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US Policy Toward Iran - William J. Burns Statement

William J. Burns, Under Secretary for Political Affairs
Opening Statement before the House Foreign Affairs Committee
Washington, DC
July 9, 2008

U.S. Policy Toward Iran; Opening Statement before the House Foreign Affairs Committee

Mr. Chairman, thank you for the opportunity to appear before the Committee today to discuss U.S. policy toward Iran. As you mentioned, I've just returned from three years as Ambassador in Moscow, and I look forward to working with all of you in my new position. I'd ask that my written statement be included in the record. With your permission, I'll offer a very brief oral summary, and highlight a few key points.

First, the behavior of the Iranian regime poses as serious a set of challenges to the international community as any problem we face today. Iran's nuclear ambitions; its support for terrorism; and its efforts to undermine hopes for stability in Iraq and Afghanistan, including lethal backing for groups attacking American troops, are all deeply troubling. So are its destructive actions in Lebanon, its longstanding rejection of a two-state solution for Israelis and Palestinians, and the profoundly repugnant rhetoric of its leaders about Israel, the Holocaust, and so much else. Compounding these concerns is Iran's deteriorating record on human rights. Ten years ago, we saw signs of opening in Iran's political and social systems. Today, sadly, Iranian citizens are subjected to increasingly severe restrictions on basic rights, and increasingly blatant manipulation of the electoral process.

Second, it is important to understand not only the dangers posed by Iranian behavior, but also the vulnerabilities and complexities of Iranian society. To be sure, the Iranian regime is a potent regional adversary, tactically cunning and opportunistic, and good at asymmetric conflict. But it is not ten feet tall. It often substitutes assertiveness and self-aggrandizing pronouncements for enduring power, promoting the illusion of Iran as a real counterweight to the United States, or to the institutions of global order, especially the United Nations and the International Atomic Energy Agency.

The truth is a little bit more sobering for Iran. Because of its behavior, it can count on few allies in the world beyond the unimposing trio of Cuba, Belarus and Venezuela, and sometimes Syria, and no real friends that could offer strategic reassurance, vital investment or a secure future in a globalized world. Its neighbors are all wary. Most Iraqi leaders want normal relations with Iran, not surprisingly, but as the Maliki government's capacity and confidence slowly grow, its priority is to assert Iraq's own sovereignty. The readiness of the Iraqi government and security forces to confront Iranian-backed militias has also produced new support and cooperation from its Arab neighbors. So far, Jordan, Bahrain and the UAE have decided to send Ambassadors back to Baghdad, and we are pressing other Arab governments to do the same. Meanwhile, Syria's active involvement in indirect peace talks with Israel is a reminder to Iran that even its regional partners may have higher priorities than their relationship with Iran.

And beneath its external bluster, Iran faces a number of internal contradictions. Despite $140/barrel oil, its economy is stagnating, and a remarkably inept Iranian leadership is failing its own people. Inflation is running at 25%, and food and housing costs are skyrocketing. Because of bad economic management, the oil windfall has failed to generate anywhere near the 1 million new jobs that Iran needs each year just to keep up with population growth, or to bring desperately needed diversification to the economy. In these circumstances, it's fair for Iranians to ask whether the cost of its defiant nuclear program, which could run into the tens of billions of dollars, is really worth it.

Iranians need only look across the Gulf -- to the spectacular rise of an advanced, innovative economy in Dubai, the rapid expansion of Qatar's natural gas exports and gas-based industries, and the efforts of Saudi Arabia and other oil-rich states to reduce debt, undertake needed reforms, and invest in future capacity -- to appreciate the opportunities squandered by their own leaders. In Iran, the fourth largest oil producer in the world, nearly half of all refined petroleum products still need to be imported.

With two-thirds of its population under the age of 30, Iran is also a society with a mounting appetite for modernity, advanced technology and connections to the rest of the world. Its younger generation is far more attuned to what those connections can offer than warped, isolated, impoverished places like North Korea -- and far more likely to feel the pull that comes through the Internet and satellite television and travel abroad.

My third point, against that backdrop, is that the purpose of our policy is to change the behavior of the Iranian regime, making common cause with as much of the international community as we can. We should not let the Iranian regime off the hook about its behavior, or allow it to divert attention from its domestic failings and external adventurism, under the false pretext that it is under existential threat from the outside. The problem is the regime's behavior, which endangers not only the international community but the self-interest of the Iranian people. Our strategy is built on tough-minded diplomacy, maximizing pressure on the Iranians at multiple points to drive home the costs of continued defiance of the rest of the world, especially on nuclear issues. At the same time, however, we are trying to make clear to Iran and its people what they stand to gain if they change course.

My fourth comment considers the "sticks" side of the equation, the progress -- sometimes frustratingly slow but nonetheless tangible -- that we've made in sharpening the downsides for Iran of its continued refusal to heed the Security Council or the IAEA. Three Chapter VII sanctions resolutions have significantly complicated Iran's pursuit of its nuclear ambitions, as well as its international financial position. While deeply troubling, Iran's real nuclear progress has been less than the sum of its boasts. It has not yet perfected enrichment, and as a direct result of UN sanctions, Iran's ability to procure technology or items of significance for its nuclear and missile programs, even dual use items, has been impaired. Key individuals involved in Iran's procurement activities have been barred from travel and cut off from the international financial system. Iran's front companies and banks are being pushed out of their normal spheres of operation, away from the dollar and increasingly away from the euro too. Last year, Iran's credit risk rating was downgraded from 5 to 6 on a scale of 0 to 7. As a result, the cost of export credits to Iran has increased by 30 percent, and the overall level of credits has diminished. A growing number of major international financial institutions have cut ties with Iran over the past year, and more are moving in that direction.

In this respect, renewed willingness by EU states to tighten pressure on Iran is especially welcome. Two weeks ago, the EU adopted new sanctions against 38 individuals and entities, including imposing an assets freeze on Iran's largest bank, Bank Melli. Last week, the EU began formal consideration of additional measures. We are consulting quietly with other major players, such as Japan and Australia, about what more they can do. Our partners in the "P5+1" -- Britain, France, Germany, Russia and China -- remain committed to a two-track approach, and that will mean consideration of new steps beyond resolution 1803 if Iran refuses our recent incentives package and ducks its UNSC and IAEA obligations.

To reinforce multilateral actions, the U.S. has also implemented a series of autonomous sanctions against Iran. In particular, the Departments of Treasury and State have carried out an effective campaign to limit Iran's access to the international business community. Indeed, yesterday we designated 11 additional Iranian entities and individuals for proliferation activities. These measures, combined with warnings, such as the ones issued last year and early this year by the Financial Action Task Force, reverberate in financial sectors, making Iran less hospitable for business, and aggravating the impact of the regime's economic mismanagement.

My fifth and final point focuses on the "carrots", or incentives, side of the equation -- on our intensifying efforts to make clear to the Iranian people what's possible with a different pattern of behavior. Javier Solana's recent visit to Tehran helped highlight the opportunities before Iran if it cooperates with the international community. Solana carried a package of incentives, including an offer of assistance on state-of-the-art light water reactor technology, along with a letter signed by the P5+1 foreign ministers, including Secretary Rice. None of us dispute Iran's right to pursue civilian nuclear power for peaceful purposes; but Iran needs to answer the questions posed by the IAEA, comply with UNSC resolutions, and restore confidence in its intentions. Major powers like South Korea have realized the benefits of civilian nuclear energy without the need to enrich and reprocess, and that is a path that is open to Iran too.

While skepticism about the Iranian regime's reaction to international incentives is almost always a safe bet, we are working with our P5+1 partners in an intense public diplomacy campaign to explain what we're offering directly to the Iranian people, as well as to others in the international community, like leading members of the Nonaligned Movement, who might also help drive home the advantages of cooperation. We want the Iranian people to see clearly how serious we are about reconciliation and helping them to develop their full potential -- but also who's responsible for Iran's isolation. The truth is that Iran's nuclear weapons ambitions bring it less security, not more. They set back, rather than advance, Iran's ability to play the significant regional and international role that its history, culture and geopolitical weight should bring it.

Interpreting Iran's domestic debates is always a humbling business, but there are some interesting commentaries beginning to emerge after Solana's visit. In one newspaper column, the former deputy head of Iran's Atomic Energy Organization wrote that "spinning three or four thousand centrifuges at semi-industrial levels is useful for political maneuvering in talks, but if it means the imposition of technological, economic and welfare hardship, then it raises the question of what other vital interests are being harmed by immovable, stubborn [Iranian] officials." It's hard to say where any of this will lead, but it at least suggests that it is well worth the effort to explain and publicize what we are putting on the table. The Iranian regime has provided an initial reply to the P5+1 proposals, and has proposed a further meeting with Mr. Solana in the coming weeks to discuss this in more detail.

We are also trying to find creative ways to deepen our own engagement with Iran and its people, who remain among the most pro-American populations in the region. While that is admittedly a low bar these days, it is striking how curious Iranians are about connections to Americans. With the generous support of Congress, we are in the second year of successful people-to-people exchange programs. Partnering with the U.S. Olympic Committee, we invited 15 members of the Iranian national table tennis team to the United States last week. This group included the first female Iranian athletes who have ever been to the U.S. on this program. In cooperation with the NBA, we will bring the Iranian Olympic basketball team here next week for the NBA Summer League. We are committed to using educational, cultural and sports exchanges to help rebuild bridges between our two societies after 30 years of estrangement.

Mr. Chairman, I have no illusions about the grave dangers presented by the behavior of the Iranian regime, or the difficulties of changing that behavior. I am convinced that we cannot do it alone, and that a strong international coalition is crucial. Hard-nosed diplomacy, backed up by all the tools at our disposal and as much leverage as we and our partners can muster, is also an essential ingredient. As Secretary Rice said earlier this year, "America has no permanent enemies, we harbor no permanent hatreds. Diplomacy, if properly practiced, is not just talking for the sake of talking. It requires incentives and disincentives to make the choice clear to those with whom you are dealing that you will change your behavior if they are willing to change theirs."

That is the kind of approach that helped produce significant breakthroughs with Libya several years ago, including its abandonment of terrorism and the pursuit of nuclear weapons. It is the kind of approach that is beginning to produce results in our multilateral diplomacy with North Korea. It may or may not produce results on Iran, with whom we have had a relationship burdened by deep-seated grievances and suspicions, and a long history of missed opportunities and crossed signals. But it is important for us to try, bearing in mind that our audience is not only the Iranian regime, but also the Iranian people and the wider international coalition we are seeking to reinforce. At a minimum, it seems to me, it is important to create in this Administration as strong an international diplomatic mechanism as we possibly can to constrain Iranian behavior, on which the next Administration can build. Our choices are not going to get any easier in the months and years ahead, but they will be even more difficult if we don't use all our diplomatic tools wisely now.

Thank you again, Mr. Chairman. I look forward to your questions.

Released on July 9, 2008

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