Speakers:

Richard Allen Roth
Principal Deputy Assistant Secretary of State for Near Eastern Affairs
Geoffrey Kemp
The Nixon Center

Suzanne Maloney
The Brookings Institution
Ray Takeyh
Washington Institute for Near East Policy

Moderator/Discussant:

Chas. W. Freeman, Jr., President, Middle East Policy Council
902 Hart Senate Office Building
Washington, D.C.
Tuesday, December 12, 2000
9:30 – 12:00 A.M.

Transcript by:
Federal News Service
Washington, D.C.

MR. FREEMAN: Good morning. I'd like to call us to order, although I know quite a number of other people are struggling to find this place. I'm Chas. Freeman. I'm president of the Middle East Policy Council, among other notorious positions that I occupy. And it's a pleasure to welcome you all here for a discussion of whether it is not now appropriate to rethink our policy toward Iran.

I note that many people have been thinking about this topic, and as I review our own activities over the last year or so, I note that in response to quite a bit of interest in this topic, we have gotten into it a good deal ourselves.

But I would like to call the attention of everyone interested in this topic to a very interesting statement by Bob Pelletreau, assistant secretary of State for Near Eastern Affairs, in Houston a few days -- well, about two weeks ago, on the subject of U.S.-Iranian relations, and more particularly to the forthcoming report of the Atlantic Council of the United States, of which I happen to be vice chair, on U.S.-Iranian relations, which is, I think, in its very final stages and should be coming out in February. This is the result of two years of very hard work by a distinguished panel organized by the Atlantic Council.

Before we get into the topic, let me just take 30 seconds, if I may, for the benefit of those of you who don't know the Middle East Policy Council, to explain who we are and what we do. We are a small, struggling 501(c)3 organization, non-profit, some would say profitless organization, which attempts to raise questions for policy discussion that are neglected or are so politically incorrect or awkward that they do not get adequate attention.

We do three things. First, we convene occasional meetings of this sort, Capitol Hill conferences, to discuss the kinds of questions to which I referred. Second, we publish a quarterly called Middle East Policy, which I am proud to say is the most-often cited journal in the field internationally. This is the most recent issue. There will be copies out there. It deals heavily with relevant topics. It begins, as always, with the edited transcript of the last Middle East Policy Council Capitol Hill Conference, this one on the Caspian issue. But this last issue is heavily devoted to Iraq. So we have been spending a lot of time on Iran and related issues.

The previous issue, I might note, begins with a question which, alas, is no longer as topical as we thought it would be, namely, if there is peace between Israel and its neighbors, what are the implications for Iraq and Iraq; do we leave them outside the structure of peace or bring them in? Alas, that is, as I said, not as relevant as we had hoped.

We're here to discuss a country with which the United States has, in a very brief span of time, within the memory of many in this room, had relationships of vastly different characters. A quarter century ago, Iran was the preferred American "gendarme" of what we then called the Persian Gulf. Now it is officially, I suppose no longer a "rogue state" but a "state of concern," whatever that is, in the Arabian Gulf. And the transformation in this relationship reflects deep grievances on the part of both Americans and Iranians toward each other.

We're here today to discuss whether the time may not be ripe to put some of these behind us. On the American side, I think the relationship has been characterized by a sense of grievance at the post-revolutionary Iranian hostility to the United States; concern about Iranian support of Hezbollah and opposition to the now defunct U.S.-led peace process between Israelis and their Arab neighbors; concern, anger about deaths, abductions in Lebanon, in particular, where Iran has seemed to have a hand; and a continuing series of issues arising from Iranian efforts to develop weapons of mass destruction. We also have a very significant Iranian-American population, which is always quick to raise issues of human rights whenever the discussion of U.S.-Iranian relations comes up.

On the Iranian side, the grievances are equally complex, although quite different. They begin with the U.S. role in the Iran-Iraq war where the U.S., in the interest of maintaining a balance of power, swung into limited support of Iraq at various points. They continue with the Iranian sense of grievance over the loss of 300 people on an Iran air flight, shot down in 1988 by the USS Vincennes.

They continue, importantly, with an Iranian sense that the Iranian responsible behavior during the Gulf War, when Iran had many opportunities to mess up U.S. strategy and did not, was met with U.S. ingratitude or indifference.

Obviously American sanctions, which many argue isolate the U.S. from Iran rather than Iran from the world, are another point of Iranian anxiety and anger, as is U.S. opposition to oil slots, pipeline and gas deals involving Iran.

And finally, we have a continuing litany of congressional posturing against Iran, and gestures like the creation of Radio Free Iran and other gestures that are interpreted in Iran as efforts to overthrow the Islamic Republic. And we haven't yet, finally, solved the issue of Iranian frozen assets. So there is a lot of accumulated anger, frustration, and concern on both sides.

But we are now in a situation where the allies and friends of the United States, without exception, even including Great Britain, have normalized, warily normalized their relations with Teheran. And the sanctions that we impose are demonstrably not effective in constraining Iranian behavior. In fact, we see in the Persian Gulf at present, a very significant erosion in, not just posture toward Iran, but toward Iraq.

I would note, finally, before I invite our speakers to address you, that we are -- when we conceived of this topic, we imagined a very different context in the Levant, between Israel and its neighbors, than now exists. It's clear that Israeli attitudes toward Iran bear heavily on the possibilities of American rapprochement with Iran. We are political realists and that is a fact.

It is not clear, with Israel now in low-intensity conflict with Palestinians, and in an increasing state of hostility with its other Arab neighbors, whether Israel will, as it seemed to be in an earlier era, rethink its own posture toward Iran and reevaluate its own analysis of Iran. And that will have some bearing on the posture of the new administration in the United States, whoever that may be. I suppose we will find out some time in the course of the next 24 hours, but I have been thinking that for five weeks.

So with these few words of introduction, let me turn now to the very distinguished and extremely well-qualified group of people who have agreed to come and address the topic. On the back of the program, you have detailed biographic information, so I'm not going to recapitulate anything in there. The order of the speakers will be Principle Deputy Assistant Secretary of State Richard Roth, first, and then Suzanne Maloney, Ray Takeyh, and finally, Geoff Kemp.

And I think Richard Roth, who's agreed to stay for the entire session and therefore will be here for the discussion following the core presentation, is particularly welcome. He is in a bureau which is quietly attempting to rethink things in anticipation of some sort of new administration, whatever that may be. Richard has a very distinguished career in the Foreign Service, including service in many positions related to Arab-Israeli affairs and in Europe and North Africa. And it's a great pleasure to welcome you, Richard, to the podium.

Please.

MR. ROTH: Thank you very much, Chas. Sometimes it's quite daunting to follow a mentor as wise and as impressive as Chas., somebody who I had the great opportunity of working with while he was in the Foreign Service and somebody who is quite a legend within our building. And it's quite a pleasure to be able to come here today and speak to you.

I hope to sort of lay out a framework of where we are currently in our policy towards Iran. And perhaps that framework will then allow for succeeding speakers to fill in some of the details, and then we'll go into a question-and-answer session afterwards.

As you can imagine with the uncertainty of our own elections and the fact that our own transition has not even yet begun, we have been in the process, within the department, of writing and rewriting and trying to figure out what are the key issues that the new administration will have to deal with. And each of the geographic bureaus have been trying to put together these lists, and we in the Near Eastern bureau are no different. Clearly, Iran is very, very high on our agenda of issues which we believe a new administration will have to deal with within the first six months.

So let me go into some of my prepared remarks, and then during the Q&A session, I'd be more than happy to try and answer whatever questions I can about where the administration might be going.

For more than 20 years after its revolution, Iran continues to surprise, intrigue, infuriate and simply to compel the attention of Americans. There has been a great deal of continuity in our policies over these 20 years. Many of the same problems continue to complicate our relations. But obviously the Iran of today is not the same as the Iran we saw 10 or even five years ago, and there have been discernible internal changes which we need to respond to as a government. They include a series of increasingly free and fair elections, more social freedoms and a general trend to strengthening Iran's civil society.

The hesitant and uncertain nature of those changes has become all to clear to us over the past six months, and I think most Iran-watchers agree that there is no easy way to predict Iran's short- and medium-term political future. Iran has also moderated in some areas its foreign policies, particularly in seeking rapprochement with Europe and the Gulf Arab countries.

In other areas of great concern to the United States, though, such as support against the peace process and for terrorist groups who are dedicated to undermining that process, as well as the development of weapons of mass destruction and long-range missiles, there has been no positive change, and in fact, a trend toward increased efforts in each of these areas by the government of Iran. There are several core issues which have driven U.S. policy toward Iran since the revolution: Iran's implacable opposition to the peace process, particularly its overt and covert support for groups advocating and committing acts of terrorism and other violent means to oppose the peace process; Iran's aggressive pursuit of destabilizing weapons of mass destruction and long-range missile technology; and less-than-full Iranian respect for human rights within Iran, especially the treatment of religious minorities.

These core issues and our assessment of their importance have not changed. However, we have not failed to recognize that changes are occurring in Iranian politics, especially, as I said, on domestic policies. We, like our European allies, have tried to view these developments as an opportunity to explore ways to engage Iran on issues of mutual interest and as a new means to pursue long-standing objectives. We have also been able to broaden the way we see our interests with Iran. We have sought to increase the nonofficial and semiofficial people-to-people exchanges between Iran and the United States. We have initiated some adjustments in our sanctions regime to reach out to the Iranian people in areas where the economic and other benefits of trade can most directly affect them. We have supported certain Iranian diplomatic initiatives, such as the Dialogue Among Civilizations and Iran's constructive participation in the Six Plus Two dialogue on Afghanistan.

We have also looked for opportunities to begin addressing the historical issues that hinder understanding on both sides, and on this, I would refer you back to the secretary's speech of last March. We have offered to explore a global settlement of all outstanding legal claims between our two countries, often misleadingly termed "frozen assets," and we have sought unambiguously a direct government-to-government dialogue with Iran, without preconditions, to explore how our two countries can push this further.

Because while the differences between the United States and Iran on policy issues are fairly clear, there are areas where we could have or should have common interests, and these get much less attention. These areas potentially include policies toward Iraq, the implications for stability in the Gulf, Afghanistan, the security and independence of the states of Central Asia, and global issues, such as narcotics trafficking and the environment.

If the United States and Iran ever arrive successfully at direct diplomatic engagement, each side could be expected, at least initially, to defend its own national interests. However, in addition, each side might find a more creative approach in which to address our common interests. We do not believe that this can be accomplished through competing press statements or through intermediaries, no matter how sincere or well-intentioned.

Let me take a minute or two to review some of the criticism we hear from the opposing sides of the Iran policy debate. There are those who argue that the United States should lift all economic sanctions on Iran, even if gradually, because they harm American businesses, in addition to causing some damage to Iran. These critics hope that progress on the economic front will open the way for the flag and for productive political relations. In an ideologically driven regime like the current one in Iran, this formula is not apparent.

Nevertheless, we are well aware of the opportunity costs of economic sanctions to ourselves, and the new administration should carefully review a package of economic measures that could be identified as incentives to encourage greater political dialogue. While a worthy goal, our European allies too have found this a very difficult path to pursue with much success.

On the other hand, we continue to be painfully conscious these days of the active Irani opposition to fundamental U.S. interests in the region; namely, the stability of our friends and the success of the Middle East peace process. We believe Iran has pursued a provocative policy aimed at derailing the peace process and also, consequently, threatening regional stability. Also, Iran's aggressive weapons of mass destruction programs are potentially destabilizing. Our policies, including our economic sanctions, are designed to directly challenge Iran on this ground and to encourage a change in its policies.

From the other side of the debate, there are those who claim the United States has been fooled by a sort of phony reform, that we have jumped to support a reformist president who has little real power. I would like to say for the record that we have no favored political leader or faction in Iran. We have undertaken a series of very carefully calibrated and minimalist steps in response to clear political and foreign policy changes in Iran at the macro level.

Some of these changes began to develop under a previous leadership, and many of the positive social changes in Iran, such as the yet-to-mature trends toward greater openness and transparency, have been driven from the bottom up by the Iranian people. What we are still waiting for is for these trends to be adopted by Iran's ruling elite and to be instituted throughout Iran's key institutions. Who rules Iran is not nearly so important to us as what rules Iran will be governed by.

As the situation evolves within Iran, I expect the new administration will try to be responsive to what rules emerge from the Iranian leadership, as one basis for improved relations.

Thank you.

MR. FREEMAN: Thank you very much, Richard. That was both admirably clear and admirably brief. We attempt to keep speakers at these gatherings to no more than 15 minutes and preferably 10, and I think you went 12, so that was exactly right.

I would now like to invite Suzanne Maloney, who is a student, post-doctoral student, of Iranian domestic policy at Brookings Institution where she's writing a manuscript, in fact, on U.S.-Iranian relations, the topic that we are addressing today to come and speak about the domestic situation in Iran, filling in some of the details to which Richard referred.

MS. MALONEY: Good morning, and thanks very much for coming this morning. And I'd like to thank the Middle East Policy Council for inviting me to speak and be part of such a distinguished panel of experts on Iran and on U.S. policy towards the Middle East.

Anne Joyce and the people at MEPC asked me to think a little bit about Iranian domestic politics and particularly events of the past six to eight months, since the parliamentary elections that took place beginning in February of 1999. And in doing so, I sort of struck back to all these events. It began with an election that was very bitterly fought, with those who lost at the polls actually contesting the results of the election; with recounts of the votes that went on for weeks and actually even into months; with the courts and the judiciary tainted, as a whole, by accusations of partisanship; fears of a crisis of legitimacy; and in the aftermath, the presidency paralyzed by factional conflict.

Politics in Iran are very peculiar, aren't they?

(Laughter.)

But in truth, it has actually been a very tumultuous year over the past year or so in Iran and for those of us in the Iran-watcher community here in Washington. President Khatami was elected three years ago in a surprise upset of the conservative heir apparent that not only revealed a profound public yearning for change, but also helped to energize and institutionalize it.

Today the date of his victory, the 2nd of the month of Hordad, by the Iranian calendar, has become shorthand for a wide-ranging agenda of political and cultural reforms whose proponents now have a majority in the parliament and dominate the apparatus of government on a provincial and local level.

However, the reformist trend has not prevailed over some of the most powerful instruments of the state power in Iran, including the military, the state television and radio, vast semi-governmental economic conglomerates, and the religious councils that must approve any parliamentary legislation. And in fact, since the February 1999 parliamentary elections, which delivered Iran's relatively powerful legislative body into the hands of ardent reformists, the Islamic Republic has not reached the turning point that many of us here believed, and, in fact, I think, hoped that it had.

Since August, in particular, with most of the reformist newspapers shuttered, with the political leadership of the reform movement largely jailed or otherwise silenced, and the parliament effectively stymied from effecting any meaningful change by the explicit intervention of the supreme religious leader, I think many people here in Washington declared the reform movement dead in its tracks.

I would argue, though, that in fact reports of its demise have been greatly exaggerated, and this has been demonstrated in the past weeks by some of the statements of President Mohammed Khatami.

President Khatami has been the victim of what many in Iran have called a sort of Khatami fatigue. The halo surrounding the hero of the reform movement has been somewhat tainted by his inability or ineffectiveness in preventing the conservative backlash.

About two weeks ago, however, he spoke up and said, quote, "I must admit that after three and a half years in the presidency, I'm aware that the head of state does not have the adequate prerogatives to do his job. I am the guarantor of the Constitution, and to ensure its application, I must have the necessary means."

What does this all mean for the reform movement, and what are the implications for U.S. policy toward Iran? I'm probably going to spend the next seven or eight minutes talking solely about the domestic events in Iran, and I hope that you will -- I presume, in fact, that you'll challenge me during the Q&A, because in fact I would argue that U.S. policy should not be based on the domestic politics of Iran; in fact, it should be largely independent of that; and that we have a national interest in engaging in a policy of limited engagement toward Iran that is irrespective of the politics.

I think that what the past six months demonstrate, particularly for U.S.-Iran relations, is that in fact the catharsis that many of us hoped, the turning point, the watershed, is not looming on the horizon. We have not passed that point at which Iranian politics have changed wholly and irrevocably. The reform movement is deeply divided and has been largely thwarted in its efforts. This is partly because it was bifurcated from the beginning. It was both a top-down and a bottom-up movement from the start. And its progenitors undertook dual strategies. The strategy for the first year or two was one that they described as pressure from below, as popular pressure, and negotiation from above.

The reform has always been a relatively amorphous concept, which expanded and contracted to fit a given set of circumstances. And so in the past six months, we've seen a real clash within the reform movement itself, with some advocating, in fact, bypassing Khatami and going forward beyond some of the things that he's argued for, and others preferring to stay within the strategy of negotiating at the top. It's called quodi (ph) within the Iranian context. It's more a version of inside baseball.

To some extent, this reflected some concerns about how powerful Khatami could be as an advocate of reform. He seems wearied by his position, and in fact there are many in the population who are beginning to grow frustrated by the fact that reform was not impacting their daily lives at all.

I'd also argue that the stalemate we see in Iran is a product of a very successful strategy by the conservatives. Those of us who counted the conservatives down and out after their routing at the polls in February 1999, I think, have been surprised to see how successful they've been at a three- or four-pronged strategy that has involved keeping the reform movement on the defensive through a period of what they call chain crises, that have involved a number of trials and political persecution of some of the key reform leaders. They have also been more successfully making an argument on an economic basis, that in fact the reform movement is too concerned with the abstract political concerns of its elites and not with the day-to-day issues that affect the average Iranian's life.

In recent months, the conservatives have also engaged in a concerted effort to persuade Khatami that in fact it would be in the good of the nation for him to step aside. And finally, through their control of some of the key instruments of state power, they've been able to block any effort by the parliament particularly to change the press law and to put most of the reform newspapers, which have been closed since April of this year, back into publication.

But while see this stalemate, I think that we also see that most of the momentum remains with the reform effort. From my perspective talking to Iranians on the streets when I visit there, as long as the balance of hope remains on the side of the reformers, most Iranians are willing to give them the benefit of the doubt. In fact, Khatami's recent statements tell us that he is not prepared to go beyond the parameters of the system as it exists today. He has insisted that in fact democracy and freedom can be realized if we all respect the constitution.

And I think that while there are many Iranians, including many of those within the reform movement itself, who have doubts about that possibility, most are willing to continue to give him the benefit of the doubt so long as they see that there is progress on the fringes. And we have seen that, in fact, in the parliament. Since June, the parliament has managed to accomplish a number of things, albeit on the margins of the key issues that concern most Iranians. They've called a number of hearings into the issues that are most politically sensitive, they've begun to restructure the administrative bureaucracy of the state, and they've also more recently, I think, demonstrated some dexterity in dealing with some of the more sensitive issues, such as the establishment of a framework for political parties to operate that would, in fact, probably be more powerful and more effective in institutionalizing a freer and more open system in Iran than the simple issue of reopening the newspapers.

The reformers have been in power a relatively short period of time. Their learning curve was abound to be steep. They appear to have decelerated on some of the more ambitious elements of their original agenda, and yet they also appear to be gaining greater consensus with the conservatives themselves.

I would argue that Iran is likely to remain in a situation of stasis. There have been many here in Washington, in particular, who have been concerned about the possibilities for chaos in Iran, and I think that that is always within the realm of possibility.

However, I was in Iran during July of 1999 and I saw the reaction to the protests from both people on the streets, and clearly from the day-to-day progression of events from some of the key politicians on both sides of the fence. And I think that it was evident to all parties that violence served very little purpose for either the conservatives or the reformists. The demonstration effect of the violence in Palestine and Israel is sure to also condition much of the response. There're small groups of people who have an interest and will continue to try to provoke chaos. But, in fact, both sides have exerted great influence over their most partisan extremists to avoid any provocations.

I'm going to jump ahead and just talk a little bit about the prospects for the future. There are presidential elections coming up in Iran in May of 2001. They're likely to engage in fierce partisanship among some of the political factions within Iran. There's already some doubt that President Khatami may not choose to contest those elections. If that were to be the case, there would be a great deal of, I think, uncertainty in the Iranian political system.

However, I'd argue that, in fact, President Khatami's declining to in fact commit himself 100 percent to running in those elections is simply a strategy on his part which is entailed to put the conservatives back on the defensive themselves. I expect President Khatami to run in those elections, barring, of course, the unforeseen circumstances that inevitably pop up in Iranian politics. And, in fact, if he runs, I think that there's very little doubt that he will win with something close to the mandate of 20 million votes that he was able to garner in 1997.

The bigger question is what 3rd of Hordad, which will be the date of the elections by the Iranian calendar this coming May, mean for the reform movement and mean for the Iranian-U.S. relationship?

We've also seen a process by which the conservatives are retooling, and some of the events that have been probably missed by the American press in the past few weeks, but have roiled the Iranian press, from the conservatives are quite interesting. One of the key conservative politicians said only a week or so ago that in fact U.S.-Iran rapprochement was not outside the bounds of what the conservatives were willing to envision. His comment was: "For our national interests, we can even negotiate with Satan at the bottom of hell." (Laughter.) I think this would probably qualify, from Mohammed Javad Larijani's perspective, as the bottom of hell right here.

And the question that I have is how willing are we to negotiate with the Iranians? Clearly, American policy has always stated that in fact we have no preconditions and that we're prepared for an authoritative dialogue at any time in any place. And yet there is certainly some doubt in the minds of many Iranians about the signals that they have received. And that's why I would argue that in fact it's time for the end of signal diplomacy.

The past three years have been very effective, beginning, of course, with President Khatami's CNN address, in which he talked about his respect for the American people and the American democratic system. Since then, we've engaged in a series of signals back and forth. Occasionally these can be very elegant and very efficient, as they were in President Clinton's remarks in April 1999 when he expressed some concern for Iranian grievances. This was a quote which made the newspapers for about a month or two in Iran on a daily basis, but which received very little attention here. This is the power of subtle and effective signal diplomacy.

However, I think we've reached the end of the line in terms of what we can actually accomplish, and the dangers of misinterpretation on both sides are really unfortunate. There have been a number of incidents in which Iranian policies or overtures have in fact backfired or been misinterpreted here. And I think the same could be said of some of the statements from the American government, including Secretary Albright's speech in March of 1999. I think that there's going to be an argument made that in fact we shouldn't involve ourselves in Iranian domestic politics. I agree with that wholeheartedly. A conservative government may be less ideologically akin to American values, but in fact it may be more capable of controlling those institutions and affecting those issues that concern us. Our policy should not be based on which faction controls the Iranian government, and we should be equally prepared to sit down with a conservative as we are with a reformist. We should recognize that in fact the political stalemate within Iran makes reciprocity very difficult in the near term, and makes the long-term effort that much more important. For that, I would argue that a policy based on our national interest would proactively pursue opportunities rather than simply adopt to -- adopt a reactive approach to overtures and to potential changes within the Iranian domestic politics themselves.

From there I'm going to turn the microphone over and hope to talk to you some more with the Q&A.

MR. FREEMAN: Thank you very much. Very thoughtful and informative presentation indeed, and it lead us directly Ray Takeyh, who kind of has I think a slightly different perspective on some of these issues. Ray is a research fellow at that Washington Institute for Near East Policy. And I'm proud to say that we have published him in Middle East Policy on occasion. He specializes in studying states with good reputations in the United States, like Iran and Libya.

Please.

MR. TAKEYH: I'd like to refocus the debate a little bit on Iran's international relations, because whenever you talk about Iran, most people talk about some of the dynamic internal changes that take place, but there is an equally compelling international approach. Namely, that what Iranian reforms are trying to do is not just to liberalize the theocracy, but, as we've seen, inject a measure of pragmatism in its conduct abroad in its approach to the international community. And this is a trend that I would argue that didn't begin with Mohammed Khatami, but arguably, one of the more important dates in Iran's modern history was 1989, the year of Ayatollah Khomeini's death. In the aftermath of Khomeini's passing, we see this clerical community lapse into a fundamental debate regarding the direction of the revolution. It's a debate that remains by and large unsettled in terms of Iran's domestic policy.

But a relative, rough consensus does emerge in terms of Iran's international approach. Namely, both pragmatists and hard-liners recognize that Khomeini's conduct, as divisive as it was, only isolated Iran, and it was time for a change of approach and a change of strategy. Khomeini's successors, therefore, abandoned the mission of exporting the revolution and began to replace it with a more conventional measure of national interest. Tehran's path would be gradual. It will seek to advance its interests and aspirations less through confrontation than accommodation with its neighbors.

This trend reaches its apex with the inauguration of President Khatami in 1997. During the presidential election of '97, and maybe in this one, most people will focus on the internal proposals of Khatami, and neglected in '97 I think his equally compelling call for peace abroad. Khatami's advocacy of civil society, rule of law necessarily entails a different concept of international relations. The president's slogan of "dialogue amongst civilizations" was not a mere slogan, but an appreciation of interdependence of societies, economies and political systems. This recognition is bound to affect Iran's approach to international relations, and I'll focus on three specific areas: Iran's policy in the Gulf; the Arab-Israeli conflict, and U.S., and I'll leave the easier part to Geoff to finish up.

From Iran's perspective, the most important set of relationships its can have are those in the Persian Gulf. And in the Persian Gulf, Iran faces potentially its most fundamental security concern: namely the unresolved nature of its relationship with Iraq, the fact that the war has ended, but the peace has not really come about. It is unlikely, as some people suggest, that Iran and Iraq will form a tactical front. That's highly unlikely given the fact the Iraqi destruction of Iranian cities, employment of chemical weapons and continued border tensions.

But from Iran's perspective, the two important issues in the Gulf, the two geopolitical concerns are the potential rehabilitation of Iraq and the presence of the United States naval forces.

While Iran's relations with Iraq remain problematic and potentially, in the long term, a source of concern, Iraq has uniquely provided Iran an avenue in Gulf politics. I would argue that Khatami's most spectacular diplomatic success abroad has come in the Persian Gulf area. Under Khomeini's leadership, of course, Iran vilified the Gulf rulers, the Saudi rulers, and called on opposition groups to overthrow the Gulf leaders and institute authentic Islamic polity.

Khatami's election has fostered a perceptible shift in Iran's Gulf policy, namely, Iran is not trying to overthrow the Gulf rulers, but is appealing to them and suggesting to them that by forming an indigenous alliance network would be the best way of ensuring Gulf stability and containment of Iraq; that you don't really have to rely on the American naval forces, we can pretty much do this on our own, locally and indigenously.

Therefore, what Khatami is doing, very cleverly, is appealing to the accomodationist instinct of the Gulf rulers and their historic aversion to rely for their security concerns completely and categorically on Western powers. This policy has already paid dividends. Iran and Saudi Arabia have, to an extent, harmonized their oil policies; expanded diplomatic trade and cultural relations. Since Khatami's momentous visit to Riyadh in 1999, Iran and Saudi Arabia have instituted low-level defense cooperative efforts. Although in my opinion, the Gulf rulers are unlikely to accept any regional defense network replacing U.S. naval presence when such confidence-building measures could further project Iran's power and influence in the Gulf.

Well, Khatami, therefore, has introduced important changes in Iran's Gulf policy. His approach to Israel is characterized more by continuity rather than change. For a generation of Iranian leaders, Israel is not only a strategic competitor, but an agent of a pernicious ideology. Khatami's approach to the Arab-Israeli peace process reflects his concern that should the peace process succeed, it could only enhance Israel's ability to influence the regional state system and, therefore, isolate Iran. The Turkish-Israeli alliance, from Iran's perspective, is an ominous indicator full of such possibilities, should the peace process succeed.

Therefore, Iran's opposition to the peace process comes at two different fronts. On the strategic front, any effort that obstructs Israel's peace with its neighbors and polarizes Israel's domestic politics is viewed as advantageous. On the political front, through active support for Hezbollah, Islamic Jihad, Hamas and so on, Iran can still claim its Islamic credentials and present itself as a pillar of Muslim resistance to the so-called Zionist entity.

The recent events -- the recent mayhem in the West Bank and Gaza has reinforced Iran's strategy and seemingly validated its claim. The troubling aspect of Iran's rhetoric in the recent crisis is to suggest Israel as an agent of attack on Islam's domain. The transformation of the Arab-Israeli conflict from a nationalist one to a concessional one can only exacerbate an already inflamed situation. Therefore, from Iran's perspective, it is unlikely, given its ideological predispositions and its strategic concerns, to acquiesce to the Oslo process, or the process formerly known as the Oslo process.

Having stipulated Iran's unhelpful conduct, it is important to note that the current impasse in Israeli-Palestinian relationship is not due to Iran's diplomacy. The peace process will succeed or fail based upon what Israelis and Palestinians do as opposed to what Iranians say they ought to do.

Iran will vigorously oppose the peace process, but it will grudgingly, reluctantly, passively accept a peace treaty. Ultimately, the ultimate arbiters of what is an acceptable, equitable peace between Israelis and Palestinians will be Israelis and Palestinians.

U.S.-Iran relations are by far the most peculiar of Iran's international relationships. The issue of U.S.-Iran relations has always transcended this strategic plan, and somehow is always based on visceral emotion. The Ayatollahs routinely castigated the United States as evil and satanic, and for Americans, the Ayatollahs were not just misguided, but irrational.

At the very basic level, the core of U.S.-Iranian conflict is a conflict between a superpower with global pretensions and a local power with regional ambitions. But somehow, Iran-U.S. relations have always transcended this strategic claim and have taken place in a distinct cultural terrain.

Ayatollah Khomeini, and for many other members of the Iranian clerical class, they anguish not only about the American armada in the Persian Gulf, but about the American social order that seemingly and purportedly inflicts Islam's domains with cultural dislocation, moral equivalence, distorted values -- three good things.

The election of Mohammed Khatami has ended a very specific phase in U.S.-Iranian confrontation, namely, the cultural phase. As a scholar with an understanding and appreciation of Western political heritage and philosophy, Khatami has suggested that the civilizations can not only interact but learn from one another.

Although the phase of cultural confrontation between U.S. and Iran may have ended, Iran's policies still do not coincide with those of the United States in some very important respects. As with his predecessors, Khatami insists that Iran, by virtue of its location, size, demography, history, has earned the right to become the dominant power in the Gulf, and the reason why it is not the dominant power in the Gulf is because the Americans insist on incorporating the Gulf in their own strategic framework. A lessened American presence in the Gulf is a goal that Iran's reformers press, advance, and actively endorse.

What's the way out of the impasse? Briefly, I always felt that U.S.-Iranian relations should be modeled on Sino-American relations. The United States and China disagree in some important respects, but also have certain common objectives. Washington and Beijing actively attempt to reach consensus on some of those issues.

Iran and the United States have certain important objectives in common. They both have an interest in continued marginalization of Iraq. They both have an interest in the stabilization of Afghanistan. They both have an interest in stopping the drug traffic. They both have an interest in free passage of commerce through the Gulf. These are the goals that they can accede to. Iran and the U.S. should move toward a new paradigm, whereby they compete and cooperate at the same time.

In that particular sense, this is a policy neither of containment nor an alliance, but selective partnership on a limited range of issues. For this policy to succeed, there must be diplomatic dialogue and economic interaction between the two states. Should the United States move to modify its economic policies, economic sanctions policies, it perhaps could resume the long-suspended dialogue with Iraq.

At the end of the day, in the post-Cold War period -- a trite and often-repeated phase, but nonetheless -- the United States will face not a single global threat but a series of regional challenges. Iraq is such a challenge, a medium-sized power that seeks to determine the political trends in its immediate environment. The best way of dealing with such a challenge is to use a broad array of diplomatic, political, and economic tools.

Should Iran become further integrated into the global economy and actively included in the community of nations, hopefully it will voluntarily suppress some of its most intemperate impulses and moderate some of its more problematic conduct.

At any rate, Iran, for good or bad, will offer the next administration, whoever that is, both challenges and certain opportunities for new thinking.

Now I'll leave guns and bombs to Geoff.

MR. FREEMAN: There are many points that I'm sure will excite attention in the subsequent discussion. The challenge to recognize and manage a relationship which combines elements of competition and cooperation -- in other words, a normal sort of international relationship -- would challenge the maturity of whoever it is who comes in as president on January 20th. But I think that was a very useful formula.

Geoff -- Geoff Kemp, of course, really doesn't need an introduction. He is the director of research for the Nixon Center, and a man who has studied the Middle East and written on it in many, many of its dimensions, including a couple of years ago a road map for U.S.-Iranian relations. So, Geoff, please, you have the last word.

MR. KEMP: Well, I've forgotten what the line is about Zsa Zsa Gabor's fifth husband. I think it's something like "I know what I'm meant to do, but how do I make it interesting?"

This is difficult, to pinch-hit on these excellent presentations. Let me just say that when Ray alluded to U.S. relations with Iran perhaps being more like China, I could also add, perhaps, a little like U.S. relations towards France, since I think that is going to be a big item for the new administration.

Let me just make a few sort of obvious points. Iran is the only country in the world that refuses to have formal contact with U.S. officials. The North Koreans do. The Cubans do. The Soviet Union did all throughout the Cold War. This is a unique sort of situation. And yet I think we all realize that if the relationship improved, both sides would have considerable benefits. My sort of basic thesis is that the political crisis in Iran is not going away anytime soon, and that until the bitterness between the reformists and the conservatives is more muted, there is unlikely to be any dramatic change in Iran's willingness to talk and deal with the United States because, in my judgment, the United States remains the third rail of Iranian politics.

Once we are able to talk to each other, then these what I call "red button" issues, which Chas. Freeman alluded to in his introduction, have to be addressed -- the historic grievances, of course; the issue of terrorism, which everyone has mentioned; the U.S. military presence in the Gulf, which I think is a very ambivalent issue for Iran, since we indirectly protect Iran from Iraq; the opposition to the peace process in Israel; and energy policy, which I happen to believe is an extremely serious issue for the Iranians.

And it may well be that because these red button issues are so difficult that when we ultimately do formally talk to the Iranians, it may be better to start with what one might call "green button" issues; those issues where we have more in common and which are less likely to be divisive from day one. And again, I think we all know what that list consists of. We have common interests concerning narcotics, common interests concerning Afghanistan; both countries are very worried about Pakistan's evolution and its relationship with the Taliban; and we do have some common interests concerning Iraq, though I wouldn't overdo that commonality.

I think, from the Iranian point of view, the grievances go back of course even beyond the Iran-Iraq War, and the amount of literature that has come out in Iran in the past few months about our role in the '53 coup is still a lightening rod for, I think, all Iranians. And the fact of the matter is that the list of grievances that the Iranians express are those shared by moderates as well as conservatives, so that even if the quote-unquote "moderates" do prevail in the power struggle, the grievances are still going to be there and are still going to have to be addressed.

I think the one thing on the list of grievances that does separate out the moderates from the hard-liners is the United States itself. You know, from what one hears and reads and talks, there are groups within the conservative faction who truly do regard the United States itself as an existential threat. It is us as the superpower, the great arrogance, the great Satan, that is the problem. And for that reason, the concept at this point in time of restoring diplomatic relations with Iran and sending an American ambassador or even a senior diplomat back to Tehran, I think, is unthinkable at this point in time, for precisely this reason.

There are also issues that I hope Suzanne can talk more about in the Q & A -- enormous corruption in the country, corruption managed by many of the conservatives and, of course, if there were political reform that we would like to see, this would undermine and challenge a lot of the conservative financial interests.

So I think we can say that as long as the conservatives control the key instruments of power in Iran -- which are, after all, you know, the judiciary, the armed forces and the intelligence services -- and as long as the conservatives believe that they would be losers if they had better relationships with the United States, then they're going to do whatever it takes to put off the day when the great Satan comes back to Tehran. What we have to hope is that conditions will change in the region and change in Iran and possibly even change here, so that the conservatives do not feel that it is a zero-sum game.

So you can see, my perspective right now, as we speak here in December of 2000, is quite pessimistic, seen from Tehran; I think it's also quite pessimistic when viewed from Washington. I don't believe that the new administration will institute major changes towards Iran, first, until the Iranian elections are over, because I think we do not want to meddle in those elections and they are in May -- that's not too far away; but also until the Iranians actually agree to talk to us formally. And three, they have to mute their opposition to the peace process and their deliberate efforts to torpedo it, because let's face it, if the U.S. is the third rail of Iranian politics, Israel is the third rail of American politics. And I would argue that hostility to Israel has done more to harm Iran's image in this country, especially here on Capitol Hill, than any issue since the hostage crisis, since '79 and '80.

Now, one way out for the Iranians, they have said, is that they are prepared perhaps to talk to us formally if only we will offer them some gesture, such as, for instance, unfreezing their assets which they believe number in the billions of dollars. I don't believe any new administration, particularly one that comes to power on such a narrow margin of victory as is likely to be the case here, would be prepared, at least early on, to make any gestures or concessions before having talks with the Iranian administration. But this does not mean to say that the new administration can do nothing.

I think there are a number of things a new administration can do to improve the environment for eventual rapprochement, especially, especially if Iraq becomes perhaps the most serious Middle East challenge for the new administration, as I think some people believe it will do. There is, I think, a desire to break away from this concept that was fashionable in the early days of the Clinton administration to sort of lump Iran and Iraq together -- dual containment, two rogues out there; isolate them -- and be much more nuanced and much more understanding of the fact that there's been major changes in Iran for the better, and major changes in Iraq for the worst. And, therefore, if Iraq becomes a more prominent issue, there may be more willingness to rethink some of the policies towards Iran.

Even without that, there are things we can do. I think the style of U.S. diplomacy can be changed. From what I hear from Iranians -- and this comes not only from Iranians one meets, but these remarks that Mr. Khatami himself made to the Germans on his trip to Germany last year -- earlier this year, is that, you know, we have a tendency to announce our policy through formal speeches of the secretary of State, which are not cleared in advance by the Iranians. We make a few gestures, and then we expect the Iranians to reciprocate within hours or days, and if they don't, we say, "My God, they're not listening to us." And this does not help when we constantly interject into these policy statements praise for Khatami and the reformers, and criticism of Khamenei and the conservatives. This merely becomes a divisive issue which the Iranians resent and which the reformers tell us hamper dialogue rather than help it. So while I understand that from our own point of view we have to distinguish between the groups that we can work with and those we can't, perhaps doing it in speeches by the secretary of State is not very productive.

We do have legitimate concerns that we have to discuss in any Iranian regime, particularly WMD and terrorism. I will not discuss terrorism because it's already been alluded to. But the WMD problem, the nuclear, biological, chemical and missile issues are extremely important. But I think we have to have a more complex, more nuanced policy in discussing them.

What we say right now, both on the Hill and in the executive branch, is Iran has to get rid of its WMD, as one of our goals. It's not going to. They're not going to, let's face it. Even if the moderates win, they will have genuine national security concerns -- Iraq, Pakistan, India, Israel -- all nuclear powers. I don't believe that the new administration will institute major changes towards Iran, first, until the Iranian elections are over, because I think we do not want to meddle in those elections and they are in May -- that's not too far away; but also until the Iranians actually agree to talk to us formally. And three, they have to mute their opposition to the peace process and their deliberate efforts to torpedo it, because let's face it, if the U.S. is the third rail of Iranian politics, Israel is the third rail of American politics. And I would argue that hostility to Israel has done more to harm Iran's image in this country, especially here on Capitol Hill, than any issue since the hostage crisis, since '79 and '80.

Now, one way out for the Iranians, they have said, is that they are prepared perhaps to talk to us formally if only we will offer them some gesture, such as, for instance, unfreezing their assets which they believe number in the billions of dollars. I don't believe any new administration, particularly one that comes to power on such a narrow margin of victory as is likely to be the case here, would be prepared, at least early on, to make any gestures or concessions before having talks with the Iranian administration. But this does not mean to say that the new administration can do nothing.

I think there are a number of things a new administration can do to improve the environment for eventual rapprochement, especially, especially if Iraq becomes perhaps the most serious Middle East challenge for the new administration, as I think some people believe it will do. There is, I think, a desire to break away from this concept that was fashionable in the early days of the Clinton administration to sort of lump Iran and Iraq together -- dual containment, two rogues out there; isolate them -- and be much more nuanced and much more understanding of the fact that there's been major changes in Iran for the better, and major changes in Iraq for the worst. And, therefore, if Iraq becomes a more prominent issue, there may be more willingness to rethink some of the policies towards Iran. Even without that, there are things we can do. I think the style of U.S. diplomacy can be changed. From what I hear from Iranians -- and this comes not only from Iranians one meets, but these remarks that Mr. Khatami himself made to the Germans on his trip to Germany last year -- earlier this year, is that, you know, we have a tendency to announce our policy through formal speeches of the secretary of State, which are not cleared in advance by the Iranians. We make a few gestures, and then we expect the Iranians to reciprocate within hours or days, and if they don't, we say, "My God, they're not listening to us." And this does not help when we constantly interject into these policy statements praise for Khatami and the reformers, and criticism of Khamenei and the conservatives. This merely becomes a divisive issue which the Iranians resent and which the reformers tell us hamper dialogue rather than help it. So while I understand that from our own point of view we have to distinguish between the groups that we can work with and those we can't, perhaps doing it in speeches by the secretary of State is not very productive.

We do have legitimate concerns that we have to discuss in any Iranian regime, particularly WMD and terrorism. I will not discuss terrorism because it's already been alluded to. But the WMD problem, the nuclear, biological, chemical and missile issues are extremely important. But I think we have to have a more complex, more nuanced policy in discussing them.

What we say right now, both on the Hill and in the executive branch, is Iran has to get rid of its WMD, as one of our goals. It's not going to. They're not going to, let's face it. Even if the moderates win, they will have genuine national security concerns -- Iraq, Pakistan, India, Israel -- all nuclear powers. The one problem the Iranians face is that they are bound by international agreements they've signed and, therefore, breaking out of those international agreements, such as the Nonproliferation Treaty, is going to be very, very difficult and tricky for them. One way they could certainly improve their reputation, which right now in the intelligence services is very dismal, would be to agree to these new protocols that the IAEA has come up with for inspecting nuclear facilities, the so-called Program 93 Plus 2. But they say they won't do this unless they are given access to civilian nuclear technology, which we will refuse to go along with.

When it comes to their missile program, the only thing the United States can do is slow down Russian and Korean aid, and possibly even Chinese aid at some point in the future. We can't stop the Iranians; they're not bound by any treaty not to build missiles. Those missiles are going to go ahead. We're going to have to live with them.

The final point I'd like to make, where I do think a new administration, particularly a Bush administration, will take a new look and that could have a positive impact long term, is to review our Caspian policy, because it is in the Caspian that the Iranians and the Russians have enormous criticisms of our efforts to exclude them from projects in that part of the world.

And I think you're all familiar here with the arguments the administration has made why we are insisting in East-West pipelines for both oil and gas coming out of Central Asia and the Caucasus, so I won't repeat those. What I will say is that there is huge disagreements with this policy not only in the region, but also in many of our oil companies. And that the bottom line, from my point of view, is that the Caspian and Central Asia are important areas for American interests, but they're not vital areas for American interests; they're not as vital as the Persian Gulf, whereas for Russia and Iran they are.

And therefore, I think there is a case for reviewing our whole policy in the Caspian with the objective of being more flexible about energy projects and Iran's eventual participation in them, because this would help us in two ways. First, it would help defuse the growing rapprochement and cooperation between Russia and Iran, who as I say are reacting to our exclusionary policies. And secondly, we have, I think, in the context of world energy, a lot of reasons for wanting to see Iranian energy resources developed to the full.

Now, I don't believe a new administration will end oil sanctions with Iran unilaterally unless the Iranians reciprocate in some way that we can point to. Clearly, the important thing, I think, from the point of view of the Congress and a new administration would be a more muted Iranian behavior concerning the peace process and Israel. But I'm not keeping my fingers crossed on that; I doubt if that will happen.

But nevertheless, my last point would be, is that ultimately, as both Suzanne and Ray said, we have to ultimately consider dealing with the conservatives. The conservatives are not a monolithic group in Iran. Some have shown extraordinary pragmatism in the past. And it was, after all, the Ayatollah Khomeini who did the deal with Israel during the Iran-Iraq War to get arms.

Absent any breakthroughs like this, there are other things we can do. We can stop fingerprinting Iranians coming to the United States, and maybe if we did that, they would make it easier for us to visit Iran.

Thank you.

MR. FREEMAN: Thank you very much. I think we've been given a great deal to think about and to talk about. If indeed the era of signal diplomacy has come to the end of its useful life, and we now are moving into a new era as well as a new administration, admitting that the new administration naturally -- especially a new administration that is likely to be as weak in its domestic political base as whichever one we have will be -- the new administration will always address questions like this in terms of what's in it for us, what's in it for them, the administration.

Still, I think if we had had this discussion a year ago, we would have had a very different discussion, and it demonstrates the extent to which the question is now open. In that regard, Geoff, I just -- I can't help remarking that if I were an Iranian, I would see a certain difficulty with your prescription that I mute my opposition to something that no longer exists, namely the peace process. But perhaps -- and we're not here to talk about that particularly, but perhaps if whatever replaces the peace process involves actors like Europeans in addition to Americans -- that is if the American monopoly, as many speculate, will have to be the case -- hence, then that may itself have its impact on Iranian willingness to mute opposition.

I would like to -- I'd like to note also one point that came through in several of the presentations, which I think is -- and most particularly yours, Geoff, at the end, which seems to me to be fundamental, and that is the Iranian sense that the cultural identity of Iran is somehow in jeopardy when Iran deals with the United States. The supreme interest of any country is its national independence and its identity, and I think you're right, there has been a sense that somehow the very distances of the United States and our global reach constitute an existential threat to Iran. The question is, how do we, as Americans, if that is a problem, what on Earth can we possibly do about that? We already said something that Iranians are simply going to have over.

And finally, I'd like to ask -- and maybe this will start the discussion -- what specific actions might replace signal diplomacy? Geoff has suggested a review of Caspian policy, which many in the region would agree is overdue. Others might see oil and gas projects, or relaxation in elements of the American sanctions for example, resumption of civilian aircraft sales, as the sort of step that might lead to introducing some of those elements of cooperation into the competition that has been proposed here.

Others might look at military measures, disentangling naval operations in the Gulf, for example, as an option. I hope in the succeeding period we can get down to some rather specific proposals. I know many who have come today do have specific interests. I hope you'll feel free to raise them to the panel.

As we move into the question period, or the comment period, I'd ask you please to identify yourselves as you make your comment or ask your question. Try to keep it brief, if you can, and intelligible. Otherwise, I will interpret it and perhaps not do it the justice that I might. Please also come to the microphone, and I invite anyone who wishes to begin this process now to do so.

Q I'm Walt Grossman for Dr. Takeyh. I take the point about the Khatami change in policy toward the Southern Gulf States. Much improved security relationships, especially Kuwait, Qatar and Oman. One fly in the ointment seems to be [inaudible] still standing in the way of a similar rapprochement with the UAE, and it's to these three useless bits of rock in the middle of the Gulf that I address your attention.

MR. TAKEYH: Addressing useless bits of rock is always intriguing. I have never understood Iran's preoccupation with those three islands. But I also don't think that they stop Iran's fundamental relationship in the Gulf, which is with Saudi Arabia. I think the Saudis have implied and intimated that Iran's peculiar and fascination with these useless pieces of rock are not going to impede some of the more fundamental relationship. I think ideally one would hope that Iran would somehow reach some sort of consensus with UAE, perhaps within the framework of GCC, or something like that. But I just don't think that particular issue is going to impede more fundamental relationships that the Gulf States would like to have with Iran on the entire range of issues which they both find advantageous, not just petroleum policy, passage reform, and so on, but also they all have