Unrevised transcript of evidence taken before

The Select Committee on the European Union

External Affairs (Sub-Committee C)

Inquiry on

EU-IRAN: UPDATE ON THE INTERIM AGREEMENT

Evidence Session No. 1 Heard in Public Questions 1 - 13

THURSDAY 8 MAY 2014

10.05 am

Witness: Sir Richard Dalton

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Members present

Lord Tugendhat (Chairman)

Baroness Bonham-Carter of Yarnbury

Baroness Coussins

Lord Foulkes of Cumnock

Baroness Henig

Lord Jopling

Lord Lamont of Lerwick

Baroness Quin

Lord Radice

Earl of Sandwich

Lord Trimble

Baroness Young of Hornsey

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Examination of Witness

Sir Richard Dalton

Q1 The Chairman: Sir Richard, thank you very much for coming back. We all remember

the very successful meeting that we had with you some months ago when you kindly agreed

that you would come back in the New Year. In fact, rather more time has passed than we

would have wished. On the other hand quite a lot of things have happened. Unlike the

previous session, I believe you have agreed that this session should be on the record. As I

think you probably know, we are going to hear evidence from Mr Sharma later this morning.

If we might kick off, as I said quite a lot of things have happened since we last saw you and I

wonder whether you will be kind enough to give us your view of the current state of play

and where you think things might go, looking at both sides of the equation: what is

happening on the western side and what is happening within Iran itself.

Sir Richard Dalton: Specifically on the nuclear negotiations?

The Chairman: Yes.

Sir Richard Dalton: Would you like me to talk about the regional situation at all, or shall

we leave that on one side?

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The Chairman: No, let us kick off on the nuclear negotiations, but I would not want you

not to talk about the region.

Sir Richard Dalton: Ajay Sharma, when you see him, will have come hotfoot from technical

talks in New York designed to prepare the way for high-level meetings next week. This is

something of a turning point because both sides have agreed to start drafting an agreement.

So in diplomatic parlance I am hoping that what will emerge at the end of the meetings in

New York is a single common text for an agreement, albeit one that will be full of disputed

and disagreed passages and hence square brackets on the wording.

What might be happening over the next three months? They are working to a deadline to

try to achieve a comprehensive agreement by 20 July this year. I think we could foresee

three possible outcomes. The first is success: they manage to solve all the outstanding issues.

The second is a further interim agreement in which they bank matters on which they have a

common text but leave others open, so they declare incomplete progress but progress none

the less. The third outcome would be some private agreements that in fact they have made

progress but agree that they have disagreed, that they have not been able to reach either an

interim or a complete comprehensive agreement. Then they would go away and resume

work later on to try to bridge the outstanding gaps.

I do not believe that the fourth possible scenario of a complete collapse is at all likely. Even

in the darkest days when there appeared to be no progress at all, both sides were

thoroughly committed to continuing the diplomatic process, albeit that for several years they

trod water. Now, I believe, both sides have no better alternative to realise their basic

objectives than this potential comprehensive agreement. In other words, politically both

sides have a tremendous investment in the success of these talks.

What are the questions going to be that have to be answered before one can assess

whether they will succeed either with a comprehensive agreement or a further interim

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agreement? I think there are three that we need to look at. The first is why are people

relatively optimistic in their public pronouncements? Certainly, commentators are more

upbeat than they have been for months. Secondly, who is in charge? What are the political

forces that have to be reconciled to the text of an agreement at the end of the day? Thirdly,

can one foresee spoiling action from one side or the other?

To start with the guarded optimism, I believe that there will be an agreement at the end of

this process. I think it is 60:40 or better in favour of a comprehensive agreement. I cannot

say that those odds are so good for this July, but the reason for that is that there is growing

trust in the good faith of either side, although the talks are still bedevilled by distrust.

Secondly, the potential answers to the different technical issues in play have now been

thoroughly discussed, and they are growing in potential strength as solutions to the

problems rather than being weakened in the course of the official discussions that are, thank

goodness, secret and in the comment that one gets in political or academic circles. I think

those are the two main reasons why there is guarded optimism.

On the detail, though, I think we can say that there is progress on transparency, on how to

build permanently on Iran’s commitments that it will open up more to international

inspection and, when conditions are right, accede to the gold standard for transparency and

inspection: namely, the additional protocol to Iran’s safeguards agreement. It can put that

for ratification once there is a full package in place, including action to be taken by the other

side on lifting sanctions, so that appears to have been agreed in principle.

On certain matters, Iran has also agreed to go further than the additional protocol requires

on both transparency and limitations to its activities. I think the gaps have closed, too, on

the vexed question of the heavy water-moderated reactor at Arak that the Iranians have

been building for a number of years. It is not switched on. It is getting closer to the point at

which it might be switched on one day, but the Iranians have, by their own public admission,

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agreed to modify it so that it produces much less plutonium. There is also the question of

how it might be fuelled, and potentially fuelling that reactor from Iran’s stockpiles of low-

enriched uranium might be a way of reducing anxiety about those stockpiles, but it does not

appear from the public comment that there is an agreement on that yet. It is not now being

touted as a major obstacle in the way it was last year, and that is good.

Then, on the potential military dimensions of Iran’s past programme that have to be

investigated by the International Atomic Energy Agency, the secretariat in Vienna is

reporting reasonable progress in Iran responding to IAEA questions, so the work

programme to shed light on what it might have done in the past contrary to its undertakings

that its programme would always be peaceful is so far developing satisfactorily.

Where are the gaps? Clearly the future scale of Iran’s enrichment capability is a major issue.

The Iranians will want it to be as large as possible so that they can preserve it intact for

creating low-enriched uranium and then turn that material into fuel for future generations of

as yet unbuilt power reactors. The United States, its negotiating partners and Israel will

want to keep that capability as small as possible, both in terms of the numbers of operating

centrifuges and the modernity—in other words, the productivity—of those remaining

centrifuges.

Finally, what happens to the production of those centrifuges? A milestone in addressing that

question will have been achieved in New York in the past few days in that it is reported that

Iran has at last presented to its negotiating partners a scheme for its “practical need” for

enrichment. This is a very important phrase from the agreement of 24 November 2013

under which this whole process is governed, because the international community

recognises that the peaceful nuclear programme to which Iran has a right should at the end

of the day accommodate some enrichment, provided that it is geared to those practical

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needs and provided that everything else—limitation, supervision and Iranian guarantees

about wholly peaceful use—is satisfactory.

I do not know whether Ajay Sharma will be able to comment on those when he returns, but

to someone like me, knowing what future reactor building Iran is bidding for—whether it is

research reactors for medical purposes or power reactors, and over what timescale—who

is going to build them and how they will be fuelled is at the heart of this debate. There is

considerable uncertainty about some matters. There is a lot of pressure for them to be

included in the negotiations, but Iran is highly resistant.

The chief one is Iran’s missile capabilities. It does not have a nuclear weapons-building

programme and it does not have nuclear weapons. It has a conventional force that has

outdated equipment, so over the last 20 or 30 years it has concentrated on missiles, given in

particular that its own cities were bombarded by Iraq during the war that Iraq launched on

Iran in the 1980s. The Iranians see missiles as an essential part of their defence. Naturally,

the Israelis and others see the capability of missiles being adapted for carrying weapons of

mass destruction as a part of the equation, too. Some device will need to be found so that

there is some form of transparency on aspects of Iran’s missile programme, and I suspect

that will come down to the examination of rumours that Iran may have done some design

work on warheads capable of carrying nuclear weapons on the tips of its missiles. But there

will not be an agreement if the United States and its partners insist on putting Iran’s missile

infantry into the negotiation formally.

A key area that has not been agreed is the duration of the transitional proposals for limiting

and supervising Iran's programme. The ultimate aim that is agreed in the 24 November 2013

programme of action under which these negotiations take place is that Iran’s nuclear status

at the UN Security Council and in the International Atomic Energy Agency will be

normalised in due course. But does “in due course” mean once the additional protocol is

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implemented and the IAEA has certified that there are no materials or activities that are not

peaceful? That could take four or five years. Or does “in due course” mean in 20, 30 or 40

years, as Iran is more hardline opponents might wish? Who is in charge? At the moment, on

the Iranian side, the negotiators are supported by the Supreme Leader. He has publicly

declared his scepticism as to whether there will be a positive result. I believe that is so that

he can claim on the one hand claim success for endorsing the negotiation if it works, but also

to disassociate himself from it if it should fail. It is also consistent with his experience of the

United States as he sees it. Each time he thinks that Iran has made concessions, the United

States and its partners have tended to ask for more. His pessimism is understandable, if

unfortunate, because it is giving some encouragement to hardliners in Iran who do not want

to see any form of rapprochement with the United States and who are highly suspicious of

the kinds of restrictions and limitations on the nuclear programme which they believe

President Rouhani’s team may be going to concede. They are concerned that Iran should not

project an image of weakness by having made excessive concessions, and there is a lot of

sniping in the background against the negotiating team, which has support from very

important figures, including the Speaker of the Iranian parliament, the Majlis. Mr Ali Larijani

recently called for support for the negotiating team, but the best one can say at the moment

is “so far so good”.

The balance of political opinion in Iran is in favour of this process continuing and is in favour

of an end result that lifts sanctions. Provided that Iran is able to have a viable nuclear power

reactor-building programme in the long term with a substantial domestic technical input to

that programme, I believe that the majority in the Iranian establishment could be persuaded

to accept the kind of deal that might be saleable in Washington, and ultimately in Tel Aviv.

Washington and Tel Aviv are also in the throes of this very intense debate about what

would be acceptable in theory. Many Israeli commentators, including the Prime Minister,

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have staked out powerful positions that what has happened since November 2013 has been

a mistake and that there are perils ahead for Israel. People say that Iran cannot be trusted:

that it is merely after lifting sanctions while retaining its nuclear capabilities intact and that it

is not honest on declaring that it does not wish weapons of mass destruction and has no

intention of building nuclear weapons. They fear that the West will put in place a system of

inspection and monitoring that can be evaded. Others in Israel take quite the opposite view.

They believe that the kind of safety nets that the international community can build through

this negotiating process will be adequate. They also maintain that the so-called existential

threat from Iran is much less than the more hardline in Israel maintain. Clearly, the

Government’s voice is very strong in Israel and it is also strong in Congress. There are many

within the United States Congress who are equally suspicious and who believe that Iran is an

ineradicable enemy of the United States. They are reinforced, too, by some voices from the

Gulf Co-operation Council countries who believe that it would be a mistake in any

circumstance to lift sanctions even in recompense for a good nuclear agreement. So far, the

Administration has been laudably resistant to both sets of voices. Indeed, what has happened

since spring 2013 in the State Department and the White House on Iran diplomacy appears

to represent the very best of United States diplomatic activity. They have used the full

techniques and capability of which they are capable. They have used allies and supporters

skilfully and they have stood up to the kind of lobbying that I have just described. The

superpower has made a determination that this is right and they can bring Congress with

them, and at the end of day many people think that the doubters will have to fall into line.

That is as much as I can say now about how the lines of discussion have shaped up. I remain

optimistic.

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The Chairman: That is a very comprehensive discourse, as well as extremely clear and

thorough. Thank you very much indeed. I have the following speakers: Lord Jopling, Lord

Lamont and Lord Radice and Baroness Coussins, and Lord Foulkes.

Q2 Lord Jopling: Sir Richard, on the sanctions that have been applied in the past, can you

give us a picture of how effective they have been? What has been the effect of them on

normal life in Tehran and throughout the country, and to what extent is the effect of the

sanctions driving them to make a deal?

Sir Richard Dalton: The main reason why they are going for a deal is that they are

currently being blamed for something that they are not actually doing. They are not building

nuclear weapons and they are under extreme economic pressure as a combination of the

effects of long-term structural problems, mismanagement in recent years and sanctions. They

have a primary national requirement to lift nuclear-related international economic sanctions

and bilateral European and United States sanctions over time. However, the economic pain

is not so great that they will give in whatever the cost. It has to be a balanced agreement. As

candidate Obama said all those years ago, there has to be a path for Iran to make

concessions with honour. Sometimes this is translated as being able to declare a victory over

their enemies, preserving their dignity, preserving their independence and preserving their

view of their own destiny as having survived this unprecedented onslaught of economic

sanctions.

In hard facts, the trend for national economic growth is between 4% and 7%. They have been

forced back over the last few years into a recession that is to do, as I said, with the effect of

sanctions as well as economic mismanagement, particularly mismanagement that has

propelled inflation. But there is no doubt that when President Rouhani came to power,

looked into the books and made his first report to the Supreme Leader in summer 2013, the

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latter was shocked when he was given an honest picture of the then negative rate of growth

and the long-term prospects for the Iranian economy.

There are two particularly damaging sanctions. One is the financial effects on commercial

transactions, in particular the United States’ threats against companies and banks who want

to do business with Iran that they will lose their business in the United States if they

continue to trade with Iran. That has made everything much more expensive and has slowed

down a lot of economic activity. Secondly, there are the restrictions on investment in the

Iranian oil industry. Not only are they earning less for reinvestment from domestic

resources as a result of their inability to sell more than a million barrels a day in exports, but

they cannot get the kind of investment by outside investors that they need. Indeed, two big

Chinese investors have just been kicked off their contracts because they have done nothing

as a result of the pressure from the United States. Therefore the long-term viability of Iran

as a hydrocarbon producer, 10 or 15 years down the track, is in doubt unless those

restrictions can be lifted.

Q3 Lord Lamont of Lerwick: Chairman, I refer to my entry in the Register of Members’

Interests in that I am the unpaid chairman of the British Iranian Chamber of Commerce. I

have also been a director of companies that in the past have done business with Iran. I also

ought to declare an interest that I know Sir Richard quite well and we often discuss these

matters.

I will ask two questions. The first is about what I think is the elephant in the room: the scale

of the Iranian uranium enrichment programme. When I was in Tehran in January and met Mr

Zarif, the Foreign Minister, I detected great pessimism from him on that central issue. There

seems to be a huge gap between the calculations of the West and the calculations of Iran

about what is necessary for a civilian programme. I know that you are familiar with the

article that Mr Mousavian wrote in the FT, which said that the present enrichment was not

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enough for one power station, although it was enough, he said, to make a small bomb, while

the United States was arguing that it was enough for many power stations. There seems to

be such a huge gap between the arithmetic of what a given amount of uranium produced by

particular methods means in terms of both a bomb and of what it would generate electricity-

wise. Can you comment on that? The second question is very brief: are you sure that the

United States can lift sanctions?

Sir Richard Dalton: Yes, the gap on what Iran might need by way of domestic enrichment is

huge. A number of tests have been put forward to try to resolve that point. One is that Iran

will not have any domestically built nuclear reactors to fuel using domestic fuel for 10 years,

so it has no practical need for the generation of low-enriched uranium during that period. In

any case, it can buy that uranium on the overseas market. That fuel for those future

reactors, which are still notional, can be bought on international markets.

Another test is the one which the Iranians have put forward, which is that they cannot rely

on international suppliers, such has been their bad experience with them over the years.

Therefore they need to build up a stock, and build up a capability to generate large

quantities, which means continuing research and development on more advanced centrifuges

than the first-generation centrifuges they already have in the room.

A third test for the short term, which the Iranians have put forward—I do not know its

status now—is that they should be able to retain low-enriched uranium sufficient for one

reserve load for the existing Russian-built reactor at Bushehr in case that supply contract

goes down.

You are absolutely right that the gaps are huge, but Mr Mousavian is basically right that what

the Iranians have accumulated, and the capability they have in installed and operating

centrifuges, is small in relation to the hypothetical future needs of the country should they

have, for example, four more civil nuclear reactors generating power. The fact that these

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gaps are so big and the uncertainties are so great is what makes it so interesting that this

week, if reports are true, they have started to get down to analysing what the arithmetic

might be under different scenarios and to analyse what might or might not be acceptable to

either side.

Can the Americans lift sanctions? Yes they can. It will take time, and it will be an enormous

problem to establish confidence between the United States and Iran, because Iran will look

at the uncertainties, and they know perfectly well that the Administration has to persuade

and cajole Congress. It cannot order Congress to lift sanctions in a certain order and by a

certain time. So this could indeed, together with the scale of the enrichment programme and

the duration of the transitional measures, be among the very last issues to be dealt with.

One idea put forward by the National Iranian American Council, a group that thinks hard

about how to bridge the gaps between Iran and the United States, is that Congress should

give a power to the President to waive sanctions, or to suspend them, for longer periods

than is currently allowed for in the legislation in each set of sanctions, in order that the

Iranians can have certainty that the sanctions will be lifted at a point of time close to the

conclusion of the agreement and the fulfilment by Iran of its part of that agreement, but that

at the same time Congress would have the ability to withdraw that right of suspension or

waiving if it should be established that Iran has not fulfilled the agreement or is cheating.

I am not enough of an expert on what happens in the United States Congress or on the

balance of political forces to know whether such a device might work or whether it might

attract support. Of course, if it turns out that it is a good agreement from the point of view

of those countries negotiating with Iran, some things that now look very difficult might

become possible.

Q4 Lord Radice: I do not know whether you saw the interview which the Foreign

Minister and the Deputy Foreign Minister had with the Guardian; there was a report in the

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Guardian yesterday. He said that he was hopeful that an agreement would be reached, but he

then went on to say, “There are spoilers everywhere who don't want an agreement, there

are dark forces who don't like this process”. Presumably he is referring to both sides, was

he?

Sir Richard Dalton: I think so. I think that was an excellent interview and a very good

article. The headline picked on Israel, but he was probably referring to Saudi Arabia, and

maybe some other GCC states that are very reluctant to see the process go forward

successfully. He was also referring to Republicans on the right and maybe some Democrats,

even in the United States.

Lord Radice: And presumably he was also referring to forces inside Iran.

Sir Richard Dalton: Possibly, but I find it very hard to know whether the forces he is

referring to are tactical enemies of Rouhani as a controversial political figure in a partly

pluralistic society, trying to do the hard job of running a Government, or whether it

represents strategic obduracy and a determination to undertake spoiling action to prevent

there ever being agreement. Hitherto, the people who are sometimes pointed to as dark

forces or Rouhani’s opponents in Iran have always heeded the instruction of the Supreme

Leader, Ayatollah Khamenei. When the time comes and there is a text and there are no

more concessions to be wrung out of the United States or its negotiating partners, there will

be very extensive meetings, including some chaired personally by the Ayatollah. They will try

to reach a consensus and he will have the final word if consensus cannot emerge without it.

Q5 Baroness Coussins: If the New York talks turn out to be your second scenario—

that is, a partial agreement followed by a period of further negotiations—how likely would it

be that we could see any disruption towards those negotiations, or a significant policy

change on the part of the US, the EU and the UK as a result of the forthcoming elections in

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each of those places, or is the West’s position quite stable irrespective of any change in

political control?

Sir Richard Dalton: I think the position in the West is stable. As I said, both sides are

invested in this process, and both sides have no better way of meeting their fundamental

objective of no nuclear weapons in Iran; combating proliferation of nuclear weapons

generally, including across the Middle East; no conflict, and no more wars in which hundreds

of thousands of lives are lost; and peaceful development of the region generally, as it faces

enough problems as it is. So I see this as one of those questions that is largely bipartisan in

Europe. French policy, for example, has tended to be more hardline than British or German

policy in recent years, and the change of government in Paris did not affect that a year or

two back. Similarly, there have been changes in government in Britain and Germany in

relation to this issue, and the drive to achieve a negotiated solution has remained the same.

There was a key change in the policy of these countries in the course of 2013 when it

became apparent as a result of the secret phase of negotiations between the United States

and Iran—discussions would be a better word, because it was not a formal negotiation—as

was confirmed by public statements in New York at the General Assembly in September

2013, that Iran was going to be a lot more forthcoming. In return, the West decided that it

could, for the first time, commit to there being an Iranian nuclear enrichment capability long

term in the context of practical needs and of an otherwise satisfactory agreement that gave

assurance that Iran would not divert materials and technology to military use.

Q6 Lord Foulkes of Cumnock: I think you said that the chances of an agreement were

about 60:40. Can I revert to what my colleague Lord Radice said about the dark forces?

What is the biggest threat to the agreement—the dark forces in America or in Iran?

Sir Richard Dalton: The biggest threat lies in the combination of Israel and its more

extreme supporters in the United States establishment, particularly in Congress. Again, there

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are two schools of thought on this. One is that Israel’s might in relation to the US political

process and its determination that there should not be an agreement on the terms envisaged

in the 24 November programme of action are so great that they would be able to exert

significant force to derail an agreement at the final stage.

Another school of thought is that ultimately they will have to lump it, because they will be

faced with a choice between a major additional break with their principal ally and their

excoriation as opponents of an otherwise good agreement by a large section of European

opinion, and going along and making the best of it, relying on their nuclear deterrent

capability. At the end of the day, that is what they have, and Iran is not a suicidal state; Iran is

deterable in its exercise of military power. Therefore, when Netanyahu says at the end of

the relevant passage of his recent Holocaust Day speech, “Israel stands strong”, that is true.

Israel is not going to weaken in any way the power of that deterrent possibility of fighting

fire with fire and thereby preventing the fire from bursting out in the first place.

Lord Foulkes of Cumnock: In reply to Baroness Coussins, you said that you did not think

there was a better way of dealing with this. If the talks are derailed in some way, is there a

plan B, or is there no alternative?

Sir Richard Dalton: It depends partly how they are derailed, but I would point out that

there have been discoveries of alleged weapons supplies into the region from Iran, there has

been an incredibly bitter confrontation between Iran in its capacity as one of the primary

allies of President Assad in Syria, and the diplomatic process has continued because of its

importance to regional peace and the cause of non-proliferation. So in my view I think they

would regroup and find an alternative basis, if there were a collapse, which I do not think is

going to happen. The fundamentals would not have changed; in the event of a collapse, Israel

and other countries in the region would be less safe than they would be in the event of an

agreement. So the logic would propel them to try to find a basis for agreement. Again,

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reverting to Lord Jopling’s question, the punishing effect of sanctions on the Iranian economy

would provide a continued incentive on Iran to try to find the basis of an agreement.

Q7 Baroness Bonham-Carter of Yarnbury: In the article that Lord Radice referred to

in the Guardian, the Deputy Foreign Minister draws attention to the fact that there has to be

100% agreement among the negotiators. Do you feel that that is a potential problem—the

unity of desires, as it were—between the P5+1 countries.

Sir Richard Dalton: Minister Araqchi draws attention in that interview to the fact that the

P5+1 do not always see things from the same point of view. There is nothing new in that.

Everyone who negotiates with a committee knows how to discern the shades of difference

between them. At the end of the day they find a common position, although for years Russia

and China started from very different positions. They started from the position which

Germany, United States, France and Britain arrived at on 24 November 2013 in the

programme of action. They had been advocating that kind of staged approach, with a clearer

objective up front for Iran to persuade it to join in, at least three years previously. But Russia

and China recognised that their strategic interests lay in bringing the group as a whole—one

representing the permanent members of the Security Council and Germany, and able to

bring along the European Union as a whole, with strong links into other countries in the

region—and keeping that group together.

I think one can discount disagreements between the six countries negotiating with Iran from

torpedoing the talks at the final stage. The key point is that even if 95% is agreed between

both sides but if one of those very difficult questions that I mentioned is unresolved—on the

size of the enrichment programme or the duration of the transitional measures, and possibly

the missiles issue—then there is no agreement.

Q8 Earl of Sandwich: Could you say a word more about President Rouhani’s personal

situation? We perceive that as the major issue from here, but if you look at it from a

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domestic point of view, is the nuclear issue make or break for him against the considerable

other domestic problems that they have?

Sir Richard Dalton: Recent Iranian Presidents have all managed two terms—eight years in

all. If these nuclear negotiations were to collapse irrevocably, first it would be extremely

difficult for President Rouhani to present himself successfully to the Iranian electorate as an

Iranian powerbroker for a second time. Secondly, they have gone out on a limb in the

Iranian political establishment with significant gestures, such as the telephone call with

President Obama and in the statements they have been making about regional affairs. There

are many within the Iranian political establishment who do not agree and who constantly

seek to undermine those new lines of policy which Rouhani and Zarif have adopted.

So if the main event which they are engaged in fails—these nuclear negotiations, which have

such significant hopes of the Iranian electorate attached to them—then I believe that

President Rouhani will become a much weakened figure. He will find it very much harder to

achieve the other elements of the programme which he promised. His main slogan was

moderation and development: development meaning sound economic management, free of

factionalism, and moderation meaning rolling back the security state. If he succeeds in the

nuclear talks, his arm will be strengthened on what we would regard as important human

rights and political issues. It will also be strengthened on economic management—bringing in

foreign investment and changing the terms of the contracts for foreign investors in the

Iranian hydrocarbons industry, which is a vital question for the future of Iran. Conversely, if

he fails then he would be treading water.

Q9 Lord Trimble: A month or two ago, I was in Israel and met a very senior person

there, who I will not identify while the light is on over the door. He made an interesting

comment on this topic. He said that his assessment was that for Iran, Israel was not the

primary target. One knows that within the last year or two Iran made a serious attempt to

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destabilise one of the Gulf states. So looking at it from the point of view of the other Gulf

states and Saudi Arabia, how do you see things?

Sir Richard Dalton: I am not sure I know what you mean by Iran making a serious attempt

to destabilise a Gulf state. If you are referring to a cache of explosives that came from Iraq

and may ultimately have come from Iran via Hezbollah, then I would not describe that as a

serious attempt to destabilise a Gulf state.

Lord Trimble: Neither would I.

Sir Richard Dalton: Sorry, I have lost the gist of your question. Is it that Israel is not the

main target of Iran?

Lord Trimble: Yes.

Sir Richard Dalton: Very briefly, on Iran’s sense of its strategic situation, ever since the

revolution—and particularly when after the revolution there was some western support for

Iraq in the war against Iran—it has perceived itself to be under military threat. The constant

reiteration of military threats in connection with the nuclear programme, year after year and

decade after decade, has merely reinforced that. They also have a revolutionary objective of

countering what they see as Israeli expansionism in the region and supporting resistance as

the best way of securing the rights of Palestinians. They are in a minority in thinking that

resistance is the right way of doing that, but given the failure of successive rounds of

negotiations, one can at least see why under their own logic they would regard resistance as

something that should be considered.

The combined effect of this sense of their strategic position and their desire to resist Israel is

that they see a need for forward defence. As I said earlier, they have a weak conventional

army, so many of the motivations of their policy coincide in maintaining a bridgehead in both

Syria and Lebanon. The person you were talking to might have been referring to the fact that

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should Iran find itself in a more benign international climate, its perception that it needs a

front military line in Lebanon and Syria may decline.

So the hostility to Israel, the arming of Hezbollah and the close links with Assad are driven in

part by that sense of an existential threat. It is not the main cause in which Iran is engaged,

which is, I submit—and this could be the view of your interlocutor—the security and

development of the Iranian homeland. They have huge challenges and there is a strong

tendency among sections of the Iranian people to say, “Why the hell are we so extensively

engaged in foreign countries? We should be putting our resources in at home”.

Lord Trimble: What I was really getting at is that the Saudis and the other Gulf states

regard Iran as being a serious threat to them.

Sir Richard Dalton: There is a strategic rivalry, yes. Do not forget that Saudi Arabia is, I

think after three superpowers, the world’s largest military spender and that the United

States has its back. There is no significant military risk to Saudi Arabia from Iran if you look

at the balance of forces present in the region. The Saudis, as they have explained it to me,

see the danger of the political encirclement of Sunni Islam and they consider aspects of what

Iran does, not only in Lebanon and Syria but above all in Iraq, as illegitimate involvement by

Shia powers in the affairs of countries that should be regarded as within the Sunni sphere of

influence. They react to the polarisation in Syria by saying that Iran will lose its bridgehead

into Syria: “We will oppose them to the point where they are not able to operate in Syria”.

Whether this is wise, given what is happening in Syria and the emergence in Syria of many

enemies of Saudi Arabia, of the al-Qaeda kind, is an open question. So once Syria is solved, I

do not despair of a gradual accommodation between Iran, Saudi Arabia and the GCC states,

starting with low-level talks to try to get across the lines of enmity and point out where

there are common areas of interest in avoiding conflict.

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Lord Lamont of Lerwick: Following on from Lord Trimble’s question, would you not

agree that the Saudi/Iran or Shia/Sunni tension is not all one way by any means? Look at the

rhetoric coming out of the Sunni side. The Gulf state-financed television stations beam down

virulent racist anti-Shia rhetoric and incitement to murder, whereas a lot of the senior

clergy, such as Ayatollah Sistani in Iraq and indeed Mr Khamenei in Iran, have issued fatwas

saying that it is completely wrong to murder Sunnis on religious grounds. I put to you that

the tension comes the other way very much as well.

Sir Richard Dalton: It does, yes.

The Chairman: There are questions remaining from Baroness Quin and Baroness Young.

That will leave only Baroness Henig, and I do not know whether she wants to intervene or

not. She is under no compulsion to do so.

Q10 Baroness Quin: My question is also related to Saudi Arabia and the Gulf states.

Earlier on we were talking about “spoilers”, and those nations were mentioned as not being

very comfortable with the whole process and the agreement. How serious are their

objections to the agreement? Is it more a case of disgruntled mutterings? Is there any debate

within those states about the point you made later on that we could all feel safer as a result

of this agreement? Is there some kind of discussion about that?

Sir Richard Dalton: Yes, there is discussion, though I am not privy to it, but it is difficult for

that discussion to make headway against the distrust. Senior Saudis, who are still assisting in

the running of their Government, have had agreements with Iran in the past and believe that

those agreements were not honoured by Iran. Secondly, they tend to play up the links

between Shia clerics and the Iranian Government and Shia co-religionists of the Gulf, and

they sometimes allege that these activities are actually more destructive than they really are.

It is a convenient stick with which to beat opponents of ruling families.

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I do not see this as a monolithic debate on the GCC side of the Gulf. The UAE, for example,

looks both ways; it is highly suspicious of Iran’s policies but at the same time has a massive

economic interest in trade across the waters of the Gulf. The ruler of Dubai has gone on

record as saying that the sanctions should be lifted, although I am sure that he means “in the

context of an agreement”. I think there is latent support for this negotiating process, but

they were very taken aback in 2013 by the amount of work that the United States did with

Iran on its own, without taking the countries of the region into its confidence every step of

the way.

Q11 Baroness Young of Hornsey: In reality, is there anything the Iranians could do to

win over the hardliners in Washington? That is one part of the question, while the other

part has kind of been touched on by what Baroness Quin was asking you: earlier you said

that Obama—when he was still a candidate, I think—had observed that there would need to

be something to help the Iranians save face, as it were, should the deal go through. I was

wondering whether you thought that there would be anything of that nature or whether

some similar strategy would be needed for opponents elsewhere in the Middle East.

Sir Richard Dalton: I would like to see Iran reverting explicitly to the position implicit in

the time of President Khatamei from 1997 to 2005, under which Iran’s policy on Israel was

that it would not oppose an agreement freely entered into between the Palestinian people

and Israel. In other words, if there were a two-state solution, which Iran hitherto has not

agreed is the right outcome, that is something that Iran would live with. A policy of that kind

declared now could have a significant effect.

I think there are two reasons why the Iranians do not make such gestures. First, they would

be regarded as going too far by hardliners in their own society in the absence of requital

from Israel regarding its hostility to Iran. Secondly, they fear that it would not actually have

any effect. A recent example that would not encourage them to make verbal gestures is the

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dismissal in Israel of Mahmoud Abbas’s comments about the Holocaust as a crime. Saying

“Water off a duck’s back”, “No one trusts someone coming from that stable” and those

sorts of things probably makes the Iranians fear that the same fate would be attached to

gestures of a political kind in advance of an agreement. That is not to say that once you had

a good text on the table and the US Administration were saying, “We’re going to sell this to

Congress. Please help us”, Iran’s pragmatists would not come up with that idea or better

ones as a way of assisting the process of getting a critical number of Congressmen in the

United States to realise that this was a different game—a different Iran from the one that

they thought they were dealing with.

Baroness Henig: I do not have a question, Sir Richard, but I have found this a most

illuminating session. You have covered so many areas and thrown so much light on them. I

just hope, Lord Chairman, that we could have regular updates. This complex situation is

moving so much that it would be very helpful to have an update, maybe in the autumn, on

what has happened, particularly around the July dates. I have found this enormously helpful.

The Chairman: Sir Richard, we have kept you for an hour so far and it has been

enormously helpful. I think that the questions that have been directed at you show how

interested the Committee has been. May I just put a question to the Committee? We have

Mr Sharma coming at 11.30 am. We need to discuss our next programme, which I had

anticipated doing between now and then. However, I would not like to let Sir Richard go if

there is anything further that colleagues wish to ask him. We have an opportunity, if

colleagues feel that there is anything more that they would like to press Sir Richard on, to go

off the record briefly, although Sir Richard has been so open and frank that I do not know

whether there is any need for that. I just want to make quite sure that the Committee does

not have anything else that it would like to deal with, either on or off the record, before we

turn to other business.

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Q12 Lord Radice: Just one point. Sir Richard said that he would like to comment on the

regional situation. In a sense he has been doing so, but is there anything else that he would

like to add on that?

Sir Richard Dalton: I would like to add a point that I made when you kindly invited me last

time, which is that in our diplomacy with Saudi Arabia and its colleagues, in so far as we have

any substantive contacts with Iran, we as a nation need to emphasise that outside powers

with an interest—and that includes the UK—want to see Helsinki-type moves made

between the countries of the region. In other words, it is not good enough just to glare at

each other from opposing armed camps. A more serious effort needs to be made, and

doubts about the failure of past overtures need to be set aside, given the critical stakes at

present. By “Helsinki” I mean initiating a process whereby you admit that there are massive

disagreements and reasons for distrust and fear such as security threats against each other,

but you are going to set out an agenda for a long-term process to deal with those.

Q13 Earl of Sandwich: You have not mentioned Russia. We are going to go into the

region, so could you say two sentences on the Russian position?

Sir Richard Dalton: The Russians have remained unaffected by the Ukraine crisis in their

approach to nuclear diplomacy—as far as I know, that is, although you had better direct that

question to your next witness for a reply that is properly informed. They want to be able to

trade profitably with Iran. They do not want Iran to have a nuclear weapon. They want Iran

to come back into conformity with its obligations to the IAEA and the UN Security Council.

They also have an important interest in hydrocarbons; Russia would like to be an investor in

Iran through Gazprom. They want to be able to have a strong influence on Iran’s gas

policy—it is the second or third holder of gas in the world in terms of reserves. Maybe they

want to have some influence so that Iranian gas does not necessarily find its way into

European markets, I do not know. So they have a big stake. They do not have any territorial

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disputes with Iran. I think they want to keep their end up in relation to other strategic

competitors, whether that be China or Europe.

The Chairman: Sir Richard, thank you very much indeed. Following what Baroness Henig

said, I hope that we can look forward to receiving you again in future.