Rice says sanctions affecting Iran

Secretary of State Condoleezza Rice said the sting of international sanctions is forcing at least some Iranian leaders to second-guess the regime's rebuff of world demands that it roll back its disputed nuclear program.

"The Iranians are paying real costs for their behavior," Rice told The Associated Press on Monday. "It hasn't yet convinced them that they have to change their course, but there are plenty of voices being heard inside that government that are talking about the costs and about whether or not they've made a mistake in getting themselves so deeply isolated."

Rice did not name names, and Iran's diffuse power structure can make it hard for outsiders, especially the United States, to know whose opinion matters in setting policy.

The United States helped lead a drive at the United Nations to sanction Iran for an extensive nuclear development program that many nations suspect could lead to an atomic weapon. The sanctions were never as strong as the US wanted, and they have had no visible effect on Iranian policy. Rice insisted, however, that UN and other penalties are forcing hard financial choices on a nation already under economic stress.

Without predicting that Iran would heed international calls to stop its nuclear activities, Rice said there is reason to believe the accumulating costs created by economic sanctions will make a difference at some point.

"Sooner or later they are going to have to deal with the fact – particularly with declining oil prices – that those costs are going to become pretty acute," she said.

The Bush administration's top diplomat, in a farewell interview with AP reporters and editors at the State Department, strongly defended the US intervention in Iraq as worth the cost in lives, money and heartache.

Trying to put the unsettling image of an Iraqi television reporter hurling his shoes at a visiting President Bush in the best possible light, Rice said it demonstrates how far the former dictatorship has come. The shoe incident Sunday in Baghdad "is a kind of sign of the freedom that people feel in Iraq," Rice said.

Bush brushed the incident off, and Rice called it insignificant in comparison with the development of a pluralistic democratic government in a country once devastated by Saddam Hussein's brutal rule.

Rice also said that the US wants the UN Security Council to enshrine Bush's Israeli-Palestinian peace effort as the best chance yet to end the six-decade conflict. The talks begun at Annapolis, last year should not be dropped by the incoming Obama administration for failure to meet a stated goal of a peace framework on Bush's watch, she said.

"The Security Council will make clear that that is the basis" for continuing peace efforts, Rice said.

The resolution calls on the Israelis and Palestinians "to fulfill their obligations" under the Annapolis process and for all nations and international groups "to contribute to an atmosphere conducive to negotiations."