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updated 9/28/2009 11:35:26 AM ET 2009-09-28T15:35:26

Guest host: Mike Barnicle

Guests: Chuck Todd, David Gregory, Jamie Rubin, Ron Brownstein

MIKE BARNICLE, GUEST HOST:  Iran‘s secret underground nuke site. Let‘s play HARDBALL.

Good evening.  I‘m Mike Barnicle, in tonight for Chris Matthews.  Leading off tonight: Caught red-handed.  Iran admitted to building a second secret underground plant to enrich uranium, and President Obama demanded that Iran open nuclear sites for inspection or be held accountable.

We are awaiting President Obama‘s press conference at the G-20 summit in Pittsburgh.  NBC News White House correspondent Chuck Todd will break down what this disclosure means for the president a week before the six-nation talks with Iran are set to begin.

Plus: Why are Democrats seeing a significant drop in fund-raising, and how can they convince big donors to open up their checkbooks ahead of the 2010 mid-term elections?

And remember the conservative outcry over President Obama‘s back-to-school speech a couple of weeks ago?  well, A student performance at a New Jersey public elementary school is now drawing fire from some conservative critics.  Check it out.

(BEGIN VIDEO CLIP)

STUDENTS (SINGING):

(END VIDEO CLIP)

BARNICLE:  Conservatives charge that the school and the teacher was attempting to indoctrinate and brainwash the students in support of the president.  Are they right?

Also, “MEET THE PRESS” moderator David Gregory will preview his interview with Bill Clinton.

And finally: Ousted Illinois government Rod Blagojevich just can‘t help himself on his never-ending media tour.  He now claims he‘s the anti-Nixon.  We‘ll have more of what he said in the HARDBALL “Sideshow.”

But we begin with the disclosure of Iran‘s secret underground nuclear facility and President Obama‘s response.  NBC News White House correspondent and political director Chuck Todd is on the phone with us from the G-20 summit in Pittsburgh, Ed Schultz is the host of “THE ED SHOW,” and MSNBC political analyst Pat Buchanan is also with us.  And Jamie Rubin is a former State Department spokesman.  He‘ll be with us a bit later.

Let‘s start with Chuck Todd out there in Pittsburgh.  Chuck, what‘s the mood within the White House over this latest development with regard to Iran?  They have Iraq to worry about, they have Afghanistan choices to be made coming up very shortly, and now this revelation.

CHUCK TODD, NBC POLITICAL DIR./CORRESPONDENT (via telephone):  Well, it‘s a little bit frenetic.  I mean, there‘s no doubt they have been—this is the issue that has dominated the week, and we in the press corps obviously didn‘t find out about it until 4:00 o‘clock this morning when this thing went public in “The New York Times.”

So we‘re now learning what the week was really like for this White House behind the scenes with the Russians, behind the scenes with the Chinese.  It was all about letting them know what was going on with Iran and this nuclear facility.  They briefed the Russians, they briefed the Chinese, all in an attempt to try to get everybody on the same page because they knew that this thing—the Iranians had found out that we had known their secret.

And so it became a race to sort of get each side of the—to get this side of the story out, to get their case together in front of the international community, because we now knew what‘s—we obviously knew what was coming next week, on October 1st, which is this meeting of the P-5, which in this case is the five permanent members of the United Nations Security Council, China, Russia, Great Britain, France and the U.S., plus Germany, get them all on the same page when they sit down with Iran.

Now, what has happened today, and what makes White House feel pretty good about what‘s going on, is, one, they feel like they have good intelligence.  They feel like they made a strong case to the Russians.  And now they‘re just sitting here, waiting on the Chinese.  And if they can get everybody on the same page, they think they can actually have (INAUDIBLE) have some leverage over the Iranians on the sanctions front.

Of course, now, though, the fact we‘re learning all this—and this is the third time that the administration said—the third time the Iranians have been caught lying about their nuclear ambitions, third time that they‘ve been caught cheating—how much more diplomacy can the president pursue before he‘s got to just say, You know what?  That‘s it.  But the question is, what is the “That‘s it” if it‘s not just sanctions?

BARNICLE:  Pat Buchanan, the images of street unrest in Teheran are still fresh in a lot of people‘s minds from the election that was held earlier this summer.  What do you figure this says, if anything, about political unrest within the Iranian administration?  Ahmadinejad, the mullahs, who is running Iran?

PAT BUCHANAN, MSNBC POLITICAL ANALYST:  Well, that‘s the—you‘ve touched on the basic question here.  What the United States is saying to the Iranian people is, Your government, Ahmadinejad and the ayatollah, are lying to you and they are lying to the world when they say that all their nuclear facilities are for peaceful purposes.

Up to now, Mike, all the revelations we know about, even though some of them are secret, are consistent with a peaceful program.  If the United States is correct that they are upgrading the uranium, enriching it to 90 percent, that can only be for one thing, an explosive device.  So the Americans are saying, You‘ve lied to your people about this and you‘ve lied to the world about this.  You do have facilities there that are exclusively or only can be for nuclear weapons.

I think Ahmadinejad and the ayatollah are going to have to come clean with the IAEA, with the world and with their own people on this and prove, if they can, that this is not a weapons facility.

BARNICLE:  Ed Schultz, I mean, you talk to the country a couple of times a day every day.  What do you think goes through people‘s minds out there in the middle of the country in Iowa and the great Northwest, up in Seattle, way up in Portland, Maine, when they hear the phrase “U.N.  sanctions”?

ED SCHULTZ, HOST, “THE ED SHOW”:  Well, they‘d rather have that than

another confrontation, Mike.  But I really think that this revelation today

and the revealing of this secret facility that has been denied in the past

·         this is a great political opportunity for this president to show that this is the man that he talked about on the campaign trail, that he can bring people together, that he can lead, that he can bring coalitions together.

I think it‘s very encouraging for the White House to hear what Medvedev is saying from Russia about how they‘ve got new relations with the United States.  It was very cold at the end of the Bush administration.  I thought President Obama did a tremendous job today, his demeanor, his academic approach to this, his willingness to work with other leaders.

This is a very crucial test for the president.  During the campaign, a lot of people were talking about, He didn‘t have the experience.  He didn‘t have the international experience.  We‘re seeing it right now.  This is the president of the United States on the international stage, having to perform, to bring in Great Britain to talk about a line in the sand, to get some tough words out of Sarkozy, to bring on the Germans, and now getting positive reaction from the Russians.  The Russians play a big key in all of this because of the business dealings that they‘ve had over the years with the Iranians.  And now, of course, the Chinese are telling the Iranians they need to back off.

This is—this situation is putting Barack Obama in, I think, a great position to show that the United States wants to go to the moral high ground and reestablish itself as a world leader.

BARNICLE:  Chuck Todd, can you give us any internal background in the White House about the president‘s dealing with Russia and China to get them on the same page with regard to Iran?

TODD:  I‘m going to be very quick here because it does look like we‘re a few minutes away.  But here‘s the best I can tell.  This was news to the Russians, and it really ticked off the Russians.  They did not know the Iranians were doing this.  This is based on—look, this is based on sources I‘ve talked to that sort of was reading body language.  They really believe this was news to the Russians.

And the reason that‘s important is the Russians feel like they were out there defending the Iranians to us both behind the scenes and publicly, and they feel burned.  And that‘s why that‘s important.  And that‘s why the White House contingent here at the G-20 feels pretty good about the statement.  That‘s why they think they got a stronger statement out of the Russians than, for instance, they would have expected a week ago.  And that‘s because the Russians feel like that they were basically sold a bill of goods by the Iranians.

The Chinese—they play coy, but they usually—you know, they‘re not going to be there by themselves.  And if the Russians are with us, the White House believes the Chinese will eventually go along.

I‘m going to get in my seat here, guys...

BARNICLE:  OK, go ahead.

TODD:  (INAUDIBLE) when you see Reggie Love (ph) come out near the podium...

(CROSSTALK)

BARNICLE:  We don‘t want you to lose your seat, Chuck.

(CROSSTALK)

BARNICLE:  Pat, I might have to interrupt you for the president of the United States.

BUCHANAN:  Sure.

BARNICLE:  I‘m sure you‘ll understand.  But weapons-grade plutonium—if it can be proved that the Iranians are developing weapons-grade plutonium in this new nuclear facility that we‘re talking about, wouldn‘t that prove that the Israelis were right?  And wouldn‘t that give Israel a stronger leg up on saying, Hey, we‘re going to have take care of this ourselves at some point perhaps?

BUCHANAN:  Look, if it is, as the Americans are saying, they‘re enriching up to 90 percent, that‘s weapons-grade uranium.  It‘s the type of uranium which was used in one of the atomic bombs, a gun-type (ph) bomb that we dropped over it was either Hiroshima or Nagasaki.  There‘s only one use that I know of for uranium enriched to 90 percent.

And Chuck makes a very important point.  It‘s not only Ahmadinejad and the ayatollah were lying to their country and lying to the West.  If this is true, they lied to the Russians, who have been out there fronting for them by telling them, Look, it‘s all for peaceful purposes.  So they‘ve sandbagged every friend they‘ve got that‘s been out there.

And you are correct.  If this is true, the Israelis, who have been saying, Look, the Iranians are much further along, they‘re much more determined to build weapons than you Americans are saying, when you said they canceled their plans in 2003, you got a high confidence.  The Israelis will have been proven correct, I think, if this is true.

This is a central point, I think, Mike.  The Iranians are going to have to explain that this is not weapons-grade uranium coming out of this plant, that this is simply a back-up for Natanz in case the Israelis or the Americans blew it up, which would be illegal but understandable.  I mean, they‘re not going to put all their centrifuges in there and get them all blown up in one place.  Nobody would do that.

BARNICLE:  Hey, Ed, we have less than two minutes until the president appears at the podium here.  We‘re watching that.  But listening to Chuck and listening to Pat, I want to go back to what you were saying earlier.  This could be potentially a very positive development for this very young Obama administration.

SCHULTZ:  I don‘t think there‘s any doubt about it.  And I‘ve talked to military people over the last five years on the radio, retired admirals, that have told me that the Russians play a big key in dealing with the Iranians.

And if I could, Mike, go back to a story that “The New York Times” carried back in January of 2005 -- and I brought up earlier today, What is the Israeli reaction going to be to this ?  Former president (SIC) Dick Cheney was quoted in a “New York Times” story as saying back in January 2005, that, You never know, the Israelis may take action on the Iranians before anybody else because they‘ve known that this stuff was going on.

So this is, I think, the big picture point here, a real opportunity for the president and for the United States to show some leadership, not overreact, take the academic approach, be very strong, keep this coalition together, operate with the facts, take the moral high ground and show that we‘ve got a great direction.  This is really an opportunity for the Obama administration to show that there‘s a new sheriff in town running the United States of America.

I mean, there‘s always the political reaction to everything, but this is a chance for the United States and the Russians to move forward with a new, positive relationship.

BARNICLE:  We‘re looking there at a picture on the scene, Ed, right now, as you speak, of Rahm Emanuel, chief of staff, Robert Gibbs, the press secretary, and David Axelrod, senior adviser to the president of the United States, who has already had a hugely important day.

And here he is now coming on the stage in Pittsburgh, Pennsylvania, President Barack Obama.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  Good afternoon. 

Let me, first of all, thank Mayor Luke Ravenstahl, County Executive Dan Onorato, and the people of Pittsburgh for being just extraordinary hosts. 

Last night, during the dinner that I had with world leaders, so many of them commented on the fact that sometime in the past they had been to Pittsburgh—in some cases, it was 20 or 25 or 30 years ago—and coming back, they were so impressed with the revitalization of the city.  A number of them remarked on the fact that it pointed to lessons that they could take away in revitalizing manufacturing towns in their home countries. 

The people here have been just extraordinary, and so I want to thank all of you for the great hospitality. 

I will tell you, I‘m a little resentful, because I did not get to Pamela‘s Diner for pancakes, although Prime Minister Yukio Hatoyama of Japan did get pancakes.  And I don‘t know how he worked that, but he was raving about them. 

Six months ago, I said that the London summit marked a turning point in the G-20‘s efforts to prevent economic catastrophe.  And here in Pittsburgh, we‘ve taken several significant steps forward to secure our recovery in transition to strong, sustainable and balanced economic growth. 

We‘ve brought the global economy back from the brink.  We laid the groundwork today for long-term prosperity, as well. 

It‘s worth recalling the situation we faced six months ago:  a contracting economy, skyrocketing unemployment, stagnant trade, and a financial system that was nearly frozen.  Some were warning of a second Great Depression.

But because of the bold and coordinated action that we took, millions of jobs have been saved or created, the decline in output has been stopped, financial markets have come back to life, and we stopped the crisis from spreading further to the developing world. 

Still, we know there is much further to go. 

Too many Americans are still out of work and struggling to pay bills.  Too many families are uncertain about what the future will bring.  Because our global economy is now fundamentally interconnected, we need to act together to make sure our recovery creates new jobs and industries, while preventing the kinds of imbalances and abuse that led us into this crisis. 

But Pittsburgh was a perfect venue for this work.  This city has known its share of hard times, as older industries like steel could no longer sustain growth, but Pittsburgh picked itself up and it dusted itself off and is making the transition to job-creating industries of the future, from biotechnology to clean energy.  It serves as a model for turning the page to a 21st century economy and a reminder that the key to our future prosperity lies not just in New York or Los Angeles or Washington, but in places like Pittsburgh. 

Today, we took bold and concerted action to secure that prosperity and to forge a new framework for strong, sustainable and balanced growth. 

First, we agreed to sustain our recovery plans until growth is restored and a new framework for prosperity is in place.  Our coordinated stimulus plans played an indispensable role in averting catastrophe; now we must make sure that when growth returns, jobs do, too.  That‘s why we will continue our stimulus efforts until our people are back to work and phase them out when our recovery is strong. 

But we can‘t stop there.  Going forward, we cannot tolerate the same old boom-and-bust economy of the past.  We can‘t grow complacent. We can‘t wait for a crisis to cooperate.  That‘s why our new framework will allow each of us to assess the other‘s policies, to build consensus on reform, and to ensure that global demand supports growth for all. 

Second, we agreed to take concrete steps to move forward with tough new financial regulations so that a crisis like this can never happen again.  Never again should we let the schemes of a reckless few put the world‘s financial system and our people‘s well-being at risk. 

Those who abuse the system must be held accountable.  Those who act irresponsibly must not count on taxpayer dollars.  Those days are over. 

That‘s why we‘ve agreed to a strong set of reforms.  We will bring more transparency to the derivatives market.  We will strengthen national capital standards so that banks can withstand losses and pay for their own risks.  We will create more powerful tools to hold large global financial firms accountable and orderly procedures to manage failures without burdening taxpayers.  And we will tie executive pay to long-term performance so that sound decisions are rewarded instead of short-term greed. 

In short, our financial system will be far different and more secure than the one that failed so dramatically last year. 

Third, we agreed to phase out subsidies for fossil fuel so that we can transition to a 21st century energy economy, an historic effort that would ultimately phase out nearly $300 billion in global subsidies. 

This reform will increase our energy security.  It will help transform our economy so that we‘re creating the clean-energy jobs of the future.  And it will help us combat the threat posed by climate change. 

As I said earlier this week in New York, all nations have a responsibility to meet this challenge, and together we have taken a substantial step forward in meeting that responsibility. 

Finally, we agreed to reform our system of global economic cooperation and governance.  We can no longer meet the challenges of the 21st century with 20th century approaches.  And that‘s why the G- 20 will take the lead in building a new approach to cooperation.      To make our institutions reflect the reality of our times, we will shift more responsibility to emerging economies within the International Monetary Fund and give them a greater voice. 

To build new markets and help the world‘s most vulnerable citizens climb out of poverty, we established a new World Bank trust fund to support investments in food security and financing for clean and affordable energy. 

And to ensure that we keep our commitments, we agreed to continue to take stock of our efforts going forward. 

Now, we have learned time and again that in the 21st century the nations of the world share mutual interests.  That‘s why I‘ve called for a new era of engagement that yields real results for our people, an era where nations live up to their responsibilities and act on behalf of our shared security and prosperity. 

That‘s exactly the kind of strong cooperation that we forged here in Pittsburgh and earlier this week in New York.  Indeed, on issue after issue, we see that the international community is beginning to move forward together. 

At the G-20, we‘ve achieved a level of tangible global economic cooperation that we have never seen before, while also acting to address the threat posed by climate change. 

At the United Nations Security Council, we passed a historic resolution to secure loose nuclear materials, to stop the spread of nuclear weapons, and to seek the security of a world without them.

And as we approach negotiations with Iran on October 1st, we have never been more united in standing with the United Kingdom, France, Russia, China, and Germany in demanding that Iran live up to its responsibilities. 

On all of these challenges, there is much more work to be done, but we leave here today more confident and more united in the common effort of advancing security and prosperity for all of our people.  So I‘m very grateful to the other world leaders who were here today.

And with that, let me take a few questions.  I‘ll start with Ben Feller of A.P. 

QUESTION:  Thank you, Mr. President.  The Iranian president said today that your statement of this morning was a mistake and that your mistakes work in Iran‘s favor.  What gives you any sense that you can genuinely negotiate with him?  And also, when you talk about holding Iran accountable, is the military option growing more likely? 

OBAMA:  I think it‘s important to see what happened today, building on what happened in New York.  You had an unprecedented show of unity on the part of the world community saying that Iran‘s actions raised grave doubts in terms of their presentation that their nuclear program was for peaceful purposes.        Not only did the United States, France, and the United Kingdom who initiated the intelligence that brought this to light stand before you, but you had China and Russia, as well, issue statements calling for an immediate IAEA investigation. 

That kind of solidarity is not typical.  Anybody who‘s been following responses to Iran would have been doubtful just a few months ago that that kind of rapid response was possible. 

So I think Iran is on notice that, when we meet with them on October 1st, they are going to have to come clean and they are going to have to make a choice.  Are they willing to go down the path which I think ultimately will lead to greater prosperity and security for Iran, giving up the acquisition of nuclear weapons, and deciding that they are willing to abide by international rules and standards in their pursuit of peaceful nuclear energy, or will they continue down a path that is going to lead to confrontation? 

And as I said before, what has changed is that the international community, I think, has spoken.  It is now up to Iran to respond. 

I‘m not going to speculate on the course of action that we will take. 

We‘re going to give October 1st a chance.

But I think you‘ve heard that even countries who a year ago or six months ago might have been reluctant to even discuss things like sanctions have said that this is an important enough issue to peace and stability in the world that Iran would make a mistake in ignoring the call for them to respond in a forthright and clear manner and to recognize that—that the choice they make over the next several weeks and months could well determine their ability to rejoin the international community or to find themselves isolated. 

Last point I‘ll make, specifically with respect to the military, I‘ve always said that we do not rule out any options when it comes to U.S.  security interests, but I will also re-emphasize that my preferred course of action is to resolve this in a diplomatic fashion. It‘s up to the Iranians to respond. 

QUESTION:  You said a couple of months ago that the war in Afghanistan is a war of necessity.  Do you think it‘s possible to meet U.S. objectives there without an extra infusion of U.S. troops?  And as you consider this, how does the public‘s lagging support for the war affect your decision-making now?  And how has your review process been affected by the allegations of election fraud?  Thank you. 

OBAMA:  First of all, let me be clear on our goals.  We went into Afghanistan not because we were interested in entering that country or positioning ourselves regionally, but because Al Qaida killed 3,000- plus Americans and vowed to continue trying to kill Americans.

And so my overriding goal is to dismantle the Al Qaida network, to destroy their capacity to inflict harm not just on us, but people of all faiths and all nationalities all around the world, and that is our overriding focus. 

Stability in Afghanistan and in Pakistan are critical to that mission.  And after several years of drift in Afghanistan, we now find ourselves in a situation in which you have strong commitments from the ISAF coalition, our NATO allies.  All of them are committed to making this work, but I think there‘s also a recognition that after that many years of drift it‘s important that we examine our strategies to make sure that they actually can deliver on preventing Al Qaida from establishing safe havens. 

Obviously, the allegations of fraud in the recent election are of concern to us, and we are still awaiting results.  We‘re awaiting the IEC and the ECC issuing their full report. 

What‘s most important is that there is a sense of legitimacy in Afghanistan among the Afghan people for their government.  If there is not, that makes our task much more difficult. 

In terms of the review process that we‘re going through, we—the minute I came into office, we initiated a review and, even before that review was completed, I ordered 21,000 additional troops into Afghanistan because I thought it was important to secure the election, to make sure that the Taliban did not disrupt it. 

What I also said at the time was that, after the election, we are going to reassess our strategy, precisely because so much of our success has to be linked to the ability of the Afghan people themselves to provide for their own security, their own training, the Afghan government‘s ability to deliver services and opportunity and hope to their people.

So we are doing exactly what I said we would do in March.  I put in a new commander, General McChrystal, and I asked him to give me an unvarnished assessment of the situation in Afghanistan.  And he has done that, as well.

But keep in mind that from the start my belief was—and this is shared with our ISAF allies—that our military strategy is only part of a broader project that has to include a civilian component, has to include a diplomatic component, and all those different factors are being weighed and considered at this point.  And I will ultimately make this decision based on what will meet that core goal that I set out at the beginning, which is to dismantle, disrupt and destroy the Al Qaida network. 

With respect to public opinion, I understand the public‘s weariness of this war, given that it comes on top of weariness about the war in Iraq.  Every time we get a report of a young man or woman who‘s fallen in either of those theaters of war, it‘s a reminder of the extraordinary sacrifice that they‘re making.  I know that our partners in Afghanistan feel that same pain when they see their troops harmed. 

So this is not easy, and I would expect that the public would ask some very tough questions.  That‘s exactly what I‘m doing, is asking some very tough questions.  And, you know, we‘re not going to arrive at perfect answers.  I think anybody who‘s looked at the situation recognizes that it‘s difficult and it‘s complicated.

But my solemn obligation is to make sure that I get the best answers possible, particularly before I make decisions about sending additional troops into the theater. 

John Dellna of KDKI (ph).  Is John around? 

QUESTION:  Right here.

OBAMA:  Good to see you, John. 

QUESTION:  Thank you, Mr. President.  Let me ask you, while we were inside this very safe and secure and beautiful convention center, some 5,000 -- at least—demonstrators were on the outside.  Some caused some property damage; others just shouted their messages, much of which had to do that, while you believe the G-20 summit was a success and represents a positive sign, they see it as something devilish and destructive of the world economy, and particularly the economy of the poor.  What‘s your response to those who are demonstrating and those who oppose this summit? 

OBAMA:  Well, first of all, I think it‘s important just to keep things in perspective for the people of Pittsburgh.  If you have looked at any of the other summits that took place—I mean, in London, you had hundreds of thousands of people on the streets.  In, you know, most of these summits, there has been a much more tumultuous response.

And I think the mayor and the county executive and all the people of Pittsburgh deserve extraordinary credit for having managed what is a very tranquil G-20 summit. 

You know, I think that many of the protests are just directed generically at capitalism, and they object to the existing global financial system, they object to free markets.  One of the great things about the United States is that you can speak your mind and you can protest.  That‘s part of our tradition.

But I fundamentally disagree with their view that the free market is the source of all ills. 

Ironically, if they had been paying attention to what was taking place inside the summit itself, what they would have heard was a strong recognition from the most diverse collection of leaders in history that it is important to make sure that the market is working for ordinary people, that government has a role in regulating the market in ways that don‘t cause the kinds of crises that we‘ve just been living through, that our emphasis has to be on more balanced growth, and that includes making sure that growth is bottom up, that workers, ordinary people are able to pay their bills, get—make a decent living, send their children to college, and that the more that we focus on how the least of these are doing, the better off all of us are going to be. 

That principle was embodied in the communique that was issued. And so, you know, I would recommend those who were out there protesting, if they‘re actually interested in knowing what was taking place here, to read the communique that was issued. 

Laurent Lozano?  Is Laurent here?  There he is.

QUESTION:  Thank you, Mr. President.  I would like to follow up on Iran.  Since Iran seems to be so blatantly in breach of its international obligations and with some of your allies, main allies, obviously, growing impatient, why even meet with the Iranians on—on October 1st?  And can you also explain to us what happened between the end of 2007, when an intelligence estimate cast doubts on the fact that Iran was pursuing nuclear weapons and this year?  What credit should be given to such intelligence? 

Well, first of all, with respect to the intelligence that we presented to the IAEA, this was the work product of three intelligence agencies, not just one.  These intelligence agencies checked over this work in a painstaking fashion precisely because we didn‘t want any ambiguity about what exactly was going on there. 

And I think that the response that you saw today indicates the degree to which this intelligence is solid and indicates the degree to which Iran was constructing an enrichment facility that it had not declared, contrary to U.N. resolutions and contrary to the rules governing the IAEA. 

In terms of meeting, I have said repeatedly that we‘re going to operate on two tracks, that our preferred method of action is diplomatic, but if that does not work, then other consequences may follow. 

I also said—and this was debated extensively here in the United States, because there were some who suggested, you know, you can‘t talk to Iran, what‘s the point—that, by keeping the path of diplomacy open, that would actually strengthen world unity and our collective efforts to then hold Iran accountable. 

And I think you‘re starting to see the product of that strategy unfold during the course of this week.  What we saw at the United Nations in the Security Council was a strong affirmation of the principles of the Nuclear Non-Proliferation Treaty.  And as a consequence, the IAEA is strengthened and those countries who follow the rules are strengthened when it comes to dealing with countries like North Korea and Iran that don‘t follow the rules.  And that means that, when we find that diplomacy does not work, we will be in a much stronger position to, for example, apply sanctions that have bite. 

Now, as I said, that‘s not the preferred course of action.  I would love nothing more than to see Iran choose the responsible path. Whether they do so or not will ultimately depend on their leaders, and they will have the next few weeks to show to the world which path they want to travel. 

I‘m going to take one last question.  Yeah, I‘ve got to call on one of these guys.  You know, they‘re my constituency here.  All right. 

QUESTION:  Thank you, Mr. President.  You just mentioned sanctions that have bite.  What kinds of sanctions—and I know you can‘t get into details—but what kinds of sanctions at all would have bite with Iran?  Do you really think any kind of sanction would have an effect on somebody like Ahmadinejad? 

Secondly, some of your advisers today said that this announcement was a, quote, “victory.”  Do you consider it a victory?  And if so, why didn‘t you announce it earlier since you‘ve known since you were president-elect? 

OBAMA:  This isn‘t a football game, so I‘m not interested in victory.  I‘m interested in resolving the problem.  The problem is, is that Iran repeatedly says that it‘s pursuing nuclear energy only for peaceful purposes, and its actions contradict its words.  And as a consequence, the region is more insecure and vital U.S. interests are threatened.  My job is to try to solve that. 

And, you know, my expectation is that we are going to explore with our allies, with the P5-plus-one, a wide range of options in terms of how we approach Iran, should Iran decline to engage in the ways that are responsible. 

You just told me I‘m not going to get into details about sanctions, and you‘re right.  I will not.  But I think that, if you have the international community making a strong, united front, that Iran is going to have to pay attention. 

In terms of why we didn‘t come out with this sooner, I already mentioned to Laurent that it is very important in these kinds of high- stakes situations to make sure that the intelligence is right.  And we wanted all three agencies—the French, the Brits and the Americans—to have thoroughly scrubbed this and to make sure that we were absolutely confident about the situation there.  We are, and now it‘s up to Iran to respond. 

OK?  Thank you very much, everybody.  I hope you enjoyed Pittsburgh. 

Thank you. 

(APPLAUSE)

BARNICLE:  You‘ve been watching President Barack Obama at the G-20 on a day when Iran revealed a previously secret nuclear facility used for enriching uranium.  The president said he prefers to resolve the dispute with Iran diplomatically, but he did not rule out any options. 

Let‘s bring in Jamie Rubin, former spokesman for the State Department.  Jamie, according to several reports we‘ve heard prior to this press conference—and I think things that the president alluded to during his Q&A session with the media—Russia was kind of surprised with the revelation of this new nuclear development in Iran. 

If—A, do you believe that?  And B, if they were surprised, does that make our position vis a vis dealing with Iran stronger?  And why?

JAMIE RUBIN, FMR. STATE DEPARTMENT SPOKESMAN:  First of all, I doubt the Russians will end up surprised when they have finished absorbing all the information that has been provided and what the Iranians say back.  In the end, this will be another enrichment of uranium facility, very similar to one that has already existed.  The Iranians will make the same arguments.  And in the end, the Russians will have to come to the same judgments. 

In a tactical sense, in a sort of today, tomorrow, the next day sense, the Russians probably did not expect this to become a public issue right now.  And they may not have had the same intelligence that we had.  But when you examine very carefully the White House fact sheet about this facility, they make clear that it doesn‘t change the intelligence community‘s assessment that Iran has not begun an actual nuclear weapons program. 

So we‘re back to the same dilemma that we‘ve been facing for quite some time now.  This revelation today is important.  It has highlighted the dilemma we‘ve been facing for quite some time.  But it doesn‘t change that dilemma. 

The dilemma is that Iran is going full board for the ability to enrich uranium to a level that is not weapons grade.  But they will have the capability inherently to increase that, an inherent breakout capability. 

Meanwhile, the U.S. intelligence community doesn‘t think they have a nuclear weapons program right now.  So that difference between having an inherent capability, having a peaceful so-called nuclear energy program, and actually building weapons is something where countries like the United States, France and Britain are extremely worried, and they take a tougher stance. 

Countries like Russia and China, as long as they don‘t believe the Iranians have begun enriching uranium to weapons grade, as long as they believe that the Iranians are still not actually engaged in a nuclear weapons program, their response is going to be limited. 

So we‘re going to be in the game that the president was talking about in the last question, which is some form of sanctions. 

BARNICLE:  You say the same dilemma.  You just mentioned sanctions.  The UN has been rather a toothless tiger when it comes to sanctions.  Has it not?  We‘ve been talking about sanctions as a country vis a vis Iran for thirty years. 

RUBIN:  In the last three years, President Bush and now President Obama have gone to the Security Council and sought some form of economic sanctions.  They‘re quite limited.  They affect certain industries, certain individuals.  They‘re not the kind of embargo, say, that we have on Cuba. 

I don‘t think we‘re going to get that kind of embargo.  This information doesn‘t dramatically transform the case the Iranians have, or the case the Americans have.  It is very effective tactical intelligence that will put the pressure our Russia, put the pressure on China.  But it‘s not going to change their fundamental position.  We are not going to see an economic embargo, some sort of blockade on Iran, or something like that. 

The truth is—this is what the last question brought out.  Most experts, most people involved, have a hard time seeing why this particular regime, now that it has become even more extreme with the recent election and the crack down, will capitulate in the face of an economic sanction of some kind.  So this dilemma is going to become even starker in the coming months for the president. 

BARNICLE:  You know, you have lived within the diplomatic world for a large part of the—

RUBIN:  You‘re about to throw one at me, I think. 

BARNICLE:  I‘m not.  I think the average person listening to you might say to themselves, you just referenced the embargo in Cuba.  The average person might say, how crazy is this?  The only missiles they have in Havana are cigars, you know, Robustos.  And these people in Iran, the government of Iran, might be capable of assembling a nuclear warhead.  And we can‘t provide tougher sanctions on Iran than we provide on Cuba?  That‘s like crazy stuff. 

RUBIN:  I agree that the Cuba embargo is something that most people will never understand, why they are singled out for this extreme economic sanction.  I certainly agree with you that that has always been an outlier in term of why the U.S. has taken such an extreme stance. 

But the bottom line, Mike, is that we‘re going to have limited economic sanctions posed against Iran.  There perhaps will be some form of restriction on certain oil products.  Maybe gasoline, if we‘re very lucky, but I doubt that. 

And in the end, this regime, particularly one now run by the more extreme version of the Iranian revolution, those who have been left after this terrible crackdown which involved many of the members of the government and the elite and the establishment there breaking from the Revolutionary Guard that seems to be in large part in control.  That‘s—what‘s left of the Iranian government is the least likely to be subject to economic sanctions. 

All I‘m saying here is that the president and his team have done a great job of highlighting the tactical situation, to put some pressure on Russia.  But now this is a major international issue.  They themselves have highlighted it, have brought it to supersede the entire economic summit in Pittsburgh that has taken place. 

And yet, the result, as you saw in that last question, is no closer to achieving the Iranians stopping this program.  And we‘re headed for, in the coming months, some big questions.  Do we learn to live with this inherent capability or do we do something much more drastic? 

BARNICLE:  We‘re joined now by Chuck Todd, who was in Pittsburgh at the press conference.  Chuck, Jamie Rubin, you just heard him talking about the answer to the last question the president gave about sanctions.  And Jamie seems to feel—he‘ll correct me if I misinterpret it—that while Russia and China will be on board, he thinks, for sanctions, they are tip-toeing into the realm of sanctions, and might not end up agreeing with tougher sanctions, nearly as tough as we would want. 

What is the feeling within the White House and the administration about how hooked into this Russia and China happen to be? 

CHUCK TODD, NBC NEWS WHITE HOUSE CORRESPONDENT:  Right now, they‘re very bullish on the fact that they think Russia is on board.  The statement that Russia put out today was tougher than they would have thought they would have gotten out of the Russians even just a couple of days ago.  So they‘re bullish on this idea that the Russians privately really do feel a little bit burned by the Iranians, in the fact that the Iranians were concealing this. 

The US folks that I‘ve talked, some sources I‘ve talked to indicate it is pretty clear to them the Russians didn‘t know about this site.  And that bothers them.  Not on the intelligence front, that bothers them in that relationship.  They‘ve been out there defending Iran. 

In many ways, China has been hiding behind Russia in this divide between British—Between Britain, France and the U.S. and where China and Russia stood on this issue.  Suddenly, if you‘ve got Russia aboard, the hope among those in the White House is that that will bring a reluctant China. 

They‘re still acting very reluctantly.  And that‘s where I think Jamie could be very right.  China might not be ready to go with its toughest sanctions, as the U.S. would hope for. 

I‘ll tell you, on the one hand, they talk about North Korea.  They‘ll sit there and say, you know what, we have the Chinese on board, some of the toughest sanctions against North Korea that anybody has gotten out of the Chinese in a long time.  That‘s fine. 

Iran, though, is going to turn into a domestic political fight in this country.  The pressure the president is going to feel on this front is so much different than North Korea.  You‘re going to see Congressional Republicans and a lot of Democrats.  Today, Joe Lieberman, Evan Bayh put out joint statements today about their feelings on Iran.  It was a very hawkish statement, very sort of a message to the president about getting tough. 

There could be bipartisan bills that come out of Congress with a lot of teeth, a lot of sanctions in it, that could just pop up as a bill for the president to sign, before he can make headway, frankly, when it comes to what he‘s trying to do in the P-5 plus One.

Then you have this line in the sand that the president sort of drew for next week, but then said, well, they have a few weeks.  So, you know, look, it depends on what the Iranians do.  Do they snow up, number one?  And do they agree to some basic things that these six nations have been asking for them for, starting with allowing for some inspections by the International Atomic Agency. 

BARNICLE:  Speaking of the testing and the sites, let‘s take a look at these pictures of the alleged uranium enriching facility in Iran.  They were released by the Institute for Science and International Security. 

The first is from March 2005.  And the second is from January of 2009.  I don‘t know what we can tell from that.  I certainly can‘t tell anything from that.  But Jamie, let me ask you, Chuck was talking about the domestic politics aspect of it here in the United States.  Joe Lieberman, Evan Bayh. 

Let me ask you, what do you think the situation is in Tehran?  They‘ve gone through a summer of unrest, based upon the elections and the street riots.  Who‘s in charge in Iran?  Is it Ahmadinejad, who is no longer the craziest guy in town?  We saw that the guy from Morocco—Libya is even crazier this week.  Or is it the Ayatollahs in Iran?  Who runs that country? 

RUBIN:  Well, two points, first of all.  After this crackdown this summer, it‘s clear that President Ahmadinejad has more power than he did in his last term.  The collective leadership that existed in Iran for many, many years, decades, has now split, with the most extreme members of that collective leadership, led by the leader Mr. Khameini, and now President Ahmadinejad, fully in charge, and the more moderate, so-called conservative, true conservatives, some of the clerics, a number of the businessmen, et cetera.  The more reasonable ones are now in opposition to this government. 

So this is the most extreme government in Iran that‘s ever existed.  People will argue they‘ve always been extreme.  I think it‘s clear this is the most extreme government. 

It‘s clear to me, at least, what is going to happen at this meeting next week.  Iran has already made clear, they‘re going to go in there; they‘re going to allow inspections of this facility, sooner or later.  And they‘re going to say, this is another example of our peaceful nuclear energy.  This is an enrichment facility that the White House paper makes very clear is not a military facility.  It‘s enriching up to five percent, which is the energy level. 

It happens to be, and this is quite interesting, at a Republican Revolutionary Guard facility.  So it‘s showing the potential military capabilities here. 

But the dilemma hasn‘t changed.  They say they can do enrichment at this five percent level.  And the international community says no.  And that‘s the problem. 

BARNICLE:  OK.  Jamie Rubin, as always, thank you.  Chuck Todd, as always.  Thank you. 

Up next, much more on Iran‘s newly revealed nuclear site and how President Obama is handling this major test on the world stage.  This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA:  I‘ve always said that we do not rule out any options when it comes to US security interests.  But I will also reemphasize that my preferred course of action is to resolve this in a diplomatic fashion.  It‘s up to the Iranians to respond. 

(END VIDEO CLIP)

BARNICLE:  We‘re back.  It‘s time for the politics fix, with David Gregory, moderator of NBC‘s “Meet the Press” and Ron Brownstein, political director for Atlantic Media.  David, we just saw the president on a stage in Pittsburgh, but it‘s really a world stage for him now.  Does this change the dynamic of what his presidency is all about and who he is?  Is he now more of a leader of the Western world than just the United States? 

DAVID GREGORY, MODERATOR, “MEET THE PRESS”:  Inevitably in a presidency, there are events that are thrust upon the president, that he has to respond to, shape.  And he has to shape it not just for himself but, as you say, for the western world, for the western allies.  That‘s what the president is in the middle of doing right now. 

This is the moment of confrontation, of challenge with regard to Iran.  This is the moment when he is able to say to the Iranians, got you.  We got you.  We see what you‘re doing.  Now you either sit down and talk and negotiate away nuclear weapons, or there‘s going to be a different track that you‘re not going to like. 

So stop haranguing, stop negotiating, stop saying one thing one day, and something else another.  Let‘s talk.  And let‘s talk about the potential for a real relationship, because I, President Obama, is somebody who wants to engage with you. 

All of that is coming up for a test right now. 

BARNICLE:  Ron, the back story here—it‘s not really the back story.  It‘s a major one—involves the president and his relationship with and his discussions with the Russians and the Chinese over this very issue.  How, if at all, does this help him domestically in politics here? 

RON BROWNSTEIN, ATLANTIC MEDIA:  Well, first of all, your point is correct, Mike.  I think a lot of things that have happened up to this point in his presidency have put him in a stronger position to organize a kind of unified response from the world.  The overall trajectory of his discussion of international organizations, the fact that he has made clear he was willing to have a negotiation with Iran, a more direct kind of engagement, and also, frankly, the decision on missile defense that removed some hurdles to the relationship with Russia. 

Those all put him in a stronger position to try to organize an international coalition here.  The hard truth is that this is one of those problems in which even the combined influence of a unified outside world may have limited capacity to change the trajectory of policy in Iran.  This is going to be a difficult and frustrating problem for Obama, in all likelihood, as it was for President Bush.

So, on the one hand, I think it does elevate his stature in the world.  That cannot help but help him at home.  On the other hand, it is going to be a persistent headache, and one that is unlikely to lead to the equivalent of a VE Day any time soon. 

BARNICLE:  OK.  Ron Brownstein, David Gregory, thanks very much. 

Chris Matthews returns Monday at 5:00 and 7:00 Eastern for more HARDBALL. 

Right now, it‘s time for “THE ED SHOW” with Ed Schultz.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

END   

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