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July 24, 2000:

Transcript of remarks by Mohammad HosseinZahedin Labbaf, Iran's senior representative at the Iran-U.S.Claims Tribunal, at a Congressional forum hosted by theAmerican-IranianCouncil

Note: Neither FDI, its Executive Director,nor The Iran Brief have any affiliation with the Council, which is aprivate non-profit foundation funded by U.S. corporations seeking tolobby against the trade ban with Iran.


AMERICAN-IRANIAN COUNCIL

 

CONGRESSIONAL ROUNDTABLE ON U.S.-IRAN RELATIONS

FINANCIAL IMPEDIMENTS AND POSSIBILITIES

PARTICIPANTS:

HOOSHANG AMIRAHMADI, PRESIDENT, AIC

HOT-LINK DIRECTO TO COMMENTS BY:

CONGRESSMAN JIM LEACH (R-IA)

MOHAMMAD HOSSEIN ZAHEDIN LABBAF, IRANIANEXPERT

HELEN EL MALLAKH, CONOCO

Q & A

 

LOCATION: 2128 RAYBURN

WASHINGTON, D.C.

TIME: 9:30 A.M. (EDT)

DATE: MONDAY, JULY 24, 2000

Transcript by: Federal News Service - Washington, D.C.

MR. AMIRAHMADI: May I have your attention, please.

Excellencies, ladies and gentlemen, good morning and welcome tothis first AIC congressional roundtable. You will have hopefully aseries of this every month with various members of the Congress andthe Senate, along with you. We are honored today, of course, to havewith us the Honorable James Leach, Congressman, Republican from Iowa. I will, in a minute, say a few words about our honorable guest. ButI also have the pleasure to welcome a good number of distinguishedcolleagues to this room who come from various perspectives,institutions, and, in fact, countries.

We have for today three speakers. Congressman Leach is goingto actually lead the discussion, and then I am very pleased to informyou that we have a gentleman from The Hague, the claims tribunalbetween the United States and Iran. That's Mr. Mohammad HosseinZahedin Labbaf, who is on the right side. He represents Iran, infact, on that tribunal. We also have Helen El Mallakh from Conocojoining us to speak about business developments in Iran. My hope isthat she will be able to frighten all of you about all that the othercountries and the other companies are doing in Iran and the Americansare sitting and watching. And also, at the very far end here is ourchairman of the board, Robert Pelletreau. Ambassador Pelletreau willtake over after the speeches are done, and he will be moderating thesession.

I would like to acknowledge a few people. I wanted toacknowledge, first and foremost, Mr. Don Bloom of the StateDepartment. Mr. Bloom is the Iran desk officer at the department,and he has been extremely helpful in making arrangements of thisnature, particularly when it comes to Iranian officials. I wouldlike to acknowledge Bill Tate, who is not here, who is the chief ofthe staff of Congressman Leach's office, and I am pleased that he hasbeen so helpful. I wanted to acknowledge Mr. David Hoffman,president of Internews, who has co-organized this meeting with uswith his capable colleagues in this city. I'm grateful to all ofthem. I hope that our cooperation will continue in the future. Iwould like to acknowledge the sponsorship of Conoco Inc., who paidfor our expenses today.

Today's focus is on the Iranian assets and the legal claims,both sides, actually. And I'm very pleased that at least two of ourspeakers are most knowledgeable and expert on this matter. Ofcourse, as you all know, Congressman Leach is the chairman of theHouse's Banking & Financial Services Committee, and Mr. ZahedinLabbaf is, as I said, Iran's agent for the matter in The Hague.

Now, as you all know, back on March 17 at the AIC conference inthis city, Secretary Madeleine Albright made a strong pointconcerning the Iranian assets. And I quote. She said that theUnited States is ready to reach, quote/unquote, "global solutionsconcerning this matter with Iran" -- "global resolution of thismatter with Iran." And I am very pleased that we are following heradvice, and my hope is that this meeting will be a good start forthat global resolution of the active issues that continue to be anobstacle on U.S.-Iran relations, and particularly when it comes toIran. As most of you know, the Iranian leaders kept telling uscontinuously that one major thing that the United States must dobefore it gains our trust again is to, quote/unquote, "free ourassets. And again, whether the assets will be freed or returned orresolved is an issue that will be discussed today.

I am also pleased to let you know that, following SecretaryAlbright's speech, she indeed took a major step in that direction, inthat global resolution, and appointed David Andrews as theappointment for this. I am very unhappy that David is not heretoday. We invited Mr. Andrews, but for a variety of reasons beyondhis control, he could not be present today, but he will join ushopefully in the next meeting.

I may also say that although many of us think that SecretaryAlbright's speech has not been yet reciprocated by Iran, but we knowhere and there that Iran has been, in fact, practically speaking,making statements and taking actions that have been, in fact,positively influencing U.S.-Iran relations. I'm very pleased to saythat Iran was very fundamental in stopping, for example, theHezbollah of Lebanon from chasing the Israelis back and stopping thathostility when the Israelis withdrew from South Lebanon. Iran'sForeign Minister Kharazi took upon himself to go all the way toLebanon and make it very clear to the Hezbollah that they do not havethe support of the Iranian government in further hostilities withIsrael.

In fact, just this July, President Khatami, in Germany, made avery interesting statement, after some months of silence, he said,quote/unquote, that what Secretary Albright did was "a new turn" --and the quote, "new turn" is his statement -- in U.S.-Iran relations. And he, in fact, urged the U.S. government to take further action,and obviously he was not clear or, in fact, specific as to what. Andhopefully our two-days' meeting is a step in that direction.

While all these positive things are happening, obviously wehave two major problems that my hope is that will not alter thisprospect, and one is a bill that is due, and it's coming from, Ibelieve, Senator Lautenberg that directly impacts the asset issue. And I know Mr. Zahedin is going to be speaking about, and I'm hopingthat Congressman Leach also is going to tell us a bit about that,plus the fact that Congressman Brad Sherman of California has beentrying to introduce a bill that will, quote/unquote, "reverse" theachievements back on March 17. Both of these activities will, I'msure, and you agree that would be extremely detrimental to ourincreasingly open discussion between U.S. and Iran and thenormalization process that we are in.

With that, I would like to take this opportunity to say a fewwords about our honorable guest today, Congressman James Leach. Congressman Leach was elected to the 95th Congress in November 1976and each succeeding Congress. He chairs the Committee on Banking& Financial Services, is a member of the Committee onInternational Relations and the Subcommittee on Asia and PacificAffairs. He is a member of many committees, including theConstitutional Forum, the 21st Century Fund, global parliamentarianfor Global Action, and many more. He's also a member of the ArmsControl & Foreign Policy Caucus. He, in fact, was chairman backin '83 and '84.

Congressman Leach has had extensive and distinguished careereven before he joined the Congress, and since when he has been there. He has been active in the State Department. He was in the UnitedNations as a delegate there; the disarmament conference, a delegateof the U.S. there; and many others. He has education in LondonSchool of Economics. He has his master's from SAIS, School ofAdvanced International Studies, at Johns Hopkins. And he is agraduate of Princeton University, where, in fact, American-IranianCouncil is located, its main offices.

Congressman Leach has two honorary degrees in public serviceand philosophy from St. Andrews University and Marycrest (ph)College. I am very pleased to introduce to you the honorable JamesLeach.

(Applause.)

REP. LEACH: Well, thank you, Professor,Ambassador, and Mr. Labbaf. Let me welcome you first to the HouseBanking Committee. I might point out that the painting straightahead is the painting by an American artist named Larry Poons, and Isometimes suggest to Mr. Alan Greenspan that if you look at itcarefully, you can see the direction of interest rates. (Laughter.) But a sub-plot, I think, is the direction of U.S.-Iranian relations. But sometimes things are hard to predict.

What I thought I'd do is take four or five minutes and talk alittle bit about the basics and then the direction we may be goingin. Arguably, in the basics in American history, there have beenfour great debates, and the first is right at the founding of therepublic, whether we could have a society based on the rights of man,and then we had a debate about a century later that was all aboutdefinitions, whether rights applied to people that weren't male andweren't pale. And then we've had a debate in this century about ifrights are to be valid, don't you have to infuse a certain kind ofopportunity? And you have the contrast of the Roosevelt New Deal andthe Reagan Revolution. And then finally we have a debate that'songoing now about whether rights, to be valid, you have to have aright to peace.

And analogously, it strikes me Iran has had certain similarcircumstances in their own country, not that all countries don't facethis, but particular in the international arena, where we overlap inmany important ways. But Iran has had the advantage and disadvantageof a history that's far longer than ours. And our original debatewas posited on borrowing extensively from Europe. Iran has not justa couple of centuries but a couple of millennia of history that bothstrengthen and, to some degree, make it a different actor in worldaffairs.

In this century, to some degree, it's arguable Iran might havegone too fast in the secular way and too slow in a democratic, andthere obviously was a revolution and now we have, if not acounterrevolution, something that's occurring that's a littledifferent. And in western philosophical thought, we're all awarethat there was a German named Hegel who talked about thesis,antithesis, synthesis, and possibly we're seeing a synthesis in Iranthat is of a very interesting dimension. And this is particularlythe case with the recent elections for the Parliament that would seemto reflect a number of new approaches for which this country is veryimpressed. And we all identify with the struggle for democracyanywhere in the world, and particularly with the rights of people inan individual rights kind of way.

The United States has obviously been looking for ways toimprove relations. The executive branch, very forthrightly inrhetoric, though actions have been a little slower, but I wouldsimply like to underscore that I don't think there's any division inCongress. I think you have an issue in which the vast majority inCongress would like to see much better relations with Iran. I thinkthe executive branch would in that we're in the institutions ofgovernance together rather than apart. And I'm confident that,whatever this presidential election brings, whether it be Mr. Gore ormy preference, Mr. Bush, you're going to see some progressive stepstowards and improvements in Iranian-American relations, if at allpossible. In fact, not to have them, I think, would be a fairlystunning mistake.

Some of you might have run into, in the way in, as I did, withJeremy Stone, who's got a new group called -- Jeremy, am I right? --Catalytic Diplomacy. I would only stress that I don't know whatJeremy's group is, although I have a lot of respect for Jeremy, butit's clear, as the 20th century came to an end, that diplomacy takeson different means in different directions. We have a lot ofinterchanges between peoples that are important. In fact, I don'tthink there's a country in the world that has, on a percentage basis,more students that have gone to school in the United States thanIran. And this is something that is, I hope, a very positivepotential tie.

But diplomatically, there are certain things that can only bedone government to government, particularly the resolving of legalissues, of which this day apparently is going to disproportionatelytalk about when it comes to property settlements. But it's obviousthat what is going to bring people closer together, as time goes on,is going to be less government to government, more not just people topeople but technology to technology. And that is, the Internet isgoing to be more important diplomatically, I think, than any heads ofstate in terms of driving self-interest or, potentially, competitiveinterest to the brink. And so it's going to be a new kind ofdiplomacy in the next century, and hopefully one in which people aregoing to see things in a little different ways.

I don't know if any of you read a recent editorial in the NewYork Times by their columnist who writes so much on the Middle East,telling about southern Lebanon, where people are going to schools tolearn how to use the Internet. And that is a people concern andsomething that I think is one of great hope. Likewise with Iran, Ithink the future is going to be very much whether we open up insocietal ways that have to be countenanced or led by governments butare probably going to be more important than government.

On the other hand, I'm very pleased that Mrs. Albright, who'smade the pronouncement she has that we want to see some globalsettlements on claims because claims issues are issues that rub oursocieties wrong. Other issues do, too. Over the last couple ofdecades, I've personally been very interested in some things in Iranthat have been imperfect there; for example, treatment of the Bahai. And obviously in the last six months, we've had a very serious issueon some of the trials against Jewish citizens. But they underscoreto me the necessity and the importance of governments talking andpeoples talking and interchanges occurring.

And finally, let me just say culturally, I come from a state inthe middle part of the country called Iowa. In Iowa, we recognizethe ultimate artistic culture, which is, of course, the sport ofwrestling. And we think that this is a greater metaphor for ourcountry than others and that Iran, with its great wrestlingtradition, and America, with a fledgling wrestling tradition, oughtto get along better, Professor.

In any regard, let me just conclude by saying, with regard tothe basics, that one aspect of life that our society deals with everyday in a legislative way and some of the deep personal things is therole of religion in public life. We founded a society that involvedthe separation of church and state, but it did not involve anythingbut the presumption that our government would be under God.

In fact, when you look at the American Revolution, thephilosophy that was Jeffersonian was rooted in law beyond law that isa higher law than civil law. And when you look at countries that maybe a little more theocratic than America might like, it still has tobe understood that there is a commonality of interest between peoplewho believe in some sort of god and those that don't. Andrevolutions that are rooted in higher laws can be dangerous, but atthe same time we in this country had a revolution of our own, rootedin the same basic fundamental notion that civil law is not thepreeminent.

Now, we also had the modest assumption that no individualshould control, and so we moved away from kingships. The Iraniancircumstance might be more theocratic than is comfortable forAmericans, but it's moved away from a shah-ship. And that is not allbad and not something that we totally disagree with in oursociety.

Anyway, I am not only an optimist. I'm a believer that thereare very few countries in the world that the United States doesn'thave a greater vested interest in coming closer together. I thinkeveryone at this table knows that we've had books written in recenttimes about the clashes of civilizations, as contrasted betweennation-states, and sometimes they're implied in the differencesbetween nation-states.

I personally believe that that kind of thesis is conceivable,but by no means is it inevitable. And therefore, it's particularlyimportant that we come to grips with traditions and circumstancesthat are different than our own or older than our own, and in someways more vibrant than our own, and in some ways ours are morevibrant than Iranian.

Anyway, I'm pleased this conference is occurring and I hope --I look forward to the comments, particularly from Mr. Labbaf. Thankyou, sir.

MR. AMIRAHMADI: Thank you very much. Our next speaker, as Isaid, is Mr. Mohammad Hossein Zahedin Labbaf. Mr. Zahedin has a BAin justice law from Teheran's National University and an MA incomparative and international law from the Free University ofBelgium. Mr. Zahedin joined Iran's Bureau of International LegalServices in The Hague back in 1989 as a lawyer, and his book haslargely centered on claims between Iran and the United States.

In 1995, Mr. Zahedin was appointed Iran's, quote/unquote,"agent" in The Hague's U.S.-Iran claims tribunal. Andsimultaneously, he was appointed Iran's agent in International Courtof Justice, which is an agency of the United Nations. I'm verypleased to welcome Mr. Zahedin.

(Applause.)

MR. ZAHEDIN: Thank you, ProfessorAmirahmadi. Thanks to Senator James Leach and thanks to AmbassadorPelletreau. Ladies and gentlemen, it is a great pleasure for me tohave the occasion to address this distinguished audience. I havealready been introduced by Hooshang Amirahmadi. However, I think itis necessary to tell you again why I am here. I do this not becausesome believe that normally nobody listens to introductions, butbecause I think it is important to focus the ensuing discussion onthe specific purpose of my presence here.

As was said, I am the representative of the Islamic Republic ofIran to the Iran-U.S. Claims Tribunal. This tribunal has beenestablished pursuant to two treaties between Iran and the UnitedStates, commonly known as the Algiers Declarations. My duty, likethat of a government's agent to the International Court of Justice,ICJ, or to any court or intergovernmental tribunal, is to representthe government at the tribunal and act as liaison between theconcerned parties.

I am not here as a representative of the government of Iran. There is not, obviously, any place for such representation here. Iam a lawyer who happens to be knowledgeable about the work of thetribunal and the commitments of the two governments because of myinvolvement in this judicial forum. I have myself volunteered toparticipate in this gathering in my personal capacity to be able totell you about the tribunal's work and hope to shed light on certaincontemplated measures which have the potential of undermining theauthority and jurisdiction of all tribunals and may dash allreasonable expectations for the rule of law on the internationalplane.

The tribunal has thus far resolved a large number of issues,about 4,000 claims between the two countries. Now it is called totackle the question of Iran's assets in the United States. Thetribunal's vision will soon lawfully resolve this issue, in arelatively short period of time, I hope.

The two governments have been working in the context of thistribunal mandate, as they should have, in a very civilized andrespectful manner. The respect for law, as stipulated in one of theAlgiers declarations, has been an inviolable guiding tenet. Bothgovernments, as far as the work of the tribunal is concerned, havedone their best not to allow any political cloud to be cast on thefunctioning of this tribunal, which has to operate by its ownjudicial mechanism as a peaceful, principled and civilized means ofresolution of differences. This does not, however, mean that the twogovernments, and in particular Iran, have not been critical oncertain decisions made by the tribunal.

In the past two decades, Iran has not faltered in itscooperation with the tribunal, in compliance with its internationalobligations, in spite of the dire circumstances, some admittedlycreated by the United States government. One of those circumstances,as you know, was the well-known tragedy of shooting down Iran'spassenger aircraft over the Persian Gulf. Another circumstance isthe economic and trade embargo imposed on Iran in disregard of UnitedStates pledges under the Algiers declaration. And last, but not theleast, as you all know, is the Iraqis imposed war against Iran whichlasted for about eight years.

Presently, however, there are activities in the United Statesthat, if successful, would surely undermine the tribunal's authority,as well as the achievements reached by its work and, moreimportantly, would set the international stage for a legalconfrontation which would adversely affect not only the interests ofthe two countries but also the rule of law in the internationallevel.

The activities alluded to are exemplified by a series ofamendments made to the Foreign Sovereign Immunity Act of the UnitedStates since 1996, as well as by the proposed amendment to that act,currently under discussion and consideration by the Congress,entitled "Justice for Victims of Terrorism Act."

The proposed amendment, as you may know, seeks to make, one,assets of foreign governments, including the diplomacy propertiesblocked by the United States or monies, or to monies dealt from orpayable to foreign governments by the United States, subject toattachment and execution in aid of the judgment issued by U.S. courtspursuant to 1996 FSIA amendment.

In the case of Iran, these assets and monies are an array ofproperties not only covered by the principle of state immunity underinternational law, but also by certain multilateral or bilateraltreaties between the two countries, including the declaration.

Let me open this point a little bit more. The amendments, aswell as the proposed ones, as seen by Iran and by internationalcommunity, are clearly political and self-serving measures dictatedby domestic U.S. policies, and in my view, lack any genuine judicialcontent. If this line of action is pursued by the United States,international law as a whole and not the Iran-U.S. relationship willbe the victim. This is because, according to 1996 amendment, if theexecutive branch of the United States government labels a state as astate sponsor of terrorism, the U.S. courts would be able to assessrestrictions over that state.

To label a country as a state sponsor of terrorism, and therebydisregard that state's sovereign immunity, the U.S. government neednot follow any internationally agreed-upon principles. Obviously,this is a purely political decision which all countries are able tomake. Now, imagine the disastrous consequences that follow if allcountries adopted laws similar to U.S. laws.

Now let me go back to my main point. The core issues in mypresentation are, first, a brief discussion of the United Statesobligations under the declarations, of course, with regard to Iran'sassets; second, the relevant precedents of the Iran-U.S. claimstribunal in this regard; and third, the legal repercussions of theproposed amendment if passed into the law.

First, I discuss the Algiers declaration. We are alreadyalmost two decades into the life of enforcement of the declarationsand the operation of the tribunal. Once the United States returnedpart of Iran's funds and assets in 1981, in compliance with itsundertaken obligations, Iran did the following: Iran paid all of itsdebts in the rough amount of $4 billion to American bankinginstitutions. Iran transferred $1 billion to a security account inNetherlands to pay any awards issued by the tribunal in favor of theUnited States claimants. Third, Iran, in addition, regularlyreplenished the security account for the payment of the award infavor of the U.S. nationals.

Thus far, Iran has paid over $2 billion to the U.S. claimantsas a result of the award issued by the tribunal, and, of course, hasbeen able to collect, more or less, the same amount of its assetspursuant to the award issued by the tribunal or settlement agreementsmade with the American parties.

Now let me turn to United States obligations under thedeclarations. The U.S. obligations with respect to Iran's assets areenvisaged in Principle A and Paragraphs 4 through 9 of one of theAlgiers declarations which is known as general declaration. Principle A provides that the United States will restore thefinancial position of Iran, insofar as possible, to that whichexisted prior to 14 November, 1979.

In this context, the United States commits itself to ensure themobility and free transfer to Iran of all Iranian assets within theU.S. jurisdiction. Paragraph 8 under the title of "Other Assets inthe U.S. and Abroad" confirms, inter alia, the monies in Iran's trustfund for the purchase of military equipment from the U.S. government. This part obligates the United States to transfer these funds toIran. And finally, Paragraph 9 requires the United States to arrangefor the transfer to Iran of all Iranian properties located in theUnited States.

These obligations have been endorsed by the tribunal in some ofthe awards issued by it. For example, in Case B-1, the tribunalconfirmed that the United States' obligation is to compensate Iranfor the full value of its properties plus interest if it chooses forany reason to arrange for their transfer to Iran. In another case,Case A-15, the tribunal further confirmed its ruling in Case D-1 andstressed that if the United States, for any reason, does not exportIranian properties to Iran, it could have to compensate Iran for allits losses, embracing not only the full value of the property, butall the associated consensual damages. And finally, in Case A-27, asto what constitutes compliance with the tribunal award, the tribunalruled that the United States payment obligation under an award wouldnot be satisfied unless and until the United States pays the awardedsum directly to Iran.

It is a well-recognized principle of international law that nostate can rely on its national legislation in justification ofnon-performance of a treaty commitment. A domestic law inconsistentwith an international obligation of a state, in fact, constitutes thevery proof of the breach of treaty. This principle is undisputed,and the tribunal's precedents endorsing it are numerous. So ifIran's monies or assets in the United States are given to anybody butIran by the issue of whatever national law, including the amendments,the United States' obligations under the declarations would not bedischarged.

Apart from the inconsistencies between their obligations andtheir declarations, the unilateral measures of the United Stateswould also disturb the international order. The internationalcommunity, as you all know, cannot properly function unless itsmembers abide by the laws and norms recognized by the same community. A state enacting laws injuring the rights of other sovereign states,in violation of established principles of law and its internationalcommitments, no doubt promotes chaos at international level. Thisanarchy shall undoubtedly adversely affect the recourse to civilizedand peaceful means of settlement of disputes. Such unique conduct bya state is, in fact, tantamount to an individual taking the law intohis own hands within the domestic jurisdiction.

In case a country allows itself to brand another sovereignstate as a terrorist, rogue or of concern, other states willnaturally follow suit. The result would be obviously a lamentableinternational chaos. Apart from this result, unilateral measureswould, of course, encourage other governments and states toreciprocate these kind of measures.

The United States conduct has already compelled Iran toreciprocate by enacting a similar law. This law allows Iraniancourts to assess restrictions over claims brought by Iraniannationals against foreign states violating Iran's sovereign immunity. Now, there are a stream of claims queuing up for consideration. Theclaimants are people suffering damages as a result of actionscommitted or supported by the United States government.

These actions, as admitted directly or by implication by thesecretary of State in her speech on 17 March, includes the following: U.S.-sponsored coup d'etat overthrowing Dr. Mossedagh's nationalgovernment in 1963 to reinstate the shah; second, the injuriesinflicted upon a large number of people by the shah's regime,especially his intelligence organization, SAVAK, where agents weretrained by the United States government; third, substantial materialsupport lent to Iraq, an undisputed aggressor in Iran-Iraq war; andfinally, killing and injuring scores of Iranians by attacking anumber of Iranian oil platforms and naval vessels in the Persian Gulfin 1987 -- 1986 and '87; I'm sorry.

In case the Congress approves the proposed amendment, therewould be indeed very little trust left in other states in theirdealings with the United States. There is no way other states canconfidently put their money in the U.S. banks or enter into anycontractual relationships with the United States. They wouldnaturally fear that the United States, having taken the law into itsown hands, might label them as a state sponsor of terrorism, a rogue,or of concern, and then convert their assets to its national use. Asyou all know, law, unless founded on just and sound principles, is,in fact, lawlessness in disguise.

I would like to conclude my presentation by saying that theamendments made to FSIA and the proposed amendment, if adopted, areincompatible with the well-recognized principles of international lawand are contrary to the letter and the spirit of Algiers declarationsand some other multilateral or bilateral treaties between the twocountries, such as Treaty of Amity of 1965.

Further, they are detrimental to universal legal order to thecause of justice, to U.S. international image, and finally, long-runinterests of both countries.

[TAPE CHANGE.]

As I explained, in the past, the two countries have been able tosuccessfully resolve a very important crisis in their relationsthrough the conclusion of the Algiers declaration and establishmentof The Hague tribunal. It would be indeed an odd contrast withIran's faithful and laudable compliance with Algiers declaration ifthe Congress approved the proposed amendments impeding the executivebranch of U.S. government performance of its internationalobligations.

It would run counter to the overtures of the secretary of Statefor the settlement of assets claims when she has stated on 17 March,2000 that, I quote, "Our goal is now to settle the relatively few,but very substantial claims that are still outstanding between alltwo governments at The Hague," unquote. Along such lines, theCongress is naturally expected to promote rather than obstruct suchan initiative in seeing to meet the United States promises under theAlgiers declarations made 20 years ago.

Thank you very much for your attention.

(Applause.)

MR. AMIRAHMADI: Thank you very much, Mr. Zahedin. Our nextspeaker is Helen El Mallakh of Conoco. Helen has an MBA in financefrom Rice University, an MA in regional studies of the Middle Eastfrom Harvard, double bachelor's degree in economics and internationalstudies from UCLA. I hardly got one. And currently Helen is incharge of monitoring the political risks of the countries that Conocooperates in, including Nigeria, Venezuela, Russia, and the Caspianand the Middle East states. Helen.

MS. EL MALLAKH: Well, I'd like to thankAIC and Hooshang for putting together this roundtable. I think thisis very critical for us to join together and have a richer, deeperdialogue on U.S.-Iranian relations.

From the point of view of Conoco -- and being a U.S.-based oilcompany, of course, we have a lot of interest in what's going on inIran -- today what I'd like to present is an overview of some of thecommercial and economic activities that are going on in Iran. I'dlike to present this talk, frame it in a little different way than Iusually do, because I know that we're looking here at a number ofpeople who are involved in forming U.S. public policy.

I think we're at a crossroads right now in terms ofprioritizing what indeed our national interests are and ourpriorities are concerning U.S.-Iran. We wouldn't obviously be havingthis conversation, having these roundtables, if we weren't at thatturning point right now. Iran is so crucial, not only from theMiddle East perspective but also crucial from the Caspianperspective. We have a number of newly independent states, many ofwhich are landlocked, where their only hope of development is throughtheir hydrocarbons and being able to export them. And as many of youwho are familiar with the energy scene know, Iran is a very importanttransit center, and so this will definitely be an issue that comes toplay.

What I would basically argue via my presentation today is thatit is time for us to look at the priorities in terms of the U.S.public policy and to subjugate the lesser priorities for the greaterpriorities. This includes issues such as the freezing of Iranianassets. I hope that this presentation is going to be brief, but itwill give you an overview so that it will inform some of our publicpolicymakers on what is the situation going on in Iran vis-a-visEuropean companies and what stakes are being made.

Over the last five years, we've seen a remarkable story unfoldin Iran. Undoubtedly, part of the reason that we are having thisneed to shift our priorities is because of the dramatic changes thathave taken place in Iran. These changes have taken place on apolitical level, obviously. They've taken place on a sociallevel.

I don't think that we can forget the demographic issue in Iran,which is extremely important. You have the majority of Iranians nowwho either were not born at the time of the revolution or were notold enough to remember the revolution, and this is an extremelyimportant aspect for us to keep in mind, along with the fact that bythe year 2020, Iran's population will be greater than that of Russia. This is simply a country that we cannot try to isolate anymore interms of U.S. public policy.

Very briefly, I'd like to touch upon what I see are somepromising signs in terms of the shifting in U.S. public policytowards Iran and in terms of prioritizing some of our nationalinterests. The ILSA waiver -- and I'll just briefly go over whatILSA is. ILSA is the Iran-Libya Sanctions Act, which prohibitsforeign companies from investing more than $20 million in either Iranor Libya in energy investments.

The waiver that was given to France's Total Energy, Petronas ofMalaysia, and Russia's Gazprom in 1997, I believe, or 1998 -- Ibelieve it was 1997 -- was a fundamental shift in our prioritiesbecause it allowed us to see that if we didn't waive ILSA, we wereset up to have a trade dispute with the European Union. And I thinkthis was a key issue in terms of looking at our priorities. Was itworth trying to isolate European companies from investing in Iran orprohibiting them from investing in Iran, or was our greater prioritymaintaining our relationship with key trade partners such as France? So I do think that this is a positive sign, along with the partiallifting of sanctions that occurred earlier this year with the liftingof sanctions on caviar, carpets, and, I believe, pistachios and othernuts. So I do believe that we are making a substantial shift.

What I want to talk about is the remarkable story that'shappened in Iran over the past five years. I'm starting in 1995because that was an important year, as Ambassador Pelletreauremembers, for Conoco in Iran. Basically, Conoco was the firstcompany in Iran to be awarded an investment contract since therevolution. Now, you have to remember, so in 1995 there was zeroforeign investment in Iran in the energy sector. Due to theexecutive agreement that was signed by President Clinton, we wereobligated to give up that contract, and Total took it. But in 1995,at the beginning of 1995, Iran basically had zero investments.

Today, in the year-to-date 2000, it has foreign investmentstotaling $4.5 billion. In the year 1995, as yet there was nocontract signed. Total was looking at the contract. So was Conoco. Today you have more than a dozen foreign companies competing in Iran. Those include UK-based BP-Amoco, Arco, British Gas, French-basedTotalfina, Elf and Gas de France, ENI from Italy, Australia's BHP,the Chinese National Oil Company, firms from India, includingReliance Energy, Canada's Bow Valley Energy, Norsk Hydro yrdHydrdfromNorway, Petronas, which is the Malaysian national oil company, andGazprom, which is Russia's national gas company.

Not only has Iran gone from being a completely closed,basically completely closed energy environment from the revolution in1979 through 1995, but today it is one of the most open energyinvestment countries in the Middle East, if not the world. They haveopened up a number of opportunities. Today there are upstreamopportunities in exploration blocks, both on and offshore, indeveloping projects on and offshore, in LNG projects, in exportpipelines; in fact, we have one of the most renowned experts ofpipelines for the Caspian and Iran with us today, Tom Stouffer. Andit's amazing what has opened up. A number of contracts have beensigned to start exporting oil and gas.

Now, most of you should have received -- and if you haven'treceived a handout of this map which shows the buy-back agreements,and another copy that shows the competitive environment -- if westill have copies -- I think there's someone in the back who doesn'thave them. What this is basically here to provide you with is -- itgoes into a lot of detail, but it provides us with an understandingof what the scope is of what's taking place in Iran, again, lookingat that time frame, 1995 to the year 2000.

When we look at this map of Iran, what do we see? Iran, asmany of us know, is a major hydrocarbon producer. It possesses 9percent of the world's proven oil reserves. That is equivalent tothe proven oil reserves of Kuwait and also of the United ArabEmirates. It has the second-largest proven gas reserves in theworld. That's at 15 percent. That's only behind Russia. To date,those gas reserves have been underdeveloped, and that is going tochange, and change rapidly.

In terms of Iran's role in OPEC, it is the second-largestproducer. With the current July 1st, 2000 OPEC quotas, Iran isproducing 3.37 million barrels per day of oil. So certainly, from apriority, when oil prices are very high and Secretary Richardson goesand meets with a number of the OPEC members, it would certainlyprobably help us if we had better relations with the Iraniangovernment, given Iran's prominent role within OPEC. We oftentimesforget that and only view it as Saudi, because Saudi's a swingproducer. But Iran also plays a vital role within OPEC.

Now, very briefly, I would like to go over some of thecontracts that were signed over the last five years. To date therehave been six major contracts signed worth a total of $4.5 billion. The first of these projects to be signed was the Sirri A&E deal. That was the contract, again, as I referred to before, that Conocohad to forfeit, and the contract was awarded to Total and Petronas. The brochure, this competitive environment package that I have sentout, has more details about these. I'm not going to bore theaudience with a lot of the facts and figures, but the information isthere if you would like to look at this.

All of this information is available from publicly-availablesources such as MEES, which is the Middle East Economic Service --Survey, I'm sorry -- and also, the DOE country analysis reports thatare available on the Internet are a very good source for thisinformation. And the map is from Petro Consultants.

By 1995, again, Sirri A&E had been awarded to the Frenchand the Malaysians. That deal was worth approximately $550 million. It was at that time that the Congress realized or some members inCongress realized that in order to maintain the policy of stoppingforeign investment into Iran, they would have to do something,because clearly it was apparent that Total and Elf and others werepositioning themselves to go into Iran. At that time, ILSA came intobeing, which was, again, as I referred to it, the Iran-Libyasanctions act. And important point in this process that has alloweda number of contracts to be signed ultimately was the fact that ILSAdid not act as a deterrent and ultimately it couldn't be upheld. TheSouth Pars agreement, which was one signed by Total, Gazprom andPetronas with the national oil company of Iran, was a very importantstep in this process. South Pars -- and you can see it on your map-- is a huge offshore gas field. It is tied into the Qatari (ph)north field. This is the huge gas field that Iran is planning todevelop in eight phases, each phase producing approximately onebillion cubic feet per day; each phase of development isapproximately $1 billion.

What happened was under pressure from EU, of course becausethey were representing Total's interests, it was very apparent thatthe U.S. could not uphold this extraterritorial sanction, andironically we put -- we impose U.S. unilateral economic sanctions oncountries that impose extraterritorial sanctions on other countries. So it was clear that this was not going to be uphold. As a result,South Pars is the only deal that has thus far received an ILSAwaiver. The other deals that have gone on so far have not receivedILSA waivers, and apparently it's not much of a deterrent because wesee a number of European countries engaged in pursuing theseagreements.

Besides the South Pars field, another company, Elf, went in andsigned the Balal field with Bow Valley, which is a Canadian company. And by 1998 the Iranians did something that I think surprised manypeople, because they radically opened up their energy sector with anumber of buy-back agreements in August of 1998. This map that youhave shows the buy-back agreement and categorizes them whether theywere on-shore, off-shore, gas or oil projects.

The most important thing to note is that there are a number ofmajor, major projects. These will take billions of dollars inforeign investment to develop, and thus far -- we call this the"going, going, gone" list, because every time we look down somethingnew has been signed or is in the process of being signed.

In addition to the Sirri A&E, the South Pars field and theBalal field that were signed by Bow Valley Energy and Elf, Shell wentin and was the first one to sign this Soroush/Nowruz field, and thoseare two fields. And let me find out what the cost was for those. That was a contract of approximately $800 million. Quickly following that was the Doroud field, which was signed by Elf and Eni. You'llnotice when I'm talking about these Elf was the original purchaser ofsome of these contracts and Total was the original contractor. Whathappened when Total bought Elf, or now Totalfina Elf, is that itgreatly enlarged the French dominance in terms of these buy-backagreements, making the French companies have a lot at stake now inIran. They're the primary investor. That's important toremember.

Now, following the Soroush and Nowruz fields, which wereoffshore oil development projects, Elf and Eni went into a field forthe Doroud field, which was a $1 billion contract. And most recentlyNorsk Hydro has come in with the Anaran exploration bloc. They willnot be -- they're going to come in at spending less than $20 million,so they would not -- they are under the ILSA limit. But the othercontracts aren't. Those are the six contracts that are already inplay. And there are a number of contracts that are currently beingnegotiated on this list. I don't want to go into too many of them,but just to get a sense of what's already on the table. We haveagain South Pars, the additional phases. Four and five most likely-- we have a consortium competing. It's the Gaz de France andBritish Gas, consortiums versus the Shell and Gazprom consortium. Again, that will probably range -- come out to be about a $2 billioninvestment. We're looking at South Pars phases six and seven. Thatwill be another $3 billion in investment. And the Ahwaz area to thepromising attractive onshore area. Of course you'll notice that alot of these investments are near the Iraqi border. They're shared. Shell, Total, Elf Fina, Eni, Lazmo (ph) are looking at those fields. Darquain field is an onshore oil development. Eni is most likely todevelop that. That's a 500 to 600 million dollar field. Dehluran,also on this, is an onshore oil development that will most likely goto Norsk Hydro. Esfandiar and Foroozan will probably go to Eni, andthe Mehr exploration bloc will probably also go to Eni.

So what we are looking at is of this list, over the past fiveyears a number of these blocs are already in the process of havingcontracts signed for or in the negotiating process.

In addition to these projects, there's also pipeline issuesthat are coming about. This is incredibly important for us toremember with the Caspian that despite U.S. public policy stance onthe Baku-Ceyhan line and the number of other lines that do nottransverse Iran, Shell and other people who invest in countries suchas Kazakhstan and Turkmenistan, are very supportive of doing swapsthrough Iran, because it just makes much more sense from an economicstandpoint. What we see is that the Neca-Tehran (ph) pipeline isapparently in the process of being negotiated to be upgraded. Thiswill be a joint project with NIOC and the Chinese National PetroleumCorporation. It will cost roughly $360 million.

In addition, there is a gas utilization study that isundergoing right now. This is extremely important, because what Iranwants to do is use more gas domestically so that they can export moreoil. And they are also looking at ways to export their gas. Thisgas strategy study, which will outline the whole strategy for NIOCover the next 25 years is being done by nine international oilcompanies. Again, they are the same people that we have been talkingabout here.

In addition, we also see Iran starting to build bridges withits Arab neighbors. It signed a petrochemical mutual agreementunderstanding. Iran wants to put in another $20 billion worth ofinvestments into petrochemicals.

So what we are really seeing over the last five years is just adramatic shift in terms of what is open in Iran. It's been amazing,because you can't see this type of opening in terms of the scope andthe depth in any country in the Middle East. And I think that thisis often overlooked when we are looking at this. The situation haschanged so dramatically, and I believe that it will continue to see anumber of these fields on this buy-back agreement continue to go.

And, again, the U.S. really won't have a say on where thesepipeline routes are going to be. We're really basically out of thegame right now and it's pretty much up to the French Shell, theFrench companies and Shell and other companies to decide which waythese projects should be exported.

At the end of the day we are now looking at so many -- not onlyare the companies going in, but it's also allowing an opportunity forthe countries that these companies are based in to establish ties. We have seen that a number of diplomatic ties have been restored tosome degree or another with a number of these countries that now havetheir businesses operating there. These include Australia, Canada,Japan, Malaysia, Russia, France, Italy, Britain, Norway, theNetherlands, China, India, and a number of the Arab countries.

That basically sums up what is going on. Again, the bottomline is that there is dramatic investment undergoing in Iran, andILSA has not been a deterrent.

I think at the end of the day what we are looking at is notonly the commercial development in the region but also accompanyingwith that political developments and social developments.

The entire landscape of the Iranian energy sector has virtuallychanged within the past five years when Conoco went in and tried todo the Sirri project.

Given the development of the Iranian energy sector, and thecountry as a whole, I believe that it's time to look again at ourpriorities and our goals for the region and reevaluate what we arelooking at.

Today we are looking at an Iran that isn't isolated. In 1995it was isolated. What is happening today is that while Iran isbecoming a country that is more interdependent and connected with theglobal community. Iran is no longer isolated. The situation now isthat the United States is isolated from Iran. And I hope that withreforms like this we can be working on these issues and engagement,and hopefully help bridge this gap. That concludes my talk. Thankyou.

(Applause.)

MR. AMIRAHMADI: Thank you very much. AIC is very pleased tohave presented to you a very informative panel, and we are gratefulto that, for our speakers -- of course Congressman Jim Leach, Mr.Zahedin and Helen, thanks a lot. I would like of course now yourturn to make comments and ask questions. But before we move to that,I would like to do two things. First obviously to ask our chairman,Ambassador Pelletreau to take over. But before I ask the ambassadorto do it, I want to recognize an individual from AIC that has doneall of this, and we are very grateful to her, and that's nobody butSudabeh. Sudabeh. And I'm happy to report that Sudabeh will jointhe Johns Hopkins University very soon for further education, and wewish her good luck. But the good news is that she will be continuingworking with us from Washington. We thank you very much,Sudabeh.

Now next obviously it's time for the discussion. You all knowour distinguished chairman, Ambassador Robert Pelletreau, who wasassistant secretary of State during a major period, a critical periodin U.S.-Iran relations. And Ambassador Pelletreau is sitting there,and I am very pleased that I have such a distinguished boss. Thankyou.

AMB. PELLETREAU: Well, the threespeakers this morning have set the context of the discussion. Congressman Leach in broad terms has set an historical context for anappreciation of the current state of relations between Iran and theUnited States. Mr. Zahedin has come from The Hague to present anIranian view of the claim situation in terms that are seldom heardhere on Capitol Hill. And I would just say that I hope, sir, that anAmerican interlocutor, whether governmental or private, would beheard with the same courtesy and attention before the Majlis. AndMs. El Mallakh has presented the important developments that aretaking place in the oil and gas sector in Iran.

As we open up for discussion, for questions or for comments, Iam conscious of the fact that we have only a few microphones aroundthe table. I would ask speakers first to identify themselves andthen either go to a microphone or speak slowly and very clearly. Sir?

Q My name is [inaudible]. I'm an internationallawyer. I teach at NYU Law School. I work parttime with the Councilon Foreign Relations.

[Question off-mike and inaudible.]

AMB. PELLETREAU: Either Mr. Zahedin or Ms. El Mallakh do youknow the answers to those questions?

MS. EL MALLAKH: Just a little bit about -- I can't speak toall of the litigation issues, but just a little bit about the typesof agreements that are signed in the hydrocarbon sector. To touchupon your point that you made earlier, it's very true that Iranpolicy -- they do want to get out of the hydrocarbon dependence. About 90 percent of their export revenues today come from oil. Definitely they want to decrease this. But in terms of thecontracts that you have signed today in Iran in the hydrocarbonsector -- there's something called a buy-back agreement -- I don'tknow if you are familiar with this buy-back agreement. The buy-backagreement is something that you only find in Iran. It was set upbecause it is aligned with Islamic law that prohibits the guaranteeof a certain rate of return with no risk, similar to the problemsthat you have with getting a fixed interest rate in Islam -- it's thesame principle.

If I could get my notes on the buy-back agreement to explainthat a little bit. Okay, buy-back contracts -- and you can findmore information about these again on the DOE Web site under thecountry analysis for Iran. They are essentially risk servicecontracts where the contractor, in this case the foreign company,funds all of the investment from a commercial field, and thenreceives remuneration from NIOC, which is the Iranian National OilCompany. It's based on a fix rate of return. Tom Stouffer wastelling me -- our numbers had it between 15 and 17 percent return. Tom Stouffer has said, from his research, it's about 16 to 18 percentrate of return. And this is paid to the contractor in the form ofNIOC's allocation of a share of production equal in value to theamount due.

The buy-back agreements do have some plus and some downsides. Of course these were never used before in Iran. This is a newcontract that is being used. So we are not very sure of some of theramifications, legal ramifications and commercial ramifications. Wejust know what has happened over the last couple of years. Generallyspeaking, what happens is in a lower price environment it isdisadvantageous to NIOC, whereas in the higher price environment it'sadvantageous to them because they can capture the upside.

In terms of litigation, again, that would probably have to takeplace under Islamic law jurisdiction, and I would have to defer toour expert here on that. But again, these contracts are based onIslamic legal degrees.

MR. ZAHEDIN: The subject of your question, sir, would gobeyond my expertise and knowledge, despite what Ms. Helen said, I amsorry I cannot provide any answer on that. I have no study on that. I'm sorry.

AMB. PELLETREAU: Okay. You had a question? You want to takethe mike?

Q -- A, to what extent are those assets actually somewheresitting in cash in real money in escrow? Or, B, to what extent wouldwe have to actually appropriate money if we were in a position wherewe ultimately had to pay up? I was given to understand that theamount of cash that is sitting there is surprisingly little inrelation to the claims cum interest. Does anybody know the -- thatstatus?

AMB. PELLETREAU: I don't know the precise answer. I thinkyour presumptions are largely in the right direction. The problemwith all legislation, as you know, we have these legislativealternatives, is that people deal on ethereal theory without dealingin ramifications. And the ramifications, both geopolitical as wellas in the real aspect of how you get at given sets of circumstances,the fact that there is a lack of cash also implies cascading legalclaims against non-cash assets, which may be real. But they also maybe difficult to unwind.

Q [Off-mike and inaudible.]

AMB. PELLETREAU: Let me just do a first brush on your firstquestion. I think a lot depends on the resolution of kind ofpolitical issues. That is, if it looks like there is a potential forserious rapprochement between our countries, I think the likelihoodof Congress moving in one direction increases; if it looks like thereis greater tension, the likelihood of moving in another directionincreases.

Also, you do have an awkward situation congressional-executivebranch relations, and I try not to get into the politics of politicsvery much. But for whatever reason, this Congress doesn't haveimmense confidence in this administration, even though it's my ownview administrations are 90 to 95 percent right 90 to 95 percent ofthe time, no matter who is in office. But the split between theexecutive and legislative branches is a split that does getreflected sometimes in this kind of issue as you see on otherhot-button countries as well -- like Cuba. So that becomes adifficulty.

Now, as we all know, we have an election coming up, and forcandidates that may or may not be perceived in an historical spectrumas interesting versus uninteresting, the election itself is going tobe very interesting, because I've never known a closer circumstanceboth for the House, the Senate and the executive branch in this particular year, and how that comes to affect all these issues isgoing to be something that only time will tell. And then you havethe accidents of people in particular positions, with chairmanships,with committees, secretaries of State, et cetera. So all of thisbecomes an interesting phenomenon.

Now, if you have a Bush administration and the hints of aslight possibility that Colin Powell would be secretary of State,Dick Cheney as vice president, one of the clear things is that theseare people who look in geopolitical issues in a different kind of waythan people that might otherwise look in geo-human rights kinds ofissues and you get an different emphasis on conclusions. On theother hand, my hope is that it's basically a bipartisan kind ofmovement, and I think it will have some accidents to do with Iraniangovernance as well -- I mean, what steps the Iranian government willtake, what steps Iranian leaders will take, and then you have anaction-counterreaction that fits the times.

But I will tell you, for getting the amendments to the ForeignSovereign Immunities Act, the long-term interesting aspect of thatact is, and lawyers will tell you that there are lots of subtleties,and so what I say is going to be fairly gross. But one aspect ofthat act is that it says than when a foreign government acts as acorporation it comes under U.S. corporate law, which applies amongother things antitrust law, which implies among other things anorganization like OPEC can be considered to be a trust that may beaffected by United States law. And to me that's far more significantin the long term than any of the amendments to the act itself.

Yes?

MR. ZAHEDIN: In response to your question, sir, I will say Iam not a representative of the government here, so I am not aware ofthe reasons why the government has decided not to appear before thecourts of the United States. But, as I mentioned in my speech, in mydeveloping on the 1996 amendment giving jurisdiction to the U.S.courts over foreign state for certain actions that happened outsidethe United States, is contrary to the very principle of sovereignimmunity under international law and perhaps this must be or has beenone of the reasons the government has decided not to appear before the U.S. courts and understand under the 1996 amendment any plea,jurisdictional plea, would be doomed to defeat, as in the way the lawthat has been drafted by the Congress.

And perhaps another reason for not appearing would be that thegovernment would not have regarded itself as responsible as far asthe substantive matter of the case is concerned, and so it hasdecided not to appear.

Another reason could be that -- I'm sorry -- another reasoncould be the incongruity of the rules, I mean the amendment with thebilateral treaties between the two governments, for example as I saidthe Treaty of Amity. As you know, the Treaty of Amity has anarticle, 11(4), which provides for a certain set of rules of theimmunity and the non-immunity of the government, of the contractingparties and the enterprises formed by them working in the duties ofthe other contracting party. These are all considerations that mayhave led the government not to participate. As I said, these are thelegal opinions of myself.

AMB. PELLETROU: Here, sir.

Q [Off-mike and inaudible.]

MR. ZAHEDIN: We have two microphones that are movable. So Iwould ask if the audience would be kind enough to move them whensomeone speaks.

Thank you.

Q Yeah, I have two questions. One is what we have beentalking about here is foreign direct investment and the impedimentsthat the Tribunal activities are causing in that process to go ahead. Perhaps some interim measures to signal support from the U.S.Congress and government, and also allow a little bit involvement byU.S. companies could be things like removing the U.S. objections tolending to Iran at the World Bank and IMF. I used to also serve atthe IMF, so I realize the politics behind that. And allowing forinstance the purchase of euro bonds by U.S. and the financialinstitutions which thinks they're cleared, and stated itinternationally, and have cost-default clauses which doesn't allowthe government to hand-pick U.S. companies and not pay them -- maybea good solution to still get more interaction between the twocountries.

The other set of questions is years ago, maybe 10 years ago aspart of a consulting company that advised the IRS on its suitsagainst U.S. corporations who had claim damages against the Tribunaland had actually gotten money back, had at the same time declaredthe losses to the IRS and gotten those tax benefits. I mean,thinking back to that perhaps one solution once the politicalenvironment allows is to allow U.S. companies to have remainingclaims rather than go to the Tribunal to allow for tax deductions. And since the Republicans seem to favor every tax deduction thesedays, that may be a good interim solution again.

AMB. PELLETROU: I take it that's more of a comment than aquestion. Down the table please. Yes?

Q Thank you very much. Kenneth Katzman, CongressionalResearch Service. Just a quick comment on regard to the judgmentsaccount. The $400 million in DOD is probably money that was accruedwhen the military equipment that was sold the shah was sold to otherbuyers, including Egypt and some others. But I would add that thereis also a judgment fund available in the State Department which isreplenished every year in annual appropriations. And if there wassome sort of settlement agreement to settle all the assets, then the$400 million would be available, and the judgments fund would beavailable to pay that settlement. If the settlement was too large,more than was in the judgment fund, then there would need to be aspecial supplemental appropriation. But if the amount settled uponwere low enough that the escrow account combined with the judgmentfund could pay what's settled do, then there would not have to be aspecial appropriation.

AMB. PELLETREAU: That's another comment? Don?

Q My name is Don Weadon. I also am an internationallawyer. There are so many lawyers in this town. I am secretary ofAIC. I'd like to ask a question of Ken while he's here, because itcould be very valuable to all the attendees. Immediately followingthe freezing of assets -- I have just gotten back from Iran, and Iam one of the few Americans who have studied in Iran with HarvardBusiness School and was therefore very interested in business in Iranat the Madagazi Mudaet (ph).

There was an inventory of all claims of all properties and allmonies, and that inventory was conducted by the Department ofTreasury, and it was in violation of U.S. law not to respond to thison behalf of many multinational and large defense contractors. Ihelped them do their inventories. And I am wondering if -- and Ithink this is an interesting issue, because many people areinterested in the subject. Are those -- is that information and thefederal financing bank and all the FMS and other U.S. governmenttrust accounting accounts, and all the financial crossruffs wheremilitary equipment was sold on letters of offer and acceptance toother foreign governments and those funds returned to the exchequer. Is all that transparent and available to the public? I think itwould tend to enrich the debate and help resolve many of the -- Well,you're supposed to have this much money -- no, we only have that muchmoney, but we are not going to tell you kind of debates that go on. Is that available? Have there been steps made to make thatavailable, or in your work at CRS have you found this information andmade it directly available to the Congress? And in return, thatshould perhaps be posted on the Web site or somewhere where therewould be public disclosure. I think that would tend to cut through alot of needless debate over who has what, what is available, andperhaps help remove yet another component of indecision and mysterysurrounding an issue which I think from both America's and Iran'sstandpoint -- and I would reach back to the sensitivity sobrilliantly presented by Representative Leach to the culture of Iranand the Shi'ia which looks to justice. We are both republics builton the fundamental and, if you will, social religious inception ofjustice. And I think unless we respect that of each other and lookto these issues and pare away the mystery, I think we will comecloser more quickly to a resolution respecting each other's desirefor justice, rectitude and respect for agreements.

And I might just add one final thought.

MR. : I think that --

Q Okay, enough of my comment.

Q I can honestly say I have not requested from DOD thatinformation that you talked about. If a particular member ofCongress were to ask me to ask DOD for that information, I could thentask them to send me that information. It could be classified,although I expect it is not classified because most contracts forsales of military equipment to foreign governments are disclosed toCongress under Section 36(B) of the Foreign Assistance Act and someparts may be classified where specific technology is involved. But Isuspect that it's gone long enough since the shah was in power thatthat would not be classified information and that DOD could turn itover if one were to task them to turn it over. But honestly I havenot done such a specific inquiry because I have not been requestedto, and I don't think there's a -- the things I work on have more ofa mass market, and this is sort of specialized. So I would have toreceive a specific request to get this information.

MR. STOUFFER: Perhaps if I can continue this discussion. TomStouffer. And let me being an economist and engineer here play thelawyer and spin out a hypothetical, because I suspect thattransparency might be distinctly not in our interests. And considerthe hypothetical. Let's say the claim just for the FMS accounts,related accounts, is about 4 to 4.5 billion dollars, which withinterest at the kinds of rates recognized in The Hague -- I was inmany of those cases -- comes to about $15 billion to pay in roundnumbers. And let's say there is only $400 million in cash. Thatmeans somehow we have to come up with $414.6 billion, which calls inappropriation, and which could be kind of embarrassing. I throw thatout as a pure hypothetical.

AMB. PELLETREAU: Thank you. Down at the end please.

Q My name is Karvar Fasian (ph). I'm a political scientistat UC-Berkeley. And I just returned from Iran, and also fromGermany, while President Khatami was there. And one thing that struckme in particular about that trip to Germany was how sharplydifferentiated the European approach is toward Iran nowadays from theUnited States. Looking at a picture of the president of Germany andPresident Khatami, and would very much like to see one not too farfrom now of a U.S. president and President Khatami. Of course that'swishful thinking in today's environment.

My question to Chairman Leach is, first of all, would youplease address the thorny issue of the conflict between Congress'simpending amendment and commitment to the Algiers declaration andothers that Mr. Zahedin spoke about? And furthermore, as apolitical scientist, it appears to me that whenever there is a smallwindow of opportunity opened up for betterment of U.S.-Iranrelations, there are strong countertrends set forth by variouslobbying groups and so forth. And I understand tomorrow in this veryroom there'll be yet another report on Iran's alleged proliferationof weapons of mass destruction, and so forth, by some people in thisvery room. And my question to you, Chairman Leach, is can thisvicious circle be broken at all? You spoke about Congress'swillingness to have better ties with Iran, but what concrete measuresor steps is Congress willing to take toward that direction?

I spoke with some members of Iran's parliament just a couple ofweeks ago from the reformist faction who are very interested inmeeting with some members of the U.S. Congress. And do you see anypolitical will on the part of Congress to reciprocate such athing?

REP. LEACH: Well, first let me say on a personal level I thinkthere is an increasing interest in members of Congress to have morein a relationship with Iranian government officials, and thenunderstanding the two sides have to come together to at leastunderstand each other.

Then there are some honest differences of opinion. The weapons of mass destruction issue is not a trivial issue in theUnited States and in the Congress. And this is a very seriousconcern.

Secondly, when it comes to property, property is a seriousissue. It is a constitutional issue. Again, I don't want toexaggerate, but you go back in American political science, ThomasJefferson was basically a Lockean and made one change -- Locke talkedabout rights of life, liberty and property. Jefferson inserted thesewords "pursuit of happiness," which I thought were Jeffersonian. Irecently discovered he stole them from a Swiss natural rightsphilosopher.

But all I would stress is property issues are very seriousissues. One of the legislative dilemmas is that some of us are veryconcerned about is that you can legislate to give some propertyclaimants advantage over other property claimants, which is a veryawkward thing for Congress to give, to make those kinds ofdeterminations. But I will tell you any credible rapprochement withIran will involve a whole spectrum of issues in which there has to bean honest dialogue on weapons of mass destruction, there has to be anhonest dialogue on property, there has to be some sense of dealingconstructively with the future. And this Congress is obviously veryconcerned with certain Middle Eastern issues, questions of terrorism,et cetera.

Now, on a timing sense there are a couple of things comingtogether that are obviously deeply profound. I personally havebelieved the Middle East -- at least the Palestinian settlement -- isin the bag and has been for many months, and that with this situationclarifying, with the Lebanon situation improving, that takes some ofthe antagonism off the table. And it also takes off the table someof the I think impulses to weapons of mass destruction, althoughthere are many impulses that relate less than that one part of theMiddle East. Then if you take the geopolitics of the United States,we have no geopolitical desire to have anything except balance andstability between Iran and Iraq. We have nothing except a desire tohave greater stability and respect between the Islamic world and theJudeo-Christian world. And when it comes to property, what isenormously self-evident is the commonality of interest in thepetroleum area. And then what I think has been registered at thistable today -- the desire of peoples to go way beyond petroleum. Andthat to me implies that Iran should have a vested interest in workingwith United States technology and the United States have a vestedinterest in working with Iran. And so I just think the commonalitiesof interest exceed the tensions, but the tensions can't exactly betotally ignored either.

AMB. PELLETREAU: Let me just take one more question. We areabout out of time. Then we'll close the session.

Q I'd like to ask the panel, or perhaps Donald Bloom, ifthe U.S. government has any idea what President Khatami wanted whenhe made his speech in Berlin and asked for further unilateralinitiatives. As I recall, Foreign Minister Kharazi was very specificabout pistachios and carpets and caviar, and that was one of thereasons Secretary Albright could respond very directly and grantthat. But as I understand it no one has a clear idea of whatPresident Khatami had in mind. If Donald Bloom had some idea I wouldlike to ask Jim Leach that if ever was asked is politicallypossible.

REP. LEACH: Go ahead.

Q: He didn't mention anything in that speech, is thatcorrect?

AMB. PELLETROU: As I read the speech it was a reiteration ofpast positions that did not put forward any new initiative or newsuggestion or idea. That was my reading.

Q Well, is there anything in this financial area that mightfit the bill that President Khatami requested of some unilateralinitiative on our side? Is anybody thinking about what that mightbe?

AMB. PELLETROU: Well, this is an area that is open for furtherdevelopment between the two governments. And the engagement has beenbegun. It will be, as I think we can conclude from the sessiontoday, it will be fairly long. Parts of it will be quitecontentious. But it's a positive thing that the first steps havebeen taken to engage in such a discussion regarding a settlement ofclaims.

REP. LEACH: Let me just add two quick things on this. One, Ithink the executive branch is entirely right to talk about globalsettlements. I think that's a positive. And then the only thing Ithink I haven't stressed, from a congressional perspective there isenormous respect for the new parliament and the new direction ofelections in Iran. And that is something that I think good will canfeed upon good will on, and that that is something just as alegislator I feel obligated to underscore.

AMB. PELLETREAU: On that final high note, I think we ought toconclude with a few word from our president.

MR. AMIRAHMADI: Thank you very much.

First off, I have two good newses actually. One news isPresident Khatami will be visiting the United States again in thefirst week of September. I am hoping that the administration isready for us and that before he arrives he is given a gift for that. Second, you have even more importance for the first time in the lasttwo years ago, Iran's speaker of parliament will be in the country. Mr. Karrubi will be visiting the United States in the last week ofAugust.

Now, given that that man represents a parliament that is sowell respected, as Congressman Leach said, in this country and thisCongress, I believe that the Congress of the United States shouldtake an explicit step in the direction of welcoming him here. And Idon't know how or what shape it can take. I will leave it toCongressman Leach to think about it and let us know what we can dofor him in that direction.

I want to thank you all -- okay? -- and conclude one statementfrom President Clinton who back on February 15th, 2000 on CNN saidthe following: One of the best things that we could do for thelong-term peace and help the Middle East, and indeed much of the restof the world, is to have a constructive partnership with Iran. Ihope that we come to that.

Thank you very much.

[APPLAUSE AND END OF EVENT.]