Did the Bush Administration miss a major opportunity in the spring of 2003 to engage Iran and stabilize the Middle East? Two high-ranking former Administration officials contend it did.

In May 2003, Iran faxed a letter to the State Department, via the Swiss ambassador to Iran, proposing a sweeping realignment in US-Iranian relations. Iran offered “full transparency” on its nuclear enrichment program, to take “decisive action against any terrorists (above all Al Qaeda) on Iranian territory,” to help stabilize Iraq and establish democratic institutions there, to disarm Hezbollah, to stop “material support to Palestinian opposition groups,” and accept a two-state solution to the Israeli-Palestinian conflict.

In exchange, the Iranian government asked the US government to foreswear regime change, abolish sanctions, crack down on the terrorist group MEK and allow Iran to develop peaceful nuclear technology.

“What the Iranians offered in 2003 was nothing short of a Nixon-in-China breakthrough in US-Iranian relations,” said Flynt Leverett, the Bush Administration’s former top official on Middle East policy at the National Security Council, at a conference on Iran sponsored by the New America Foundation today. “The Bush Administration, for its own reasons, rejected it.”

According to Leverett, then-Secretary of State Colin Powell said he “couldn’t sell it at the White House.” Added Lawrence Wilkerson, Powell’s top deputy: “I doubt Powell thought he had the power or political capitol” to take on Dick Cheney or Donald Rumsfeld, who opposed negotiations with Iran.

Then-National Security Advisor Condoleezza Rice could have pushed President Bush to begin talks with Iran. But Rice did nothing–and now claims she never saw the memo. “I just don’t remember ever seeing any such thing,” she told the House Foreign Affairs Committee last week.

Leverett says Rice is lying. She’s acknowledged the existence of the Iranian offer in previous interviews and discussed it with him personally. “She owes Congress an apology for saying she has never seen that document,” he says.

Both Leverett and Wilkerson stressed that it is not to late to begin negotiating with Iran, as the Baker-Hamilton Commission and countless other foreign policy experts have urged. “If the Administration comes to its senses, it’s still possible to put US-Iranian relations on a more positive trajectory,” says Leverett.

That means favoring diplomacy over sanctions, unproven accusations and threats of military action. It’s up to Congress to keep the Administration honest. The House Foreign Affairs Committee should invite Rice back and ask her why she can’t keep her facts straight.