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NEWSMAKER SATURDAY (CNN) - July 30, 1988

MR. BEGLEITER: Welcome to NEWSMAKER SATURDAY. I'm Ralph Begleiter in Washington. After eight years and a million casualties, Iran and Iraq are finally sitting down to negotiate an end to the bloody Persian Gulf war. Will this also mean freedom for the American hostages in the Middle East? We'll ask former Secretary of State Henry Kissinger today on NEWSMAKER SATURDAY.

MR. BEGLEITER (on tape): Iraq's foreign minister and his counterpart from Iran are in New York talking with United Nations Secretary General Perez de Cuellar, but not yet directly with one another.

SECRETARY GENERAL PEREZ DE CUELLAR (Wednesday): For me, as Secretary General, it would be the ideal formula for achieving rapid success to have direct talks, but I think it is something which has to be agreed by both sides.

IRAQI FOREIGN MINISTER TARIQ AZIZ (Wednesday): If the Iranians do not accept that formula, that means that they are not sincere about peace.

MR. BEGLEITER (on tape): Iran is resisting direct talks, still suspicious of dealing with Iraq.

U.N. AMBASSADOR VERNON WALTERS (Wednesday): They're all still mad at one another. But you've got to get over that, and you've got to walk on the road to peace. And the pressure from the world for peace is so great, I don't think anybody, Iranian or Iraqi is going to be able to withstand it.

MR. BEGLEITER (on tape): The United States is not directly involved in the talks, although U.S. military presence in the Gulf, and U.S. pressure to block arms shipments to Iran played an important role in persuading Ayatollah Khomeini to come to the bargaining table. Perhaps even the disastrous deaths of almost 300 civilians aboard an Iranian jet this month contributed to Khomeini's decision to stop fighting the war. The U.N. has a military observer team surveying the war zone to determine how a cease fire might be implemented. American experts believe both sides are ready to move quickly toward a cease fire through the

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negotiations at the U.N.

ASSISTANT SECRETARY OF STATE RICHARD MURPHY: I think it's reasonable to expect it in the next few weeks. It's impossible to put a date on it, although the secretary general himself a few days ago predicted early August for the cease fire. But he has a good deal of work to do with the two parties to get their agreement.

MR. BEGLEITER (on tape): Henry Kissinger, among the world's best known diplomats, is remembered for his Middle East shuttle diplomacy after the 1973 war, but also for secretly negotiating the historic re-opening of relations between the U.S. and China.

MR. BEGLEITER: With all that's happening in the Persian Gulf now, we'll ask Dr. Kissinger about how to engineer a similar diplomatic re-opening between the U.S. and Iran. Please stay with us, on NEWSMAKER SATURDAY.

MR. BEGLEITER: Welcome back. Dr. Kissinger, with the Gulf war talks now under way, is this the moment for us to watch for Iran and the U.S. to begin talking again with one another?

DR. KISSINGER: I think the circumstances for improving relations with Iran exist. Fundamentally, it has been a weird kind of hostility anyway, because there is no fundamental clash in national interest between the United States and Iran. Iran's longest border, in fact its major border is with the Soviet Union. All the historic invasions of Iran have come from territory which is today Soviet, and from the Soviet Union. The United States is the country furthest away from Iran. So there is no reason for hostility. We have an interest in the independence of Iran. We have, of course, to oppose their terrorist and expansionist activities, but if they'd stay within their own territory, there is no reason why we can't have better relations, except, of course, for the hostage question.

MR. BEGLEITER: Well, I was going to say. So there are fundamental reasons why the U.S. and Iran should get together, but there are a lot of practical reasons at the moment why that's

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impossible, aren't there?

DR. KISSINGER: But I'm assuming that Iran needs improved relations with the West, or it wouldn't have initiated these talks. It is in trouble on the military front. It is in trouble economically, and it is pursuing a war that is weakening it against its historic opponents. The hostages, whatever they thought they would do with them when they first engineered their being taken, the hostages are today an obstacle, because it would be crazy for us to pay any price for these hostages, because we would only teach the Iranians and any other terrorists that the way to deal with the United States is to kidnap innocent Americans. On the other hand, if the hostages are released, unconditionally, there is fundamentally no obstacle to improving relations, and some of the things that the Iranians are asking for would be happening naturally. We have no reason to block their assets indefinitely, if they become a peaceful state.

MR. BEGLEITER: Is that what you expect the next step to be, that Iran would have to unilaterally and unconditionally work to release the hostages, and get them freed?

DR. KISSINGER: Well, what I think might happen, what is a useful approach would be this: That Iranians and Americans meet secretly, so that there is no loss of face on either side. The American negotiators explain our basic approach to policy as far as Iran is concerned, our interest in their independence, and why we would prefer to have normal relations with them. Then, if the Iranians are receptive to this, we would point out that we cannot do this as long as innocent Americans are being held in Beirut and elsewhere. Under those conditions, perhaps the Iranians would be prepared to release the hostages, and then the concrete negotiations resume.

MR. BEGLEITER: So you're suggesting negotiations take place to discuss the hostages and broader relations, but that nothing changes hands?

DR. KISSINGER: No, no. I would not favor--the only

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thing the United States should say about the hostages is that we insist on their unconditional release. That as long as there are hostages, there can be no significant improvement in Iranian-U.S. relations.

MR. BEGLEITER: And could the talks take place before any hostages are released by Iran?

DR. KISSINGER: That part of the talks could take place, and we might also point out our philosophy, our concept of our relations with Iran, that we have no hostility towards Iran, that it is in our own national interest that Iran remains independent, and a significant country in the area. Beyond that, I would not go.

MR. BEGLEITER: Now, in light of this administration's bad experience with an attempt at secret negotiations with Iran, why do you say those talks would have to be secret? Why not simply have both sides announce them and say, look, we're going to sit down, give this a shot. If it doesn't work--

DR. KISSINGER: Well, because after that you have to make long statements. But it isn't a huge difference whether the negotiations are secret or whether they are public, as long as they are serious and conceptual, and as long as we don't haggle about a price for hostages. What was wrong with the other negotiations was not that they were secret, but that they were conducted by amateurs and that they involved a ransom for hostages, and that the only thing we discussed was a ransom for hostages. Both of these things are wrong.

MR. BEGLEITER: Is there any danger in having the negotiations secretly, and then having everybody buzzing about what kind of a deal is being struck? Wouldn't there be some benefit to having public statements in a sense forced on both sides?

DR. KISSINGER: It's not really--that is not a huge issue of principle. I think the Iranians might prefer to have the initial negotiations secret. My concept, incidentally, of the initial negotiation, is not some covered up ransom negotiation. My concept is to make absolutely clear that no ransom whatever

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would be paid, and that the only thing we would do in the first
round of negotiations, as we did in the first round of the Chinese
negotiations, is to explain why we think better relations with
Iran are in the mutual interest, and why there is no permanent
hostility on out side, except for what the Iranians are doing to
us. Beyond that, I would not go. I would not get into anything
that implies that a price will be paid for hostages.

MR. BEGLEITER: I want to get back and talk a little bit
more about the price for the hostages in just a moment when we
return, with Dr. Henry Kissinger. Please stay with us on NEWSMAKER
SATURDAY.

MR. BEGLEITER: Dr. Kissinger, a moment ago you said
that under no circumstances would you suggest the U.S. offer to
pay anything, in any form, for the hostages. But it wasn't too
many weeks ago that you wrote that the compensation for victims of
the Iranian Airbus disaster might somehow be tied to or connected
to or linked to, in diplomatic terms, the release of the hostages.
Have you changed your mind about that?

DR. KISSINGER: No, no. My position was this: We have
some obligation. I can understand that we feel we have a human
obligation to pay compensation for the innocent victims of an
American mistake. And Iranian families have suffered as a result
of that mistake. But American families have suffered as a result
of deliberate Iranian action. And therefore, my view was that the
compensation for the hostages be placed into an escrow account--
the compensation for the--

MR. BEGLEITER: Compensation for the victims of the Airbus.

DR. KISSINGER: --for the victims of the Airbus be
placed into escrow until all American hostages are released. This
is not a payment for American hostages. This is holding in escrow
a payment that we feel morally obligated to make to Iranian victims
of an American mistake, but not paying it until the American
families' suffering is also ended.

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NEWSMAKER SATURDAY (CNN) -- July 30, 1988

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MR. BEGLEITER: What's the difference between doing that, and having frozen Iranian assets, which we have now, quite a bit of which actually are, in effect, in escrow, in the hands of the Iranian claims tribunal. And what's the difference between the U.S. saying, okay, you'll get that stuff when the hostages are released. Isn't there a similar sort of implied quid pro quo there?

DR. KISSINGER: No. I don't want the Iranians to get into a position where if they take hostages--these funds that are now blocked were put into escrow, or were blocked after the Ayatollah went on a radical course and took the last batch of American hostages in 1979. That's when we froze all Iranian assets, when our diplomatic relations with Iran were broken.

MR. BEGLEITER: And what should the U.S. do with those now?

DR. KISSINGER: I would expect that if relations with Iran normalize that a large percentage of these assets could be unfrozen. In fact, an international tribunal was set up in the Hague after the last hostages, after these 40 hostages were released, in order to adjudicate claims that Iranians have on the United States, and Americans have on Iran. I would expect that after the hostages are released, and once negotiations for the normalization of relations have started, and if those normalization talks proceed, that over a period of time the majority of these funds would be released. I do not believe that we would release the military equipment for Iran that was purchased at the time of the Shah because conditions have changed dramatically since that time.

MR. BEGLEITER: Who should make the first step toward getting these negotiations started? The U.S. said it would welcome an authoritative spokesman for the government of Iran?

DR. KISSINGER: I don't think that is a major matter. I would feel that we can afford to take the first step towards negotiations, so long as they don't turn into a haggle over the price for hostages. The first thing that has to be discussed between Iran and the United States, and determined, is whether there are any common interests that would lead to an improvement

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of relations.

The second that has to be made clear is no improvement of relations is possible until the hostages are unconditionally released. The third step then can be to adjudicate the various claims that the two sides have against each other.

MR. BEGLEITER: Is there any sense in your mind of deja vu here, of coming to the end of the Jimmy Carter administration, coming to the end of the Reagan administration with this hostage matter hanging over head, essentially with the same country, essentially with the same government in the same country? Any fear that this will wind up the same way, that President Reagan will be embarrassed by it at the very end?

DR. KISSINGER: Well, I suspect it would be in the Iranian character to try to demonstrate that they embarrassed and maybe even were a decisive influence in an American election by using hostages. They tried to do that in the Reagan-Carter election, and they may try to do it in this election. I believe that it would be highly desirable if both presidential candidates adopted the same position with respect to hostages, to make clear that whatever our differences are, over hostages Americans are united.

MR. BEGLEITER: Dr. Kissinger, in a moment, I want to get to a broader discussion of what the U.S. should do next in the Persian Gulf in general. But we'll have to wait a moment for that while we take a break on NEWSMAKER SATURDAY.

MR. BEGLEITER: We're talking with Dr. Henry Kissinger, former secretary of state and national security adviser to President Nixon. Dr. Kissinger, in the last few weeks we've seen a renewed offensive in effect by Iraq in the Persian Gulf war, even after Iran has agreed to come to the United Nations to discuss it. The U.S. has been calling Iran the intransigent party in the war for a long time. Who's being intransigent now?

DR. KISSINGER: Well, in the present circumstances, Iraq is the more intransigent party. It feels it is winning. I don't

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think it can win decisively. But it can occupy some more Iranian territory. And they also want to humiliate the ayatollah, because the ayatollah had made the overthrow of the Iraqi regime a condition for ending the war, and by forcing him to sit down with that government, they want to demonstrate that his campaign was a total failure. That's understandable. But that demand was never in the original U.N. resolution which Iraq accepted when it thought it was under pressure, and which Iran has now accepted.

MR. BEGLEITER: The U.S. has had its Operation Staunch in effect for a long time, with the exception of the Iran-contra deal, an effort to stop weapons from reaching Iran. But there's been some assistance to Iraq all along. Should the U.S. stop that, or has it been stopped to your knowledge?

DR. KISSINGER: I don't know what the United States has done. I think if, against all expectations, there should be a failure for a cease fire due to Iraqi intransigence, then the United States should consider the return to a more even handed posture. We were right in doing what we did with respect to Iraq, and I think altogether, the Persian Gulf policy of the United States has been a big success. But if Iraq unreasonably holds up a cease fire, I think the amount of assistance it gets from Western nations ought to be reduced, and in time stopped.

MR. BEGLEITER: How about in terms of the U.S. role in the Persian Gulf now? The U.S. has increased its military presence in the Gulf, naval presence, and has assisted other countries on the Western side of the Gulf, presumably in defense of a possible attack from Iran. What steps should the U.S. administration take now, now that the talks have begun, in order to encourage a cease fire?

DR. KISSINGER: First of all, the United States has to make clear that its interest in the independence and development of the countries on the western side of the Gulf remains, because these countries under conditions of peace are likely to be under pressure from both Iran and Iraq. With respect to American military

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deployment, once a reliable cease fire has taken hold, then there's no longer the need for the additional deployment that took place in order to protect freedom of navigation, because presumably the cease fire will apply also, obviously will have to apply to navigation in the Persian Gulf. So I would think that the American force can be reduced to the traditional level that we have had in the Persian Gulf--not so much in the Persian Gulf as in the Indian Ocean--to protect our historic interests. And I would therefore expect that the American forces be gradually reduced.

MR. BEGLEITER: What about the escorting of international shipping through the Straits of Hormuz?

DR. KISSINGER: I think the escorting of international shipping through the Straits of Hormuz will be necessary after a cease fire has taken effect.

MR. BEGLEITER: I'm sorry. You say you think it will be necessary?

DR. KISSINGER: Will not be necessary.

MR. BEGLEITER: Will not be necessary. But nothing should be done under a cease fire is underway.

DR. KISSINGER: That's correct. I think we should maintain the status quo until the cease fire is in effect.

MR. BEGLEITER: No value to any kind of an incentive or a show of good faith or anything of that sort?

DR. KISSINGER: No, I think in international politics you rarely get paid for services you have already rendered.

MR. BEGLEITER: How about negotiations--coming back to the negotiations with Iran, between the U.S. and Iran. Who would be a good figure with whom the United States could deal? From your observation of the Iranian government, is there anyone in that government that we could trust enough to negotiate with?

DR. KISSINGER: Well, to tell you the truth, they all look almost equally weird to me. If I look at them on television. But it is generally said that Speaker Raffsanjani, who is supposed to be the number two man, at least as far as military operations

NEWSMAKER SATURDAY (CNN) - July 35, 1988

are concerned, is the key man. But I think we ought to let the
Iranians worry about who a responsible interlocutor for us is, and
not try to second guess the internal politics of Iran, which are
hard enough to understand for Iranians.

MR. BEGLEITER: Still, it is difficult, with the history
this administration has had, for it to decide on whom to meet with.

DR. KISSINGER: Well, they shouldn't meet with a character
like Ghorbanifar. They shouldn't meet with an arms merchant who
has an interest in making money on arms sales. And they shouldn't
do it in the context of a commercial transaction at all. Either
we have compatible national interests or we do not. The more we
give the impression to the Iranians that we cannot live without
their good will, and that we are eager for their approbation, the
more we will encourage them to blackmail us. If there are compatible
interests, we will discover them quickly enough, and we then can
adjust our relationships. But there's a big difference between
negotiating with a character like Ghorbanifar or, saying among a
group of potential leaders that have recognized positions that we
prefer one over the other. That might destroy the position of
that person.

MR. BEGLEITER: Is the Soviet Union going to sit by
while the United States and Iran restore their relations and
settle all this in the Gulf? Aren't they going to try to do
something to upset it?

DR. KISSINGER: Well, I don't know what they could do to
upset it. Iran--if Iran moves towards us and towards the West, it
will be for reasons of its own, and I'm sure they're not going to
ask the Soviets' permission. I consider a military intervention by
the Soviet Union out of the question.

MR. BEGLEITER: And, finally, on Middle East peace
prospects in general, real briefly, is the settlement of this war
going to help, hurt, or be indifferent for the effort to get the
Arabs and the Israelis negotiating?

DR. KISSINGER: Well, I think puts one more radical Arab

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country into the field. Iraq will have the best, best trained,
best equipped Arab army. And Iraq is more on the radical side of
the Arab-Israeli dispute.

MR. BEGLEITER: Thank you very much, Dr. Kissinger. I'm
sorry, we're out of time again. I appreciate you joining us on
NEWSMAKER SATURDAY. I'm Ralph Begleiter in Washington.