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Middle East Digest: March 7, 2007

Bureau of Public Affairs
March 7, 2007

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The Middle East Digest provides text and audio from the Daily Press Briefing. For the full briefings, please visit http://www.state.gov/r/pa/prs/dpb/

From the Daily Briefing on March 7, 2007:

QUESTION: Do you have anything more on the regional meeting in Baghdad over the weekend, Iran is attending? Could you provide a few more details on what the U.S. hopes to get out of this and your views on Iran's attendance and whether you plan any bilats?

MR. MCCORMACK: Right. Well, first of all, let's refocus. This is a meeting that is hosted by the Iraqis and the focus is on Iraq. It is not on the United States. We are there as an attendee and we are pleased to be going.

It is -- part of Iraq's regional diplomacy where they are working with their neighbors in the region to develop the kind of relationship that they want to have that will help them through their political processes, help them find their place in the region. And it is also designed to help the neighbors in the region have a degree of assurance about what the Iraqi Government's plans are vis--vis economic reform, political reform and security. I'll leave it to the Iraqi Government to outline exactly what the agenda of the meeting will be. I expect there will be a heavy focus on security, perhaps a presentation on the Baghdad security plan as well as a discussion about those security issues that require discussion among neighbors: controlling borders, security for transmission of electricity and fuel oil and other such commodities. So that -- it will be a discussion, a preparatory meeting, if you will, for a ministerial meeting that is intended to be held at some point in April, perhaps the first half of April.

So I think it's a good opening discussion for this particular grouping. There had previously been regional neighbor meetings hosted by Turkey on a variety of different topics, but this is the first one where you'll have the P-5 present as well.

On the second part of your topic, I can't tell if there's going to be any particular interaction between our representatives -- Zal Khalilzad, our Ambassador there, and David Satterfield, who is the Secretary's advisor on Iraq. We shall see if we an opportunity to raise the issue of EFPs and Iran's support for those networks and supply of those networks with the technology know-how to construct these EFPs, you bet we're going to raise it, because that gets to an issue of force protection for our troops and we're going to take every possible opportunity that we can take to ensure that our troops are protected in theater. And if that means having a discussion with the Iranian representative in the context of this meeting, yeah, we're going to take that opportunity.

QUESTION: But have you approached the Iranians and asked them for that opportunity? When you say "You bet we'll raise it," but --


QUESTION: Have you approached them and said, "We'd like to discuss this face to face?"

MR. MCCORMACK: Well, there are a number of different opportunities to communicate with the Iranians. You have, of course, the Swiss channel. There is the ambassador-to-ambassador channel, which is also available to both sides. There has not been a meeting involving those two ambassadors to date. And then of course, you have the opportunities in this -- in the context of this conference, so we will see. We will see what interactions may come about. I'm not going to -- I'll go back to my standard line. I'm not going to point you in the direction of any particular diplomatic interaction, nor am I going to wave you off of any one occurring.

QUESTION: But if you're making the effort to be in the same room as them anyway, why not go the extra mile and arrange a bilateral to discuss this key issue?

MR. MCCORMACK: Well, again, the -- everybody -- I am going to resist all attempts to make this about the United States and Iran. This conference, this meeting is about Iraq. And it is hosted by the Iraqis, it is going to be run by the Iraqis, they are going to set the agenda, they are taking a lead on drafting a potential statement coming out of this meeting or perhaps, the next one. So any opportunities for -- that we or the Iranians may take to exchange information or to have a discussion on the security issues related to Iraq in this meeting will be -- are incidental.

Again, the focus of this is -- this meeting is Iraq, as it properly should be, and let's make it clear that the pathway for any negotiations on any issues not related to Iraq is with the P-5+1 process. And the Iranian Government knows full well what it is that they have to do in order to realize those discussions and those negotiations.

QUESTION: So just to clarify, you said you have the opportunity to talk to them. It could be around the table with others involved or it could be face to face. You're not saying it's going to be one or the other?

MR. MCCORMACK: You know, I'm not going to try to predict. You know, our -- Zal or David Satterfield certainly aren't going to go run in a corner if there's an opportunity for a discussion on that -- security issues related to Iraq. I'm not going to try to predict any particular manner of the interaction.

QUESTION: Is there one that you favor, though?

MR. MCCORMACK: Again, this is -- you know, this is diplomacy. People want things to be scripted down to the last iota -- you know, when somebody picks up their glass of orange juice and then do they put it back down on the napkin or not. You know, look, we're not going to try to prescribe those sorts of things.

If there is some interaction, some diplomatic interaction, some discussion in the room, we are going to make every effort to fully inform you that such a discussion took place and then give you as full a briefing as we possibly can on the contents of such a discussion. I cannot tell you that one will take place. I can tell you, however, that should one take place, that it will not be on any issue other than Iraq and issues related to Iraq security.


QUESTION: Well, once again, just to follow through --


QUESTION: This is a meeting that'll focus heavily on security?


QUESTION: Security of American troops and the security of Baghdad and Iraq are a major concern to every party; these EFPs are carrying American soldiers and yet --


QUESTION: -- no special effort has been made to set up a meeting on the sidelines between Americans and Iranians?

MR. MCCORMACK: Again, we will see. I said that if we have the opportunity that of course we're going to take that opportunity. And I am not going to, despite everybody's efforts, try to detail exactly how that might happen and what the manner might be, whether or not they're going to be standing five feet away from everybody else or seated at the table.

QUESTION: Are you optimistic it might happen?

MR. MCCORMACK: Steve, we shall see. We shall see. I'm not going to tie the hand of our diplomats who are going to this meeting. But I will reiterate that the issue is Iraq and certainly the issues that you outlined about Baghdad security as well as EFPs are of deep concern to us. And one interesting note, we wouldn't even be having this discussion if President Bush hadn't raised it back in January. And I think there's something to be said for bringing the issue to the fore and having -- raising it in public. The Iranians are going to be around a table with all of Iraq's neighbors -- Iraqis, as well as us -- and there's a different dynamic in that room potentially because this issue is out there. If the President had not raised it and talked about what we are going to be doing concerning protection of our troops, you wouldn't be having this discussion right now.


QUESTION: What's the United States message to Iraq's neighbors this weekend about what they can do to help in Iraq? What are you looking for from them?

MR. MCCORMACK: Well, it's going to be up to them. We urge them to come in the spirit of full participation and being open to listening to what the Iraqi Government is doing vis--vis security and also come ready to fully participate and to discuss what commitments they might make that could help reassure this Iraqi Government that they do have friends in the region that are concerned about their future that will help the Iraqis understand that they do have a place in the region. And what we hope or what we would hope also for the Iraqis is that in sitting down and describing to their neighbors what it is that they are doing and their plans, that that offers their neighbors some degree of assurance as to what their plans are. So it's an opportunity to have that discussion.

Ultimately you have -- you want this to lead to a discussion at the ministerial level and also there is potentially an interplay here with the International Compact for Iraq. Now, that is a totally separate effort. But you can imagine if there is a degree of mutual reassurance and understanding that takes place within these neighbors meetings that that somehow can also reinforce the efforts on the International Compact for Iraq where you have a much more focused dialogue on Iraqi reconstruction and economic reform and what neighbors might -- what members of the International Compact for Iraq might do to help out Iraq on those issues.


QUESTION: So is it possible that you could be laying the groundwork then for a bilateral between the Secretary and the Iranian Foreign Minister, whoever attends the meeting in mid-April, to discuss this?

MR. MCCORMACK: I'm not leading you down that pathway.


QUESTION: Are you open to that possibility?

MR. MCCORMACK: You know, let's get through this first -- let's get through this first meeting. I suppose at this point I would offer the same line about this meeting as I would about a potential ministerial meeting; certainly, if the Secretary has an opportunity to raise issues related to the security of our troops, she's not going to shy away from those opportunities, nor is she going to go run and hide in the corner if there's a particular opportunity for an interaction with an Iranian diplomat on issues related to Iraq and Iraqi security.

QUESTION: Well, I mean, just to follow up, and I'm sorry if you addressed this already, on the North Korea six-party talks, for instance, you had talks on a bilateral context within the context of the six-party talks. So as to say that Ambassador Hill sat down with his counterpart to discuss issues related to the nuclear file*, is that a dynamic that you see flowing from this process?

MR. MCCORMACK: Totally different, apples and oranges, comparing these two things.

QUESTION: Well, no, I understand that the issues are apple and oranges, but I mean, is a multilateral forum --

MR. MCCORMACK: I would say the process -- no, I would say the processes are apples and oranges. What you have in the six-party talks is a negotiating forum. There's an agreed upon agenda with a definitive objective: denuclearization of the Korean Peninsula. You also have that potential with the P-5+1 process, but Iran has to meet certain conditions in order to realize those kinds of negotiations. And in those negotiations, they can raise whatever it is that they want to, but the focus would be on addressing Iran's nuclear program.

Now, those two, if you wanted to try to make some analogy between those two processes, then you might have a case. But in terms of this Iraq neighbors meeting, it's focused on Iraq. It's not a negotiation and it's not one that is hosted by us. We are invited guests, as opposed to stakeholders in the process.


QUESTION: A follow-up on Iran. The Financial Times has a story suggesting that Germany's biggest importer of natural gas is pursuing a gas supply contract with Iran in order to reduce its dependence on Russia.


QUESTION: Any comment?

MR. MCCORMACK: Let's see. We have something on this. Our reaction would be that we applaud the company's focus on diversifying supply of gas to help guarantee reliable supplies; however, we're a little surprised at the selection. There is little evidence that Iran would prove to be a reliable supplier and we would point to a 2005 deal with India that unraveled over shifting cost estimates by the Iranians for how they would -- what they would supply to the Indians.

And just a general comment about business dealings with Iran. It is -- we are in a time now where it is -- it should not be business as usual in terms of exchanges, business exchanges, with Iran. I'm not saying that we are trying to cut off business exchanges with Iran, but companies need to look closely at what their interactions are and with whom they are dealing. That has been one of the points of the Security Council resolution as well as our discussions with European financial institutions as well as other financial institutions around the globe.

I would note also that the German Government has been quite responsible in this regard. Export credits in support of business dealings with Iran are down substantially. I understand the Japanese have also taken some steps in this regard. So clearly governments are not treating this as a business as usual atmosphere and we would encourage companies around the world when they are looking at those types of business dealings or potential business dealings with the Iranian Government to examine them closely vis--vis the situation in which the international system finds itself now.

QUESTION: But why are you saying you're not trying to dissuade -- you're not trying to cut off dealings? I mean, you are.

MR. MCCORMACK: No, while we are -- first of all, it's not within our power to do so.

QUESTION: Well, that's beside the point. As to what you're encouraging, I mean, Stuart Levey is making speeches in the region, you're here at the podium. You dance around it, but it seems to me you're doing a lot of encouraging people to stop dealing with Iran.

MR. MCCORMACK: No, look, businesses will make their own decisions based on their assessment of reward and risk. And the only point that I'm trying to make is that we are in a different atmosphere with respect to risk involving Iran. They are under Chapter 7, Article 41 sanctions at the moment and there is every prospect that they will find themselves under additional sanctions in the not-too-distant future with a new Security Council resolution. And businesses around the world, including some major financial institutions, have decided that they -- that the risk involved, because Iran now finds itself in this situation of being under Chapter 7 resolution, is not worth the potential rewards.

And those are business decisions that they themselves have to make. They aren't -- those businesses aren't necessarily answerable to governments. Of course, they have to abide by rules and laws and regulations. They're answerable to their shareholders. And so they're going to make decisions about where they put their capital, where they invest and with whom they do business. And if there is an increased risk involved in some of those transactions, I think it only stands to reason that some of those businesses are going to choose not to do business with the Iranian Government.

QUESTION: Can I follow up on that?

MR. MCCORMACK: Yeah, sure.

QUESTION: You may not have the actual power to cut them -- to cut some of these transactions off, but certainly Stuart Levey and other U.S. officials have traveled to various European countries, and if not kind of put the fear of God in them and certainly discouraged them and made them take a hard look, encouraged them to take a hard look, reminding them of the risks of these type of transactions, so while you may not be trying to -- you may not have the power to cut them off, certainly wouldn't you agree that you're discouraging businesses from doing business with Iran?

MR. MCCORMACK: Well, what we are encouraging businesses to do is to take a hard look at with whom they are dealing. There have been myriad cases of Iran setting up front companies. Those front companies would be making purchases on behalf of all sorts of missile programs, WMD programs, and potentially involved in other types of illicit activity.

Our counsel is that -- take a close look at with whom you are dealing and also keep in mind that the United States has a responsibility to enforce its laws and to enforce its regulations, as with any state around the world. And now, there is the additional responsibility of looking at with whom you are dealing because of a Security Council resolution that is in place.

So -- and these come about because of the behavior of the Iranian Government, and it is the consensus among the Security Council that that behavior has merited a Security -- a Chapter 7 Security Council resolution. And there is, beyond the Security Council, widespread concern about Iran's activities in developing a nuclear weapon and also with respect to its missile development.

So there's -- this is -- there is certainly a different climate that exists, but that different climate exists because of Iran's behavior and its refusal to heed the very reasonable calls of the international system and its failure also to take up the opportunities afforded it by the P-5+1 for negotiations.


QUESTION: There are reports that a top Iranian general who's involved in the nuclear program has either defected or been kidnapped by Israel, and there's reports that he may end up being in the United States. Do you have any information on his whereabouts?

MR. MCCORMACK: No information on it. I've seen the press reports. No information for you.

QUESTION: Would you at least deny that he's in the United States?

MR. MCCORMACK: Kirit, I couldn't tell you. I have no information on the matter.

QUESTION: Sean, on a related subject. (Inaudible) *quotes a British* official as saying that no one is discussing full blown trade and economic sanctions at this stage, referring to the UN Security Council deliberations.


QUESTION: Is that correct?

MR. MCCORMACK: That's correct. That's correct. These are -- you know where we are now. There's a Security Council resolution that covers -- it focuses on assets, transactions and individuals associated with their nuclear program. And we are taking an incremental approach, building on that base right now in drafting the language for this next Security Council resolution. So, no, nobody is talking about a full-blown sanctions resolution that's widespread that covers all of the Iranian economy.

QUESTION: Nick said yesterday on the Hill that he was interested in seeing some kind of restrictions put on export credits given to the Iranians. Is that part of the discussions?

MR. MCCORMACK: It has been a topic that's been discussed. The German Government itself -- I just talked about the fact that it has taken steps to reduce the number of export credits. I suppose there's probably also a reduction in demand there because people are looking at with whom they're dealing. And it's a topic that states are going to have to look at individually regardless of the discussion in the Security Council right now, but it's a topic that's being discussed.


QUESTION: Is that something the U.S. would like to see formally enshrined in the next resolution?

MR. MCCORMACK: Well, it's something that is being examined with respect to the resolution.


QUESTION: Did the Saudis brief the U.S. about the results of the visit of Ahmadi-Nejad to Saudi Arabia last week or did they hint if they will -- the Iranians may play a positive role in the Baghdad meeting?

MR. MCCORMACK: I've heard that they're going to attend. I've seen the press reports that the Iranians are going to attend. The Iraqis have said that they're going to attend. I know that we at a variety of levels talk to the Saudi Government about the meeting between King Abdullah* and President Ahmadi-Nejad. I don't have a readout for you, though.

QUESTION: Do you have any comment on the World Bank report today on funds being funneled through President Abbas' office? They're questioning whether there's enough oversight for those funds and recommending that funds should now be channeled through the finance ministry.

MR. MCCORMACK: I understand that this report is out. Our guys haven't looked at it. We haven't had a chance to look at it.

Just sort of some background information off the top, though. There has been very limited number of actual fund transfers to the presidency, never mind the Palestinian Authority. I did a real quick check before I came out here, and I could find three that have happened over the past couple of years.

QUESTION: And how much was --

MR. MCCORMACK: The first -- I don't have the exact numbers right now, but the first two dealt with -- and these were all out in the press so you can go back and look in our archives. You've all done reporting on this. The first couple dealt with assisting the PA with, I think, electricity payments and infrastructure payments, and that was done in two tranches. The last -- the most recent one had to do with assisting the Palestinian Authority prior to the election of Hamas with infrastructure, governance assistance, post-Gaza withdrawal.

Now, what happened is before all of that money got spent there was the election of Hamas. They took over the Palestinian Authority. And so there was, I think, actually $3 or $4 million in unspent funds that were returned to the United States after that by the Palestinians.

So those are the three instances recently where there have been direct -- there's been direct assistance to the Palestinian Authority. There have been other in-kind humanitarian assistance donations like with medicines and that sort of thing. And what we're talking about with the proposed $86 million supplemental request, or reprogramming request, deals with training as well as in-kind assistance of non-lethal equipment -- uniforms, communications gear, that sort of thing.

So I'm not quite sure what it is that they're referring to. There were for all of those transitions quite detailed safeguards and auditing procedures that were worked out. One of the big holes the Palestinians had to dig themselves out from after the death of Yasser Arafat was reforming their financial management and accounting systems because there was a -- you know, during the era of Yasser Arafat a lot of this stuff was done with people handing out envelopes filled with dollar bills. And that era, in terms of President Abbas, we are confident has ended.

Now, with respect to funneling funds through the finance ministry of a Hamas-led government, that's just -- you know, that's not going to happen.

QUESTION: This World Bank report is referring largely to, I think, the funds provided by the Arab League states. But if the World Bank is questioning whether there's enough oversight for that money, does this not make your case harder to argue in Congress for the 86 million?

MR. MCCORMACK: Well, let me look into exactly what it is that you're talking about, Sue. The report said the Arab League funds that are going in?

QUESTION: I believe that this is --

MR. MCCORMACK: That have been pledged?

QUESTION: -- referring to the Arab League funds.

MR. MCCORMACK: Yeah, I know that there have been a lot of funds that were pledged. I'm unclear as to exactly how much of that has been delivered. Again, there have been discussions about this, making sure that any assistance is humanitarian assistance and it reaches those for whom it was intended.

So we'll -- I'm happy to look into it and get you a detailed answer. It may require some time, as people have to look through the report and understand it.

QUESTION: I think it also covers the Israeli $100 million in taxes, too.

MR. MCCORMACK: Again, we'll take a look at it and we'll get you a reaction, but we have to read it first.

QUESTION: Okay, thank you.


QUESTION: Did you have a chance to listen to the speech by King Abdullah of Jordan before Congress? And if so, what's your reaction to his --

MR. MCCORMACK: I saw it, parts of it. I have to confess I have not seen the full text. But King Abdullah is a good friend and a close ally. An indication of that is the fact that he had dinner over at the White House with President Bush. Secretary Rice hosted him here for a working lunch. So we -- he is a good friend and he is somebody who is passionate about the cause of peace in the region. We value his counsel. So but I have to confess I haven't seen the text of his remarks.

QUESTION: But what's -- why the timing now, like to honor him like in Congress, White House and State? Is there any specific element with him?

MR. MCCORMACK: Well, it's what you do with friends. We're able to honor our friends in different ways, and this is just one way that we do it. It's a real honor to speak before the Congress like that.

QUESTION: Thank you.

QUESTION: Thank you.

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