UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 496-i

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

Foreign Affairs Committee

 

 

Global Security: Iran

 

 

Wednesday 2 May 2007

SIR RICHARD DALTON KCMG and DR. ROSEMARY HOLLIS

Evidence heard in Public Questions 1 - 54

 

 

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Oral Evidence

Taken before the Foreign Affairs Committee

on Wednesday 2 May 2007

Members present:

Mike Gapes (Chairman)

Rt hon. Mr. David Heathcoat-Amory

Mr. John Horam

Andrew Mackinlay

Mr. Ken Purchase

Rt hon. Sir John Stanley

________________

Examination of Witnesses

Witnesses: Sir Richard Dalton KCMG, Ambassador to Iran 2002-06, and Dr. Rosemary Hollis, Director of Research, Chatham House, gave evidence.

 

Q1 Chairman: We have before us two people whom we know very well, Sir Richard Dalton and Dr. Rosemary Hollis, and we are just beginning an inquiry that will look at Iran. We thought that it would be helpful if we focused initially on the recent captives crisis and the events surrounding it. I am conscious that, because of the election timetable, some of my colleagues are not here today. Nevertheless, we have a quorum, and I am sure that we will be able to cover all the territory.

Would you both set out how you saw the objectives of the Iranians in capturing and detaining our marines and sailors? Why did they do it? What were they trying to achieve? What was their purpose and did they meet their objectives in doing this?

Sir Richard Dalton: We do not know. We do not know what their objectives were because we do not know who took the decision. There are three options. The first is that the system decided that it wanted to make an example of the British and this was the way to do it using its constitutionally decreed arrangements, ratified if necessary by the supreme command of the armed forces, Ayatollah Khamenei. At the other end of the spectrum, it might be that local commanders decided that this would be a good thing to do; they believed that they had mounted a successful operation against the British in 2004 and it was a good time to do it again. In between those two options, it could be that the commanders thought that it was a good idea and checked it with their military superiors, who had a quiet word with somebody on the political side who said, "Well, go ahead and do not worry; the system will back you up after you have done it." We have no evidence that I am aware of publicly to choose between those three options.

Speculating about their motives, I think that they wanted to show that they were tough and ready to repel anybody who wanted to aggress against their territory, so they had a general objective of showing military determination. Secondly, they wanted to taunt the British, who are regarded as enemies, particularly in the revolutionary guard and in the higher clerical circles. The target was one that they would have spotted because they keep an extremely close watch on what goes on, and they would have concluded that for low military cost they might well be able to make a significant political demonstration against the United Kingdom, their habitual enemy.

There might have been feelings to assuage because they-particularly in the revolutionary guard-had been on the receiving end of some setbacks, such as the arrests in Irbil by the Americans, with five of the revolutionary guards' associates kept by the Americans. There had also been a high level probable defector, Mr. Asgari, which was a blow to their pride. The Revolutionary Guard commanders may have thought that it was a good time to show that they could not be taken for granted and were ready to defend their position. Speculation about who took the decision and what their motives were is beside the point. The system took up the action as soon as the news came through to Tehran that the captives had been taken and it ran with it. Within a matter of minutes or hours, it became a system-wide exercise.

Q2 Chairman: We will go into other aspects of that in a moment, but have you got anything to add, Dr. Hollis?

Dr. Hollis: I go along with everything that Sir Richard has said about the options over how it originated. I concur totally that once it had started, the system was going to play it for all it was worth. I would add that the Iranians seem to have a propensity to play on a very large battlefield and to try to have as many options in the air as possible. While it is not actual warfare, it is a sort of asymmetrical warfare. That fits in with Iran's own rhetoric in which it said that, "If the Americans attacked us, they would be mistaken if they assumed that we would retaliate with missile attacks on US assets in the region. We have many other ways of making their life difficult." That episode fits nicely with Iran's sense of its place in the region. It has multi-faceted relationships in the region and multiple opportunities to make its presence and position felt.

Q3 Sir John Stanley: Sir Richard, will you explain why you appear to rule out a fourth option, namely that it was retaliatory action for the taking into custody of certain Iranian personnel and, if the media reports are to be regarded as authentic, for the news that more would be taken into custody in Iraq by Iraqi security forces and the US?

Q4 Sir Richard Dalton: I certainly do not rule that out. I said that they wanted to assuage their feelings that had been sorely hurt by that action. It could have been a direct retaliatory action on the grounds that the UK would be a softer touch than getting directly at the United States.

Q5 Chairman: In your answer earlier, Sir Richard, you referred to the regime taking on the issue and using it. In an article that you wrote a few weeks ago, you said that the Iranians appear to have been improvising rather than working on an overall diplomatic plan. Could you summarise how the Iranian diplomacy worked once they had taken it on in the way that you described?

Sir Richard Dalton: I do not know any of the inside story. You would have to ask the Foreign and Commonwealth Office to give you a good answer to that question. It was clear, as in the case of the capture in 2004, that the Ministry of Foreign Affairs in Tehran had to play catch up to find out which units were holding those people and why, what the line of communication was and what the view of the political leadership was of the action taken to capture them. How matters evolved in that interplay of the different actors in Tehran is, in my experience, always shrouded in mystery. They keep their counsel very close. The Ministry of Foreign Affairs is a faithful expounder of an agreed line, but does not take a foreign embassy into its confidence about what line is being taken by which players in the preparation of that agreed line.

Q6 Chairman: A question for both of you: do you feel that the Iranians now regard the way in which they handled our personnel as sensible? I refer to their use of confession, televising, and the threats that were made to the personnel. In retrospect, might they think that perhaps they should not have done that?

Dr. Hollis: If I may say so, I think that the Iranians deemed it a pretty successful manoeuvre from start to finish. It ended happily, and at the right time. They had sent messages, they had tested to see how far they could go and they regrouped when they came up against the limits of that. I dispute the argument that they made at the time of the release of the personnel to the effect that, had Tony Blair not taken the issue to the Security Council and to other members of the European Union, it could all have been resolved sooner. The fact that they said that was indicative of the careful manoeuvres in which they were engaged, and it justified their position. However, by taking the issue to the UN Security Council and to fellow EU members, the British in effect raised the stakes, but also established-for all to see-the extent of support that they were likely to receive. They demonstrated to the Iranians that they were not a pushover.

Sir Richard Dalton: I broadly agree with that. I would add that it was a very high risk strategy for the British to go to the Security Council at the time that they did. Making a large public fuss is rather different from making private representations to allies and regional neighbours of Iran. The more one uses publicity and the international pulpit, as it were, the higher the value of captives to some of the extremists in the Government whom one is trying to influence. The fact that the release of Faye Turner was aborted as a consequence of going to the Security Council shows the degree to which a risk existed.

In addition to the EU partners, who I suspect would have been prepared to go into reverse in some of their dealings with Iran had the issue remained unresolved after a period of time, the key influences on the Iranians were, I think, the regional ones. As Dr. Hollis said, a major Iranian objective was to show power in the region, yet they had a stream of phone calls from all their regional neighbours, saying, "Please bring this to an end."

Q7 Mr. Horam: Why did the Syrians take the line that they took? They made it plain that they were against the Iranian position. Why would they do that?

Sir Richard Dalton: I do not think that they made it plain publicly. There have been articles suggesting on the basis of Syrian briefings that the Syrians were pleased to help. That would fit with the Syrian wish to make it plain to the west that it is not a country to be put into the doghouse and isolated, in the way that might be associated with US policy, but rather is a reasonable country, that can be dealt with. Putting a good word in would have been a logical course as part of the Syrian campaign to rehabilitate its image.

Q8 Mr. Horam: That is part of its wider game plan.

Sir Richard Dalton: Yes.

Q9 Mr. Horam: Do you agree, Dr. Hollis?

Dr. Hollis: I do. The Syrians saw it as an opportunity to demonstrate that they could be useful. I think that they capitalised to the extent that the US official Nicholas Burns, talking this morning about US-Iran relations, mentioned the Syrian Foreign Minister Mr. Muallem by name as one of the players who will be present with neighbours of Iraq and other interested parties in the next two days of diplomacy on reconstructing Iraq. Given during Mr. Burns' presentation this morning on diplomacy with Iran, I remark that as an indication that the Syrians have quite successfully reinserted themselves in the regional game.

Q10 Chairman: May I take you back to the issue of how the release was arranged? Was it as a consequence of the internal power struggle within the regime? Sir Richard, you said originally that we do not know why they were taken. Why were they released when they were and why do you think that Ali Larijani decided to go on Channel 4 News? Was that part of the power struggle or was it for other reasons?

Sir Richard Dalton: There is a power struggle for influence in foreign affairs between Dr. Larijani and President Ahmadinejad. It could be that Dr. Larijani spotted an opening to insert himself, not only to solve a problem for Iran but to show that he can deliver, which could be relevant to his standing in Iran. We need to step back a little and ask ourselves why the Iranians decided not to put them on trial, which was touted, as you know. There are precedents for taking people who have transgressed the sea borders of Iran-it did not happen in this case, but it has happened in other cases-putting them on trial and sentencing them for quite long periods. It was always a distinct possibility, but, speculating again, it would appear that the Iranians concluded that to put them on trial would prolong the issue to Iran's disfavour and, as Dr. Hollis said, it had got all it was going to get out of the issue after a couple of weeks. At that point, there was scope for a pragmatic international actor, as Dr. Larijani is, to a degree, to step in.

Dr. Hollis: I agree that there is a power struggle. I was taking soundings as much as I could from Iranian contacts, including those in Iran as the situation unfolded, and my sense is that President Ahmadinejad was persuaded to stay out of this until he was given the opportunity to do the theatre at the end. In the internal power struggle there was a division of labour and Dr. Larijani felt to me to be very much in charge at the other end of the overall direction that it was going to take. As one Iranian described it to me, the President's reward for not trying to hijack the issue was the drama at the end.

Q11 Andrew Mackinlay: My questions are for both of you. You gave us possible reasons, or options, but one that you did not mention-it comes later in my brief, but I will touch upon it now-is the dispute about whether the Royal Navy was in internationally agreed Iraqi waters, in that area that is blurred or in dispute, or in Iranian waters, and I want to link this to the Security Council. As I understand it, we went to the Security Council seeking condemnation of the taking of our people, and so on, but other members of the Security Council, particularly the Russians, were not prepared to say that these were Iraqi waters. It strikes me that they had an unexpected bonus because the Security Council did not do what the United Kingdom wanted it to do with regard to the location. That was a point to Iran, and it could pump the air. I am concerned that we did not do our preparation before we went to the Security Council in order to know what other Security Council players would sign up to. It seemed to me that there was a diplomatic failure or error by us and the Security Council. If the Chairman will allow it we may also come later to the matter of whether internationally other people agree about the status of these particular waters and the location of our RIB craft. I want to bounce that off you both, because it seems it was a bit clumsy in New York.

Dr. Hollis: Sir Richard called it a high-risk strategy. I admit that I felt at the time that it went as far as it could with the Security Council because not only did the Iranians learn that the British would have support, but the British learned the limits of that support. The silver lining was that not endorsing the British claim about where exactly the British vessel was presented the opening for the resolution of the crisis. Both sides could agree that it is a sensitive area, in which one has to be doubly careful, and there is some value in closer engagement to ensure that misunderstandings do not happen in the future.

Sir Richard Dalton: I shall add to that by saying that I do not believe that the we are talking, for practical purposes, about disputed waters. An enormous amount of shipping goes up and down those waters, and there have not been any similar incidents-at least, they have not been publicised. That is because it is very much in the Iranian interest to respect the international acquis, even if it is informal, as to where the border is.

When we had difficulties with the Iranians in 2003 over movements by their forces toward and beyond the Iraqi border, I took the issue on instructions to the Ministry of Foreign Affairs. It stoutly maintained that Iran's policy was to respect the commonly accepted borders in order that there could be a proper negotiation in due course with an independent Iraqi state, at which the borders would be fixed once and for all at what, for Iran, would be a relatively favourable situation-that with which it was left after the Iran-Iraq war in 1988.

The reason why the Iranians did not contest where the UK said the line was in the northern waters of the Persian gulf was that it did not wish to set up an irritation in its relationship with Iraq that would make the maritime border harder to deal with.

Q12 Andrew Mackinlay: This is a very important point. The British Government's position was that the waters were indisputably Iraqi. You said that there was a modus vivendi by which merchant shipping was let go, as happens in an awful lot of waterways around the world that are subject to opposing claims. I think that you have concurred with my feeling that, in fact, the waters were disputed, and that the Government would have known that. There might well have been a custom and practice that craft of all nations could go into the waters and that that would not be an issue. It became an issue the moment that somebody wants to say, "You are in our waters-in our bailiwick".

Sir Richard Dalton: I would not agree with that. Only if two parties to a border dispute it can we say that a border is disputed. Neither Iraq or Iran is disputing the line that exists on the Admiralty charts that are used by 90 per cent.-[Interruption.]

Q13 Andrew Mackinlay: Whose Admiralty?

Sir Richard Dalton: Our Admiralty. The charts used by the British Navy are the charts used by 90 per cent. of the world's shipping, I am told. At the time of the incident, neither Iraq or Iran was disputing the line. There is a lack of clarity in international law because there is no treaty between the sovereign Governments of Iraq Iran to define the line. Royal Navy policy was to leave a 1 km buffer zone between an operation and the commonly accepted and undisputed line in the Persian gulf because of the possibility of mistakes. They were outside that self-imposed buffer area by 0.2 km.

Q14 Mr. Purchase: Could I just remind you that on 2 April Ali Larijani said there was no need to proceed with the trial, on 3 April Jalal Sharafi was freed in return to Tehran and on 4 April Iran was told it could have access to the five detainees from Arbil? The Secretary of State for Defence, Des Browne, said there was no deal. You suggested, Sir Richard, that there was a firm refusal, both in public and private, to pay a price. Not that I want to spoil the Prime Minister's tea party on his 10th anniversary, but he also said there was no deal and that it happened without any negotiation or any side agreement of any nature. Does it not seem a bit of a spin to suggest that there was no negotiation and no side agreement-yet on 5 April the lads were out?

Dr. Hollis: I do not know whether spin is at work here. I think the word "negotiation" could be interpreted in different ways. I think what was meant was that there was no negotiation in the sense that there was no concession made and no demand and therefore no responding concession. I think there was a great deal of diplomatic activity-some might call that negotiation-around the issue. It could well be that there is nothing to hide here. It is a success.

Q15 Mr. Purchase: They are free, sure. It is a success. But credibility is stretched a little-isn't it?-when we have these closely related events of what appears to be recanting on two positions, then the next thing the lads are out but there was no deal.

Dr. Hollis: Wait a minute. You are talking about the service personnel recanting.

Q16 Mr. Purchase: No, I am talking about the five detainees from Arbil. We gave the Iranian authorities access to them.

Dr. Hollis: I am sorry. I was connecting it back to the business of where they were in the territorial waters.

Q17 Mr. Purchase: I am sorry if I misled you. Perhaps I did not provide a full enough description of the events. On 4 April, Iran was told it could have access to the five detainees from Arbil.

Sir Richard Dalton: I think what is happening here is that there was a very helpful coincidence, but how it arose I do not know. My hunch is that it arose out of UK-US diplomacy rather than US-Iran diplomacy or UK-Iran diplomacy. It is an obvious thing to do to ease the path of an Iranian climbdown for consular access to be given to these US detainees in Arbil. It is a small step towards normal international practice by the United States Government and is actually very welcome on its own merits.

The return of Mr. Sharafi is even more of a mystery. He is the second secretary from the Iranian embassy in Iraq who had been kidnapped. There is no evidence linking the United States authorities with that. But he was returned to Iran in the course of the exchanges between the UK and Iran about the Royal Navy captives. It seems to me to have oiled the wheels.

Q18 Mr. Purchase: In the middle of all this, on 3 April Nigel Sheinwald had a telephone conversation with Mr. Larijani. The whole thing seems to me to fit together for a negotiation-with people saying, "We'll do this if you'll do that."

Dr. Hollis: Wait a minute. If you look at the Jon Snow interview with Mr. Larijani-

Q19 Mr. Purchase: On Channel 4?

Dr. Hollis: Yes. Larijani gave lots of information without demands. It seems to me that a lot of information was being passed among all the players who got involved, some publicly and some behind the scenes. Deductions were made as to what would smooth the path of diplomacy. I am not trying to defend anybody's position, but I recollect that watching it unfold was like watching a carefully choreographed dance.

Mr. Purchase: I am happy with the outcome. It seems faintly ridiculous that we should deny, or that it should be denied, that anything was done to enable the happy release of our sailors to take place.

Q20 Chairman: Can I rephrase the question? Is it not really that we had sequenced, unilateral steps such as confidence-building measures rather than a negotiation?

Sir Richard Dalton: It could be. It is not the same thing.

Chairman: It is not. Therefore, you could say that there was no negotiation, but you could also take unilateral steps, or get your allies to do so, to help build confidence in order to secure the release.

Q21 Andrew Mackinlay: May I ask Dr. Hollis and Sir Richard a question? Admittedly, you are not in the Foreign Office, but I want to put to you my impression. Des Browne, in his statement in the House of Commons, implied that other people, presumably coalition partners, were fulfilling rigorously and with vigour the search and board, but he has never been able to show that that was so. Last week, there was an announcement that we have returned to that. Surely the truth is that this day, the Royal Navy is not doing search and board in the same location, to the same extent and with the same frequency, and that therefore the Iranians have clearly gained their central objective.

Dr. Hollis: Wait a minute. If we are talking about the exchanging of signals, it was 24 hours before the personnel were captured that one member of the British service personnel in the Basra area said that although he could not prove it, he was being informed that Iranians were behind the channel of money going to Iraqis, averaging $500 a head, to pay them to attack British soldiers. That is quite an accusation. He said that he could not prove it, but that he was hearing it.

I see one explanation for the Iranian action within a couple of days of that. It demonstrated that we have a very complex relationship. The background is that the Iranians have been accusing the British of interfering in Khuzestan, a south-west province on the Iranian side of the border that is populated by a majority of Arabs. It is therefore confusing for a British soldier in Iraq when dealing with an Iranian national who happens to be from Arabestan and is speaking Arabic to some friends or relatives in Basra. When are they doing transactions and friendly engagement, and when are they causing a problem for the British? And exactly who is on whose side anyway?

In those circumstances, one could give an explanation for the British who might be conducting operations in a somewhat different mode since the episode. It might just be cautionary tactics, as opposed to backing down specifically to Iranian pressure. Both players in that difficult area have accepted that there is far too much room for a small misunderstanding to spin out of control, escalate and cause blows.

Q22 Andrew Mackinlay: I welcome your explaining that to us, but it gives credence to my feeling that things are not being done in the same fashion, to the same extent, in the same location and with the same frequency as they did before the seizure of Royal Navy personnel. That is your view?

Dr. Hollis: Yes, but that need not be backing down under pressure.

Sir Richard Dalton: Do we have any information to that effect-that things have been done differently by the Royal Navy? I do not.

Q23 Chairman: But it is a fact that we do not have the boats back. The Iranians still hold them.

Sir Richard Dalton: Yes.

Q24 Chairman: Therefore there is unresolved business for our presence and the effectiveness of what we can do.

Dr. Hollis: May I add another thing here? The British were inspecting vessels, and still are, to look for smugglers. How, if not through illicit trade, are some of the militiamen who are fighting for control of the local governorship in Basra to get their income? How, if not through that kind of trafficking, linking their mates on one side of the border with their mates on the other side? The British are literally interfering with local politics in Iraq, and local politics and the Iranians are in bed together.

Q25 Mr. Purchase: May I try to press you a bit further? I am not quite sure how important this all is, but to reinforce what I was trying to get across earlier, we know that Margaret Beckett spoke to her Iranian counterpart Mottaki on several occasions-whether it was useful or not, she did that. We know that there was the phone call from Nigel Sheinwald to Ali Larijani, which was probably key to the whole affair.

The Prime Minister has said that there was a dual-track strategy. One track was bilateral dialogue with the Iranian regime, and the FCO in London and the British ambassador in Iran made attempts to engage with the Iranians. All that strikes me as probably quite a successful effort to resolve the difficulties. I do not understand why it is necessary to say that there were no negotiations and there was no side deal. It seems blindingly obvious to me that here were people struggling to find a way forward and finding one, but then for some reason not wanting to say that they had found one. Let me specific: how important do you think Sheinwald's discussion on the telephone was to the whole process?

Sir Richard Dalton: I would have thought that it was very important for Britain not to be seen to be paying a price to get its own captives back. That was a fundamentally important objective of Her Majesty's Government, and I support it. Somebody who acts illegally to take captives in such a way will only be encouraged to do so again, if they gain something tangible from it.

I do not think that Iran was the winner in the episode, and I do not agree with Bolton-we may come on to him later-that it was a "double victory" for Iran. They managed to pull their chestnuts out of the fire by conceding when they did, because the situation was getting worse for them. I stand by my thought that that happy coincidence could well have been arranged, but I can quite see why the British Government would want to deny that it specifically paid a price to the Iranians. I do not know what Sir Nigel Sheinwald and Mr. Larijani talked about, so I cannot really comment on that.

Q26 Mr. Purchase: I will not press this any further. I merely say that if you put the whole thing together it lacks a certain credibility, and I think that we may not have controlled it.

Dr. Hollis: I wonder, though; surely successful diplomacy is about resolving a source of dispute with face saved on both sides. I noticed the way in which the press were asking questions towards the end of the episode. They did not seem to be operating with a concept of win-win. They wanted to discover who had won. A more direct answer to your question would have enabled them to say, "Aha, the British caved in. We had to concede something to get this resolved." Then the British press would have been assisting the Iranians, and the British politicians who had given the straighter answer for which you are looking could potentially have given the Iranians an additional propaganda benefit. Personally, I was puzzled that there seemed to be only a Bolton-like understanding that there must be a winner and there must be a loser.

Q27 Mr. Purchase: I like the idea that we arrived at a sensible conclusion. There was a whole series of events and the outcome was satisfactory, yet very senior people suggested that nothing had happened, that they just gave in.

Dr. Hollis: Could it also be that Jon Snow provoked a new twist in the saga? Am I not right in thinking that Sheinwald spoke to Larijani after he was given the terms of the conversation on British television?

Chairman: Could we move on, please? We have other areas to cover.

Q28 Mr. Heathcoat-Amory: I think that you are being fantastically innocent if you really think that those parallel moves were not part of an overall negotiation. It is only diplomats who can dress these things up in that way. Let us leave it as a happy coincidence.

I am interested in what lessons there are for future relations with Iran. We have heard that we do not know on whose authority the hostages were taken, nor who was behind the decision-making process that led to their release. It is all opaque; there are many centres of authority in Iran. How, then, will we make agreements over issues such as Iran's interference in Iraq, where they are destabilising the country and killing a lot of people, or the nuclear issue? It is a large rogue state and we do not know who is in charge. How and with whom will we negotiate with the prospect of making agreements that stick?

Sir Richard Dalton: We do know who is in charge: it is the Supreme Leader, who is called upon to referee disputes, if they exist, between his military and civilian leaderships. It is exactly the same as the power structure in any other Government; there a top dog who is called upon to arbitrate. Sometimes he is called a President, sometimes he is called a Prime Minister, but we should not be bamboozled into thinking that nobody is in charge in Iran because he is called the supreme leader and because many of the concepts are rather unfamiliar. The system works quite efficiently. The main politico-security decisions are debated in the Supreme National Security Council, which Mr. Larijani heads. There is a representative of the Supreme Leader in that body, who along with Mr. Larijani has direct access to the Supreme Leader, who then endorses or differs from the decision that has come from the tier below. There is an iterative process as decisions are prepared, in which the leader's circle of advisers are brought in and consulted. Again, there are parallels in other government systems, including our own. By the time the issue comes up for decision, the path to something that will stick is smoothed.

It is extremely difficult to make that system work for the benefit of foreigners, not so much because the system is opaque, but because the issues are highly difficult and the differences on the actual substance are immense. As European negotiators, we felt that if it had been possible in the course of European negotiations on a political dialogue agreement to reach agreement on human rights, weapons of mass destruction, terrorism or the middle east peace process, and the Supreme Leader and the rest of the system had endorsed the agreements that had been negotiated at a lower level, they would have stuck. Since we, as the UK, had tried to re-establish diplomatic relations with Iran at the proper level, our experience was that the agreements that we reached were broadly fulfilled satisfactorily by the Iranian side.

Q29 Mr. Heathcoat-Amory: I am still unclear. There is an unelected Supreme Leader and an elected President, who we all thought had a lot of authority. Finally, he paraded the captives and said how lucky they were to go home. There is also a Foreign Minister. We had difficulty reaching anyone in the first week of the crisis. That does not seem to impart a lot of confidence in how and with whom we will reach agreements. Should we always make a telephone call to the Supreme Leader? How do we negotiate with people like that?

Sir Richard Dalton: In exactly the way that you negotiate with other people.

Q30 Mr. Heathcoat-Amory: We usually negotiate with President Bush by going to see him, and he is accountable.

Sir Richard Dalton: There are nominated representatives. We do not actually get access to the Supreme Leader but we knew, for example, when for a year and a half the Iranians honoured the agreement to suspend their enrichment activities, that that was an agreement endorsed by him. In the intermediate stage, the key figures to whom we could convey messages were the intelligence establishment, the foreign ministry and the President. We did not have direct access to the military, but of the four main power centres that were dealing with whether Iran should suspend, we could get messages through to three. We reached an agreement at Foreign Minister level in Tehran in November 2003, and it was then cleared with the Supreme Leader by the senior Iranian negotiator.

The system might not be 100% the same as ours, but the principles behind it are similar, and it sticks. The problem is whether the Iranians are willing to change their views on the substantive issue. Hitherto, they have not been willing to do that in relation to most of the issues on which we have been dealing with them.

Dr. Hollis: If I might add, one does not just negotiate with President Bush, or whoever is the incumbent of the White House. There are four or five different key figures in Washington who need to be on board in any given situation in order for diplomacy with the Americans to be effective.

Q31 Mr. Heathcoat-Amory: We heard earlier that you could not tell us on whose authority the hostages were taken, so the Supreme Leader does not seem to be in charge of his own military forces. I do not think that that is an exact parallel with the United States, where I understand there to be a pretty clear chain of command. My worry relates, for instance, to a potential agreement over the future of Iraq. If there are still rogue elements who are unknown and unidentified, I am not sure that a lot can be said for any agreement that is made with this mysterious Supreme Leader-someone who is above the elected President.

Dr. Hollis: Larijani will have sorted out with the Supreme Leader the line that he will take both on this episode and on the nuclear negotiations. He speaks with authority on the nuclear issue, whereas the President does not. However, he complicates the picture with his dramatic rhetoric, his populism, and his strutting on the stage. There is a need to unpick the messages that come out of Iran, which is frustrating, but I do not necessarily concur with the idea that that makes them unreliable.

Q32 Sir John Stanley: On a wider question, could you tell us your view of the Iranian Government's objectives in Iraq, and what political outcome they want to see there?

Sir Richard Dalton: I believe that they want to see a Shi'a-dominated Government in a peaceful country which is a good neighbour with Iran. They want there to be no American bases in Iraq in the long run, and ideally they would like America to fail-to be perceived as having extended its power into the middle east in 2003 and to have made a Horlicks of it and gone away with its tail between its legs. The manner of the American withdrawal is very important to Iran's view that it is in an ideological and potentially military struggle with the world's only superpower. They would see an American departure as a triumph for justified resistance by Muslim peoples in the region. One of the main objectives in increasing the pain for the United States is to increase the pressure for American withdrawal.

I believe that previously the Iranians were trying to achieve that pressure without precipitating Iraq into a state of chaos, but I think that there is now a state of chaos in Iraq, although that is not primarily the work of Iran. When Mr. Negroponte said in his last intelligence assessment, in January this year, that Iran's behaviour was a factor in externally generated instability in Iraq but not by any means the main one, he was right. In calibrating its uses of support for violence in Iraq, Iran is hoping to achieve the political aims that I described.

Another political aim is to show the political actors in Iraq that they must keep on good terms with Iran, so that there will sometimes be support for enemies of people whom Iran ultimately wants to have as friends. For example, there is instability associated with Iranian support in parts of the country, such as the north, in which Iran is trying to have a good and trusting relationship with the regional government. They want to discourage that regional government from ever thinking of supporting the Kurds inside Iran. They have a many-layered approach to their policies; some they operate at a national level in Iraq and some at a rather local level.

Q33 Sir John Stanley: I will come to you in a moment if I may, Dr. Hollis, to put the same question to you. I wish to ask you further, Sir Richard, when you say that you think their objective is to have a Shi'a-dominated Iraq, can you tell us what brand of Shi'a domination you think they are going for? Are they comfortable with the type of Shi'a Government that is in place now, who have signed up for the basics of western-style human rights, rights for women and so on, or do you think that the Iranians want a much more radical, militant brand of Shi'a domination, represented by the militants?

Sir Richard Dalton: I think they want a Government that works. Their interest in stability is much greater than their interest in the particular ideological complexion of the Government. You could argue that, in an ideal world, they would love to have a theocracy that mirrored their own, but they have never been able to work for theocracy in the whole of Iran and they have done so, because they know that it would be fundamentally contrary to the views of the major theological authority in Iraqi Shi'adom, namely Ayatollah Sistani. As it is not a feasible objective, I believe that they have been wise enough not to try it. They would like a Government with the chance to operate on behalf of the majority community, but ultimately success for an Iranian policy in Iraq requires that Government to be on reasonable terms with Kurds and Sunnis.

Q34 Sir John Stanley: Dr. Hollis, what is your view of Iranian political objectives in Iraq? What sort of Government structure and complexion do you think the Iranian Government would like to see in Iraq?

Dr. Hollis: They would not like to see Kurdistan becoming a separate state and they therefore want a unitary state. Democracy suits them very well because it gives power to the Shi'a majority, or that majority is able to dominate the Government as it does at the moment.

My sense is that they are possible unaware of how much hostility is building among non-Shi'a Iraqis and Sunni Arabs generally over the increase in Iranian influence in Iraq. I find that there is a tendency among Sunni and secular Jordanians and Saudis and Sunni Iraqis essentially to equate Shi'a Arabs with Iranians even though they are, of course, ethnically different and have different national aspirations.

There is a larger conflict playing out here: the Iranian preferences for Iraq seem to me to overlook the kind of opposition that is building to the sort of Iraq that they are getting and the sort of Iraq that they want.

Q35 Mr. Horam: You said, Sir Richard, that one aspect of Iranian policy towards Iraq, following the question from Sir John, was that it would be very happy if there were a world perception that the US had failed to come into that area and gone out with its tail between its legs. How could the US avoid that perception? What US policy now could you see as avoiding that?

Sir Richard Dalton: I support the surge. Again, it is high risk. Everybody knows that it is going to take time to yield results and it is not clear whether the United States domestic political timetable will coincide with the timetable that General Petraeus is asking for. But I am impressed by analysts who say that we will not know whether the new set of policies is working satisfactorily until the first quarter of next year. Whether there are enough troops in the surge to make a real difference is another big question but I do think it right for the United States to make a further effort to withdraw with honour because withdrawing with honour requires stability of a kind in Iraq and forward movement once again.

Q36 Mr. Horam: Could I come back to something that you said at the time of the capture of the sailors? You said that you thought that the Government had let their anger at the way the sailors were being treated get the better of them and that they might have gone to the Security Council too early. I think that Dr. Hollis commented on that, but you were a bit nervous about the earliness. How do you see that now? Do you still stand by that in the light of what has happened?

Sir Richard Dalton: Yes, I do. I think that building international pressure was the right thing to do, but the pressure that really counted was the pressure in the region, rather than what actually happened in the Security Council. The Iranians reacted badly to our going to "our club" for the endorsement that we were almost certain to get and to seek to open up a front of that nature against Iran to add to the other areas in which Iran was being, in its own view I hasten to add, driven into a corner. I thought at the time that there was still mileage in finding understandings based on ensuring that things like this do not happen in the future and that exploring that fully, before having recourse to the Security Council, was likely to be more productive.

Q37 Mr. Horam: And you still maintain that, even in the light of what has happened? It seems to have worked?

Sir Richard Dalton: Yes, because we established whether it was an arranged coincidence, whether there were aspects of the British Government's presentation to Iran that have not been announced, like ways of ensuring that incidents like this do not happen in the future and there are better communications respecting certain lines. These are not questions that I am competent to answer. That is what worked. It is impossible to say that X% of the formula which enabled it to work was the Security Council.

Q38 Mr. Horam: Now all this has happened and is water under the bridge, how do you think UK policy towards Iran should change, if it should change? We understand, for example, that a review is taking place of UK policy towards Iran. What would you say to the people who are undertaking that review? Would you advocate any significant changes, or should we carry on as before?

Sir Richard Dalton: It is a very difficult one this, because we do not have that many bilateral levers to use against Iran. There should be some attempt to find an area of our co-operation with Iran which is valuable to Iran and which we can withdraw for a period in order to underline our rejection of what they did and how they did it. So, yes, I think that it is right-

Q39 Mr. Horam: To have a sort of cooling period?

Sir Richard Dalton: Exactly. But if you ask what we are doing in Iran and what we are doing with Iran, an awful lot of it is to the benefit of UK citizens. It is possible in such circumstances to find something to retaliate with which is actually cutting off your nose to spite your face. I imagine that we wish to maintain good services for British citizens and, for access control to the UK, an effective visa presence. We wish to maintain our programmes of co-operation against drugs. There are Afghan issues to handle and Iraqi issues to handle.

Q40 Mr. Horam: There is not much that we can do?

Sir Richard Dalton: I do not know. I would find it hard to find something to do.

Q41 Mr. Horam: Would you agree, Dr. Hollis?

Dr. Hollis: Yes. I would also say that we had one or two indications that there was not a well worked out negotiation that was direct, back and forth, because the Foreign Secretary was, convincingly, advising everybody to expect the release to take a lot longer. I got the impression that the release came sooner than Ministers were expecting. As I said earlier, Jon Snow intervened in a way that smoothed the path for the conversation between Sheinwald and Larijani. All of these things indicate to me that the British did not overreact, but that there were moments of extreme nervousness when they might have done. They were being baited; they were being invited to get much angrier and embarrass themselves; and they managed to avoid doing that. The multiple lines of communication that were set in motion produced the result.

What do we deduce from that? For the future, we deduce that there is a chance of another complex situation emerging, especially given the British position in southern Iraq and Iranian feelings about the British and Iranian connections into southern Iraq. The chances of something spinning out of control in the future are great. Therefore, for those reasons, I would say that Britain needs to move forward with the greatest caution.

Q42 Andrew Mackinlay: What has troubled me over the past couple of years is that we seem to have been sending mixed messages of variable degrees of indignation to Tehran. I would buttress that comment by saying that the Prime Minister, frequently at Prime Minister's Question Time, has linked the ordnance armaments and deaths of British soldiers-you know, suggesting that the smoking gun goes back to Iran. He has consistently done that, and Defence Secretary Reid did that, too. However, if one looks at Foreign Secretaries Straw and Beckett, they have been much more fudging of this, as have their junior Ministers-Kim Howells, for instance, has said different things at different times. Is not part of the problem that we are not singing with one voice in Whitehall at ministerial level? As I say, we are sending mixed messages. Is that comment fair, or have you identified that problem?

Sir Richard Dalton: I have not been following what Kim Howells has been saying, or what Margaret Beckett has been saying, as closely as you have. I apologise for saying this, but it was certainly not the case up until March, when I left Tehran, that there were mixed messages going out. What the Prime Minister was saying was reflected in the more detailed work of officials such as myself. As for what has happened since then, what do you think, Rosemary? Have mixed messages been sent?

Dr. Hollis: I think that in the diplomacy triangle between the United States, Iran and the UK, what the British Prime Minister has said is important-it was much stronger on keeping the option of force on the table. There would be no invasion-he said that repeatedly-but he did not rule out the use of force. That was a big contrast to Jack Straw and, as you know, there were some theories that that was one of the reasons for moving Jack Straw. Now, one could rationalise it as good cop, bad cop, but the fact that the Prime Minister has taken the stand that he has is the key issue, from my point of view.

Q43 Andrew Mackinlay: I would like to ask a final question on this subject. In recent weeks, it seems to me that, overall, the Iranian Government regime is now emboldened by events. The dust has settled, as it were, so what say you to that?

Dr. Hollis: Some members of the regime may be emboldened. I have said before that I think that they are over-confident about their regional situation and how events such as this play to their advantage. However, I am aware of a lot of Iranians who are embarrassed, especially by the behaviour of their President in the episode. I am also aware of Iranians who think that they sent out a signal, although I do not believe that it has been received. They think that the signal that they sent was, "This is how to deal with the nuclear issue: use complex lines of communication; not step-by-step 'I give you this, you give me that' negotiation but putting a number of items on the table, moving them around, discussing, and then arriving at a joint conclusion." They think that they sent that message in the way in which they handled the business with the British, and that that message is therefore there to be taken up in terms of a new gesture from the EU3, the British and the United States on the nuclear issue.

Sir Richard Dalton: I think that is too convoluted. I do not think that there is a direct link between this issue and nuclear diplomacy. The naval matter is inherently a rather small issue. It certainly did not humiliate the UK, and I do not think that the Iranian system, at supreme leader level, would regard it as a major act of state that the messages could be applied across the board for Iranian diplomacy, other than the very general ones, "We can kick back too," which we knew anyway, and "We will defend our borders," which we knew anyway, too.

I do not think that that is going to embolden the Iranians. All the lines of policy action that they are pursuing now in matters that are highly disobliging to the rest of us-in Lebanon over the middle east peace process, or on terrorism, the nuclear issue or Iraq-were set long ago. It was under President Khatami in his last days that the negotiating approach pursued by the P5 and Germany on the nuclear issue was firmly rejected.

Andrew Mackinlay: Another thing, Sir Richard-

Chairman: This will be your final question, Mr. Mackinlay.

Q44 Andrew Mackinlay: I apologise. I am on a roll. Are you satisfied as to the robustness of EU sanctions-just the robustness, not necessarily the prudence-in relation to materials going to Iran? Things often have a dual use. For example, during your time in Iran, some zirconium silicate was held up in Bulgaria on behalf of the EU. That can be used for various parts of the nuclear process. Sanctions have been increased, but are the EU and the UK really serious about them, and are there any flaws or deficiencies in the process?

Sir Richard Dalton: It is not being done resolutely enough. To achieve success in nuclear diplomacy, should the Iranians decide to negotiate once more, we need four things, and at present we have only about one and a half. The first of those four things is a proper vision leading to some form of process for a regional security arrangement. The second is a set of firmly articulated incentives to Iran-that is the "one" that I said we already have, and there is a lot of that in the May 2006 proposal, but it could be improved in negotiation. The third is a set of real disincentives, and this is the answer to your question.

The permanent five and Germany are placing huge emphasis on international unity in approaching Iran, in order to give Iran no excuse to try to divide the powers and international institutions with which they are dealing. That has worked, and there is a very firm consensus. However, the cost of that international unity has been weak measures, only slowly applied. So far, those who argue in Iran that, with just the tightening of a belt or two Iran can see this one out, have a lot to point to. The final thing that we do not yet have, although the Americans are moving gradually in the right direction, is the prospect of serious negotiation between the United States and Iran on a bilateral basis.

Q45 Mr. Heathcoat-Amory: Can we turn to the performance of the British sailors and marines and how they were used in Iran? Clearly, the Iranians were fortunate to have a group of people who turned out to be very compliant and did more or less what they were asked by the Iranians and, indeed, thanked their captors on their release. Whether that was due to poor training, morale or a more fundamental problem of discipline in the Navy, we want to find out from the inquiry when it reports. How do you think that it has come across in the middle east? Is it a symptom of a lack of western resolve or a loss of military determination? The pictures that were flashed all around the world cannot have done our reputation much good. What are the diplomatic and military implications?

Sir Richard Dalton: Can I pass that question to Dr. Hollis?

Dr. Hollis: Some Iranians have tried to exploit an aspect of this in terms of, "The British are not as strong or as frightening as they used to be," but they have not succeeded totally in making that story stick, in part because those in the region at least know how complicated and muddled the situation is. I have described it twice, so I shall not do it again. The very complex context within which the personnel were taken means that it is not a clear-cut case that they should have behaved in a certain way, come what may. That said, the overall effect was not of professionalism.

Q46 Mr. Heathcoat-Amory: I find that response quite extraordinary. In my limited contacts with people overseas who saw the photographs, they thought, "Well, what has happened to Britain's senior service; what has happened to Nelson's Navy and to British military personnel, who used to hold their heads up high and walk out with their uniforms on?" We would not have thanked our captors in times past. Are you saying that the general collapse in British morale was already played out in those areas, and that this came as no surprise? I am genuinely asking you, because that conflicts with my anecdotal experience when talking to people from overseas who did not quite understand how it had happened to the Royal Navy.

Dr. Hollis: I do not think that I am disagreeing with you as much as I appear to have done. In terms of professional conduct, stiff upper lip, withstanding pressure and, in particular, having one woman among them, the events did not do the British reputation any good at all-quite the contrary. However, it is long since that the British are seen as weak and as merely helping the Americans. The general perception in the region is that the Iranians would not have dared take the Americans, because they would have been clobbered if they had. We then point out that, if we had clobbered the Iranians, what good would that have done in terms of getting the service personnel back safely? We enter a discussion in which I say there is some level of understanding that the British may have handled this in such a way as to extract their personnel. Did Britain have a very high reputation for strength and for being a power that you don't mess with before that? No, it did not have a very high reputation.

Q47 Chairman: May I take you to a different international reaction, which was touched on earlier-the remarks by John Bolton? He strongly criticised the British approach, and said that we were pusillanimous, weak, and various less polite adjectives. He said that the Iranians had won a great victory. How much do you think Bolton's view is the view of the US Administration, and how much is it John Bolton being John Bolton? Given that the Americans were so quiet early on in the crisis, was it because we told them to be quiet and they listened or because they did not regard it as being of great significance?

Dr. Hollis: I think it was John Bolton being John Bolton. I heard, with conviction, from American service personnel, that they wanted the British to hang tough, not to get agitated and not to overreact, and that this could all be resolved peacefully. That was from the US military directly engaged in Iraq.

Sir Richard Dalton: I think John Bolton was trying to keep alive the dying neo-con agenda for dealing with Iran. He was not approaching this from the point of view of a diplomatic problem that had to be solved, or, rather, a problem that had to be kept diplomatic if at all possible rather than spilling out into anything much worse. He was looking at it purely from the point of view of his idea of geopolitics and the handling of Iran. He and his ilk never established any link between how they would like to have seen Iran dealt with and getting the sailors back.

Q48 Chairman: I also want to take you to the Security Council. The British Government did not get quite what it wanted in terms of the Security Council resolution. Was that because the Russians watered it down? If so, does that mean that Russia can continue to play that role, in effect softening international pressure on Iran on the nuclear and other issues for the future? Is that likely?

Sir Richard Dalton: Russia looks at each issue on its merits and decides what its own national interest is in relation to that issue. On this issue, it was not prepared to side either with Iran or the UK on exactly where the capture took place.

Q49 Chairman: Why would Russia prefer to be perceived to be assisting the Iranians rather than supporting the UK? Is it because Russia-UK relations are so difficult or for other reasons?

Sir Richard Dalton: It does not surprise me; I do not know the exact reasons in this instance. Nobody gets a blank cheque from Russia nowadays.

Q50 Chairman: Dr. Hollis, do you have a view on that?

Dr. Hollis: I am not sure what the Russians' motive was.

Sir Richard Dalton: On where the Russians are on the nuclear issue generally, I think they are in the right place. They are maintaining their willingness to consider an offshore enrichment facility in which Iran would have a serious interest, and international agreements would guarantee Iran access to the product of that facility for power reactors in Iran, as and when they are built. Secondly, they are aware that Russia bilaterally has leverage with Iran and they are willing to use it, for example in connection with bringing the Bushehr reactor on stream. Thirdly, on general sanctions, they are going to have an eye to their own trade interests, but it should be possible to get them to agree a third round of sanctions, provided that it does not impact too much on Russian traders.

Q51 Mr. Horam: Sir Richard, you said in your article in The Daily Telegraph that Britain's reputation for fairness and for understanding the middle east must be restored. How could we go about that? You might disagree that it has such a reputation anyway, Dr. Hollis-from what you said, it appeared that you thought it was rather weak these days.

Sir Richard Dalton: The first thing to do is to recognise that there is a problem and to adjust our performance on middle east issues so that it is more in line with our pretensions. We should not talk about making a major effort to help resolve the middle east peace impasse unless we actually have something to do and something to say that will really contribute. Secondly, on the detail, we need to recognise that the boycott of the Palestinian Government has not been a success. Thirdly, we need to promote a move as soon as we possibly can to dealing with the fundamental issues around the final status of an independent Palestinian state, living in security with Israel. Those are the three main points to which I would draw attention.

Q52 Mr. Horam: And as regards Iran? Has anything positive emerged that could be helpful to UK-Iran relationships?

Sir Richard Dalton: I do not understand the question.

Q53 Mr. Horam: Has anything positive emerged? We have had talks, for example, between Sheinwald and Larijani. Has anything positive emerged out of all of that that we could build on to have a better effect on Iranian politics?

Sir Richard Dalton: No, I do not think it has. The evidence for that is Margaret Beckett saying that there has to be a review to see whether our relationship, as currently constituted, ought to be continued or modified. If the Foreign Office and No. 10 felt that something positively positive had emerged, there would be a different sort of language.

Q54 Mr. Horam: The Prime Minister has said that he thinks that something positive has emerged, because of the contacts that have been made at an individual level between UK and Iranian personnel. Presumably, he is thinking about the talks between Sheinwald and Larijani, for example. You would not agree with that, then.

Sir Richard Dalton: Access to Mr. Larijani has not been a problem in the past. Face-to-face access has always been possible, as with his predecessor, Mr. Rowhani, and, as Sir Nigel Sheinwald is going to Washington, I am not sure whether we have gained much.

Chairman: I think that we must call an end here. We will be taking evidence later this month on the Iranian nuclear issue, and, to touch on your final points, Sir Richard, we will also be pursuing wider middle east questions.

Thank you very much, Dr. Hollis and Sir Richard Dalton. The meeting is concluded.