The Future of U.S. Power in the Middle East

JONATHAN KARL: Welcome. I'm Jonathan Karl with ABC News and honored to be presiding over a meeting featuring Senator Joe Lieberman, who does not need much introduction at all. So first, just a few things about the meeting itself:

First of all, if I could ask everybody to turn off cell phones and Blackberries. And I'm told, because it interferes with the sound system here, not even vibrant, but if you could just please turn them off. And you know, I'll do it too. What do you think? (Laughter.)

This meeting will be on-the-record -- everything here on-the-record. The senator has some short remarks, then I will ask him some questions; then we'll open up to questions from you. And no introduction, but I'll do a short one anyway, just because.

Senator Lieberman is the soon-to-be senior senator from the state of Connecticut. Elected of 1988, chairman of the Homeland Security and Government Affairs Committee -- one of the truly independent voices in Congress, especially on national security issues. Obviously, his role in supporting the Iraq war well known, caused a few headaches for some of his party leadership. He is -- (laughter) -- yes, but plenty for us in the press.

He, of course, was the Democratic nominee for vice president in 2000, and in 2008 was McCain's choice to be the Republican nominee for vice president -- that is Meghan McCain. (Laughter.)

Without further ado, Senator Joe Lieberman. Thank you. (Applause.)

SENATOR JOSEPH I. LIEBERMAN (ID-CT): Thanks, Jon. Thank you, Jon. Thanks to everybody. And I can't resist -- anytime anybody says I'm somebody who doesn't need an introduction, I'm reminded of being in a room with Henry Kissinger a few years ago here in Washington when the person got up and said, "If there's anybody in the world that doesn't need an introduction, it's Henry Kissinger. So I give you Dr. Henry Kissinger."

And Henry got up and said, "You know, I suppose it's true. I don't need an introduction, but I like a good introduction." (Laughter.) So I thank you for that introduction.

It's a pleasure to be back at the Council on Foreign Relations to talk about the future of American power in the Middle East.

As I was preparing my remarks today, I was reminded of a story about the pre-history of the CFR. The council, as some of you may know, grew out of a project begun by President Woodrow Wilson shortly after the United States entered World War I. President Wilson's idea was to assemble some of the best and brightest minds from academia to advise him about what the shape of the postwar order would be and what role America should play in it.

This initiative included a working group on precisely the subject I would like to discuss this afternoon -- the future of the Middle East. The group's composition was unique: Ten distinguished academics, including an historian of the Crusades, two professors of ancient Persian literature and a specialist on Native American tribes. What the group did not include, however, was anyone who knew anything about the contemporary Middle East at that time. (Laughter.)

According to one account of the initiative's work, and I quote: "Many of the researchers did no more than summarize the information they found in an encyclopedia about the Middle East. Many delved into questions of literature and architecture and few of the reports had any bearing on the question of American national interests." End of quote.

So with this history in mind, I want to preface my remarks this afternoon by assuring all of you that you will not be subjected to any attempts at literary criticism on my part. No encyclopedias -- not even, in this case, Wikipedia! -- were consulted in the preparation of this speech.

I will say, though, in fairness to your predecessors at the council, and mine, it is also significantly easier today than it was in Woodrow Wilson's time to identify America's national interests in the Middle East. In fact, it's hard to miss them.

The U.S. has never been more engaged and invested across the Middle East than we are right now e from the Straits of Hormuz to the wilds of Yemen; from proliferation to the peace process. Indeed, it is hard to imagine a day in the life of an American President in which the Middle East does not figure prominently, probably.

This did not happen overnight. Rather, it reflects a set of real American interests and critical American commitments in the Middle East that have developed in recent decades under both Democratic and Republican administrations. This has happened because successive American presidents have recognized that developments in the Middle East have a direct impact on the physical safety and economic security of our country and our citizenry.

And yet paradoxically, despite this unprecedented engagement in the Middle East today, I have been struck, when I've traveled in the region in recent months, by what seems to me to be a heightened uneasiness about the future of American power there. Behind closed doors, one hears an unmistakable uncertainty about our resolve and staying power -- notwithstanding the fact that, in my opinion, we're more engaged in the region today than we ever have been before.

I want to suggest four possible reasons for this paradox and these concerns. First: It may actually reflect just how indispensable and integral American leadership has become in the Middle East. Despite the frustrations and resentments in different groups in the region that America seems to provoke, we are also looked to and counted on as a partner and guarantor for security; as an honest broker in diplomacy and politics; and as a voice for human rights and democratic change.

Second: The global financial crisis and our national fiscal deficits have aroused fears in the Middle East, as they have elsewhere in the world, that America might be tempted to turn inward -- unwilling or unable to sustain our global commitments.

Third: The anxieties in the region about America's staying power also undoubtedly reflect some of the setbacks we have encountered in pursuit of our goals in the Middle East -- from the mismanagement of the early years in postwar Iraq to the inability of successive administrations to secure the comprehensive regional peace that we have repeatedly tried to achieve.

But fourth -- and I think, ultimately, most important today -- the major geopolitical driver for the heightened anxiety about America's staying power in the Middle East is the Islamic Republic of Iran -- more specifically, its determined push to become the dominant power in the region and tilt the balance of governance there towards Islamist extremism -- and whether the United States has the will to stop that push.

The Iranian regime's pursuit of a nuclear weapons capability cannot be separated from its long-term campaign of unconventional warfare, stretching back decades now, to destabilize the region and remake it in its own Islamist extremist image. So we have a power here that is both extreme and expansionist and that's a dangerous combination.

Through use of the IRGC Quds Force and its terrorist proxies, the Iranian regime has sought to neutralize the conventional military advantage of the United States and our allies and overturn the balance of power in the Middle East. It's also, of course, responsible for the murder of hundreds of Americans -- mostly in Iraq. The same strategic logic, I think, is driving its pursuit of a nuclear capability.

If Iran succeeds in acquiring a nuclear weapons capability, it would severely destabilize the Middle East -- a region whose stability has been an important long-term American national and economic security priority.

It will also damage America's ability to sustain the commitments we have made in the Middle East: our commitment dating back to Presidents Carter and Reagan to prevent the domination of the Persian Gulf by a revisionist or extremist power; our commitment to secure lasting peace and security between Israel and its neighbors; and our commitment, more recently, to deter, disrupt and defeat state-sponsored Islamist extremist groups, who would suddenly be able to wage attacks from under the protection of Iran's nuclear umbrella. So this would be a transformational event for the worst.

It goes without saying that Iran's illicit nuclear activities implicate broader global interests of the U.S. -- not just regional, but global interests as well -- foremost, the international nuclear nonproliferation regime. As President Obama has repeatedly warned, a nuclear Iran could drive other states in the region to seek to acquire their own atomic arsenals. And have no doubt: The more nuclear-proliferated the Middle East becomes, the greater the odds that nuclear weapons will fall into the hands of terrorists who will try to use them against the U.S. and our allies around the world.

That is why I believe that the single most important test of American power in the Middle East today is whether we succeed or fail in stopping Iran from acquiring nuclear weapons capability. How we do on that test will significantly affect our standing in the rest of the world.

I've been a strong supporter of the Obama administration's dual-track approach of engagement and pressure in response to the Iranian challenge -- including the effort to orchestrate a new set of sanctions, in the hope that these measures will push the leadership in Tehran to suspend its illicit nuclear activities and reconcile with the international community. The White House has pursued this strategy with discipline and determination.

The result has been a cascade of new measures since this summer -- beginning at the U.N. Security Council, then continuing in Congress and then going to responsible countries and companies worldwide from the EU to Australia, Japan and South Korea. It has been faster, broader and more intensive than I expected -- but much more important, than the Iranian leadership anticipated.

There is no question that the regime in Tehran is under heightened pressure today, both at home and abroad. In addition to the new sanctions, the Green Movement, and the regime's oppression of that movement, has robbed the Islamic Republic of whatever pretense of legitimacy it ever possessed -- proving once and for all that the regime in Tehran today has become neither "Islamic" nor a "republic," but a crude military dictatorship. In the region, meanwhile, the heart of that military dictatorship, the IRGC's, has the dream of replicating -- excuse me -- the IRGC's dream of replicating the Hezbollah model in southern Iraq was rolled back by the Iraqi and American forces, while the revival of the Israeli-Palestinian peace process -- with all it's current fits and starts --has put the Iranian regime on the defensive, particularly since the legitimate leadership of the Palestinian Authority told Tehran earlier this month to stop interfering in their internal affairs.

Yet at the same time, the harsh fact is that Iran's nuclear efforts are continuing forward. Despite some apparent technical difficulties, Iran's centrifuges keep spinning, and its stockpile of fissile material continues to grow.

Sanctions of course are important, but sanctions are a means to an end, not an end unto themselves. The true measure of success will not ultimately be how many Iranian banks we designate or how many foreign companies cut economic ties to Iran, but whether these actions motivate meaningful behavior change on the part of the Iranian regime -- in other words, to stop its illicit nuclear activities. As of yet, the obvious fact is that they have not. And until they do so, we must not only maintain the pressure but keep ratcheting it up.

That means aggressive and creative enforcement of existing sanctions against Iran. It means American penalties against companies that continue to invest in Iran's energy sector or supply or sell refined petroleum to Iran. And it means that the administration should make use of the powerful new authority granted to it by the congressional sanctions legislation, to cut off from the U.S. financial system any foreign bank that continues to do business with the IRGC, its front companies, or other illicit Iranian actors.

There have been suggestions recently that the Iranian regime may be prepared to resume talks about the nuclear matter with the P-5 plus one. President Ahmadinejad suggested this when he was in New York last week at the U.N. At the same time, he made his outrageous and insane accusation that the U.S. government was responsible for 9/11. I must say, that combination of statements by Ahmadinejad last week at the United Nations reminded me of an old Connecticut politician's warning: "Don't spit in my face and then tell me it's raining." In his speech at the United Nations, Ahmadinejad once again rejected President Obama's outstretched hand and instead, slapped the U.S. and the rest of humanity in the face.

Certainly, the door to the negotiating table should remain open to the Iranians e but it is equally certain to me that the Iranians must not be rewarded simply for showing up at the table. The test whether the Iranian regime is talking -- the test is not whether the Iranian regime is at the table talking; the test is what the regime is doing. As long as centrifuges are spinning and uranium is being enriched, the pressure from sanctions on Iran must keep growing.

My personal concern is that the current leaders -- the fanatical leadership of Iran today e particularly the IRGC hardliners, who have consolidated power in the wake of last year's election e are incapable of compromise on the nuclear program, no matter how much pressure is put on them, because opposition to America and the West is so integral to their identity -- the identity of -- the essence of their power. If this is indeed the case, it may be that our best hope to resolve this confrontation is not for the regime in Tehran to change its behavior, but for the regime itself to be changed. I am not naive about how difficult this may be, but supporting such a change -- such popular opposition -- is surely the policy our fundamental national values require and the one that the people of Iran deserve.

And remember: More than once in our lifetimes, we have been surprised to see seemingly impregnable regimes collapse under pressure for freedom from their own citizens. What is likewise clear is that the current leaders of Iran spend a lot of time and a lot of energy and a lot of resources worrying about the internal opposition to their government. They certainly take the threat from the opposition seriously and so should we.

Our sanctions effort should therefore increasingly aim, I believe, not just to add pressure on the existing regime, but to target the fissures that already seem to exist within the Iranian regime itself and between the regime and Iranian society.

This should include much more robust engagement and support for opposition forces inside Iran, both by the United States and like-minded democratic nations across the world. The Obama administration, I fear, missed an important opportunity in the wake of last year's election in Iran. But it is certainly not too late to give strong support to the people in Iran who are courageously standing up against their repressive government. And there's very good and encouraging news on this front to report to you now.

In the comprehensive sanctions bill passed by Congress this summer, Senator McCain and I led a bipartisan effort to include a provision that requires the administration to impose targeted sanctions against individuals in the Iranian government who committed human rights abuses after the June 12 election. I'm pleased to report to you -- if you have not already heard -- that Secretary of State Clinton and Secretary of the Treasury Geithner are right now announcing the first of these human rights designations of individuals who we have good reason to believe were complicit in denying the human rights of the citizens of Iran. I cannot adequately applaud and thank the Obama administration for taking this important action today.

I'll just add this: While the president has extremely capable point people responsible for negotiations with Iran and sanctions against the regime there, there is still no one in the Obama administration e as far as I can tell e who wakes up every day "owning" the mission of helping the people of Iran overcome their government's electronic monitoring and censorship, to secure the universal human rights with which all of us have been endowed by our creator. The president needs to find his "Stuart Levey" for the Green Movement.

We have now come to the moment in this long struggle when the Iranian regime must understand that we will not wait indefinitely for sanctions to work. As my colleague in the House of Representatives, Foreign Affairs Chairman Howard Berman, warned last week, we are talking about months, not years. I therefore hope that President Obama will conduct an assessment at the end of this year e just as he did last year e to determine if the current strategy towards Iran is working. If it has not produced meaningful change in Iran's nuclear weapons policy by then, we will need to begin a national conversation about what steps should come next.

This inevitably will involve consideration of military options. I agree with President Obama that the use of military force is not the "ideal way" to stop the Iranian nuclear program. But nothing is more corrosive to the prospect of resolving this confrontation peacefully than the suspicion e among our friends and enemies in the Middle East e that in the end, the United States we will acquiesce to Iran's acquisition of a nuclear weapons capability. If a nuclear Iran is as unacceptable as we say it is, we must be prepared to do whatever is necessary to prevent the unacceptable.

It is time for us to take steps that make clear that if diplomatic and economic strategies continue to fail to change Iran's nuclear policies, a military strike is not just a remote possibility in the abstract, but a real and credible alternative policy that we and our allies are ready to exercise if necessary.

It's time to retire our ambiguous mantra about all options remaining on the table. It's time for our message to our friends and enemies in the region to become clearer: Namely, that we will prevent Iran from acquiring a nuclear weapons capability period -- by peaceful means if we possibly can, but with military force if we absolutely must. A military strike against Iran's nuclear facilities entails risks and costs -- I know that -- but I am convinced that the risks and costs of allowing Iran to obtain a nuclear weapons capability are far greater.

Some have suggested that we should simply learn to live with a nuclear Iran and pledge to contain it. In my judgment, that would be a grave mistake. As one Arab leader I recently spoke with pointed out, how could anyone count on the United States to go to war to defend them against a nuclear-armed Iran, if we were unwilling to go to war to prevent a nuclear-armed Iran in the first place? Having tried and failed to stop Iran's nuclear breakout, our country would be a poor position to contain its consequences.

I want to add that I also believe it would be a failure of U.S. leadership if this situation reaches the point where the Israel government decides to attempt a unilateral strike on Iran. If military action is absolutely necessary to stop Iran from gaining nuclear weapons capacity, then the United States is clearly in the strongest position to confront Iran and manage the regional consequences. This is not a responsibility we should outsource. We can and should, of course, coordinate with our many allies who share our interest in stopping a nuclear Iran, but we cannot delegate our global responsibilities to anyone else.

Iran presents us with daunting and difficult challenges -- as we all know. By now, I suspect, some of you may be getting wistful for the days of Woodrow Wilson when discussions about American policy in the Middle East could focus some on Persian poetry. But before you get too wistful, also remember that those were the days when the principal strategic challenge confronting the president of the United States was a great power conflict in the heart of Europe between Germany and her neighbors e a conflict of nationalistic hatreds, of extremist ideologies, of geopolitical rivalries that twice ignited into world war and claimed the lives of tens of millions of people, including several hundred thousand Americans.

Today, by comparison -- we take it often for granted -- but it's possible to walk from Portugal to Poland without encountering a militarized border, or changing the currency in your wallet -- much less stumbling into an active conflict. A part of the world that a century ago was a strategic sinkhole for American blood and treasure, hopelessly entrenched in war, is today an unbroken field of democratic allies and a bulwark for peace and stability e so much so that we too often take for granted just how difficult and improbable a journey to this time has been.

So yes, American power clearly faces great challenges and dangerous enemies -- including, particularly, the Islamic Republic of Iran -- today. But we must also remember that American power is capable of achieving great things e sometimes seemingly impossible things.

This is the alternative future I believe we must also summon the imagination to envision, and the political will to help bring into being: A vision of a Middle East in which a democratic Iran assumes its rightful place as a regional power and as the modern heir of one of the world's great civilizations e an engine of prosperity and innovation that benefits its own people and the entire world; a vision of a Middle East in which Islamist extremism no longer inspires violence, let alone loyalty, but joins other failed and inhumane ideologies on the ash heap of history.

And a vision of a Middle East in which Israel and its Arab and Persian neighbors live in peace with each other as fellow democracies that respect the human rights of their citizens e and in a region where the notion of going to war against each other becomes as unthinkable and absurd as it seems today to teenagers living in France and Germany.

Thank you very much. (Applause.)

KARL: Let's start by defining where we are in time.

LIEBERMAN: Okay.

KARL: It seems to me that for the past five or six years, the perception has been that we are about a year-and-a-half -- year or two away from Iran crossing the, you know, crossing the line. So where are we right now? How much time do we have?

LIEBERMAN: Let me answer the question to the best of my ability and authority and then make a comment on it.

Obviously, you get differing estimates. The International Atomic Energy Agency has estimated that Iran now has enough -- now has enough low-enriched uranium to build two nuclear weapons. This is very much a question of how Iran intends to go at this -- whether it continues to accumulate highly-enriched uranium and basically holds it for a sudden surge breakout. But the time frame has tended now to be -- the closest estimates are about a year and the further estimates about Iran becoming a real nuclear go to two to three years.

What I'm suggesting here today -- or saying explicitly -- is I think we have to start -- that those discussions are not irrelevant, but they're not ultimately determinative, so long as we conclude that Iran continues to do whatever it can -- centrifuges; moving, adding fissile material being stored -- that when they reach nuclear capacity is not the factor. The factor -- the motivating factor or animating factor here should be how are our policies aimed at stopping that behavior working? And most significantly now, how are the sanctions working?

And that's why I think it's so important for the president and our allies to do a review at the end of this year. That will have allowed about six months since the U.N., U.S., EU sanctions began to go into effect. I'm not saying that we have to make a decision about anything else then, but it's a time to look and see whether we've had an effect on Iranian policy.

KARL: Now, your comments on outsourcing to the Israelis were interesting. What is your sense about how they look at this? Is there much daylight between what the Israelis think the timeline is and where this administration thinks the timeline is?

LIEBERMAN: This is something that's best not to talk about in great detail in public, but my own sense is that the estimates here have grown closer together between the U.S. and Israel and other allies about the time frame for Iran gaining nuclear weapons capability.

Obviously, the Israelis and the Arab countries have a slightly different perspective that goes beyond time --

KARL: Geography.

LIEBERMAN: Geography -- it goes -- proximity to Iran and makes them all more anxious about Iran's nuclear weapons program.

KARL: Now, you saw Michele Flournoy's comments in April that the military option for now is off the table. Could you see this president engaging in a military action against Iran?

LIEBERMAN: Well, the president -- President Obama has been -- obviously, this is -- this may be the most important decision that President Obama will make during this first term as president. And it's a -- obviously, with all sorts of consequences, so you know, I can't predict what he will do.

But I will simply say to you that I've heard him say more than once that Iran gaining nuclear weapons capacity is unacceptable. And when he says unacceptable, he means unacceptable. And I think we've got to give him some room within that strong statement to determine what actions to take to pursue it.

KARL: But this is not something he talks about much. I mean, this is not -- I mean, President Bush, secretary of State, the question of Iran's progress in this direction was a constant refrain, a constant concern that was expressed. I mean, are you hearing the same from President Obama?

LIEBERMAN: Obviously, because of the economy, the president and all of us in Washington have been focused more on domestic policy matters. But I will say this -- just to draw out a little bit what I said during my remarks: The Obama administration has been very active and aggressive in pursuing its two-track toward Iran -- both extending an open hand, but also putting pressure on and ratcheting up the pressure. And leave it to the president to say, but it's my impression that he's at least disappointed by the reaction of the Iranians to his outstretched hand, which has been to essentially slap it.

And so that -- what I'm trying to say is, I don't know about the number of words said in public by President Obama about Iran as compared to his predecessor, but the actions of this administration -- particularly on the sanctions front -- have been very strong and I think very effective. And I give them a lot of credit for that -- not just in working with Congress to adopt the sanctions legislation, but really a path gaining U.N. Security Council support, Congress and then working very hard with our allies. Some of them are taking actions that are not in their best mercantile interests to impose sanctions against Iran. And that wouldn't have just happened automatically. So I think you -- I have a very positive feeling about what's happened so far in the Obama administration to deal with the Iranian nuclear challenge.

KARL: But let's be clear about what you were saying -- and you were quite clear: You're raising the possibility of a U.S.-led war, military strike against Iran on this administration's watch. I mean, this is a timeline of two to three years at the outside, maybe sooner.

Do you see -- does this president, if he's -- truly would go in that question? That's the big question. Has he done anything to lay the groundwork with the American people of yet another war in the Middle East?

LIEBERMAN: Well, again, we're not talking about a war, because nobody is talking about invading Iran or --

KARL: Well, you don't know what the reaction to a -- to a strike is.

LIEBERMAN: Right. And believe me, both the president and our military leadership, just the exercise of their responsibilities, as you know, the military leadership of the U.S. has made clear that they have contingency plans for military action against Iran, if the commander in chief asked them to take such action.

That -- those contingency plans, I'm confident, also include estimates of the Iranian reaction and how we would counter it and stifle it. Again, in talking about raising up the possibility of a military strike against Iran's nuclear facilities, if all else fails to alter their policy regarding nuclear weapons, I'm not naive about the risks and the cost. But as I said in my remarks, I'm totally convinced that the risks and the costs of a nuclear Iran are much greater -- a nuclear arms race in the Middle East; probably some Arab countries feeling that they have to fall within Iran's orbit out of fear; support of the terrorists -- part of the end of any prospect of peace between Israel and the Palestinians, because of the influence that will -- that Hamas and Hezbollah will gain as a result of an Iranian nuclear program. And I'm afraid, the end of one of President Obama's major international policy goals, which is to expand the nuclear nonproliferation regime. I think the regime, as it exists now, will essentially collapse if Iran gets nuclear weapons.

So for all those reasons, I think we've got to consider and make it clear to the Iranians that we're taking this seriously enough to consider a military strike against them.

KARL: You remember what John Abizaid -- who was, of course, CENTCOM commander so this was his responsibility -- shortly after he stepped down, 2007, he said -- and I'll read it word for word here: "I believe the United States with our great military power can contain Iran. Let's face it, we lived with a nuclear Soviet Union; we lived with a nuclear China and we're living with other nuclear powers as well."

I know you don't agree with what General Abizaid said there. I'm wondering if you think, based on your discussions with this administration, if you think that that is a belief that is held by some within the president's inner circle.

LIEBERMAN: I don't know. And I haven't heard anybody in the inner circle of the president on foreign policy say exactly those words.

And of course, to me there are differences here. This is really a fanatical regime. This is a theologically extreme regime, which has clear expansionist goals in the region and has much less concern for human life -- including the life of their own citizens -- than even the Soviet Union did. So I think there's a real danger here for us and we've got to deal with it before it becomes more serious.

KARL: Okay. Well, with that, open it up from some questions. And if you -- there are microphones here, so if you can speak into the microphone.

Let's see who we have first -- get a mike right here.

QUESTIONER: Oh, excuse me. Bob Winter, Arnold & Porter.

You're very convincing in stating the risks that would come about from a nuclear Iran. And you state that you're not being naive about the risks of going to war. But quite arguably, many were naive about the risks of the first Iraqi war -- not the least of which was the prospect of a much stronger Iran coming out of the Iraqi war.

LIEBERMAN: Right.

QUESTIONER: And I wonder how you have the type of discussion you say we should have about the prospects of that type of military action, without a serious discussion of what the risks really are. And not simply to say, as you say it, that we have plans and we'll stifle them.

What do you think are the significant risks; how serious are they and what, as a practical matter, could we do to contain them?

LIEBERMAN: Right. It's a fair question.

The military risks, of course, are that Iran will counter attack either through Hezbollah or Hamas or other client-proxy terrorist groups or against -- and the counterattacks will be against our allies in the Middle East, Arab and Israeli, or against U.S. positions in the Middle East or elsewhere in the world.

So we would obviously have to raise our guard and increase the capacity of our allies in the region to defend themselves, which we are, incidentally, doing quite well right now. In other words, we're increasing the capacity of our Arab allies to defend themselves.

To me that's the most significant. Obviously, there might be a short-term increase in the price of oil. It depends on how other oil-producing countries deal with it and the normal laws of supply and demand. Although, I think if you think about the power of a nuclear Iran to arbitrarily and unilaterally affect oil price and therefore, America's economy, the world economy, it's much greater than if they gain nuclear power than not.

So I'm just saying that I don't want anybody to think that I think that this will be like the Israeli attack on Iraq or Syria where there essentially was not a response. I expect -- we have to expect that there will be a response. But my own judgment is, in calculating it, is that we and our allies will be prepared and can deal with it.

I think that if we act -- and again, I want to stress, I understand the interest in the possibility of a military attack, but if we -- I want to stress that I hope we don't get to that point. I hope the Iranians not only come to the table, but enter into sincere negotiations about ending their nuclear program and then come back and join the community of nations.

But if we do act, then I believe it will greatly strengthen our allies in the region. And particularly, our Arab allies who feel, in some senses, more vulnerable to Iranian attack than even the Israelis do. I think it will also greatly increase our credibility and strength, and therefore, our security in the world, because we will have shown that we're prepared to take steps to stop something that we have said over and over again is unacceptable.

KARL: Yes?

QUESTIONER: In seeking a peaceful solution, what should we do about the large and existing Israeli nuclear weapons arsenal?

LIEBERMAN: Well, this is -- I guess you heard the question.

The U.S. position for a long time on this has been that the Israelis are in a uniquely vulnerable position in the Middle East politically, and that any consideration of what to do with their alleged nuclear program has to await a time when there is a broader political agreement -- diplomatic agreement -- between the Israelis and their neighbors. And so I -- that's the position that I would take.

KARL: Yes?

QUESTIONER: I'm Guy Tioni (ph).

LIEBERMAN: Nice to see you.

QUESTIONER: One sentence in support of your point of at least discussing the military option.

LIEBERMAN: Yes.

QUESTIONER: I was the guest of the reformers in Iran and deliberately covered outside Iran, and what you see all over the place is shrines for the people they lost in Iraq. They're very leery to go to war. And indeed, as you recall, in May 2003, after our military accomplishment in Iraq, Iran made by far the best offer for a settlement. So at least discussing the military option seems to be something to consider.

But question is: If one takes everything that you say as your text, given that our intelligence estimates in the past are not completely reliable -- I think you would agree with that -- that waiting more than six months seems not to be justified.

LIEBERMAN: Waiting more than six months to be justified?

QUESTIONER: No. Not justified, because --

LIEBERMAN: Ah, I see -- in other words, to err on the side of caution.

QUESTIONER: You have to assume -- it's better safe than sorry.

LIEBERMAN: Well, I don't have much to say in response to that, except to say that I've always respected your judgment and wisdom, Professor.

KARL: Yes, back here?

QUESTIONER: Senator, thank you for your remarks.

My question is: When you were looking at threats to regional stability from Iran, you not only concentrated on the nuclear aspects, but also the threats because of the popular illegitimacy of the regime and its abuse of human rights and its support for violent extremism.

My question is: If those are so important for regional stability -- and arguably, for long-term regional stability -- why don't those criteria apply to other states in the region, specifically Saudi Arabia?

If you look at many surveys, just as totalitarian, just as abusive of human rights. And yet, this is a regime that receives over $60 billion in and arms sale recently.

KARL: Right. In the State Department human rights report, they get hit a little harder. And the Religious Freedom House survey, they --

LIEBERMAN: Yeah. My answer would be that -- I'll start by saying that diplomacy, like life itself, is not perfect. (Laughter.) And your point is obviously well taken.

The difference, of course, is that Iran is a hostile power to us and most of the rest of -- not only their neighbors, but most of the -- most of the Western world. The Saudis are not a hostile power within the region. And to their credit, in recent years, I think they've finally awakened to the fact that Islamist extremism threatens them -- the regime there -- more directly than anyone else. And they have become very good allies in counterterrorism. But we should not stop to continue to put, you know, pressure on.

To me it's the clear way for the future. It may not happen tomorrow, but it's got to continue to happen throughout the Middle East.

I don't -- I bristle at any of the suggestions that somehow -- which you hear both within the region and from outside -- that somehow the Arab world is not ready for democracy. I don't buy that and there are a lot of examples to show that it's not the case.

KARL: Senator, it is 1:30. If you -- if it's all right with you, could we extend a little bit, because we --

LIEBERMAN: Yes.

KARL: Another five minutes or so?

LIEBERMAN: Sure.

KARL: So if anybody has to leave, it's 1:30. So take this time now for a few more questions.

Yes?

QUESTIONER: Senator, Roger Parkinson.

I'd like to take the discussion, if I could, still in the Mideast in a little different direction.

We read -- at least I've read in the newspaper recently -- about the new, very new viruses that have been supposedly created by a foreign country to attack, in this case, the Iranian nuclear facilities. But such viruses intel -- intelligence can't identify the source inclusively. And they also have the ancillary affect of attacking other aspects -- whether it's India, Indonesia or Idaho -- unintended.

It seems to me like that's a ratcheting up in warfare, in cyber warfare. And I'm wondering what you think the U.S. or the community of nations should do in terms of strategy or tactics to deal with this.

And I emphasize that I read about it in the newspaper, because I think you have a very bright and talented aide who works on cybersecurity, who also happens to be my daughter, so -- (laughter) -- and she's very tight lipped and I read it in the newspaper.

LIEBERMAN: Oh, Deborah's your daughter?

QUESTIONER: Yes.

LIEBERMAN: Well, she does a great job.

Okay, well --

KARL: Should we refer the question to Deborah? (Laughs.)

LIEBERMAN: Deborah, yeah. No. She really does.

Let's just see just briefly -- I must say, in terms of the topic today in Iran, I myself have been fascinated that Iranian authorities have acknowledged that their nuclear facilities are under cyber -- if not attack, at least intrusion -- and that it's slowing up their work. Of course, I think that is good news, but I don't have anymore I can say about it.

But it does show us that -- and if I may step back -- this is a classic moment of an experience we see throughout history. Anytime -- not anytime, but so many times when there's an advance technology or otherwise -- going back to the beginning of fire, let alone in more recent times the telegraph or the engine -- they're used for military purposes. And there's no question that some nations and some non-state actors have extraordinarily active programs of cyber warfare and it's a real threat to our security.

And this brings me to my Homeland Security work. And we are working with Senator Collins and others -- supported, I might say, truly brilliant staff -- to bring forward cybersecurity legislation, which will improve our -- the organization of our defenses.

But this is a truly threatening situation where a country with much less military strength conventionally and less wealth than we have, if they focus their investment in cyber capacities have the ability, if we're undefended, to do terrible damage to us in our financial infrastructure, our electric power grid. I mean, if you want to have a real nightmare, get into -- they might get into computer systems that, for instance, operate dams and, you know, open up the dams.

So I just want to assure you and everybody else that our government is now -- mostly in ways that are not specifically seen -- investing a lot of money in raising our defenses. And we're doing pretty well at it.

KARL: All right. Let's take one more question. Back over here -- and just a reminder, this meeting has been and continues to be on the record.

QUESTIONER: Thank you. My name is Ronit Avni from Just Vision.

I'm just very concerned, as we're talking about potentially opening up a third front -- a third invasion of a country -- on multiple levels both in terms of the recruitment capacity for extremist groups and the unintended consequences. As you talk about dams and other places, I have family in Israel and I am certainly very worried, given the failure of intelligence to predict what emerged both in Iraq and Afghanistan, but also on a more simple level in terms of the election of Hamas in the region.

So I have very little confidence that our predictions are going to bear fruit in the constructive way that you lay out.

LIEBERMAN: Well, let me -- whatever one thinks of our intelligence or global intelligence, a lot of this information now comes from the International Atomic Energy Agency, which is not in our control. And sometimes, I think Americans and other allies felt it was not particularly friendly to us.

But they're the ones who talk repeatedly about the extent to which Iran is violating existing United Nations Security Council resolutions. They are the ones who've made the estimate that they have enough low-enriched uranium to build two nuclear weapons now if they choose to. I could go on. You know, they're the ones who say that the number of centrifuges is growing and the fissile material that they have is growing.

So this is a threat. And somebody said to me -- and I think it's probably right -- that the only thing that this fanatical regime in Tehran, repressive regime, cares about more than developing nuclear weapons is the survival of the regime. That's why they're so worried about the popular opposition in the country.

And I just think -- here's another difference, I believe, between this and perhaps Iraq and Afghanistan in the Arab world: There is great fear in the Arab world about Iran getting nuclear weapons. And in some ways -- perhaps unfortunately -- this is not only a reflection of the expansionism of the Islamic Republic of Iran, but it reflects centuries old rivalry between Persia and the Arab countries and Arab peoples of the region.

So I wouldn't reach a conclusion that a military strike by the U.S. and our allies against Iran's nuclear weapons facilities -- if that becomes absolutely necessary -- will be unpopular in the Arab world. I can tell you this, from personal knowledge: It will not be unpopular in Arab capitals of the Middle East.

KARL: Of course, part of the intelligence failure in Iraq was not just the weapons of mass destruction, but what would happen. And we -- you know, the whole greeted as liberators phenomenon.

And you know, I think that that's a big part of that question as well.

LIEBERMAN: Well, here again, we're dealing with a regime that, from all that we know, is extremely unpopular. It's unpopular because of its repression -- women's rights, labor rights, journalists in jail, et cetera, et cetera.

It's also now increasingly unpopular because of the failure of Ahmadinejad's government to manage the economy successfully. So they're now considering removing subsidies on staples like flour and also subsidies for the cost of refined petroleum. If you begin to do that, there's going to be a lot of public unrest there.

Look, we -- it's not so long ago -- and I know people associate it with the shah -- but it's not so long ago that the people of the U.S. had a pretty darn good relationship with the people of Iran. There's no natural conflict there. From all that we continue to hear -- maybe you saw this in your -- the meetings, Professor -- you know, the people of Iran are highly education, very modern, just feel like they're being suppressed and sort of pushed back into the God knows what century and they want to come forward into the 21st century.

So I think anything we can do to help them find a better way forward -- basic freedom, human rights, economic opportunity -- I think it's going to be very popular in Iran.

KARL: All right, Senator Lieberman.

LIEBERMAN: Thank you all very much. It's been a good discussion. (Applause.)

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THIS IS A RUSH TRANSCRIPT.

JONATHAN KARL: Welcome. I'm Jonathan Karl with ABC News and honored to be presiding over a meeting featuring Senator Joe Lieberman, who does not need much introduction at all. So first, just a few things about the meeting itself:

First of all, if I could ask everybody to turn off cell phones and Blackberries. And I'm told, because it interferes with the sound system here, not even vibrant, but if you could just please turn them off. And you know, I'll do it too. What do you think? (Laughter.)

This meeting will be on-the-record -- everything here on-the-record. The senator has some short remarks, then I will ask him some questions; then we'll open up to questions from you. And no introduction, but I'll do a short one anyway, just because.

Senator Lieberman is the soon-to-be senior senator from the state of Connecticut. Elected of 1988, chairman of the Homeland Security and Government Affairs Committee -- one of the truly independent voices in Congress, especially on national security issues. Obviously, his role in supporting the Iraq war well known, caused a few headaches for some of his party leadership. He is -- (laughter) -- yes, but plenty for us in the press.

He, of course, was the Democratic nominee for vice president in 2000, and in 2008 was McCain's choice to be the Republican nominee for vice president -- that is Meghan McCain. (Laughter.)

Without further ado, Senator Joe Lieberman. Thank you. (Applause.)

SENATOR JOSEPH I. LIEBERMAN (ID-CT): Thanks, Jon. Thank you, Jon. Thanks to everybody. And I can't resist -- anytime anybody says I'm somebody who doesn't need an introduction, I'm reminded of being in a room with Henry Kissinger a few years ago here in Washington when the person got up and said, "If there's anybody in the world that doesn't need an introduction, it's Henry Kissinger. So I give you Dr. Henry Kissinger."

And Henry got up and said, "You know, I suppose it's true. I don't need an introduction, but I like a good introduction." (Laughter.) So I thank you for that introduction.

It's a pleasure to be back at the Council on Foreign Relations to talk about the future of American power in the Middle East.

As I was preparing my remarks today, I was reminded of a story about the pre-history of the CFR. The council, as some of you may know, grew out of a project begun by President Woodrow Wilson shortly after the United States entered World War I. President Wilson's idea was to assemble some of the best and brightest minds from academia to advise him about what the shape of the postwar order would be and what role America should play in it.

This initiative included a working group on precisely the subject I would like to discuss this afternoon -- the future of the Middle East. The group's composition was unique: Ten distinguished academics, including an historian of the Crusades, two professors of ancient Persian literature and a specialist on Native American tribes. What the group did not include, however, was anyone who knew anything about the contemporary Middle East at that time. (Laughter.)

According to one account of the initiative's work, and I quote: "Many of the researchers did no more than summarize the information they found in an encyclopedia about the Middle East. Many delved into questions of literature and architecture and few of the reports had any bearing on the question of American national interests." End of quote.

So with this history in mind, I want to preface my remarks this afternoon by assuring all of you that you will not be subjected to any attempts at literary criticism on my part. No encyclopedias -- not even, in this case, Wikipedia! -- were consulted in the preparation of this speech.

I will say, though, in fairness to your predecessors at the council, and mine, it is also significantly easier today than it was in Woodrow Wilson's time to identify America's national interests in the Middle East. In fact, it's hard to miss them.

The U.S. has never been more engaged and invested across the Middle East than we are right now e from the Straits of Hormuz to the wilds of Yemen; from proliferation to the peace process. Indeed, it is hard to imagine a day in the life of an American President in which the Middle East does not figure prominently, probably.

This did not happen overnight. Rather, it reflects a set of real American interests and critical American commitments in the Middle East that have developed in recent decades under both Democratic and Republican administrations. This has happened because successive American presidents have recognized that developments in the Middle East have a direct impact on the physical safety and economic security of our country and our citizenry.

And yet paradoxically, despite this unprecedented engagement in the Middle East today, I have been struck, when I've traveled in the region in recent months, by what seems to me to be a heightened uneasiness about the future of American power there. Behind closed doors, one hears an unmistakable uncertainty about our resolve and staying power -- notwithstanding the fact that, in my opinion, we're more engaged in the region today than we ever have been before.

I want to suggest four possible reasons for this paradox and these concerns. First: It may actually reflect just how indispensable and integral American leadership has become in the Middle East. Despite the frustrations and resentments in different groups in the region that America seems to provoke, we are also looked to and counted on as a partner and guarantor for security; as an honest broker in diplomacy and politics; and as a voice for human rights and democratic change.

Second: The global financial crisis and our national fiscal deficits have aroused fears in the Middle East, as they have elsewhere in the world, that America might be tempted to turn inward -- unwilling or unable to sustain our global commitments.

Third: The anxieties in the region about America's staying power also undoubtedly reflect some of the setbacks we have encountered in pursuit of our goals in the Middle East -- from the mismanagement of the early years in postwar Iraq to the inability of successive administrations to secure the comprehensive regional peace that we have repeatedly tried to achieve.

But fourth -- and I think, ultimately, most important today -- the major geopolitical driver for the heightened anxiety about America's staying power in the Middle East is the Islamic Republic of Iran -- more specifically, its determined push to become the dominant power in the region and tilt the balance of governance there towards Islamist extremism -- and whether the United States has the will to stop that push.

The Iranian regime's pursuit of a nuclear weapons capability cannot be separated from its long-term campaign of unconventional warfare, stretching back decades now, to destabilize the region and remake it in its own Islamist extremist image. So we have a power here that is both extreme and expansionist and that's a dangerous combination.

Through use of the IRGC Quds Force and its terrorist proxies, the Iranian regime has sought to neutralize the conventional military advantage of the United States and our allies and overturn the balance of power in the Middle East. It's also, of course, responsible for the murder of hundreds of Americans -- mostly in Iraq. The same strategic logic, I think, is driving its pursuit of a nuclear capability.

If Iran succeeds in acquiring a nuclear weapons capability, it would severely destabilize the Middle East -- a region whose stability has been an important long-term American national and economic security priority.

It will also damage America's ability to sustain the commitments we have made in the Middle East: our commitment dating back to Presidents Carter and Reagan to prevent the domination of the Persian Gulf by a revisionist or extremist power; our commitment to secure lasting peace and security between Israel and its neighbors; and our commitment, more recently, to deter, disrupt and defeat state-sponsored Islamist extremist groups, who would suddenly be able to wage attacks from under the protection of Iran's nuclear umbrella. So this would be a transformational event for the worst.

It goes without saying that Iran's illicit nuclear activities implicate broader global interests of the U.S. -- not just regional, but global interests as well -- foremost, the international nuclear nonproliferation regime. As President Obama has repeatedly warned, a nuclear Iran could drive other states in the region to seek to acquire their own atomic arsenals. And have no doubt: The more nuclear-proliferated the Middle East becomes, the greater the odds that nuclear weapons will fall into the hands of terrorists who will try to use them against the U.S. and our allies around the world.

That is why I believe that the single most important test of American power in the Middle East today is whether we succeed or fail in stopping Iran from acquiring nuclear weapons capability. How we do on that test will significantly affect our standing in the rest of the world.

I've been a strong supporter of the Obama administration's dual-track approach of engagement and pressure in response to the Iranian challenge -- including the effort to orchestrate a new set of sanctions, in the hope that these measures will push the leadership in Tehran to suspend its illicit nuclear activities and reconcile with the international community. The White House has pursued this strategy with discipline and determination.

The result has been a cascade of new measures since this summer -- beginning at the U.N. Security Council, then continuing in Congress and then going to responsible countries and companies worldwide from the EU to Australia, Japan and South Korea. It has been faster, broader and more intensive than I expected -- but much more important, than the Iranian leadership anticipated.

There is no question that the regime in Tehran is under heightened pressure today, both at home and abroad. In addition to the new sanctions, the Green Movement, and the regime's oppression of that movement, has robbed the Islamic Republic of whatever pretense of legitimacy it ever possessed -- proving once and for all that the regime in Tehran today has become neither "Islamic" nor a "republic," but a crude military dictatorship. In the region, meanwhile, the heart of that military dictatorship, the IRGC's, has the dream of replicating -- excuse me -- the IRGC's dream of replicating the Hezbollah model in southern Iraq was rolled back by the Iraqi and American forces, while the revival of the Israeli-Palestinian peace process -- with all it's current fits and starts --has put the Iranian regime on the defensive, particularly since the legitimate leadership of the Palestinian Authority told Tehran earlier this month to stop interfering in their internal affairs.

Yet at the same time, the harsh fact is that Iran's nuclear efforts are continuing forward. Despite some apparent technical difficulties, Iran's centrifuges keep spinning, and its stockpile of fissile material continues to grow.

Sanctions of course are important, but sanctions are a means to an end, not an end unto themselves. The true measure of success will not ultimately be how many Iranian banks we designate or how many foreign companies cut economic ties to Iran, but whether these actions motivate meaningful behavior change on the part of the Iranian regime -- in other words, to stop its illicit nuclear activities. As of yet, the obvious fact is that they have not. And until they do so, we must not only maintain the pressure but keep ratcheting it up.

That means aggressive and creative enforcement of existing sanctions against Iran. It means American penalties against companies that continue to invest in Iran's energy sector or supply or sell refined petroleum to Iran. And it means that the administration should make use of the powerful new authority granted to it by the congressional sanctions legislation, to cut off from the U.S. financial system any foreign bank that continues to do business with the IRGC, its front companies, or other illicit Iranian actors.

There have been suggestions recently that the Iranian regime may be prepared to resume talks about the nuclear matter with the P-5 plus one. President Ahmadinejad suggested this when he was in New York last week at the U.N. At the same time, he made his outrageous and insane accusation that the U.S. government was responsible for 9/11. I must say, that combination of statements by Ahmadinejad last week at the United Nations reminded me of an old Connecticut politician's warning: "Don't spit in my face and then tell me it's raining." In his speech at the United Nations, Ahmadinejad once again rejected President Obama's outstretched hand and instead, slapped the U.S. and the rest of humanity in the face.

Certainly, the door to the negotiating table should remain open to the Iranians e but it is equally certain to me that the Iranians must not be rewarded simply for showing up at the table. The test whether the Iranian regime is talking -- the test is not whether the Iranian regime is at the table talking; the test is what the regime is doing. As long as centrifuges are spinning and uranium is being enriched, the pressure from sanctions on Iran must keep growing.

My personal concern is that the current leaders -- the fanatical leadership of Iran today e particularly the IRGC hardliners, who have consolidated power in the wake of last year's election e are incapable of compromise on the nuclear program, no matter how much pressure is put on them, because opposition to America and the West is so integral to their identity -- the identity of -- the essence of their power. If this is indeed the case, it may be that our best hope to resolve this confrontation is not for the regime in Tehran to change its behavior, but for the regime itself to be changed. I am not naive about how difficult this may be, but supporting such a change -- such popular opposition -- is surely the policy our fundamental national values require and the one that the people of Iran deserve.

And remember: More than once in our lifetimes, we have been surprised to see seemingly impregnable regimes collapse under pressure for freedom from their own citizens. What is likewise clear is that the current leaders of Iran spend a lot of time and a lot of energy and a lot of resources worrying about the internal opposition to their government. They certainly take the threat from the opposition seriously and so should we.

Our sanctions effort should therefore increasingly aim, I believe, not just to add pressure on the existing regime, but to target the fissures that already seem to exist within the Iranian regime itself and between the regime and Iranian society.

This should include much more robust engagement and support for opposition forces inside Iran, both by the United States and like-minded democratic nations across the world. The Obama administration, I fear, missed an important opportunity in the wake of last year's election in Iran. But it is certainly not too late to give strong support to the people in Iran who are courageously standing up against their repressive government. And there's very good and encouraging news on this front to report to you now.

In the comprehensive sanctions bill passed by Congress this summer, Senator McCain and I led a bipartisan effort to include a provision that requires the administration to impose targeted sanctions against individuals in the Iranian government who committed human rights abuses after the June 12 election. I'm pleased to report to you -- if you have not already heard -- that Secretary of State Clinton and Secretary of the Treasury Geithner are right now announcing the first of these human rights designations of individuals who we have good reason to believe were complicit in denying the human rights of the citizens of Iran. I cannot adequately applaud and thank the Obama administration for taking this important action today.

I'll just add this: While the president has extremely capable point people responsible for negotiations with Iran and sanctions against the regime there, there is still no one in the Obama administration e as far as I can tell e who wakes up every day "owning" the mission of helping the people of Iran overcome their government's electronic monitoring and censorship, to secure the universal human rights with which all of us have been endowed by our creator. The president needs to find his "Stuart Levey" for the Green Movement.

We have now come to the moment in this long struggle when the Iranian regime must understand that we will not wait indefinitely for sanctions to work. As my colleague in the House of Representatives, Foreign Affairs Chairman Howard Berman, warned last week, we are talking about months, not years. I therefore hope that President Obama will conduct an assessment at the end of this year e just as he did last year e to determine if the current strategy towards Iran is working. If it has not produced meaningful change in Iran's nuclear weapons policy by then, we will need to begin a national conversation about what steps should come next.

This inevitably will involve consideration of military options. I agree with President Obama that the use of military force is not the "ideal way" to stop the Iranian nuclear program. But nothing is more corrosive to the prospect of resolving this confrontation peacefully than the suspicion e among our friends and enemies in the Middle East e that in the end, the United States we will acquiesce to Iran's acquisition of a nuclear weapons capability. If a nuclear Iran is as unacceptable as we say it is, we must be prepared to do whatever is necessary to prevent the unacceptable.

It is time for us to take steps that make clear that if diplomatic and economic strategies continue to fail to change Iran's nuclear policies, a military strike is not just a remote possibility in the abstract, but a real and credible alternative policy that we and our allies are ready to exercise if necessary.

It's time to retire our ambiguous mantra about all options remaining on the table. It's time for our message to our friends and enemies in the region to become clearer: Namely, that we will prevent Iran from acquiring a nuclear weapons capability period -- by peaceful means if we possibly can, but with military force if we absolutely must. A military strike against Iran's nuclear facilities entails risks and costs -- I know that -- but I am convinced that the risks and costs of allowing Iran to obtain a nuclear weapons capability are far greater.

Some have suggested that we should simply learn to live with a nuclear Iran and pledge to contain it. In my judgment, that would be a grave mistake. As one Arab leader I recently spoke with pointed out, how could anyone count on the United States to go to war to defend them against a nuclear-armed Iran, if we were unwilling to go to war to prevent a nuclear-armed Iran in the first place? Having tried and failed to stop Iran's nuclear breakout, our country would be a poor position to contain its consequences.

I want to add that I also believe it would be a failure of U.S. leadership if this situation reaches the point where the Israel government decides to attempt a unilateral strike on Iran. If military action is absolutely necessary to stop Iran from gaining nuclear weapons capacity, then the United States is clearly in the strongest position to confront Iran and manage the regional consequences. This is not a responsibility we should outsource. We can and should, of course, coordinate with our many allies who share our interest in stopping a nuclear Iran, but we cannot delegate our global responsibilities to anyone else.

Iran presents us with daunting and difficult challenges -- as we all know. By now, I suspect, some of you may be getting wistful for the days of Woodrow Wilson when discussions about American policy in the Middle East could focus some on Persian poetry. But before you get too wistful, also remember that those were the days when the principal strategic challenge confronting the president of the United States was a great power conflict in the heart of Europe between Germany and her neighbors e a conflict of nationalistic hatreds, of extremist ideologies, of geopolitical rivalries that twice ignited into world war and claimed the lives of tens of millions of people, including several hundred thousand Americans.

Today, by comparison -- we take it often for granted -- but it's possible to walk from Portugal to Poland without encountering a militarized border, or changing the currency in your wallet -- much less stumbling into an active conflict. A part of the world that a century ago was a strategic sinkhole for American blood and treasure, hopelessly entrenched in war, is today an unbroken field of democratic allies and a bulwark for peace and stability e so much so that we too often take for granted just how difficult and improbable a journey to this time has been.

So yes, American power clearly faces great challenges and dangerous enemies -- including, particularly, the Islamic Republic of Iran -- today. But we must also remember that American power is capable of achieving great things e sometimes seemingly impossible things.

This is the alternative future I believe we must also summon the imagination to envision, and the political will to help bring into being: A vision of a Middle East in which a democratic Iran assumes its rightful place as a regional power and as the modern heir of one of the world's great civilizations e an engine of prosperity and innovation that benefits its own people and the entire world; a vision of a Middle East in which Islamist extremism no longer inspires violence, let alone loyalty, but joins other failed and inhumane ideologies on the ash heap of history.

And a vision of a Middle East in which Israel and its Arab and Persian neighbors live in peace with each other as fellow democracies that respect the human rights of their citizens e and in a region where the notion of going to war against each other becomes as unthinkable and absurd as it seems today to teenagers living in France and Germany.

Thank you very much. (Applause.)

KARL: Let's start by defining where we are in time.

LIEBERMAN: Okay.

KARL: It seems to me that for the past five or six years, the perception has been that we are about a year-and-a-half -- year or two away from Iran crossing the, you know, crossing the line. So where are we right now? How much time do we have?

LIEBERMAN: Let me answer the question to the best of my ability and authority and then make a comment on it.

Obviously, you get differing estimates. The International Atomic Energy Agency has estimated that Iran now has enough -- now has enough low-enriched uranium to build two nuclear weapons. This is very much a question of how Iran intends to go at this -- whether it continues to accumulate highly-enriched uranium and basically holds it for a sudden surge breakout. But the time frame has tended now to be -- the closest estimates are about a year and the further estimates about Iran becoming a real nuclear go to two to three years.

What I'm suggesting here today -- or saying explicitly -- is I think we have to start -- that those discussions are not irrelevant, but they're not ultimately determinative, so long as we conclude that Iran continues to do whatever it can -- centrifuges; moving, adding fissile material being stored -- that when they reach nuclear capacity is not the factor. The factor -- the motivating factor or animating factor here should be how are our policies aimed at stopping that behavior working? And most significantly now, how are the sanctions working?

And that's why I think it's so important for the president and our allies to do a review at the end of this year. That will have allowed about six months since the U.N., U.S., EU sanctions began to go into effect. I'm not saying that we have to make a decision about anything else then, but it's a time to look and see whether we've had an effect on Iranian policy.

KARL: Now, your comments on outsourcing to the Israelis were interesting. What is your sense about how they look at this? Is there much daylight between what the Israelis think the timeline is and where this administration thinks the timeline is?

LIEBERMAN: This is something that's best not to talk about in great detail in public, but my own sense is that the estimates here have grown closer together between the U.S. and Israel and other allies about the time frame for Iran gaining nuclear weapons capability.

Obviously, the Israelis and the Arab countries have a slightly different perspective that goes beyond time --

KARL: Geography.

LIEBERMAN: Geography -- it goes -- proximity to Iran and makes them all more anxious about Iran's nuclear weapons program.

KARL: Now, you saw Michele Flournoy's comments in April that the military option for now is off the table. Could you see this president engaging in a military action against Iran?

LIEBERMAN: Well, the president -- President Obama has been -- obviously, this is -- this may be the most important decision that President Obama will make during this first term as president. And it's a -- obviously, with all sorts of consequences, so you know, I can't predict what he will do.

But I will simply say to you that I've heard him say more than once that Iran gaining nuclear weapons capacity is unacceptable. And when he says unacceptable, he means unacceptable. And I think we've got to give him some room within that strong statement to determine what actions to take to pursue it.

KARL: But this is not something he talks about much. I mean, this is not -- I mean, President Bush, secretary of State, the question of Iran's progress in this direction was a constant refrain, a constant concern that was expressed. I mean, are you hearing the same from President Obama?

LIEBERMAN: Obviously, because of the economy, the president and all of us in Washington have been focused more on domestic policy matters. But I will say this -- just to draw out a little bit what I said during my remarks: The Obama administration has been very active and aggressive in pursuing its two-track toward Iran -- both extending an open hand, but also putting pressure on and ratcheting up the pressure. And leave it to the president to say, but it's my impression that he's at least disappointed by the reaction of the Iranians to his outstretched hand, which has been to essentially slap it.

And so that -- what I'm trying to say is, I don't know about the number of words said in public by President Obama about Iran as compared to his predecessor, but the actions of this administration -- particularly on the sanctions front -- have been very strong and I think very effective. And I give them a lot of credit for that -- not just in working with Congress to adopt the sanctions legislation, but really a path gaining U.N. Security Council support, Congress and then working very hard with our allies. Some of them are taking actions that are not in their best mercantile interests to impose sanctions against Iran. And that wouldn't have just happened automatically. So I think you -- I have a very positive feeling about what's happened so far in the Obama administration to deal with the Iranian nuclear challenge.

KARL: But let's be clear about what you were saying -- and you were quite clear: You're raising the possibility of a U.S.-led war, military strike against Iran on this administration's watch. I mean, this is a timeline of two to three years at the outside, maybe sooner.

Do you see -- does this president, if he's -- truly would go in that question? That's the big question. Has he done anything to lay the groundwork with the American people of yet another war in the Middle East?

LIEBERMAN: Well, again, we're not talking about a war, because nobody is talking about invading Iran or --

KARL: Well, you don't know what the reaction to a -- to a strike is.

LIEBERMAN: Right. And believe me, both the president and our military leadership, just the exercise of their responsibilities, as you know, the military leadership of the U.S. has made clear that they have contingency plans for military action against Iran, if the commander in chief asked them to take such action.

That -- those contingency plans, I'm confident, also include estimates of the Iranian reaction and how we would counter it and stifle it. Again, in talking about raising up the possibility of a military strike against Iran's nuclear facilities, if all else fails to alter their policy regarding nuclear weapons, I'm not naive about the risks and the cost. But as I said in my remarks, I'm totally convinced that the risks and the costs of a nuclear Iran are much greater -- a nuclear arms race in the Middle East; probably some Arab countries feeling that they have to fall within Iran's orbit out of fear; support of the terrorists -- part of the end of any prospect of peace between Israel and the Palestinians, because of the influence that will -- that Hamas and Hezbollah will gain as a result of an Iranian nuclear program. And I'm afraid, the end of one of President Obama's major international policy goals, which is to expand the nuclear nonproliferation regime. I think the regime, as it exists now, will essentially collapse if Iran gets nuclear weapons.

So for all those reasons, I think we've got to consider and make it clear to the Iranians that we're taking this seriously enough to consider a military strike against them.

KARL: You remember what John Abizaid -- who was, of course, CENTCOM commander so this was his responsibility -- shortly after he stepped down, 2007, he said -- and I'll read it word for word here: "I believe the United States with our great military power can contain Iran. Let's face it, we lived with a nuclear Soviet Union; we lived with a nuclear China and we're living with other nuclear powers as well."

I know you don't agree with what General Abizaid said there. I'm wondering if you think, based on your discussions with this administration, if you think that that is a belief that is held by some within the president's inner circle.

LIEBERMAN: I don't know. And I haven't heard anybody in the inner circle of the president on foreign policy say exactly those words.

And of course, to me there are differences here. This is really a fanatical regime. This is a theologically extreme regime, which has clear expansionist goals in the region and has much less concern for human life -- including the life of their own citizens -- than even the Soviet Union did. So I think there's a real danger here for us and we've got to deal with it before it becomes more serious.

KARL: Okay. Well, with that, open it up from some questions. And if you -- there are microphones here, so if you can speak into the microphone.

Let's see who we have first -- get a mike right here.

QUESTIONER: Oh, excuse me. Bob Winter, Arnold & Porter.

You're very convincing in stating the risks that would come about from a nuclear Iran. And you state that you're not being naive about the risks of going to war. But quite arguably, many were naive about the risks of the first Iraqi war -- not the least of which was the prospect of a much stronger Iran coming out of the Iraqi war.

LIEBERMAN: Right.

QUESTIONER: And I wonder how you have the type of discussion you say we should have about the prospects of that type of military action, without a serious discussion of what the risks really are. And not simply to say, as you say it, that we have plans and we'll stifle them.

What do you think are the significant risks; how serious are they and what, as a practical matter, could we do to contain them?

LIEBERMAN: Right. It's a fair question.

The military risks, of course, are that Iran will counter attack either through Hezbollah or Hamas or other client-proxy terrorist groups or against -- and the counterattacks will be against our allies in the Middle East, Arab and Israeli, or against U.S. positions in the Middle East or elsewhere in the world.

So we would obviously have to raise our guard and increase the capacity of our allies in the region to defend themselves, which we are, incidentally, doing quite well right now. In other words, we're increasing the capacity of our Arab allies to defend themselves.

To me that's the most significant. Obviously, there might be a short-term increase in the price of oil. It depends on how other oil-producing countries deal with it and the normal laws of supply and demand. Although, I think if you think about the power of a nuclear Iran to arbitrarily and unilaterally affect oil price and therefore, America's economy, the world economy, it's much greater than if they gain nuclear power than not.

So I'm just saying that I don't want anybody to think that I think that this will be like the Israeli attack on Iraq or Syria where there essentially was not a response. I expect -- we have to expect that there will be a response. But my own judgment is, in calculating it, is that we and our allies will be prepared and can deal with it.

I think that if we act -- and again, I want to stress, I understand the interest in the possibility of a military attack, but if we -- I want to stress that I hope we don't get to that point. I hope the Iranians not only come to the table, but enter into sincere negotiations about ending their nuclear program and then come back and join the community of nations.

But if we do act, then I believe it will greatly strengthen our allies in the region. And particularly, our Arab allies who feel, in some senses, more vulnerable to Iranian attack than even the Israelis do. I think it will also greatly increase our credibility and strength, and therefore, our security in the world, because we will have shown that we're prepared to take steps to stop something that we have said over and over again is unacceptable.

KARL: Yes?

QUESTIONER: In seeking a peaceful solution, what should we do about the large and existing Israeli nuclear weapons arsenal?

LIEBERMAN: Well, this is -- I guess you heard the question.

The U.S. position for a long time on this has been that the Israelis are in a uniquely vulnerable position in the Middle East politically, and that any consideration of what to do with their alleged nuclear program has to await a time when there is a broader political agreement -- diplomatic agreement -- between the Israelis and their neighbors. And so I -- that's the position that I would take.

KARL: Yes?

QUESTIONER: I'm Guy Tioni (ph).

LIEBERMAN: Nice to see you.

QUESTIONER: One sentence in support of your point of at least discussing the military option.

LIEBERMAN: Yes.

QUESTIONER: I was the guest of the reformers in Iran and deliberately covered outside Iran, and what you see all over the place is shrines for the people they lost in Iraq. They're very leery to go to war. And indeed, as you recall, in May 2003, after our military accomplishment in Iraq, Iran made by far the best offer for a settlement. So at least discussing the military option seems to be something to consider.

But question is: If one takes everything that you say as your text, given that our intelligence estimates in the past are not completely reliable -- I think you would agree with that -- that waiting more than six months seems not to be justified.

LIEBERMAN: Waiting more than six months to be justified?

QUESTIONER: No. Not justified, because --

LIEBERMAN: Ah, I see -- in other words, to err on the side of caution.

QUESTIONER: You have to assume -- it's better safe than sorry.

LIEBERMAN: Well, I don't have much to say in response to that, except to say that I've always respected your judgment and wisdom, Professor.

KARL: Yes, back here?

QUESTIONER: Senator, thank you for your remarks.

My question is: When you were looking at threats to regional stability from Iran, you not only concentrated on the nuclear aspects, but also the threats because of the popular illegitimacy of the regime and its abuse of human rights and its support for violent extremism.

My question is: If those are so important for regional stability -- and arguably, for long-term regional stability -- why don't those criteria apply to other states in the region, specifically Saudi Arabia?

If you look at many surveys, just as totalitarian, just as abusive of human rights. And yet, this is a regime that receives over $60 billion in and arms sale recently.

KARL: Right. In the State Department human rights report, they get hit a little harder. And the Religious Freedom House survey, they --

LIEBERMAN: Yeah. My answer would be that -- I'll start by saying that diplomacy, like life itself, is not perfect. (Laughter.) And your point is obviously well taken.

The difference, of course, is that Iran is a hostile power to us and most of the rest of -- not only their neighbors, but most of the -- most of the Western world. The Saudis are not a hostile power within the region. And to their credit, in recent years, I think they've finally awakened to the fact that Islamist extremism threatens them -- the regime there -- more directly than anyone else. And they have become very good allies in counterterrorism. But we should not stop to continue to put, you know, pressure on.

To me it's the clear way for the future. It may not happen tomorrow, but it's got to continue to happen throughout the Middle East.

I don't -- I bristle at any of the suggestions that somehow -- which you hear both within the region and from outside -- that somehow the Arab world is not ready for democracy. I don't buy that and there are a lot of examples to show that it's not the case.

KARL: Senator, it is 1:30. If you -- if it's all right with you, could we extend a little bit, because we --

LIEBERMAN: Yes.

KARL: Another five minutes or so?

LIEBERMAN: Sure.

KARL: So if anybody has to leave, it's 1:30. So take this time now for a few more questions.

Yes?

QUESTIONER: Senator, Roger Parkinson.

I'd like to take the discussion, if I could, still in the Mideast in a little different direction.

We read -- at least I've read in the newspaper recently -- about the new, very new viruses that have been supposedly created by a foreign country to attack, in this case, the Iranian nuclear facilities. But such viruses intel -- intelligence can't identify the source inclusively. And they also have the ancillary affect of attacking other aspects -- whether it's India, Indonesia or Idaho -- unintended.

It seems to me like that's a ratcheting up in warfare, in cyber warfare. And I'm wondering what you think the U.S. or the community of nations should do in terms of strategy or tactics to deal with this.

And I emphasize that I read about it in the newspaper, because I think you have a very bright and talented aide who works on cybersecurity, who also happens to be my daughter, so -- (laughter) -- and she's very tight lipped and I read it in the newspaper.

LIEBERMAN: Oh, Deborah's your daughter?

QUESTIONER: Yes.

LIEBERMAN: Well, she does a great job.

Okay, well --

KARL: Should we refer the question to Deborah? (Laughs.)

LIEBERMAN: Deborah, yeah. No. She really does.

Let's just see just briefly -- I must say, in terms of the topic today in Iran, I myself have been fascinated that Iranian authorities have acknowledged that their nuclear facilities are under cyber -- if not attack, at least intrusion -- and that it's slowing up their work. Of course, I think that is good news, but I don't have anymore I can say about it.

But it does show us that -- and if I may step back -- this is a classic moment of an experience we see throughout history. Anytime -- not anytime, but so many times when there's an advance technology or otherwise -- going back to the beginning of fire, let alone in more recent times the telegraph or the engine -- they're used for military purposes. And there's no question that some nations and some non-state actors have extraordinarily active programs of cyber warfare and it's a real threat to our security.

And this brings me to my Homeland Security work. And we are working with Senator Collins and others -- supported, I might say, truly brilliant staff -- to bring forward cybersecurity legislation, which will improve our -- the organization of our defenses.

But this is a truly threatening situation where a country with much less military strength conventionally and less wealth than we have, if they focus their investment in cyber capacities have the ability, if we're undefended, to do terrible damage to us in our financial infrastructure, our electric power grid. I mean, if you want to have a real nightmare, get into -- they might get into computer systems that, for instance, operate dams and, you know, open up the dams.

So I just want to assure you and everybody else that our government is now -- mostly in ways that are not specifically seen -- investing a lot of money in raising our defenses. And we're doing pretty well at it.

KARL: All right. Let's take one more question. Back over here -- and just a reminder, this meeting has been and continues to be on the record.

QUESTIONER: Thank you. My name is Ronit Avni from Just Vision.

I'm just very concerned, as we're talking about potentially opening up a third front -- a third invasion of a country -- on multiple levels both in terms of the recruitment capacity for extremist groups and the unintended consequences. As you talk about dams and other places, I have family in Israel and I am certainly very worried, given the failure of intelligence to predict what emerged both in Iraq and Afghanistan, but also on a more simple level in terms of the election of Hamas in the region.

So I have very little confidence that our predictions are going to bear fruit in the constructive way that you lay out.

LIEBERMAN: Well, let me -- whatever one thinks of our intelligence or global intelligence, a lot of this information now comes from the International Atomic Energy Agency, which is not in our control. And sometimes, I think Americans and other allies felt it was not particularly friendly to us.

But they're the ones who talk repeatedly about the extent to which Iran is violating existing United Nations Security Council resolutions. They are the ones who've made the estimate that they have enough low-enriched uranium to build two nuclear weapons now if they choose to. I could go on. You know, they're the ones who say that the number of centrifuges is growing and the fissile material that they have is growing.

So this is a threat. And somebody said to me -- and I think it's probably right -- that the only thing that this fanatical regime in Tehran, repressive regime, cares about more than developing nuclear weapons is the survival of the regime. That's why they're so worried about the popular opposition in the country.

And I just think -- here's another difference, I believe, between this and perhaps Iraq and Afghanistan in the Arab world: There is great fear in the Arab world about Iran getting nuclear weapons. And in some ways -- perhaps unfortunately -- this is not only a reflection of the expansionism of the Islamic Republic of Iran, but it reflects centuries old rivalry between Persia and the Arab countries and Arab peoples of the region.

So I wouldn't reach a conclusion that a military strike by the U.S. and our allies against Iran's nuclear weapons facilities -- if that becomes absolutely necessary -- will be unpopular in the Arab world. I can tell you this, from personal knowledge: It will not be unpopular in Arab capitals of the Middle East.

KARL: Of course, part of the intelligence failure in Iraq was not just the weapons of mass destruction, but what would happen. And we -- you know, the whole greeted as liberators phenomenon.

And you know, I think that that's a big part of that question as well.

LIEBERMAN: Well, here again, we're dealing with a regime that, from all that we know, is extremely unpopular. It's unpopular because of its repression -- women's rights, labor rights, journalists in jail, et cetera, et cetera.

It's also now increasingly unpopular because of the failure of Ahmadinejad's government to manage the economy successfully. So they're now considering removing subsidies on staples like flour and also subsidies for the cost of refined petroleum. If you begin to do that, there's going to be a lot of public unrest there.

Look, we -- it's not so long ago -- and I know people associate it with the shah -- but it's not so long ago that the people of the U.S. had a pretty darn good relationship with the people of Iran. There's no natural conflict there. From all that we continue to hear -- maybe you saw this in your -- the meetings, Professor -- you know, the people of Iran are highly education, very modern, just feel like they're being suppressed and sort of pushed back into the God knows what century and they want to come forward into the 21st century.

So I think anything we can do to help them find a better way forward -- basic freedom, human rights, economic opportunity -- I think it's going to be very popular in Iran.

KARL: All right, Senator Lieberman.

LIEBERMAN: Thank you all very much. It's been a good discussion. (Applause.)

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