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27–613 PDF

" ! COMMITTEE PRINT 109TH CONGRESS

2d Session

S. PRT.

2006

109–63

IRAN’S POLITICAL/NUCLEAR AMBITIONS

AND U.S. POLICY OPTIONS

A COMPILATION OF

STATEMENTS BY WITNESSES

BEFORE THE

COMMITTEE ON FOREIGN RELATIONS

UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

MAY 17 and 18, 2006

Printed for the use of the Committee on Foreign Relations

Available via World Wide Web: http://www.access.gpo.gov/congress/senate

COMMITTEE ON FOREIGN RELATIONS

RICHARD G. LUGAR, Indiana, Chairman

CHUCK HAGEL, Nebraska

LINCOLN CHAFEE, Rhode Island

GEORGE ALLEN, Virginia

NORM COLEMAN, Minnesota

GEORGE V. VOINOVICH, Ohio

LAMAR ALEXANDER, Tennessee

JOHN E. SUNUNU, New Hampshire

LISA MURKOWSKI, Alaska

MEL MARTINEZ, Florida

JOSEPH R. BIDEN, Jr., Delaware

PAUL S. SARBANES, Maryland

CHRISTOPHER J. DODD, Connecticut

JOHN F. KERRY, Massachusetts

RUSSELL D. FEINGOLD, Wisconsin

BARBARA BOXER, California

BILL NELSON, Florida

BARACK OBAMA, Illinois

KENNETH A. MYERS, JR., Staff Director

ANTONY J. BLINKEN, Democratic Staff Director

(II)

CONTENTS

Page

Letter of Introduction .............................................................................................. v

DAY ONE—MAY 17, 2006

Senator Richard G. Lugar, Chairman, U.S. Senate Committee on Foreign

Relations ............................................................................................................... 1

Senator Joseph R. Biden, Ranking Member, U.S. Senate Committee on Foreign Relations ....................................................................................................... 4

Honorable Robert J. Einhorn, Senior Adviser, Center for Strategic and International Studies, Washington, DC ...................................................................... 7

Dr. David Albright, President and Founder, Institute for Science and International Security (ISIS), Washington, DC ......................................................... 15

Dr. Kenneth M. Pollack, Senior Fellow and Director of Research, Saban

Center for Middle East Policy, the Brookings Institution, Washington, DC .. 28

Mr. Karim Sadjadpour, Iran Analyst, International Crisis Group, Washington,

DC .......................................................................................................................... 36

Dr. Patrick Clawson, Deputy Director for Research, the Washington Institute

for Near East Policy, Washington, DC ............................................................... 43

Dr. Geoffrey Kemp, Director of Regional Strategic Programs, The Nixon Center, Washington, DC ............................................................................................ 50

DAY TWO—MAY, 18, 2006

Senator Richard G. Lugar, Chairman, U.S. Senate Committee on Foreign

Relations ............................................................................................................... 55

Senator Joseph R. Biden, Jr., Ranking Member, U.S. Senate Committee on

Foreign Relations ................................................................................................. 57

Honorable Frank G. Wisner, Vice Chairman for External Affairs, American

International Group, Inc., New York, New York ............................................... 59

Dr. Vali R. Nasr, Professor of Middle East and South Asia Politics, Department of National Security Affairs, Naval Postgraduate School, Monterey,

California .............................................................................................................. 66

Ms. Julia Nanay, Senior Director, PFC Energy, Washington, DC ...................... 70

Mr. James A. Phillips, Research Fellow for Middle Eastern Affairs, the Douglas and Sarah Allison Center for Foreign Policy Studies, the Heritage

Foundation, Washington, DC .............................................................................. 74

(III)

LETTER OF INTRODUCTION

MAY 26, 2006.

Dear Colleague:

The challenges and threats posed by Iran to the United States

and the rest of the world continue to demand our attention and

analysis. In order to gain a better understanding of how we may

address these issues as they confront us, the Committee on Foreign

Relations held a series of hearings on May 17 and 18, 2006, entitled ‘‘Iran’s Political/Nuclear Ambitions and U.S. Policy Options.’’

We believe that the witnesses’ testimonies can be helpful in preparing members for subsequent Senate debate on this matter of national security and have gathered them into this committee print.

The first panel on May 17 focused on the status of Iran’s nuclear

program. Testimony was heard from the Honorable Robert J.

Einhorn, Senior Adviser at the Center for Strategic and International Studies, and Dr. David Albright, President of the Institute

for Science and International Security. The second panel discussed

Iran’s motivations and strategies. We heard from Dr. Kenneth M.

Pollack, the Director of Research of the Saban Center for Middle

East Policy at The Brookings Institution; Mr. Karim Sadjadpour,

Iran Analyst at the International Crisis Group; Dr. Patrick Clawson, Deputy Director of the Washington Institute for Near East

Policy; and Dr. Geoffrey Kemp, Director of Regional Strategic Programs at The Nixon Center.

On May 18 we heard from a variety of experts regarding U.S.

policy options towards Iran. The panel consisted of the Honorable

Frank G. Wisner, former Ambassador to India and currently Vice

Chairman for External Affairs at the American International

Group; Dr. Vali R. Nasr, Professor of National Security Affairs at

the U.S. Naval Postgraduate School in Monterey, California; Ms.

Julia Nanay, Senior Director at PFC Energy; and Mr. James A.

Phillips, a Research Fellow in Middle Eastern Affairs at the Heritage Foundation.

Sincerely,

RICHARD G. LUGAR, Chairman.

JOSEPH R. BIDEN, JR.,

Ranking Member.

(V)

(1)

Day One—May 17, 2006

OPENING STATEMENT

SENATOR RICHARD G. LUGAR

CHAIRMAN, U.S. SENATE COMMITTEE ON FOREIGN RELATIONS

BEFORE THE

U.S. SENATE COMMITTEE ON FOREIGN RELATIONS

MAY 17, 2006

The Foreign Relations Committee meets today to examine the

situation in Iran and options for U.S. policy. We will have a second

hearing on this topic tomorrow. As the American people and policy

makers debate our course in Iran, I am hopeful that this committee

can contribute by being a bipartisan forum for clarifying the diplomatic situation and evaluating policy options. Our intent is to inform our own policymaking role, as well as help stimulate constructive public debate.

President Bush has announced that the United States remains

committed to exhausting all diplomatic options with respect to

Iran. The United States and its allies at the United Nations have

been pressing for multilateral diplomatic and economic sanctions

under Chapter 7. There is widespread agreement that Iran has

sought to deceive the international community about its nuclear intentions. Tehran’s decision to move ahead with uranium enrichment was condemned by the international community, but efforts

to attain a Security Council consensus on a firm response to Iran’s

actions have not been successful.

American policy in the near term will be defined by efforts to

convince the international community of our commitment to diplomacy and to build a broad multilateral and international coalition

against Iran’s nuclear ambitions. I believe that this is the strategy

that Iran fears most. Last minute negotiations, letters to President

Bush, and feigned interest in compromises are just a few of the

transparent efforts Tehran has undertaken to split the international community. We must overcome Iran’s efforts with patient

diplomatic spadework.

We have stated that no option is off the table. Although direct

talks with Iran come with difficulties and risks, we cannot rule out

their utility, particularly as they relate to our primary effort to

build an international coalition. Secretary Baker’s talks with Iraqi

leaders in 1991 were distasteful, but proved to be a gesture that

displayed America’s hope for a peaceful settlement and built international equity for all steps in our response. The United States has

2

the diplomatic prowess to attain a strong multilateral response and

win the international debate. We must be prepared to commit the

time, energy, and resources necessary to win this diplomatic battle.

Retaining all communication tools is also important because they

may be necessary to avoid a tragic miscalculation by the Iranians.

Analysts in our intelligence agencies and State Department do not

regard the Tehran regime as irrational, but the framework for their

decision-making is very different from our own. We must understand that they are interpreting our actions in ways that we do not

always discern. If one overlays these perceptual differences with

demagogic rhetoric, historic suspicion, and high political stakes, the

possibility for miscalculation increases exponentially. Our policies

and our communications must be clear, precise, and confident,

without becoming inflexible. In some situations, this delicate diplomatic balance can best be achieved through direct communications.

Some have expressed frustration with the administration’s coalition-building approach and have advocated quick, punitive, and

unilateral sanctions focused on international companies doing business in Iran. Secretary Rice has stated that such a policy: ‘‘Would

complicate our ability to work successfully with our allies to

counter the threat posed by Iran. It would narrow in important

ways the President’s flexibility in the implementation of Iran sanctions, create tensions with countries whose help we need in dealing

with Iran, and shift focus away from Iran’s actions and spotlight

differences between us and our allies. This could play into Iran’s

hands as it attempts to divide the U.S. from the international community as well as to sow division between the EU-3, China, and

Russia.’’

Unilateral sanctions targeting European and Asian corporations

do not appear to be an effective way to secure long-term commitments from their host governments on a multilateral approach to

the threat posed by Iran. As such, they are likely to be counterproductive, as the Bush administration has asserted.

As part of our diplomatic efforts, the administration should consider how the NATO alliance might be utilized to strengthen our

position. NATO is the principal defense and security organization

of the trans-Atlantic community. NATO has become the preeminent strategic forum for broader security cooperation with

Japan, Australia, and members of the Partnership for Peace in the

Caucasus and Central Asia. It also is facilitating closer ties with

North African countries through the Mediterranean Dialogue.

NATO is the only entity that has successfully developed and implemented a strategy of deterrence and containment against a nuclear-armed enemy. The Alliance provides us with an effective and

experienced infrastructure capable of supplementing our activities

at the U.N. and implementing an international coalition’s strategy

towards Iran.

I would underscore a final point as the Congress and the administration move forward with decisions pertaining to Iran. Even as

we work quickly, we must calibrate our response with the long

term in mind. The issues related to Iran’s pursuit of nuclear weapons, its role in the Persian Gulf region, and its impact on world energy markets will not be addressed with a single act or policy, be

it military, economic, or diplomatic. The American people must

3

know that whatever policy options are chosen will likely require

years, if not decades, of intense vigilance and diplomatic follow-up.

To assist us in our deliberations today, we welcome two distinguished panels of experts. The first panel will discuss the status of

Iran’s nuclear program. We are joined by the Honorable Robert

Einhorn, a Senior Adviser at the Center for Strategic and International Studies and Dr. David Albright, President of the Institute

for Science and International Security. Our second panel will discuss Iran’s motivations and strategies. Joining us will be Dr. Ken

Pollack, the Director of the Saban Center for Middle East Policy at

the Brookings Institution; Mr. Karim Sadjadpour, an Iran expert

with the International Crisis Group; Dr. Patrick Clawson, Deputy

Director of the Washington Institute for Near East Policy; and Dr.

Geoffrey Kemp, Director of Regional Strategic Programs at The

Nixon Center.

We thank our witnesses for being with us today, and we look forward to their insights.

(4)

OPENING STATEMENT

SENATOR JOSEPH R. BIDEN, JR.

RANKING MEMBER, U.S. SENATE COMMITTEE ON FOREIGN

RELATIONS

BEFORE THE

U.S. SENATE COMMITTEE ON FOREIGN RELATIONS

MAY 17, 2006

Mr. Chairman, I commend you for calling this hearing. And I

welcome an impressive group of experts. It will not be a surprise

that I am very much in agreement with the Chairman’s statement.

Unfortunately, the administration has chosen not to send a senior official to be a part of these hearings. That is a mistake.

If the administration wants to avoid a repeat of the Iraq fiasco,

it must begin to do what it initially failed to do in that arena: level

with the American people about what is at stake and what its

strategy is. Platitudes like ‘‘all options are on the table’’ and ‘‘we’re

pursuing diplomacy’’ aren’t good enough.

Dodging congressional hearings is not a good start to what promises to be one of the most challenging problems facing our country

over the next several years.

Let me state what the potential problem is: a nuclear-armed

Iran. That would put the bomb in the hands of a radical theocracy,

swimming on a sea of high priced oil, whose president has denied

the holocaust, threatened to wipe Israel off the map and to attack

us.

In my view, Iran probably would not use a weapon against us or

Israel or give the technology to terrorists. But it would feel

emboldened to make even more mischief in the region. And if Iran

gets the bomb, that could well fuel an arms race with Sunni Arab

countries like Egypt and Saudi Arabia, making an already volatile

region even more dangerous.

But I believe we have time: most published reports conclude Iran

is unlikely to develop a weapon for at least another five years. The

critical question is: how do we use that time to persuade Iran to

forego nuclear weapons?

For now, the administration seems to have settled on a diplomatic course. That’s the right course—but it seems to be pursuing

it with one hand tied behind its back, and without providing the

answers to critical questions that we need to shape a smart policy.

For example, our allies in Europe are working on a package of

incentives that are meant to be a final offer to Iran. What is our

role in developing these incentives? How seriously can Iran take

5

any offer from Europe—say on matters related to security guarantees—if the United States is not part of the deal?

Why are we in a posture of—in effect—negotiating with the negotiators? Wouldn’t it save some trouble and confusion to be in the

room along with our allies as well as Russia and China?

The press reports that if the Iranians spurn the European offer,

the U.S. and its allies will move to sanction Iran either through the

United Nations Security Council or, failing that, through a coalition of like-minded nations.

What costs will these sanctions entail for Iran, for us, and for

key countries we need on our side? How vulnerable is Iran to a ban

on imports of gasoline or exports of crude? What would be the impact on oil markets and at the local gas pump if Iranian crude were

removed from the market? Why isn’t the administration doing more

to prepare the public for the sacrifice sanctions would entail as the

Iranian leadership is preparing their public?

More broadly, what are the chances that Europe, Russia, and

China will agree to sanctions if they believe the U.S. has not explored every diplomatic avenue, including direct talks with Tehran?

Is the administration committed to regime change in Iran?

Would it be prepared to abandon it as part of a package of security

guarantees in a negotiated settlement of the nuclear issue?

Is the administration’s funding of democracy activities inside

Iran the best way to promote internal reform, or is that literally

the ‘‘kiss of death’’ for Iranian democrats? How do we tap into the

deep desire for change, particularly among the majority of the Iranian population which was born after the Islamic Revolution?

I wish we had someone here today from the administration to answer these questions. It is time for a full public airing of the

choices before us.

Let me state my recommended policy up front.

Last week, the Iranian President sent a letter to President Bush.

The letter won’t be nominated for the Nobel Prize for Literature—

or for Peace. But the content or style of the letter is not the point,

nor is the identity of the sender. I have not been alone in suggesting that we should respond—not to the letter we received, but

with our own ideas on how to move forward.

I would go a step further. We shouldn’t respond to President

Ahmedinejad. President Bush should write to the man who has the

final say in Iran—Ayatollah Khamenei.

I would make the letter public and I would include a call for direct talks with Iran—anywhere, anytime, with everything on the

table.

We should be willing to talk about all the issues that divide us:

the nuclear program, terrorism, Iraq, Afghanistan, Israeli-Palestinian peace, sanctions, and security.

We should lay out for Iran’s leader—and especially for its people

‘‘what the future could look like if Iran renounces its nuclear ambitions and support for terrorism—and what the future could look

like if it does not.

Would Iran respond favorably? I don’t know, but in recent

months, Iran has indicated a readiness to engage.

Indeed, an Iranian outline for a grand bargain was communicated to the Bush administration three years ago. While the govVerDate 11-MAY-2000 12:17 May 31, 2006 Jkt 025358 PO 00000 Frm 00011 Fmt 6604 Sfmt 6604 27613.TXT SFRELA2 PsN: SFRELA2
6

ernment in Tehran has changed since then, Iran’s fundamental positions likely have not. If anything the regime is now more comfortable with the reformists purged from the Majlis and the presidency.

Four years ago, when I was chairman of this committee, I called

publicly for a dialogue between members of Congress and the Iranian Majlis. Senator Hagel joined me in that effort. That call—from

two senators—sparked an intense debate in Iran that lasted several weeks. The reformist press embraced it. The hard-liners condemned it. The government couldn’t figure out how to respond.

If two senators can spark that kind of debate, imagine what the

President could do.

I believe that an offer of direct dialogue would place enormous

pressure on the Iranian leadership—from their own people and

from the international community. Iranian leaders would face a

stark choice—reject the overture and risk complete isolation and an

angry public, or accept it and start down a path that would require

Iran to alter its nuclear ambitions.

Talking to Tehran would not reward bad behavior or legitimize

the regime. Talking is something we have done with virtually every

other country on earth, including the former Soviet Union—which

posed an existential threat to us—and unsavory regimes like the

ones in North Korea and Libya.

Demonstrating that we made a serious attempt at diplomacy is

also the best way to keep others on board for tougher actions if

Iran fails to respond.

It would be a wise course of action for any administration. But

for this administration, with its blemished record in Iraq, it is not

simply a wise choice—it is a requirement. The threshold of trust

is much higher. If the administration wants to convince our allies

and others to place serious pressure on Iran, it must walk the

extra diplomatic mile.

I hope that we can proceed with the wisdom that this moment

requires. How the Iran crisis is handled will help determine international security for a generation, if not longer.

I look forward to the testimony.

(7)

PREPARED STATEMENT

HONORABLE ROBERT J. EINHORN

SENIOR ADVISER, CENTER FOR STRATEGIC AND INTERNATIONAL

STUDIES, WASHINGTON, DC

BEFORE THE

U.S. SENATE COMMITTEE ON FOREIGN RELATIONS

MAY 17, 2006

THE IRAN NUCLEAR ISSUE

Mr. Chairman, thank you for giving me the opportunity to appear before the committee this morning.

Developments over the last 10 months—including Iran’s abrogation in July of its agreement with the EU3 (Britain, France, and

Germany), its resumption in August of uranium conversion at

Isfahan, the end of its voluntary implementation of the IAEA Additional Protocol, the weak U.N. Security Council Presidential statement issued at the end of March, Iran’s production of enriched uranium at Natanz, and the inability so far of the five Security Council Permanent Members to agree on a Chapter 7 resolution—have

created a widespread impression that Iran’s quest for a fissile material production capability is progressing more rapidly than expected and is essentially unstoppable.

Fostering that impression—and the belief that the international

community has little choice but to accommodate to the reality of an

Iranian enrichment program—is very much part of Iran’s game

plan. But despite the significant progress Iran has made, Iran’s

claims that it has mastered centrifuge enrichment are premature;

it still has far to go before it can produce either highly enriched

uranium (HEU) or nuclear weapons; and its willingness to negotiate an end to its enrichment and reprocessing programs has yet

to be put to a serious test.

Evaluating recent Iranian progress

As documented by the International Atomic Energy Agency

(IAEA) in its report of April 28, 2006, Iran has indeed passed some

important milestones in recent months. Since September 2005, it

has produced over 110 tonnes of uranium hexafluoride (UF6) at the

Isfahan uranium conversion facility, enough gaseous uranium feedstock for over 20 nuclear weapons. After ending its suspension of

enrichment activities in January, it fed UF6 into a single P-1 centrifuge machine, then into 10-machine and 20-machine cascades,

and then moved quickly to a 164-machine cascade (a key building

8

block in a centrifuge enrichment facility) where it successfully enriched uranium to around 3.6%. Meanwhile, Iran has been assembling two additional 164-machine cascades at its Pilot Fuel Enrichment Plant (PFEP), one which is about to begin enrichment operations and the other which should be ready by June. In addition,

the Iranians announced that they would begin installing the first

3000-machine module of their industrial-scale enrichment facility

in the fourth quarter of 2006.

On the basis of these developments, Iran’s leaders are claiming

that they have now mastered centrifuge enrichment technology and

that it is too late to stop them. They go so far as to say that, even

if existing nuclear facilities were destroyed, they have reached a

stage where they could re-generate their program quickly and confidently, with little loss of time. But such claims are premature.

The Iranians have cut corners in their research and development

effort in order to register the accomplishments listed in the IAEA’s

report. Standard practice would have required them to run the 164-

machine cascade with UF6 on an uninterrupted basis for up to six

months or more before gaining confidence in its operation. Instead

of proceeding in parallel to assemble and operate additional cascades, the efficient operation of the initial cascade would first have

been demonstrated. To verify the ability to manufacture centrifuges

indigenously, the experimental cascade would have relied on machines made in Iran rather than imported, and it would have been

heavily instrumented to measure performance. And before introducing UF6 into the cascades, any impurities in the uranium gas

that could damage the centrifuges would have been addressed and

eliminated.But the Iranians deviated from standard practice. Apparently intent mainly on demonstrating publicly the ability to

reach a significant enrichment level, they ran the cascade with UF6

for less than two weeks. A significant portion of the experimental

cascade may have consisted of centrifuges imported from the A.Q.

Khan network rather than produced indigenously. Moreover, little

of the equipment normally used to measure performance seems to

have been used during the short experimental run. And instead of

taking the time to fix the problems in the Isfahan conversion process that have produced impurities in the UF6, the Iranians seem

to have chosen to use the impure UF6 and accept the risk of having

to replace any centrifuges damaged as a result.

Iran’s research and development efforts to date seem to have

been driven by political rather than technical considerations. By

giving highest priority to achieving and announcing the ability to

produce uranium enriched to 3.6%, the Iranians wanted to present

the world with a fait accompli—to demonstrate that they already

have an enrichment capability and that continued efforts to stop

them would be futile. Moreover, fearing (despite their determined

show of self-confidence) that they may eventually be forced to accept another freeze on their program, they wanted to establish the

highest possible baseline for such a freeze—thus, accelerating the

operation of the second and third cascades at the PFEP and starting installation of the 3000-machine module this year at the industrial-scale facility. And not least, Iran’s leaders saw the early announcement of the enrichment breakthrough as a way of boosting

national pride and building domestic support for the regime, espeVerDate 11-MAY-2000 12:17 May 31, 2006 Jkt 025358 PO 00000 Frm 00014 Fmt 6604 Sfmt 6604 27613.TXT SFRELA2 PsN: SFRELA2
9

1David Albright and Corey Hinderstein, ‘‘The Clock is Ticking, But How Fast?’’ The Institute

for Science and International Security (ISIS), March 27, 2006.

cially in anticipation of international pressures and possible hardships to follow.

Having taken a series of short-cuts largely for political reasons,

Iran presumably will now have to do the thorough developmental

and testing activities it would normally have done earlier. That will

take considerable time, and is probably one reason why the Iranians are saying they would be prepared to negotiate a deferral of

industrial-scale enrichment if the Europeans and others will agree

to accept continued R&D activities on a pilot scale.

So recent reports regarding progress in Iran’s nuclear program,

especially boastful accounts coming from Tehran, have created the

somewhat misleading picture that Iran’s efforts have accelerated to

an alarming degree. While Iran has indeed reached some key milestones of late, the basic timelines for Iran achieving a nuclear

weapons capability—in particular, the capability to produce enough

HEU for a single nuclear weapon—have not significantly changed.

Timeline for producing HEU

One of the best recent analyses in the open literature of Iran’s

timeline for producing HEU was done by David Albright.1 Since

he’s a witness at today’s hearing and available to explain his analysis, I’ll just cite his conclusion—that whether Iran builds a clandestine enrichment plant with 1500 P-1 centrifuges or breaks out

of the NPT and uses its first module of 3000 P-1 centrifuges at its

industrial-scale facility, the earliest it could produce enough HEU

for a single nuclear weapon would probably be three years from

now, or 2009. Albright emphasizes that this is a worst-case assessment and that Iran is likely to take longer if, for example, it needs

additional time to manufacture and install the necessary number

of centrifuges and overcome the normal technical difficulties that

arise in seeking to operate a number of cascades in a single production unit.

Director of National Intelligence John Negroponte seems to believe Iran will probably take longer than three years. In testimony

before the Senate Intelligence Committee in February 2006, he said

that, if Iran continues its present efforts, it ‘‘will likely have the capability to produce a nuclear weapon within the next decade.’’ A

National Intelligence Estimate on Iran produced last year reportedly judged that Iran could have a nuclear weapon in from five to

ten years.

Large margins of uncertainty inevitably surround judgments of

when Iran will or could have nuclear weapons or the fissile materials to build them. Some of the biggest unknowns relate to Iran’s

intentions—whether it is determined to produce HEU and acquire

nuclear weapons as soon as possible; whether—and for how long—

it is willing to stop at an LEU production capability while deferring

decisions on HEU production and weaponization; or whether it is

prepared to forgo, temporarily or indefinitely, the capability to

produce even LEU in order to avoid penalties or gain rewards.

Other uncertainties about the pace of Iran’s nuclear program relate more to capabilities. If Iran cannot readily overcome the techVerDate 11-MAY-2000 12:17 May 31, 2006 Jkt 025358 PO 00000 Frm 00015 Fmt 6604 Sfmt 6604 27613.TXT SFRELA2 PsN: SFRELA2
10

nical problems that typically accompany start-up enrichment operations, the timeframe will lengthen. If, however, Iran can soon

learn to master the much more efficient P-2 centrifuge design and

build P-2 enrichment units, the timeframe will shorten. Iran’s ability to procure materials, equipment, and technology from abroad

will also affect the pace of its nuclear program, although imports

will be much more important in the case of Iran’s industrial-scale

enrichment facility, which still requires large quantities of specialized materials and equipment, than in the case of a pilot-scale facility. Indeed, even if it were possible to cut off its access to foreign

supplies, Iran probably already possesses within its territory all

the materials and equipment it needs to set up a 1500- or 3000-

machine centrifuge facility and produce enough HEU for a small

nuclear weapons stockpile.

A key variable affecting the pace of Iran’s nuclear program is

whether—and the extent to which—Iran has a clandestine nuclear

program parallel to its overt program. Obviously, a successfully

hidden conversion plant and enrichment facility would invalidate

current estimates and eventually confront the United States and

its allies with a sudden, major security threat. But even undetected

activities of less importance (e.g., manufacture of centrifuge components or assembly of centrifuges) could have a substantial impact

on timeframes for producing HEU or nuclear weapons.

Monitoring Iran’s program—the role of the IAEA

The IAEA plays a critical role in narrowing our uncertainties

about Iran’s nuclear program. But IAEA monitoring of Iran’s program has serious limitations, especially given Tehran’s decision in

February to cease implementation of the Additional Protocol and

its overall failure to meet the IAEA’s requirements for transparency and cooperation.

The Agency’s presence in Iran, even with the less intrusive

verification rights contained in the IAEA-Iran Comprehensive Safeguards Agreement (as compared to the Additional Protocol), provides a strong basis for monitoring declared nuclear facilities and

activities in Iran. Agency inspectors can measure accurately how

much UF6 is produced at Isfahan and verify that it is not being

diverted to a covert enrichment plant. They know how much enriched uranium is being produced at Natanz and can be confident

that no HEU is being produced there and that no Natanz-produced

LEU is being sent to a covert enrichment facility to be further enriched to weapons grade. Frequent IAEA visits also enable us to

keep track of progress in assembling and operating cascades at the

PFEP, in constructing and operating the heavy water production

plant and heavy-water research reactor at Arak, and in building

the industrial-scale enrichment plant at Natanz. This information

is crucial in understanding the nature and pace of Iran’s acquisition of a fissile material production capability.

While the IAEA can effectively monitor declared nuclear facilities

and activities as long as the Agency has access to them, monitoring

confidence drops off rapidly at undeclared locations or if inspectors

are no longer given access to declared sites. In the latter case, such

as in the event of NPT withdrawal and termination of IAEA

verification, Iran could proceed without international scrutiny to

11

use previously monitored facilities to produce fissile material, either by starting from natural uranium or boosting previously safeguarded LEU to HEU.

Even if Iran remains in the NPT, monitoring undeclared locations is a formidable challenge, especially given Iran’s 20-year

track record of what the IAEA calls its ‘‘many failures and

breaches of its obligations to comply’’ with its NPT safeguards

agreement and given its February decision no longer to act as if

bound by the Additional Protocol. In its April 28th report, the

IAEA cites numerous ‘‘gaps in the Agency’s knowledge’’ that have

sustained or even heightened ‘‘concern’’ that Iran may be pursuing

nuclear weapons. Among the IAEA’s concerns are that Iran is not

being honest about the extent of its work on P-2 centrifuges, that

Iran took fuller advantage of a 1987 offer by A.K. Khan’s network

than it is admitting, that procurement of dual-use equipment (e.g.,

mass spectrometers) was related to a weapons program, that Iran’s

military is heavily involved in the nuclear program, that experiments with plutonium, polonium, and uranium metal point to a

weapons program, and that Iran may be engaged in nuclear-related

high explosives testing and missile re-entry vehicle design.

These concerns, and the IAEA’s judgment that Iran is not providing the Agency ‘‘full transparency and active cooperation,’’ have

brought the IAEA to the sobering admission that it ‘‘is unable to

make progress in its efforts to provide assurances about the absence of undeclared nuclear material and activities in Iran.’’ The

April 28th report goes on to say that ‘‘additional transparency

measures, including access to documentation, dual use equipment,

and relevant individuals’’—all of which have been specifically requested by the IAEA Board of Governors but denied by Iran—will

be required if the Agency is to be able to do its job.

Iran’s decision to stop implementing the Additional Protocol (AP)

has hampered the IAEA’s work. But implementation of the AP is

not enough. The AP has its own limitations. Unlike what many observers believe, it does not provide for ‘‘anywhere, anytime’’ inspections. It does not, for example, authorize investigation of suspected

weaponization activities or allow access to military facilities where

no nuclear materials are believed to be present. That is why the

IAEA Board has several times requested, unsuccessfully, that Iran

accept verification procedures going beyond what is required by the

AP.The IAEA must be given stronger tools to perform its

verification mission in Iran, and that will require action by the

United Nations Security Council. The IAEA Director General

should be asked to determine what additional verification authorities the Agency would need to carry out its mandate in Iran. If required, those authorities should go well beyond what is contained

in the existing Comprehensive Safeguards Agreement or even the

Additional Protocol. The Security Council should then take a decision to grant the IAEA those additional authorities.

Enhanced verification tools would not be a panacea. Even if Iran

complied with a Security Council directive to cooperate with them,

more intrusive methods would not necessarily be capable of uncovering all undeclared nuclear activities. For example, a relatively

small clandestine centrifuge enrichment plant (e.g., 1500 centrifuges) might still be difficult to detect. But stronger verification

12

tools would give the international community significantly more

confidence than it currently has in the ability to detect and deter

violations.

Persuading Iran to forgo its enrichment program

The absence so far of a clear-cut IAEA determination that Iran

is seeking nuclear weapons has made it very difficult to build

strong international support for a strategy capable of persuading

Iran to give up its enrichment capability. Indeed, under present circumstances, the prospects for heading off an Iranian fissile material production capability by means short of the use of military

force do not look very good.

Iran’s leaders have done an effective job convincing the Iranian

public that an indigenous enrichment capability is an Iranian right

that is essential to national dignity, technological advancement,

and energy independence and must never be given up. While influential Iranians occasionally express concern about the potential

consequences of pursuing an enrichment program in defiance of the

international community, the regime can be expected to remain on

course barring a major shift in the currently perceived balance of

benefits and risks.

The risks, at this stage at least, appear manageable. Tehran

probably believes the likelihood of military strikes has increased in

recent months but remains remote given Washington’s preoccupation with Iraq and its appreciation of Iran’s many options to retaliate. The Russians and Chinese have so far remained stalwart in

their opposition to sanctions and a Chapter 7 resolution. Even if resistance in Moscow and Beijing eroded, the Iranians may calculate

that any sanctions adopted would be weak and easily weathered

and that tougher measures (such as those affecting oil and gas

markets) would be avoided on the assumption—actively promoted

by Tehran—that they would hurt the West more than Iran.

Not only do the risks of continuing enrichment seem limited, but

the benefits of giving up the enrichment program also currently appear small (especially when compared to the perceived security,

geo-political, and prestige benefits of acquiring a nuclear weapons

option). The economic, technological, and political incentives offered

by the Europeans last July apparently didn’t impress the Iranians,

who probably recognize that, without U.S. support, those benefits

may not fully materialize. More fundamentally, Iran’s leaders may

see little sense in giving up their trump card in a deal with the

Europeans if they believe they’d still face a U.S. government intent

on pursuing a policy of regime change.

If the international community is to have any chance of persuading Iran to give up its enrichment capability (and its nuclear

weapons option), it must radically alter Tehran’s current calculus

of benefit and risk.Part of the equation is stronger sticks. Iran

must face the credible threat of increasingly severe penalties—

ranging from travel bans, asset freezes, and political gestures to investment and trade restrictions to even the use of military force.

Russia and China, in particular, must be persuaded that such

threats are necessary and not counterproductive. But they will be

prepared to join in threatening such penalties only if Iran is also

13

offered incentives that they believe could get Iran to accept the

deal and therefore avoid the need to implement the penalties.

And so the other part of the equation is more attractive carrots.

Possible incentives for Iran have been widely discussed, including

the kinds of commercial and technological cooperation offered by

the Europeans last July, membership in the World Trade Organization, lifting of existing U.S. economic sanctions, military confidencebuilding arrangements in the Gulf region, and so forth. But the

carrot likely to be most influential in Tehran would be the prospect

of a less threatening and more normal relationship with the United

States—and specifically a recognition in Washington that regime

change in Tehran should be the prerogative of the Iranian people

and not the policy of the U.S.

Direct engagement between the U.S. and Iran

The most effective way to offer the incentive of a more normal,

less threatening relationship with the United States—and indeed

the only way it would be credible—is through direct, face-to-face

discussions involving American and Iranian representatives. Bilateral U.S.-Iranian contacts could take place within the framework

of a multilateral process that also included Britain, France, Germany, Russia, and China—analogous to the Six Party Talks that

have provided an acceptable context for bilateral meetings between

the U.S. and North Korea during the last year or so.

The agenda for U.S.-Iranian discussions should not be confined

to the nuclear issue. It should instead cover the full range of issues

that divide the two countries, including U.S. concerns about Iran’s

support for Middle East terrorist groups, its role in Iraq, its alleged

harboring of al-Qaeda operatives, its policies toward Israel, and its

treatment of its own people. Iran undoubtedly will have its own list

of issues and demands. The purpose of the talks would be to explore whether U.S. concerns can be met and whether the interests

of the two countries can be reconciled. Only by addressing the

broad range of issues can prospects for normalization be assessed.

And only the prospect of normalized bilateral relations can provide

the context in which Iran is likely to consider suspending its enrichment program and giving up its aspiration for nuclear weapons.

At various times during the past decade, the U.S. and Iran have

both been interested in bilateral engagement, but never at the

same time. In recent weeks and months, the Iranians have been

sending signals—however mixed and confusing—that they might

be ready. But it is the U.S. administration that is now resisting.

Asked recently whether the Bush administration is willing to engage directly with Iran, Secretary Rice replied: ‘‘What is to be

gained if Iran is not prepared to show that it is ready to accede

to the demands of the international community?’’ But do we really

expect Iran to meet our demands even before sitting down to talk

with us—before knowing what it might receive in return? Do we

realistically think our current bargaining position is so strong?

There seems to be a strong conviction within the administration

that talking to the current regime in Tehran will give it legitimacy

and sustain it in power, whereas pressuring and isolating it will divide the leaders from the people and perhaps even result in regime

change and more acceptable policies on the nuclear issue and other

14

issues. But most experts on Iran tend to believe just the opposite—

that external pressures will unite the Iranian public behind the regime and its nuclear policies, while engagement will magnify the

fissures that have begun to appear within the Iranian leadership

and perhaps produce significant changes in policy, including on the

nuclear issue.

In London this Friday, the P-5 countries plus Germany are

scheduled to meet to consider a European-drafted package proposal

for Iran. It is an opportunity to make the major changes in Iran’s

calculation of benefits and risks that will be necessary to induce

Tehran to give up its enrichment capability. To have that effect,

the Russians and Chinese should agree that the package will require stiff penalties if Iran does not accept a reasonable offer. The

Europeans should provide incentives more attractive than those

contained in their July proposal. And the U.S. should be prepared

to engage in direct talks with the Iranians within a multilateral

framework.

Such a package would be the first real test of whether Iran is

willing to give up its quest for a nuclear weapons capability. If the

Iranians are determined to proceed with their nuclear plans come

what may, they will fail the test. But that will at least put the U.S.

and the Europeans in a stronger position to rally the international

community behind a longer-term strategy to demonstrate to Iran

that it has much to lose and little to gain by staying on its present

course.

Despite recent progress in Iran’s enrichment program, Iran is

still years away from being able to produce a nuclear weapon. But

it will not be long—perhaps several months to a year—before Iran

is confident in its ability to enrich uranium efficiently in overt or

clandestine production units large enough to produce bomb quantities of HEU in less than a year. It is therefore important that the

U.S. and the other key states move quickly to construct and

present a package that gives Iran a stark choice—it can be a pariah with nuclear weapons or a well-integrated, respected member

of the international community, with normal relations with the

U.S., without them.

(15)

PREPARED STATEMENT

DR. DAVID ALBRIGHT

PRESIDENT AND FOUNDER, INSTITUTE FOR SCIENCE AND

INTERNATIONAL SECURITY (ISIS), WASHINGTON, DC

BEFORE THE

U.S. SENATE COMMITTEE ON FOREIGN RELATIONS

MAY 17, 2006

Iran is now on the verge of mastering a critical step in building

and operating a gas centrifuge plant that would be able to produce

significant quantities of enriched uranium for either peaceful or

military purposes. However, Iran can be expected to face serious

technical hurdles before it can produce significant quantities of enriched uranium.

In testimony before the Senate Intelligence Committee on February 2, 2006, John Negroponte, Director of National Intelligence,

stated that Iran is judged as probably having neither a nuclear

weapon nor the necessary fissile material for a weapon. He added

that if Iran continues on its current path, it ‘‘will likely have the

capability to produce a nuclear weapon within the next decade.’’

The basis for this estimate remains classified, although press reports state that Iran’s lack of knowledge and experience in building

and running large numbers of centrifuges is an important consideration. Many interpret Negroponte’s remark to mean that Iran will

need 5–10 years before it possesses nuclear weapons.

Estimates of the amount of time Iran needs to get its first nuclear weapon are subject to a great deal of uncertainty. Many questions about Iran’s technical nuclear capabilities and its plans to

build nuclear weapons remain unanswered. In addition, the International Atomic Energy Agency (IAEA) is unable to verify that Iran

has fully declared its nuclear activities. It still cannot state conclusively that Iran does not conduct secret uranium enrichment activities. Nonetheless, because of over three years of inspections, the

IAEA has developed considerable knowledge about Iran’s nuclear

program and identified the main uncertainties in its knowledge

about that program. The remaining uncertainties appear to exclude

the existence of undeclared nuclear facilities large enough to significantly shift projections of the amount of time Iran would need

to produce nuclear weapons. However, these uncertainties also suggest that Iran intends to develop a nuclear weapons capability, enabling it to build deliverable nuclear weapons once the regime’s

leaders make to a decision to do so.

16

To understand the assumptions, key information, calculations,

and uncertainties driving estimates of the timelines, I present two

‘‘worst-case’’ estimates of the time Iran would need to build its first

nuclear weapon. In both of these estimates, which involve the production of highly enriched uranium (HEU) and cover the more likely scenarios, Iran appears to need at least three years, or until

2009, before it could have enough HEU to make a nuclear weapon.

Given the technical difficulty of the task, it could take Iran longer.

Before discussing these estimates, I will provide background information on Iran’s nuclear program and discuss recent developments in Iran’s gas centrifuge program. In particular, I will discuss

several of Iran’s recent progress and problems in its centrifuge program that affect these estimates.

Iran’s Nuclear Program

Iran has invested heavily in nuclear industries in the last twenty

years. It has sought a wide range of items overseas, including nuclear reactors, uranium conversion facilities, heavy water production plants, fuel fabrication plants, and uranium enrichment facilities. Many of its overseas purchases were thwarted, such as multiple efforts to buy research reactors and an attempt to purchase

a turn-key gas centrifuge plant from Russia in 1995. However, in

general, Iran found suppliers to provide the wherewithal to build

nuclear facilities. A. Q. Khan and business associates in Europe

and the Middle East provided Iran the ability to build and operate

gas centrifuges. Without their assistance, Iran would have likely

been unable to develop a gas centrifuge program.

Iran’s current nuclear infrastructure is impressive. Although

many key facilities are not finished, Iran is close to operating a

large power reactor at Bushehr and has started or is close to operating several relatively large fuel cycle facilities. Following the end

of the suspension embodied in its November 2004 agreement with

the European Union, Iran resumed operating its uranium enrichment facilities at Natanz. Table 1 summarizes the main nuclear facilities in Iran.

Most of Iran’s foreign procurement for its fuel cycle facilities occurred in secret, and several of the associated nuclear materials

and facilities were not declared to the IAEA, as Iran was required

to do under the Nuclear Non-Proliferation Treaty. Appendix 1 lists

Iran’s many violations of its safeguards agreement and important

incidences of its lack of cooperation with the IAEA.

If Iran finishes its declared nuclear facilities, it would have a capability to produce HEU and plutonium for nuclear weapons. At

that point, Iran could decide to change the purpose of its safeguarded nuclear facilities and rapidly dedicate them to nuclear

weapons purposes.

Under current and expected developments, Iran’s gas centrifuge

program provides the quickest route to the indigenous production

of nuclear explosive materials. As a result, the gas centrifuge program is the main focus of my testimony.

However, Iran is also progressing on developing an indigenous

method to produce plutonium. It continues to build a heavy water

reactor at Arak, despite repeated international requests that Iran

discontinue this project. Iranian officials have stated that the reacVerDate 11-MAY-2000 12:17 May 31, 2006 Jkt 025358 PO 00000 Frm 00022 Fmt 6604 Sfmt 6604 27613.TXT SFRELA2 PsN: SFRELA2
17

tor is scheduled to be completed in 2009, although this schedule

may not be met due to problems in building and starting up such

a reactor. When fully operational, the reactor is estimated to be

able to produce about 9 kilograms of weapon-grade plutonium per

year, enough for two nuclear weapons per year. Iran has told the

IAEA that it does not intend to build reprocessing facilities to separate plutonium from this reactor. It did state that it was planning

to build hot cells to separate ‘‘long-lived radioisotopes,’’ but said

that it was having problems obtaining the necessary manipulators

and lead glass windows. IAEA investigations into Iran’s past reprocessing activities continue.

Iran Breaks the Suspension on Enrichment Activities

Iran ended the suspension on enrichment and enrichment-related

activities in January 2006. Its actions appear aimed at finishing

the Pilot Fuel Enrichment Plant (PFEP) at Natanz this year and,

soon afterward, starting to install centrifuges in the Fuel Enrichment Plant (FEP), the main underground enrichment facility at

Natanz slated to hold eventually about 50,000 centrifuges.

In early January 2006, Iran removed 52 seals applied by the

IAEA that verified the suspension of Iran’s P-1 centrifuge uranium

enrichment program. The seals were located at the Natanz, Pars

Trash, and Farayand Technique sites, Iran’s main centrifuge facilities. On February 11, Iran started to enrich uranium in a small

number of centrifuges at Natanz, bringing to a halt Iran’s suspension of uranium enrichment that had lasted since October 2003. A

few days earlier, Iran moved to end its implementation of the Additional Protocol, an advanced safeguards agreement created in the

1990s to fix traditional safeguards’ inability to provide adequate assurance that a country does not have undeclared nuclear facilities

or materials.

After removing seals, Iran started to substantially renovate key

portions of the PFEP. Iran began construction on the PFEP in secret in 2001, and it installed up to 200 centrifuges in 2002 and

2003. The PFEP is designed to hold up to six 164-machine cascades, groups of centrifuges connected together by pipes, in addition to smaller test cascades, for a total of about 1,000 centrifuges.

At Natanz and Farayand Technique, Iran quickly restarted testing centrifuge rotors and checking centrifuge components to determine if they are manufactured precisely enough to use in a centrifuge. By early March, Iran had restarted enriching uranium at

the pilot plant in 10- and 20-centrifuge cascades.

On April 13, 2006, Iran announced that it had produced low enriched uranium in its 164 machine cascade, finished in the fall of

2003 but never operated with uranium hexafluoride prior to the

suspension of enrichment that started in October 2003 as a result

of an agreement between the European Union and Iran reached in

Tehran. Soon afterward, it announced that it had enriched uranium up to a level of almost 5 percent.

Restarting the 164-machine cascade took several months. Iran

had to repair damaged centrifuges. According to IAEA reports,

many centrifuges crashed or broke when the cascade was shut

down at the start of the suspension in 2003. Before introducing

uranium hexafluoride, it had to reconnect all the pipes, establish

18

1The annualized average output of each centrifuge was about 1.4 separative work units per

machine per year, based on Aqazadeh’s statement of a maximum feed rate of 70 grams per hour

and the production of 7 grams per hour of 3.5 percent enriched uranium. The feed and product

rate imply a tails assay of 0.4 percent. This relatively low output could mean that the aluminum

centrifuge rotors are spinning at a lower speed than possible. For the main plant, he said that

48,000 centrifuges would produce 30 tonnes of low enriched uranium per year. Assuming a tails

assay of 0.4 percent and a product of 3.5 percent enriched uranium, the estimated average output of each machine would be about 2.3 swu/yr. With an assumed tails assay of 0.3 percent,

the estimated output rises to 2.7 swu/yr, high for a Pakistani P1 design, but theoretically possible if the centrifuge is further optimized.

a vacuum inside the cascade, and prepare the cascade for operation

with uranium hexafluoride.

The initial performance of the P-1 centrifuges in this cascade has

been less than expected. Based on statements on state-run television on April 12, 2006 by the Gholam-Reza Aqazadeh, head of the

Atomic Energy Organization of Iran, the average annualized output of the centrifuges in this cascade is relatively low.1 In the same

interview, he implied that he expects that the average output of

each P1 centrifuge will almost double in the main plant.

In addition, the Iranians have not yet run this cascade continuously to produce enriched uranium. One report stated that the cascade operated with uranium hexafluoride only about half of its first

month of operation, although it continued to operate under vacuum

the rest of the time. The Iranian centrifuge operators do not yet

have sufficient understanding of cascade operation and must conduct a series of longer tests to develop a deeper understanding of

the cascade.

The IAEA reported in April that Iran was building the second

and third cascades at the PFEP. A senior diplomat in Vienna said

in a recent interview that the second cascade could start in May

and the third one could start in June. This schedule would allow

Iran to test multiple cascades running in parallel, a necessary step

prior to building a centrifuge plant composed of such cascades. The

diplomat speculated that Iran could continue with this pattern, installing the fourth and fifth in July and August, respectively. He

stated that the slot for the sixth cascade is currently being occupied

by the 10- and 20-machine cascades.

Iran would likely want to run its cascades individually and in

parallel for several months to ensure that no significant problems

develop and to gain confidence that it can reliably enrich uranium

in the cascades. Problems could include excessive vibration of the

centrifuges, motor or power failures, pressure and temperature instabilities, or breakdown of the vacuum. Iran may also want to test

any emergency systems designed to shut down the cascade without

losing many centrifuges in the event of a major failure. Absent

major problems, Iran is expected to need roughly six months or

more to demonstrate successful operation of its cascades and their

associated emergency and control systems.

Once Iran overcomes the technical hurdle of operating its demonstration cascades, it can duplicate them and create larger cascades. Iran would then be ready to build a centrifuge plant able to

produce significant amounts of enriched uranium either for peaceful purposes or for nuclear weapons. However, Iran may encounter

additional problems when it tries to build and operate a centrifuge

plant.

19

As of late April, according to the IAEA, Iran was not moving aggressively to finish the FEP in preparation for installing the first

module. Earlier, it moved process tanks and an autoclave, used to

heat uranium hexafluoride into a gas prior to insertion into centrifuge cascades, into the FEP at Natanz. Iran told the IAEA that

it intends to start the installation of the first 3,000 P1 centrifuges,

called the first module, in the underground cascade halls at the

FEP in the fourth quarter of 2006. Iran still needs to finish the

basic infrastructure, including installing electrical cables. A key

question is whether Iran has procured or manufactured all the

equipment it needs to finish the first module. In addition, questions

remain about the number of centrifuges Iran has in-hand and the

quantity it would still need to manufacture indigenously to exacting specifications, a task that many countries have found challenging.

The Uranium Conversion Facility (UCF) at Isfahan has continued to operate since its restart in August 2005, following the breakdown in the suspension mandated by the November 2004 agreement between Iran and the European Union. By late February

2006, Iran had produced about 85 tonnes of uranium hexafluoride,

where the quantity refers to uranium mass. This amount had increased to about 110 tonnes in April. With roughly 5 tonnes needed

to make enough HEU for a nuclear weapon, this stock represents

enough natural uranium hexafluoride for roughly 20 nuclear weapons. Although Iran’s uranium hexafluoride reportedly contains impurities that can interfere with the operation of centrifuges and reduce their output, IAEA experts believe that Iran can overcome

this problem. Iran is known to be working to improve the purity

of the uranium hexafluoride produced at the UCF. Nonetheless, if

necessary, Iran could use its existing stock of impure material, if

it had no other material. It could take additional steps to purify

this uranium hexafluoride, or it could use the material in its own

centrifuges and experience reduced output and a higher centrifuge

failure rate.

Worst-Case Estimates

Developing an answer to how soon Iran could produce enough

HEU for a nuclear weapon is complicated and fraught with uncertainty. Beyond the technical uncertainties, several other important

factors are unknown. Will Iran develop a nuclear weapons capability but produce only low enriched uranium for nuclear power reactors and not any highly enriched uranium? Will Iran withdraw

from the NPT, expel inspectors, and concentrate on building secret

nuclear facilities? How does Iran perceive the risks of particular actions, such as producing HEU in the pilot plant? What resources

will Iran apply to finishing its uranium enrichment facilities? Will

there be military strikes against Iranian nuclear sites?

Before developing a timeline, it is necessary to estimate how

much HEU Iran would need to make a nuclear weapon. Many assessments cite 25 kilograms of weapon-grade uranium (HEU containing more than 90 percent uranium 235) as the minimum

amount necessary for a crude, implosion-type fission weapon of the

type Iran is expected to build. However, the experience of similar

proliferant states such as Iraq leads to lower quantities. In 1990,

20

2 Alternatively, Iran could secretly build a ‘‘topping plant’’ of about 500 centrifuges and use

a stock of low enriched uranium produced in the pilot plant as feed to produce HEU. However,

the estimated timeline for this alternative route is not significantly different from the one outlined in this scenario and is not considered further.

Iraq initially planned to use 15 kilograms of weapon-grade uranium in its implosion design. An unclassified design using almost

20 kilograms was calculated in a study co-authored by Theodore

Taylor and Albright in about 1990. Thus, an Iranian nuclear weapon could be expected to need about 15–20 kilograms of weapongrade uranium. A larger quantity of HEU is needed than the exact

amount placed into the weapon because of inevitable losses during

processing, but such losses can be kept to less than 20 percent with

care and the recovered material recycled into successive weapons.

Thus, for the estimates presented here, a crude fission weapon is

estimated to require 15-20 kilograms of weapon-grade uranium.

Scenario I—Clandestine Centrifuge Plant

Iran’s most direct path to obtaining HEU for nuclear weapons is

building a relatively small gas centrifuge plant that can make

weapon-grade uranium directly from natural uranium.2 If Iran

built such a plant openly, it would be an acknowledgement that it

seeks nuclear weapons. As a result, Iran is likely to pursue such

a path in utmost secrecy, without declaring to the IAEA the facility

and any associated uranium hexafluoride production facilities.

Without the Additional Protocol in effect, however, the IAEA

faces a difficult challenge discovering such a clandestine facility,

even as Iran installs centrifuges at Natanz to produce low enriched

uranium. The IAEA has already reported that it can no longer

monitor effectively centrifuge components, unless they are at

Natanz and within areas subject to IAEA containment and surveillance. When Iran halted its adherence to the Additional Protocol,

the IAEA lost access to centrifuge production and storage facilities.

Alternatively, Iran may feel less assured about successfully deceiving the inspectors and proceed with such a plant only after withdrawing from the NPT and asking inspectors to leave. In either

case, U.S., Israeli, and European intelligence agencies would be unlikely to locate precisely this facility.

The key to predicting a timeline is understanding the pace and

scope of Iran’s gas centrifuge program, for example the schedule for

establishing a centrifuge plant large enough to make enough HEU

for one nuclear weapon per year. Such a clandestine facility would

require about 1,500–1,800 P1 centrifuges with an average capacity

of about 2.5–3 swus per year. These values for separative work are

at the high end of the possible output of Iran’s P1 centrifuge; actual values may be less.

A capacity of 4,500 swus per year is sufficient to produce about

28 kilograms of weapon-grade uranium per year, assuming continuous operation and a tails assay of 0.5 percent, where tails assay

is the fraction of uranium 235 in the waste stream. This is a relatively high tails assay, but such a tails assay is common in initial

nuclear weapons programs. As a program matures and grows, it

typically reduces the tails assay to about 0.4 percent and perhaps

later to 0.3 percent to conserve uranium supplies.

21

Iran has enough components for up to 5,000 centrifuges, according to senior diplomats in Vienna. However, other senior diplomats

said that Iran may not have 5,000 of all components, and many

components are not expected to pass quality control. In total, Iran

is estimated to have in-hand enough good components for at least

an additional 1,000 to 2,000 centrifuges, beyond the roughly 800

centrifuges already slated for the pilot plant at Natanz. Iran could

also build new centrifuge components, and in fact may have already started to do so.

If Iran had decided to build a clandestine plant in early 2006, it

could assemble enough additional usable centrifuges for this plant

of 1,500–1,800 centrifuges in about 15–18 months, or by about mid2007. It would need to assemble at the upper limit of its past rate

of about 70–100 centrifuges per month to accomplish this goal. If

necessary, Iran could also increase the centrifuge assembly rate, for

example by increasing the number of shifts from one to two per

day, according to diplomats in Vienna.

In the meantime, Iran would need to identify a new facility

where it could install centrifuge cascades, since it is unlikely to

choose Natanz as the location of a secret plant. It would also need

to install electrical, cooling, control and emergency equipment, feed

and withdrawal systems, and other peripheral equipment. It would

then need to integrate all these systems, test them, and commission the plant. Iran could start immediately to accomplish these

steps, even before the final testing of the 164 machine cascades at

Natanz, but final completion of the clandestine plant is highly unlikely before the end of 2007.

Given another year to make enough HEU for a nuclear weapon,

where some inefficiency in the plant is expected, and a few more

months to convert the uranium into weapon components, Iran

could have its first nuclear weapon in 2009. By this time, Iran is

assessed to have had sufficient time to prepare the other components of a nuclear weapon, although the weapon may not be small

enough to be deliverable by a ballistic missile.

This result reflects a worst-case assessment, and Iran can be expected to take longer. Iran is likely to encounter technical difficulties that would delay bringing a centrifuge plant into operation.

The output of its centrifuges may not achieve the higher value used

in this assessment. Other factors causing delay include Iran having

trouble in the manufacturing and installation of so many centrifuges and cascades in such a short time period, or Iran taking

longer than expected to overcome difficulties in operating the cascades as a single production unit or in commissioning the secret

centrifuge plant.

Scenario II—Break Out Using FEP

Iran has stated its intention to start installing centrifuges in late

2006 in its first module of 3,000 centrifuges in the underground

halls of FEP at Natanz. This module would give Iran another way

to produce HEU for nuclear weapons, even though the module is

being designed to produce low enriched uranium. Once Iran has an

adequate stock of LEU, the time to produce enough HEU for a nuclear weapon in this facility could be dramatically shortened.

22

At above rates of centrifuge assembly, and assuming that Iran

has or can produce enough new P1 centrifuge components and associated equipment, Iran could finish producing 3,000 centrifuges

for this module sometime in 2008. Although cascades would be expected to be built before all the centrifuges are assembled, Iran will

probably need at least another year to finish this module, placing

the completion date in 2009 or 2010. Unexpected complications

could delay the commissioning date. On the other hand, Iran could

accelerate the pace by manufacturing, assembling, and installing

centrifuges more quickly. Given all the difficult tasks that must be

accomplished, however, Iran is unlikely to commission this module

much before the start of 2009.

If Iran decided to make HEU in this module, it would have several alternatives. Because of the small throughput and great operational flexibility of centrifuges, HEU for nuclear weapons could be

produced by reconfiguring the cascades in the module or batch recycling where the cascade product is used as feed for subsequent

cycles of enrichment in the same cascade.

Reconfiguration could be as straightforward as connecting separate cascades in series and selecting carefully the places where new

pipes interconnect the cascades. The Iranian module is slated to be

composed of 164-centrifuge cascades operating together under one

control system. In such a case, reconfiguration would not require

the disassembly of the individual cascades, and it could be accomplished within days. In this case, the loss of enrichment output can

be less than ten percent, although the final enrichment level of the

HEU may reach only 80 percent, sufficient for use in an existing

implosion design albeit with a lower explosive yield. With a reconfigured plant, and starting with natural uranium, 20 kilograms of

HEU uranium could be produced within four to six months. If Iran

waited until it had produced a stock of LEU and used this stock

as the initial feedstock, it could produce 20 kilograms in about one

to two months.

Batch recycling would entail putting the cascade product back

through the cascade several times, without the need to change the

basic setup of the cascade. Cascades of the type expected at Natanz

could produce weapon-grade uranium after roughly four or five recycles, starting with natural uranium. Twenty kilograms of weapon-grade uranium could be produced in about six to twelve months.

If the batch operation started with an existing stock of LEU, the

time to produce 20 kilograms of weapon-grade uranium would drop

to about one to two months.

Whether using batch recycling or reconfiguration, Iran could

produce in 3,000 centrifuges at Natanz enough HEU for its first

nuclear weapon in less than a year. Iran could do so in considerably less than a year, if it used an existing stock of LEU as the

initial feed. It is likely that Iran would operate the module to make

LEU so that any production of HEU would be expected to happen

quickly.

Using either break-out approach, Iran is not likely to have

enough HEU for a nuclear weapon until 2009. This timeline is

similar to that outlined in the clandestine plant scenario. In addition, technical obstacles may further delay the operation of the

module in the FEP.

23

Conclusion

The international community needs to be committed to a diplomatic solution that results in an agreement whereby Iran voluntarily forswears having any deployed enrichment capability. Looking at a timeline of at least three years before Iran could have a

nuclear weapons capability means that there is still time to pursue

aggressive diplomatic options, and time for measures such as sanctions to have an effect, if they become necessary.

In the short-term, it is imperative for the international community to intensify its efforts to disrupt or slow Iran’s overseas acquisition of dual-use items for its centrifuge program and other nuclear programs. Iran continues to seek centrifuge-related items

aboard, but it has encountered greater difficulty acquiring these

items because of the increased scrutiny by key supplier states. As

Iran seeks these items in a larger number of countries, greater efforts will be required to thwart Iran from succeeding.

It is vital to understand what Iran has accomplished, what it

still has to learn, and when it will reach a point when a plan to

pursue nuclear weapons covertly or openly could succeed more

quickly than the international community could react. Although

these estimates include significant uncertainties, they reinforce the

view that Iran must foreswear any deployed enrichment capability

and accept adequate inspections. Otherwise, we risk a seismic shift

in the balance of power in the region.

TABLE 1—IRAN’S MAIN DECLARED NUCLEAR SITES

Activity Location

Uranium Mining and Milling .... Saghand Mine and Mill

Gchine Mine and Mill

Nuclear Research ........................

& Development ........................

Jabr Ibn Havan Multipurpose Laboratories

(JHL)

Radiochemistry Laboratories of TNRC

Tehran Research Reactor (TRR)

Uranium Chemistry Laboratory (UCL)

Research reactors at Esfahan

Molybdenum, Iodine and Xenon Radioisotope

Production Facility (MIX Facility)

Uranium Conversion .................. Uranium Conversion Facility (UCF)

Centrifuge Research ...................

& Development ........................

and Manufacturing .................

Kalaye Electric Company

Farayand Technique

Pars Trash

Other centrifuge manufacturing sites

Centrifuge Uranium ...................

Enrichment ..............................

Pilot Fuel Enrichment Plant at Natanz

Fuel Enrichment Plant at Natanz

Laser Uranium Enrichment ....... Lashkar Ab’ad

Karaj Agricultural and Medical Center

Fuel Fabrication .......................... Fuel Fabrication Laboratory (FFL)

Zirconium Production Plant (ZPP)

Fuel Manufacturing Plant

Heavy Water-Related Facilities Heavy Water Production Plant

IR-40 Heavy Water Reactor

Hot Cells

Nuclear Power Generation ......... Bushehr Nuclear Power Plant (BNPP)

24

1 International Atomic Energy Agency, ‘‘Implementation of the NPT Safeguards Agreement in

the Islamic Republic of Iran,’’ GOV/2004/83, 15 November 2004.

TABLE 1—IRAN’S MAIN DECLARED NUCLEAR SITES—CONTINUED

Activity Location

Waste Disposal ............................ Anarak

Suspect Sites ............................... Parchin, Lavisan-Shian

APPENDIX 1—IRAN’S SAFEGUARDS VIOLATIONS

The International Atomic Energy Agency (IAEA) has found that

Iran violated the Nuclear Non-Proliferation Treaty (NPT) and its

related safeguards agreement for many years. Iran’s violations and

eventual—though still incomplete—cooperation with the IAEA can

be divided into four eras or stages.

First Stage: up to mid-2002

In the first stage, beginning in the mid-1980s to early 1990s and

continuing until mid-2002, Iran violated its safeguards agreement

by pursuing undeclared fuel cycle activities with little scrutiny by

the IAEA or member states. Although the IAEA and member states

were collecting information about Iranian violations, they were reluctant to act publicly.

Second Stage: 2002–2003

The second stage began in August 2002 when the National Council of Resistance of Iran (NCRI) made the first of many public revelations about secret Iranian nuclear facilities, revealing the

Natanz and Arak nuclear sites and ended in late 2003. After pressure from the IAEA and further public revelations about the

Natanz site by ISIS, Iran finally allowed the IAEA to visit Natanz

in February 2003, and that month Iran began to reveal some of its

violations. However, the Atomic Energy Organization of Iran denied many of the accusations, and blocked access by the IAEA to

suspect sites. During this time, Iran’s leadership seemed to be torn

between acting cooperative and protecting their nuclear secrets at

all costs. Despite many efforts by Iran to hide its past and current

activities, however, the IAEA, with assistance from member states,

NCRI, and ISIS, revealed several more secret nuclear activities and

facilities.

In his November 2004 safeguards report to the IAEA Board of

Governors, the Director General detailed Iran’s failures to implement its safeguards agreement that had been uncovered through

this period. The violations include Iran’s failure to report activities

related to nuclear material, the failure to declare the existence of

relevant nuclear facilities, the failure to provide design data for a

number of facilities, and the ‘‘failure on many occasions to cooperate to facilitate the implementation of safeguards, as evidenced by

extensive concealment activities.’’ 1

According to the IAEA, Iran failed to declare six major activities

related to nuclear material:

25

2 International Atomic Energy Agency, ‘‘Implementation of the NPT Safeguards Agreement in

the Islamic Republic of Iran,’’ GOV/2003/75, 10 November 2003, Annex 1, p. 2.

• Iran failed to report that it had imported natural uranium

(1,000 kg of UF6, 400 kg of UF4, and 400 kg of UO2) from

China in 1991 and its transfer for processing. Iran acknowledged the import in February 2003.

• It failed to report that it had used the imported uranium to

test parts of its uranium conversion process, such as uranium

dissolution, purification using pulse columns, and the production of uranium metal, and the associated production and loss

of nuclear material. Iran acknowledged this failure in February

2003.

• Iran failed to report that it had used 1.9 kg of the imported

UF6 to test P1 centrifuges at the Kalaye Electric Company centrifuge workshop in 1999 and 2002. In its October 2003 declaration, Iran said it first fed UF6 into a centrifuge in 1999 and

in 2002 fed UF6 into as many as 19 centrifuges. Iran also

failed to declare the associated production of enriched and depleted uranium.

• It failed to report that in 1993 it had imported 50 kg of natural

uranium metal, and that it used 8 kg of this for atomic vapor

laser isotope separation (AVLIS) experiments at Tehran Nuclear Research Center from 1999 to 2000 and 22 kg for AVLIS

experiments at Lashkar Ab’ad from 2002 to 2003.2 Iran acknowledged these activities in its October 2003 declaration.

• Iran failed to report that it had used imported depleted UO2,

depleted U308, and natural U308 to produce UO2, UO3, UF4,

UF6, and ammonium uranyl carbonate (AUC) at the Esfahan

Nuclear Technology Center and the Tehran Nuclear Research

Center.

• It failed to report that it had produced UO2 targets, irradiated

them in the Tehran Research Reactor, and then separated the

plutonium from the irradiated targets. Iran also failed to report the production and transfer of waste associated with these

activities and that it had stored unprocessed irradiated targets

at the Tehran Nuclear Research Center. In meetings with the

IAEA following its October 2003 declaration, Iran said that it

conducted the plutonium separation experiments between 1988

and 1993 using shielded glove boxes at the Tehran Nuclear Research Center.

According to the IAEA, Iran failed to declare the existence of key

nuclear facilities and failed to provide design information, or updated design information, for a number of facilities. Iran failed to

declare the existence of the pilot enrichment facility at the Kalaye

Electric Company workshop, the laser enrichment facility at

Tehran Nuclear Research Center, and the pilot laser enrichment

plant at Lashkar Ab’ad.

Iran failed to provide design information for the facilities where

the uranium imported in 1991 was received, stored, and processed,

including at Jabr Ibn Hayan Multipurpose Laboratories, Tehran

Research Reactor, Esfahan Nuclear Technology Center, and the

waste storage facilities at Esfahan and Anarak. Iran also failed to

26

provide design information for the facilities at the Esfahan Nuclear

Technology Center and the Tehran Nuclear Research Center where

Iran produced UO2, UO3, UF4, UF6 and AUC using imported depleted UO2, depleted U308, and natural U308. Iran failed to provide

design information for the waste storage facilities at Esfahan and

Anarak in a timely manner. It failed to provide design information

for locations where wastes resulting from undeclared activities

were processed and stored, including the waste storage facility at

Karaj. And it failed to provide design information for the Tehran

Research Reactor, in relation to the irradiation of uranium targets,

the facility at the Tehran Nuclear Research Center where Iran separated plutonium, and the center’s waste handling facility.

Third Stage: End of 2003–2005

The third stage, from October 2003 to the end of 2005, could be

called the ‘‘Rowhani era,’’ because Hassan Rowhani, then head of

Iran’s National Security Council, took the lead from the Atomic Energy Organization of Iran in the fall of 2003 and attempted to convince the international community that Iran would now be transparent and cooperate fully with the IAEA. Facing a deadline set by

the IAEA Board of Governors, on October 21, 2003 Iran made an

extensive written declaration to the IAEA of its past nuclear activities, which revealed a number of additional safeguards violations,

and Iran agreed to sign the Additional Protocol.

According to the IAEA Director General’s November 15, 2004 report to the Board of Governors, ‘‘Since October 2003, Iran’s cooperation has improved appreciably, although information has continued in some cases to be slow in coming and provided in reaction

to Agency requests. Since December 2003, Iran has facilitated in a

timely manner Agency access under its Safeguards Agreement and

Additional Protocol to nuclear materials and facilities, as well as

other locations in the country, and has permitted the Agency to

take environmental samples as requested by the Agency.’’

However, despite better cooperation, a number of new questions

have been raised. For example, Iran’s work on developing P2 centrifuges, which Iran had failed to declare in its declaration in October 2003, is not fully understood by the Agency. In addition, Iran

has not allowed the IAEA sufficient visits to suspect sites at

Parchin that are involved in research and development of high explosives. In proceeding with construction of tunnels at the Esfahan

Nuclear Technology Centre before it had told the IAEA, Iran failed

to honor its commitment to tell the IAEA about plans to construct

new facilities.

Iran has not permitted the IAEA adequate information about

and access to dual-use equipment and materials procured by the

Physics Research Center for its Lavisan-Shian site that could be

used in a gas centrifuge program. Except in one case, Iran has also

refused repeated IAEA requests to interview individuals involved

in the acquisition of these items. In the one case where the IAEA

recently interviewed a former head of the Physics Research Center

and took environmental samples of some of the equipment he presented to the inspectors, it detected traces of HEU on some vacuum

equipment. This result links this equipment to the gas centrifuge

27

program and contradicts Iranian denials about its relationship to

the centrifuge program.

In addition, the IAEA has questions about a range of studies and

documents that could have a military nuclear dimension. The documents include a 15-page document that describes the production of

uranium metal from uranium hexafluoride and the casting of enriched and depleted uranium into hemispheres, activities typically

associated with a nuclear weapons program. Iran declared that it

received the document unsolicited from agents of the Khan network

and that it has never used the document. Because this document

was part of a package of detailed documents available from the

Khan network related to the production of nuclear weapon components made from depleted uranium and HEU, the IAEA remains

concerned that Iran may have received more documents in the

package and conducted undeclared activities associated with these

documents.

Another set of documents were located on a laptop computer that

was brought out of Iran and provided to the United States, which

in turn shared part of the information with the IAEA. The studies

relate to a ‘‘Green Salt Project,’’ high explosives testing, and the design of a missile re-entry vehicle that appears able to carry a nuclear warhead. Although this information is not a smoking gun, it

suggests the existence of a military-run nuclear weapons program.

Iran has refused to answer questions about the last two areas and

offered inadequate answers about the Green Salt Project.

A number of questions from before October 2003 also remain unanswered, pending new information or further analysis, such as the

source of low enriched uranium and some HEU contamination on

Iran’s P1 centrifuges and the timeline of Iran’s plutonium separation activities.

Fourth Stage: 2006–Present

In the fourth stage, starting in early 2006 and continuing until

today, Iran has broken the suspension and halted its adherence to

the Additional Protocol. The IAEA is making minimal progress in

answering its outstanding questions and concerns or in confirming

the absence of undeclared nuclear material and activities. It has

also lost access to key centrifuge production and storage facilities,

which would enable inspectors to determine the rate and status of

Iran’s production of centrifuges. This knowledge is especially relevant to concerns of a possible covert enrichment program.

(28)

PREPARED STATEMENT OF

DR. KENNETH M. POLLACK

SENIOR FELLOW AND DIRECTOR OF RESEARCH, SABAN CENTER FOR

MIDDLE EAST POLICY, THE BROOKINGS INSTITUTION, WASH- INGTON, DC

BEFORE THE

U.S. SENATE COMMITTEE ON FOREIGN RELATIONS

MAY 17, 2006

Mr. Chairman, Senator Biden, other distinguished members of

the committee, it is an honor to appear here today to discuss a

matter of such importance to our Nation.

As with all writing about Iran’s political process, it is important

to be humble about what we can know. Our sources of information

about Iranian decisionmaking are miserable and the Iranian governmental process is labyrinthine and unpredictable even for the

most subtle and knowledgeable observers inside Iran and out. Even

Iran’s public opinion is difficult to discern because the regime

works hard to control sources of information, punishes dissent, and

hinders the efforts of disinterested pollsters. Consequently, we are

all ‘‘reading tea leaves’’ when it comes to trying to predict Iran’s

behavior, especially on an issue as important and heavily debated

as this one. All that any of us can offer is an educated guess as

to what the Iranians are thinking and how they may react.

With that caveat in mind, I believe that Iran’s interest in nuclear

weapons is both wide and deep, but it is not adamantine. The

issue, as always in politics, is not whether Iran wants to see its nuclear program through to completion but what it would be willing

to sacrifice to keep it. On this matter, I believe the Iranians would

be willing to sacrifice a fair amount, but hardly everything. What

this suggests then is that convincing Iran to give up its nuclear

program is going to require very considerable inducements, both

positive and negative, but that it is not impossible to do so.

IRAN’S STRATEGIC PERSPECTIVE

Setting aside the question of whether Iran is determinedly seeking actual nuclear weapons or simply the capability to produce

fissile material (and thereby be in a position to acquire the weapons themselves rapidly), there is ample reason to believe that Iranians would want nuclear weapons.

Deterrence. It has become a cliche in the United States to note

that Iran lives in a tough neighborhood. Iranian leaders in Tehran

can objectively look out beyond Iran’s borders and see a wide range

29

of potential threats, from chaos and civil war in Iraq or Afghanistan, to a nuclear-armed Pakistan, to Israel over the horizon, to

American forces arrayed all along Iran’s borders. What’s more,

Tehran’s relations are strained or antagonistic with many of its

neighbors, and even those with correct relations with the Islamic

Republic tend to view it with considerable suspicion. Thus, the Iranians can honestly point to a wide range of threats and serious

concerns for their security, although the fact that their own actions

have been responsible for much of the animosity they face is probably lost on most of them.

In other words, possession of nuclear weapons makes sense from

an Iranian perspective for purely defensive reasons. While nuclear

weapons cannot solve all of Iran’s security problems, they can solve

some, and in so doing might make dealing with the rest much easier. At the most extreme, Iran is unlikely to be able to deter a determined American military operation without a nuclear arsenal. This

lesson has no doubt been driven home to the Iranians by the divergent experiences of Iraq and North Korea, the two other members

of President Bush’s ‘‘Axis of Evil.’’ North Korea is believed to possess nuclear weapons and so the United States has not attacked it

and is being forced to engage with Pyongyang. On the other hand,

Saddam Hussein’s Iraq did not possess nuclear weapons—but was

believed to be trying to acquire them—and so the United States

was willing to invade and overturn the Ba’thist regime. It is hard

to imagine that the leadership in Tehran did not see this as a very

simple set of reinforcing conclusions: If you have nuclear weapons,

the United States will not dare use force against you, but if you

don’t, you are vulnerable.

Prestige. We should never forget that the Iranians see themselves

as the lineal descendants of a 2,500-year-old civilization that bequeathed to the world its first superpower (the Persian Empire of

Cyrus the Great, Darius, and Xerxes), and a long string of great

powers from the Parthians to the Sassanids to the Safavids. Only

very recently, as measured by the full tale of human history, has

Persian power been supplanted in the region by European and

eventually American power. A great many Iranians believe that

their country’s history, experience, and natural resources mandate

for it a role as one of the world’s great powers and the dominant

force in southwest Asia and the Persian Gulf.

To the legacy of Persia’s imperial greatness can be added the

pride of the Islamic Revolution, which since 1978 has reinforced to

many Iranians the sense that their nation has been marked by destiny to play a leading (perhaps ‘‘the’’ leading) role in the region and

the Islamic world. Although many Iranians have soured on the revolution, others continue to see it as vital to Iran’s mission in the

world and many more still see it as another sign that Iran should

be the intellectual, diplomatic, and military hegemon of the region.

Persian pride appears to be another motivation in Iran’s pursuit

of nuclear enrichment capability, if not actual nuclear weapons. Acquiring nuclear weapons would give Iran a status that only a very

few other nations possess. It would immediately catapult Iran into

the ‘‘big leagues’’ of world politics. It would likely force other states

to pay more attention to Iran’s aspirations and wishes. Here the recent model that seems to stand out in the minds of many Iranians

30

is India, whose development of nuclear weapons—and their acceptance by the international community—has been a critical element

of New Delhi’s acceptance as one of the great powers of the world,

whose views should be considered on any matter of importance.

Since this is the position to which many Iranians seem to aspire,

matching India in the nuclear realm also appears to be a self-evident necessity for Iran.

Export of the Revolution. For at least some Iranians, typically referred to as the ‘‘radical hardliners,’’ Ayatollah Khomeini’s dream

of exporting Iran’s Islamic Revolution to the rest of the Muslim

world (and possibly even beyond) is yet another motive. Throughout the 1980s and, to a lesser extent during the early 1990s, Iran

attempted to realize this dream by attempting to subvert reactionary Middle Eastern governments and assist would-be revolutionaries in those same countries. Iranian efforts in Iraq, Saudi

Arabia, Kuwait, Bahrain, and even Lebanon were all motivated in

part or in whole by this goal. But Iran’s efforts in these countries

triggered the animosity of the United States and in at least one

case (Iraq during the Iran-Iraq war) prompted limited but direct

American military intervention against Iran. In Lebanon, Iranian

actions were part of what inspired American intervention there,

and in Saudi Arabia, Iranian activities sparked other aggressive

American responses as well as prompting debate in Washington

over whether to mount retaliatory military actions against the Islamic Republic.

For still other Iranians, another motivation to acquire nuclear

weapons appears to be the related goal of waging war against the

United States. This is an offensive version of the deterrence argument above that is also closely related to export of the revolution.

Proponents of this motivation continue to see the world as Khomeini described it—as a battle between the forces of good, represented by Iran, and the forces of evil, represented by the United

States. In this worldview, Iran will not just face endless attack by

the United States but it will also face constant opposition to its efforts to export the revolution from the United States. Therefore,

Iran must have the power to drive out American influence from the

region and prevent the United States from keeping Iran from

achieving its destiny.

For Iranians holding either or both of these more offensive rationales, acquisition of nuclear weapons would also appear to be

vital because it would be the only sure way to limit or preclude an

American military response for Iranian asymmetric warfare, terrorism, and subversion against the United States and its conservative allies in the region.

MOTIVATIONS VS. PRIORITIES

The Iranians clearly have a range of powerful motivations, strategic, ideological, and psychological, for desiring an arsenal of nuclear weapons—or at least the capability to manufacture such

weapons in short order. Nevertheless, it would be a mistake to confuse motivations with a universal and indomitable determination to

do so. The history of the past 60 years demonstrates that other

states with equal or greater strategic need, ideological justification,

and/or psychological desire for nuclear weapons ultimately chose eiVerDate 11-MAY-2000 12:17 May 31, 2006 Jkt 025358 PO 00000 Frm 00036 Fmt 6604 Sfmt 6604 27613.TXT SFRELA2 PsN: SFRELA2
31

ther not to pursue them at all or to give up their pursuit midstream:

• In the 1960s it was considered a foregone conclusion that

Egypt would develop a nuclear weapon as its strategic and psychological incentives were even more compelling than Iran’s

are today. Egypt was locked in a conflict with a nuclear-armed

Israel which resulted in four mostly disastrous wars (for

Egypt) in 25 years, and Cairo aspired to be the ‘‘leader of the

Arab world.’’ Yet Egypt shut down its nuclear weapons program entirely of its own volition because the Egyptian leadership concluded that it had higher priorities which the pursuit

of nuclear weapons were undermining. • Leaders in Italy, Australia, Sweden, Japan, and South Korea

considered developing nuclear weapons at various points, and

the Italians and Australians actually made some considerable

progress toward that goal. However, all of them decided that

nuclear weapons would be counterproductive to other, higher

priorities, and that they could find ways to deal with their security problems (including even South Korea) through other

means. • Belarus, Ukraine, and Kazakhstan went even further in the

early 1990s, voluntarily surrendering the nuclear arsenals that

they had inherited from the Soviet Union. Although many

Western academic strategists believed that they were insane to

do so, all three recognized that the security benefits from possessing nuclear weapons were outweighed by the diplomatic

and economic benefits of giving them up and strong economies

and good relations with the rest of the world were of far greater importance to them. • Finally, there is the example of Libya, long one of the Middle

East’s worst rogue states, which agreed to give up its nuclear

program in December 2003 after 10 years of U.N. sanctions

convinced Muammar Qadhafi that his pursuit of the bomb was

not worth the devastation of Libya’s economy and international

relationships.

What these examples demonstrate is that it is entirely possible

for the international community to dissuade states from trying to

acquire nuclear weapons and even persuade them to give them up,

even when those states have compelling strategic rationales for

possessing the weapons. In every case, the key has been to create

a powerful set of positive incentives and negative disincentives

geared to the priorities of the state in question.

Iran’s political leadership is divided over its nuclear program in

important ways. While the available evidence suggests that most

Iranian leaders would like at least a nuclear weapons capability (if

not the weapons themselves), it also indicates that they differ widely in the priority they ascribe to this goal. For instance, in an interview in 2002, then Minister of Defense, Ali Shamkhani, warned

that the ‘‘existence of nuclear weapons will turn us into a threat

to others that could be exploited in a dangerous way to harm our

relations with the countries of the region.’’ More important still,

former President Ali Akbar Hashemi Rafsanjani has warned that

‘‘If there [are] domestic and foreign conflicts, foreign capital will

not flow into the country. In fact, such conflicts will lead to the

32

flight of capital from this country.’’ Statements like these demonstrate that important Iranian leaders do not regard possession of

nuclear weapons either as an unvarnished blessing or Iran’s highest priority.

The same appears to hold true for the Iranian populace, as best

we can discern it. When Iranians took to the polls in the spring of

2005 to elect a new president, they did not vote for Mr.

Ahmedinejad because he was determined to acquire nuclear weapons. Instead, they voted for him because he promised to reform

Iran’s economy and curb the rampant corruption that is the principal blight on the economy. Anecdotal evidence has repeatedly confirmed that for the Iranian people, ‘‘it’s the economy, stupid.’’ Of

course, many average Iranians continue to voice their support for

Iran’s nuclear program and even for acquisition for nuclear weapons, but stated in a vacuum (i.e., without regard for potential

tradeoffs) such sentiments are meaningless. As a friend of mine, a

Swedish diplomat, put it to me, ‘‘If you were to ask Swedes whether Sweden should have a nuclear weapon, most of them would

probably say ‘yes’ too, until you told them that it would come at

the cost of isolation or even sanctions.’’

What’s more, the regime appears to be well aware of this. Supreme Leader Ali Khamenei and his allies have tried hard to steer

clear of policy paths that would cause Iran’s European and Japanese trading partners to impose economic sanctions on Tehran,

even being willing to agree to suspend Iran’s nuclear program in

2003 to avoid such a fate. It is noteworthy that while President

Ahmedinejad and his hardline colleagues in Iran’s Foreign Ministry

regularly reject foreign overtures to deal with Iran’s nuclear program, Khamenei’s people have just as frequently contradicted the

hardliners by announcing a willingness to negotiate. Thus it was

Ahmedinejad’s Foreign Ministry that rejected the 2005 Russian

proposal to allow Iran to enrich uranium at Russian facilities, but

days later National Security Adviser (and Khamenei protege) Ali

Larijani accepted the Russian offer to start a dialogue on this proposal, almost certainly in an effort to drag out negotiations, postpone U.N. Security Council action, and possibly harden Russia’s

support for Tehran’s position.

It is also important to note that the regime itself has scrupulously maintained that the nuclear program is about securing

Iran’s energy needs (so that it can export more oil and gas) and developing a high-tech industry. While there are a number of logical

and evidentiary problems with these claims, what is critical is that

they are designed to portray Iran’s nuclear program as necessary

to Iran’s economy, not its security. Indeed, Tehran is so paranoid

about this that it temporarily evicted CNN’s bureau from Iran

when a CNN interpreter mistranslated ‘‘nuclear power’’ as ‘‘nuclear

weapons’’ in a speech of Ahmedinejad’s. This too makes clear that

the regime shares the belief that if the Iranian people were ever

forced to choose between the nuclear program and economic health,

they would choose the latter.

SQUARING THE CIRCLE

This discussion suggests that convincing Iran to give up its nuclear program is going to be tough. The Iranians are not going to

33

do so willingly. But it also tells me that doing so should not be impossible, because there are Iranians—both the bulk of the people

and important members of the regime—for whom nuclear weapons

are desirable, perhaps even important, but neither essential nor

even their first priority.

Another comparison is useful to illustrate this point. North Korea’s calculus regarding nuclear weapons was clearly different from

Iran’s. For Pyongyang, its nuclear weapons program was its highest priority and it was willing to tolerate hardships that few other

countries (including even Iran) would be willing to. Ultimately,

North Korea accepted the devastation of its economy, the impoverishment of its citizenry, and having 3 million of its people starve

to death to hold onto its nuclear weapons program. If the same

could be said about Iran then it probably would be impossible to

convince Iran to give up its nuclear program; however, there is no

Iranian or Iran expert who believes that this is the case. There is

absolutely no evidence that Tehran would be willing to tolerate the

extremes of sacrifice that North Korea did. Instead, the evidence

suggests exactly the opposite, that Iran would be more like Libya:

Difficult, but hardly impossible to convince.

The key then is for the United States and its allies to compel the

Iranians to choose between their nuclear program and their highest

priority—their economic well-being. The way of doing so is now

well-explicated, including in my own work. Briefly, it would involve

a multilateral sanctions regime that would gradually shut down

Western (ideally the OECD, but initially perhaps just the G–7) investment in Iran, particularly its gas and oil sectors, in response

to continued Iranian recalcitrance. Even with oil prices above $60

per barrel, Iran is desperate for Western investment capital because corruption is sucking the oil revenues right out of the system

and thus having little impact on the overall economy. Despite the

claims of some that Russia and China could make up for any loss

capital from Europe and Japan, the fact is that their economies are

still roughly a decade away from being in a position to do so. Simultaneously, as we did with the Libyans, in return for Iran agreeing to abandon its nuclear program and do so in verifiable fashion,

the West (or the U.N. Security Council) would offer Tehran a package of incentives to include admission to the WTO and integration

into the global economy, a lifting of U.S. economic sanctions (assuming that, like Libya, Iran renounced terrorism as well) and a

universal settlement of all outstanding claims, investment guarantees to make investing in Iran more attractive for Western companies, provision of properly safeguarded light water reactors, terms

for giving Tehran access to enrichment technology (without the

feedstock materials, the equipment, or the spent fuel), security

guarantees, and ideally a new security architecture in the Persian

Gulf similar to the Organization of Security and Cooperation in Europe that would allow Iran to address its legitimate security concerns through a peaceful process of dialogue and, eventually, arms

control.

Presenting such a package would make clear to the Iranian people and their leadership that their country really did have just two

choices. They could retain their nuclear program (and their support

for terrorism) and they would become an international outcast and

34

have their economy slowly crippled by sanctions. Or they could give

up these two things and enjoy all of the benefits of the international community that they ever dreamed of.

Two additional caveats suggested by the discussion of Iranian

motives and priorities are also in order here. First, the package

would have to make very clear that all Iran has to give up is its

pursuit of nuclear weapons—not nuclear energy or nuclear technology—to get all of the benefits promised. Any ambiguity here

would allow Iran’s hardliners to continue to proffer the canard that

Iran’s nuclear program is about its economy, thus engaging Iran’s

highest priority and making it less likely that the Iranian people

would favor it.

Second, both the carrots and the sticks employed by the international community are going to have to be very big. Iran has

major strategic, ideological, and psychological equities attached to

its nuclear program and it will not budge easily. Small carrots, like

those offered by President Bush on March 10, 2005 (admission to

the WTO and sale of spare parts for Boeing passenger aircraft), or

simply deals for nuclear reactors and technology, are probably not

going to be adequate. The Iranian people will have to believe that

there is a huge pot of gold at the end of the rainbow, especially if

they are going to be able to help Iran’s more pragmatic leaders defeat Tehran’s hardliners in what is likely to be a knock-down, dragout internal political battle. Similarly, no one should be under the

misimpression that Iran will accept such a deal without the threat

of very serious economic sanctions. Indeed, it seems likely that the

international community, or merely the West acting outside the

United Nations in multilateral fashion, will have to impose strong

sanctions on Iran and keep them in place for some time before

Tehran accedes. As noted above, it took 10 years for Libya to come

to terms, although the Libya sanctions were relatively light as far

as sanctions go.

Moreover, throughout the 1990s the European countries threatened Iran with sanctions for its bad behavior but never, ever followed through on their threats no matter how outrageous Iran’s behavior. Consequently, it appears that Iran does not believe that the

Europeans will be willing to impose such sanctions, let alone maintain them for very long. This is the root of Tehran’s current strategy of brinksmanship: The Iranians seem certain that, in the end,

the Europeans will balk and when that happens, the crisis will be

over and they can go back to both pursuing nuclear weapons and

enjoying trade and investment from Europe. Thus their strategy is

to give on nothing and force the Europeans either to make good on

their threats or, as Tehran seems to believe, admit that they are

bluffing. For this reason, the Iranians are probably going to have

see the Europeans actually impose meaningful sanctions and be

willing to hold them in place for some time before Tehran actually

believes the Europeans mean business.

None of this should be terribly heartening, but neither should it

cause us to lose heart. We always knew that convincing states like

Iran that have a range of important rationales for pursuing a nuclear capability to give it up is difficult. But few things in the

worlds of politics and diplomacy are impossible, and there is good

reason to believe that Iran can be dissuaded from its current

35

course if the United States and its allies in Europe and Asia can

forge a common position and make clear to Iran that pursuit of a

nuclear weapon will cost it what most Iranians value the most.

(36)

PREPARED STATEMENT OF

MR. KARIM SADJADPOUR

IRAN ANALYST, INTERNATIONAL CRISIS GROUP, WASHINGTON, DC

BEFORE THE

U.S. SENATE COMMITTEE ON FOREIGN RELATIONS

MAY 17, 2006

Mr. Chairman and Senator Biden, thank you for allowing me, on

behalf of the International Crisis Group, the privilege to discuss before you the fate and relationship of the two countries which I care

most deeply about, the United States and Iran.

Mr. Chairman and Senator Biden, I fear we are on a collision

course with decidedly devastating consequences for the future of

the U.S.’s international standing, nuclear nonproliferation, Middle

East peace and security, and Iran’s evolution toward a society

which respects the human rights and civil liberties of its citizens.

What was once described as a game of chess has evolved into a

game of chicken: The United States and Iran are like two cars moving head on with increasing velocity. Most concerning is that neither side believes that it serves its interests to slow down or get

out of the way.

The policy stances of both sides have the merit of being clear:

Washington sincerely doubts that Tehran’s intentions are peaceful,

and refuses to ‘‘reward bad behavior’’ or ‘‘confer legitimacy’’ on the

Iranian regime by talking to it. Tehran, meanwhile, believes that

the nuclear issue is simply a pretext used by the United States to

cover its regime change ambitions, and that agreeing to compromise on its ‘‘legal NPT rights’’ would not allay U.S. pressure,

but on the contrary be perceived by Washington as a sign of weakness that would only invite further pressure. Operating under this

premise, Iran’s leadership believes it must not relent from its position, especially when oil prices soar, its hand in Iraq is strong, and

there is still no indication that a more conciliatory Iranian approach would beget a more conciliatory U.S. response.

I do not believe that a nuclear-armed Iran is inevitable. Nor do

I believe that a firm decision has been made in Tehran to pursue

the acquisition of a nuclear weapon. Despite current ominous

trends I remain hopeful that the Iranian people’s aspirations to live

in a more open society at peace with the outside world is a worthy

goal which will one day be realized. But I believe the probability

of achieving either of these two salient goals—preventing a nuclear-armed Iran and forwarding the cause of Iranian democracy—

is highly unlikely in the context of current U.S. policy toward Iran.

37

Over three decades of U.S. attempts to change Iranian behavior

by isolating it politically and economically have borne little fruit:

27 years after the 1979 revolution, Iran continues to sit atop the

State Department’s list of the world’s state sponsors of terror, continues to play an unconstructive role in the Israeli-Palestinian conflict, continues to expand its military arsenal, and continues to repress its own population. If U.S. policy toward Iran were a business

model, it would have been scrapped long ago for failing to achieve

its bottom line.

I. TEHRAN’S CALCULATIONS: THE INTERNAL NUCLEAR DEBATE

Iran’s senior leadership has always attempted to project a unified

mindset regarding the nuclear issue, but in reality the country’s

ruling elites are divided into three broad categories: Those who

favor pursuit of the nuclear project at all costs; those who wish to

pursue it without sacrificing diplomatic interests; and those who

argue for a suspension of activities to build trust and allow for a

full fuel cycle down the road. Understanding and exploiting these

differences should be a key component of any diplomatic approach.

The first group, sympathizers of President Mahmoud

Ahmadinejad, comprises ideologues and confrontationists who romanticize the defiance of the revolution’s early days. They believe

that former President Mohammed Khatami’s ‘‘de ́tente’’ foreign policy projected an image of weakness while achieving little for

Tehran other than membership in the ‘‘Axis of Evil.’’ In contrast,

they favor an uncompromising approach, in some cases going as far

as to advocate that Iran withdraw from the NPT, unequivocally

pursue its nuclear ambitions, and dare the international community to react. This group advocates measures such as withholding

oil exports and cutting diplomatic ties with countries that side

against Iran, confident that ‘‘the West needs Iran more than we

need them.’’ While 2 to 3 years ago such views were on the fringe,

with the recent elections they have gained increased relevance and

credibility.

Like the confrontationists, the second group is highly cynical of

Western (particularly U.S.) intentions, and argues that Iran is

‘‘bound by national duty’’ to pursue its ‘‘inalienable’’ right to enrich

uranium. Unlike them, however, they favor working within an

international framework. Iran’s lead nuclear negotiator Ali Larijani

is perhaps the best representative of this group, arguing simultaneously, perhaps inconsistently, that Iran must neither succumb to

‘‘Western double standards’’ nor abandon diplomacy. ‘‘The West

wants two classes of nations,’’ Larijani frequently says. ‘‘Those that

have nuclear technology and can be advanced, and nations that

must be restricted to produce only tomato juice and air conditioners

. . . [But] a country’s survival depends on its political and diplomatic ties. You can’t live in isolation.’’

The third, more conciliatory group, arguably most representative

of popular sentiment, is currently the least influential. After

months of silence, however, they are increasingly beginning to

make their voices heard. Former president Khatami and former

lead nuclear negotiator Hassan Rowhani have criticized their successor’s disregard for diplomacy, and the country’s largest reform

party recently urged the government to voluntarily suspend all nuVerDate 11-MAY-2000 12:17 May 31, 2006 Jkt 025358 PO 00000 Frm 00043 Fmt 6604 Sfmt 6604 27613.TXT SFRELA2 PsN: SFRELA2
38

clear fuel cycle work. Believing the costs of nuclear intransigence

to be greater than its benefits, they argue that Iran should freeze

its enrichment activities in order to build confidence and assuage

international concerns. This group welcomes diplomacy and has

consistently backed direct talks with the United States, convinced

that the Europeans are incapable of providing the political, economic, and security dividends Iran seeks.

Signing off on all major decision in Iran is Supreme Leader Ayatollah Ali Khamenei, whose 17-year track record suggests a leader

who wants neither confrontation nor accommodation with the

West. Yet decisions in Iran are made by consensus rather than decree, and at the moment Ayatollah Khamenei appears more influenced by advisors who argue—with some plausibility—that nothing

short of regime change will satisfy the United States, and that retreating on the nuclear question will only display weakness. If

there is to be clash with the United States, Tehran’s hardliners

want it to occur on their terms, when oil prices are high and the

United States is bogged down in Iraq.

II. AHMADINEJAD AND THE STRUGGLE FOR POWER

If Mahmoud Ahmadinejad’s election proved anything, it is that

the Iranian regime is far from monolithic and Iranian politics are

far from predictable. While his triumph last June was widely

viewed as a consolidation of power by the nation’s conservatives,

differences among conservatives have never been greater than

today. And though it was widely assumed that he would focus on

domestic economic affairs and have minimal influence over Iran’s

foreign policy, in the 9 months since his inauguration

Ahmadinejad’s impact on Iran’s foreign relations has been nothing

short of monumental.

Ahmadinejad’s assertiveness and outspokenness has surprised

many. During his election campaign he criticized Iran’s previous

nuclear negotiating team for being ‘‘frightened,’’ and as president

he disbanded it in favor of his own. He is said to have personally

authored the provocative speech he delivered at the U.N. Security

Council last September, and to have penned his recent 18-page letter to President Bush. Ahmadinejad also has repeatedly issued provocative, bellicose statements on Israel that go beyond what the

Supreme Leader or others in the leadership have pronounced.

By most accounts, the president’s style has irked the country’s

entrenched political elite. Senior officials have complained that he

‘‘doesn’t play by the rules,’’ and displays a surprising lack of respect

for the Islamic Republic’s protocols and hierarchy. Rather than

defer to the elders of the revolution on matters as significant as the

nuclear issue or U.S.-Iran relations, he has tried to present himself

as a force that cannot be bypassed. Indeed, political rivalries once

kept under wraps are now playing out in the open. Last month, for

example, Ahmadinejad’s eagerly anticipated announcement that

Iran had successfully operated a centrifuge cascade was preemptively leaked by Rafsanjani to the Kuwaiti press. More recently,

when news came out that he had written an unprecedented letter

to President Bush, former lead nuclear negotiator Hassan Rowhani

quickly countered by releasing a concise, two-page compromise proVerDate 11-MAY-2000 12:17 May 31, 2006 Jkt 025358 PO 00000 Frm 00044 Fmt 6604 Sfmt 6604 27613.TXT SFRELA2 PsN: SFRELA2
39

posal to Time Magazine—seemingly sending a message to the West

that he is an alternative messenger with an alternative message.

Ahmadinejad’s behavior can be explained on two counts. To some

extent, it is a function of his ambiguous relationship with Ayatollah

Khamenei. The two men have decidedly different post-revolution

experiences and responsibilities: Ahmadinejad and his peers’ most

salient experience was fighting in the battlefields during the IranIraq war whereas Ayatollah Khamenei was serving as president,

and faced with the day-to-day dilemmas of governing a country embroiled in a full-blown war and facing near total political, economic,

and diplomatic isolation. Wary of repeating this experience, the Supreme Leader has more than once publicly downplayed

Ahmadinejad’s fiery pronouncements. Yet, at the same time, there

is evidence that Khamenei appreciates Ahmadinejad’s

anticorruption campaign and his commitment to revolutionary

ideals, and finds comfort in working with a junior president who

is seemingly loyal to him and at the same time makes him look like

a moderate. Moreover, Khamenei judges various government officials by their results: In this case, he may well consider that during

his relatively short tenure Ahmadinejad has accomplished more

progress on the nuclear file than in the previous 21⁄2 years of negotiations with Europe.

While Ahmadinejad’s behavior has caused disquiet among the political elite, his standing on the Iranian street is more difficult to

assess. On one hand he has failed to deliver on his core electoral

promise, namely that he would ‘‘put the oil money on people’s dinner tables’’; since his inauguration last August the country has experienced massive capital flight, foreign investment has dropped

precipitously, and Tehran’s stock exchange has lost nearly a third

of its value. Most noticeably for the Iranian people, inflation has

increased dramatically, and unemployment has also risen.

Still, Ahmadinejad continues to enjoy some backing, a result of

his populist rhetoric, pious ways, humble lifestyle, and fiery nationalism. Aware that he lacks support among the urban middle and

upper classes, he instead has courted economically disenfranchised

Iranians in smaller towns and far-off provinces, promising loans

and debt-relief. Realizing that he lacks favor among the country’s

top elite—technocrats, business mangers, journalists, academics,

and even senior clerics—he curries favor with the country’s paramilitary groups, such as the bassij; has attempted to co-opt the

country’s military forces by providing numerous projects in the construction and development sector to Revolutionary Guard commanders; and has formed close alliances with powerful hardline

clerics in Qom, such as Ayatollah Mesbah Yazdi. All in all, he has

managed through his nationalist rhetoric and postures to set the

tone for Iranian foreign policy in a way that few had anticipated

beforehand.

III. IRAN’S DOMESTIC EVOLUTION

Despite concerns about Ahmadinejad and his team’s desires to

return to the early days of the revolution, societal reform in Iran

is a train that has left the tracks. While it may be slowed down

at times, and will certainly face delays and obstacles, it is process

that will be near impossible to reverse, for sheer demographic reaVerDate 11-MAY-2000 12:17 May 31, 2006 Jkt 025358 PO 00000 Frm 00045 Fmt 6604 Sfmt 6604 27613.TXT SFRELA2 PsN: SFRELA2
40

sons: Two-thirds of Iranians are under 33 years old; they increasingly are connected to the outside world via satellite television and

the Internet; and they have no special affinity for a revolution they

did not experience and a revolutionary government which has not

been able to meet their economic expectations.

Indeed, for the vast majority of Iranians the priority is economic

rather than political deliverance. This is not to say that democracy

and human rights are not important concerns, but that for a majority of Iranians they come second. As a Tehran laborer once explained to me, ‘‘When your stomach is empty you don’t cry for democracy, you cry for bread!’’

While throughout the country Iranians’ sense of alienation vis-avis their leaders is palpable, despite these socio-economic discontents people have become increasingly disillusioned with politics. In 1997, 2000, and 2001 they went to the polls in overwhelming numbers, twice to elect President Khatami and once to

elect a reform-minded Parliament, yet saw insufficient returns on

their civic investments. As a Tehran-based intellectual once told

me, ‘‘People’s political frustration is to be expected. It’s like exercising every day for 6 years and not seeing any results. Soon you

are going to stop going to the gym.’’

What’s more, without a clear alternative model or alternative

leadership, the deep-seated desire for economic, political, and social

reform among many Iranians is tempered by a strong aversion to

unrest, uncertainty, and insecurity. Having already experienced

one tumultuous revolution (or in the case of Iran’s youth, the aftermath of one tumultuous revolution) and a brutal 8-year war with

Iraq, Iranians have few concrete ideas as to how change should

take place other than it ought to occur bedun-e khoonrizi—‘‘without

bloodshed.’’

The post-war turbulence and insecurity in next-door neighbor

Iraq has made Iranians even wearier about the prospects of a sudden political upheaval or a quick-fix solution. As opposed to the

aftermath of the U.S. removal of the Taliban in Afghanistan, when

some Iranians could be heard naively romanticizing about the prospects of a swift U.S. intervention in Tehran, today it is rare to find

any Iranians who see Iraq as a model for change, or look to their

Western neighbor with envy. In the widely echoed words of one

middle-class, middle-aged Tehran resident, ‘‘When we look at

what’s going on in Iraq, it seems that the real choice is not one between democracy or authoritarianism, but between stability or unrest. People may not be happy in Iran, but no one wants unrest.’’

IMPLICATIONS FOR U.S. POLICY

1. To effectively counter Tehran’s confrontationists, the United

States must simultaneously strengthen its pragmatists

While the United States should make clear that a bellicose Iranian policy will not reap rewards, it should also clarify that a conciliatory and compromising Iranian stance would trigger reciprocal

steps. A broader diplomatic accommodation—Iran forsaking domestic uranium enrichment and modifying its objectionable domestic

and regional behavior in exchange for improved bilateral relations,

security assurances, and a lifting of sanctions—is the preferred opVerDate 11-MAY-2000 12:17 May 31, 2006 Jkt 025358 PO 00000 Frm 00046 Fmt 6604 Sfmt 6604 27613.TXT SFRELA2 PsN: SFRELA2
41

tion. But given the depth of mutual mistrust and ill will, it may

not be possible to achieve this at the moment.

A smaller bargain proposed by the International Crisis Group

would be to offer Iran a ‘‘delayed, limited enrichment scheme,’’ acknowledging its eventual right, after several years of a total freeze,

to operate a small-scale uranium enrichment facility under an intrusive inspections regime, making clear that a military program

would not be tolerated.

In both instances the logic is similar: To strengthen the hand of

Iranians who are pressing for a more accommodating foreign and

nuclear policy, they need to have a realistic and appealing alternative to point to.

2. Dialogue does not equal appeasement and certainly not indifference to human rights abuses

It is important that we disabuse ourselves of the notion that dialogue is tantamount to appeasement, or would be ‘‘selling out’’ the

Iranian people’s aspirations for a more representative government.

Quite the contrary: Opinion polls suggest that upward of 75 percent of Iranians want their government to have relations with the

United States. Iranian democratic activists like female former MP

Fatemeh Haghighatjou—currently a fellow at MIT—have long argued that a U.S.-Iran diplomatic accommodation is crucial for domestic change to take place in Iran. Embarking on a comprehensive dialogue with Iran would provide the United States with the

opportunity to match its rhetorical commitment to Iranian democracy and human rights with action, instead of ineffectively, and at

times counterproductively, trying to promote it from afar.

Greater economic and cultural contacts with the outside world,

combined with continued international insistence on political reform and respect for human rights, would strengthen Iran’s burgeoning civil society; not weaken it, and dilute the conservatives’

hold on power rather than fortify it.

3. A sudden upheaval or abrupt political change in Iran is unlikely

to be for the better

John Limbert, the erudite Iran scholar and talented former U.S.

diplomat (taken hostage in Iran for 444 days) once reflected on the

1979 Iranian revolution that his liberal-minded Iranian friends

‘‘who could write penetrating analyses and biting editorials’’ lacked

the stomach to ‘‘throw acid, break up meetings, beat up opponents,

trash opposition newspapers, and organize street gangs . . . and

engage in the brutality that wins revolutions.’’

Today we should be similarly sober about the realities of a shortterm upheaval in Iran. There currently exists no credible, organized alternative to the status quo whether within Iran or in the

diaspora. And despite the fact that a majority of Iranians favor a

more tolerant, democratic system, there is little evidence to believe

that in the event of a sudden uprising it would be Iranian democrats who come to power, especially in a country with nearly

150,000 revolutionary guardsmen and 2 million members of the

bassij, whose livelihood, in many cases, depends on the continuation of the status quo.

42

4. The United States should make it clear that it has no intention

of undermining Iran’s territorial integrity

While a diversity of opinion exists among Iranians regarding the

country’s nuclear ambitions, the maintenance of the country’s territorial integrity is an issue which unites the vast majority of countrymen of all ethnic, religious, and political persuasions. Amid

widespread concern and rumors in Iran that the United States is

flirting with a strategy of supporting ethnic Iranian separatists

groups, Washington should do its utmost to reassure the Iranian

people that such concerns are unfounded.

Mr. Chairman and Senator Biden, I believe there are two equally

plausible visions for Iran’s future. One is a hostile, backward-looking nation increasingly isolated from the international community,

but with enough oil wealth to fund military and paramilitary

groups which repress popular demand for change. Despite popular

discontent, such a situation could be sustainable in Iran for years

if not decades; an Islamic Cuba, with potentially a nuclear weapon.

The second scenario is of a country which has made amends with

the United States, is reintegrated into the international community, experiences large flows of foreign investment, a strengthened

middle class, a burgeoning private sector, and a free flow of tourists and members of the Iranian diaspora visiting freely. It is this

scenario which will provide fertile ground for Iran’s transition to a

more tolerant and democratic system at peace with the international community.

(43)

PREPARED STATEMENT OF

DR. PATRICK CLAWSON

DEPUTY DIRECTOR FOR RESEARCH, THE WASHINGTON INSTITUTE FOR

NEAR EAST POLICY, WASHINGTON, DC

BEFORE THE

U.S. SENATE COMMITTEE ON FOREIGN RELATIONS

MAY 17, 2006

If Iran saw its nuclear program as essential to defending the

country’s very existence—the way Israel and Pakistan view their

nuclear programs—then economic considerations would make little

difference to Iran’s calculations. But defense is not the principal

factor behind the Iranian nuclear program. Rather, Iran’s principal

motives for its nuclear program are the pursuit of prestige and influence. Iranian leaders consistently present the nuclear program

as an accomplishment of Iranian science and as evidence that Iran

is an advanced modern industrial power. They also argue that

Western opposition to Iran’s nuclear ambitions are an effort to keep

Iran down, to prevent the country from assuming its rightful place

as a leader in the region and the broader Muslim world. They play

to Iranians’ national pride, to their sense that Iran is naturally a

great power—not to any sense that Iran is so threatened that it

must take desperate steps to defend itself.

The challenge for the West is to persuade Iran’s powerholders

that the nuclear program will not advance Iran’s prestige and influence. Economic instruments can play a role in this regard,

though they are most unlikely to be sufficient by themselves.

IRANIAN SELF-ASSURANCE

Unfortunately, the West’s ability to press Iran has eroded in recent years. Iran’s leaders are now remarkably self-assured, given

the conjunction of favorable circumstances, including the end to

threats to Iran from Iraq and Afghanistan; the United States being

tied down in Iraq; and victories by pro-Iranian forces in Iraqi and

Palestinian elections. Economic factors play no small part in this

self-assurance, as documented by the recent International Monetary Fund report (the source of all the economic figures I cite, unless otherwise noted). Oil and gas exports have shot up from $23

billion in 2002/03 to $55 billion this year, driven entirely by higher

prices (Iran got $23 per barrel in 2002/03 and will get $55 this

year). The oil exports have swelled government coffers allowing an

explosion of off-budget spending that has sent economic growth

shooting up to an average of 6.2 percent a year (discounting for inVerDate 11-MAY-2000 12:17 May 31, 2006 Jkt 025358 PO 00000 Frm 00049 Fmt 6604 Sfmt 6604 27613.TXT SFRELA2 PsN: SFRELA2
44

flation) from 2002/03 to this year. Foreign exchange reserves have

shot up to $47 billion, more than twice the size of all foreign debt,

and are expected to rise further to $62 billion by the end of this

year.

In light of the favorable strategic situation, many in the Iranian

leadership are no longer convinced that it must maintain strong

ties with Russia and Europe, nor do they think that these relationships have brought Iran any benefits to date. To the extent that

this self-reliant attitude prevails, it will be harder to persuade Iran

to cooperate with the international community. However, if the

great powers can remind Iran about the true danger of isolation,

the terms of the nuclear debate in Iran will change. Conceding will

be difficult for Iran, but the Islamic Republic has in the past made

difficult compromises with its revolutionary principles, such as ending the Iran-Iraq war.

Complicating the situation is that Iranian President Mahmoud

Ahmadinejad seems to welcome the prospect of an attack on Iran

as a means to rekindle the lost fervor of the early revolutionary

days. While he represents a dangerous and growing element in the

Iranian elite, the real power holder has been the Supreme Leader

(who is exactly what the title suggests), Ayatollah Ali Khamenei.

For the last 18 years, Khamenei has preferred low-level confrontation with the West—just enough to keep the revolutionary spirit

alive, but not enough to risk open hostilities. For now, Khamenei

seems to think that the West, despite its tough rhetoric, will do

nothing to stop Ahmadinejad, so why not let him push ahead.

ECONOMIC VULNERABILITY

Having pegged his reputation on his ability to help the ordinary

man, Ahmadinejad faces serious problems: The economy is a mess,

his policies are disastrous, and Iranians’ expectations are sky-high.

The World Bank’s 2003 report about Iran noted, ‘‘Despite the

growth in the 1990s, GDP per capita in 2000 is still 30 percent

below what it was in the mid-1970s, compared with a near doubling for the rest of the world.’’ Iranians are galled to find that

their country has slipped badly behind the Arabs on the south side

of the Persian Gulf, whom they traditionally have regarded as their

social inferiors. Thanks to the tens of thousands of Iranians living

in Dubai, Iranians know full well that Dubai is booming because

it has embraced globalization, while their country falls ever farther

behind, trapped by its suspicion of the West.

Ahmadinejad’s policy is based on producing everything at home

and creating barriers to trade—he has no use for globalization. His

government has been discouraging foreign investors, for instance,

refusing to allow Renault to use the billion-dollar facility it built

in Iran to build an inexpensive car for the Asian market. The recent Iranian boom has been based almost entirely on profligate

government spending which cannot last forever. Despite the flood

of oil money, government policies are such that the IMF warns the

budget will fall back into deficit again within 2 years even if oil

prices remain sky-high.

The recent massive government spending has led to several years

of solid growth, yet it has barely dented the country’s long-term

economic problems. While reported unemployment fell to an 8-year

45

low of 10.3 percent last year, job creation remains insufficient to

absorb the 700,000 young people entering the job market each year.

The IMF forecasts that even if oil prices remain at their present

high level, unemployment will steadily increase in years to come.

In its 2003 report, the usually sober and understated World Bank

summed up the ‘‘daunting unemployment challenge’’ with strong

words: ‘‘Unless the country moves quickly to a faster path of

growth with employment, discontent and disenchantment could

threaten its economic, social, and political system.’’

Economic and political frustration is feeding social problems. One

is chronic drug problem, with the Iranian Government acknowledging that 2 million people use narcotics, mainly opium; other estimates are higher. Divorce is on the rise; one study found that 30

percent of newlyweds got divorced within 3 years. Another is increasing prostitution; the official estimate is 300,000 prostitutes.

There have been a number of corruption scandals involving judges

and government social workers involved in prostituting young girls.

Instead of making reforms that would allow entrepreneurs to create jobs, the political elite is more comfortable with the ‘‘solution’’

of rising emigration rates, especially among the well educated. In

sum, many of Iran’s best and brightest are leaving the country, and

a growing number of those remaining are at risk of becoming an

underclass.

BUSINESS CONFIDENCE: THE ACHILLES’ HEEL

Given that inappropriate government policies are already making

the Iranian business community nervous, international pressure on

the economy could have a major impact on business confidence.

‘‘The [Tehran stack market has shown to be hypersensitive to political issues (such as the course of the nuclear enrichment negotiations), as well as domestic economic policy uncertainties,’’ writes

the state-owned Karafarin Bank in its Survey of the Iranian Economy far October–December 20. In 2005, the stock market index fell

26 percent. At the same time, the banking system was hit by a crisis from dishonored promissory notes, primarily by big firms unable to pay their debts.

With even Iranian fans nervous about business conditions, there

are excellent opportunities to press foreign firms to reduce their

presence in Iran. There have already been some notable successes

in this regard. Strict U.S. Treasury application of existing rules

about fund transfers—such as those to prevent transfer of funds to

terrorists and weapons of mass destruction proliferators—led the

two largest Swiss banks (UBS and Credit Swiss) and a large British bank (HSBC) to decide recently that Iran was not an attractive

place to do business, so they stopped taking new business. The impact that this is having was well described by the state-owned

Karafarin Bank in its Survey of the Iranian Economy for October–

December 2005:

Most probably, the fear of imposition of sanctions by the

U.N. against Iran, in connection with the nuclear enrichment issue, has reduced the reliability of Iranian banks as

international trading partners. In other words, despite [an]

important balance of payments surplus, Iranian banks

46

have been facing difficulties dealing with their otherwise

cooperative correspondents. This may prove to be for the

banks and the country as a whole, [sic] one of the most important obstacles to hurdle in the months to came.

There is much scope for working with U.S. allies to more vigorously apply restrictions an financial transactions and trade with

Iran. U.N. Security Council Resolutions 1373 and 1540 call on

countries to adopt and enforce effective controls on funds and services that would contribute to terrorism and WMD proliferation respectively. The United States and its allies can approach countries

to ask what are they doing to implement these resolutions regarding Iran, especially in light of the International Atomic Energy

Agency (IAEA) decisions finding Iran has violated its safeguards

agreements with the IAEA. Industrial firms can be warned about

the many items which could be diverted from their declared peaceful intentions to be used instead in the nuclear program. Banks can

be cautioned about the negative publicity as well as regulatory

complications if they were found to be facillitating shady businesses. European governments excel at using such quiet warnings,

which can be very effective at persuading firms that the Iran market is not worth the risks; indeed, a number of European governments seem already to be passing such warnings. The U.S. Treasury has a well-oiled machinery for implementing restrictions, and

its warnings to banks can be particularly effective since few banks

in the world are willing to risk being cut off from dealings with the

U.S. financial system. That same machinery could be extended to

press firms considering investments in the Iranian oil and gas industry.

Tighter restrictions are ‘‘de facto sanctions’’ which have many advantages over formal sanctions imposed by the U.N. Security Council. Russia and China have no veto over tightening restrictions. In

the best of cases, obtaining Security Council consensus for action

takes a long time, whereas tightening restrictions can be done

much more quickly. Action by the Security Council provides

Ahmadinejad with a banner around which he can rally nationalist

reaction, claiming that the country is under attack. By contrast,

tighter restrictions operate under the public’s radar screen, while

their impact is fully felt by the business community—which in Iran

means first and foremost the revolutionary elite which behind the

scenes controls the economy as fully as it does the political system.

OIL’S MIXED ROLE

Given that Iran’s goal is to use its nuclear program to achieve

influence and prestige, fewer instruments would seem better suited

to that task than its oil exports. It has been suggested that were

Iran to make good on threats to cut off its oil exports of 2.5 million

barrels/day, this action would hurt the West so much it might have

to back off on its pressure against Iran’s nuclear program.

Perhaps—but perhaps not. The present tight world oil market

will not last forever. Production outside of OPEC is increasing, not

least under the stimulus of high prices, and the return of Katrinadamaged facilities will only add to the higher output. Despite the

red-hot Chinese and Indian economies, world demand is growing

47

more slowly as price influences consumption. It is not beyond the

realm of possibility that within the next few years, oil markets

could become much more slack. After all, that was the experience

after both the 1973–74 and 1980–81 price increases: Within 4

years, the oil market got soft. In short, the more time that passes,

the less may be Iran’s strategic leverage regarding oil.

Indeed, the world oil situation is already changing, though that

fact is obscured by the fears of consumers and speculation of traders. In April 2006, world oil production was 1 million barrels/day

higher than demand, according to the prestigious Petroleum Intelligence Weekly. Plus OPEC countries—principally Saudi Arabia—

had excess production capacity of about 1.5 million barrels/day, and

the world refinery situation is changing such that the heavier

Saudi crude oils could be more readily absorbed (last year when

Saudi Arabia wanted to sell additional oil to offset post-Katrina

price spikes, refineries were unable to take advantage of the exceptionally low prices offered). Those two factors alone could have

made up for a cutoff in Iranian oil exports, even without the use

of the West’s approximately 1.4 billion barrels in strategic reserves,

which are the equivalent of 560 days of Iranian exports (figures

from the International Energy Agency).

Were Iran to cut off its oil exports, the impact on the Iranian

economy would be considerable. To be sure, Iran’s ample foreign

exchange reserves would cushion the impact, but those reserves

would only be sufficient to pay for a year’s imports (or, if Iran cut

back imports to the bone, for 2 year’s imports at that low level).

And the Iranian Government relies on oil revenue to fund 75 percent of its expenditures, according to Karafarin Bank (the IMF reports are not much help on this issue, because the government has

taken to conducting so many of its operations outside the budget

through various shady accounts).

Perhaps the most immediate Iranian vulnerability regarding oil

is its dependence on imported gasoline, which provide about 40 percent of the 350,000 barrels of gasoline sold daily. However, this vulnerability is less than meets the eye. The price of gasoline at the

pump is 800 rials per liter, or about 35 cents a gallon. Such a ridiculously cheap price encourages rampant smuggling of gasoline to

neighboring countries, such as Turkey and Pakistan, where gasoline prices are more than ten times higher than in Iran. Plus the

low pump price leads to excessive gasoline consumption that gives

Tehran some of the world’s most polluted air; schools frequently

have to close because it would be unhealthy for children to go outside. And the low gasoline price results in a massive loss of government revenue; just the cost of distributing the fuel after it leaves

the refinery gate is more than what the customer pays. The IMF

and World Bank have spent years documenting in great detail the

pernicious economic and health impact of the excessive gasoline

consumption. In short, there are few steps which would help the

Iranian economy more than forcing a reduction in gasoline consumption. And the Iranian Government is well along with plans to

ration gasoline from September 2006—plans which would allow a

quick response in the event of a gasoline import cutoff.

A final word about the role of oil in thinking about Iran’s nuclear

program. It is tempting to assume that Iran can use its oil riches

48

to influence the decisions of other governments. However, there is

remarkably little evidence that Iran has successfully used oil to induce other countries to turn a blind eye to its nuclear violations.

Consider for instance that the great power most reluctant to press

Iran has been Russia, which is a fellow oil exporter and could

therefore benefit if Iranian oil were kept off the market. Indeed,

there is little reason to think that Moscow’s approach has been affected by any economic consideration, which is not surprising given

the remarkably favorable economic circumstances Russia finds

itself in, with the main dilemma facing the government being how

much of the vast budget surplus to spend and how much to save.

As for Iranian efforts to use oil projects to influence China, Japan,

or India, they seem to have had little impact, in part perhaps because Iran has been unwilling to offer particularly attractive terms

to foreign investors. The eye-poppingly large deals announced with

great fanfare have all run into serious difficulties over the terms

and conditions.

THE LIMITATIONS OF ECONOMIC INSTRUMENTS

Economic instruments alone are unlikely to be sufficient to persuade Iran to freeze its nuclear program. The principal levers of

power in Iran are in the hands of revolutionaries who are not motivated primarily by economic concerns, while those who care about

the state of the economy do not have sufficient influence on their

own to persuade the real powerholders to change policies. Success

at influencing Iranian policy is much more likely if action on the

economic front is combined with action on other fronts. In particular, the security apparatus—especially the Revolutionary

Guards—are a vital power center in Iran. They need to be convinced that the current nuclear policies are threatening Iran’s security, because Iran’s neighbors and the great powers will react in

ways that will hurt Iran. If Iran makes the gulf a more dangerous

place, then the United States and other powers will need to deploy

more powerful military assets to the region, if for no other reason

to protect shipping from Iranian threats to close the Strait of

Hormuz. And Iran’s nuclear program could start an arms race,

which the Gulf Arab monarchies and Turkey would win, since compared to Iran they are both richer and have better ties with the

world’s principal arms suppliers.

Much as pressure should be applied on several fronts rather than

just on the economy, so inducements offered Iran should take multiple forms rather than only being trade and investment incentives.

Indeed, economic inducements look suspiciously like bribes paid for

bad behavior. Besides being odious, such bribes give the impression

that bad behavior is more profitable than good behavior. Pro-Western reformers were unable to secure a trade agreement with Europe or substantial U.S. relaxation of its economic sanctions despite

their obvious interest in improving relations, but now it appears

that anti-Western hardliners may achieve those objectives—which

suggests that Iran would be well advised to be obnoxious rather

than cooperative. No matter how creatively one designs or packages economic inducements, they will inevitably look like reward

for bad behavior.

49

A much more appropriate form of inducement would be security

inducements. Such security inducements should be designed to

counter the argument that Iran needs nuclear weapons for its defense. There are many confidence- and security-building measures

and arms control measures that would provide gains for both Iran

and the West, similar to the way such steps reduced tensions between the old Warsaw Pact and NATO during the cold war. One

example would be an agreement to reduce the risk of incidents at

sea between the United States and Iranian navies.

A further security inducement which the United States could

offer would be to address the reported concern that the Bush administration’s real goal is regime change in Iran and that the Bush

administration will use force to that end. Such complaints sound

peculiar coming from an Iranian Government whose president lectures President Bush on why the United States should abandon its

liberal democracy and who sponsored a conference last fall on the

theme ‘‘The World Without Zionism and America’’—a government

which regularly organizes mass demonstrations filled with the

chant ‘‘Death to America.’’ Perhaps we should take as a compliment

that Iran’s hardliners expect the United States to be more restrained than they are; we certainly do not organize terror attacks

to blow up their barracks the way they did at Khobar Towers in

1996 or in Beirut in 1983.

It would of course be inappropriate for the U.S. Government to

offer any security guarantees to the Iranian or any other government; what government is in power in another country is up to the

people of that country to decide. But what Washington could offer

Tehran would be a ‘‘conditional security assurance’’—jargon for the

simple proposition, ‘‘We will not attack you if you do not attack us.’’

To clarify what that means, the U.S. Government should spell out:

• ‘‘Just as you criticize us for our liberal democracy, we will remain free to criticize you for your undemocratic violations of

human rights.

• ‘‘Just as you spend tens of millions on radio and television

broadcasting to our country to propagate your views, so we will

remain free to support broadcasts to Iran.

• ‘‘Just as you tightly restrict trade with America, we will remain free to restrict trade with Iran.’’

Such a conditional security assurance might not be all that Iranian hardliners want, but at the very least, it would help in the

battle to influence European and Middle Eastern opinion that the

United States is being reasonable and Iran is not. Since Iran’s

main objective in pursuing its nuclear program is to gain influence

and prestige, Washington’s strategy should be to show that

Tehran’s obstinate nuclear stance is undermining Iran’s influence.

(50)

PREPARED STATEMENT

DR. GEOFFREY KEMP

DIRECTOR OF REGIONAL STRATEGIC PROGRAMS, THE NIXON CENTER,

WASHINGTON, DC

BEFORE THE

U.S. SENATE COMMITTEE ON FOREIGN RELATIONS

MAY 17, 2006

Mr. Chairman, I am grateful for the opportunity to speak to you

and your colleagues about a matter of grave importance to the

United States, namely Iran’s behavior and its nuclear program.

The committee has asked me to comment on three subjects:

• Can Russia and China be helpful in pressuring Iran to change

its present course?

• What are the attitudes of Iran’s neighbors to the current regime and the course it has chosen to pursue?

• Do opportunities exist in the region for those seeking to contain Iran?

I will add a fourth issue:

• The need for continued U.S.–EU cooperation

Can Russia and China be helpful in pressuring Iran to change its

present course?

There is no doubt, in my opinion, that Russia is the key player

on this matter and that with adroit diplomacy it would have been

possible to obtain the cooperation of the Putin government to put

far more pressure on the Iranian regime to put limits on its nuclear program. In the event of Russian cooperation it is unlikely

that China would be the lone dissenter to joint pressure against

the Islamic Republic.

However we have not handled the Russia portfolio with skill.

Russia sees Iran as a cooperative partner in an unstable part of the

world straddling the Caucuses and Central Asia. In contrast the

U.S. policy toward Russia’s ‘‘near abroad’’ is seen in Moscow to be

provocative. The laudatory objective of the Bush administration is

to nurture more freedom in Eurasia and to develop multiple pipeline routes in the context of energy security. However in the specific context of persuading Russia that it is in its interests to turn

on one of its partners, Iran, it must be asked what it is we are offering the Russians to make this difficult choice worthwhile? Russians privately tell you that if the Americans want to deal on Iran

then it would require some quid pro quo, such as not encouraging

51

Ukraine to join NATO or not deliberately making provocative

speeches in the region a few weeks before the G–8 Summit in St.

Petersburg. I would have to conclude that while there are good arguments for being critical of Russia and being supportive of neighbors such as Ukraine and Georgia, the Baltic states, and

Kazakhstan, such pronouncements are counterproductive in the

context of Iran policy.

Seen from the Russian point of view, not only are we interfering

in their backyard, but if we eventually improve relations with Iran

as part of some ultimate ‘‘grand bargain’’ and remove economic

sanctions then Russia stands to lose a great deal of economic leverage in that country while witnessing the return of the United

States and all that entails for the region.

A similar set of tradeoffs could be made in the context of China.

China is not unhappy to see us struggling in the Middle East, even

though it does not want to see a failure in Iraq. Neither does it

want to see an Iranian nuclear program. Yet China, too, would

need some quid pro quo to put serious pressure on Iran.

What are the attitudes of Iran’s neighbors to the current regime?

Iran’s neighbors have different specific problems with the current

leadership in Tehran but all are concerned about its nuclear program. Most of Iraq’s Shi’a leaders owe a big debt to Iran and have

nurtured close ties with the Mullahs while making it clear that

they do not wish to establish a Shia theocracy in Iraq. Turkey and

Iran share common concerns about the evolving Kurdish region in

northern Iraq. The Sunni Arab states are all fearful of Iran’s hegemonic tendencies and talk about a ‘‘Shia Crescent’’ running from

Iran, through Iraq into Syria and Lebanon. The Gulf states with

significant Shia populations, notably Saudi Arabia and Bahrain,

worry about domestic pressure. The UAE has a long-standing territorial dispute with Iran. Qatar has become a firm military ally of

the U.S. Oman is probably the least worried about Iran, though

this could change.

How to assess the impact of Iran’s nuclear program on Gulf security? There is a major difference between Saudi Arabia and the

smaller GCC countries, because of Saudi Arabia’s size, budget, infrastructure, and regional aspirations. For instance, unilateral options open to the smaller Gulf states in the event of an Iranian

bomb are very limited. Saudi Arabia, however, has the capacity

and the wealth to consider some form of nuclear deterrent, most

likely in cooperation with another country, such as Pakistan. Saudi

Arabia already has Chinese SS–2 medium range missiles in its current inventory. It is not unreasonable to assume that Saudi Arabia

could engage in nuclear purchases, either the basic fissile materials

to make a bomb or a finished product. Furthermore, it is not only

an Iranian bomb that could motivate Saudi Arabia to consider such

an option. The propensity of Saudi Arabia to think about a nuclear

option is related to the state of its relationship with the United

States, which, until recently, was always considered the protector

of the Kingdom in the last resort.

Aside from Saudi Arabia’s reaction, the most likely initial response of the gulf countries to the news of an Iranian nuclear

weapons program will be concern about possible U.S. and Israeli

52

preemptive military actions. The Bush administration and Israeli

leaders have both made it clear that the Islamic Republic’s possession of the bomb will be an intolerable threat.

However, since the Iraqi war and the unreliability of western intelligence concerning Iraq’s WMD programs, the case for preemptive war against supposedly proliferant states has been weakened

and, therefore, the political costs of undertaking such action in the

future have become much higher. If there is uncertainty with intelligence about an Iranian bomb, the United States and Israel will

have problems garnering support for military action. Even if the

evidence is overwhelming and highly convincing (i.e., Iran either

tests a nuclear device or announces it is building the bomb), there

will be reluctance to endorse U.S.-Israeli military action for fear of

the chaos this could bring to the gulf and the region.

Do opportunities exist in the region for those seeking to contain

Iran?

An Iranian nuclear program means the United States will have

strong reasons to maintain its military presence in the Gulf States.

The nature and purpose of enhanced military cooperation between

the United States and the Arabian Peninsula could take many

forms. The most important component would be a counterdeterrent

to indicate to Iran that any efforts to use nuclear weapons to intimidate or blackmail would be challenged by the United States.

The credibility of this counterdeterrent would be linked to the vulnerability of U.S. forces and U.S. targets themselves to Iranian intimidation. And here we are referring to regional targets. Iran is

not expected to deploy an intercontinental ballistic missile capable

of striking the continental United States for many, many years. It

is difficult to see under what circumstances Iran could use its nuclear weapons in anger, except for in some suicidal spasm similar

to the scenarios that were heard so frequently with respect to Saddam Hussein and his capacity for a glorious Gotterdammerung

ending to his fiefdom.

Need for Continued U.S.–EU Cooperation

The Iranian Government feels sufficiently confident of its diplomatic position on the nuclear program, at both the United Nations

and the IAEA, to run the risk of a major confrontation with the

United States and Europe. The key test will be whether the United

States and Europe can continue to address this issue from the

same set of principles and talking points. Much will depend on

whether the Europeans are now finally prepared to join the United

States on imposing economic sanctions on Iran if pressures from

the IAEA at the Security Council fail. The Iranian nuclear issue

will be a test not only of U.S.-European relations, but of European

resolve as well. It is important to note how far out on a limb the

European governments, particularly Britain, France, and Germany,

have gone in proposing this agreement and what a challenge they

face if the Iranians continue their nuclear enrichment program.

Iran’s leaders appear to have calculated that they can withstand

the diplomatic pressure they are likely to face and that even if

sanctions are imposed Iran has the will and financial resources to

ride them out. It remains to be seen what the long-term implicaVerDate 11-MAY-2000 12:17 May 31, 2006 Jkt 025358 PO 00000 Frm 00058 Fmt 6604 Sfmt 6604 27613.TXT SFRELA2 PsN: SFRELA2
53

tions of this are for both Iran’s domestic politics and its actions in

Iraq. If the United States and Europe increase their rhetoric

against the Iranians, and if sanctions begin to hurt Tehran, Iran

may use its bargaining chips in Iraq at a critical moment in its

post-Saddam political evolution. The linkage between the Iran’s nuclear issue and its role in Iraq is becoming clearer.

Despite Iran’s gleeful defiance of the international community on

the nuclear issue, it would be unwise for Iran’s leaders to take

their current good luck for granted. The Islamic Republic faces significant social and economic challenges that can only be made more

difficult by alienating the West. The embarrassing and unacceptable statements by its new President calling for Israel’s destruction, while a popular theme in many Islamic countries, have

harmed Iran’s international image and caused further anxiety with

his behavior at home. Regionally, Iran has poor relations with its

Arab neighbors, and it cannot be assumed that Iraq’s Shiite community will remain friendly and grateful indefinitely. Iran’s vital

national interests could be helped by ending the standoff with the

United States. Likewise, the United States has more to gain than

lose if it adopts a more coherent and pragmatic policy toward the

Islamic Republic.

(55)

Day Two—May 18, 2006

OPENING STATEMENT

SENATOR RICHARD G. LUGAR

CHAIRMAN, U.S. SENATE COMMITTEE ON FOREIGN RELATIONS

BEFORE THE

U.S. SENATE COMMITTEE ON FOREIGN RELATIONS

MAY 18, 2006

The Foreign Relations Committee meets today to continue our

examination of U.S. policy toward Iran. This is the second hearing

of our two-part series. Yesterday, we focused our attention on the

status of Iran’s nuclear program and on analysis of Iran’s motivations and strategies. Today, we will evaluate the options available

to deal with this challenge.

The Bush administration has been attempting to build a cohesive

international coalition capable of applying economic and diplomatic

pressure on Iran that would have the potential to dissuade it from

continuing its drive toward a nuclear weapons capability. Though

efforts to attain a Security Council consensus on a firm response

to Iran’s actions have not been successful—primarily because of resistance from Russia and China—diplomacy backed by multi-lateral sanctions remains the focus of U.S. policy.

Our witnesses yesterday judged that Iranian acquisition of nuclear weapons is not inevitable, though they underscored that a nuclear weapons capability is an extremely important Iranian goal

that would be given up only grudgingly. They noted that the Iranian leadership is pursuing nuclear weapons for a number of reasons, including self-defense, Iranian national pride, and regional influence. But as several of our witnesses asserted, the Iranian leadership is faced with economic problems that could be exacerbated

by multi-lateral sanctions and international isolation. In contrast,

a verifiable resolution of the nuclear problem could result in longterm economic benefits flowing to Iran, including much-needed

Western investment in the energy sector. Our witnesses also emphasized that Iran’s government is far from a monolith. Factions

and personalities in Tehran have varying priorities that could lead

to diplomatic opportunities.

The witnesses generally shared the view that no diplomatic options, including direct talks, should be taken off the table. Direct

talks may in some circumstances be useful in demonstrating to our

allies our commitment to diplomacy, dispelling anti-American rumors among the Iranian people, preventing Iranian misinterpretaVerDate 11-MAY-2000 12:17 May 31, 2006 Jkt 025358 PO 00000 Frm 00061 Fmt 6601 Sfmt 6601 27613.TXT SFRELA2 PsN: SFRELA2
56

tion of our goals, or reducing the risk of accidental escalation. Our

policies and our communications must be clear, precise, and confident, without becoming inflexible.

I noted a comment by Dr. Henry Kissinger in an op-ed on Iran

that appeared in Tuesday’s Washington Post. Dr. Kissinger wrote:

‘‘The diplomacy appropriate to denuclearization is comparable to

the containment policy that helped win the Cold War: i.e., no preemptive challenge to the external security of the adversary, but

firm resistance to attempts to project its power abroad and reliance

on domestic forces to bring about internal change. It was precisely

such a nuanced policy that caused President Ronald Reagan to invite Soviet leader Leonid Brezhnev to a dialogue within weeks of

labeling the Soviet Union the ‘evil empire.’ ’’

Dr. Kissinger’s analogy, as well as the testimony that we heard

yesterday, reinforce the point that Iran poses a sophisticated policy

challenge that will require the nuanced use of a range of diplomatic

and economic tools.

To discuss how such tools might be applied, we are joined by four

distinguished experts. We welcome the Honorable Frank Wisner,

former Ambassador to India and currently Vice Chairman for External Affairs at the American International Group; Dr. Vali Nasr,

a Professor of National Security Affairs at the U.S. Naval Postgraduate School in Monterrey, California; Ms. Julia Nanay, a Senior Director at PFC Energy in Washington; and Mr. James Phillips,

a Research Fellow in Middle Eastern Affairs at the Heritage Foundation.

We thank our witnesses for joining us today, and we look forward to their insights on the policy options open to the United

States.

(57)

OPENING STATEMENT

SENATOR JOSEPH R. BIDEN, JR.

RANKING MEMBER, U.S. SENATE COMMITTEE ON FOREIGN

RELATIONS

BEFORE THE

U.S. SENATE COMMITTEE ON FOREIGN RELATIONS

MAY 18, 2006

Thank you, Mr. Chairman. I welcome our witnesses.

Yesterday, we heard from several well-informed witnesses on

Iran’s nuclear program. We also heard about Iran’s motivations,

the attitude of its population, and its vulnerability to economic

sanctions. Today, I look forward to hearing about the options before

us.

This hearing is timely. Our European allies are crafting a package of incentives and, if they fail, sanctions that will be presented

to Iran.

Their first objective is to secure Chinese and Russian support for

the entire package, so that Iran will understand that it faces UN

Security Council mandated sanctions if it rejects the offer.

If Russia and China balk at supporting the package, there is talk

of the U.S. and Europe forming our own sanctions coalition. We

heard yesterday that Iran is already feeling some pressure as investors and banks pull back from Iran in anticipation of sanctions.

But achieving broad-based agreement on sanctions cannot be the

sum total of a diplomatic strategy for Iran. Sanctions are at best

one tool to achieve our broader objectives, including ending Iran’s

uranium enrichment activities.

We need greater clarity on our precise goals—clarity the Bush

administration has thus far failed to provide.

If our goal is regime change, then that argues for an aggressive

set of policies that will likely alienate most of friends, particularly

in the wake of Iraq.

If our goal is to see Iran’s threatening behavior end in the shortterm—while working for long-term change—then that argues for a

policy that many could likely support.

Yesterday, I recommended that President Bush respond to the

recent letter sent by the Iranian President, but he should write to

the man who has the final say in Iran—Ayatollah Khamenei.

I would make the letter public and I would include a call for direct talks with Iran—anywhere, anytime, with everything on the

table.

58

We should be willing to talk about all the issues that divide us:

the nuclear program, terrorism, Iraq, Afghanistan, Israeli-Palestinian peace, sanctions, and security.

We should lay out for Iran’s leader—and especially for its people—what the future could look like if Iran renounces its nuclear

ambitions and support for terrorism—and what the future could

look like if it does not.

As I said yesterday, I don’t know for certain how Iran would respond, but I believe that an offer of direct dialogue would place

enormous pressure on the Iranian leadership—from their own people and from the international community.

Iranian leaders would face a stark choice—reject the overture

and risk complete isolation and an angry public, or accept it and

start down a path that would require Iran to alter its nuclear ambitions.

Talking to Tehran would not reward bad behavior or legitimize

the regime. Talking is something we have done with virtually every

other country on earth, including unsavory regimes like the ones

in North Korea and Libya.

Demonstrating that we made a serious attempt at diplomacy is

also the best way to keep others on board for tougher actions if

Iran fails to respond.

If the administration wants to convince our allies and others to

place serious pressure on Iran, it must walk the extra diplomatic

mile.

I look forward to the testimony.

(59)

PREPARED STATEMENT

HONORABLE FRANK G. WISNER

VICE CHAIRMAN FOR EXTERNAL AFFAIRS, AMERICAN INTERNATIONAL

GROUP, INC., NEW YORK, NEW YORK

BEFORE THE

U.S. SENATE COMMITTEE ON FOREIGN RELATIONS

MAY 18, 2006

The United States, the international community and Iran are in

crisis. The crisis broke out last year in the wake of Iran’s decision

to proceed with its nuclear enrichment program and limit its cooperation with the International Atomic Energy Agency. But the

crisis runs deeper. It is rooted in broad international concern over

Iran’s clandestine efforts to develop an enrichment program, which

have put into question the spirit of Iran’s compliance with the NonProliferation Treaty.

In fact, the origins of the crisis are long standing. For over a

quarter of a century and as a result of the overthrow of the Shah’s

regime, Iran’s clerically dominated government has been at odds

with the United States and frequently with its neighbors. The regime’s aggressive assertion of its religious identity has frightened

Sunni Muslim nations in the Gulf, the Middle East and elsewhere

in the region. Iran’s espousal of Hezbollah and Hamas has put the

country on the front lines of the war against terror. The Iranian

leadership’s unwillingness to accept the existence of the State of

Israel has further undermined the ability of the United States to

find common ground with it.

In response to the Iranian Government’s policies and the principles it espouses, the United States, during the Bush administration, has identified Iran as an opponent of the United States and

a candidate for ‘‘regime change.’’ The Congress’ involvement in legislation to fund activities which would undermine clerical rule in

Iran has sent the strong signal of aggressive American intent. To

a nation historically under siege and more recently at odds with

the United States, these threats have hit hard and have stirred

broad Iranian insecurities.

I come to this meeting over the future of American policy toward

Iran, having read Iran’s history closely and having followed attentively its recent actions and our relationship. I bring to this session

my thirty-seven years of experience in our Nation’s diplomatic service as well as a four year association with ‘‘track two’’ discussions

with knowledgeable Iranians. These discussions have been organized under the auspices of the United Nations’ Association of the

60

United States (UNA-USA). The results have been regularly shared

with officials of the United States government.

In addition, I represented the United States Government in 1997

in discussions with Russia’s authorities over the transfer of missile

technology from the Russian Federation to Iran. This said, I have

no access to official intelligence on Iran, its nuclear program nor

the workings of Iranian domestic politics.

In presenting my conclusions today, I do not speak for the American International Group, where I serve as Vice Chairman, External Affairs. My views are entirely my own.

I intend, in the course of my testimony, to answer four questions:

(1) Will Iran develop a nuclear weapon; (2) Is that outcome imminent; (3) Is Iran’s leadership united behind the development of a

nuclear weapon and (4) What is the way ahead for the United

States.

Will Iran develop a nuclear weapon?

The answer to that question is not obvious. It is clear Iran believes it has the right to enrich uranium and fuel a nuclear power

system. Iran further argues that this right is part of its commitment to the NPT. It is also true that Iran has pursued a nuclear

ambition since the days of the Shah. Finally, it is obvious that Iran

has developed its fuel enrichment system clandestinely and in violation of its international obligations.

It is my view that Iran has not made a nuclear weapons decision

and that its house is divided on the subject. There are Iranians

who believe Iran would be better off with a nuclear weapon; there

are others who argue that a weapon will increase the dangers

which Iran faces. Virtually all Iranians, including those who live

outside the country, share the opinion that their country needs nuclear power and that an enrichment program is a legitimate assertion of the nation’s right. Moreover, the nuclear program has become in Iranian eyes a question of national honor and prestige.

It is possible that Iran will proceed down the path of enrichment,

stopping just short of a nuclear weapon, leaving open the option to

acquire such a capacity. Given Iran’s dangerous record on other

fronts and the lack of confidence in its government’s behavior, that

outcome is unacceptable to the United States and our friends in

Europe. In a word, we must deal with the nuclear issue and seek

to contain it.

Is a weapon imminent?

Again, I advise caution in concluding that the United States

faces an immediate, threat. Estimates of the time it would take

Iran to assemble adequate amounts of fissionable material vary

sharply. Like you, I have seen figures that range from three to ten

years, depending on the urgency with which Iran pursues the goal,

the technology and resources available to it and the international

environment. The design and weaponization of a nuclear device is

another matter but not one for ‘‘tomorrow morning.’’ I argue, therefore, that we have time to consider carefully our strategy for dealing with the very real threat which Iran’s enrichment program

poses. There need be no rush to judgment; and we have time to explore and exercise the option of diplomacy.

61

Let me make this point in a different way.

Is Iran’s leadership united behind the development of a nuclear

weapon?

Once again my experience leads me to be careful about concluding Iran’s leadership and political class are united. Those, who

state with confidence that they know Iran’s intentions, have been

consistently wrong. Our insights into the politics of the clerical regime are limited; our estrangement from Iran has impeded serious

analysis of political trends and developments. This state of affairs

is regrettable and I suggest it is in the interests of the United

States to increase the attention we pay to Iran, its politics, economics and social trends—within government and in academic and research communities.

It is my view that Iran’s leadership, broadly defined, is not

united on a wide range of issues of national importance, including

nuclear weaponization. Power is divided. The Supreme Leader retains control over Iran’s Revolutionary Guards, its intelligence

services and the nuclear program. Mahmoud Ahmadinejad, the

President and author of deeply offensive and inflammatory statements about Israel, the region, Iran’s nuclear intentions and the

United States, does not directly control these institutions and programs. But he won the election to the Presidency with a solid majority and with clerical sympathy. Today he is playing Iranian politics with consummate skill. Ahmadinejad will be a significant factor in Iranian politics for years to come. He has developed a strong

base among young Iranians and he appeals effectively to the

street’s instincts. Moreover he enjoys substantial standing with the

Supreme Leader and the Guardians. In the election campaign and

his brief time in office Ahmadinejad has eclipsed the reformers; his

leverage in Iranian politics is rising. This said, so are his opponents who are questioning the President’s assertions about national security policy and his profligate interventions in the economy.

Finally, it has been my experience that the exercise of power has

the potential of educating its holders in the realities of international and domestic life. This has been Iran’s recent experience.

The country’s original revolutionary fervor has run thin. We are in

Ahmadinejad’s early days. There is more to come, but the present

situation of crisis strengthens the Iranian President’s hand. There

is reason therefore to lessen, if we can, the intensity of the present

crisis.

What are the United States choices?

I suggest that the nuclear stand-off with Iran will play out over

a period of time—months if not years. There are no quick fixes and

we need the time to examine, select and pursue our options. The

United Nations’ Security Council is divided. Our European friends,

deeply opposed to Iran’s nuclear program, seek a diplomatic resolution.

Is there a military solution to enrichment? There is no obvious

way to deal with Iran’s intention to proceed with nuclear enrichment. It is my view that military action can only disrupt Iranian

facilities. Worse yet, the consequences of an American attack on

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Iranian intentions will be severe. If Iran’s leaders have not crossed

the nuclear threshold, they would in the wake of American military

action. We would have to anticipate direct Iranian retaliation

against our forces in Iraq and other American targets in the Gulf

and the Middle East—if not beyond. I have not seen any evidence

that our intelligence is adequate to pinpoint Iran’s nuclear enrichment system and make it vulnerable to a decisive military strike.

The political consequences of an American attack would be even

more devastating. I can assure you that there will be an eruption

of protest across the Muslim world; public opinion in allied nations

would be hostile and our standing in international fora would be

undermined. We must also calculate the economic consequences. I

have no way to predict where the price of oil will go in the wake

of military action against Iran or counter moves which impeded the

Straits of Hormuz.

Military action should always be the last choice—and never excluded. But I do not believe that we have reached the end of the

road and can therefore justify or appropriately use military force

to stop Iran’s enrichment program.

Will economic sanctions deter Iran?

The United States has committed the majority of its sanctions

arsenal against Iran in the past and has few decisive instruments

left. While the possibility of greater allied cooperation in the face

of a nuclear threat is somewhat better, our allies have been hard

to bring along in the past. Ordinary trade sanctions will be very

difficult to enforce, given Iran’s long borders and proximity to trading entrepots, like Dubai. Financial sanctions come at the cost of

disruption of our complicated, international financial system. Sanctions against the movement of Iranian officials are hardly significant. Sanctions generally work when they are targeted, short term

and multilateral. It is hard to imagine the Iranian nuclear crisis

being either of short duration or subject to resolution only through

the imposition of sanctions.

The case for engagement.

The first choice in conflict resolution should be diplomacy. There

are diplomatic options available to the United States.

Does this mean that military means or sanctions have no place

in addressing the crisis we face with Iran? Of course not. They are

and must remain arrows in our quiver. Diplomacy, without

strength and the ability to deliver pressure, is rarely successful.

For the moment, military force and additional sanctions are more

effective as threats which its leaders must contemplate.

Our leverage lies elsewhere. Iran is an isolated nation. Apart

from a few states, like Syria, whose association with Iran is based

on tactical considerations, Iran has few friends and no allies. If the

international community, notably Russia and China, are divided

from us about how to deal with Iran, there are no divisions over

the issue of Iran’s nuclear pretensions nor her historic sponsorship

of violence in her region. Cut off from acceptance within the international community, Iran is also isolated in the mainstream of

world economics. She sells oil but she receives virtually no investment. Existing sanctions, especially those put in place by the

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United States, limit foreign capital flows. And these sanctions can

be deepened. Iran receives little to no technology and will not as

long as she to stand outside the norms of acceptable international

behavior.

Iran’s isolation, born of her policies of confrontation, aggravates

her perception of threat and preoccupies her leaders and intelligentsia. At heart, they know that Iran cannot force her way into respectability, partnership and security. Sooner or later, Iran must

meet all of us ‘‘half way’’ or she will remain threatened and denied

the capital flows, investment partnerships and technology her lagging economy and highly dissatisfied and deprived population requires. In a word, Iran’s understanding of her isolation and our capacity to sustain and intensify it are powerful weapons in addressing the nuclear crisis we face and the other threats Iran poses to

our interests. Equally, our willingness to offer a path away from

isolation is a powerful tool.

Then how do we deal with Iran?

Our ability to respond militarily is ‘‘on the table’’ and it should

remain there. Sanctions are in place and selectively, for example a

multilateral agreement aimed at the denial of official credits, can

be added over time. We have drawn our ‘‘lines in the sand’’ and the

time is right to move on and engage Iran politically.

The time is right, moreover, to signal that the United States not

only seeks agreement which will contain the nuclear crisis but that

we are prepared to consider normalizing relations, provided, of

course, that Iran is similarly disposed and acts accordingly. Engagement, through diplomatic dialogue, means addressing the

broad array of issues that divide Iran from us and the international community—the issues that leave her marginalized and

insecure—in other words, the issues that undergird distrust of

Iran.

The questions, which we and Iran must address, are obvious and

they deal with subjects of vital importance to the United States—

Iran’s nuclear pretensions; the future of Iraq and Afghanistan; the

security of the Gulf; the prevalence of terror in the Middle East;

political instability in the Arab East; and peace between Israel and

Palestine. The U.S. plays a very special role in Iran’s thinking. The

questions she wishes to address with us are her isolation; the sanctions’ regimes she faces; her search for acceptance in the international community and her insecurity in a deeply troubled region.

In particular, Iran needs access to the international economy if she

is to provide employment for her young.

Our record of engagement with Islamic Iran is a poor one. Past

attempts, born of initiatives to address a single issue, have failed.

They will fail again if we and Iran do not address the totality of

our relationship and if we and Iran are not prepared to set, as an

ultimate objective, the normalization of our relationship. And that

means, simply stated, a reciprocal readiness to live in peace and

mutual respect, no matter how sharply divided we are over our

view of each others’ political systems.

History is replete with examples of the United States finding a

working basis for our relationships with those from whom we were

sharply divided over ideology, national ambition, and questions of

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vital national security concern. I have in mind our ability to find

common ground, through detente, with the erstwhile Soviet Union

and through the Shanghai Communique ́, with the People’s Republic of China.

Engagement begins with a commitment at the top of our political

system. On our side, it starts with an undertaking by the President

to a normalized relationship. It means a willingness to set aside

the rhetoric of ‘‘axis of evil’’ and measures legislatively mandated

to undermine Iran’s regime. Our concerns are legitimately with

Iran’s external ambitions and absent any confidence in those ambitions, its nuclear intentions. Its domestic orientation is another

question. Iranians have changed their regimes in the past and they

will do so again. In a situation of greater peace and security, that

day may even come sooner. Our objective must be the stability of

the region and our interests there—not Iran’s domestic order. We

have our principles; the clerics have theirs. Let’s see on whose side

history sits.

I believe there is an opportunity today to pursue engagement

with Iran. Based on my assessment of Iran’s policies, I conclude

that Iran’s clerical leaders are more comfortable with the country’s

elected government and are willing to give it the freedom to maneuver internationally, including with us. This was not the case in

Khatami’s time. In addition Iran’s leaders are less intimidated by

our ability to deliver on the threats they feel we have articulated.

They know we are bogged down in Iraq. Therefore they feel they

can approach us on a more equal footing. Our European allies want

us to enter the dialogue; Russia and China clearly share that view.

I suspect they would welcome a signal the United States is ready

to seek normalized relations with Iran and to live in peace.

Ahmadinejad’s recent letter, as bizarre and objectionable as its

content are, is based on a sense of self confidence. It deserves an

answer—not rejection. We are under no obligation to reply to the

terms which the letter offers. We are free to state our case and

spell out our objectives for a dialogue.

I do not have a neat formula to resolve the nuclear crisis. I doubt

Iran will renounce enrichment but will it enter into cooperative,

internationally based arrangements for the production and supervision of enriched fuel? Is it possible to find common ground over

Iraq and Afghanistan where Iranian interests have been served by

the elimination of Saddam and the Taliban? I believe so, especially

if we make it clear the United States does not intend to be a permanent fixture in Iraq or Afghanistan and that we will not use our

position in either country to threaten Iran. Can the concerns of

Sunni Arabs be addressed? I contend there is room for a regional

conference to elaborate security guarantees. Can Iran address the

dangers posed by Hezbollah and Hamas and can Iran be brought

to be a more responsible player in the Israeli-Palestinian equation?

Perhaps, but it will be difficult. But it is reasonable to conclude

Iran sees in Hamas’ victory in the Palestinian elections a vindication and because Hamas is now in power, a two state solution can

be pursued.

This said, I return to my core contention: the starting point in

negotiations with Iran is our willingness to seek normalization.

65

The United States must deal with the nuclear crisis. We have

time, leverage and the authority to do so. But to repeat, our approach should be a broad one; aimed at a full exploration of the

several issues of concern to us and with the objective of a normalized relationship. The history of America’s dealings with Iran

should make it clear that anything less will lead to frustration.

(66)

OPENING STATEMENT

DR. VALI R. NASR

PROFESSOR OF MIDDLE EAST AND SOUTH ASIA POLITICS, DEPARTMENT OF NATIONAL SECURITY AFFAIRS, NAVAL POSTGRADUATE

SCHOOL, MONTEREY, CALIFORNIA

BEFORE THE

U.S. SENATE COMMITTEE ON FOREIGN RELATIONS

MAY 18, 2006

Iran today presents a serious foreign policy challenge to the

United States. The growing prominence of security concerns: escalation of tensions over Iran’s continued development of a nuclear

capability, the country’s role in Iraq and Afghanistan and support

for Hamas and Hezbollah have preoccupied U.S. foreign policy. The

election of a hard-line president in Iran in 2005, who has adopted

a belligerent rhetoric, has added urgency to contending with these

challenges.

The U.S. policy between 2001 and 2005 was focused on promotion of democracy in Iran with the hope that such a transition

would result in a break through in U.S.-Iran relations, and that in

turn would solve the above mentioned challenges. It was hoped

that the example of democracy in Iraq would undermine theocracy.

Many observers looked to the presidential elections of 2005 in Iran

as an opening: expecting that it would exacerbate internal tensions

in Iran and produce a ‘‘Ukrainian moment.’’

The election results defied expectations. The reformist lost, and

the most radical conservative forces won. The turn-out was higher

than expetced, and despite electoral irregularities there were no

wide-spread protests and a new militant and hard-line president

assumed power, and quickly escalated tensions with the West. The

United States now confronted a more aggressive Iran at a time

when the Iraq war was taxing America’s military capability, constricting its ability to deter Iran.

Iran in particular intensified its campaign to acquire nuclear capability, and after the break-down of negotiations with the EU-3

became less cooperative with IAEA and less willing to compromise.

It in fact, adopted a policy of deliberately escalating tensions, believing that it had ample room to push for maximum gains.

It became clear that the priority for U.S. policy in its relations

with Iran would have to be first and foremost, containment of its

nuclear program; and in addition, contending with Iran’s regional

role—in particular in Iraq and Palestinian territories.

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U.S. policy has since 2005 continued to look to democracy as a

solution to the Iranian challenge. There are inherent problems in

this approach:

1. The scope of intensification of Iran’s nuclear program

requires a more direct and focused policy to address specific threats and concerns. Democratization does not

amount to such a policy.

2. It is increasingly doubtful that there is in fact a credible democracy movement in Iran, and if it is likely to have

an impact on regime behavior or decision-making in the

small policy-making window that is available to the U.S.

to deal with the nuclear issue.

3. It is also likely that democracy promotion and contending with security concerns regarding Iran may not be

compatible with each other, and in fact may interfere with

one another.

Prospects for Democracy in Iran

Iran today has many ingredients of democracy. It has an educated youth (some 70% of the population), who are receptive to

western ideas, thousands of activist NGOs, more women in universities than men, and the level of cultural dynamism that is unique

in the Middle East. Persian is today, after English and Mandarin

Chinese, the third most popular language on the internet, and

there are over eighty thousand Iranian blogs. There are hundreds

of widely read newspapers, magazines, and periodicals, and there

is relatively easy access to outside sources of information. One

third of Iranians listen to BBC Radio, and BBC’s Persian website

at one point received 450,000 hits a day. Iranians watch everything

from CNN to Al-Jazeera on satellite TV. Although unelected authorities screen election candidates, and there are deep flaws in

electoral politics, still Iranians are more familiar with the rudiments of elections than their neighbors. Iranians take the campaigning and voting seriously. The voting age is fifteen. An entire

generation has now grown up with ballots and electioneering,

promises from politicians, and the ideals of democracy as well as

its mechanics.

These social factors, however, have not produced democracy. Conversely, over the past five years Iran has witnessed growing power

of conservative forces that since the 2005 elections are consolidating their hold on power. The conservative leadership comprise

of clerics and Revolutionary Guards commanders, and their allies

in the bureaucracy, media, and private sector. They now control all

institutions of power—the executive, legislature and judiciary—and

are in command of key decision-making bodies. Their political ethos

combines loyalty to the ideals of the revolution with an ascendant

nationalism that sees Iran as a regional power. Although Iranian

society may look like Eastern Europe of 1980s the Iranian government does not.

The conservative leadership in Iran unlike Eastern European

governments of 1980s is not completely alienated from society, and

hence isolated and vulnerable. The ruling regime in Iran is confident and in control, and has a base of support of around 20% (a

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steady number in election after election), and far from feeling

under pressure is confident of its own legitimacy and ability to govern. It sees itself as capable to confronting social opposition. The

conservative leadership has proven itself capable to defending its

own prerogative to power. It combines nationalism with revolutionary ideology with populism to mobilize the poor in its own support and marginalize the more affluent middle classes that demand

democracy. The rising price of oil has made such an approach possible. In this regard the Iranian regime resembles Hugo Chavez’s

regime in Venezuela or Evo Morales’ in Bolivia.

Since 2005 elections Iran’s pro-democracy forces are demoralized

and marginalized. They have lost their access to power and are excluded from all state institutions. They are disorganized. They lack

political parties, and in-fighting has prevented them from forming

a united front before the regime. They do not have a program of

action or a platform that could challenge the current government’s

foreign policy or populist economic policies. In addition there is no

wedge issue around which they could mobilize their followers, organize demonstrations, and build a movement. There is no major

election on the calendar for the next five years—nothing to rally

around. Escalation of tensions between U.S. and Iran—and especially the prospects of sanctions and a military strike on Iran—has

moreover, created a rally to the flag phenomenon in Iran—war and

nationalist fervor do not favor democracy. As strong as the demand

for democracy is in Iran the democracy movement is weak. It poses

no palpable threats to regime stability.

Contending with the Challenge

In the past five years the challenges posed by Iran to U.S. policy

have not gone away, they have in fact grown. The prospect for democracy has in the meantime faded. It is fair to conclude that democracy is not in the short run a solution to the pressing problems

in U.S.-Iranian relations. There is no democratic partner organization, no clear opening, or an election to rally around.

At the same time it is possible that contending with pressing

issues in U.S.-Iranian relations will require engaging Iran more directly. Any conversation between U.S. and Iran that yields results

will have to contend with security guarantees that will be sought

by Iran. A key element of such a guarantee is likely to be a removal of U.S. threat to regime survival in Iran. Such a guarantee

will run counter to the goal of democracy promotion. Hence, not

only will democracy not solve the security challenges facing the

U.S., but rather, the solution to those challenges will adversely impact democracy-promotion. Three considerations are important at

this juncture:

1. U.S. policy-making must realize that democratization

is a long-run process in Iran. It will not address short run

problems.

2. At a time of escalating tensions between U.S. and

Iran overt U.S. support for democracy in Iran will be counterproductive. It will cast democracy advocates as unpatriotic. It is also likely to be futile as pro-democracy forces

are unlikely to engage the U.S. at a time when U.S. and

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Iran are in conflict. Faced with a choice between democracy or nationalism the Iranian population will likely

choose nationalism, and pro-democracy forces will likely

follow the same trend.

3. The imperative of solving short run crises requires

that policies directed at solving them be decoupled from

the long run goal of democracy promotion.

Democracy promotion should remain a U.S. objective, and U.S.

should continue to lend its moral authority to advocating its cause.

However, the U.S. should not see this as a short run policy or a

solution to the nuclear crisis. Democracy promotion should not be

a substitute for diplomacy.

(70)

PREPARED STATEMENT

MS. JULIA NANAY

SENIOR DIRECTOR, PFC ENERGY, WASHINGTON, DC

BEFORE THE

U.S. SENATE COMMITTEE ON FOREIGN RELATIONS

MAY 18, 2006

Good morning. Senator Lugar and distinguished members of this

committee, it is a pleasure to come before you today to address

such an important topic. My name is Julia Nanay and I am a Senior Director at PFC Energy. PFC Energy is a strategic advisory

firm, based in Washington, DC. We are advisors to the petroleum

industry on oil markets and various aspects of investment risks related to the global petroleum environment.

Iran is a Major Risk Factor Driving Energy Prices Higher

The timing of today’s hearing is important as it occurs in an extremely volatile period for oil markets. Here are some of the headlines from the news over the course of just a few days May 3–May

12: Oil hovered near $75 a barrel, within striking distance of record

highs, because of mounting tension over Iran’s nuclear plans; oil

held steady near $70 a barrel after major powers failed to come up

with a strategy for containing Iran’s nuclear ambitions; oil fell

below $70 a barrel on hopes tension over Iran’s nuclear ambition

will ease after Iran’s President made an unprecedented move to

contact Washington.

Uncertainty over the ability of the markets to supply the world’s

oil requirements if Iran’s oil supplies were reduced has kept oil

markets on edge. The day to day volatility in today’s oil markets

is driven by the news about Iran. The more that Iran is in the

news and the more that the U.S. presses for sanctions and holds

out the possibility of military action, the higher that oil prices stay.

Any news about the easing of tensions and possible talks between

the U.S. and Iran causes the price to drop. Estimates of the Iran

premium in today’s oil price run as high as $15 a barrel.

Iran’s Production and Exports

Iran’s oil production capacity today is about 4 million barrels per

day. Its oil production is estimated to average 3.8–3.9 million barrels per day. The country’s OPEC quota is 4.11 million barrels per

day. Iran’s oil exports have held steady at 2.4-2.5 million barrels

per day, without any significant drops related to tensions over the

nuclear problem. Iran’s oil export policies have not changed.

71

Since President Ahmadinejad was elected in June 2005, however,

no new contracts for oil or gas development have been signed. Production from Iran’s existing old oil fields is being depleted and

without significant new investment, oil production declines of at

least 200,000 b/d per year are foreseen. Iran has been unable to

meet its OPEC quota because of the lag in capacity expansion

plans. The Iran Libya Sanctions Act (ILSA) prohibits U.S. investment in Iran’s oil and gas sector and has discouraged many western companies from investing.

One solution being promoted by the government of Iran is to dip

into the Oil Stabilization Fund to finance oil and gas developments.

One idea floated in Iran is to take loans from the Oil Stabilization

Fund to spend on oil and gas fields, using future revenues to repay

the loans. Information on the actual level of this Fund is difficult

to come by since the government has been drawing against it for

various purposes. The Oil Stabilization Fund does not show up in

Iran’s national budget. It is run as an account at the Central Bank

by a handful of senior government officials. A better way to look

at the Oil Stabilization Fund would be to refer to it as a hard currency reserve account.

The threat of additional sanctions on Iran’s oil and gas sector

and the rumors about possible military action are keeping foreign

investors away from Iran. This could lead to less oil being available

from this country over time, depending on how long the current

stand off continues. In a period of increasingly tight oil markets,

this will keep a floor under oil prices.

Countries That Buy Oil From Iran

The U.S. buys no oil from Iran. According to a report from the

Joint Economic Committee of Congress in March 2006, 56% of

Iran’s oil exports are to Asia and 29% to Europe. The remainder

goes to Africa, the Middle East and Latin America. Japan and

China together buy over 800,000 b/d of Iran’s oil exports or over

one-third. Japan is particularly dependent on Iran and the Middle

East in general since it imports every barrel it uses and over 90%

of its imports come from the Middle East. China purchases less oil

from Iran than Japan and its oil import sources are more diversified. Angola and Russia are both large suppliers of oil to China.

Japan, therefore, is most vulnerable to any supply interruptions

from Iran.

Worries about oil disruptions from Iran are forcing Japanese and

Chinese buyers to try to diversify their import sources. Japanese

refiners have changed their purchasing patterns to reduce Iranian

volumes. Both Japan and China are making overtures to Russia to

open up East Siberia to their companies and to allow them to help

finance and build new East Siberian export pipelines. This could

pose a challenge to western buyers of Russian crude and gas as

these resources could be diverted from the west to feed Asian buyers clamoring for non-Middle East supplies. Chinese companies are

also becoming increasingly active in Africa. In a recent bidding

round in Angola, China’s Sinopec offered a signature bonus of $1.1

billion for two deepwater blocks offshore significantly outbidding

U.S. companies in a region that in the past was the preserve of the

U.S. and European oil industry. U.S. efforts to further isolate Iran

72

are being felt in ways big and small in global petroleum markets

as international investors scramble to diversify away from the Middle East.

Still, unless there are major disruptions caused by some sort of

military intervention or sanctions on Iran’s oil exports, Iran itself

is unlikely to stop or cut back the flow of oil to its customers. For

one thing, it would be reluctant to jeopardize its contractual relationships; for another, it would not want to lose the revenues. For

every barrel of the 2.4 million barrels a day that Iran exports, it

earns over $50 a barrel. Iran’s net oil export revenues in 2005 were

close to $47 billion and it will earn over $50 billion in 2006.

Iran Imports Gasoline

Despite being OPEC’s second largest oil producer, Iran has a deficit in refining capacity to manufacture gasoline. Iran uses about

422,000 b/d of gasoline and imports 170,000 b/d of it, paying upwards of $4 billion in 2006 for these imports. Gasoline is heavily

subsidized in Iran, with the price set at under 40 cents per gallon.

$2.6 billion was withdrawn from the Oil Stabilization Fund last

year to pay for gasoline imports.

Again according to a report from the Joint Economic Committee

of Congress in March 2006, an estimated 25 percent of Iran’s gasoline imports come from Persian Gulf countries, 15 percent from

India, and the remainder from a variety of sources, including

France, Turkey, Singapore, the Netherlands and China.

At the same time, volumes equivalent to as much as half of the

amount of Iran’s gasoline imports are being smuggled abroad. Subsidized prices at home make it lucrative for smugglers to move this

product out of the country, with Iraq being a favored market along

with Pakistan. Many people in border areas earn a living from

smuggling gasoline.

Iran is looking into rationing gasoline, so that low prices would

apply to a certain level of purchases by each car owner after which

the full cost of the gasoline would be paid. This two-tier pricing

system is still being discussed but it could be implemented later in

2006.

If gasoline import sanctions were imposed, one affect would be to

cut down on smuggling and another, to alleviate the traffic pollution problems in Tehran. Gasoline import sanctions might cast the

U.S. in a negative light since unlike other oil and gas sanctions,

their impact would fall directly on Iran’s people.

U.S. Policy Options in the Oil and Gas Sector

About 60 percent of Iran’s export earnings come from the oil and

gas sector and 40 to 50 percent of the government’s revenues. Investments in Iran’s oil and gas sector are already dramatically reduced and timetables delayed due to the sanctions currently in

place, as well as weak terms on offer under the buyback contract

model. Short of disrupting Iran’s oil trade with sanctions on oil exports, which would drive up oil prices and negatively impact the

U.S. economy, there is limited impact to be gained for the world

community from any other additional sanctions on Iran’s oil and

gas industry. In a market where companies and countries seek to

secure their economic lifelines through access to oil and gas, the

73

idea that you can create a fool-proof sanctions system targeted at

any oil and gas producer is a non-starter. There will always be

those who violate the sanctions.

Sanctions on gasoline imports would be disruptive and would result in creating dislocations in Iran’s economy. However, their impact would be offset to some extent by the likely elimination of the

smuggling of gasoline to neighboring countries. Such targeted sanctions will have their own unintended consequences of probably encouraging the smuggling of gasoline from such offshore sources as

Dubai from where many products already enter Iran.

The U.S. has to weigh carefully what it wants to gain from such

sanctions. The cut off of gasoline imports could just be another

item on a list of sanctions already imposed on Iran, which certainly

creates problems for the government but then results in adjustments without seriously undermining the government’s power or

changing its behavior with regard to nuclear enrichment.

Iran-Pakistan-India gas pipeline

Finally, just a few words about the status of this pipeline. This

is a project that has been talked about for many years and it is still

being discussed. Let’s put it in the context of the Baku-TblisiCeyhan oil pipeline which at 1,780 km is 1,000 kms shorter than

the 2,775 km Iran-Pakistan-India pipeline. It took almost a decade

for BTC to be realized from first project appraisal and this is a

pipeline that had private oil company investment and where BP

took a strong lead. Constructing and financing such multibillion

dollar projects is difficult and expensive and it takes serious commitment from all parties. With an estimated $7 billion price tag,

the Iran-Pakistan-India pipeline still has a long way to go before

it can be considered a serious project. While the energy is clearly

needed by Pakistan and India, there is no agreement in place yet

among the three countries to build the pipeline, with the question

of who would pay for it not even addressed.

(74)

PREPARED STATEMENT

MR. JAMES A. PHILLIPS

RESEARCH FELLOW FOR MIDDLE EASTERN AFFAIRS, THE DOUGLAS

AND SARAH ALLISON CENTER FOR FOREIGN POLICY STUDIES, THE

HERITAGE FOUNDATION, WASHINGTON, DC

BEFORE THE

U.S. SENATE COMMITTEE ON FOREIGN RELATIONS

MAY 18, 2006

Thank you Mr Chairman and distinguished members of the committee for this opportunity to discuss U.S. policy regarding Iran’s

nuclear program.

The efforts of the United States and its allies to dissuade Iran

from pursuing its long-sought goal of attaining a nuclear weapons

capability have so far failed to yield satisfactory results. Iran made

temporary tactical concessions in October 2003 under strong international pressure to temporarily freeze its uranium enrichment operations and submit to increased inspections of its nuclear facilities

by the International Atomic Energy Agency (IAEA). Tehran feared

that referral to the Security Council could result in diplomatic isolation, economic sanctions, or possible military attack. It undoubtedly also was motivated by the examples set by the rapid overthrow of the Taliban regime in Afghanistan in 2001 and Saddam

Husseinss regime in Iraq in early 2003 by U.S.-led coalitions.

Tehran made enough tactical concessions to stave off international sanctions and engage the European Union in diplomatic

negotiations led by Britain, France, and Germany (the EU-3) to

temporarily defuse the crisis. But Tehran later dropped the charade of negotiations after it apparently concluded that the international situation had shifted in its favor. It now apparently believes that it is in a much stronger position due to the continued

need for U.S. military forces in Iraq and Afghanistan; the rise in

oil prices which has given it greater bargaining leverage with oil

importers; and its diplomatic cultivation of China and Russia,

which can dilute or veto resolutions brought before the U.N. Security Council.

The installation of a new hard-line government led by President

Mahmoud Ahmadinejad in August 2005 also was a major factor

that led Tehran to renege on its agreement with the EU-3. Iran’s

new president is firmly committed to Iran’s nuclear program and

vehemently criticized Iran’s previous government for making too

many concessions in past negotiations with the EU-3. Shortly

thereafter Iran resumed operations at the Isfahan uranium converVerDate 11-MAY-2000 12:17 May 31, 2006 Jkt 025358 PO 00000 Frm 00080 Fmt 6604 Sfmt 6604 27613.TXT SFRELA2 PsN: SFRELA2
75

sion facility, converting yellowcake into uranium hexafluoride, a

preliminary step before enrichment. In January 2006 Iran announced its intention to resume uranium enrichment activities and

removed IAEA seals at its Natanz facility. Iran remains determined to develop a complete nuclear fuel cycle, which would eventually give it the fissile material for a nuclear weapons capability.

Thus far, Iran has escaped paying any significant price for its apparent violations of its commitments under the NPT and failure to

fully cooperate with the IAEA.

The U.S. should mobilize an international coalition to raise the

diplomatic, economic, domestic political, and potential military

costs to Tehran of continuing to flout its obligations under its nuclear safeguards agreements. This ‘‘coalition of the willing’’ should

seek to isolate the Ahmadinejad regime, weaken it through targeted economic sanctions, explain to the Iranian people why their

government’s nuclear policies will impose economic costs and military risks on them, contain Iran’s military power, and encourage

democratic change. If Tehran persists in its drive for nuclear weapons despite these escalating pressures, then the United States

should consider military options to set back the Iranian nuclear

weapons program.

The Growing Threat of Ahmadinejad’s Iran

Mahmoud Ahmadinejad rose up through the ranks of the Islamic

Revolutionary Guard Corps (IRGC), the praetorian guard dedicated

to advancing and exporting the revolution that Ayatollah Ruhollah

Khomeini inspired in Iran in 1978–1979. Ahmadinejad is a true believer in Khomeini’s radical vision of Iran’s role as the vanguard

of a global Islamic revolution. He has lambasted the U.S. as ‘‘a failing power’’ and a threat to the Muslim world.

In sharp contrast to his predecessor, former President Mohammad Khatami, who advocated a conciliatory ‘‘dialogue of civilizations’’ but was blocked by the strong opposition of the ideological

hardliners, Ahmadinijad has returned to the fiery rhetoric of the

Khomeini era. In September he delivered a truculent speech at the

United Nations, warning foreign governments against meddling in

Iranian affairs. On October 26, he made a venomous speech attacking Israel in which he quoted Khomeini: ‘‘As the Imam said, Israel

must be wiped off the map.’’

Ahmadinejad’s vehement return to Khomeini’s radical line has

been accompanied by a purge of pragmatists and reformers within

the regime. Forty of Iran’s senior ambassadors have been recalled

from overseas posts, including diplomats who were involved in the

EU-3 negotiations in Britain, France, Germany, and at the United

Nations in Geneva. Ahmadinejad has appointed many of his IRGC

cronies to key positions throughout the government.

Iran also has been increasingly aggressive in stirring up trouble

inside Iraq. In October, the British government charged that the

Iranians had supplied sophisticated bombs with shaped charges capable of penetrating armor to clients in Iraq who used them in a

series of attacks on British forces in southern Iraq. Iran also has

given discreet support to insurgents such as Moqtada al-Sadr, who

twice has led Shiite uprisings against coalition forces and the Iraqi

government.

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Iranian hardliners undoubtedly fear that a stable democratic

Iraq would present a dangerous alternative model of government

that could undermine their own authority. They know that Iraq’s

pre-eminent Shiite religious leader, Grand Ayatollah Ali al-Sistani,

whose religious authority is greater than that of any member of

Iran’s ruling clerical regime, rejects Khomeini’s radical ideology

and advocates traditional Shiite religious doctrines. Although Iran

continues to enjoy considerable influence with many Iraqi Shiites,

particularly with Iraq’s Supreme Council for the Islamic Revolution

in Iraq and the Dawa Party, the moderate influence of Sistani dilutes their own revolutionary influence. Therefore, Tehran plays a

double game in Iraq, using the young firebrand al-Sadr to undermine Sistani and keep pressure on the U.S. military to withdraw,

while still maintaining good relations with Shiite political parties

who revere Sistani and need continued American support.

In addition to its destabilizing role in Iraq, Iran continues to be

the word’s leading sponsor of terrorism. Secretary of State

Condoleezza Rice recently called Iran ‘‘the central banker’’ of international terrorism. It has close ties to the Lebanon-based

Hezballah terrorist group, which it organized and continues to finance, arm, and train. Tehran also has supported a wide variety

of Palestinian terrorist groups, including Fatah, Hamas, and Palestinian Islamic Jihad, as well as Afghan extremists such as

Gulbuddin Hekmatyar. Iran was involved in the 1996 Khobar Towers bombing, which killed 19 American military personnel deployed

in Saudi Arabia. Moreover, Iran reportedly continues to give sanctuary to elements of al-Qaeda, including at least one of Osama bin

Laden’s sons, Saad bin Laden, and Saif al-Adil, a top operations coordinator.

This long and deep involvement in terrorism, continued hostility

to the United States, and repeated threats to destroy Israel, provide a strong warning against the dangers of allowing such a radical regime to develop nuclear weapons.

Leading an International Response to Iran’s Nuclear Challenge

Diplomatic efforts centered on the United Nations to pressure

Iran to abandon its clandestine nuclear efforts are unlikely to solve

the problem, in part due to the institutional weaknesses of the

U.N. Security Council, where a lack of consensus often leads to paralysis or lowest common denominator policies that are not effective. Nevertheless, the Bush administration must resolutely press

the diplomatic case at the Security Council to set the stage and improve the U.S. position in the push for possible diplomatic and economic sanctions targeted at Iran’s recalcitrant regime, or, as a last

resort, possible future military action.

Another goal should be to make sure that the end result of the

Security Council’s interactions with Iran clearly lays the responsibility of any failure on Tehran, not Washington. Washington should

seek to focus the Security Council debate on the critical issue—the

threat posed by Iran’s nuclear program—not the broader question

of whether to seek a multilateral ‘‘grand bargain’’ with an

untrustworthy revolutionary power that exploited and sabotaged

past American efforts to stage a rapprochement under the Carter

and Reagan administrations and failed to respond to the tentative

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de ́tente offered by the Clinton administration. Getting drawn into

a multilateral dialogue with Iran through the auspices of the

United Nations would allow Iran to divert attention from its safeguard violations and history of terrorism, while subjecting the

United States to growing international pressure to bribe Iran with

diplomatic carrots to comply with international legal commitments

that it already has violated and could renege on again in the future.

Iran already has provided ample evidence that it has no intention to fully cooperate with the IAEA or end the uranium enrichment activities that eventually will give it a nuclear weapons capability. If it merely seeks a nuclear power capability for economic

reasons, as it insists, then it would not have rejected the Russian

offer to enrich uranium at facilities in Russia, which would have

saved it considerable costs in building and operating uranium enrichment facilities. Moreover, Iran also would have received additional economic benefits from the EU-3 if it had not broken off

those negotiations.

Under these circumstances, the EU-3’s recent undertaking to put

together a new package of incentives for Iran is the triumph of

wishful thinking over experience. Beginning a new round of negotiations while Iran continues to work to perfect its uranium enrichment technology will enable Tehran to buy time for its nuclear

weapons program, forestall sanctions, and weaken the perceived

costs of violating the nuclear non-proliferation regime in the eyes

of other countries who may consider following Iran’s path. To

change Iran’s course, the EU-3 should be considering larger disincentives, not just larger incentives.

Forge a Coalition to Impose the Strongest Possible Sanctions on the

Iranian Regime

Although it has greatly benefited from the recent spike in world

oil and natural gas prices, Iran’s economic future is not a promising one. The mullahs have sabotaged economic growth through

the expansion of state control of the economy, economic mismanagement and corruption. Annual per capita income is only

about two thirds of what it was at the time of the 1979 revolution.

The situation is likely to get worse as President Ahmadinejad follows through on his populist promises to increase subsidies and

give Iran’s poor a greater share of Iran’s oil wealth.

Iranians are sending large amounts of their capital out of the

country due to fears over the potentially disastrous policies of the

new government. Shortly after Ahmadinejad gave his October 26

speech threatening Israel, Iran’s stock market plunged to its lowest

level in two years. Many Iranian businessmen understand, even if

Ahmadinejad does not, that Iran’s economic future depends on access to world markets, foreign investment, and trade.

The U.S. should push for the strongest possible sanctions at the

UN Security Council. But experience has demonstrated that Washington cannot rely on the UN to halt the Iranian nuclear program.

Russia and China, who have extensive economic, military, and energy ties to Iran, may veto or dilute any effective resolution. The

U.S. therefore should make contingency plans to work with Britain,

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France, Germany, the EU, and Japan to impose sanctions outside

the UN framework if necessary.

An international ban on the import of Iranian oil is a non-starter. It is unrealistic to expect oil importers to stop importing Iranian

oil in a tight, high-priced oil market. Instead, the focus should be

on denying Iran loans, foreign investment, and favorable trade

deals. Washington should cooperate with other countries to deny

Iran loans from international financial institutions such as the

World Bank and to deny Iran loans for a proposed natural gas

pipeline to India via Pakistan.

Although Iran is one of the world’s leading oil exporters, it is also

an importer of gasoline due to mismanagement and inadequate investment in its refinery infrastructure. An international ban on

gasoline exports to Iran would deprive Tehran of approximately 40

percent of its daily gasoline consumption. This would significantly

drive up the price of Iranian gasoline and underscore to the Iranian people the shortsighted policies of Iran’s ruling regime.

In addition to economic sanctions, the U.S. should press its allies

and other countries to ban nuclear assistance, arms sales, and the

export of dual use technology to Iran. Symbolic sanctions, such as

a travel ban on Iranian officials or ban on Iranian participation in

international sports events, would drive home to the Iranian people

that international opposition to Iran’s nuclear program is widespread and not an artificial issue created by the United States, as

their government claims.

Support Iran’s Democratic Opposition.

The Bush administration has correctly aligned the U.S. with the

Iranian people in their efforts to build a true democracy, but it has

held back from a policy of regime change, partly in deference to the

EU-3 negotiations with Iran about its nuclear program. However,

now that it is clear that Iran has reneged on its promises to the

EU-3, Washington should discreetly aid all Iranian groups that

support democracy and reject terrorism, either through direct

grants or indirectly through nongovernmental organizations. The

Iran Freedom and Support Act of 2005 (H.R. 282 and S. 333), currently under consideration by Congress would authorize such aid

and tighten U.S. economic sanctions on Iran.

Iran has a well-educated group of young reformers who seek to

replace Iran’s current mullahcracy with a genuine democracy that

is accountable to the Iranian people. They have been demoralized

by the failure of former President Khatami to live up to his promises of reform and his lack of support for the student uprisings of

1999, but are likely to be re-energized by a brewing popular disenchantment with the policies of Ahmadinejad’s hard-liners.

The U.S. and its allies should discreetly support all Iranian opposition groups that reject terrorism and advocate democracy by publicizing their activities internationally and within Iran, giving them

organizational training indirectly through western NGOs, and inviting them to attend international conferences and workshops outside Iran, preferably in European or other countries where Iranians

could travel relatively freely with minimal fear of being penalized

upon their return to Iran.

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Educational exchanges with western students would be an important avenue for bolstering and opening up communication with

Iran’s restive students, who historically have played a leading role

in Iran’s reform movements. Women’s groups also could play a key

role in strengthening support for political reforms among young

Iranian women, a key element opposing the restoration of harsh social restrictions by Iran’s resurgent Islamic ideologues.

The United States also should covertly subsidize opposition publications and organizing efforts, as it did to aid the anti-communist

opposition during the Cold War in Europe and Asia. But such programs should be strictly segregated from the public outreach efforts

of the U.S. and its allies, to avoid putting Iranian participants in

international forums at risk of arrest or persecution when they return home.

The United States should not try to play favorites among the

various Iranian opposition groups, but should encourage them to

cooperate under the umbrella of the broadest possible coalition. But

Washington should rule out support for the People’s Mujahideen

Organization (PMO), which is also known as the Mujahideen

Khalq, or its front group, the National Council of Resistance. The

PMO is a non-democratic Marxist terrorist group that was part of

the broad revolutionary coalition that overthrew the Shah, but was

purged in 1981 and aligned itself with Saddam Hussein’s dictatorship.

While this cult-like group is one of the best-organized exile organizations, it has little support inside Iran because of its alliance

with arch-enemy Iraq during the Iran-Iraq war. Moreover, the

PMO resorted to terrorism against the Shah’s regime and was responsible for the assassinations of at least four American military

officers in Iran during the 1970s. It demonstrated in support of the

Soviet invasion of Afghanistan in 1979 and against the release of

the American hostages in 1981. The U.S. cannot afford to support

an organization with such a long history of terrorism, if it expects

Tehran to halt its own terrorism.

Launch a Public Diplomacy Campaign to Explain to the Iranian

People How the Regime’s Nuclear Weapons Program and HardLine Policies Hurt Their Economic and National Interests

Iran’s clerical regime has tightened its grip on the media in recent years, shutting down more than 100 independent newspapers,

jailing journalists, closing down websites, and arresting bloggers.

The U.S. and its allies should work to defeat the regime’s suppression of independent media by increasing Farsi broadcasts by government sponsored media such as the Voice of America, Radio Free

Europe (Radio Farda), and other information sources. The free flow

of information is an important prerequisite for the free flow of political ideas. The Iranian people need access to information about

the activities of Iranian opposition groups, both within and outside

Iran, and the plight of dissidents.

The internet is a growing source of unfiltered information for

many Iranians, particularly Iranian students. Farsi is reportedly

the fourth most popular language used online and there has been

a proliferation of political blogs devoted to Iranian issues. The U.S.

should consider ways of assisting Iranians outside the country to

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establish politically-oriented websites that could be accessed by activists and other interested people inside Iran.

Mobilize Allies to Contain and Deter Iran.

The bellicose resurgence of Iran’s hardliners, Iran’s continued

support for terrorism, and the prospective emergence of a nuclear

Iran pose threats to many countries. President Ahmadinejad’s belligerence gives Washington greater opportunity to mobilize other

states, particularly those living in growing shadow of Iranian

power. The United States should maintain a strong naval and air

presence in the Persian Gulf to deter Iran and strengthen military

cooperation with the Gulf States.

The U.S. and its European allies should strengthen military, intelligence, and security cooperation with threatened states, such as

Iraq, Turkey, Israel and the members of the Gulf Cooperation

Council (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the

United Arab Emirates), which was founded in 1981 to provide collective security for Arab states threatened by Iran. Such a coalition

could help contain the expansion of Iranian power and possibly

would cooperate in facilitating military action, if necessary against

Iran.

Washington could also offer to deploy or transfer anti-ballistic

missile defense systems to threatened states, enhance joint military

planning, and step up joint military and naval exercises. In particular, the U.S. and its allies should stage multilateral naval exercises to demonstrate the will and capability to defeat Tehran’s

threats to block the Strait of Hormuz, through which flow about

one fifth of the world’s oil exports.

Prepare for the Use of Military Force As a Last Resort

A strong U.S. military posture is essential to dissuading and deterring Iran from fielding nuclear weapons and supporting terrorism, and when necessary responding decisively and effectively to

Iranian threats. To deal with a nuclear or terrorist threat from

Iran several military capabilities are particularly important. They

include (1) expanding and strengthening the proliferation security

initiative; (2) theater missile defense; (3) robust special operations

forces and human intelligence (HUMINT) assets; (4) assured access

to bases and staging areas in the theater for both special operations and conventional ground, air, and sea forces, and; (5) Energy

security preparations.

Proliferation security initiative (PSI). PSI is a multi-national effort to track down and breakup networks that proliferate chemical,

biological, and nuclear weapons technologies and materials. The

administration should field more modern capabilities that can provide the right intelligence, reconnaissance, surveillance, and interdiction assets for the U.S. military. In particular, modernization of

Coast Guard and Naval forces that can help prevent seaborne trafficking of weapons material is vital.

Theater Missile Defense (TMD). TMD is also essential. Missile defenses provide the means to intercept a ballistic missile in flight

and destroy it before the missile can deliver a nuclear warhead to

its target. The United States should work with its friends and alVerDate 11-MAY-2000 12:17 May 31, 2006 Jkt 025358 PO 00000 Frm 00086 Fmt 6604 Sfmt 6604 27613.TXT SFRELA2 PsN: SFRELA2
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lies to provide theater missile defense to countries in the region.

The United States should continue to pursue a mix of air, land,

and sea-based missile defense systems.

Special Operations Forces and HUMINT. These military and intelligence assets provide the capacity for focused operations against

specific targets. Today, these forces are overstretched, performing

many missions in the global war on terrorism. The Pentagon must

end the use of special operations for training foreign militaries and

other tasks that can be done by conventional military units. In addition, the administration must bolster the ranks of the special

forces and HUMINT assets that might be required to operate in

Iran, ensuring they have the right language skills, area knowledge,

and detailed, actionable intelligence.

Theater Access. The United States must ensure it retains the

means to deploy and sustain forces in the theater. The Pentagon

should work to secure a variety of basing options for staging military operations. In addition, the military must have robust means

to ensure its ability to operate in the Gulf and defeat ‘‘anti-access’’

weapons that Iran might employ such as cruise missiles, sea-based

mines, terrorist attacks, and biological or chemical weapons.

Energy Security Preparations. In the event of a military clash

with the United States, Iran undoubtedly will try to follow through

on its threats to close the Strait of Hormuz to oil tankers and disrupt oil exports from other Persian Gulf oil exporters. Washington

should take immediate steps to limit the future impact of such oil

supply disruptions by working with the Arab gulf states to help

them reduce the vulnerability of their oil infrastructure to Iranian

military and terrorist attacks; pressing U.S. allies and other oil importers to expand their strategic oil stockpiles; encouraging Saudi

Arabia to expand its excess oil production capacity; and asking

Saudi Arabia to upgrade the Trans Saudi Arabian pipeline to increase its capacity and make preparations to bring the Iraq-Saudi

pipeline back online to reroute oil exports away from the Persian

Gulf to the Red Sea oil export terminals.

The Nightmare Scenario of a Nuclear Iran

There is no guaranteed policy that can halt the Iranian nuclear

program short of war, and even a military campaign may only

delay Iran’s acquisition of a nuclear weapons capability. But U.S.

policymaking regarding the Iranian nuclear issue inevitably boils

down to a search for the least-bad option. And as potentially costly

and risky as a preventive war against Iran would be, allowing Iran

to acquire nuclear weapons would result in far heavier potential

costs and risks.

The U.S. probably would be able to deter Iran from a direct nuclear attack on American or Israeli targets by threatening massive

retaliation and the assured destruction of the Iranian regime. But

there is a lingering doubt that a leader such as President

Ahmadinejad, who reportedly harbors apocalyptic religious beliefs

regarding the return of the Mahdi, would have the same cost-benefit calculus about a nuclear war as other leaders. The bellicose

leader, who boldly called for Israel to be ‘‘wiped off the map’’ before

he acquired a nuclear weapon, might be sorely tempted to follow

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through on his threat after he acquired one. Moreover, his regime

might risk passing nuclear weapons off to terrorist surrogates in

hopes of escaping retaliation for a nuclear surprise attack launched

by an unknown attacker.

Even if Iran could be deterred from considering such attacks, an

Iranian nuclear breakout would undermine the NPT and trigger a

nuclear arms race in the Middle East that could lead Saudi Arabia,

Egypt, Turkey, Iraq, and Algeria to build or acquire their own nuclear weapons. Each new nuclear power would multiply the risks

and uncertainties in an already volatile region.

Iran also may be emboldened to step up its support of terrorism

and subversion, calculating that its nuclear capability would deter

a military response. An Iranian miscalculation could easily lead to

a future military clash with the United States or an American ally

that would impose exponentially higher costs than a war with a

non-nuclear Iran. Even if it could not threaten a nuclear missile attack on U.S. territory for many years, Tehran could credibly threaten to target the Saudi oil fields with a nuclear weapon, thereby

gaining a potent blackmail threat over the world economy.

I believe that Senator John McCain was correct when he concisely stated: ‘‘There is only one thing worse than the U.S. exercising a military option, and that is a nuclear-armed Iran.’’

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