QUESTION: (Inaudible) talk about Iran cranking up its uranium enrichment capability. It said by December, it could have about 8,000 centrifuges enriching uranium, a significant rise, which -- of its nuclear --

MR. MCCORMACK: Right. I hadn't seen any new reports. Now there's -- the IAEA has put out reports, the Iranians themselves have talked about the fact that they are going to continue to add to their centrifuge cascades. Off the top of my head, I can't tell you exactly where they are right now. I think they're either up in or close to the thousands. I know they're working towards that goal. It's a source of grave concern to the international system that they persist in this behavior in defiance of the will of the international community, the Security Council, the IAEA Board of Governors and the reaction of the world is going to be one that makes it clear to Iran that it can't persist in this behavior; that they have to change course and that failure to change course is only going to result in greater isolation of the Iranian people from the rest of the international system. That'll take the form of international sanctions, Security Council sanctions, that if Iran -- the Iranian Government continues in this behavior, it's going to become more and more punitive in terms of its effect on the Iranian Government. It's not something that we want to see. It's certainly not our desired course of action, but that is the pathway that Iran is taking the world down at the moment.

Yeah, Sue.

QUESTION: Iran's Foreign Minister Mottaki is also saying that the United States is going to regret the detention of the five Iranians in Iraq. And -- well, he said we will make the Americans regret their ugly and illegal action and then he goes on. I just wondered if you had any reaction to that sort of veiled threat?

MR. MCCORMACK: Yeah. Well, I'm not sure exactly what that means. I think he also claimed that these individuals were diplomats and working in a consulate -- false. You can ask the Iranian Government, the Iraqi Government. You can -- and they will tell you that these were not diplomats. They didn't have diplomatic credentials. They weren't working at a consulate. It was not accredited as a consulate. Now, in fairness, the Iranians say and the Iraqis say that it was their intention to make this a consulate. But the fact of the matter is it was not -- they're not diplomats and they were engaged in activities related to these EFD networks that pose a threat to our troops. These EFDs are killing our troops. So you can fully expect that the United States is going to take what steps that it deems necessary in order to protect its troops. Our troops are there at the invitation of the Iraqi Government to help provide a more stable, secure environment so the Iraqis can build a better Iraqi state. That's in everybody's interest. That's in the interest of the Iraqi people. It's in -- I would submit to you -- the interest of Iran. I don't think that they have an interest in medium…short, medium or long-term instability in Iraq.

QUESTION: Do you think it's -- that the -- that Iran's detention of four U.S. Iranian citizens is a sort of a tit-for-tat for the five? I mean, are you looking at them as --

MR. MCCORMACK: We certainly -- no, we certainly don't draw any linkage between those two and I don't think anybody has -- anybody else has drawn that linkage either and we would reject such a linkage. Look, you have a situation where you had five individuals who were engaged in activities related to trying to kill our troops. That's the situation in Iraq. On the other hand, you have in Iran innocent civilians who, for the most part, were going there to visit family members and in two cases, these are grandmothers.

And these are also people -- if you look down the list of these people, these are people who had -- throughout their lives, were committed to trying to build bridges between Iran and the United States. So I cannot tell you what the motivations of the Iranian Government were, in this regard. I can't tell you what they are.

But as President Bush has said, we call upon the Iranian Government to immediately release these people. Let them come back to the United States and be reunited with their families. Let -- don't freight this issue with all of the various other issues in the Iran-U.S. relationship. There are channels to address those issues that are open to the Iranian Government. This is a human issue; let these people come back and be reunited with their families; let them see their children, let them see their loved ones, let them see their grandchildren.

And if there are other issues the Iranian Government wants to discuss, there's a channel through the P-5+1 on the nuclear issue. They can take steps to address their behavior in Iraq. There had previously been a meeting with our ambassador in Iraq. We will see if there is another and we'll wait to see if the Iranian Government takes any steps to address their negative behaviors in Iraq. But again, don't freight all of those issues onto the issue of these innocent civilians who are being held up in Iran.

QUESTION: Anything on Bob Levinson, any news?

MR. MCCORMACK: No news, no.

Yeah.

QUESTION: Iran is saying --

MR. MCCORMACK: Kirit.

QUESTION: Yeah, Iran is saying that a judge will decide the fate of those four in the next couple of days. Have they made that clear to you guys and do you have any reaction?

MR. MCCORMACK: Only through the meeting. We haven't heard back from them in this regard. Look, they -- as I said before, these people should just be allowed to leave. They should be allowed to do what they want to do and that is to return back to see their families and be reunited. These are people that don't pose any threat to the Iranian regime -- to suggest that they do is really just nonsense -- and that they should be allowed to return immediately.

James.

QUESTION: Sean, you and the Secretary, Under Secretary Burns, other officials, have said repeatedly that the United States is working with its allies outside the UN Security Council --

MR. MCCORMACK: Right.

QUESTION: -- to impose added financial hardships on the Iranian regime and/or the Iranian economy in order to get the Iranian regime to change its calculus about suspension of uranium enrichment.

MR. MCCORMACK: Right.

QUESTION: Can you tell us some more about those efforts? What do they involve? Are there any statistics associated with this that you could provide for us?

MR. MCCORMACK: At this point, James, I can provide sort of the broad outline of what we're doing. I checked into this, and our Treasury officials have worked with 40 international banks on the issue to talk to them about the activities of the Iranian regime, how they use their banks in the international financial system.

The -- what we want to get at here is informing governments, informing foreign banks, exactly how the Iranians misuse the international financial system for -- to engage in illicit activities. And now, that's not anything -- that's not the type of behavior that any government, any bank, wants to be -- wants their financial system to be used for.

The Secretary, Secretary Paulson, Stuart Levey, who is Under Secretary of Treasury, have been working on this issue for more than a year now and we have made some progress in this regard. I'll give you one example: Bank Sepah. It's a bank that we designated -- one of the largest Iranian banks -- under our regulations, and then it was also designated under the UN Security Council resolution. This is a financial institution that had billions of dollars of assets. It effectively cannot do business anymore in the international financial system. That's one step. So that's some -- one practical effect.

The Government of Germany -- just one more example -- has reduced its export credits to Iran by about 40 percent, and other European countries as well as Japan are looking at what they might do in terms of reducing those export credits. And we're talking about tens of billions of dollars worth of export credits.

Now, why does all this occur? All of this occurs because Iran has clearly, clearly indicated that it is going to take actions that are outside the norms of accepted international behavior. They are working to develop a nuclear weapon, where they signed a treaty saying that they wouldn't do so. There is a cloud that is hanging over Iran and Iran's reputation in the international financial system right now. And that doesn't have to be there. It is brought about only because of the behaviors of this regime. And that will have practical effects. You're already starting to see some of those. I outlined a couple of them for you. And if there's one thing that we have learned about financial sanctions is that they are quite powerful and very difficult to reverse. We've learned that though the BDA issue.

And the Iranian regime should take note that it is -- once they get themselves into this kind of situation where the international financial system doesn't want to take their business, won't touch them, won't touch their money, that it is -- it has severe consequences, and it is very difficult to reverse. And Iran is going to soon find itself at a point where it will become very difficult for this regime to have a normal relationship with the international financial system. It's already not normal, as indicated by the designation of Bank Sepah. It's going to become increasingly more difficult for them, which has real consequences, has real financial implications for them.

QUESTION: Is it possible to estimate the extent to which the ability of Iran to conduct business through the international financial system has been curtailed? Fifty percent there or --

MR. MCCORMACK: It's -- yeah, it's a good question. I can't give you a precise answer, and I'm not sure that we have done those calculations, but it's a good question. They are certainly moving down the scale in a negative way in terms of their ability to use the international financial system. I can't quantify it for you at this point beyond what I have done, but suffice it to say these -- their actions, which have led to these sanctions, will have real consequences for the regime and the Iranian economy.

QUESTION: Two more, if I could, on this issue.

MR. MCCORMACK: Yeah.

QUESTION: Are we satisfied -- is the United States Government satisfied with the efforts of our European allies to follow suit or to also take measures to make Iran feel the pain of its present course of action?

MR. MCCORMACK: Well, they're taking this seriously. I think there's more to do, but they are taking this seriously. And we have been going along with them step-by-step in ratcheting up the pressure on the regime. And there's no difference in that approach. We agree, they agree, Russians and Chinese agree on this approach. So they have been gradually increasing the pressure on the regime. I think they have been serious about it. They've taken serious steps. I think there's more to do. We would do more, but we don't have the same sort of trading relationship with Iran that say, European countries do.

So they're going to take a good, hard look at this. This is going to be a focus of our efforts, not just Europe, but other countries around the world that have a more developed economic relationship with Iran -- economic/financial relationship with Iran, and ask them to take a look at what steps they might make take to indicate to the regime you can't continue to engage in this behavior. The cost for continuing to engage that behavior is further isolation.

QUESTION: And in addition to talking to governments and banking institutions, the Administration is also talking to private companies. Is that correct?

MR. MCCORMACK: Yes.

QUESTION: Across the world?

MR. MCCORMACK: Yeah.

QUESTION: Can you give us an idea of -- you know, you mentioned 40 banking institutions --

MR. MCCORMACK: Right.

QUESTION: -- that have been contacted by Treasury.

MR. MCCORMACK: Right.

QUESTION: Can you give us an idea of the scope of this program and its results?

MR. MCCORMACK: Again, I can't quantify it for you. I don't have the -- you know, the total assets of all of these banks at the tip of my fingers, but -- you know, suffice it to say --

QUESTION: (Off-mike.)

MR. MCCORMACK: Well, we're working mostly -- we're working primarily with the financial institutions. As for companies that might be engaged in trade with Iran, we would certainly -- they would certainly catch our attention if they -- we thought they were engaged in illicit activities and there's a separate set of regulations that govern that.

With respect to the financial institutions, that is the focus of the Department of Treasury. We're working closely with Treasury on it, Hank Paulson and Stuart Levey taking the lead on that. Deputy Secretary Kimmitt's also been deeply involved in that. So I give you the number of 40 institutions that they have reached out to. These are some of the world's largest financial institutions that have --

QUESTION: (Inaudible) was because in his testimony before the Senate in March, Under Secretary Burns specifically mentioned U.S. outreach to specific companies. He mentioned Shell Oil and some others.

MR. MCCORMACK: Oh, I see what you're talking about. That again -- that is yet another category and that falls under the Iran Sanctions Act. And that has to do with international energy companies that are looking at investments in Iran. And when you reach a certain threshold of total investment in a project -- I can't remember exactly what the figure is. It's relatively low. It's -- you know, $50 million or about that order.

Then there's a possibility of the United States looking at various sanctions that it might impose on that company. Now to my knowledge, we have not done so in the history of what was formerly referred to as the Iran-Libya Sanctions Act, but now the Iran Sanctions Act. But we have recently talked to some energy companies that have expressed an interest in investing in Iran. We've talked to Shell Oil. We've talked to the Chinese national oil company.

There have been several others as well that I don't have listed here, but we have talked to some of those companies essentially -- you know, giving them informational briefings and talking to them about whether or not, really, this is the right time to be making those sorts of big bets on the Iranian energy sector when you have a country that is already under Chapter 7 resolution, a pretty exclusive club, I might add, and has the prospect of falling under numerous other Chapter 7 resolutions.

And it raises the question of, well, is this the kind of investment climate that you want to enter into. These are big bets of billions of dollars that people are calculating they're going to get returns over a significant number of years. And if you have that level of uncertainty, I think the business end will make their own calculations about whether or not that's the place where they want to invest their money.

QUESTION: Did you see results from these briefings? Did you see companies not do deals and that sort of thing?

MR. MCCORMACK: Well, I think that the -- where Iran finds itself now is not a place where it wants to be and that -- I think that where Iran finds itself right now gives some companies pause about whether or not they want to make those big bets in Iran.

Yeah.

QUESTION: Do you have any kind of readout from the Hill-Chun talks yesterday?

MR. MCCORMACK: I don't, no.

QUESTION: Sean, just one step --

QUESTION: (Inaudible.)

MR. MCCORMACK: Sure. We'll see -- we'll see what we can provide for you.

QUESTION: Okay.

QUESTION: Sean, just to go back to James' question for one step.

MR. MCCORMACK: Yeah.

QUESTION: You said where Iran finds itself is not a place where it wants to be. It continues to do what it's doing. I mean the Security Council is going about its business in what former U.S. negotiator Dennis Ross called slow-motion diplomacy, and you're taking the steps you're taking, Iran is doing what it's doing. Why do you say it finds itself in a place it doesn't want to be?

MR. MCCORMACK: Because it's one of the few countries on Earth under Chapter 7 sanctions right now. And look, the effect of sanctions is not immediate. It's not like you necessarily flip a switch and all of a sudden the situation is qualitatively worse. Now, you have the example of Bank Sepah. That's an example where immediately overnight their situation became qualitatively worse.

But as we have seen with many other cases around the world, and the BDA issue is a good example of this, reputation and reputational risk are very real factors in the international financial community. If you're in the banking community, one of the -- one of your most valuable assets is your reputation. And banks are going to become increasingly -- and banks and financial institutions are going to become increasingly wary of doing business with entities, in this case the Iranian Government, if that business might somehow significantly tarnish their reputation and open them up to legal action by the United States as well as others. That's a very real calculation that they have to take into account.

Now, you say the Iranian Government continues along this behavior. You're right. But it is our hope that the so-called reasonables within Iran will do a different cost-benefit analysis. Is it really worth the increasing costs that are accruing to continue to build a nuclear weapon? We hope that there are those in Iran that can do that calculation and come out with the answer of, no, it's not worth it; not only do we not want to accrue those costs, but if we engage in negotiations then we can -- we can have peaceful nuclear power, which is what they say they want.

But this is a process that we knew was going to take some time. The Secretary and the President are committed to this course of trying to find a diplomatic solution, as we've said before. In the absence of doing nothing, there are two pathways, both not pathways that anybody wants to go down to -- go down. So what we're trying to find is a diplomatic solution that gives the international community objective assurances that Iran is not going to develop a nuclear weapon and allows the Iranian people to benefit from peaceful nuclear energy.

QUESTION: Are you seeing the Iranians taking any countermeasures in order to blunt the impact of these financial penalties that the U.S. and its allies are seeking to impose on them outside the Security Council? Are they setting up dummy corporations or other ways to continue doing business? Are you detecting anything like that?

MR. MCCORMACK: Nothing that I'd be able to share with you, James. But they -- I think it's widely known that they are pretty clever in setting up corporations and moving their money around. There have been lots of news reports about efforts by the Iranian Government to move their money around. And it's also -- you also ask about costs and one other thing occurred to me. If you look at the situation in Iran at the moment, there -- inflation is ramped up. They are -- the government had to ration gasoline. So there are very real costs -- all of this done while the President of Iran is writing all sorts of checks in every speech he gives in terms of promises or promises of largess to the Iranian population. So there are -- those are some other examples of real costs that are accruing to the Iranian Government for their actions.

Yeah.

QUESTION: Diplomatically, Iran doesn't seem to be isolated at all, has even -- you talk about business deals. You see Iran forging deals with many Asian countries. Malaysia, for example, refining capacity, and then you have the oil pipeline South Asia is still negotiating with Iran. So how do you see that in the context with what you --

MR. MCCORMACK: You know, there's a big difference between talking about an oil pipeline and actually building it. I can't speak to this Malaysia deal. I'm not saying that Iran is completely cut off from the rest of the world, but I don't think you'll find anybody, including the Iranian Government, if they're -- if you catch them in an honest moment that will say that they are in a better position now vis-à-vis the international system than they were five years ago or two years ago or even a year ago. I think that's - you know, if somebody tries to make that argument, I don't think it holds any water.

Sue.

QUESTION: Change subject?

MR. MCCORMACK: Sure. Anything else on Iran?

QUESTION: On Turkey.

MR. MCCORMACK: Oh, yeah. Don't even try to squeeze Iran into what you're going to ask about. (Laughter.)

Yeah.

QUESTION: Apparently the AU says that Sudan has agreed to the deployment mandate and structure of an AU/UN hybrid force. There may be some restrictions in terms of they only want to have African troops?

MR. MCCORMACK: Right. Ah yes, the fine print. Uh huh.

QUESTION: Yes. And I just wondered whether you had, first of all, any reaction to what appears to be the agreement to it, but these restrictions that they might place on the force?

MR. MCCORMACK: Well, President Bashir has made promises before about accepting a AU/UN hybrid force. But there's always the fine print. And in this case, the fine print seems to be that the force should be limited to African troops. Well, everybody knows that it is likely the case -- it would be very difficult to fill out the full AU/UN force of 17 to 19,000 troops with only African troops. They just don't have -- it's not a lack of will or a lack of desire on the part of the African countries, but the assets simply aren't there.

So to say that the force will be -- would be limited to only African troops, it is, in effect, to say that you are not agreeing to the full 17 to 19,000 troops, which everybody -- again, the experts believe is what you need in order to perform the mission. So again, it's a statement that, on its face, would appear to accept everything, but in fact, when you look at it and examine it closely, it doesn't. So we're still waiting for the answer that will allow in an effective AU/UN force.

QUESTION: Do you have clarity on exactly what they've accepted?

MR. MCCORMACK: What --

QUESTION: Well, have they given you a copy of exactly what they will accept? Have they written in gold what they --

MR. MCCORMACK: I can't tell you.

QUESTION: Okay.

MR. MCCORMACK: I can't tell you. You know, I'm not sure -- but I -- yeah, but I'm not sure -- unless their verbal statements differ significantly from their written statements, I'm not sure that that, in effect, makes a difference. Is -- you know, because their verbal statements don't meet the threshold.

Yeah, Michelle.

QUESTION: What are -- what is the U.S. doing to make this hybrid force a reality if they have, in fact, agreed to it? What kind of money are you going to put up for it or lift any of this? What's on the table?

MR. MCCORMACK: Well, we would -- we have already provided quite a bit of funding to the AU directly to keep the AU mission going in Darfur at the moment. And we, of course, are contributors to the UN peacekeeping operations and the -- as I understand it, the UN portion of this is funded through the peacekeeping operations, so there's contribution there. I know that we're the largest donor to the peacekeeping operation. I can't tell you what amount would be required for this particular course, so there is real dollars that we're putting behind this. We're also putting our diplomatic weight behind this and we have for some time.

Certainly, we welcome the efforts of Foreign Minister Kouchner on this issue. I know that he is somebody who is -- cares deeply about the issue, is passionate about the issue and working actively to try to come to a solution. The same goes for Secretary-General Ban Ki-Moon. So we are working in concert with others in the international system to try to get this done.

QUESTION: Hasn't the U.S. funding for peacekeeping, though, dropped off?

MR. MCCORMACK: I know that there have been some issues there. I can't tell you exactly what the amounts are, but we're still a contributor to the operations. And for Secretary Rice, this is one of her highest priorities over the next couple of years, over her next couple of budgets, is to make sure that we are working well and effectively and that -- with the UN peacekeeping operation and that in turn, the UN peacekeeping operation is an effective tool of international diplomacy.

Gollust.

QUESTION: Same general region. In Ethiopia --

MR. MCCORMACK: Right.

QUESTION: -- dozens of people who some consider political dissidents were sentenced on treason charges --

MR. MCCORMACK: Yes.

QUESTION: -- and other things yesterday, what's your response to this? Also, the notion is being advanced that the U.S. has pulled its punches on this issue because Ethiopia's strategic interests over there --

MR. MCCORMACK: Right. Well, we're quite surprised, first of all, by the action that was taken by the government and very, very concerned. It would appear that this is a preemptory action that was taken by the court that surprised not only us, but the defendants as they were working to mount a defense against these charges. So we are examining it very closely. We're examining the -- whether or not this action is in accordance with the Ethiopian constitution, Ethiopian law. So, suffice it to say, it's something we're very surprised about, quite concerned about, and watching very closely.

Yes, sir.

QUESTION: The PKK announced a conditional ceasefire earlier today saying it would not attack unless it was attacked. Is this a good thing? Have the United States or Iraqi Kurds played any role in this or any other comments?

MR. MCCORMACK: Right, I can't tell you what, if any, role we or anybody else has played in this. Look, if there aren't innocent lives that are lost as a result of violent actions by a terrorist group, I think that that is a positive thing. Is it a solution? No. The PKK is a terrorist organization. We take quite seriously the concerns of the Turkish Government. They have lost lives. Innocent lives have been lost. And it's an issue that this -- that needs to be dealt with. It's best dealt with by cooperation between Iraq and Turkey and we're playing a role in that, an active role with General Ralston. But is it a -- is this a lasting solution? I would put to you that it's not.

QUESTION: Turkish Prime Minister Erdogan again earlier today ruled out military incursion into northern Iraq, saying that PKK terrorism should be fought with inside Turkey, not inside Iraq. Is this a good thing?

MR. MCCORMACK: Well, we've made it clear that we don't think an incursion into Iraq by the Turkish armed forces is, again, the solution. We understand. We've been -- we were victims of terrorism here in the United States. We know what it's like to lose innocent life. But Iraq and Turkey are neighbors. That's not going to change. And we believe it is in everybody's interests -- Turkey's interests, Iraq's interests and frankly our interests -- that this be worked out through cooperative action as opposed to unilateral actions involving incursions into Iraq by Turkey.

QUESTION: Finally, does General Ralston have any plans to travel to the area in the foreseeable future?

MR. MCCORMACK: I'll check for you. I'll see and see if we can get an answer for you.

QUESTION: A follow up.

MR. MCCORMACK: Yes, Lambros.

QUESTION: A follow-up on Turkey. Mr. McCormack, to be honest with you, I'm afraid that Turkey's general, in particularly Yasar Buyukanit, who according to new reports insist an invasion into northern Iraq prior to the election of July 22nd, asking and pushing a permission from Recep Erdogan to give a written instructions. Any comment on that in connection with (inaudible) you said?

MR. MCCORMACK: I have not -- I have not seen these reports, Lambros.

QUESTION: And --

MR. MCCORMACK: We have confidence in Turkey's secular democracy and the relationship between the military and civilians.

QUESTION: Any response to my yesterday's pending question regarding the explosion in Istanbul carried out by terrorists or others injuring 14 innocent Turkish people?

MR. CASEY: (Inaudible) read your e-mail. We posted an answer.

MR. MCCORMACK: Yeah, we posted an answer. Basically -- basically, what we have determined is that this was one of these flash bang grenades. It was sort of a sound grenade. I know some people were injured. I don't know who's responsible for it.

QUESTION: Do you condemn this action?

MR. MCCORMACK: Well, people were injured by a -- what appears to be an act -- a violent act. You know, I don't know who's responsible and we certainly regret that people were injured by it. I can't tell you who perpetrated it, Lambros. I don't know.

QUESTION: What about my other question on the new type of military movements along the Iraqi border since some Turkish politician said, "The military's decision is a declaration of martial law." And you told me yesterday that you are going to look into that and give me an answer.

MR. MCCORMACK: Well, somebody will get back to you with an answer.

QUESTION: Thank you.

MR. MCCORMACK: Yeah.

QUESTION: Thank you. Sean, the President Bush had mentioned at G-8 meeting in Germany last week United States had certain limit of patience to wait to North -- for North Korea response to denuclearization problem. What other option does the U.S. have in case North Korea do not honor their promise in denuclearization?

MR. MCCORMACK: Again, we're not there yet. We still have -- North Korea has assured us as well as other members of the six-party talks it intends to implement the agreement. We hold them to that. Let's all hope that the BDA issue will be resolved. I, probably more than anybody, would like to see the BDA issue resolved so I don't have to keep answering questions like this and I can get back to talking about what is happening in the six-party talks.

QUESTION: (Inaudible) BDA issue is not resolved, before that President Bush have (inaudible) some kind of options.

MR. MCCORMACK: Well, we'll let you know if we get to that point.

QUESTION: Are things in place for the BDA issue possibly to be resolved as early as tomorrow? Are you expecting something in the next few days?

MR. MCCORMACK: I never make predictions about when the BDA issue will be resolved, but I know the Treasury Department had a statement out yesterday about it. I'm not going to venture beyond that. We all would like to see it resolved as quickly as possible so that we can get back to the six-party talks, North Korea can focus on what it needs to do in order to fulfill the February agreement. That's where everybody's focus we hope will be in the near future.

QUESTION: Sorry, just one more. Syria says that it's ready to negotiate peace with Israel but it won't accept any of the conditions that Israel apparently has laid down. I wondered whether you had any response to that, especially in the light of Prime Minister Olmert's visit next week when the Syrian issue is apparently going to be discussed.

MR. MCCORMACK: Right. Well, we have said before, I'll repeat for you, that we're not going to make decisions on behalf of Israel about its foreign policy. But if you take a look at recent Syrian behavior in the region -- not even recent, going back years -- I don't know if you'll find any indication of a state and a regime that has an interest in coming over to the side of negotiation as opposed to the use of violent extremism in order to achieve political ends. So if there's any indication of that, certainly it hasn't been discernible to the human eye. And again, Israel will have to make its own decisions, but you know, I'm not sure that there's any indication from this regime that it is actually interested in a serious dialogue about settling differences via peaceful means.

QUESTION: May I?

QUESTION: Same thing?

QUESTION: Yeah, yeah.

QUESTION: Yeah.

QUESTION: Has the Bush Administration privately or otherwise proposed something to Syria analogous to the Qadhafi deal?

MR. MCCORMACK: To the Qadhafi deal?

QUESTION: Yeah, whereby in exchange for renouncing weapons or other activities the United States doesn't like, we can move forward on some kind of better footing --

MR. MCCORMACK: Not to my knowledge. But you know, again, this isn't just activities that we don't like. These are activities that are harmful to the interests of everybody in the region. If you just ask the Lebanese, many Lebanese, what they think about Syrian activities in Lebanon, ask the Palestinian people what they think about -- think about the Syrian Government supporting violent extremist Palestinian rejectionist groups, I think you're seeing some of the effects of that now in the Gaza Strip of some of this terrible fighting that is going on there.

Let's be clear about it. These -- this most recent round of violence started up by the "military wing of Hamas" was coming just at the point as you started to see some of the Qassam rocket attacks go down, that you saw the Egyptian Government in Gaza trying to bring the various political factions within the Palestinian areas to some sort of agreement so that you could end the violence. And once again it has flared up in an ugly way, and that is because you are seeing those who are irreconcilable to any political process or participation in a political process, nevermind negotiating peace with Israel, acting to subvert any hope of reducing the violence emanating out of the Gaza Strip.

Yeah.

QUESTION: Can I -- just one general question. The meeting between Prime Minister Olmert and Abbas is being postponed and, as far as I know, there isn't another date yet. Do you think that -- I mean, how do you see what's happening at the moment in terms of the role that you've been trying to play to push the peace process forward? Do you think that you're making headway? Do you think that because of the chaos that you just can't find any opportunity in that chaos? I mean, where are you?

MR. MCCORMACK: Well, we -- well, first of all, the fact of their not meeting -- they are going to have to decide -- make these decisions about exactly the when and the where. We leave it -- we leave it to them. I'm not going to tell you we don't encourage -- we're not encouraging them to get together. We have. Secretary Rice has said that she will continue to do so, and we do.

We're confident they are going to meet together, if for no other reason than both see it in their interest to meet together to try to work on problem solving. There's a mutual -- there is a mutual interest there. And certainly we think it is in the interest of both parties to try to start a dialogue on the whole spectrum of issues in -- ranging from the most minute to some of the most important that remain between the Israelis and the Palestinians to try to eventually come to a political accommodation that results in an Israel and a Palestine.

The violence in Gaza is certainly nothing that anybody wants to see, but ultimately it is the Palestinians that need to reconcile the political differences that are at the root of this violence. You know, there are, again, quite clearly two pathways that the Palestinian people can take, and there's the pathway of Palestine via the negotiating table, which is the only way that you're going to realize a Palestine, or they can continue down this pathway in which a violent few can drag an entire population into a miserable, violent, awful situation in which kids can't take their final exams at high school, they can't take their university exams. And that's a situation nobody wants to see.

But ultimately it's going to be the Palestinians that need to sort out their politics and make a decision about which pathway they want to go down. You know, Israel, of course, has things that it needs to do as well. So there is a certain -- there are a certain number of things that we can do. There are a certain number of things that we can encourage people to do, that we can push people to do, that we can intervene to do. But there are some irreducible things that, for example, the Israelis and the Palestinians need to do for themselves.

QUESTION: But the Secretary at one point had said she'd hoped to go every month and that hasn't happened. Are you losing steam here?

MR. MCCORMACK: Well, no, certainly not. If you measure -- if you measure it in terms of the activity that is ongoing that you don't always see with the Secretary talking to her foreign counterparts; David Welch, Elliott Abrams, others talking to their counterparts, trying to move the process forward. It's -- look, the Middle East is unpredictable and you set out -- you set out targets for action with the intent of meeting them. Sometimes -- sometimes circumstance will dictate that it is better to give people a little time and space in order to have more effective meetings, to allow them to take more effective action.

But this is not something that the Secretary -- it is not an issue that the Secretary is in any way losing focus on. It is not in any way an issue that she is devoting any less energy to. And she remains committed to trying to move forward an Israeli-Palestinian track, moving forward an Israeli-Arab track. The Quartet has already committed itself to meeting towards the end of this month first with Israelis and Palestinians then with Arab representatives. So again, that's another -- one more benchmark.

I know this is a -- sometimes an issue where it's difficult and -- difficult to measure progress in any other way than having meetings, but we hope to get to the point where you don't just measure progress in what meetings you're having, what phone calls you're having, but actually seeing results on the ground. And that's what the Secretary is going to continue driving towards.

Yeah.

QUESTION: Just a question back on Iran. U.S. officials are now talking publicly for the first time about Iran's support for the Taliban in providing arms and so on. Can you give us any examples of this and did it come up at all in Ryan Crocker's meetings in Baghdad?

MR. MCCORMACK: Well, I'm not sure it came up with Ryan's meetings in Baghdad. I know that Secretary Gates as well as some of our military officers in Afghanistan have talked about Iranian arms flowing into Afghanistan. Now that's a -- that is, of course, of great concern to us. Now the one final linkage that I'm not sure anybody has made, and I don't think I could at this point, is what exactly is the active involvement of the Iranian Government in those arms moving into Afghanistan. You could have -- you could posit a situation where you have Iranian-manufactured arms that somehow made their way through the international arms market and now ended up in Afghanistan. I'm not telling you that's the case. I'm not suggesting it. But I'd merely point it out to say that we have not made that final, final linkage to elements of the Iranian Government taking an active role in shipping those arms in with an intent to arm the Taliban.

QUESTION: I don't know if this is something that Secretary Gates has talked about, but do you -- can you give us any specifics on what you're seeing -- find --

MR. MCCORMACK: I know our military in Afghanistan has talked about it, I think, in terms of -- at least small arms. I don't know what beyond that.

(The briefing was concluded at 1:26 p.m.)