The Iran Brief®

---

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

We have for today three speakers. Congressman Leach is going to actually lead the discussion, and then I am very pleased to inform you that we have a gentleman from The Hague, the claims tribunal between the United States and Iran. That's Mr. Mohammad Hossein Zahedin Labbaf, who is on the right side. He represents Iran, in fact, on that tribunal. We also have Helen El Mallakh from Conoco joining us to speak about business developments in Iran. My hope is that she will be able to frighten all of you about all that the other countries and the other companies are doing in Iran and the Americans are sitting and watching. And also, at the very far end here is our chairman of the board, Robert Pelletreau. Ambassador Pelletreau will take over after the speeches are done, and he will be moderating the session.

I would like to acknowledge a few people. I wanted to acknowledge, first and foremost, Mr. Don Bloom of the State Department. Mr. Bloom is the Iran desk officer at the department, and he has been extremely helpful in making arrangements of this nature, particularly when it comes to Iranian officials. I would like to acknowledge Bill Tate, who is not here, who is the chief of the staff of Congressman Leach's office, and I am pleased that he has been so helpful. I wanted to acknowledge Mr. David Hoffman, president of Internews, who has co-organized this meeting with us with his capable colleagues in this city. I'm grateful to all of them. I hope that our cooperation will continue in the future. I would like to acknowledge the sponsorship of Conoco Inc., who paid for 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 our speakers are most knowledgeable and expert on this matter. Of course, as you all know, Congressman Leach is the chairman of the House's Banking & Financial Services Committee, and Mr. Zahedin Labbaf 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 in this city, Secretary Madeleine Albright made a strong point concerning the Iranian assets. And I quote. She said that the United States is ready to reach, quote/unquote, "global solutions concerning this matter with Iran" -- "global resolution of this matter with Iran." And I am very pleased that we are following her advice, and my hope is that this meeting will be a good start for that global resolution of the active issues that continue to be an obstacle on U.S.-Iran relations, and particularly when it comes to Iran. As most of you know, the Iranian leaders kept telling us continuously that one major thing that the United States must do before it gains our trust again is to, quote/unquote, "free our assets. And again, whether the assets will be freed or returned or resolved is an issue that will be discussed today.

I am also pleased to let you know that, following Secretary Albright's speech, she indeed took a major step in that direction, in that global resolution, and appointed David Andrews as the appointment for this. I am very unhappy that David is not here today. We invited Mr. Andrews, but for a variety of reasons beyond his control, he could not be present today, but he will join us hopefully in the next meeting.

I may also say that although many of us think that Secretary Albright's speech has not been yet reciprocated by Iran, but we know here 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 say that Iran was very fundamental in stopping, for example, the Hezbollah of Lebanon from chasing the Israelis back and stopping that hostility when the Israelis withdrew from South Lebanon. Iran's Foreign Minister Kharazi took upon himself to go all the way to Lebanon and make it very clear to the Hezbollah that they do not have the support of the Iranian government in further hostilities with Israel.

In fact, just this July, President Khatami, in Germany, made a very 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. And hopefully our two-days' meeting is a step in that direction.

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

With that, I would like to take this opportunity to say a few words about our honorable guest today, Congressman James Leach. Congressman Leach was elected to the 95th Congress in November 1976 and each succeeding Congress. He chairs the Committee on Banking & Financial Services, is a member of the Committee on International Relations and the Subcommittee on Asia and Pacific Affairs. He is a member of many committees, including the Constitutional Forum, the 21st Century Fund, global parliamentarian for Global Action, and many more. He's also a member of the Arms Control & Foreign Policy Caucus. He, in fact, was chairman back in '83 and '84.

Congressman Leach has had extensive and distinguished career even before he joined the Congress, and since when he has been there. He has been active in the State Department. He was in the United Nations as a delegate there; the disarmament conference, a delegate of the U.S. there; and many others. He has education in London School of Economics. He has his master's from SAIS, School of Advanced International Studies, at Johns Hopkins. And he is a graduate of Princeton University, where, in fact, American-Iranian Council is located, its main offices.

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

(Applause.)

REP. LEACH: Well, thank you, Professor, Ambassador, and Mr. Labbaf. Let me welcome you first to the House Banking Committee. I might point out that the painting straight ahead is the painting by an American artist named Larry Poons, and I sometimes suggest to Mr. Alan Greenspan that if you look at it carefully, 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 a little bit about the basics and then the direction we may be going in. Arguably, in the basics in American history, there have been four great debates, and the first is right at the founding of the republic, 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 about definitions, whether rights applied to people that weren't male and weren't pale. And then we've had a debate in this century about if rights are to be valid, don't you have to infuse a certain kind of opportunity? And you have the contrast of the Roosevelt New Deal and the Reagan Revolution. And then finally we have a debate that's ongoing now about whether rights, to be valid, you have to have a right to peace.

And analogously, it strikes me Iran has had certain similar circumstances in their own country, not that all countries don't face this, but particular in the international arena, where we overlap in many important ways. But Iran has had the advantage and disadvantage of a history that's far longer than ours. And our original debate was posited on borrowing extensively from Europe. Iran has not just a couple of centuries but a couple of millennia of history that both strengthen and, to some degree, make it a different actor in world affairs.

In this century, to some degree, it's arguable Iran might have gone too fast in the secular way and too slow in a democratic, and there obviously was a revolution and now we have, if not a counterrevolution, something that's occurring that's a little different. And in western philosophical thought, we're all aware that there was a German named Hegel who talked about thesis, antithesis, synthesis, and possibly we're seeing a synthesis in Iran that is of a very interesting dimension. And this is particularly the case with the recent elections for the Parliament that would seem to reflect a number of new approaches for which this country is very impressed. And we all identify with the struggle for democracy anywhere in the world, and particularly with the rights of people in an individual rights kind of way.

The United States has obviously been looking for ways to improve relations. The executive branch, very forthrightly in rhetoric, though actions have been a little slower, but I would simply like to underscore that I don't think there's any division in Congress. I think you have an issue in which the vast majority in Congress would like to see much better relations with Iran. I think the executive branch would in that we're in the institutions of governance together rather than apart. And I'm confident that, whatever this presidential election brings, whether it be Mr. Gore or my preference, Mr. Bush, you're going to see some progressive steps towards and improvements in Iranian-American relations, if at all possible. In fact, not to have them, I think, would be a fairly stunning mistake.

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

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

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

On the other hand, I'm very pleased that Mrs. Albright, who's made the pronouncement she has that we want to see some global settlements on claims because claims issues are issues that rub our societies wrong. Other issues do, too. Over the last couple of decades, I've personally been very interested in some things in Iran that have been imperfect there; for example, treatment of the Bahai. And obviously in the last six months, we've had a very serious issue on some of the trials against Jewish citizens. But they underscore to me the necessity and the importance of governments talking and peoples talking and interchanges occurring.

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

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

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

Now, we also had the modest assumption that no individual should control, and so we moved away from kingships. The Iranian circumstance might be more theocratic than is comfortable for Americans, but it's moved away from a shah-ship. And that is not all bad and not something that we totally disagree with in our society.

Anyway, I am not only an optimist. I'm a believer that there are very few countries in the world that the United States doesn't have a greater vested interest in coming closer together. I think everyone at this table knows that we've had books written in recent times about the clashes of civilizations, as contrasted between nation-states, and sometimes they're implied in the differences between nation-states.

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

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

MR. AMIRAHMADI: Thank you very much. Our next speaker, as I said, is Mr. Mohammad Hossein Zahedin Labbaf. Mr. Zahedin has a BA in justice law from Teheran's National University and an MA in comparative and international law from the Free University of Belgium. Mr. Zahedin joined Iran's Bureau of International Legal Services in The Hague back in 1989 as a lawyer, and his book has largely 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. And simultaneously, he was appointed Iran's agent in International Court of Justice, which is an agency of the United Nations. I'm very pleased to welcome Mr. Zahedin.

(Applause.)

MR. ZAHEDIN: Thank you, Professor Amirahmadi. Thanks to Senator James Leach and thanks to Ambassador Pelletreau. Ladies and gentlemen, it is a great pleasure for me to have the occasion to address this distinguished audience. I have already been introduced by Hooshang Amirahmadi. However, I think it is necessary to tell you again why I am here. I do this not because some believe that normally nobody listens to introductions, but because I think it is important to focus the ensuing discussion on the specific purpose of my presence here.

As was said, I am the representative of the Islamic Republic of Iran to the Iran-U.S. Claims Tribunal. This tribunal has been established pursuant to two treaties between Iran and the United States, commonly known as the Algiers Declarations. My duty, like that of a government's agent to the International Court of Justice, ICJ, or to any court or intergovernmental tribunal, is to represent the government at the tribunal and act as liaison between the concerned parties.

I am not here as a representative of the government of Iran. There is not, obviously, any place for such representation here. I am a lawyer who happens to be knowledgeable about the work of the tribunal and the commitments of the two governments because of my involvement in this judicial forum. I have myself volunteered to participate in this gathering in my personal capacity to be able to tell you about the tribunal's work and hope to shed light on certain contemplated measures which have the potential of undermining the authority and jurisdiction of all tribunals and may dash all reasonable expectations for the rule of law on the international plane.

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

The two governments have been working in the context of this tribunal mandate, as they should have, in a very civilized and respectful manner. The respect for law, as stipulated in one of the Algiers declarations, has been an inviolable guiding tenet. Both governments, as far as the work of the tribunal is concerned, have done their best not to allow any political cloud to be cast on the functioning of this tribunal, which has to operate by its own judicial mechanism as a peaceful, principled and civilized means of resolution of differences. This does not, however, mean that the two governments, and in particular Iran, have not been critical on certain decisions made by the tribunal.

In the past two decades, Iran has not faltered in its cooperation with the tribunal, in compliance with its international obligations, in spite of the dire circumstances, some admittedly created by the United States government. One of those circumstances, as you know, was the well-known tragedy of shooting down Iran's passenger aircraft over the Persian Gulf. Another circumstance is the economic and trade embargo imposed on Iran in disregard of United States pledges under the Algiers declaration. And last, but not the least, as you all know, is the Iraqis imposed war against Iran which lasted for about eight years.

Presently, however, there are activities in the United States that, if successful, would surely undermine the tribunal's authority, as well as the achievements reached by its work and, more importantly, would set the international stage for a legal confrontation which would adversely affect not only the interests of the two countries but also the rule of law in the international level.

The activities alluded to are exemplified by a series of amendments made to the Foreign Sovereign Immunity Act of the United States 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 properties blocked by the United States or monies, or to monies dealt from or payable to foreign governments by the United States, subject to attachment and execution in aid of the judgment issued by U.S. courts pursuant to 1996 FSIA amendment.

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

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

To label a country as a state sponsor of terrorism, and thereby disregard that state's sovereign immunity, the U.S. government need not follow any internationally agreed-upon principles. Obviously, this is a purely political decision which all countries are able to make. Now, imagine the disastrous consequences that follow if all countries adopted laws similar to U.S. laws.

Now let me go back to my main point. The core issues in my presentation are, first, a brief discussion of the United States obligations under the declarations, of course, with regard to Iran's assets; second, the relevant precedents of the Iran-U.S. claims tribunal in this regard; and third, the legal repercussions of the proposed amendment if passed into the law.

First, I discuss the Algiers declaration. We are already almost two decades into the life of enforcement of the declarations and the operation of the tribunal. Once the United States returned part of Iran's funds and assets in 1981, in compliance with its undertaken obligations, Iran did the following: Iran paid all of its debts in the rough amount of $4 billion to American banking institutions. Iran transferred $1 billion to a security account in Netherlands to pay any awards issued by the tribunal in favor of the United States claimants. Third, Iran, in addition, regularly replenished the security account for the payment of the award in favor of the U.S. nationals.

Thus far, Iran has paid over $2 billion to the U.S. claimants as a result of the award issued by the tribunal, and, of course, has been able to collect, more or less, the same amount of its assets pursuant to the award issued by the tribunal or settlement agreements made with the American parties.

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

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

These obligations have been endorsed by the tribunal in some of the awards issued by it. For example, in Case B-1, the tribunal confirmed that the United States' obligation is to compensate Iran for the full value of its properties plus interest if it chooses for any reason to arrange for their transfer to Iran. In another case, Case A-15, the tribunal further confirmed its ruling in Case D-1 and stressed that if the United States, for any reason, does not export Iranian properties to Iran, it could have to compensate Iran for all its losses, embracing not only the full value of the property, but all the associated consensual damages. And finally, in Case A-27, as to what constitutes compliance with the tribunal award, the tribunal ruled that the United States payment obligation under an award would not be satisfied unless and until the United States pays the awarded sum directly to Iran.

It is a well-recognized principle of international law that no state can rely on its national legislation in justification of non-performance of a treaty commitment. A domestic law inconsistent with an international obligation of a state, in fact, constitutes the very proof of the breach of treaty. This principle is undisputed, and the tribunal's precedents endorsing it are numerous. So if Iran's monies or assets in the United States are given to anybody but Iran by the issue of whatever national law, including the amendments, the United States' obligations under the declarations would not be discharged.

Apart from the inconsistencies between their obligations and their declarations, the unilateral measures of the United States would also disturb the international order. The international community, as you all know, cannot properly function unless its members 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 international commitments, no doubt promotes chaos at international level. This anarchy shall undoubtedly adversely affect the recourse to civilized and peaceful means of settlement of disputes. Such unique conduct by a state is, in fact, tantamount to an individual taking the law into his own hands within the domestic jurisdiction.

In case a country allows itself to brand another sovereign state as a terrorist, rogue or of concern, other states will naturally follow suit. The result would be obviously a lamentable international chaos. Apart from this result, unilateral measures would, of course, encourage other governments and states to reciprocate these kind of measures.

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

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

In case the Congress approves the proposed amendment, there would be indeed very little trust left in other states in their dealings with the United States. There is no way other states can confidently put their money in the U.S. banks or enter into any contractual relationships with the United States. They would naturally fear that the United States, having taken the law into its own hands, might label them as a state sponsor of terrorism, a rogue, or of concern, and then convert their assets to its national use. As you 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 the amendments made to FSIA and the proposed amendment, if adopted, are incompatible with the well-recognized principles of international law and are contrary to the letter and the spirit of Algiers declarations and some other multilateral or bilateral treaties between the two countries, such as Treaty of Amity of 1965.

Further, they are detrimental to universal legal order to the cause of justice, to U.S. international image, and finally, long-run interests of both countries.

[TAPE CHANGE.]

As I explained, in the past, the two countries have been able to successfully resolve a very important crisis in their relations through the conclusion of the Algiers declaration and establishment of The Hague tribunal. It would be indeed an odd contrast with Iran's faithful and laudable compliance with Algiers declaration if the Congress approved the proposed amendments impeding the executive branch of U.S. government performance of its international obligations.

It would run counter to the overtures of the secretary of State for 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 all two governments at The Hague," unquote. Along such lines, the Congress is naturally expected to promote rather than obstruct such an initiative in seeing to meet the United States promises under the Algiers declarations made 20 years ago.

Thank you very much for your attention.

(Applause.)

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

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

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

I think we're at a crossroads right now in terms of prioritizing what indeed our national interests are and our priorities are concerning U.S.-Iran. We wouldn't obviously be having this conversation, having these roundtables, if we weren't at that turning point right now. Iran is so crucial, not only from the Middle East perspective but also crucial from the Caspian perspective. We have a number of newly independent states, many of which are landlocked, where their only hope of development is through their hydrocarbons and being able to export them. And as many of you who are familiar with the energy scene know, Iran is a very important transit center, and so this will definitely be an issue that comes to play.

What I would basically argue via my presentation today is that it 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 greater priorities. This includes issues such as the freezing of Iranian assets. I hope that this presentation is going to be brief, but it will give you an overview so that it will inform some of our public policymakers on what is the situation going on in Iran vis-a-vis European companies and what stakes are being made.

Over the last five years, we've seen a remarkable story unfold in Iran. Undoubtedly, part of the reason that we are having this need to shift our priorities is because of the dramatic changes that have taken place in Iran. These changes have taken place on a political level, obviously. They've taken place on a social level.

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

Very briefly, I'd like to touch upon what I see are some promising signs in terms of the shifting in U.S. public policy towards Iran and in terms of prioritizing some of our national interests. The ILSA waiver -- and I'll just briefly go over what ILSA is. ILSA is the Iran-Libya Sanctions Act, which prohibits foreign companies from investing more than $20 million in either Iran or Libya in energy investments.

The waiver that was given to France's Total Energy, Petronas of Malaysia, and Russia's Gazprom in 1997, I believe, or 1998 -- I believe it was 1997 -- was a fundamental shift in our priorities because it allowed us to see that if we didn't waive ILSA, we were set up to have a trade dispute with the European Union. And I think this was a key issue in terms of looking at our priorities. Was it worth trying to isolate European companies from investing in Iran or prohibiting them from investing in Iran, or was our greater priority maintaining our relationship with key trade partners such as France? So I do think that this is a positive sign, along with the partial lifting of sanctions that occurred earlier this year with the lifting of sanctions on caviar, carpets, and, I believe, pistachios and other nuts. So I do believe that we are making a substantial shift.

What I want to talk about is the remarkable story that's happened in Iran over the past five years. I'm starting in 1995 because that was an important year, as Ambassador Pelletreau remembers, for Conoco in Iran. Basically, Conoco was the first company in Iran to be awarded an investment contract since the revolution. Now, you have to remember, so in 1995 there was zero foreign investment in Iran in the energy sector. Due to the executive agreement that was signed by President Clinton, we were obligated 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 investments totaling $4.5 billion. In the year 1995, as yet there was no contract 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-based Totalfina, Elf and Gas de France, ENI from Italy, Australia's BHP, the Chinese National Oil Company, firms from India, including Reliance Energy, Canada's Bow Valley Energy, Norsk Hydro yrdHydrdfrom Norway, Petronas, which is the Malaysian national oil company, and Gazprom, 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 in 1979 through 1995, but today it is one of the most open energy investment countries in the Middle East, if not the world. They have opened up a number of opportunities. Today there are upstream opportunities in exploration blocks, both on and offshore, in developing projects on and offshore, in LNG projects, in export pipelines; in fact, we have one of the most renowned experts of pipelines for the Caspian and Iran with us today, Tom Stouffer. And it's amazing what has opened up. A number of contracts have been signed to start exporting oil and gas.

Now, most of you should have received -- and if you haven't received a handout of this map which shows the buy-back agreements, and another copy that shows the competitive environment -- if we still have copies -- I think there's someone in the back who doesn't have them. What this is basically here to provide you with is -- it goes into a lot of detail, but it provides us with an understanding of what the scope is of what's taking place in Iran, again, looking at that time frame, 1995 to the year 2000.

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

In terms of Iran's role in OPEC, it is the second-largest producer. With the current July 1st, 2000 OPEC quotas, Iran is producing 3.37 million barrels per day of oil. So certainly, from a priority, when oil prices are very high and Secretary Richardson goes and meets with a number of the OPEC members, it would certainly probably help us if we had better relations with the Iranian government, given Iran's prominent role within OPEC. We oftentimes forget that and only view it as Saudi, because Saudi's a swing producer. But Iran also plays a vital role within OPEC.

Now, very briefly, I would like to go over some of the contracts that were signed over the last five years. To date there have 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 Conoco had to forfeit, and the contract was awarded to Total and Petronas. The brochure, this competitive environment package that I have sent out, has more details about these. I'm not going to bore the audience with a lot of the facts and figures, but the information is there if you would like to look at this.

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

By 1995, again, Sirri A&E had been awarded to the French and the Malaysians. That deal was worth approximately $550 million. It was at that time that the Congress realized or some members in Congress realized that in order to maintain the policy of stopping foreign investment into Iran, they would have to do something, because clearly it was apparent that Total and Elf and others were positioning themselves to go into Iran. At that time, ILSA came into being, which was, again, as I referred to it, the Iran-Libya sanctions act. And important point in this process that has allowed a number of contracts to be signed ultimately was the fact that ILSA did not act as a deterrent and ultimately it couldn't be upheld. The South Pars agreement, which was one signed by Total, Gazprom and Petronas with the national oil company of Iran, was a very important step 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 to develop in eight phases, each phase producing approximately one billion cubic feet per day; each phase of development is approximately $1 billion.

What happened was under pressure from EU, of course because they were representing Total's interests, it was very apparent that the U.S. could not uphold this extraterritorial sanction, and ironically we put -- we impose U.S. unilateral economic sanctions on countries 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 ILSA waiver. The other deals that have gone on so far have not received ILSA waivers, and apparently it's not much of a deterrent because we see a number of European countries engaged in pursuing these agreements.

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

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

In addition to the Sirri A&E, the South Pars field and the Balal field that were signed by Bow Valley Energy and Elf, Shell went in and was the first one to sign this Soroush/Nowruz field, and those are 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'll notice when I'm talking about these Elf was the original purchaser of some of these contracts and Total was the original contractor. What happened when Total bought Elf, or now Totalfina Elf, is that it greatly enlarged the French dominance in terms of these buy-back agreements, making the French companies have a lot at stake now in Iran. They're the primary investor. That's important to remember.

Now, following the Soroush and Nowruz fields, which were offshore oil development projects, Elf and Eni went into a field for the Doroud field, which was a $1 billion contract. And most recently Norsk Hydro has come in with the Anaran exploration bloc. They will not 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 other contracts aren't. Those are the six contracts that are already in play. And there are a number of contracts that are currently being negotiated 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 have again South Pars, the additional phases. Four and five most likely -- we have a consortium competing. It's the Gaz de France and British Gas, consortiums versus the Shell and Gazprom consortium. Again, that will probably range -- come out to be about a $2 billion investment. We're looking at South Pars phases six and seven. That will be another $3 billion in investment. And the Ahwaz area to the promising attractive onshore area. Of course you'll notice that a lot 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 to develop that. That's a 500 to 600 million dollar field. Dehluran, also on this, is an onshore oil development that will most likely go to Norsk Hydro. Esfandiar and Foroozan will probably go to Eni, and the Mehr exploration bloc will probably also go to Eni.

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

In addition to these projects, there's also pipeline issues that are coming about. This is incredibly important for us to remember with the Caspian that despite U.S. public policy stance on the Baku-Ceyhan line and the number of other lines that do not transverse Iran, Shell and other people who invest in countries such as Kazakhstan and Turkmenistan, are very supportive of doing swaps through Iran, because it just makes much more sense from an economic standpoint. What we see is that the Neca-Tehran (ph) pipeline is apparently in the process of being negotiated to be upgraded. This will be a joint project with NIOC and the Chinese National Petroleum Corporation. It will cost roughly $360 million.

In addition, there is a gas utilization study that is undergoing right now. This is extremely important, because what Iran wants to do is use more gas domestically so that they can export more oil. And they are also looking at ways to export their gas. This gas strategy study, which will outline the whole strategy for NIOC over the next 25 years is being done by nine international oil companies. Again, they are the same people that we have been talking about here.

In addition, we also see Iran starting to build bridges with its Arab neighbors. It signed a petrochemical mutual agreement understanding. Iran wants to put in another $20 billion worth of investments into petrochemicals.

So what we are really seeing over the last five years is just a dramatic 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 and the depth in any country in the Middle East. And I think that this is often overlooked when we are looking at this. The situation has changed so dramatically, and I believe that it will continue to see a number of these fields on this buy-back agreement continue to go.

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

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

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

I think at the end of the day what we are looking at is not only the commercial development in the region but also accompanying with that political developments and social developments.

The entire landscape of the Iranian energy sector has virtually changed within the past five years when Conoco went in and tried to do the Sirri project.

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

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

(Applause.)

MR. AMIRAHMADI: Thank you very much. AIC is very pleased to have presented to you a very informative panel, and we are grateful to that, for our speakers -- of course Congressman Jim Leach, Mr. Zahedin and Helen, thanks a lot. I would like of course now your turn 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 ambassador to do it, I want to recognize an individual from AIC that has done all of this, and we are very grateful to her, and that's nobody but Sudabeh. Sudabeh. And I'm happy to report that Sudabeh will join the Johns Hopkins University very soon for further education, and we wish her good luck. But the good news is that she will be continuing working with us from Washington. We thank you very much, Sudabeh.

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

AMB. PELLETREAU: Well, the three speakers this morning have set the context of the discussion. Congressman Leach in broad terms has set an historical context for an appreciation of the current state of relations between Iran and the United States. Mr. Zahedin has come from The Hague to present an Iranian view of the claim situation in terms that are seldom heard here on Capitol Hill. And I would just say that I hope, sir, that an American interlocutor, whether governmental or private, would be heard with the same courtesy and attention before the Majlis. And Ms. El Mallakh has presented the important developments that are taking place in the oil and gas sector in Iran.

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

Q My name is [inaudible]. I'm an international lawyer. I teach at NYU Law School. I work parttime with the Council on Foreign Relations.

[Question off-mike and inaudible.]

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

MS. EL MALLAKH: Just a little bit about -- I can't speak to all of the litigation issues, but just a little bit about the types of agreements that are signed in the hydrocarbon sector. To touch upon your point that you made earlier, it's very true that Iran policy -- 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 the contracts that you have signed today in Iran in the hydrocarbon sector -- there's something called a buy-back agreement -- I don't know if you are familiar with this buy-back agreement. The buy-back agreement is something that you only find in Iran. It was set up because it is aligned with Islamic law that prohibits the guarantee of a certain rate of return with no risk, similar to the problems that you have with getting a fixed interest rate in Islam -- it's the same principle.

If I could get my notes on the buy-back agreement to explain that a little bit. Okay, buy-back contracts -- and you can find more information about these again on the DOE Web site under the country analysis for Iran. They are essentially risk service contracts where the contractor, in this case the foreign company, funds all of the investment from a commercial field, and then receives remuneration from NIOC, which is the Iranian National Oil Company. It's based on a fix rate of return. Tom Stouffer was telling me -- our numbers had it between 15 and 17 percent return. Tom Stouffer has said, from his research, it's about 16 to 18 percent rate of return. And this is paid to the contractor in the form of NIOC's allocation of a share of production equal in value to the amount due.

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

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

MR. ZAHEDIN: The subject of your question, sir, would go beyond my expertise and knowledge, despite what Ms. Helen said, I am sorry 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 take the mike?

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

AMB. PELLETREAU: I don't know the precise answer. I think your presumptions are largely in the right direction. The problem with all legislation, as you know, we have these legislative alternatives, is that people deal on ethereal theory without dealing in ramifications. And the ramifications, both geopolitical as well as 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 legal claims against non-cash assets, which may be real. But they also may be difficult to unwind.

Q [Off-mike and inaudible.]

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

Also, you do have an awkward situation congressional-executive branch relations, and I try not to get into the politics of politics very much. But for whatever reason, this Congress doesn't have immense confidence in this administration, even though it's my own view administrations are 90 to 95 percent right 90 to 95 percent of the time, no matter who is in office. But the split between the executive and legislative branches is a split that does get reflected sometimes in this kind of issue as you see on other hot-button countries as well -- like Cuba. So that becomes a difficulty.

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

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

But I will tell you, for getting the amendments to the Foreign Sovereign Immunities Act, the long-term interesting aspect of that act 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 of that act is that it says than when a foreign government acts as a corporation it comes under U.S. corporate law, which applies among other things antitrust law, which implies among other things an organization like OPEC can be considered to be a trust that may be affected by United States law. And to me that's far more significant in the long term than any of the amendments to the act itself.

Yes?

MR. ZAHEDIN: In response to your question, sir, I will say I am not a representative of the government here, so I am not aware of the reasons why the government has decided not to appear before the courts of the United States. But, as I mentioned in my speech, in my developing on the 1996 amendment giving jurisdiction to the U.S. courts over foreign state for certain actions that happened outside the United States, is contrary to the very principle of sovereign immunity under international law and perhaps this must be or has been one 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 law that has been drafted by the Congress.

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

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

AMB. PELLETROU: Here, sir.

Q [Off-mike and inaudible.]

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

Thank you.

Q Yeah, I have two questions. One is what we have been talking about here is foreign direct investment and the impediments that 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 by U.S. companies could be things like removing the U.S. objections to lending to Iran at the World Bank and IMF. I used to also serve at the IMF, so I realize the politics behind that. And allowing for instance the purchase of euro bonds by U.S. and the financial institutions which thinks they're cleared, and stated it internationally, and have cost-default clauses which doesn't allow the government to hand-pick U.S. companies and not pay them -- maybe a good solution to still get more interaction between the two countries.

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

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

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

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

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

There was an inventory of all claims of all properties and all monies, and that inventory was conducted by the Department of Treasury, and it was in violation of U.S. law not to respond to this on behalf of many multinational and large defense contractors. I helped them do their inventories. And I am wondering if -- and I think this is an interesting issue, because many people are interested in the subject. Are those -- is that information and the federal financing bank and all the FMS and other U.S. government trust accounting accounts, and all the financial crossruffs where military equipment was sold on letters of offer and acceptance to other foreign governments and those funds returned to the exchequer. Is all that transparent and available to the public? I think it would 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 much money, but we are not going to tell you kind of debates that go on. Is that available? Have there been steps made to make that available, or in your work at CRS have you found this information and made it directly available to the Congress? And in return, that should perhaps be posted on the Web site or somewhere where there would be public disclosure. I think that would tend to cut through a lot of needless debate over who has what, what is available, and perhaps help remove yet another component of indecision and mystery surrounding an issue which I think from both America's and Iran's standpoint -- and I would reach back to the sensitivity so brilliantly presented by Representative Leach to the culture of Iran and the Shi'ia which looks to justice. We are both republics built on the fundamental and, if you will, social religious inception of justice. And I think unless we respect that of each other and look to these issues and pare away the mystery, I think we will come closer more quickly to a resolution respecting each other's desire for 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 that information that you talked about. If a particular member of Congress were to ask me to ask DOD for that information, I could then task them to send me that information. It could be classified, although I expect it is not classified because most contracts for sales of military equipment to foreign governments are disclosed to Congress under Section 36(B) of the Foreign Assistance Act and some parts may be classified where specific technology is involved. But I suspect that it's gone long enough since the shah was in power that that would not be classified information and that DOD could turn it over if one were to task them to turn it over. But honestly I have not done such a specific inquiry because I have not been requested to, and I don't think there's a -- the things I work on have more of a mass market, and this is sort of specialized. So I would have to receive a specific request to get this information.

MR. STOUFFER: Perhaps if I can continue this discussion. Tom Stouffer. And let me being an economist and engineer here play the lawyer and spin out a hypothetical, because I suspect that transparency might be distinctly not in our interests. And consider the hypothetical. Let's say the claim just for the FMS accounts, related accounts, is about 4 to 4.5 billion dollars, which with interest at the kinds of rates recognized in The Hague -- I was in many of those cases -- comes to about $15 billion to pay in round numbers. And let's say there is only $400 million in cash. That means somehow we have to come up with $414.6 billion, which calls in appropriation, and which could be kind of embarrassing. I throw that out as a pure hypothetical.

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

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

My question to Chairman Leach is, first of all, would you please address the thorny issue of the conflict between Congress's impending amendment and commitment to the Algiers declaration and others that Mr. Zahedin spoke about? And furthermore, as a political scientist, it appears to me that whenever there is a small window of opportunity opened up for betterment of U.S.-Iran relations, there are strong countertrends set forth by various lobbying groups and so forth. And I understand tomorrow in this very room there'll be yet another report on Iran's alleged proliferation of weapons of mass destruction, and so forth, by some people in this very room. And my question to you, Chairman Leach, is can this vicious circle be broken at all? You spoke about Congress's willingness to have better ties with Iran, but what concrete measures or steps is Congress willing to take toward that direction?

I spoke with some members of Iran's parliament just a couple of weeks ago from the reformist faction who are very interested in meeting with some members of the U.S. Congress. And do you see any political will on the part of Congress to reciprocate such a thing?

REP. LEACH: Well, first let me say on a personal level I think there is an increasing interest in members of Congress to have more in a relationship with Iranian government officials, and then understanding the two sides have to come together to at least understand each other.

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

Secondly, when it comes to property, property is a serious issue. It is a constitutional issue. Again, I don't want to exaggerate, but you go back in American political science, Thomas Jefferson was basically a Lockean and made one change -- Locke talked about rights of life, liberty and property. Jefferson inserted these words "pursuit of happiness," which I thought were Jeffersonian. I recently discovered he stole them from a Swiss natural rights philosopher.

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

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

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

Q I'd like to ask the panel, or perhaps Donald Bloom, if the U.S. government has any idea what President Khatami wanted when he made his speech in Berlin and asked for further unilateral initiatives. As I recall, Foreign Minister Kharazi was very specific about pistachios and carpets and caviar, and that was one of the reasons Secretary Albright could respond very directly and grant that. But as I understand it no one has a clear idea of what President Khatami had in mind. If Donald Bloom had some idea I would like to ask Jim Leach that if ever was asked is politically possible.

REP. LEACH: Go ahead.

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

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

Q Well, is there anything in this financial area that might fit the bill that President Khatami requested of some unilateral initiative on our side? Is anybody thinking about what that might be?

AMB. PELLETROU: Well, this is an area that is open for further development between the two governments. And the engagement has been begun. It will be, as I think we can conclude from the session today, it will be fairly long. Parts of it will be quite contentious. But it's a positive thing that the first steps have been taken to engage in such a discussion regarding a settlement of claims.

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

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

MR. AMIRAHMADI: Thank you very much.

First off, I have two good newses actually. One news is President Khatami will be visiting the United States again in the first week of September. I am hoping that the administration is ready 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 last two years ago, Iran's speaker of parliament will be in the country. Mr. Karrubi will be visiting the United States in the last week of August.

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

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

Thank you very much.

[APPLAUSE AND END OF EVENT.]