Earlier this month, the so-called EU Three--Britain, France and Germany-- achieved an important victory for global security, convincing Iran to suspend its uranium enrichment and plutonium reprocessing activities pending further negotiation on its nuclear question. Though Iran claims that it does not desire a nuclear bomb, the West has long been skeptical of the oil-rich state's contention that it seeks a nuclear fuel cycle for energy purposes alone. Europe and the United States (and of course Israel) will sleep better knowing that Tehran is not pursuing enrichment activities, whatever their alleged purpose.

But the EU3 agreement, which fails to discuss consequences for Iran if it breaks the deal, is vulnerable to being undermined not only by Iran but also by the United States; both have already raised eyebrows in the wake of the accord. Iran raced to produce uranium hexafluoride, a gas that can be enriched into bomb fuel, before it began to observe the temporary suspension on Monday. And both President George W. Bush and outgoing Secretary of State Colin Powell have publicly aired their suspicions that Iran will continue its drive for nuclear weapons under cover of the deal.

At the moment, administration hawks are pressing to confront the mullahs at the United Nations Security Council, where economic sanctions could be considered; calls for using force and for regime change are likely to follow.

Military action is inadvisable at this point, because of a dearth of solid intelligence and the secretive, geographically diffuse nature of Iran's nuclear sites. If the issue reaches the Security Council with the United States and Europe continuing along divergent paths, the inevitable deadlock will deal a severe and lasting blow to international security. Therefore, the agreement must be fortified to keep the Iranians honest, the Europeans effectively engaged and the U.S. hawks bridled.

This can be achieved through a U.S.-European accord laying out trigger mechanisms for specified consequences if Iran violates certain benchmarks. For example, if Iran fails to allow inspectors the access accorded by the Nuclear Nonproliferation Treaty's additional protocol--which Iran is provisionally observing pending ratification--or resumes enrichment and centrifuge-building activities, it could face severe economic sanctions, censure by the Security Council (necessitating cooperation from Russia and China), or in the event of hostility, a forceful response.

We don't know yet whether Tehran will play by the rules. The regime has mastered the art of behaving badly and then seeking rewards for getting back into line. To date, the Europeans have played into its hands, offering carrots for compliance without wielding sticks to punish violations.

Therefore, the Bush administration's apparent comfort with a military option can serve as an important deterrent against Iranian cheating, arming the EU3 agreement with teeth that it would not otherwise have. Iran desires economic incentives but does not yet desperately need them; without a credible threat of U.S.-backed sanctions imposed by the international community, the mullahs can simply decide one day that the restrictions have ceased to be worth their while, and break any deal as though it were merely a business contract.

For the United States, accepting the EU3's carrot-based approach (provided the benchmarks are added) will show the world that it still supports negotiated diplomacy and multilateralism, even in cases where military threats loom. Participating in this framework will also send a message to Iran that the United States is not ruling out renewed relations. This would resonate with the largely pro-American Iranian populace, who despise their regime and are seeking inroads to break free of it.

But if the United States instead presents itself as a unilateralist maverick, it will hinder its own interests; the only thing Iranians disdain more than the mullahs is outside meddling with their deeply nationalistic desire for self-determination. The more overtly hostile the United States acts toward Iran, the more the mullahs are able to spin America's posture to alienate Iranians against the "Great Satan."

The way to keep the Iranian regime in check while speeding its demise is to insure the nuclear agreement through benchmarks and triggers, and then give the mullahs exactly what they ask for in terms of increased access to international institutions like the World Trade Organization.

Such carrots can also be Trojan Horses, allowing the forces of democratic reform within Iran to blossom by enabling pro-democracy elements to make global connections. The U.S. and Europe should saddle up those horses together.

We've been down this road before: A crisis threatens global security, and the international community is not coming together to deal with it. Hawks in the U.S. administration see the Europeans as too timid to use force and reliant on diplomacy to a fault, while many Europeans see the United States as trigger-happy and too impatient with negotiated settlements. This lack of cohesion damaged the legitimacy of the American-led war in Iraq and left U.S.-European relations in tatters. A similar disunity jeopardizes current attempts to manage Iran's nuclear aspirations, even though both sides agree that the threat posed by a nuclear Iran is grave and real.

Departing Deputy Secretary of State Richard L. Armitage positively spun the divergent U.S. and European approaches to Iran: "The [diplomatic] incentives of the Europeans," he said, "only work against the backdrop of the United States being strong and firm on this issue. In the vernacular, it's kind of a good cop/bad cop arrangement. If it works, we'll all have been successful." The problem with Armitage's hopeful outlook is that the good cop/bad cop strategy works only if pursued consciously and in coordination, and the U.S. and European approaches do not reflect that yet. In fact, they seem headed in opposite directions.

The good cops--Britain, France and Germany--recently persuaded Iran to suspend all uranium enrichment-related activities until they reach a final accord. If the mullahs cooperate, they will receive numerous economic carrots, including possible membership in the World Trade Organization (the U.S. would have to agree) and improved trade relations.

In October 2003, when the International Atomic Energy Agency was prepared to take its negative report on Iran's nuclear program to the U.N. Security Council, the mullahs cut a similar deal with the Europeans, promising to suspend all enrichment-related activities. But Iran soon grew impatient with the agreement and resumed efforts to produce the gas that feeds uranium enrichment. It similarly rushed to make as much of that gas as possible before the latest accord's deadline, undercutting confidence in the deal on both sides of the Atlantic. In another bad-faith move, Iran announced last week that it wanted to keep operating uranium-enrichment equipment for research purposes, backing off its pledge to freeze all such activities.

Enter the bad cop--the United States. It has pushed to refer the question of Iran's nuclear aspirations to the Security Council. When Secretary of State Colin L. Powell steps down, the hawkish voices in his department will probably intensify and gain influence, especially if the mullahs break the newest deal.

Armitage might be right that the discordant U.S.-European approaches will push the mullahs to hold to the deal. But the U.S. will be uncomfortable with an agreement that does not insist on any means of enforcement or verification, as is the case with the latest accord.

Iran knows that the war in Iraq colors U.S. conduct toward it. The worse Iraq gets, the less Iran worries--and the mullahs don't seem too worried at the moment. But if they break the accord with the Europeans and the Europeans respond timidly and U.S. resources are freed up as a result of an improving situation in Iraq, the U.S. could take on Iran alone--to everyone's detriment. To avoid this risk, the U.S. and Europe need to harmonize their approaches and develop a coordinated strategy for Iran. The best way to accomplish this is to agree in advance on the consequences Iran will face if it violates its commitments. For example, if the mullahs renege on the latest deal, frustrate the monitoring and verification efforts of IAEA inspectors or fail to ratify an addition to the Nuclear Non-Proliferation Treaty that allows for more invasive inspections, the U.S. and Europe should go to the Security Council, impose economic sanctions or, in the worst case, take military action.

Fortunately, diplomatic disunity over Iran does not run as deep as it did over Iraq, where even the nature of the threat was a bone of contention. Both the U.S. and Europe are worried about a nuclear Iran, and they feel strongly about enforcing the rules of nonproliferation. In June 2003, European foreign ministers required only 45 minutes to approve a document that endorsed U.N.-sanctioned use of force as a last resort against proliferators, as well as "political and diplomatic preventative measures."

If the Europeans agree to leave all responses on the table and to act decisively at the first sign of Iranian mischief, the United States would be foolish not to form a partnership with them. (It's also important that the U.S. set a better example as a member of the nonproliferation community by abandoning plans to build new mini-nuclear weapons and ratifying the Comprehensive Test Ban Treaty.)

The role the U.S. forges for itself in dealing with Iran will have significance beyond reinvesting in international order or responding to the mullahs' nuclear ambitions. Iran's despotic regime will collapse some day, and there will be a "morning after" similar to that in Iraq, where reconstruction efforts have floundered because U.S. planners underestimated the challenge of nation-building and the need for international support to make it work. When Iran makes its move toward a better government, the U.S. should be in a position to lead a coherent, collective international effort to help it get off the ground.

Yet since the severing of U.S.-Iranian ties in 1980, the U.S. has been slack in developing a viable Iran policy. Iran's nuclear ambition should be motive enough to reverse this inattention. U.S. policy toward Iran must cease to be reactive, as it is now.

In addition to working with the Europeans to curb the mullahs' nuclear efforts, the U.S. should begin crafting a strategy to work toward--and then with--a democratic Iran. Supporting a government that complies with its international obligations is certainly preferable to containing one that thwarts them. By getting involved now, the U.S. can do much to show Iranians that it will be a friend to a free Iran. A democratic Iran may still want a nuclear bomb as a matter of national pride. But a less threatening, pro-diplomacy U.S. would be in a stronger position to argue the benefits of membership in the nonproliferation community rather than life as a rogue power.

Participating in a multilateral approach to Iran's nuclear program is a great place to start. In doing so, the U.S. will signal to Iranians that its aggressive position does not reflect a desire to remake Iran in its own image but rather a desire to achieve, alongside Europe, a substantial victory for nonproliferation and international security.

In an Oct. 20 talk co-sponsored by SIIS and the World Affairs Council of Northern California, Philip Zelikow, executive director of the National Commission on Terrorist Attacks Upon the United States -- better known as the 9/11 Commission -- discussed the United States' continued vulnerability to terrorist attacks; the intelligence reforms that are needed to better protect the country; the attacks and accusations he has endured as head of the controversial commission; and his satisfaction that the body's final report has been widely disseminated to the American public, in a book that has become a best-seller. Zelikow's talk was held at Kresge Auditorium on the Stanford campus.

Zelikow is the White Burkett Miller Professor of History at the University of Virginia, and is director of the Miller Center of Public Affairs (also at the University of Virginia), the nation's largest research center on the American presidency. Before assuming his present positions in Virginia, he served in government with the Navy, the State Department and the National Security Council, and then taught at Harvard University. He was a member of the President's Foreign Intelligence Advisory Board and served as executive director of the National Commission on Federal Election Reform, chaired by former Presidents Carter and Ford. He was also the executive director of the Markle Foundation's Task Force on National Security in the Information Age.

Zelikow's books include The Kennedy Tapes (with Ernest May), Germany Unified and Europe Transformed (with Condoleezza Rice), and the rewritten Essence of Decision (with Graham Allison). He has also been the director of the Aspen Strategy Group, a policy program of the Aspen Institute.

Zelikow's talk was covered by the Stanford Daily and Stanford Report.

San Francisco -- Offshoring is just one of many global forces impacting job creation and destruction in the Bay Area and cannot be viewed in isolation from the key trends enabling it, such as globalization, technology-driven improvements in productivity and business disintermediation. Efforts to prevent offshoring will not be successful and are likely to come at considerable economic cost, according to a new study released today.

Sponsored by Joint Venture: Silicon Valley Network, the Bay Area Economic Forum and the Stanford Project on Regions of Innovation and Entrepreneurship (SPRIE), with research and project support from global management consulting firm A.T. Kearney, the study analyzed global trends, regional capabilities and the Bay Area job market.

Findings from the study, the first regionally focused on the Bay Area, were based on 120 interviews, analysis of 9,000 job listings and other primary and secondary research.

The Bay Area already has more experience with globalization and offshoring than other parts of the U.S., the study reports. Bay Area manufacturers earn almost 60 percent of their revenues in overseas markets. Analysis done as part of the study revealed 94 percent of companies in the semiconductor and semiconductor equipment manufacturing and software clusters - two driving sectors in the Bay Area in terms of employment and payroll contribution - are already using offshore resources.

This does not mean all jobs are going offshore. The study also found one-in-four job postings for large companies in those sectors during April 2004 was for positions in the Bay Area.

"The research makes clear that global trends will force continued creation and destruction of jobs in the Bay Area. These trends can't be reversed. Policies and investment should be directed toward helping the region strengthen its core capabilities to compete effectively on a national and global basis" said Sean Randolph, President & CEO of the Bay Area Economic Forum.

The study calls for policymakers to maintain strong support for basic research, invest in education to ensure a competitive local workforce and to address vulnerabilities in the regional business environment including housing, transportation and business regulations that hinder local job creation. Business leaders need to support transition programs and consider investment in local employee development to meet their future job needs.

The study found the Bay Area is losing ground to other regions in the U.S. and overseas in three competitive capabilities: mass production, back-office (transactional) operations and product and process enhancement. The competitive erosion in the latter is new. It appears that the Bay Area is rapidly losing out to other regions in occupations associated with engineering focused on cost reduction, fine-tuning processes and expanding product features. These engineering jobs, along with manufacturing and administration-related occupations, are expected to decline as the skills required for those functions are sourced more cost effectively in other regions of the United States and abroad.

The study also identified five competitive capabilities that investors and business leaders believe are key strengths of the Bay Area. In addition to three capabilities traditionally linked to the region (entrepreneurship/new business creation, research in advanced technologies and bringing new concepts to market), the analysis pointed to two other competitive capabilities not always in the spotlight:

• Cross-disciplinary research - coordinating and integrating advanced learning across industries and scientific disciplines.
• Global integrated management - managing and coordinating globally distributed business functions and networks.

Jobs aligned with these five regional strengths, such as high-level research, strategic marketing and global business and headquarter management activities, are expected to experience solid growth.

"The findings confirm that the region should continue to attract talent and foster innovation, start-up activity and job creation, as technology companies are launched and commercialized," said Russell Hancock, President and CEO of Joint Venture: Silicon Valley Network.

The Bay Area's strengths make the region a leader in job creation in early stages of the business lifecycle, but its weaknesses lead to job growth outside the region in the later stages. As a result, the study says, the Bay Area will continue to incubate and develop new businesses, a process that has historically been the core growth engine for the local job market.

"Companies founded in the Bay Area will typically maintain the majority of their workforce in the region until their first products or services gain market traction and key business processes stabilize," said John Ciacchella, Vice President with A.T. Kearney. "However, as these companies expand and mature, many of the new jobs that stay local will focus on management of expanding business operations that are outsourced, offshored and distributed to other regions."

The Bay Area also is well positioned in the industries likely to spawn new technology

start-ups, according to the study's job market analysis and interviews. Beyond its leading role in information technology, the Bay Area has the highest concentration of biotechnology firms in the country and more nanotechnology firms than all countries except Germany.

"How jobs in a region are affected by global trends depends on the competitiveness of the region's capabilities," said Marguerite Gong Hancock, Associate Director of SPRIE. "Despite a rise in the capabilities of other entrepreneurial regions globally, the Bay Area continues to lead in many of the capabilities considered most necessary for innovation and new business creation"

The study findings will be presented at a public event on Thursday, July 15, at Stanford University, where a panel of business and community leaders will discuss the report's findings and implications and take questions from the audience. The panel will be moderated by Paul Laudicina, managing director of A.T. Kearney's Global Business Policy Council, and includes:

• Edward Barnholt (Chairman, President & CEO, Agilent Technologies)
• William T. Coleman (Founder, Chairman & CEO, Cassatt Corporation, and Vice Chairman, Silicon Valley Manufacturing Group)
• Anula K. Jayasuriya (Venture Partner, ATP Capital LP)
• William F. Miller (Professor Emeritus, Stanford Graduate School of Business)
• The Honorable Joe Nation, California State Assembly

BAY AREA ECONOMIC FORUM
Bay Area Economic Forum (www.bayeconfor.org) is a public-private partnership of senior business, government, university, labor and community leaders, develops and implements projects that: support the vitality and competitiveness of the regional economy, and enhance the quality of life of the regions residents. Sponsored by the Bay Area Council a business organization of more than 250 CEOs and major employers, and the Association of Bay Area Governments, representing the region's 101 cities and nine counties, the Bay Area Economic Forum provides a shared platform for leaders to act on key issues affecting the regional economy.

JOINT VENTURE: SILICON VALLEY NETWORK
Joint Venture: Silicon Valley Network (www.jointventure.org) is a nonprofit organization that provides analysis and action on issues affecting the economy and quality of life in Silicon Valley. The organization brings together new and established leaders from business, labor, government, education, non-profits, and the broader community to build a sustainable region that is poised for competition in the global economy.

STANFORD PROJECT ON REGIONS OF INNOVATION AND ENTREPRENEURSHIP
The Stanford Project on Regions of Innovation and Entrepreneurship (http://sprie.stanford.edu), or SPRIE, is dedicated to the understanding and practice of the nexus of innovation and entrepreneurship in the leading regions around the world. Current research focuses on Silicon Valley and high technology regions in 6 countries in Asia: People's Republic of China, Taiwan, Japan, Korea, Singapore and India. SPRIE fulfills its mission through interdisciplinary and international collaborative research, seminars and conferences, publications and briefings for industry and government leaders.

A graduation ceremony held at CISAC on June 11 recognized the 10 undergraduate students who this year have completed the center's Interschool Honors Program in International Security Studies, and the ceremony honored four of the students with awards for excellence on their honors theses.

The award-winners are as follows:

*John Cieslewicz, a computer science major, received a William J. Perry Award for his thesis on "Attacks and Accidents: Policy to Protect the Power Grid's Critical Computing and Communication Needs."

*Elizabeth Eraker, a history major, received the John and Marjorie Hines Prize in American History for her thesis on "Cities as Critical Nodes: The Influence of Air Force Doctrine in the Targeting of the Atomic Bomb."

*Daniel Kliman, a political science major, also received a William J. Perry Award for his thesis on "Japan's Defense Policy in the Post-9/11 World: Toward a 'Normal' Nation."

*Anya Vodopyanov, who is studying history and political science, received a Firestone Award for her thesis on "A Watchful Eye Behind the Iron Curtain: The U.S. Military Liaison Mission in East Germany, 1953-61."

At a CISAC Directors' Seminar on June 9, Cieslewicz, Kliman and Vodopyanov presented their award-winning theses to fellow students, faculty members and others in the CISAC community.

The other six students who completed the CISAC Honors Program are the following:

Anne-Marie Corley, Slavic languages and literatures

Dana Craig, political science

Andrea Everett, political science

Tarek Ghani, symbolic systems

Lengsfelder, Savannah, international relations

Vaynman, Jane, international relations

Begun in 2000 to help develop the next generation of security specialists, the CISAC Honors Program accepts 12 Stanford undergraduate students each year, from all disciplines throughout the university. Those selected for the program attend the CISAC honors college in Washington, D.C., complete an internship with a security-related organization, attend a year-long core seminar on international security research, and produce an honors thesis with policy implications for international security. After fulfilling their individual department course requirements and completing the Honors Program, the participating students graduate in their major with an honors certificate in international security studies.