frequent active approach is margin requirements and capital requirements. the voelker rule is a complicated issue and much debated. i think the big question is how is the distinction between proprietary trading and market making going to be defined. i noticed the other day the regularities deferred their decision on that and it is not surprising because it is a hard line to draw and immense importance in terms of how our markets work and what the structure of the financial system will be. >> thanks very much. all the time we have. really appreciate your time. >> thank you. >> this is c-span 3 with politics and public affairs programming throughout the week and every weekend 48 hours of people and events telling the american story on american history tv. get our schedules and see past

programs at our websites and join in the conversation at social media sites. >> indiana senator richard lugar is running for a seventh term and being challenged by state treasurer richard murdock. you can see the debate live from indianapolis tomorrow on c-span starting at 7 p.m. eastern. the cato institute recently hosted a discussion on iran's nuclear program and the prospects for the next round of nuclear talks coming up this month. this is about an hour and a half.

sgr thank you very much. welcome to the cato institute. my name is christopher pebble, i am the vice president for defense and foreign policy studies here at cato, and it is my great pleasure to welcome you to the new auditorium and to the newly redesigned cato institute. welcome. we are very fortunate to have for this conference a terrific lineup, two panels, my privilege to be able to introduce them. i want to thank before i forget the plow sheares fund for shirr support and justin logan responsible for organizing it. i think many of you here in the audience have the bios and for those of you watching online, for your benefit, or on c-span,

right, i would quickly to want introduce the four panelists speaking in the order they will speak and i will get out of the way and let them get started. our first speaker today will be michael adler, public policy scholar at the woodrow wilson center, reporter for johns french press and covered the up rising in berm ain 1988, the reconstruction of kuwait after the first gulf war, the bar in bosnia and cover the fall in zaire and michael covered the iranian nuk lass crisis ex tense sif will i in vienna from 2002 to 2007 and reported from tehran, geneva and currently writing a back on the did i diplomacy of the iranian nuclear crisis. our second speaker is barbara slaven who specializes on iran as a non-resident senior fellow at the atlantic counsel, a public policy scholar at the woodrow wilson scholars and an

author and she was assistant managing editor for world and national security at the washington times and in 2008 and 2009 and prior to that she served for 12 years as senior diplomatic reporter for "u.s.a. today" where she covered such key issues as the u.s. led war aterrorism in iraq, policy towards rogue states and accompanied three secretaries of state on official travels and reported solo from iran, israel, egypt, north korea, saudi arabia and syria. our third speaker is alaraza nader, senior internal policy analyst and research focused iran's political dynamics, leads decision making and iranian foreign policy. he raises publications include coping with a nuclearizing iran, israel and iran, a dangerous rivalry, the next supreme

leader, succession in the republic of iran, saudi rain an relations and many others. this commentaries have appeared in a varied of media including foreign policy, global security.org, international herald try bub, "new york times" and others and a frequent guest on television and radio. the final speaker is my friend and colleague justin logan, the director of foreign policy studies here at cato. he is an expert on u.s. grant strategy, international relations theory and american foreign poechl. his current research focuses on the shifting balance of power in asia and the formation of u.s. strategy under uni-polarity. his articles appear in many policy journals including foreign policy and the national interests, orvis, foreign service journal and others and appeared on many television and

radio networks. with that i will get out of the way and introduce our first speaker, michael adler. michael. >> good morning, and thank you all for coming here. >> would you please speak from the podium. >> thank you very much. >> okay. good morning. when i first was asked to at the topic here today is did i diplomacy work and when i first was asked to do this, which was before the meeting of prime minister netanyahu and president obama and washington, and they asked me to defend the concept of did i diplomacy, i thought it would be a thankless task. it is amazing how much things have changed over the past month and the month of march. the first development was that the rush to war which seemed to be accelerating ground to a halt, not a screeching halt but a halt anyway, still screeching about war, and when netanyahu

met obama and what happened there is the president both gave a kind of statement the united states would eventually use force if necessary but also said there still was time for did i diplomacy. the israelis have reluctantly come aboard with that, and the day after the meeting of the two leaders, katherine ashton, the former policy representative for the european union sent a letter to said jaledi, the iranian negotiator on the nuclear issue to say she accepted talks which he proposed earlier. these talks are between six nations, britain, china, france, germany, united states, and russia, the two five plus one and these are the five permanent security council members and

they are -- they have been negotiating with iran since about 2006. a crisis that began in 2002 when it was revealed iran was in hiding nuclear for 72 decades. the talks have not gone well. there has been several side posts along the way and not to go through the whole history but what brings us up to what's happening now is in october of 2009 there was a meeting at which the two sides agreed to a fuel swap where iran would ship out most of the enriched uranium it made and in return forgetting fuel for a research reactor in tehran which makes medical isotopes and the idea behind that and the talks in general is it would be a confidence building measure. iran would have shipped out most of its enriched uranium that makes them less able to break out to make a nuclear weapon. at the same time they would have gotten a did he fact owe

recognition of continuing enrichment and that would set the stage for serious talks. that deal fell apart. then there were two meetings in geneva in december of twain and istanbul in january 2011 at which the two sides tried to relaunch the process. this ended badly at a meeting in istanbul after the meeting in geneva where the two sides had free reign to express their opinions, discuss the nuclear issue and the iranians brought out a range of other concerns about world peace and the influence of capitalism in the world and the iranians came to the second meeting and instead of negotiating imposed two conditions which basically killed the process. they were that all the sanctions against them would be lifted and that they would have an unequivocal right to enrich uranium. this prevented any kind of deal in istanbul.

after that, pretty much you had a growing march to war, what can i say? there were concerns that israel was about to take action that regards iran, the nuclear program and that was what was stopped at the beginning of the month and now we have the talks coming up again. these talks are not taking place in a hopeless atmosphere where people are just going through the notions. these talks are actually a chance for a new start after there has been a step back from going to war. i guess the question to ask is what is the chance of success at these talks? i think that certainly the p-5 plus one and the united states are coming into the talks with low expectations. the success of the talks will probably be if a second round is

scheduled. this second round would occur fairly quickly because the idea would be to start moving ahead. this is not the meeting at which they will be a dramatic break through. this is not the meeting in which there will be a fuel swap, and a major confidence building measure. so the main thrust of what's happening is just to start talking again. once again, it is an atmosphere of of saying we have stopped the rush to war, let's see if did i diplomacy can work. in the past there has been very much a set piece of these talks and justin said to me that i should come up with a suggestion about how things can be better. my suggestion which will never happen is that when they sit down and the talks are scheduled for mid-april, we don't know where they'll be, probably somewhere in switzerland, that when they sit down, i think that

the p-5 plus one should say, you know what, let's not really get down to talks until the afternoon. let's have tea, let's talk to each other, how is your family, what are things like in tehran because the iranians like this approach. the iranians want an informal kind of talk where everything is not laid on the table at once and not presented with an aultimatum, so i think the best thing that the united states can say to the iranians is how can we tell us how we can help you. we're in this together, let's try to work it out. i don't think that's going to happen. i do think there is a real determination, at least on the american side, to make these talks work. so there will be an effort to do things in a way where the iranians can feel that there is a forum for them to talk at. another way to measure the success of the talks is if there

are by lateral talks between the united states and iran. iran very much wants to talk directly to the united states. iran feels the united states is the country which is going to deliver the goods and the beginning of this process from 2003 to 2006, the europeans were doing most of the negotiating and the united states was not even present at the table. diplomats told me they always felt the iranians were looking over their shoulders so see where were the americans to guarantee the kind of security guarantees, the delivery of technology that would make a deal work. i think a key sign of success of this meeting will be if there is a bilateral talk between the iranian representative and between the american representative. the talks in this segment of geneva, the last two talks, there were no bilaterals between the americans and the iranians. if we get through this first round, and if we get to a second

round, which would happen fairly quickly, that's where the real difficult things begin because you want to have a confidence building measure. if this can't be a fuel swap, what would be a smaller sort of confidence building measure. it might be something called adhering to the additional protocol where iran would agree to wire inspections of their nuclear facilities. it might be iran agreeing to give early notification when it is constructing new facilities. right now iran will only disclose new facilities six months before they are going to introduce the material. those believe it or not are the small confidence building steps. the larger confidence building ste steps would be iran has enriches uranium right now to 3.5% which is the level needed for nuclear reactor. they also started to enrich to 20% because they didn't get fuel for the research reactor, and

20% is very close to the above 90% you need to make a nuclear weapon and because it is an exponential curve. it is more arithmetic. the thing is that the first really significant confidence building measure is if they stop enriching to 28%, and ship out the 20% they already made, this would really be a sign that we're in a process that means something. it is the sign the israelis are looking for where then it is a sign the did i diplomacy is serious and i want to wrap up because i have been asked to. after this would come a larger fuel swap where they would ship out much of their low enriched uranium and at that time i think it would be begin to move towards freezing sanctions. if that happens, we would definitely be in a significant process. of course the chances of that are low, but the bottom line is that there is hope of a serious

process which was unforeseen two or three months ago and let's see how it twops. thank you very much. >> good morning. thank you, cato, for inviting me. i basically want to endorse much of michael's analysis. i think that the race to war has been halted. i think president obama handled bb netanyahu brilliantly, and he embraced him close and at the same time he basically read him the riot act and said, no, you are not going to start a war now and you are not going to start a war before my re-election or hope for re-election. if you lack at the remarks made at the apec conference when they met and afterwards i think this is rather clear. at the same time, we have seen some interesting signals from

tehran and perhaps allie will talk about that more as well. not exactly, well, what passes for a charm offense from tehran, i guess, is the best way to put it. right after the comments that obama made talking about decrying the loose talk of war and stressing that did i diplomacy was his preferred apgs for dealing with the iran an nuclear program the supreme leader reiterated in 1995 f atwa in which he said building nuclear weapons would be a great sin, unquote, and he praised obama which is not something the supreme leader of iran often does for tamping down the threats of war. he says such remarks are good and indicate a step out of did he dilutions and crimed that the economic sanctions are having no effect. as we all know the sanctions are having a huge effect, and i

think this is another reason why we might actually have a diplomatic option in front of us. for those of you who haven't been following it, these sanctions are unlike any imposed on iran since the 1979 revolution. they're the most draconian imposed on any government if you look in terms of u.n. sanctions combined with the american sanctions, european sanctions, and iran an banks are basically ex communicated now from the international financial system. there are very few banks in iran that can do any kind of transactions. iran is resorting to barter increasingly. i would refer you to the atlantic council website where we have a number of papers that our task force has done and a couple that deal in particular with iran's reliance on china and on barter transactions. hard currency can't change hands. currency can't change hands so essentially iran is sending oil

to companies up is as india and china and getting credit and receiving back goods and services from those countries. iran an oil production is going down. i think so in part because iran realizes it can't sell the oil it wants and get the money that it wants. it is down to 3.3 million barrels a day. that's down from 3.8 million barrels a day just a few months ago and 4.1 million barrels a day a year or so ago. this is truly hurting the i ran an economy and the reel real, the currency dropped by half against the dollar. inflation is up. unemployment is up and there is a lot of discontent within the country. what are the other signals we're seeing from iran that it might want to deal with the united states and the rest of the p 5 plus one? the kinds of things that we follow like hawks if you are interested in iranian internal politics and foreign policy. on march 5th the iran an supreme

court ordered the retrial of a former u.s. marine sentenced to death for supposedly spying for the cia. on march 13th the u.s. deported back to iran an arms dealer who had been caught in a sting operation in the republic of georgia a few years earlier. in this country it was revealed that our treasury department has begun an investigation into the former governor of pennsylvania, ed rendel, and several others for taking money to promote an organization called the mu jadin hulk, on the state department's terrorism list that has been trying to get off the terrorism list for years and has been paying very, very well known former u.s. officials great sums of money to advocate getting off the terrorism list. they have not gotten off the list. they were supposed to be i think on march 26th deadline for the

state department to rule that deadline is gone. i would predict that there will be no decision on this issue certainly before the nuclear talks and this is another signal to iran because the iran an government hates this organization. it is believed to be responsible for assassinating five iranian scientists over the last few years in could hoots with mosaud. we have the new talks scheduled, i believe april 13th, although there is some april 14th question about the exact date and the exact venue. a degree with michael's analysis. i don't think we'll see any dramatic break through, but what we're looking for is to manage the situation. nobody is going to solve the iranian conundrum over night. the idea is to tap the program in some way, induce some limits, introduce some greater transparency, and that will contain the israelis. i think the problem is to contain israel, not so much to contain iran right now that will provide confidence that iran is

not rushing toward a nuclear weapon. it will also help contain the u.s. congress which insists on passing more and more resolutions that would attempt to really tie the hands of the obama administration in negotiating a solution. there is a resolution that would forbid containment making its way through congress until rand paul stood up and said, no, this is a kind of back door authorization for war and we can't have it. it was remarkable actually we have to rely on rand paul to prevent congress from passing ridiculous legislation. there you have it. there are a number of good proposals out there to provide this kind of management of the nuclear issue and michael has referred to some of them. most of them center around iran halting enrichment to 20% to 235 which is peril lusly close to weapons grade. if iran will stop or slow that,

if iran will stop enriching at a facility called f ordoe, built into the side of a mountain and very, very difficult for anyone to attack, if it would slow that, stop putting in more sen try fujs there, that would be a major step. katherine ashton, the eu foreign policy chief said she wants a sustained process of constructive dialog with iran in her letter back to jaleel i. ashton first sent a letter last october. it took iran until february to respond and then finally in march after the meeting between obama and netanyahu ashton said, yes, the p-5 plus one would be willing to meet. she wants a sustained process of constructive dialog which means not a one-shot deal, not one, two-day session in istanbul and nothing after that. we do need to see that there are more meetings schedule and had they begin to get into the

nitty-gritty of the nuclear program and not just talking about principles and that iran is not simply presenting a litany of grievances against the west which is what it has done in the past. a couple more things about iranian internal politics. they had parliamentary elections march 2nd. they resident what we would call free or fair, you but the iranian government declared them a great success. it declared that 64% of the iranians participate participated which is undoubtedly an inflated figure and there is a joke going around that 80% of iranians sat home on television watching 70% of iranians vote on television, so there is something a little off. nevertheless, this victory allowed the supreme leader, i think, to consolidate his base. he has won his fight with the president of iran in case you hadn't noticed, the president of

iran has been fighting with the supreme leader of iran the last year, and he reached out, the supreme leader reached out to another of his rivals and appointed him to another five-year term of something called the ex paiden sigh counsel which is a toothless group but supposed to mediate conflicts between various branchs of the government. he is a famous practicing ma tis and somebody that identified with outreach to the west. it is another signal perhaps that the supreme leader can be a little bit more flexible in these negotiations. the u.s. goal is to prevent iran from developing a nuclear weapon. i think this was also very useful during the netanyahu-obama talks that instead of talking about a nuclear weapons capability, which is what the senate resolution discusses and what the israelis have been harping

for years, the red line now is an actual nuclear weapon and this is a lot easier in terms of preventing a conflict and also a lot easier in terms of negotiations. it gives a lot of leeway for the iranians to maintain an enrichment program but not a nuclear weapons program and that kind of definition i think is going to be key if we're going to be able to achieve some sort of success. there is a very good report that's out from the congressional research service yesterday that talks about the fact iran of course we know they have dispersed the nuclear facilities widely across the country but also accounts they have sen p sent try fuj which means there is no military solution to the iranian nuclear program. you can bomb the known sites. you can kill a bunch more scientists, but you won't be able to destroy iran's ability

to reconstitute its nuclear program and as many experts suggested bombing iran would be the one thing that would convince iran it absolutely has to have a nuclear weapons program in order to deter future attacks, so i think we have seen some clarification, and very useful clarification and in terms of the goals of u.s. foreign policy in recent weeks. i personally think that if the united states and its allies fail in stopping iran from developing a nuclear weapon containment is an excellent option. we have been containing them for 33 years, and i think we can continue to do so. iran is more isolated in the region. i don't know if we will get into a discussion of its problems with its neighbors, certainly it is very, very worried about the situation in syria, and it has lost its cache, its narrative as being the champion of the oppress and had doesn't wash so well when it is oppressing its own people and putting down

demonstrations after its 2009 elections and it is supporting the asad regime in syria. i think we're in a relatively good place. the real question frankly is whether the u.s. government will be able to come up with some creative ideas in what is for us an election year and whether obama will have the courage as well as i toe la the courage to compromise. i will leave it there. >> good morning. thanks to cato for inviting me to speak today. i have been asked to basically talk about why diplomacy may not work with iran, what are the challenges. before i get into that i want to commend people and experts, come at a timers, analysts who emphasize diplomacy with iran fbs. i don't think that a military strike against iran by the

united states or israel would solve the iranian nuclear crisis and i do believe that it would be very counter productive to u.s. interests in the middle east. as barbara mentioned, there are signs, positive indications, that iran is open to compromise or engagement with the 5-5 plus one or the united states. we just had primary elections and the supreme leader consolidated power. the president is not as big of a player in the iranian politics so we can argue that iran's decision making on the nuclear program has been stream lined. in 2009 and after that one of the difficulties in engaging iran and reaching negotiated settlement was the fact that there was so many players involved, players often domestically opposed to each other. for