There was a report [PDF file, 540kb] that came out of Chatham House [a European think tank] that basically concluded that Iran has been the chief beneficiary of the war on terror. What's your assessment of that?

I don't know if they're the chief beneficiary. Right now I think that from their point of view they think the United States is bogged down in Iraq, and we're also not paying sufficient attention to Afghanistan because of that, and I think they feel it's a time for them to make hay. ...

How are they doing that, making hay?

I think they're putting a lot of pressure on the Gulf states, for instance. In the Middle East they're trying to further make sure that we are not able to concentrate on their nuclear issue because of our involvement in Iraq and because of the sort of chronic instability that still exists in Afghanistan.

How did we get here?

I think it's obvious we underestimated the difficulties of Iraq. We didn't pay close enough attention to the experts who predicted many of these problems. ... Right now it is in their interest to keep instability going, but at some point in time this problem of Iraq will burn itself out to some extent, and then I think Iraq will turn back to more traditional neuralgic relationship with Iran.

Elaborate on that.

Historically we realize these two behemoths in relative terms have fought each other and bloodied each other quite a bit. There is some antipathy that exists between Arabs and Persians, and I think that once the United States ultimately has removed itself and there is some stability -- and it's a relative term -- in Iraq, then more traditional rivalries between Persians and Arabs may crop up.

So what do you think of the analysis that says the opposite of that, that actually Iran is digging in deep in Iraq?

I think deep is, again, a relative term. If it's in terms of money -- and money is important to all parties in Iraq -- then yes, they are in deeply. But whether that means they're in permanently I think is quite a different thing. I can remember, shortly after the invasion of Iraq I traveled there. I went down to Hilla and other places and had a lot of conversations, and the Iraqis themselves who seem to be now beneficiaries of Iranian largesse were decrying the fact that Iran was their neighbor and that Iran historically has been troublesome in Iraq. So I think history would suggest that relations eventually will again becomes somewhat rocky.

... Let's go through some of the history: 9/11 happens, there are demonstrations in Tehran in support of America. How did you read at the time Iran's position as you were piecing together the U.S. response?

Iran, initially, we had discussions with it right after 9/11 because it was clear that we were going to go into Afghanistan. This was not a war of choice; this was a war of necessity. The Al Qaeda were primarily Sunni. They were also troublesome. Particularly because of the Taliban-Al Qaeda lash-up in drugs, they were troublesome to Iran as well. And the discussions we had with the Iranians made it very clear that although we would be, as they say now, kinetically involved in Afghanistan, that we bore no ill will to Iran, and should we, because of a shoot-down or something of one of our aircraft, have to go into Iran, we'd go in only far enough to extract our pilots and then leave immediately. And the Iranians accepted this. So initially things were on an even keel.

And they helped with the Northern Alliance?

Well, the Northern Alliance -- others like India and others helped a lot more ... than the Iranians did. But the Iranians were not unhelpful, mostly by staying out of the way.

And [former U.S. Special Envoy to Afghanistan] James Dobbins says they were very helpful [at the November 2001 Bonn Conference to establish a post-Taliban government].

At Bonn they were, as Jim Dobbins and [former State Department Director of Policy Planning] Richard Haass and others would tell you, they were helpful. And this continued for some time, because we shared a general view that stability in Afghanistan would very much benefit everybody.

The way the Iranians will tell this story is that ... they help in Afghanistan, asking nothing in return is what they say, and in return they get "axis of evil."

We asked some things of them further, such as some of the Taliban -- and more specifically Al Qaeda -- pitched up in Iran, and we asked them to turn these folks over. And for reasons not understood by me they refused, even though our information, we felt, was quite good that these folks did exist in Iran. So their cooperation on Afghanistan was good, but I think it was somewhat lacking in other areas.

And some of these operatives, I understand, were put up in hotels, and ... they knew exactly what they were.

I don't know where specifically, hotels or guesthouses or what, but the fact is that the government authorities knew where they were. There's no question about that.

And you were asking what?

Turn them over. We'd like them. We wanted to get them. We wanted to question them.

And the response was?

There was no cooperation. There was a variety of responses, as I recall, from "We don't have them" to "We don't know where they are," which we don't believe.

Were some transferred to third countries?

I don't know that. I don't have that information. I don't remember.

OK, because the Iranians say that yes, there may be some, but actually a lot of them were sent back home to their native countries, some Al Qaeda operatives. Do you have any sense of that?

I don't. I don't know.

OK. Axis of evil?

Yeah, the axis of evil. ... Both Secretary [of State Colin] Powell and I saw that speech, and we had several suggestions, changes. But I must say the axis of evil, speaking for me, it just flew by. I didn't take it as sort of a menu of nations to be attacked or anything of that nature. It seemed a rather accurate description, not unlike Ronald Reagan's description of the Soviet empire one time as an "evil empire." I guess this was something that I wasn't attentive enough to.

Looking back, was it the best choice of words?

I would say not, personally, because it did seem to be a laundry list at one time of places to be kinetically involved. But that's changed quite a bit. The discussions with North Korea, ... the attempts at diplomatic negotiations on the nuclear question in Iran I think have shown that the administration perhaps learned the value of some diplomacy.

But at the time when you saw it there, ... did you think about how it might impact U.S.-Iran relations at the time?

No, because there was another side to U.S.-Iran relations. There was the nuclear question, which was continuing, we believe, and I think at least the EU3 [the United Kingdom, France and Germany] believes as well. We had the question of their knowledge of terrorists existing in Iran, and we had sort of a historic relationship, certainly since 1979, with Iran. So there were a whole host of things that hadn't changed and were, I think, some of the reasons that they were ... designated a member of the axis of evil.

But you can imagine how it went down there.

I think it went down mixed. Some would say, "Suspicions confirmed"; some few would probably be disappointed. But the great majority of it, actually, I think it played to their interests. ... I think the hard-liners, this was something that played to their strength.

Let's talk about the run-up to the Iraq war. ... I've heard from people who were involved in some of these discussions on the U.S. side that Iran, while publicly taking a position against the invasion, actually privately was in favor of it. What's your recollection?

... From my discussions, which were very few, I can't make that statement. I think to the extent they would privately be very much for it, it's obvious. Here's a regime of Saddam Hussein's which costs the Iranian the cream of their youth in an almost 10-year struggle. So one could imagine that they were not disappointed to see him go. It also would clearly give them a chance to muddle things up a bit if that's what they wanted to do. So for two reasons the Iranians might have been somewhat, if not enthusiastic, at least interested in our being involved in Iraq.

When you were looking at the makeup of the Iraqi opposition, a lot of them had obvious close ties with Iran. What was your sense of that?

I was out of government, but people like Dr. [Ibrahim al-]Jaafari and Prime Minister [Nouri] al-Maliki -- I found it very strange that the president of the United States would describe these fellows in glowing terms as being great leaders when I felt that, notwithstanding what leadership ability they may have, that they had spent so much time in Iran and Syria that perhaps their guidance was coming from another quarter. ...

Were you concerned about Iran's potential influence?

I certainly was, particularly with Dr. Jaafari, whom I did meet when I was active. ... As I say, I was somewhat flummoxed by the description of Prime Minister al-Maliki as being a good man and a great leader. He may be, but I would have been much more suspicious of the long-term nature of his involvement with Iran.

After the invasion, there's been a lot of discussion about the so-called "grand bargain" fax that came through from the Swiss ambassador. Tell us your recollection of that.

Our discussions with Iranians were handled by the Swiss Embassy in Tehran, for which we were very grateful, but it had been our view that the Swiss ambassador in Tehran was so intent -- and I mean this positively -- but he was so intent on bettering relations between "the Great Satan," the United States, and Iran that we came to have some questions about where the Iranian message ended and the Swiss message may begin.

I remember talking with people from our Near East division about a fax that came in from the Swiss ambassador, and I think our general feeling was that he had perhaps added a little bit to it because it wasn't in consonance with the state of our relations. And we had had some discussions, ... particularly through intelligence channels with high-ranking Iranian intelligence people, and nothing that we were seeing in this fax was in consonance with what we were hearing face to face. So we didn't give it much weight.

What were you hearing face to face?

We were getting no cooperation on questions of terrorism, particularly ... turning people over. We had in Europe some very high-level discussions in intelligence channels and were getting a lack of cooperation. ...

... [The former National Security Council Director for Iranian and Persian Gulf Affairs] Hillary Mann said that she'd written a memo about it and then asked the secretary in an informal setting, cocktail party or something, about what had happened to the request. She said that he told her that he tried to sell it at the White House, but he couldn't.

We provided the fax to the White House; that much I know. What Secretary Powell may or may not have not have done, I'd have to refer you to him. I know that he didn't think, as I did, that this was an extraordinarily serious endeavor. That much I know. What private discussions he had at the White House, if any, I can't say.

But the White House was aware of it?

At some level. I can't say the president saw it, but I know it was sent over by Ambassador Burns, Bill Burns, who was our assistant secretary for NEA [Near Eastern Affairs]. We didn't play hide the sausage with the National Security Council at all. ...

... Some of those who were involved at the time have come out saying this was a huge opportunity.

I've seen Flynt Leverett, [former National Security Council adviser on the Middle East], for whom I've had a lot of respect. I must say that speaking for me and most of my colleagues at the State Department, we didn't see it that way, and I don't think many others did at the time because it didn't fit with some of the other things, as I said, that we'd been hearing from Iran. But ... we can explore some of the other discussions we had with the Iranians in which there were possibilities and chances for a betterment of relations. But they just lay fallow.

Such as?

After the terrible devastation of the earthquake in Bam [in December 2003], President Bush authorized me to get ahold of the Iranian ambassador to the U.N. ... I gave him the message from the president, basically, that because of the devastation -- and completely as a humanitarian and not as a political matter -- we would be willing to offer immediate assistance and earthquake relief and things of this nature. ... And we followed up, by the way, with the USAID project in Bam. If there had been a desire on the Iranian side to seek a better relationship, it would have been an ideal time afterward to send that signal, and we got no such signal to my knowledge.

You were open to it?

Rich Armitage, Secretary Powell were open to it. As you know, we've argued that we need to speak with our enemies perhaps even more than we need to speak with our friends, so we took the point of view that no matter how difficult relations are with any one country, we should not cut ourselves off from them, and we ought to talk them. So I'll say those two individuals, Secretary Powell and I, were very interested.

How about the vice president and secretary of defense?

I suspect they were much less interested, it appears. And the fact that it's been so difficult even now, two years-plus on, to get real engagement with the Iranians, notwithstanding the significant efforts, as I understand them, of the secretary of state, shows that some people in the administration are still disinclined to engage.

I heard that that opposition was present even with regard to Afghanistan, saying we shouldn't work with Iran in Afghanistan at the time, but you overcame that.

... At the time of Afghanistan there were some in the administration who wanted to go it alone, and Secretary Powell was making the point that, look, in military terms this is fine, but there's going to be a day after the military operations, and we don't want to do it alone. We want to have friends and allies with us, a coalition of the willing. That prevailed. ...

Did that same analysis work with regard to Iraq? I mean, bringing in the neighbors and trying to make sure Iran was somehow onboard or wouldn't get in the way.

In my view, Iran was not a problem in the initial invasion for some of the reasons you already alluded to. We did have significant discussions with everyone, including the Turks -- they had a different point of view; with the Saudis and the UAE and the Kuwaitis and everybody about this. So in a way we did have the discussions we needed. Now, they didn't always share our view, and I would think it's fair to say that although they all hated Saddam Hussein and most of them had suffered from Saddam Hussein, and most of all the Kuwaitis, they were very trepidatious about taking the lid off that boiling pot.

And having U.S. forces on both sides. ...

No, ... their concern had to do with Iraq: the history of Iraq; the fact that Iraq was not really a state in a sort of Westphalian notion of states, long established, etc. And they had a good sense of the competing tensions and the ethnic strife, sectarian strife that did exist and was kept from boiling because of the lid of Saddam Hussein. That's what their concern was. ...

... We interviewed Vali Nasr, who wrote this book, The Shia Revival. He said the U.S. really had no real knowledge of ... Iran's real soft power in Iraq: this huge flow of religious pilgrims, and 100,000 Iraqis who had been there going back, the intelligence ties and everything.

I think that if you'd asked this before -- were we aware of the influence and how many of the revered saints of the Shi'a religion are buried in Iran and how many in Iraq, and what the pilgrimage does bring in terms of money and soft power -- we'd have generally understood it but not specifically concentrated on it. I think it was generally understood, but it wasn't valued in a high enough way.

Did you try to get people higher within the administration to focus on this?

No, let me make something very clear, and Secretary Powell can speak for himself. I personally was not opposed to the notion of deposing Saddam Hussein by military force, particularly given the great number of U.N. Security Council resolutions. My concern had to do with the timing of it. I wanted it at quite a later date because I wanted to consolidate Afghanistan to a higher degree. And Secretary Powell, I say his concern was not with the deposing of Saddam Hussein as much as the number of troops that we were using. ...

Having said all of that, on April 9, when that statue of Saddam Hussein came down, the world thought George Bush was brilliant. You remember that day? Nobody was complaining. ... That was just the beginning of the game. It wasn't the end.

When did you get a sense that Iran was up to nefarious activities inside Iraq?

... That first trip to Hilla, a couple of months after the invasion, and speaking with one of the leading clerics there. He was quite erudite and specific about Iranian money. He was showing me Iranian posters that were posted around in various buildings and he was in the business of tearing down. And he spoke specifically about the amount of money that Iranians were putting into various clerics, making sure that they had a fairly solid footing, at least in the southern part of the country.

What did that tell you?

It told me that they were taking great advantage of the change of atmosphere in Iraq. You mentioned a previous ability to have pilgrimage; actually, it was quite limited during the time of Saddam Hussein, and they wasted no time in getting at least money in. This was long before weapons or IEDs [improvised explosive devices] attributed to Iran showed up on the scene, but to a large extent, money is weapons.

And did you think that that had to somehow be countered?

I think it started to be countered immediately. ... Our intelligence community knew it quite well.

And so what was done to stop that or lessen the influence?

Try to build up the Iraqi government to be self-sustaining and not having to depend on money from Iran, etc.; trying to get the oil output up so that the central government would have money. But these were relatively unsuccessful because the amount of oil being exported now was slightly less than that which was exported prewar. ... But the enemy in Iraq is a living, breathing enemy, and they've got their own views on how to counter each move that the United States tried to put into place.

Talk some about the nuclear issue: Why was the decision made to let the Europeans take the lead?

This was something that Secretary Powell had put in motion. We were having great difficulty in face-to-face diplomacy; that is, we were having trouble getting the administration to agree to that. My own view is that many in the administration view diplomacy as weakness, and I think that's wrong. ...

We were not able to do that one on one, so ... giving [the Europeans] the lead had the effect of starting a diplomatic process. It also had the effect of letting our European friends be very much involved in seeing how intransigent the Iranians were, and perhaps we'd get a larger and better-formed coalition if it became necessary to move on sanctions, etc.

Which is what happened.

Which is what happened. And this was what Secretary Powell had designed.

Just to be clear: So at the time before the Europeans took the lead, you and the secretary wanted the U.S. to actually negotiate directly with Iran?

Oh, sure, and with North Korea as well. It wasn't just Iran.

What kind of response were you getting within the administration?

... It was like punching a marshmallow or a cloud; you couldn't get someone to stand up and actually say, "No, it's against our interests, etc." It just was not something the president wanted to take up. He didn't want to do it. ... As I say, in some quarters of the administration diplomacy is seen as weakness.

Was there a sense that somehow if Iraq was a success, if there was a democracy in Iraq, that somehow it would have a demonstration effect and lead to regime change in Tehran?

I think the idea in the minds of some who were so enthusiastic about invasion of Iraq was twofold: one, that Iraq, which was much more kindly disposed to the United States, would give us the ability, should we want to, to be able to pressure Iran on the use of military facilities in Iraq; secondarily, the idea of democracy -- and this is certainly the president's view -- democracy in Iraq, a large country in the Middle East, would have a very positive effect on the other states.

I can remember people talking about democracy in Iraq being relatively easy, because after all, Germany and Japan, which were much more destroyed, ... became democratic in only three years. And I can remember saying that no one who has that point of view has read any history. Democracy is not simply an election, and democracy is not an endpoint; it's a journey. We haven't completed ours after 230 years. ...

Let me ask you about a story the Iranians talk a lot about, which is the MEK [Mujahideen-e Khalq, also known as the MKO]. I've heard through some interviews that in some of the discussions leading up to the invasion that [then-Deputy Assistant Secretary of State for Near Eastern Affairs] Ryan Crocker had said to the Iranians that the MEK would be treated as part of Saddam's army, the implication being [it would be] on a target list, which wasn't exactly what happened after the war.

I don't know about that specifically, but we had discussed the MEK more pointedly after the invasion. And there were some in the administration who wanted to use the Mujahideen-e Khalq as a pressure point against Iran, and I can remember the national security adviser, Dr. [Condoleezza] Rice, being very specific about it, saying no, a terrorist group is a terrorist group.

That was exactly the point of view of the State Department as well. We wanted the U.S. military to disarm the MEK and contain them. ... And eventually we did disarm the major weapons [from] the MEK. Then we ... engaged in a broad effort to try to resettle these people, but we were very unsuccessful in getting them settled in foreign lands. ...

But the idea was that they could be useful in what way?

The MEK had given intelligence on Iran to us and that [indicated] they might have capabilities in Iran of a covert nature. To my knowledge, at least when I was active, we didn't use them in this way. ... And from my point of view -- I actually served in Iran, I lived there for a year, and it was during that time that our people were killed by the MEK, assassinated.

U.S. citizens?

Yes. So from my point of view they were terrorists. ...

... What were you hearing from America's traditional allies in the region, the Sunni regimes, governments? We had the president of Egypt come out and say we're handing over Iraq to the Iranians; the foreign minister of Saudi Arabia said much the same thing. King Abdullah of Jordan was talking about a Shi'a crescent. Were you getting concerned?

It depends on where you are. In Egypt, with the smallest Shi'a population, the concern, it seemed to me, was somewhat less. Saudi Arabia, which has the eastern province which is predominantly Shi'a, [and] Jordan, which has a fear of Shi'a domination and proximity, ... they were the ones who were talking primarily about a Shi'a crescent. ...

Were you getting a sense of anger from some of these allies?

It wasn't a sense of anger; it was a sense of frustration. ... You know, historically, no one in the Middle East, although they may like or dislike our policies quite a bit, no one has ever accused us of being incompetent. And for the first time there was a question of competency, and it's a very frustrating feeling, I think, for our friends in the Middle East. ...

... We've heard people talk about a proxy war going on between the U.S. and Iran.

My feeling is that ... we've never been very clear on just who our enemy was [in Iraq]. At one time it was described as a few dead-enders, maybe 5,000 in number. Sometimes today you hear that Al Qaeda is our major threat, but it's always described as Al Qaeda in Iraq. ... There are Sunnis who are not Al Qaeda who share the view that we shouldn't be there, and they want us out. There are Shi'a clearly that want us out of the way.

So our enemy is multifaceted. To some extent Iran is involved. ... I don't think it's quite proxy war. I think we'd have plenty of war without any Iranian influence in Iraq. But I'd just be content to say that I don't think we've done a good job really understanding who our enemy really was. ...

We're hearing reports about Iran's involvement in Afghanistan and in Iraq supplying weapons.

Yeah, I saw [Secretary of Defense] Mr. [Robert] Gates' comments about Afghanistan. ... I can't say that it's a government operation; I would suspect it is, knowing Iran. But there are also some differences of opinion about the comments made by our excellent secretary of defense by some of our European friends who didn't quite share it. I think it gets back to the point I was making about Iraq, and less so in Afghanistan, but we haven't really come to grips with who our enemy really is. ...

I've heard some people say that this administration is in some ways laying the groundwork for escalating conflict with Iran while also being open to some conversations.

I have heard that as well ... The vice president went out on a carrier and made a speech; laterally we had some ships steam into the Persian Gulf.

Having served in Iran, I am fearful of their hegemonistic appetite. Even during the time of the shah, I find that I've never seen a more ethnocentric country in my life. I have never seen a country for whom the days of Persepolis was, unlike for you and I, 2,500 years ago; they see it as yesterday. So this leads me to some fear about their view of themselves on the world stage.

That's one thing, and it's quite a bit different from an impending invasion, and it would be the worst of all worlds, unless it was absolutely necessary for the safety and welfare of this nation, for an outgoing administration to start a conflict. ...

What about if they felt like diplomacy wasn't going anywhere; you had to -- not a full-scale invasion -- but to set the nuclear program back?

I think that we could do that. My own view is that we certainly could set the known nuclear program back anytime we want. But if that's going to be the case, if we are going to accept the pain in the Islamic world that that would bring, then it ought to be worth the gain. So I would allow the known nuclear program to become much more robust and cost the Iranians a lot more before I ever took it out. Because if you're going to accept the downside, you ought to have a pretty big upside. ...

I interviewed John Bolton. He said even when he was pushing diplomacy at the U.N. and the sanctions, he thought it had absolutely no chance and still has no chance of succeeding.

... If you listen to what the Iranians have said, the sanctions appear to bite a little bit. The oil minister actually said that Iran has suffered from their inability to rejuvenate their fields and be made more proficient and efficient in their ability to take product out of the ground. I think John Bolton doesn't take into consideration there are lots of dynamics in Iran -- the fact that Persians will not in the too distant future be a minority in their own country, for instance. ...

So there are a lot of things going on. Sanctions bite to a certain extent, and there's dissatisfaction with [President Mahmoud] Ahmadinejad. I think that's quite clear. There's also a great deal of cynicism about the role of the mullahs, the clerics in Iran. I'm not suggesting any revolution -- I don't think the stomach exists in Iran for that much neuralgia again; the '79 revolution took so much out of them -- but there will be change, and there is some time for diplomacy to develop. This is not something in my view we have to do tomorrow. ...

... Knowing this administration, do you think there's a chance that they may decide to take military action before they leave office?

I don't know. It would be going out the door. To take action unless it was imperative would both leave the administration with, I think, a really negative taste in the mouth of most Americans and would lead to perhaps the worst of all worlds, where a new administration then might have to make a decision to immediately cease it, and so we'd be sort of caught midstream. I think that this is not the kind of thing that would happen out of the blue unless there was an emergency.

Our system, particularly the political system these days, is so toxic right now, and I think it would require a good deal of negotiation and a good deal of interaction with the Congress in order to get the kind of support that a president would have to have. He can commit military force, there's no question; the Constitution means that. But it is the Congress which will make a decision if we're going to enter a war and sustain that war.

So you don't see that happening?

I never say never. I don't know the situation. But I think right now I'm suggesting that, from what I know, we have some time. There are a lot of factors at play, [including] the fact that our European friends are involved helpfully and usefully in this endeavor. We've got to, I think, satisfy ourselves more on Afghanistan and try to leave Iraq in a better situation before we take on Iran.

That would be my view. Now, that could change tomorrow if there were an immediate impending threat from Iran. But that's something that should be visible at least to the eyes of the U.S. Congress, ... so we could get the necessary support to carry this through. ...