Today Iran is undergoing important political developments. The UnitedStates welcomed the Iranian public's clear call for greater freedom anddemocracy in recent parliamentary elections. We hope that such encouragingdevelopments are a sign of a transition to a more open and democratic society.

However, as in any diverse society, there are many currents swirlingabout in Iran. Some are driving the country forward; others are holdingit back. Despite the momentum towards democracy, freedom, and openness,most of the elements of Tehran's foreign policy about which we are mostconcerned -- including the acquisition of destabilizing weapons systems-- have not improved.

Indeed, Iran's pursuit of weapons of mass destruction and ballisticmissile delivery systems continues unabated, and has even accelerated inthe last few years. Despite its formal adherence to international armscontrol and nonproliferation treaties, Iran maintains active programs toacquire nuclear, chemical and biological weapons as well as the long-rangemissiles to deliver them. Iran is seeking aggressively to acquire equipment,material, and technology from abroad in an effort to establish the capabilityto produce non-conventional weapons indigenously and thereby to insulatethose weapons programs from outside pressures.

Even if democracy succeeds in Iran, there is little to suggest thatits quest for weapons of mass destruction and missile delivery systemswill end. As long as Iran believes that its arch-rival Iraq is pursuingWMD, that U.S. forces in the region constitute a major threat, and thatits own non-conventional programs bolster its aspirations for influencein the Gulf region and leadership in the Islamic world, there will be pressuresin Tehran, whoever is in power, to persist on the dangerous course on whichit is now headed. We will watch closely for any changes in Iranian proliferationpolicies as Iran's domestic evolution continues. But so far we have seennone.

Iran's WMD and missile programs constitute a serious threat to the regionand to U.S. interests more broadly. Impeding those programs has thereforebeen a top priority of U.S. policy. It is a subject we would like to takeup with Iranian officials directly. But in the absence so far of a willingnessin Tehran to establish an authoritative U.S.-Iran dialogue, we have hadto rely almost exclusively on a strategy of seeking to deny Iran the materialand technological wherewithal to acquire WMD and missiles. We have hada few public -- and a number of private -- successes in that effort. Butas with any nonproliferation effort focused primarily on denial of technology,we have managed to slow Iran's programs, but we have not stopped them.

Iran's Ballistic Missile Program

Iran has one of the developing world's most active and ambitious ballisticmissile programs. It is important to recall, in this regard, that Iranwas the first victim of Iraq's development of missiles and chemical weapons.But Iran's ballistic missile programs have long since gone beyond respondingto Iraq, and now threaten much of the Middle East and soon could threatenlocations more distant.

Iran already has deployed hundreds of SCUD missiles and can now produceSCUDs indigenously. Not stopping at short-range missiles, however, Iranhas conducted three tests of the 1,300 kilometer-range Shahab-3 missile,once in 1998 and, twice this year, including just last month. As NationalIntelligence Officer for Strategic and Nuclear Programs Robert Walpoletestified just two weeks ago, "Tehran probably has a small number of Shahab-3savailable for use in a conflict; it has announced that production and deploymenthave begun." In addition to the medium-range Shahab-3, Iran is workingon longer-range missiles. Its defense minister has spoken of Shahab-4 and-5, claiming those rocket systems would be used solely as peaceful, space-launchvehicles (SLVs). But given that any SLV has inherent military missile capabilityand can relatively easily be adapted to that role, few knowledgeable observerstake those claims at face value.

Iran's acquisition of long-range ballistic missile delivery capability,coupled with its continued pursuit of nuclear weapons and other weaponsof mass destruction, poses a significant threat to U.S. forces and friendsin the region, and to regional stability generally.

Iran's ballistic missile program is heavily dependent on assistancefrom other countries. North Korea has been a major supplier to Iran, transferringSCUDs, SCUD production technology, and No Dongs. While we do not believeRussia has transferred long-range missiles to Iran, we judge that wide-rangingassistance from Russian aerospace organizations and individuals has enabledIran to make the Shahab-3 an improved version of the No Dong as well asto make substantial headway on longer-range missile systems. Chinese transfersto Iran's missile programs have largely been intended for tactical systemsbelow the Missile Technology Control Regime control level or have beendual-use items not specifically covered on international control lists.But as we have told the Chinese many times, such transfers can make --and indeed have made -- significant contributions to Iran's long-rangemissile programs.

Iran's Nuclear Program

We remain convinced that Iran maintains an active nuclear weapons developmentprogram, despite its status as an NPT party. Among the persistent indicatorsthat Iran is pursuing a nuclear weapons development program is the factthat Iran is attempting to obtain capabilities to produce both highly enricheduranium and plutonium -- the critical materials for a nuclear weapon. Neitherof these capabilities is necessary to meet Iran's declared desire to havea civil nuclear power program to generate electricity, which is itselfsuspicious in light of Iran's abundant oil resources.

For the time being, Iran's nuclear program remains heavily dependenton external sources of supply. Because of this, the United States has playedthe leading role in developing and maintaining a broad international consensusagainst assisting Iran's foreign procurement efforts. We deny Iran accessto U.S. nuclear technology and material, and all major Western suppliershave agreed not to provide nuclear technology to Iran.

A number of supplier states have abandoned potentially lucrative salesto Iran's nuclear program. In 1997 China terminated work on a uranium conversionfacility in Iran and agreed not to engage in any new nuclear cooperationwith Iran after completing two small projects that posed no direct proliferationconcern. As a result of efforts by Vice President Gore and Secretary Albright,Ukraine likewise took a major step when it determined that it would notsupply electricity-generating turbines originally contracted for by a Russianfirm and destined for the new Bushehr nuclear power plant in Iran. TheCzech Government also recently made a decision not to supply componentsfor the turbine hall of this plant.

Russia remains the one significant exception to this virtual embargoon nuclear cooperation with Iran. The most visible nuclear cooperationbetween the two countries is Russia's construction of a 1000-megawatt nuclearpower reactor at Bushehr, Iran. We have opposed this project, not becausewe believe such a light-water reactor under International Atomic EnergyAgency safeguards itself poses a serious proliferation threat, but becauseof our concern that the Bushehr project would be used by Iran as a coverfor maintaining wide-ranging contacts with Russia nuclear entities andfor engaging in more sensitive forms of cooperation with more direct applicabilityto a nuclear weapons program.

While refusing to halt the power reactor sale, the Russians have arguedthat they are just as opposed as we are to an Iranian nuclear weapons capability.At the highest levels, they committed to limiting their nuclear cooperationwith Iran to the Bushehr reactor project during the period of its construction.

Despite these repeated assurances, we are aware that Russian entities-- most of them subordinate to MINATOM, the Russian Ministry of AtomicEnergy -- have engaged in extensive cooperation with Iranian nuclear researchcenters that is outside the bounds of the Bushehr project. Much of thisassistance involves technologies with direct application to the productionof weapons-grade fissile materials, including research reactors, heavy-waterproduction technology, and laser isotope separation technology for enrichinguranium. Russian assistance to Iran's nuclear program has accelerated inthe last few years and could significantly shorten the time Iran wouldneed to acquire weapons-usable fissile material.

Chemical and Biological Weapons

Iran's chemical weapons (CW) program is one of the largest in the developingworld. Iran began its offensive program during the Iran-Iraq war in responseto Iraq's use of CW. By 1987 Iran was able to deliver limited quantitiesof blister (mustard) and blood (cyanide) agents against Iraqi troops usingartillery shells. Since then Iran's CW production capability has grownand become more sophisticated. It has already produced a number of CW agents,including nerve, blister, choking and blood agents. Despite its 1997 ratificationof the CWC, we believe Iran's CW program continues and that it possessesa substantial stockpile of weaponized and bulk agent.

Throughout the life of its CW program, Iran has sought the ability toproduce indigenously more sophisticated and lethal agents. This trend towardself-sufficiency is worrisome, since it means that Iran could eventuallybecome a supplier of CW-related materials to other nations.

Over the past several years, Iran's procurement efforts have dwindledin countries of the Australia Group, the multilateral export control regimeresponsible for chemical and biological exports, as that Group's controlshave become more effective. Instead, Iran has concentrated on suppliersin countries outside of the Australia Group. As Iran moves to suppliersoutside the major industrialized countries and seeks less specialized (andhence less strictly controlled) items, our ability to stop Iran's CW-relatedprocurement efforts has also decreased.

Iran has been in the vanguard of efforts by some countries to weakenmultilateral export controls, especially on dual-use commodities. It hasinstigated attempts to delegitimize and even to abolish the nonproliferationexport control regimes. The United States has worked closely with our partnersin those regimes to rebut the Iranian arguments and to strengthen thoseregimes in the face of these efforts to weaken them.

We believe that Iran also has an offensive biological weapons programat least since the Iran-Iraq War, notwithstanding the fact that it hasbeen a party to the Biological Weapons Convention since August 1973. Thepace of Iran's biological weapons program probably has increased sincethe 1995 revelations about the extent of Iraq's biological weapons program.

While we assess that the Iranian BW program is largely still in theresearch and development stage, we believe Iran already holds some stocksof biological agents and toxins. It has considerable expertise in the infrastructureneeded to produce basic BW agents, and can make some of the hardware neededto manufacture those agents. Iran conducts top-notch legitimate biomedicalresearch at various institutes, which we suspect also provide support tothe BW program. It appears that Iran is actively seeking to acquire materials,equipment and expertise from foreign suppliers -- primarily from entitiesin Russia and Western Europe.

U.S. Policy Responses

In view of the serious risks to U.S. interests posed by Iran's WMD andmissile programs, we have given high priority to impeding those programsand have sought to do so through a wide variety of means. We have workedto strengthen and tighten the multilateral export control regimes, therebydenying Iran and other proliferators access to most of the world's bestsources of sensitive technology and forcing them to resort to elaborateand uncertain covert procurement methods that can result in slowing thepace, driving up the costs, and reducing the quality of their acquisitions.With Iran actively looking for weak links in the chain of control, we haveprovided substantial assistance to countries that are potential targetsof Iranian procurement efforts in order to help them bolster their nationalexport control systems and their border security. When we have receivedinformation about troublesome transactions involving Iran's weapons programs,we have been able on a number of occasions to intervene diplomaticallyand persuade the governments of supplying countries to step in and halta pending transfer.

To help secure sensitive materials and know-how at their source, wehave provided large-scale support for Russia's efforts to protect, store,and account for its nuclear materials and have funded civilian scientificwork by over 20,000 former Soviet weapons specialists to reduce their incentivesfor assisting countries like Iran. We have also sought to strengthen internationalarms control arrangements to promote our nonproliferation goals -- by supportingthe International Atomic Energy Agency's strengthened safeguards system,promoting an effective Chemical Weapons Convention inspection system, andpressing for a protocol to enhance confidence in compliance with the BiologicalWeapons Convention.

Impeding Iranian non-conventional procurement efforts has figured prominentlyin recent years in our bilateral relations with China, North Korea, andRussia. As noted earlier, China agreed to phase out all of its nuclearcooperation with Iran, even cooperation carried out under IAEA safeguards.We believe the Chinese have made good on this pledge. In 1997 we imposedsanctions on seven Chinese entities for providing dual-use chemicals andchemical production equipment and technology to Iran's chemical weaponsprogram. Subsequently, Chinese authorities took steps to tighten theirsystem of chemical controls, although enforcement remains uneven. Our currentefforts with China focus primarily on missile exports. We have held severalrounds of talks this year aimed at encouraging Beijing to augment its missile-relatedexport control system and prevent Chinese entities from transferring equipmentand technology that contribute to Iranian missiles capable of deliveringnuclear weapons. We have made progress, but more work remains.

Halting missile-related exports, to Iran and other countries, is a highpriority of our engagement with North Korea. In our several rounds of missiletalks with the North Koreans, we have repeatedly sought to gain its agreementto ban all missile exports and we will continue to do so. We have alsomade clear that continued missile exports would subject them to additionaleconomic sanctions (which we have imposed six times on the DPRK, threefor transfers to Iran), and that such sanctions would place a major obstaclein the way of economic normalization between the U.S. and DPRK.

Assistance by Russian entities to Iran's missile and nuclear programshas been a persistent problem in U.S.-Russian relations for over half adecade. Both the President and the Vice President, as well as the Secretariesof State, Defense, and Energy, and numerous other senior Administrationofficials have engaged on this issue on an almost continuous basis. EveryPresidential Summit meeting, and every meeting of the U.S.-Russian Bi-nationalCommission, as well as numerous letters, telephone calls, and meetingsin between, has placed these nonproliferation concerns at the top of theagenda. The Vice President, in particular, using the institutional machineryafforded by the Bi-national Commission, has played a central role in pursuingsuch nonproliferation goals as fissile material security, the purchaseof high enriched uranium, disposition of plutonium, and the destructionof chemical weapons -- all of which are crucial to denying Iran and otherstates of concern access to these WMD-related materials. These effortsbegan in the very first year of the Administration, when the CommercialSpace Launch Agreement was signed by the Vice President and the RussianPrime Minister as an incentive to Russian aerospace entities to forgo dangerousmissile proliferation.

In our bilateral engagement, we have stressed the high stakes involvedin resolving the Russia-Iran proliferation issue, both for the stabilityof the Middle East and the world at large and for the bilateral relationship.We have made clear that stopping highly sensitive cooperation with Iranwould expand opportunities for mutually beneficial and potentially lucrativecooperation between the two countries, including in the areas of commercialspace and nuclear energy. But we have also stressed that failure to solvethe problem would inevitably create obstacles to such cooperation. So farwe have used the Administration's executive authority to impose penaltieson 10 Russian entities for assisting Iran's nuclear or missile programs.

Our intensive efforts with the Russians over the last few years haveproduced some significant positive steps. We are beginning to see the emergenceof a more effective Russian effort at export control. Russia passed a newexport control law in 1999 providing legal authority to control the exportof any item that could contribute to a program of proliferation concern.It has reorganized export control responsibilities within the governmentto make the bureaucracy more effective in implementing Russia's laws andpolicies. At U.S. urging, it has instituted internal compliance programsin key Russian entities, and so far over 500 firms manufacturing itemsof proliferation concern have received training in their export controlobligations. It has established seven export control working groups withthe U.S. in such areas as law enforcement and dual- use licensing to helpstrengthen the Russian system. It has carried out investigations of problemcases we have brought to its attention and, in a number of those cases,halted Russian entities' cooperation with Iran, enabling us last Aprilto announce our intention to lift U.S. penalties against two of them.

While we have imposed penalties on organizations engaged in sensitivecooperation with Iran, we have also made important headway by holding outbenefits for responsible behavior. In this connection, we have used thecommercial space launch quota as an incentive to encourage important changesin Russia's legal and regulatory environment, and to make improvementsin its export control system and practices. Moreover, our Russian partnersin the International Space Station and in the major U.S.-Russian commercialspace launch joint venture well understand the value of their profitablecooperation with us, and they are on guard to avoid the kind of interactionswith countries of concern that could put that cooperation in jeopardy.It is clear that key players in the Russian government, such as the RussianAviation and Space Agency and the new Department of Export Controls ofthe Ministry of Economic Development and Trade, see an important stakein stopping assistance to Iran's non-conventional programs and are workinghard to get their arms around a very difficult challenge.

However, Russian enforcement of its export control laws and policieshas been very uneven. While some Russian aerospace entities have severedtheir cooperation with Iran, other individuals and entities have been fartoo willing to take their place. The situation is even worse in the nucleararea. Unlike in the aerospace field, where many of the entities assistingIran have little relationship to the Russian government, almost all nuclearcooperation with Iran is carried out by MINATOM or one of its many subsidiariesand affiliates. We have made clear to the Russians that we will not goforward with collaboration on advanced nuclear power reactors or othernew cooperation in the nuclear area until our concerns are resolved.

Clearly, many of the remaining problems involve shortcomings of therelatively new Russian system of export control. Even with greater resourcesand the best of intentions, it would be hard for Moscow authorities todetect and stop all attempts to circumvent Russian controls. But equallyclearly, part of the problem is a lack of determination in Moscow. We areconvinced that, if Russia's leaders gave the matter sufficient priority,Iran's nuclear and missile procurement efforts in Russia could be stopped.

Why does Moscow not seem to give the matter the priority we do? Theanswer is complicated. Part of the explanation seems to be that Russianentities that no longer receive adequate budgetary support from the centralgovernment have strong incentives to export. The number of Russian entitieswith technical experts out of work is overwhelming, and they will do virtuallyanything to stay afloat. Russia also believes it has strategic reasonsfor not wanting to jeopardize bilateral relations with Iran. Moreover,the Russians tend to take a more narrow view of their nonproliferationresponsibilities than we do and are more inclined to support transactionswe would regard as too risky, especially if they do not violate any Russianinternational treaty obligations.

Whatever the mix of motives for a less-than-fully-resolute approachto the challenge of stopping dangerous Russian interactions with Iran,we do not doubt the Russians when they say their interests would be harmedat least as much as ours by Iran's acquisition of nuclear weapons deliverableby long-range missiles. But if the Russians believe that the nuclear andmissile cooperation now underway will not actually contribute materiallyto, and accelerate, Iran's acquiring such a capability, they are engagingin wishful or shortsighted thinking.

Recently we have seen some encouraging signs. At their July meetingat the Okinawa G-8 summit, President Putin assured President Clinton thathe would take personal responsibility for ensuring that Russia's laws andcommitments with respect to these nonproliferation matters are faithfullycarried out. Subsequently, when provided with information that Russia'sYefremov Institute was providing Iran with laser isotope separation technologyfor enriching uranium, Russian authorities suspended the transaction pendinga thorough investigation of its implications. We hope that this actionwill be a forerunner of concrete and decisive steps to halt assistanceby Russian entities to missile and nuclear programs in Iran.

Iran Nonproliferation Act

Recently Congress gave us new legislation intended to impede Iran'sWMD and missile programs -- the Iran Nonproliferation Act of 2000. TheAct establishes new criteria -- legal standards and procedures -- for evaluatingactivities of proliferation concern and imposing nonproliferation sanctions.The Administration has made significant progress toward completing thereview of the intelligence material necessary to make the report to Congressrequired by the Act. However, we have found that the information that mustbe reviewed in order to make the required report is considerably more detailedand voluminous than was contemplated when the bill was passed, and it hastherefore been impossible for us to submit our initial report by the datesspecified in the Act. A more detailed explanation of where we stand onthis matter has already been conveyed to the Committee.

Conclusion

In conclusion, impeding Iran's WMD and missile delivery systems willremain at the top of the U.S. national security agenda for some time tocome. (We cannot predict the direction political events in Tehran willtake, but should Iranian authorities accept the U.S. offer of an officialbilateral dialogue, nonproliferation will be a key focus. We would seekin those discussions to persuade the Iranians that their legitimate securityand other broad national interests would best be served by verifiably anreliably renouncing WMD and the long-range ballistic missiles that candeliver them.

In the meantime, we have no alternative but to continue an active strategyof seeking to thwart Iranian efforts to procure the material and technologiesthey need for their non-conventional programs. We will use a variety ofmeans to pursue that strategy, including strengthening multilateral regimes,carrying out energetic diplomatic efforts with key supplier governments,and, when warranted, utilizing our legal and other authorities to penalizethose responsible for assisting the non-conventional programs of statesof proliferation concern.

By the standards one must judge nonproliferation efforts, our policieswith respect to Iran have been effective. They have succeeded in slowingand complicating Iran's programs and driving up their costs. I They haveclosed off many of the world's best sources of advanced technology to Iranianprocurement efforts, and forced Iran to rely on technologies less sophisticatedand reliable than would otherwise be the case. And critically, we havebought additional time. Despite the gains Iran has made, we do not considerit inevitable that Iran will acquire nuclear weapons deliverable by long-rangemissiles. But avoiding that highly destabilizing outcome will require thecontinued leadership of the United States and the concerted efforts ofthe international community, including the cooperation of Russia, China,and North Korea. We will consult closely with this Committee as our effortsproceed.