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Lord Hannay of Chiswick rose to ask Her Majesty's Government how they see the prospects for Iran's relationship with the rest of the world in the light of the recent visit by the Foreign Secretary.

The noble Lord said: My Lords, I feel some shame at taking the time of the House at this rather late hour but the subject on which I have tabled an Unstarred Question is a topical and important one. It is probably one which we shall have to debate on a number of future occasions because it is not a subject that is going to go away.

Iran's relationship with its neighbours and the rest of the world has, since the Islamic revolution which saw the fall of the Shah in 1979, been a troubled and turbulent one. Soon after that revolution Iran was attacked by its neighbour Iraq and a long and bloody war then ensued. During that struggle Iran received little comfort or support from the international community, despite the clear evidence of Iraq's aggression and despite its use of chemical weapons. At the same time, a long-running confrontation with the United States following the holding of the US Embassy staff as hostages resulted in isolation and economic sanctions.

Even before that revolution, Iran's 20th-century history was one of constant intervention by outside forces—by tsarist Russia, by Britain, by the Soviet Union and by the United States. I have no intention of going into the rights and wrongs of those events—that is for the historians to judge—but it is important to understand some of that background if the mistakes of the past are not to be repeated and if there is to be a genuinely constructive dialogue and engagement with Iran in the future.

Now Iran is again in the headlines as a result of perfectly legitimate concerns about its nuclear programme, and we seem to be approaching a time when its relationship with the rest of the world could either steadily improve or take a dangerous turn for the worse. Last month's visit to Tehran by our own Foreign Secretary, together with his French and German colleagues, and even more the indications given to them that Iran would sign the additional IAEA protocol and would make a full accounting to the IAEA of all its nuclear activities, was a very welcome development, as was the more recent news that Iran had indeed provided substantial new information. Obviously, that is only the beginning of what could be an improving trend, not the end of it. Actions from now on will speak louder than words. It would be of great value if the Minister could say a bit about the next steps and the way ahead.

In handling Iran's nuclear programme, and in pressing the view—in my view, the correct one—that Iran should not develop further its capacity to enrich uranium or to separate plutonium from its spent fuel, I hope it will be possible to ensure that Iran's concern to be able to develop and operate a civil nuclear programme will be taken fully into account.

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However, we surely need to look well beyond Iran's nuclear programme if we are to avoid slipping into one of those zero-sum games which so seldom end satisfactorily. Iran, like any country, has concerns about its own security. It lives in an unstable neighbourhood; some part of those concerns has been addressed by the removal of the Taliban from Afghanistan and of Saddam Hussein's regime from Iraq. But that could be only a temporary relief, unless steps are taken to ensure medium and long-term stability in the region.

It used to be said that nothing meaningful could be done about Gulf security so long as Saddam Hussein ruled in Baghdad. Well, that is no longer the case. Has not the time now come to look again at the whole question of security in the Gulf, to consider whether, and if so how, the three key countries involved—Iran, Saudi Arabia and a new democratic Iraq—could work together in co-operation with the other states in the region? I should be interested to hear what the Minister has to say on the prospects for that.

Quite apart from the regional aspects of security, there is a concern felt by many Iranians that there still exists in the West the old hidden agenda of regime change. In that context, the very clear statement made three weeks ago in a Congressional hearing by the US Deputy Secretary of State that regime change was not part of the US agenda was very welcome. Is it not right to recognise that Iran does already possess elements of democracy, that elections are held there and that they are capable of bringing about policy changes, albeit very slowly? If so, it is surely then for the Iranians to determine their own political future without interference from outside. It may be necessary to find some way of saying that more formally than has been done hitherto.

If we are to address Iran's security concerns, as I suggest we should, it is reasonable that it should be asked to address some of ours. Foremost among those is the war against terrorism. Iran is evidently a key player in this respect. Its wholehearted participation in the efforts to deny a safe haven or funds or material to Al'Qaeda and other such groups would be of great value. Anything less than that leaves the collective effort that we and our allies are supporting seriously weakened. So far, the jury seems still to be out on this matter. Perhaps the Minister can say something about that.

Then there is Iran's attitude towards efforts to achieve a peaceful settlement in Palestine. In the past, that has been aggressively negative. So long as events on the ground continue to deteriorate, so long as the peace process lacks genuine credibility, I suspect we are not likely to have much success in influencing Iran on this matter. But if the quartet of the UN, the US, the European Union and Russia can move things back to the negotiating table and, even more, if a serious negotiation can be got under way on the final status issues, it will be important to engage Iran, too, in a serious dialogue, to seek to enlist its support and to press on it the case for so doing.

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Even this rather cursory analysis shows, I think, just how complex but also how necessary constructive engagement with Iran is likely to be. It is good that three of the main members of the European Union are back in harness after the disagreements over Iraq and are working together to achieve agreed objectives. That is a necessary, if not a sufficient, condition for a successful common foreign and security policy in this area. It is good, too, that those objectives are shared, trans-Atlantic ones and that there, too, some of the disagreements that arose over Iraq are diminishing. Indirect US support for what the Europeans are doing with Iran is welcome but one day, direct US involvement will surely be needed as well. It would be good to hear what the Minister considers may be the prospects for that.

One further point is relevant to any consideration of the relationship between Iran and the non-Islamic world. That is the need to avoid any suggestion of that clash of civilisations that could have such disastrous consequences if it ever came to pass. It was President Khatami of Iran who proposed some years ago that we should be thinking rather in terms of a dialogue of civilisations. He was surely right. But that dialogue cannot be a purely cultural manifestation; it must be situated within a framework of civility and co-operation between states if it is to flourish. I argue that that is yet another reason to work hard to improve the relationship between ourselves and our allies on the one hand and Iran on the other.

In all that consideration of geo-strategic issues, we clearly cannot and should not lose sight of problems over human rights in Iran. Those persist, whether it is a matter of the role of women or the persecution of religious minorities. But the recent award of the Nobel Peace Prize to an Iranian who lives in Iran and works on human rights issues should be an encouragement to us to sustain a dialogue rather than simply to resort to the language of condemnation.

No Briton who has lived in Iran, as I did rather more than 40 years ago, can be ignorant of the legacy of suspicion and distrust that hangs over a historical relationship that has always been close but has not always been happy. Is it too much to hope that, in the very different circumstances of the 21st century, we can get off to a new start? I know that the Foreign Secretary has devoted much thought and effort to achieving that. I would like to encourage him to continue on that course and to play a leading role within the European Union and within the trans-Atlantic alliance to define a more satisfactory and equal relationship with Iran than has existed in the past.

10.12 p.m.

Lord Phillips of Sudbury: My Lords, I thank the noble Lord, Lord Hannay, for having introduced the debate. It is no fault of his that we are conducting it at this anti-social hour. I should briefly declare two interests: the first is as secretary of the British-Iranian Parliamentary Group; the second is as president of the British-Iranian Chamber of Commerce.

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I should also declare a particular affection and admiration for Iran. I have been visiting the country since I was an undergraduate. It is a greatly misunderstood country. It has an ancient culture and a tradition of crafts skills, arts, science and poetry. If they were better understood in the West, that would, I sense, avoid some of the rather ludicrous caricaturing of Iran that occurs, such as suggesting that it is a collection of fanatical peasants. It has a passionate, proud and particular people. Too little is understood of the progress it has made in the past 20 years in moving towards a more modern and democratic state, as the noble Lord, Lord Hannay, mentioned. It is worth remembering that the past two presidential elections saw a turnout that we in this country can only envy. The election to the Majlis and more recently to local councils were firsts in Iranian history and should be given more recognition and support. As the noble Lord deftly outlined, its history with us and other great world powers, including, in particular, the United States, has been far from happy. It is no surprise that it has a dual approach to the British—part admiration and part considerable suspicion.

I turn to the way forward—there is no point in having this debate unless one concentrates on that. I do not disagree with a single remark made by the noble Lord, Lord Hannay, but there are optimistic signs towards a multi-faceted opening up of the relationship between Iran and the world at large.

I am sure that continued engagement and dialogue and constructive criticism, which has been the policy of Her Majesty's Government, must be the right way forward. I take my hat off to Jack Straw for his five or six visits to the country since he became Foreign Secretary. That has been hugely important and has created a bond and degree of trust, which will stand both countries—and the world—in good stead.

I am encouraged by the engagement of the European Union with Iran in recent times, and the various agreements with regard to trade and human rights that are now making an impression. Noble Lords should not forget that the United Nations also has a growing involvement with Iran, which represents a lowering of the suspicions of the Iranians towards outside involvement. In February, WGAD—the Working Group on Arbitrary Arrest—made a visit to Iran. That would have been unthinkable until recent times. So, too, in this month, the UN special rapporteur on freedom of expression and association has been in Iran, preparing a report. Again, that was unthinkable until very recently.

There have been several bilateral exchanges between our two countries in the past two years. There have been parliamentary visits both ways, and I was lucky to be part of the first parliamentary delegation to go out there. A group of British parliamentary women went out to Iran, and came back pleasantly surprised at the state of Iranian women and the progress that they are making. This year, we have had visits of judges and human rights lawyers, both of whom I had the good fortune to meet. A great deal is happening.

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I have to say—perhaps with a good deal less diplomacy than the noble Lord, Lord Hannay—that the role of America in all that is parlous and, I believe, counter-productive. It is not in the interests of the United States and certainly not in the interests of Iran. It is not in the interests of the American policy towards pacification of terrorism and the Middle East.

One must acknowledge and be frank about the fact, not only that Iran was involved a devastating eight-year war, but that that war was supported to the hilt by the United States and, to a lesser extent, by our own country and France, in supplying Saddam with arms. The Iranians then had to put up with the constant American warning that they should not meddle in Iraq, when Iraq is their neighbour and was their assailant and when only Iran supported the Iraqi Shias during a time when the West ignored their awful plight.

The axis of evil and the placement of Iran within that was an historic error, and the sooner that the Americans can withdraw from that, just as they have withdrawn from the ludicrous notion of effecting regime change, the better. In the past two days, we have seen the United States rejecting the clearance given by the IAEA vis-à-vis Iran's nuclear energy programme. That has a rather unhappy resonance with American attitudes towards the reports by Mr Blix and their view of weapons of mass destruction in Iraq.

I sincerely hope that Her Majesty's Government will, in a much more effective and influential way than the approach that I am taking tonight, bring pressure to bear as far as they can on the United States to drop the trade embargo that has now existed for 22 years. That embargo has been extended to non-US companies if they have the temerity to invest more than 10 million dollars in the Iranian oil industry. That is entirely counter-productive, because the one thing that would support moves towards democracy, greater regard for human rights and modernisation, would be to allow the Iranian economy to grow and expand and take up some of the damaging level of unemployment—particularly among young graduates, where there is more than 15 per cent unemployment. As I say, the Americans, by dropping that embargo and engaging with Iran in a way that I have no doubt at all the Iranians would want to reciprocate, would, I believe, bring about the goals of American policy which are, of course, admirable but which are impeded by the present approach.

I should like before finishing to say a few brief words about the constitution of Iran. It is certainly not our role to tell the Iranians how to run their affairs. We have done that for far too long and too often vis-à-vis Iran. They are independent, intelligent people who must find their own destiny in their own way within their own cultural context. That will be different from our own. We need to be far more patient and a good deal more humble, frankly, in the way we view their affairs.

However, one also cannot help acknowledging—this is something that some Iranians are very vocal about—that the Iranians have a Byzantine

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constitution. The checks and balances which are built into it are to my knowledge by far the most complex of any nation on earth. Those checks and balances have led to immobilism and deep frustration, particularly as regards the relationship between the Parliament, the Majlis, and the Guardian Council, which has the role of approving legislation but which is not itself elected. Anything we can do—it would need to be done with the greatest delicacy—towards assisting the Iranians to evolve their own constitution in a peaceable way would be of the greatest possible assistance. I refer to the kind of help that we are giving in terms of their judiciary and legal profession, which are certainly highly developed as regards the region of which Iran is the linchpin. There we are perhaps setting a model of what might be done.

On the human rights front, Iran is constantly frustrating. It is a case of two steps forward, one back, occasionally even two back, but little by little the Iranians are making progress although not as fast as many of them want and not as fast as we would like. From time to time some terrible things go on but I think that what Maurice Copithorne, special representative of the UN Commission on Human Rights, said to the Economic and Social Council of the UN in 2001 still holds true. It struck me as being a very wise statement. He said:

    "Iran is going through a period of critical turmoil, the struggle for the soul of Iranian society, for certain values such as justice, one of the oldest political values going back, scholars say, to the Achaemenian period, and for the more modern ones of accountable governance and a welfare and dignity of all citizens".

Mr Copithorne went on to say that he,

    "believes that change is clearly underway and that given certain foundational improvements that have taken place in areas such as women's education, democracy and health, the trend is now irreversible".

It is, and I sincerely hope that we shall continue to support, wherever we can—at governmental level, business level and NGO level—the emergence of this great country into a destiny that it deserves.

10.23 p.m.

Lord Wallace of Saltaire: My Lords, it is a very late hour to discuss an important but complex topic and we have been asked to be relatively brief. I congratulate the noble Lord, Lord Hannay, on the high topicality of this debate particularly in the light of the IAEA report just published.

I should like to start by saying that we on these Benches are often very critical of the conduct of British foreign policy but this is an area in which we strongly support what the Government have been doing. They have exactly the right approach. We trust that Her Majesty's Government will continue along their constructive line.

We all recognise that relations with Iran have been extremely difficult since the revolution and continue to be difficult. There is divided authority within the country—partly democratic, partly clerical. However, one of the more positive developments is that a number of Shia authorities are beginning to say openly that the claim for clerical authority in the temporal

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order is against the entire tradition of the Shia branch of Islam. There is a large younger generation that is much more open to the West. All that makes Iran not a state comparable to Saddam Hussein's Iraq or Kim Il-sung's North Korea. That is why the linking together of Iran with Iraq and North Korea into a single "axis of evil" was very much a mistake.

However, the IAEA report is very serious and damning in many ways. It confirms what many had feared—that Iran has had and still has a nuclear development programme, although the programme appears far less advanced than that in North Korea. The emergence of Iran as a nuclear power would have contributed further to tension in the region, but I agree strongly again with what the noble Lord, Lord Hannay, said about the insecurity of the region. If I were in the Iranian Government, I would have been very concerned about being surrounded by the levels of threat, and the response has to be to try to build a regional security order.

It is also a concern that there is evidence of active help from a number of unnamed outside states in the Iranian nuclear programme, which raises some large questions about the nuclear non-proliferation treaty. It is clear that Pakistan was very much part of the external assistance for Iran.

The noble Lord, Lord Hannay, also talked about Iran and the war on terrorism, the Israel-Palestine link, and of course the Iraqi link. My understanding is that the Iranian Government have been fairly helpful in our dealings with the Taliban. Again, I regret that the Americans have not done more to encourage closer co-operation with the Iranians on that. We need Iranian assistance, and we need to reward what they have done so far in order to build on that and encourage closer collaboration. So far as Israel and Iraq are concerned, that has to be part of a western policy towards the Middle East as a whole. One cannot deal with Iraq, Iran and Israel separately.

The best way to deal with that important, large, unstable and potentially threatening state seems to be the British and European approach of diplomacy backed by the threat of sanctions, but nevertheless offering potential rewards and keeping the doors open. We welcome the visit of the three Foreign Ministers together as a positive move towards closer European co-operation. We also welcome the way in which smaller states within the European Union have not attacked that initiative on behalf of the European Union by its three most active international states.

The American approach has been damaging and confused. I welcome what Richard Armitage said, but if the deputy Secretary of State has been constructive, the assistant Secretary of State for arms control has been extremely destructive all the way through. I have met John Bolton on a number of occasions, and I regard him as an actively destructive force in international diplomacy. That is deeply unfortunate. Again, if I were watching the United States from Tehran and hearing the highly confused and contradictory messages that come from different elements within the divided Bush administration, I

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would be confused and worried. There are still calls from think-tanks to which President Bush gives major foreign policy speeches for regime change in Iran. The issue has not yet entirely gone away.

The Americans still have deep hang-ups over the humiliation of 1979 and 1980. That is not forgotten. They identify Iran as a threat to regional order, partly because they see it as a threat above all to Israel, and see Israel as the centre of any future regional order in the Middle East. They attack Iran's support for Hezbollah and therefore identify it as a terrorist state without recognising that the Shias in the Lebanon are a legitimate concern for any Iranian government.

We welcome the British approach. We all have to admit, I am afraid, that the soft cop European approach has actually been eased because of the toughness of the American hard cop behind it. That may be partly why we have made progress and why the Iranian Government have made their recent concessions to the IAEA and the admissions that they had previously resisted.

Where do we go from here? We clearly need to have as closely co-ordinated a European approach as possible. I repeat that we welcome what the Foreign Secretary has achieved with his French and German opposite numbers and we hope that that will be maintained.

We recognise that the European approach must be co-ordinated as closely as possible with that of America, even though that will continue to be difficult for so long as Washington's approach to the Middle East is as confused and internally contradictory as it is. We have to take a regional approach; we cannot deal with Iran as a whole. American troops are on its border, guarding Iraq. There are now American bases to its north. The question of Israel cannot be ignored given that it comes within the entire American approach to Iran and the Iranian approach to the United States and to the western part of the Middle East.

We have to keep the door open. We have to provide incentives as well as penalties. After all, we have seen China emerge in the past 25 years from a radical revolutionary situation, involving intense nationalism and its shutting itself off from the outside world, to a state which has reintegrated itself into the world economy and the multilateral international system. We should all hope that that is the path that the Iranians will take in moving from a revolutionary state to a more open society, a more open economy and a more peaceful relationship with its neighbours. We encourage Her Majesty's Government to do everything they can to lead the Iranians down that path.

10.32 p.m.

Lord Howell of Guildford: My Lords, like others, I thank the noble Lord, Lord Hannay, for initiating our debate. I should tell my few colleagues and friends here tonight that, by the old standards of another place, this is not a late hour at all. Most of the business of the other place used to be conducted in the early hours of

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the morning. Nowadays, they all go home at 7 p.m. and the late hours seem to have moved to this House instead. Perhaps my own move from that place to this was not a good career change. I seem to have brought the late hours with me.

We are faced with the enigma that is the amazing country of Iran. On the one hand, as all noble Lords have indicated, it is a brilliant, cultivated, clever nation of highly creative people with a dazzling history that stretches back to the Sassanids and to many generations before them—our own history seems modest by comparison. On the other hand, it is today, and has been for the past two decades, a country of evasions, cruelties, human rights abuses, mass executions—not so very long ago—and shocking persecution of religious minorities, particularly the revolting treatment of the Baha'is, both adults and children.

Until recently, the country believed—and its leaders still believe it—in exporting Islamic revolution and preaching Islamic world dominance as an inevitability. That is the classic language of 20th-century religious ideology of the kind which cost millions of lives and which we do not want to see survive into the 21st century or prosper on this planet during the next 100 years.

Furthermore, as other noble Lords have mentioned, there is clear evidence that Iran has succoured not only the Hezbollah, but also organisations such as Hamas, and that it is therefore a supporter, directly or indirectly, of the ultimate barbarism of deliberately targeting innocent women and children for slaughter. That is the bad side of it and one cannot just shut one's eyes and brush it aside.

Although it is true that long ago Iran signed the nuclear non-proliferation treaty, it turns out in the IAEA report that for many years it has not been conforming to the treaty and has not been reporting its activities and developments. In other words, not to put too fine a point on it, it has been cheating for the past 18 years. Some years ago it developed uranium enrichment processes with the help of Pakistan. It is also in the business of plutonium reprocessing, which is said to be for civil use. However, when the Americans say, perhaps with a little hyperbole, that they find it impossible to believe it is for civil use and that it must lead straight to nuclear weapons, the Iranians have to make a case in response. The fact is that plutonium, in the Iranian context, is needed only for weapons. They do not need it for their civil nuclear power development—whether for their older Russian station at Bushier or any other development. There may be some justification, but it is not there yet. It certainly is not in the IAEA report.

Having put the black side—and I agree that I have done so—Iran is a major nation. It is centrally positioned in our concerns about global security. It is next door to Afghanistan and has been helpful and sensible over dealing with the reverberations of the Taliban affair and the Afghanistan war. Clearly, it goes without saying that we must work with this nation. It may even be possible to recognise that it feels

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surrounded and isolated. Nuclear powers all around may cause some justification for that. Perhaps we would think like that if we were in Tehran.

As for the recent visit by the French, German and British Foreign Ministers on 21st October, like the noble Lords, Lord Wallace and Lord Hannay, I believe that it was an excellent affair. To me, it was a perfect model of the right form of flexible, agile, European foreign policy co-operation. Perhaps I may not resist the temptation to remark that it seemed far better than the over-elaborate common foreign security policy machinery, which certain enthusiasts are always pressing us to adopt and which is not task-specific. This was task-specific; Foreign Ministers got together, just as they should, and it was an excellent example of the way things should work in European foreign policy co-operation.

It is also true that Iran is central to the Iraqi problem. It is essential that the border is not porous and that Iran stays out of Iraqi affairs, as it seems to be doing. That is encouraging. Furthermore, as we were reminded by the noble Lord, Lord Phillips of Sudbury, Iran is one of the world's major oil producers. However, I disagree with the noble Lord and those who seem to believe that more oil production and oil investment are the best way forward for that kind of nation. The truth is that over-dependence on oil is a curse and not a blessing. If one looks around the world, one sees that wherever there is over-dependence it is far from promoting enterprise, the opening up of markets and liberal governance; it has held back the societies which are often swamped in gigantic oil revenues. Therefore, in wishing the future of Iran well, I hope that it does not remain solely and overly dependent on oil development.

As to nuclear developments, I have made some comments. The whole saga of Iran's apparent cheating but now readiness to comply, and the question of whether it is developing weapons-grade uranium and plutonium for any purpose other than civil nuclear power, prompts us to rethink generally on the nuclear non-proliferation treaty. Frankly, I do not believe that that is sustainable in its present form or, indeed, enforceable. I would urge that we all applied minds to better ways of shoring up the non-proliferation process because the NPT is clearly not working. When we do shore it up, that will have implications not only for the countries that are not supposed to be existing nuclear powers but are, or the countries that are moving in that direction, as Iran may or may not be doing, but also for the five existing nuclear states as well. That includes our own country. If we want non-proliferation to work, we all have a duty to think how better to minimise our own holdings and involvement in nuclear weaponry.

Therefore, in this brief debate, my conclusion is perhaps the obvious one: we must engage with this nation and do so with our eyes wide open, without false enthusiasm but in a practical spirit. I agree with the noble Lord, Lord Wallace, that Iran is not a rogue

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state. That is an absurd label and part of the sillier neo-conservative rhetoric, which does not seem to be a very good guide to judgment in Washington policy-making.

However, we must be realistic: Iran is not yet a state that can be fully trusted. I, like others, hope that reform is under way but I believe that far more needs to be done before Iran can return to the status that it once enjoyed as a noble people and which it could enjoy again if liberalisation and reform were to go ahead in a genuine spirit of co-operation with the rest of the world community.

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