EXCLUSIVE: Sultan Qaboos bin Said, Oman’s reclusive leader and intermediary on Iran, speaks with Fox News correspondent Judith Miller

Oman's ruler, Sultan Qaboos bin Said, a longtime, discreet intermediary with Iran, says that Iran is seriously seeking a way out of American-led sanctions over its nuclear program and urges the United States to re-engage the regime on a variety of issues, not just its nuclear program.

“No one in the world can live on his own in today’s world,” the sultan said, referring to Iran.

“They don’t want to bring upon themselves more trouble. They know they are mistrusted and must convince the world of their peaceful intentions.”

Specifically, the sultan added, Iran understands that this means working more closely with the International Atomic Energy Agency to increase international nuclear inspections of its nuclear program and returning to talks with the U.S. and key Security Council members, Britain, France, Russia, China, as well as Germany, known as the P-5 plus 1. Last Thursday, Iranian President Mahmoud Ahmadinejad proposed such talks.

The sultan urged President Obama to take Iran up on its offer. “The United States and Iran should sit together and talk,” he said.

Sultan Qaboos’ conviction that Iran’s alleged pursuit of nuclear weapons can and must be resolved peacefully was among several notes of optimism he struck during a rare, four-hour interview -- the first in-depth interview he has given an American reporter since 1997. The meeting took place last week at Hisn Al Shomoukh palace, about 90 miles from Muscat, the capital.

He disclosed that Oman, at America’s “hint” for assistance, had recently conveyed to the highest levels of the Iranian government a warning about the adverse potential consequences of closing the Strait of Hormuz. How precisely that message was conveyed -- "we have our ways and means," he said -- he would not disclose. But he added that he believes the message was clearly received.

"No one will block the Strait of Hormuz," Qaboos asserted.

Iran, he added, may also be preparing to adopt unspecified reforms.

The sultan shared his views before Defense Secretary Leon Panetta said that Iran could acquire a nuclear bomb within a year. But Sultan Qaboos disputed the notion that this was Tehran’s intent.

“They now want to persuade the rest of the world that while they are seeking a nuclear capability -- like Japan -- they are not seeking weapons per se,” he said. He claims to believe them.

Asked why the West should try again to negotiate with Iran, since Tehran had reneged on an earlier agreement to reduce stocks of low enriched uranium which, if further enriched, could provide fuel for a nuclear bomb, he said that Iran’s economic challenges had now grown more severe as a result of economic sanctions.

But Washington remains skeptical, noting that Tehran has not yet responded to the European Union's demand for a specific proposal from Iran indicating that its desire to talk is more than merely a time-buying tactic.

Asked about reports that Israel was allegedly weighing a military strike to degrade and delay Iran’s nuclear program, Qaboos replied that while he understood that “Israel must be looking at all the options and keeping all of them open,” he hoped that the situation would not “deteriorate to the point that Israel feels compelled to take drastic measures.”

“Inshallah it will not happen,” the sultan stressed. But were Israel to strike, “God forbid,” he added, all parties would have to “do what you can to avoid an escalation.”

“Peaceful solutions are always preferred,” he said.

For Israel, especially, the sultan said, there was no viable alternative to resuming serious talks with the Palestinians. “These two peoples must find a way to live together,” he said.

The sultan expressed optimism about Yemen, a country that has been in constant turmoil since the outbreak of the Arab spring last year. He said he believed that Yemen would stabilize now that Yemeni President Ali Abdullah Saleh, who came first to Muscat before traveling to the U.S. for medical treatment last Saturday, had agreed to leave Yemen, at least temporarily. “He realized that he should be part of the solution, not the problem,” Qaboos said during the interview in English, which he speaks fluently and with a slight British accent.

The Sultan, who celebrated his 40th year in power last November, seemed far less optimistic about developments in Syria, Egypt, and prospects for a resumption of peace talks between Israel and the Palestinians.

With respect to Egypt, which just marked the one-year anniversary of the uprising that prompted President Hosni Mubarak’s ouster, Qaboos said that he felt personally sorry for the Egyptian president, who is ailing and on trial for capital crimes, because “it didn’t have to end this way.”

“Maybe there were other alternatives, such as reform,” he said. But Qaboos added that he wanted to hear from Mubarak’s defenders. “A proper trial should be conducted and the truth should come out.” The sultan also indirectly cautioned both Egypt’s armed forces and militant Islamists from clinging to, or trying to usurp power. “No one party or religious group should impose its will,” he said. “They all need to work together.”

As for Syria, while refraining from criticizing President Bashar Assad by name, he urged Damascus to accept the Arab League’s initiative asking Assad to step aside so that a political transition can begin. The Syrian government has rejected the Arab group’s resolution. But Sultan Qaboos urged persistence and patience. It had taken time to convince President Saleh of Yemen that Oman’s advice to leave was sound. Because Saleh was granted immunity from political charges, the sultan said, the Yemeni president felt that he could eventually return to Yemen to compete for power democratically. The Arab League resolution, as written, would enable Assad, who heads his own party, to “remain as leader of that and compete in a democratic system.”

Oman has repeatedly used what the sultan called his country’s “good ties” to Iran and his other neighbors to free hostages and help defuse potential politically explosive situations. A diplomatic cable disclosed by WikiLeaks says that Oman helped free British sailors captured by Iran’s navy in 2007.

According to the state-run Omani news agency, Oman also helped free three French aid workers being held hostage by Al Qaeda militants in Yemen by paying a sum which officials here declined to disclose but that diplomats estimate at several million dollars. Secretary of State Hillary Clinton has traveled here twice, once to thank Sultan Qaboos for his role in freeing American hikers being held by Tehran. Oman reportedly paid some $1.5 million to Iran and sent a plane to transport the hiker hostages out of the country.

To demonstrate his support for a “friend” in trouble, the sultan said he traveled to Iran for the first time ever during the Green uprising in 2009. But another Wikileaks cable, dated 2010, put such gestures in a more pragmatic light. “Oman views Iran as the strategic threat to the region but has chosen to manage the threat by fostering strong working relations with Tehran," the cable asserts.

Clinton has come here to Muscat twice to meet with the sultan, whom she has lavishly praised on several occasions.

The respect is clearly mutual. The sultan called Clinton "a lady I admire." He said he had not met President Obama, but had talked to him by phone several times. “He is a capable man,” the sultan said, with somewhat more measured enthusiasm.