAEA to identify outstanding questions is often strong and substantial. There are "known unknowns," so to speak, about what is going on in Iran's nuclear program. There are parts of Iran's program for which we possess information, and there are cases where we probably see only the tip of the iceberg. But there is a substantial set of activities that fall below the water line. This is important for us to bear in mind.

IW: Like work on the more advanced P-2 centrifuge, which Iran originally said it did not plan to pursue?

JR: Yes, that's one of the areas of concern. The Iranian president announced at a press conference that Iran was pursuing the P-2, which creates a discrepancy, as the IAEA would say, in the Iranian version of events.

IW: Do the other permanent members of the Security Council share the same concerns about unknowns in Iran's nuclear work?

JR: I think that there is a shared concern among the P5+1 about Iran's activities, and there's a strong belief that Iran needs to be prevented from acquiring nuclear weapons. In their public statements, officials are a bit more couched. But privately, officials from other countries express their concern with the direction that Iran is taking. You don't hear officials defending Iran's activities behind closed doors, explaining that its nuclear program is obviously peaceful. Iran doesn't have those defenders internationally.

But agreement on some of Iran's specific activities, I think, varies by a significant amount among the different parties. In my experience, that's not unusual. Countries are sometimes reluctant to endorse individual facts because they can see where agreement might lead. It makes it more difficult for them to then retain freedom of action, in terms of policy prescriptions later on.

IW: Let's talk about things that the United States can do outside of the Security Council. What measures could the United States implement as the Security Council process continues-or if that process should stall?

JR: The Security Council process is critical. It is a very important element of the diplomacy towards Iran, but it's not the only area. Measures that are required by U.S. law, for instance, are on their own track, in the sense that we look at them and make determinations and apply sanctions as necessary. But we don't necessarily always sequence that into other activities. For instance, we're going to be faithful in implementing the Iran, North Korea, Syria Nonproliferation Act, to the degree to which sanctions are called for under that statute. We recently imposed sanctions under this Act on two substantial Russian firms, Sukhoi and Rosoboronexport, which have not made our Russian partners pleased. [Sanctions on Sukhoi were terminated in November.] But we felt that we needed to do that in order to implement our law, and we did. Sometimes those determinations arrive at inconvenient times.

We have more discretion in applying other measures, such as the proliferation-related finance executive order [E.O. 13382], since it's an executive order-derived authority. But we have designated Iranian entities under this executive order, which denies those entities access to the U.S. financial system and, where we can, requires that we freeze their assets. You'll see us continue to, as necessary, use this authority.

There are also actions that we are encouraging other countries to take, which can have a substantial effect. We're encouraging other governments to take measures like we have with Bank Saderat, which has been denied access to the U.S. financial market because of its terrorist ties, among other things. We will continue to be active in this area. We've also encouraged countries to be more vigilant about trade with Iran, and we've had some successes.

And then there are activities that the private sector is taking on its own, based on risk calculations, which in some cases may have as substantial an impact as what governments are doing. For example, we've seen banking institutions in Europe choose not to do business with Iran because of the risk. Companies are very risk-averse, particularly some of the major financial institutions. They don't want to get involved in risky ventures.

The PSI (Proliferation Security Initiative) can also have an impact. That's another area where the United States is sending a signal about the importance of restricting trade to Iran. In the exercise that was conducted recently, you had a large group of countries, including an Arab country, participating in an exercise in the Persian Gulf, where there is a concern about Iranian proliferation.

I think that all of this could have a substantial effect on Iran.

IW: And all this can be pursued as the Security Council process continues?

JR: That's right.

IW: Do you have a sense of whether the independent risk assessment of private entities and unilateral U.S. measures have been more successful in penalizing Iran than U.S. efforts to directly engage other governments and asking them to implement financial sanctions, for example, or other measures?

JR: It's hard to disaggregate these efforts. It's difficult at times to say that a particular result is purely due to U.S. financial measures or is due to our dialogue with states, or with companies in Europe, or just due to the general climate that the Iranians have created. All of these elements contribute.

IW: According to press reports, U.S. attempts to get support in Europe for financial sanctions haven't been very successful. European countries are allegedly hesitant to do this sort of thing. Would you agree?

JR: The use of financial measures for combating proliferation or terrorism is still relatively less mature than many other foreign policy tools. We in the United States have done significantly more in this area and created a legal framework under which we can undertake these activities. Elsewhere in the world this has not generally been done before.

Our allies are now seeing the fruits of our initial efforts. And we've seen progress in Europe and in Asia. Over the last six months or one year, both are looking much more positively at these financial measures. But it will take some time for them to come around.

Look at a recent development in the North Korea case, with the passage U.N. Security Council resolution 1718. This resolution requires states to prohibit financial transactions that could aid North Korea's WMD or missile programs. There is a requirement now for states to develop a regulatory authority to implement this resolution. I think it will be a catalyst for a number of countries to put in place authorities that could then be used elsewhere, not just on North Korea but on country A or B or C, as events warrant.

IW: So the North Korea resolution provides a framework that might be used for Iran? At some point, a similar prohibition on financial transactions that aid Iran's WMD or missile programs might be undertaken through a Security Council resolution?

JR: Yes [nodded assent].

IW: How does Iran's progress in mastering uranium enrichment affect the overall diplomatic timetable? Does it place a limit on how long certain measures have to take effect?

JR: We obviously have to be cognizant of Iran's progress relative to our efforts to prevent Iran's acquisition of a nuclear weapon. When you look at some of the efforts the United States is undertaking, whether with our partners in the Security Council or elsewhere, this progress on enrichment, or lack thereof, does play a real role. It's also something that gives a sense of urgency to our diplomatic efforts. But setting timescales for diplomacy is always difficult.

The Iranians are clearly trying to pursue their program very quickly, in order to create facts on the ground that would be difficult to roll back or change. So in our assessment of their progress, we're also mindful of the political message that they are trying to send, and therefore mindful not to overstate the technical progress that has, in fact, been made. Some technical issues have come up, which is not necessarily unusual for countries that are beginning enrichment. But Iran is clearly determined to pursue a uranium enrichment program, for which there seems to be no apparent economic need or programmatic justification.

IW: Over the last couple of years, international attention has been on Iran's enrichment program. Do you think that other issues of proliferation concern have been sidelined as a result? For instance, what about the Bushehr nuclear reactor, which has long been a concern to the United States, the Arak heavy water reactor project, which is in an early stage of development, and Iran's missile program? Are we undervaluing the importance of these projects by focusing to such an extent on enrichment and the suspension of enrichment?

JR: The administration has been focused for some time on the projects you mentioned. So I don't think that we've focused too much on the enrichment program to the exclusion of other projects. Iran's missile program has been a substantial concern, and we've sought to address it, by persuading other countries to forgo cooperation and to be much more vigilant with trade in dual-use goods. And where we have had information about Iran's acquisition of goods directly related to its ballistic missile program, we've approached other governments about it and have received good cooperation.

We've also engaged in discussions with other countries on counter-proliferation measures, such as missile defense, whether through our long-standing cooperation with Israel, through talks with NATO or with countries like Turkey, or through steps taken for our own forces.

In the nuclear sphere, the Arak heavy water reactor has been a concern for some time. Iran doesn't have a justification for this type of reactor, which is the classic means by which countries have produced plutonium for use in nuclear weapons. Iran's current research reactor is being used to a very small extent of its capacity. You would need a bigger facility if you're using the current one to its full potential or if it's not sufficient for your needs. Neither is a justification that exists for Iran.

So this project is a real concern-one that we had highlighted for the EU3 in the context of their discussions with the Iranians and that was not included in the Paris Agreement [of November 2004]. We saw this as a hole in the Agreement. Since then, we've reached a common understanding with the Europeans, and you'll note that Arak is mentioned explicitly in IAEA Board of Governors documents and in Security Council resolution 1696. There is now an understanding about the need to stop cooperation on heavy water reactor-related activities in Iran. I'd say, in this particular area, that there is a common understanding with the Russians as well.

IW: What about Bushehr? The timeline may change, but at this point the reactor is expected to come online within a year.

JR: The Russians are continuing with the construction of that reactor. They have talked about the first delivery of fuel in 2007, assuming that construction proceeds apace, and if there aren't further developments in the Security Council. I think the Russians have been constructive on Bushehr, by working on a fuel take-back regime, which mitigates some of the proliferation concerns. I use the word mitigate purposely. Mitigation is of course not the same as elimination of concern, but it does mitigate the proliferation concerns we have about the reactor substantially.

IW: Is there any kind of agreement with the Russians about what would happen if additional safeguards violations are discovered in Iran after the delivery of fuel for Bushehr?

JR: The Russians have stressed the need for Iran to live up to its obligations under the spent fuel take-back arrangement, and under IAEA safeguards. So I think they would take any Iranian violations very seriously.

IW: What if we uncover additional old violations? Do you think that's going to affect how Russia looks at the Bushehr project and in particular the provision of fuel?

JR: New violations and old violations are both of concern. When you dial back the clock to the time when Iran's enrichment program first burst onto the public scene, those were clearly old violations, but it had a very substantial effect on the international community's view-including Russia's-of what Iran was doing and what needed to be done. This was a nearly two-decade long, clandestine nuclear program. It really took away Iranian credibility.

While discussing the details of Iranian nuclear activities, it's important to remember the broader perspective. There are so many things about the Iranian story that just don't add up. For example, for a country awash in oil resources to insist that it needs to produce nuclear energy, at a time when the energy they could derive from the gas that they burn, or flare, every day is more than the projected output from the Bushehr reactor… For most people, that argues against the need to build a billion dollar facility to produce electricity, when you are burning so much energy, literally burning it, every day.