[Senate Hearing 113-198]
[From the U.S. Government Printing Office]
S. Hrg. 113-198
U.S. POLICY TOWARD IRAN
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
MAY 15, 2013
__________
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COMMITTEE ON FOREIGN RELATIONS
ROBERT MENENDEZ, New Jersey, Chairman
BARBARA BOXER, California BOB CORKER, Tennessee
BENJAMIN L. CARDIN, Maryland JAMES E. RISCH, Idaho
ROBERT P. CASEY, Jr., Pennsylvania MARCO RUBIO, Florida
JEANNE SHAHEEN, New Hampshire RON JOHNSON, Wisconsin
CHRISTOPHER A. COONS, Delaware JEFF FLAKE, Arizona
RICHARD J. DURBIN, Illinois JOHN McCAIN, Arizona
TOM UDALL, New Mexico JOHN BARRASSO, Wyoming
CHRISTOPHER MURPHY, Connecticut RAND PAUL, Kentucky
TIM KAINE, Virginia
Daniel E. O'Brien, Staff Director
Lester E. Munson III, Republican Staff Director
(ii)
C O N T E N T S
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Page
Cohen, Hon. David S., Under Secretary for Terrorism and Financial
Intelligence, U.S. Department of the Treasury, Washington, DC.. 11
Prepared statement........................................... 13
Corker, Hon. Bob, U.S. Senator from Tennessee, opening statement. 2
Menendez, Hon. Robert, U.S. Senator from New Jersey, opening
statement...................................................... 1
Sherman, Hon. Wendy, Under Secretary for Political Affairs, U.S.
Department of State, Washington, DC............................ 3
Prepared statement........................................... 6
Additional Material Submitted for the Record
OFAC Publication Submitted by David Cohen as an Attachment to his
Prepared Statement............................................. 45
(iii)
U.S. POLICY TOWARD IRAN
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WEDNESDAY, MAY 15, 2013
U.S. Senate,
Committee on Foreign Relations,
Washington, DC.
The committee met, pursuant to notice, at 9:02 a.m., in
room SD-419, Dirksen Senate Office Building, Hon. Robert
Menendez (chairman of the committee) presiding.
Present: Senators Menendez, Cardin, Casey, Coons, Udall,
Murphy, Kaine, Corker, Risch, Johnson, and McCain.
OPENING STATEMENT OF HON. ROBERT MENENDEZ,
U.S. SENATOR FROM NEW JERSEY
The Chairman. Good morning. This hearing of the Senate
Foreign Relations Committee will come to order. Today we are
here to take a close look at and discuss United States policy
toward Iran. Iran's provocative actions threaten not just
regional stability, but pose an existential threat to our ally
Israel and a threat to United States national security. Iran
continues to export terrorist activity directly and through
proxies like Hezbollah. It actively supports the Assad regime
in Syria with fighters, arms, and petroleum, and its drive for
nuclear weapons is unrelenting, placing Iran at the top of our
list of national security concerns. In my view, it remains the
paramount national security challenge we face, certainly in the
Middle East, if not the world.
I called this hearing today because we are now at a
crossroads in our Iran policy and the question today is what do
we do next. The Obama administration, in concert with Congress,
has pursued the dual-track approach of diplomacy and sanctions.
Last week members of the committee met with Lady Ashton, who
has led the diplomatic track with the P5+1 along with Under
Secretary Sherman. The talks have been central in demonstrating
to the world that it is Iran and not the United States that is
acting in bad faith and it is Iran that, through its
obstinance, has helped galvanize the international community to
increase the pressure.
But the talks have failed to achieve their central
objective, getting Iran to make concessions on the nuclear
weapons program. It is clear to me that we cannot allow the
Iranians to continue to drag their feet and buy time even as
the centrifuges keep spinning.
A nuclear-armed Iran is not an option, which is why I have
been fully dedicated to do everything we can to stop Iran from
ever crossing that threshold and why I introduced Senate
Resolution 65 with Senator Graham that makes clear that a
nuclear Iran is not an option and that the United States has
Israel's back.
In my view, it is necessary that we continue to apply
pressure and that we must bring along the international
community in our effort. Although Iran's crude oil exports have
been cut in half from 2.5 million barrels per day in 2011 to
approximately 1.25 million barrels per day now, Iran still had
energy sector exports of exported $83 billion in 2012,
including $60 billion in oil and another $23 billion in natural
gas, fuel oil, and condensates.
So while the sanctions are working, they are not enough and
they are not working fast enough. At this moment we need to
double down, I believe, on four fronts: First, we need to
encourage further reductions in energy sector purchases from
Iran, including purchases of petroleum, fuel oil, and
condensates, and prevent Iran from engaging in trade in
precious metals to circumvent the sanctions.
Second, we need to ensure that we have prohibited trade
with Iran with respect to all dual-use items that can be used
in Iran's nuclear program. That means adding, for example,
additional industry sectors to the trade prohibition list.
Third, we need to ask the international community to ramp
up the pressure and change Teheran's calculus. A nuclear Iran,
after all, isn't only an American problem.
And fourth, the time may have also come to look more
seriously at all options, and that would include increasing
military pressure against Iran.
I believe there is still time for diplomacy to work, but
increased military pressure could signal to the Supreme Leader
that a nuclear program will undermine the security of his
regime, not improve it. Fundamentally, the challenge remains a
difficult one and we are walking a very fine line: How do we
convince the Supreme Leader that his continued pursuit of
nuclear weapons is threatening the very existence of his
regime? How do we convince him that this is about his nuclear
weapons program, not regime change?
To help us understand the current state of affairs and
explore ways to meet this national security challenge, we are
joined today by Wendy Sherman, the Under Secretary of State for
Political Affairs, and David Cohen, the Under Secretary of
Treasury for Terrorism and Financial Intelligence. I want to
thank you both for making the effort to be here today. We had
originally--after this hearing we were going to continue in a
classified setting, but because of about 7 to 10 votes that are
going to be held, we, No. 1, appreciate that everybody
accommodated their schedules to starting a half-hour earlier,
and we will be unable at this point to do that classified
hearing. We look forward to scheduling that at a future date.
With that, let me turn to the distinguished ranking member,
Senator Corker, for his comments.
OPENING STATEMENT OF HON. BOB CORKER,
U.S. SENATOR FROM TENNESSEE
Senator Corker. Thank you, Mr. Chairman, and thanks for
calling this hearing.
Thanks to the two of you for being here. I know we have
done this many times. I think you know we will be considering
legislation a little bit later this year to deal potentially
with additional sanctions and activities around Iran. One of
the reasons is, in spite of the inflation, in spite of the
issues that they are dealing with internally, there are still
questions as to whether this is going to cause a behavior
change with Iran, and so continued sanctions will be looked
at--additional sanctions.
I guess at some point we are going to have to make a
determination as to when sanctions are having no effect and we
have to move to some other kind of activity, and I think that
is what the chairman is referring to when he says that we may
soon be at a crossroads. The question is, Will Iran ever
negotiate away their nuclear program? I think that is certainly
highly questionable.
So another question is, What does ``yes'' look like? I
mean, if they were to negotiate with us on a nuclear program
and we came to a good end there, how do we deal with Syria? How
do we deal with the human rights piece? So I know that we will
discuss that during this hearing. I appreciate you being here.
I know that we do not really expect any changes within the
country between now and June because an election is under way,
but certainly would like to understand what you think may
happen after that. I know a great deal of that depends upon who
is elected.
But thank you for being here today and I look forward to
your testimony and the questions that come thereafter.
The Chairman. Thank you, Senator Corker.
With that, we welcome both of your testimonies, starting
with Secretary Sherman. Your full statements will be included
in the record and we ask you to synthesize that so we can get
into a discussion.
Madam Secretary.
STATEMENT OF HON. WENDY SHERMAN, UNDER SECRETARY FOR POLITICAL
AFFAIRS, U.S. DEPARTMENT OF STATE, WASHINGTON, DC
Ms. Sherman. Thank you very much, Mr. Chairman, Ranking
Member Corker, Senator Cardin, and other Senators who I am sure
will join. Good morning and thank you for the invitation to
testify along with my colleague about one of our top foreign
policy and national security priorities, and that is, of
course, Iran.
Iran's leaders want the world to think of their country as
a legitimate power and a regional leader. Yet the costly and
destructive decisions the regime is making day after day
undermine Iran as a credible player on the world stage. What's
more, Iran's policies, from its nuclear weapons ambitions to
its destabilizing regional activities to its abysmal record on
human rights, create a range of challenges to the United States
and every country committed to peace and stability.
The Obama administration takes every single one of these
challenges seriously. We know that our success depends on
effective collaboration here in Washington and with our allies
and partners around the world. We are pursuing a number of
avenues to deal with Iran: resolutions and other actions at the
United Nations, the Human Rights Council, the IAEA, and other
multilateral organizations; wide-ranging sanctions; ensuring we
have the appropriate force posture; leveraging bilateral
relationships to raise a flag when Iran seeks to open up a new
embassy; and engaging the Iranian people through virtual
diplomacy.
Every day, every Bureau in the Department of State, and I
dare say in virtually every other Department in our Government,
has their eye on Iran. We are making clear that Iran's
international legitimacy and the end to their isolation depends
on the choice Iran's leaders are facing right now: change
course or continue to pay the cost of intransigence.
Indeed, we meet here today when two very important things
are taking place. High Representative Ashton, with whom you
met, as you mentioned, Mr. Chairman, last week, will be meeting
with Dr. Saeed Jalili in Istanbul for dinner to press forward
in the negotiation track and the IAEA will be meeting with Iran
today in Vienna to further discuss the structured approach to
meeting the concerns of the international community. In
addition, today the United Nations General Assembly will be
debating Syria, where Iran is a very key and clearly
destructive player.
I would like to discuss a few specific details about the
administration's policy toward Iran. Let me begin with Iran's
nuclear program. From the start of his administration,
President Obama has been clear: The United States will not
allow a nuclear-armed Iran. He has also been clear that Iran's
leaders have a choice: Live up to their international
obligations and become a player on the global stage or continue
down the path toward isolation and devastating results for its
country.
As Iran's leaders have continued to defy international
consensus, we have put in place a dual-track policy of
ratcheting up pressure in the form of sanctions and other
measures, while pursuing a diplomatic option. The sanctions
have hit the Iranian economy hard. Iran's crude exports have
plummeted, costing Iran $3-to-$5 billion per month. The rial
has depreciated more than 50 percent over the past few months
and official inflation is 32.2 percent, although informal
estimates are significantly higher.
Even with sanctions in place, we are making sure that
humanitarian trade continues so that the Iranian people are not
facing impossible hardship. At the same time, we and our P5+1
partners are pushing for a diplomatic solution. We have offered
Iran the opportunity to reduce tensions and move toward a
negotiated solution. Unfortunately, so far the Iranians have
fallen far short with their response. As I mentioned, today in
Istanbul the EU's, Lady Ashton, and Iran's nuclear negotiator,
Saeed Jalili, are meeting, and we hope that Iran shows signs
they are prepared to finally take these talks seriously.
We are clear-eyed in our approach to the P5+1 talks and
seek concrete results. After all, while the window for
negotiation is still open, it will not remain so forever. We
will give diplomacy every chance to succeed, but ultimately the
onus is on Iran.
Beyond Iran's nuclear ambitions, we are also concerned
about the destabilizing influence Iran is casting across the
entire Middle East and beyond--support to the Assad regime,
their closest ally, sustaining the campaign of violence against
the Syrian people; their aid to terrorist organizations is
threatening our ally Israel and innocent civilians worldwide.
That is why we are deepening our military partnerships across
the region, particularly with Israel and the gulf, to defend
against attacks from the very groups supported by Iran's
leader.
I will be just one more moment.
I also want to reiterate our commitment to seeing the safe
return of Robert Levinson, Saeed Abedini, and Amir Hekmati,
Ameri-
can citizens missing or detained in Iran. Today and every day
in
this country, families are wondering where their loved ones
are, whether they are safe, and when they might come home. We
are not going to back down until these Americans are safe and
sound.
And of course, we are deeply concerned about the campaign
of repression Iran's rulers are waging against their own
people: abuse of those who speak out against their government
and harassment of their families; students, lawyers,
journalists, bloggers facing endless intimidation,
discrimination, and incarceration, desperate and vital voices,
whether in a town square or on a Twitter feed, stifled and
punished.
Over nearly 5,000 years, Persian civilization has given the
world innovations in culture, art, medicine, and government.
But today the historic greatness has been set far back. The
limitless potential of Iran's people has been stifled. As
President Obama said in his Nowruz message, all nations would
benefit from the talents and creativity of the Iranian people,
especially its youth. Every day that Iran is isolated from the
international community is a day that we are not working
together, building together, sharing history, and learning
about each other.
Today the United States and Iranian national wrestling
teams are facing off in Madison Square Garden, but, sadly, this
show of healthy competition and good sportsmanship is a deep
exception. Iranians are owed the rights, freedoms, and dignity
we cherish here as the bedrocks of our Nation and that all
people around the world deserve. So we are helping the Iranians
break through the electric curtain, creating a virtual space
for those voices that are suppressed and leveling sanctions to
hold the individuals and organizations behind the repression
accountable.
I will finish by saying that we are closely watching the
upcoming election. Four years ago, the Iranian people spoke out
for human rights, basic dignity, and great opportunity. The
regime responded by shooting demonstrators in the streets and
frightening families in their homes, and today Iran's Guardian
Council, unelected and unaccountable, is sorting through
Presidential contenders, over 600 of them, eliminating
literally hundreds of candidates.
We take no sides in the election, but we know that the
desires and aspirations of the Iranian people must start with
free, fair, and transparent elections. As I said, we are clear-
eyed about the challenges that lie ahead dealing with the
Iranian regime. Congress and this administration have stood
side by side in dealing with this threat to our security and
the security of our allies and to global stability. I'm
confident that we can continue to work together on this very
critical challenge.
Thank you.
[The prepared statement of Ms. Sherman follows:]
Prepared Statement of Under Secretary Wendy Sherman
Chairman Menendez, Ranking Member Corker, distinguished members of
the committee, thank you for inviting me here today to discuss the
administration's approach to the multiple challenges posed by Iran--by
its nuclear ambitions, its support for international terrorism and
destabilizing activities in the region, and its human rights abuses at
home. I want to use this opportunity to speak clearly about these
challenges; to lay out the multivectored strategy we are pursuing to
counter them; and to be clear about the consequential choices ahead for
America and our allies, but especially for Iran, its rulers, and its
people.
the nuclear challenge
Iran's nuclear activity--in violation of its international
obligations and in defiance of the international community--is one of
the greatest global concerns we face. A nuclear-armed Iran would pose a
threat to the region, to the world, and to the future of the global
nuclear proliferation regime. It would risk an arms race in a region
already rife with violence and conflict. A nuclear weapon would
embolden a regime that already spreads instability through its proxies
and threatens chokepoints in the global economy. It would put the
world's most dangerous weapons into the hands of leaders who speak
openly about wiping one of our closest allies, the State of Israel, off
the map. In confronting this challenge, our policy has been clear: we
are determined to prevent Iran from acquiring a nuclear weapon. Our
preference is to resolve this through diplomacy. However, as President
Obama has stated unequivocally, we will not allow Iran to obtain a
nuclear weapon, and there should be no doubt that the United States
will use all elements of American power to achieve that objective.
Iran's Supreme Leader Ayatollah Khamenei has asked why it is that
the international community does not believe that Iran's nuclear
program is for peaceful purposes only. The answer is simple: Iran has
consistently concealed its nuclear activities and continues to do so,
denying required access and information to the International Atomic
Energy Agency. As a signatory to the Nuclear Non-Proliferation Treaty,
Iran has responsibilities to the international community, and it is
that blatant disregard for those responsibilities that has made Iran
the subject of four U.N. Security Council resolutions imposing
mandatory sanctions.
From his very first months in office, President Obama put forward a
clear choice to the Iranian Government: Meet your international
responsibilities on your nuclear program and reap the benefits of being
a full member of the international community, or face the prospect of
further pressure and isolation. Unfortunately Iran has so far chosen
isolation. There is still time for it to change course, but that time
is not indefinite. I want to be clear that our policy is not aimed at
regime change, but rather at changing the regime's behavior.
the dual-track policy
Since this administration took office in 2009, we have pursued a
dual-track policy. Working with the P5+1--the five members of the U.N.
Security Council--China, France, Russia, the United Kingdom, and the
United States, plus Germany, under the auspices of the European Union--
we have actively pursued a diplomatic solution to international
concerns over Iran's nuclear program. As a result of Iran's continuing
disregard for its international obligations, we have ratcheted up the
pressure on the Iranian Government. We have built and led a global
coalition to create the toughest, most comprehensive sanctions to date
on the Iranian regime. The international community is united in its
determination to prevent a nuclear-armed Iran.
Today, Iran is isolated and sanctions are having a real impact on
the ground, exacerbated by the regime's own mismanagement of its
economy. Iran exports over 1 million fewer barrels of crude oil each
day than it did in 2011, costing Iran between $3-$5 billion per month.
All 20 importers of Iranian oil have either significantly reduced or
eliminated oil purchases from Iran. Financial sanctions have crippled
Iran's access to the international financial system and fueled the
depreciation of the value of Iran's currency to less than half of what
it was last year. Foreign direct investment into Iran has decreased
dramatically as major oil companies and international firms as diverse
as Ernst & Young, Daimler AG, Caterpillar, ENI, Total, and hundreds
more have divested themselves from Iran. The International Monetary
Fund projects the Iranian economy will contract in 2013, a significant
decrease from the over 7-percent growth 6 years ago, and far below the
performance of neighboring oil-exporting countries. Put simply, the
Iranian economy is in a downward spiral, with no prospect for near-term
relief.
And we continue to increase the pressure. Iranian oil exports will
continue to decline as we implement the law through our engagement with
the last remaining six importers of Iranian oil. Iran's currency will
remain volatile as we block Iran's revenue streams and block its access
to funds held abroad. And we will continue to track, identify, and
designate individuals and entities assisting Iran's proliferation
efforts and attempting to evade sanctions on Iran. Last week, the State
Department sanctioned four Iranian companies and one individual for
providing the Iranian Government with goods, technology, and services
that increase Iran's ability to enrich uranium, which is prohibited by
U.N. Security Council resolutions. On March 14, the State and Treasury
Departments imposed sanctions on Dr. Dimitris Cambis and his company
Impire Shipping for operating vessels on behalf of the National Iranian
Tanker Company (NITC) that disguised the Iranian origin of the crude
oil. On July 1, the Iran Freedom and Counter-Proliferation Act of 2012
takes full effect, targeting an array of sectors and industries in
Iran. Looking forward, as long as Iran continues on its current
unproductive path, the administration will continue to assess and
implement potential additional sanctions on sectors and industries that
can serve as pressure points. We look forward to continued strong
collaboration with members of Congress to develop smart sanctions and
increase pressure on the regime, while maintaining the strong coalition
we have built through sustained diplomatic efforts with partners.
In fact, one of the keys to our successful ratcheting up of the
pressure on Iran is that we are not doing so alone. The European Union
has enacted its own stringent sanctions regime, including an oil import
ban that resulted in all 27 EU member states ceasing oil purchases from
Iran. Australia, Canada, South Korea, Japan, and others have enacted
their own sets of domestic measures, strengthening the international
sanctions regime and sending a clear message to Iran: adhere to your
international obligations, or face increasing pressure from the
international community. And, even among partners who are frankly
skeptical of sanctions, we have seen robust implementation of U.N.
Security Council resolutions and cooperation on specific sanctions
issues. We continue to coordinate closely with all of our international
partners, ensuring stringent implementation of existing sanctions and
encouraging strong domestic measures on Iran. As we move forward, it
will be critical that we continue to move together and not take steps
that undo the progress made so far. Doing such would signal divisions
to Iran that it could, and likely would, exploit.
Even as we significantly increase pressure on the Iranian regime,
we remain committed to ensuring that legitimate, humanitarian trade can
continue for the benefit of the Iranian people. We take no pleasure in
any hardship our sanctions might cause the Iranian people in their
everyday lives, and it is U.S. policy to not target Iranian imports of
humanitarian items. We have worked hard to ensure U.S. regulations
contain an explicit exception from sanctions for transactions for the
sale of agricultural commodities, food, medicine, or medical devices to
Iran as long as the transactions do not involve a designated entity or
otherwise proscribed conduct. And when natural disasters have struck
Iran, we have been ready to assist. Following a tragic earthquake in
northwest Iran in August 2012, the administration issued a general
license to facilitate U.S. support to the Iranian people as they
responded to and rebuilt from the natural disaster. In all our efforts
on Iran, we have demonstrated that supporting the Iranian people and
pressuring the policies of their government are not mutually exclusive.
As we have built unprecedented pressure on the Iranian regime, we
have also intensified our efforts toward pursuing a diplomatic solution
to the nuclear issue. Since his first days in office, the President has
emphasized our readiness, working with members of the P5+1 to seek a
negotiated resolution regarding Iran's nuclear program. The P5+1 has
been incredibly unified, and we have worked closely and well with the
Russians and Chinese. On February 26, 2013, the P5+1 met with Iranian
representatives in Almaty, where the P5+1 jointly presented Iran with
an updated, balanced proposal that offered Iran a real opportunity to
take steps toward reducing tensions and creating the time and space to
negotiate a comprehensive solution to the nuclear issue. As in prior
talks, Iran was presented with a strong and united message: address the
international's community's concerns or face mounting pressure.
Interestingly, Iran's initial public response was positive and they
signaled a potential turning point.
Yet, when on April 5, 2013, the P5+1 returned to Almaty to hear
Iran's formal response to our proposal, the Iranians once again fell
short. While the P5+1 had a substantive exchange of views with Iran
during the talks, in the end, Iran's counterproposal to the P5+1
initiative was very disappointing. According to this counterproposal
Iran would place little or no constraint on its current nuclear
activities, while demanding that major sanctions be removed
immediately. Given the significant gulf between the two sides, the P5+1
members did not believe scheduling another round was warranted at that
time, and instead agreed to return to capitals to discuss the latest
developments with their respective governments. They agreed that EU
High Representative Catherine Ashton would then follow up with Iran on
next steps, and indeed Ashton and Iran's Chief Nuclear Negotiator Saeed
Jalili are scheduled to meet in Istanbul today, May 15.
We are looking for signs that Iran is prepared to move to address
substantively all aspects of the proposal we discussed in Almaty. We
are not interested in talks for talks' sake, but we must give diplomacy
every chance to succeed. And, while we leave the door open to
diplomacy, we will continue to maintain unrelenting and increasing
pressure.
We have approached these negotiations realistically, conscious of
our difficult history. We continue to seek concrete results in our
talks, not empty promises. The onus is on Iran.
support for terrorism
Beyond its illicit nuclear activity, we also have grave concerns
about Iran's destabilizing activities in the Middle East, particularly
its support for Bashar Assad in Syria; its support for terrorist
organizations like Hezbollah; and its unacceptable attacks on innocent
civilians worldwide. These activities are not going unchecked.
Iran is the world's foremost state sponsor of terrorism, which it
uses as a strategic tool of its foreign policy. Led by the Islamic
Revolutionary Guard Corps (IRGC)-Quds Force and the Ministry of
Intelligence and Security (MOIS), the ``Iran Threat Network'' comprises
an alliance of surrogates, proxies, and partners such as Hezbollah,
HAMAS, and Iraqi Shia militants, among others. Iran funds, trains, and
equips these terrorist organizations, in whole or in part, to use in
attacks around the world. This clandestine threat network destabilizes
countries throughout the Middle East and threatens regional security.
Iran's leaders have aimed most of their threats at one of our closest
allies, blatantly declaring their desire to see the destruction of the
State of Israel. We have a moral obligation to ensure that Iran never
has the tools to make good on that threat.
Israel is not Iran's only target, however. Iranian national Mansour
Arbabsiar pled guilty last year to plotting with members of the Quds
Force to murder the Saudi Arabian Ambassador by bombing a crowded
restaurant here in Washington, DC. The attempt to assassinate a foreign
diplomat in our Nation's capital is an intolerable escalation of
Iranian terrorist activity.
Iran has also sponsored and directed terrorist attacks against
Israeli civilian and diplomatic targets worldwide. On February 13,
2012, a magnetic bomb was placed under the vehicle of an Israeli
diplomat's wife in New Delhi, India, seriously injuring her and three
Indian nationals. The following day, a similar device was discovered
under a vehicle belonging to the Israeli Embassy in Tbilisi, Georgia,
and safely defused. At the same time, Thai police arrested three
Iranian nationals in Bangkok in connection with explosions at a private
residence that subsequently revealed bombmaking materials and makeshift
grenades intended for use in attacks against Israeli targets.
In June 2012, Kenyan authorities arrested two Iranian members of
the Quds Force. Armed with 33 pounds of military-grade plastic
explosives, they planned deadly attacks on Western and Israeli targets.
On May 6, a Kenyan court sentenced them to life imprisonment for
terrorism-related offenses.
Lebanese Hezbollah continues to be a key partner and substantial
part of Iran's threat network. Iran provides hundreds of millions of
dollars to Hezbollah annually and has long been Hezbollah's primary
trainer and arms supplier. Hezbollah and the Iranian leadership share a
worldview and strategic vision and are seeking to exploit the current
unrest in the Middle East and North Africa to their advantage. We
remain focused on Hezbollah activity worldwide, and have devoted a
great deal of diplomatic effort over the past several years to raising
awareness of Hezbollah activity with European partners, well before
last summer's attack in Bulgaria, in which six Israeli tourists were
killed in a terrorist bombing, and arrest in Cyprus of a suspected
Hezbollah operative.
Thwarted attacks involving Iranians and Iranian proxies like
Hezbollah in Cyprus, Thailand, and Kenya--to name a few examples--show
a clear willingness on the part of our international partners to target
and prosecute Iranian terrorist activity. As evidenced by these
disruption and prosecution efforts across Africa, East Asia, and
Europe, we and our international partners have become increasingly
effective at targeting Iranian support for terrorism.
regional meddling and support for assad
In Syria, Iran has made it clear that it fears losing its closest
ally and will stop at no cost, borne by both the Syrian and Iranian
people, to prop up the Assad regime. Today, Iran is training, arming,
funding, aiding and abetting the Assad regime and its atrocious
crackdown on its own people. It is coordinating its intervention in
Syria with Hezbollah, which is itself engaged in training proregime
militants who attack Syrian civilians, and in direct fighting on behalf
of the Assad regime against the Syrian people. Iran and Hezbollah
fighters are also directing the activities of Iraqi militia groups
which have been enlisted to join in the Assad regime's war against the
Syrian people. Iran has shown that it is willing to potentially
destabilize an entire region if it means keeping the Syrian regime as
an ally. Countering such efforts remains a key priority for the
administration and we are focused on preventing Iran from continuing to
support the Syrian regime financially, materially, and logistically.
The administration has used its authorities in several Executive orders
to highlight the role of Iran in the Syrian regime's violation of human
rights and hold accountable those responsible.
These facts further highlight Iran's continued efforts to expand
its nefarious interference in the region. In January, Yemeni
authorities seized, in Yemeni territorial waters, a 40-ton Iranian
shipment of weapons and explosives destined for Iranian-supported Huthi
extremists. These activities interfere with Yemen's ongoing political
transition, and are destabilizing to the wider region. It is no
surprise then that, according to a 2013 Zogby survey of 20 Arab and
Muslim-majority countries, Iran is now viewed unfavorably in a majority
of Arab countries and its appeal to mainstream Arab public opinion has
virtually collapsed from its 2006 peak.
As Iran's isolation grows, we are working through existing regional
counterterrorism partnerships to address the Iranian threat, and the
interdiction in Yemen is a successful example of that cooperation. We
are also deepening our military partnerships across the region. We
consult regularly on security matters with our partners in the Persian
Gulf and maintain a substantial presence in the region, to keep a
watchful eye on Iran, counter potential Iranian aggression, reassure
our allies, and protect the free flow of commerce through the Strait of
Hormuz. We are also in close and constant contact with Israel to
coordinate our policies and have taken unprecedented steps to protect
Israel's Qualitative Military Edge--including support for the Iron Dome
defense system to stop Iranian-supported militant groups from firing
Iranian-supplied rockets into Israeli communities.
levinson, abedini, and hekmati cases
Just as we are concerned about Iran's destabilizing regional
activities abroad, we remain concerned about Iran's treatment of U.S.
citizens detained and missing in Iran. The U.S. Government is dedicated
to the return of American citizen, Robert Levinson, and U.S.-Iranian
dual nationals Saeed Abedini and Amir Hekmati. Mr. Levinson went
missing from Kish Island, Iran, on March 9, 2007, and his whereabouts
remain unknown. We continue to call on the Iranian Government to make
good on its promises to assist the U.S. Government in finding Mr.
Levinson so that he can be reunited with his family. Mr. Hekmati, a
former U.S. Marine who served in Afghanistan, was detained in Iran
since August 2011, and endured a closed-door trial with little regard
for fairness or transparency. Mr. Abedini has been detained in Iran
since September 2012 on charges related to his religious beliefs, and
reportedly has suffered physical abuse by Iranian officials in prison.
Despite our repeated requests, Iranian authorities have failed to
provide them with adequate medical treatment or permit visits from our
protecting power. We will continue to raise these cases directly and
publicly as we also pursue all available options until all three of
these Americans return home safely.
human rights
We are equally disturbed by the regime's ongoing campaign of
repression against its own people. Such oppression has included the
harassment and intimidation of family members of those who speak out
for freedoms, the torture of political prisoners, and the limitation of
freedom of expression and access to information. These acts of
aggression have created a culture of fear in which few dare to voice
dissent or challenge regime officials. Students, lawyers, journalists,
and bloggers, ethnic and religious minorities, artists and human rights
activists are all targets for abuse, intimidation, or discrimination.
Labeled by press advocacy group Reporters Without Borders as an
``enemy of the Internet,'' Iran filters online content and blocks
access to the Internet to prevent Iranian people from acquiring
knowledge and unbiased information about their own country and the
outside world. We are committed to raise the cost of repression and
help Iranians break through the ``electronic curtain'' the regime is
erecting to communicate with one another and share their story with the
world.
As Dr. Martin Luther King said, ``Injustice anywhere is a threat to
justice everywhere,'' and this is true, too, as we advocate for the
rights and freedoms of the Iranian people. We have helped raise
awareness of regime abuses and held Iranian officials responsible for
their actions. Working with the authorities you provided us, we have
imposed sanctions--including asset freezes and visa bans--on 30 Iranian
individuals and entities for engaging in serious human rights abuses or
censorship activities that limit freedom of expression, including the
IRGC, the MOIS, Iran's Cyber Police, and the Islamic Republic of Iran
Broadcasting. And while we know that public discussion of these
incidents does not always help the people taking risks on the ground,
make no mistake: we have stood--and will continue to stand--fully and
firmly behind the aspirations of the Iranian people.
We have lent our voice to those the regime has tried to silence,
speaking out in defense of numerous political prisoners, such as noted
human rights defender Nasrin Sotoudeh, Christian pastor Youcef
Nadarkhani, journalist Zhila Bani-Yaghoub, and Kurdish rights activist
Seddigh Kaboudvand. We will continue to highlight such cases and
coordinate our actions with our international partners, as we did in
2011 at the U.N. Human Rights Council to create the mandate of the
Special Rapporteur for Human Rights in Iran, whose exhaustive reports
have detailed the extent of unspeakable abuses in Iran. Likewise, we
will continue to support the annual Canadian-led resolution at the U.N.
General Assembly to condemn Iran's human rights practices, a measure
which has passed for 10 consecutive years.
outreach to the iranian people
Coupled with our concerns about human rights are our concerns about
the well-being of the Iranian people. Every day, we hear from the
Iranian people directly through our public diplomacy programs and
Farsi-language social media platforms. The Virtual Embassy Tehran,
launched in December 2011, has over 2 million hits and our Farsi-
language Facebook, Twitter, Google+, and YouTube channel have also been
enormously successful. The 170 videos on our YouTube channel have more
than 1 million views and our Facebook page has over 120,000 fans, 60
percent of whom are inside of Iran and who access our sites even though
the Iranian regime blocks the site.
What we see through our interactions is that the Iranian people are
being detrimentally affected by the misplaced priorities, corruption,
and mismanagement of their government. Instead of meeting the needs of
its own people, the Iranian regime has chosen to spend enormous amounts
of its money and resources to support the Assad regime as well as its
militant proxies around the world, and to pursue the development of
weapons of mass destruction. Instead of investing in its people, Iran
continues to restrain their vast potential through censorship,
oppression, and severe limitations on their social, political and even
academic freedoms.
As the President and the Secretary have said, in the United States
our own communities have been enhanced by the contributions of Iranian
Americans. We know that the Iranian people come from a great
civilization whose accomplishments have earned the respect of the
world. That is why in his 2013 Nowruz message, the President emphasized
that there is no good reason for Iranians to be denied the
opportunities enjoyed by people in other countries.
Iranians deserve the same freedoms and rights as people everywhere
and all nations would benefit from the talents and creativity of the
Iranian people, especially its youth. It is a shame that much of the
world realizes this and the Iranian Government has yet to do so.
presidential elections
Let me conclude by addressing a topic we are watching closely:
Iran's June 14 Presidential election. Following the last election in
2009, when the regime violently quashed the hopes and dreams of
ordinary Iranians who went into the street to demand their fundamental
rights, we have seen a deliberate and unrelenting level of repression
in the lead-up to these elections.
As we speak, behind closed doors, Iran's unelected and
unaccountable Guardian Council is vetting Iranian Presidential
contenders, using vague criteria to eliminate potential candidates.
Without a transparent process, it is difficult for us to say whether
Iran's elections will be free, fair, or represent the will of the
Iranian people.
We take no sides in Iran's Presidential election. The decision
about who leads Iran is for the Iranian people, who should have every
opportunity to express freely and openly their opinions, ideas, and
hopes for the future of their country. But we do call on the Iranian
authorities to conduct a free and fair election that not only conforms
to international standards of transparency and accountability but is
just and represents the will of the Iranian people.
conclusion
In sum, Iranians deserve better. Their government has chosen to
isolate them, stunt their economic growth, repress their ability to
speak freely, and connect the people of Iran with the most heinous acts
of terrorism and regional adventurism. Iran's Government can choose to
end these policies at any time and put their people's well-being first.
As the President said, we have no illusions about the difficulty of
overcoming decades of mistrust. It will take a serious and sustained
effort to resolve the many differences between Iran and the United
States. We do not expect to always agree, but rather for Iran to be an
honest and responsible member of the international community, a
community where members honor their commitments and keep their word or
pay the price.
We share Congress' concern about Iran and want to continue our
hand-in-hand efforts to ensure that Iran does not continue on a path
that threatens the peace and stability of the region and tramples the
freedoms of its citizens. We welcome your ideas on how we can sustain
and expand our efforts.
The Chairman. Thank you.
Secretary Cohen.
STATEMENT OF HON. DAVID S. COHEN, UNDER SECRETARY FOR TERRORISM
AND FINANCIAL INTELLIGENCE, U.S. DEPARTMENT OF THE TREASURY,
WASHINGTON, DC
Mr. Cohen. Chairman Menendez, Ranking Member Corker,
distinguished members of the committee, thank you for the
opportunity to testify today.
No issue is of greater concern or urgency than preventing
Iran from obtaining a nuclear weapon. As my colleague Under
Secretary Sherman has said, that is why this administration,
from our first days in office, has pursued a dual-track
strategy that offers Iran the opportunity for diplomatic
engagement while at the same time making abundantly clear that
if Iran continues to refuse to comply with its international
obligations we along with our partners in the international
community will apply increasingly powerful sanctions on Iran.
That is exactly what we have done and that is what we are
committed to continue to do, in close collaboration with
Congress, so long as Iran refuses to engage meaningfully with
respect to its nuclear program.
In my written testimony, I describe in detail the expanding
scope, intensity, and impact of our sanctions on Iran and how
these new authorities, coupled with robust implementation and
enforcement, have had a very significant impact on Iran. I
would like to highlight just a few points.
First and most importantly, creating this powerful
sanctions regime has been, and must continue to be, a joint
effort between the Congress and the administration. Through the
enactment and energetic implementation of key pieces of
legislation, including CISADA and the NDAA, we have isolated
Iran from the international financial system and driven down
Iran's oil exports by some 50 percent, depriving Iran of a
critical source of revenue.
In addition, to enhance the sanctions pressure on Iran,
over the past year the President has adopted five Executive
orders that extend and strengthen the legislative sanctions
framework, including orders that block the property of the
entire Government of Iran, including its central bank, that
make dealings with the National Iran Oil Company and its
trading arm, NICO, subject to sanctions, and that enhance the
NDAA by authorizing sanctions on foreign banks that facilitate
the acquisition from any party of Iranian petroleum, petroleum
products, or petrochemicals.
A few months ago the Iran Threat Reduction Act went into
effect, which effectively locks up Iran's oil revenues in the
few countries that still buy Iranian oil by requiring that that
revenue can only be used to pay for bilateral trade or for
humanitarian imports. As of February 6 of this year, Iran's
dwindling oil revenue cannot be repatriated to Iran,
transferred to a third country, or used to facilitate third-
country nonhumanitarian trade.
Second, we have aggressively implemented and enforced the
entire sanctions framework. Since the beginning of 2012 we have
imposed sanctions on 22 individuals and 54 entities and added
almost 200 aircraft and vessels to the sanctions list. We have
imposed sanctions on banks, businesses, government entities,
and individuals involved in Iran's WMD proliferation
activities, its support for international terrorism, and its
support for the brutal Assad regime.
We have also targeted Iran's increasingly desperate efforts
to evade our sanctions. In the last few months, we have imposed
sanctions on Babak Zanjani and Dimitris Cambis, along with
their front companies, ships, and banks, for engineering
elaborate schemes to evade our sanctions. And just this morning
we imposed sanctions on an exchange house and a trading firm in
the UAE for providing services to designated Iranian banks,
taking direct aim at a growing mechanism of sanctions evasion,
nonbank financial institutions.
Third, we see clear evidence that these efforts are having
an impact. As I noted, Iran's crude oil and condensate exports
have dropped by roughly 50 percent or some 1.3 million barrels
per day between January 2012 and early 2013, costing Iran
between $3 and $5 billion per month. In 2012 Iran's GDP fell by
some 5-to-8 percent, the largest drop since 1988, the final
year of the Iran-Iraq war and the first contraction in 20
years. The value of Iran's currency--the rial--has plummeted,
losing over two-thirds of its value in the last 2 years.
We also see the impact of sanctions in less tangible, yet
more significant, ways. During the negotiating sessions in
Almaty, the Iranian side sought sanctions relief in exchange
for concessions on their nuclear program. They would not have
done so had the impact of sanctions not affected their
calculus.
Finally, we are committed to doing more. We will work to
increase Iran's economic and financial isolation through the
implementation as of July 1 of the Iran Freedom and
Counterproliferation Act of 2012. We will work to target
additional sources of Iranian revenue, including the
petrochemical sector. With our colleagues at State, we will
maintain our robust outreach efforts with foreign governments
and the private sector to explain our sanctions, to warn of the
risks of doing business with Iran, and to encourage them to
take complementary steps.
We will continue aggressively to implement and target
Iran's proliferation networks, support for terrorism, sanctions
evasion, abuse of human rights, and complicit financial
institutions. And we will continue to work closely with
Congress in each and every one of these endeavors, because we
know that we share a common objective, ensuring that Iran does
not obtain a nuclear weapon.
I am happy to answer any questions you may have.
[The prepared statement of Mr. Cohen follows:]
Prepared Statement of Under Secretary David S. Cohen
introduction
Chairman Menendez, Ranking Member Corker, and distinguished members
of the committee, thank you for the opportunity to testify today on the
Treasury Department's application of sanctions pressure as one part of
the U.S. Government's effort, coordinated with counterparts around the
world, to counter the threat posed by Iran's nuclear and ballistic
missile program. Our continued close collaboration with this committee
and your colleagues in Congress is essential to our success in
addressing this threat.
As this committee will appreciate, no issue is of greater concern
or urgency than preventing Iran from obtaining a nuclear weapon. As the
President recently warned, an Iran in possession of such a weapon would
increase the risk of nuclear terrorism, undermine the global
nonproliferation regime, trigger an arms race in the Middle East, and
embolden a regime that has ruthlessly repressed its citizens.
That is why this administration, from its first days in office, has
tenaciously pursued a dual-track strategy that offers Iran a path to
reclaim its place among the community of nations while making clear
that we, along with our partners in the international community, would
apply increasingly powerful and sophisticated sanctions on Iran if it
continues to refuse to satisfy its international obligations with
respect to its nuclear program. As we have repeatedly made clear,
Tehran faces a choice: it can address the call of the international
community to give up its nuclear ambitions and begin reintegrating
itself diplomatically, economically, and financially into the world
community, or it can continue down its current path and face ever-
growing isolation.
increasing pressure on iran
Since my last appearance before this committee, the scope,
intensity, and impact of U.S. sanctions on Iran have expanded through
the enactment of legislation, the adoption of Executive orders, and the
energetic implementation and enforcement of the entire sanctions
framework. These efforts have heightened the economic pressure and
imposed a very significant strain on the Iranian regime.
Designating Iranian Banks and Their Financial Partners
When I last appeared before the committee, I described the
administration's extensive efforts to implement the Comprehensive Iran
Sanctions, Accountability, and Divestment Act of 2010 (CISADA). CISADA
calls for the exclusion from the U.S. financial system any foreign
financial institution that knowingly facilitates significant
transactions or provides significant financial services for Iranian
financial institutions designated in connection with Iran's nuclear or
missile proliferation activity, or its support for international
terrorism.
The mere fact that we have CISADA at our disposal has been
sufficient to drive the overwhelming majority of banks away from
business with Iran's designated banks, isolating those Iranian banks
from the global financial system. To date we have employed this
authority against two foreign banks, China's Bank of Kunlun and Iraq's
Elaf Islamic Bank, for facilitating millions of dollars' worth of
transactions for several designated Iranian banks. Were there any
question about our willingness to apply CISADA sanctions, these actions
clearly demonstrated that we will target sanctionable activity,
wherever it may occur.
Targeting the Central Bank of Iran and Iran's Oil Revenues
Just over a year later, in December 2011, the President signed into
law the National Defense Authorization Act for Fiscal Year 2012 (NDAA),
which threatens CISADA-like consequences--that is, terminating or
restricting correspondent account access to the U.S.--for foreign
financial institutions that transact with the Central Bank of Iran
(CBI) in a way not authorized by U.S. law. Significantly, the NDAA also
marked a new phase in our sanctions campaign by targeting Iran's
economic lifeblood: its oil exports.
The logic behind the measures in the NDAA is twofold. First, it
seeks to isolate the CBI from the international financial system--a
step begun a month earlier when we designated the entire jurisdiction
of Iran as a ``primary money laundering concern'' under Section 311 of
the USA PATRIOT Act. These actions undercut the CBI's ability to
facilitate the conduct of designated Iranian banks and to support
Iran's illicit activities within Iran and abroad.
Second, because the CBI is the primary bank into which Iran
receives oil payments, the NDAA intensifies economic pressure on the
regime. To prevent Iran from benefiting from a spike in oil prices that
might be caused by a rapid reduction of Iranian oil in the market, the
NDAA was designed to encourage Iran's oil customers to undertake
significant but incremental reductions in their Iranian oil imports,
giving customers and alternative suppliers a measure of time to adjust
and accommodate this reduction. This law--working in tandem with our
efforts targeting Iran's access to the international financial system--
has had an enormous impact on Iran's oil revenues.
Locking Up Iran's Oil Revenues
The impact of the NDAA was further enhanced by a powerful measure
contained in the Iran Threat Reduction and Syria Human Rights Act of
2012 (TRA) that entered into effect on February 6, 2013. Under Section
504 of the TRA, any country that has received an NDAA ``significant
reduction'' exception--meaning that its banks can pay Iran for its
significantly reduced oil imports without risk of correspondent account
sanctions--must now ensure that those revenues are used only to
facilitate bilateral trade or humanitarian trade. Iranian oil-import
revenue cannot be repatriated to Iran, transferred to a third country,
or used to facilitate third-country trade, except for humanitarian
purchases. This is a very powerful provision, as it effectively ``locks
up'' Iranian revenues in the few countries that still buy Iranian oil
and denies Iran the free use of its diminishing oil revenue.
Tightening the Sanctions Regime Through Executive Orders
To further enhance the pressure on Iran, the President in 2012
issued five Executive orders targeting Iranian activity. I would like
to highlight two in particular, that we have used to target Iran's
efforts at sanctions evasion and to put further pressure on its energy
exports.
In response to Iran's continued abuse of the financial sector, the
President in February 2012 issued Executive Order (E.O.) 13599. Among
other things, E.O. 13599 blocks all property of the Government of Iran,
including the Central Bank of Iran, and allows us to impose sanctions
on any person--Iranian or non-Iranian--who acts for or on behalf of the
Iranian Government, regardless of the type of activity. Under this
Executive order we imposed sanctions on a Greek businessman, Dmitris
Cambis, and a group of front companies for using funds supplied by the
Government of Iran to purchase oil tankers, and then disguising the
origin of the Iranian oil transported on those vessels.
In July 2012, the President issued E.O. 13622, which enhances the
NDAA by authorizing sanctions on foreign banks and persons that
facilitate the activities of, or provide material support to, the
National Iranian Oil Company (NIOC) or its energy-trading subsidiary,
the Naftiran Intertrade Company (NICO), or that facilitate the
acquisition--from any party--of Iranian petroleum, petroleum products,
or petrochemicals. This authority also gives us the ability to target
those who provide material support to the Central Bank of Iran or who
sell gold to the Government of Iran. We have used this measure to
important effect in our engagement with foreign partners, warning
countries about the risk of undertaking this conduct and, we believe,
deterring it.
Expanding Energy, Shipping, and Shipbuilding Sanctions
Last, I would like to discuss a new authority, the Iran Freedom and
Counter-Proliferation Act of 2012 (IFCA), which was enacted in January
2013 and becomes fully effective on July 1, 2013. IFCA expands our
existing sanctions by giving us new tools to target Iran's ports,
energy, shipping, and shipbuilding sectors, as well as Iran's supply of
certain metals and industrial materials. It also provides for
additional sanctions on banks that transact with any designated Iranian
entity, not just those designated for WMD proliferation, terrorism, or
human rights abuses. To help ensure this new legislation has the
greatest impact possible, we have conducted extensive outreach to
foreign governments and companies to explain the ever-increasing risks
that business, and financial transactions incident to that business,
with Iran poses.
recent administration actions
The pressure we have brought to bear on Iran is the result not only
of the creation of additional authorities, but also the aggressive
implementation of those authorities. Since the beginning of 2012,
Treasury, in consultation with our interagency partners, particularly
the Department of State, has imposed sanctions on 22 individuals and 54
entities, and has added almost 200 aircraft and ships to the sanctions
list. I will briefly describe a few recent actions emblematic of our
work to expose Iran's WMD proliferation activities, its sponsorship of
international terrorism, its support to the brutal Assad regime, and
its abuse of human rights.
WMD Proliferation
Disrupting and disabling Iran's WMD procurement networks and
proliferation activities through the use of the counterproliferation
Executive Order, E.O. 13382, remains one of our primary objectives.
Last week, for example, we designated an Iranian financial
institution--the Iranian Venezuelan Bi-National Bank--as engaging in
financial transactions on behalf of a previously designated Iranian
bank. That brings to 28 the number of Iranian financial institutions
that have been designated under either E.O. 13382 or the
counterterrorism Executive Order, E.O. 13224. Notably, each of these
designated Iranian-linked financial institutions can trigger CISADA
sanctions, meaning that any foreign financial institution that
knowingly facilitates significant transactions for any of these 28
financial institutions risks losing its access to the U.S. financial
system.
This action follows the designations of some 15 entities in
November and December of last year that targeted the international
procurement operations of Iran's Atomic Energy Organization of Iran
(AEOI), the Iran Centrifuge Technology Company (TESA), and Iran's
uranium enrichment efforts. Actions taken under E.O. 13382 build upon
the hundreds of Iran-related designations we have made under this
authority over the past 8 years.
Terrorism
As we focus on Iran's WMD programs, we remain mindful that Iran is
still the world's foremost state sponsor of international terrorism, in
particular through its Islamic Revolutionary Guard Corps-Quds Force
(IRGC-QF). Iran continues to provide financial and military support to
several terrorist organizations, including Lebanese Hezbollah, which is
responsible for the bombing last summer of a tourist bus in Burgas,
Bulgaria.
In November 2012 we exposed a senior IRGC-QF officer and senior
official of the Iraqi terrorist group Kata'ib Hezbollah (KH), which is
backed by the IRGC-QF and whose training has been coordinated with
Lebanese Hezbollah in Iran. KH is responsible for a rocket attack that
killed two U.N. workers in Baghdad and for numerous other acts of
violence in Iraq. Treasury also maintains vigilant watch over the
activities of al-Qaeda operatives working out of Iran in an effort to
expose and isolate them. In October 2012, for example, we designated a
key facilitator for
al-Qaeda, the latest in a series of actions exposing some half a dozen
members of
al-Qaeda operating in Iran, under an agreement between Iran and al-
Qaeda.
Syria
Iran's financial, material, and logistical support for the Assad
regime's brutal campaign of violence against its own citizens also
remains an area of intensive focus. Last year the President exposed the
IRGC-QF for its support to the Syrian General Intelligence
Directorate--a key instrument of Assad's repression--in the Annex to
E.O. 13572, which targets those responsible for human rights abuses in
Syria. We have also taken action under this authority against the IRGC-
QF's commander Qasem Soleimani and his deputy, as well as the Iranian
Ministry of Intelligence and Security, Iran's primary intelligence
organization. As part of the effort to expose Iran's role in abetting
Assad's atrocities, Treasury has also targeted Iran's national police,
the Law Enforcement Forces, along with its chief, Ismail Ahmadi
Moghadam and his deputy, which have also aided the Syrian regime's
crackdown.
Iran's support to the Assad regime also is clearly reflected in
Hezbollah's aid to the Assad regime. As we observed last year when we
designated Hezbollah and its leadership for providing support to the
Government of Syria under E.O. 13582, Iran has long provided Hezbollah
with military, financial, and organizational assistance. Iran's IRGC-QF
has led these efforts, working with Hezbollah to train Syrian
Government forces and establish and equip a pro-Assad militia in Syria
that has filled critical gaps in Syria's military.
We also continue to focus on Syria and Iran's ongoing proliferation
activities. Last year, for instance, we sanctioned Iran's SAD Import
Export Company under E.O. 13382 for acting on behalf of Iran's Defense
Industries Organization, itself sanctioned under this authority, for
shipping arms to the Syrian military and supplying goods for the
production of mortars.
Human Rights
The people of Syria are only the latest to suffer from Iran's
wanton disregard for human rights. Its own citizens, as we have
witnessed for decades, continue to bear the brunt of the regime's
abuses. Under E.O. 13553, Treasury and State have the authority to
sanction Iranian officials who are responsible for, or complicit in,
serious human rights abuses against the people of Iran on or after June
12, 2009. This Executive order complements other authorities in CISADA,
the TRA, and EO 13628 that target persons who transfer goods or
technology likely to be used in serious human rights abuses or that
have engaged in censorship activities against the people of Iran.
Under E.O. 13628, we recently sanctioned the Islamic Republic of
Iran Broadcasting and its managing director, the Iranian Cyber Police,
and nearly a dozen other entities and individuals for their involvement
in abusing the human and democratic rights of Iran's citizens. We
continue to keep close watch on events in Iran, especially as the
upcoming Presidential elections draw near, and will not hesitate to
expose those who deny the Iranian people their democratic and human
rights.
Sanctions Evasion
As Iran is turned away from reputable international financial
institutions and partners, it increasingly relies on deception and
concealment to evade international sanctions to meet its financial
needs. We have worked tirelessly to expose those who aid these efforts.
In May 2012 the President issued E.O. 13608, which allows us to target
those who facilitate Iran's evasion of sanctions. And last month under
our WMD proliferation authority E.O. 13382, the administration exposed
a major network run by Iranian businessman Babak Zanjani, including
banks in Malaysia and Tajikistan, that helped move billions of dollars
on behalf of the Iranian regime, including tens of millions of dollars
to an IRGC company.
impacts on iran
The international sanctions regime--of which our sanctions are just
one, albeit very important, part--has had a significant effect on key
sectors of the Iranian economy, as well as on the Iranian economy as a
whole. More importantly, these economic effects have had an impact on
Iran's leadership. Perhaps the clearest evidence of this comes from the
recent negotiating sessions in Almaty, Kazakhstan. During those
meetings, the Iranian side sought sanctions relief in exchange for
concessions on their nuclear program. They would not have done so had
the impact of sanctions not affected their calculus.
Petroleum Sector Impacts
U.S. and EU sanctions on Iran's petroleum sector have been
particularly powerful. Of the more than 20 countries that imported oil
when the NDAA went into full effect on June 30, 2012, only a handful
continue to do so today. Iran's crude oil and condensate exports have
dropped by roughly 1.3 million barrels per day, or some 50 percent,
between the enactment of the NDAA and early 2013. The EU's decision to
ban the import of oil into Europe, effective in mid-2012, contributed
in no small part to this fall. These lost sales cost Iran between $3
billion and $5 billion a month. Iran's petrochemical exports have also
been hit, decreasing by at least 7.6 percent in 2012 from the previous
year.
Shipping Sector Impacts
As our authorities have expanded to encompass Iran's petroleum
sector, we have also used them to target Iran's ability to export its
primary commodity. Under E.O. 13599, we sanctioned Iran's primary crude
shipper, the National Iranian Tanker Company (NITC), over two dozen of
its affiliates and over 60 of its vessels. Like the Islamic Republic of
Iran Shipping Lines (IRISL), which our sanctions have largely driven
out of business, NITC has sought to deceive the world maritime
community, by changing the names of its vessels, turning off its
transponders and engaging in ship-to-ship transfers to obscure the
origin of Iranian oil. While these evasion efforts may work for a short
while, they are not sustainable and are eventually detected, as last
week's action against the Cambis network's Sambouk Shipping FZC clearly
demonstrates.
Economic Impacts
As Iran finds it increasingly difficult to earn revenue from
petroleum sales and to conduct international financial transactions,
Iran's economy has been severely weakened. Iran's own economic
mismanagement has only exacerbated these effects.
Take, for instance, the broadest measure of Iran's economic
activity, its gross domestic product (GDP). Treasury assesses that in
2012 Iran's GDP fell by some 5 to 8 percent--the largest drop since
1988, the final year of the Iran-Iraq war, and the first contraction in
20 years. This decline has impacted the Government of Iran's budget,
causing it to run in 2012 its largest deficit in 14 years, which could
amount to some 3 percent of GDP. We believe Iran's GDP will continue to
shrink in 2013 in the face of reduced government and consumer spending
and declining oil exports, as well as the ramping up of additional
sanctions.
Iran's economic contraction is manifest in its recent budget bill,
which projects almost 40 percent less oil revenue than did the previous
year's budget law. To help make up the shortfall, Iran's Parliament is
currently considering tax increases of some 38 percent. And in March,
Iran's Supreme Audit Court released figures showing that for the first
9 months of the Iranian year only 53 percent of projected budget
revenues had been realized.
We have also begun to see the impact of the bilateral trade
restriction in Section 504 of the TRA, which went into effect in
February. This measure has limited Iran's access to its foreign
exchange reserves and impeded the Government of Iran's ability to
support the rial. Supported by our extensive outreach efforts, this
powerful provision is rendering Iran's reserves increasingly
inaccessible.
Iran's currency also has been hit hard. At the beginning of 2012,
one U.S. dollar purchased 16,000 rials in the open market. As of April
30 of this year, one dollar was worth about 36,000 rials. (See Chart
1.) The open market value of the rial has lost over two-thirds of its
value in the last 2 years.
[GRAPHIC(S)] [NOT AVAILABLE IN TIFF FORMAT]
Faced with a rapidly depreciating rial, in September 2012 the
Central Bank of Iran established a Currency Trading Center (CTC) to
allocate foreign exchange for certain preferred imports at a
preferential rate of about 24,000 rials to the dollar. Apparently faced
with dwindling supplies of hard currency, just a few weeks ago the CBI
substantially limited the list of imported goods that qualified for the
CTC's preferential rate.
Inflation, partly due to the volatility and depreciation of the
rial, is another telling metric. As of April 20, 2013, the official
Statistics Center of Iran 12-month average inflation rate was
approximately 30 percent, while the point-to-point inflation rate was
nearly 39 percent. Independent analysis suggests the actual inflation
rate is significantly higher.
These figures become increasingly stark when we compare Iran to its
neighbors or similarly situated countries. Compared to groupings of
countries in the Middle East and Africa, Iran's stock of foreign
capital, as measured by the Bank of International Settlements, is down
57 percent for the 2-year period ending December 2012, representing a
reduction in lending of some $9.5 billion. This figure contrasts with a
13-percent increase in BIS banks' lending exposure to all developing
countries. (See Chart 2.) This shortage of capital is at least one
reason why Iran's automobile sector is now encountering significant
difficulties, manufacturing at some 50 percent of nominal capacity and
facing substantially reduced exports.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Claimed Impact on Humanitarian Trade
There have been some reports of shortages of some medicines in
Iran, and that some banks may be reluctant to process payments for the
export of pharmaceuticals and other humanitarian goods to Iran. At the
same time, however, we have also been told by major pharmaceutical
companies that they are able to deliver their products to Iran and
receive payment.
Regardless of this discrepancy, we take this issue very seriously.
President Obama has made clear that we have nothing but respect for the
people of Iran. The goal of our sanctions on Iran is to expose and
impede the Iranian Government's continued pursuit of its nuclear and
ballistic missile programs, and to help persuade the Iranian leadership
that its only viable choice is to come into compliance with its
international obligations.
That is why it has been the longstanding policy of the United
States to allow the export to Iran of humanitarian items, such as food,
medicine, and medical devices. Our sanctions broadly authorize the sale
and export to Iran of nearly all types of food and medicines, as well
as basic medical supplies. No special permission is required to sell
these humanitarian goods to Iran. And foreign financial institutions
can facilitate these permissible humanitarian transactions, as long as
the transaction does not involve a U.S.-designated entity, such as a
bank sanctioned for supporting Iran's nuclear program.
To allay any concerns or misunderstandings, several months ago
Treasury's Office of Foreign Assets Control (OFAC) published detailed
guidance clarifying our longstanding policies regarding humanitarian
assistance and related exports to the Iranian people. I encourage
anyone concerned about this issue to read OFAC's guidance, which is
appended to this testimony. Moreover, we and our colleagues in the
State Department have met with governments, banks, and pharmaceutical
exporters in Europe and Asia to ensure that they understand the reach
and limits of our sanctions.
So let's be clear about this issue. Whatever shortages may exist,
and whatever reluctance foreign banks may have to process transactions,
the root cause is not our sanctions programs, it is the actions of the
Iranian Government.
This fact is perhaps best illustrated by a recent incident
involving Iran's former Health Minister, Marzieh Vahid Dastjerdi. Late
last year, Minister Dastjerdi publicly complained that the Iranian
Central Bank had failed to provide the Health Ministry with the $2.4
billion in hard currency that had been budgeted for the Ministry's
import of medicines and medical devices. Instead, the Central Bank made
only $600 million--a quarter of the budgeted amount--available to the
Ministry. Pointing out that short-changing the Health Ministry so
drastically would threaten shortages of medicines and medical devices,
the Health Minister objected. Instead of heeding her warnings, the
Ahmadinejad government fired Minister Dastjerdi.
And to the extent that foreign banks may be reluctant to facilitate
permissible transactions with Iran, that, too, is due to the actions of
the Iranian Government. It is by now well-established that Iranian
banks have abused their access to the international financial system by
deceiving their banking counterparties about the true nature of the
transactions in which they engage by hiding transactions that
facilitate Iran's nuclear and ballistic missile program among otherwise
legitimate transactions. This has led many foreign banks to restrict,
if not terminate entirely, their interactions with Iranian banks. It is
thus entirely understandable that foreign banks that maintain
relationships with Iranian banks may nonetheless be wary about
facilitating otherwise permissible transactions.
next steps
Despite our success in increasing pressure on Iran, we have yet to
see the regime change its fundamental strategic calculus regarding its
nuclear program. Nonetheless, the administration remains convinced that
sanctions pressure has an important role to play in helping to bring
about a negotiated resolution. Accordingly, our commitment to the dual-
track strategy--and to applying ever more effective and potent economic
and financial pressure on Iran--has never been greater. We look forward
to continuing to work with Congress on this endeavor.
Let me briefly share with you some thoughts on where we go from
here.
Increasing Iran's Isolation
First, we will continue to identify ways to isolate Iran from the
international financial system. We will do so by maintaining our
aggressive campaign of applying sanctions against individuals and
entities engaged in, or supporting, illicit Iranian activities and by
engaging with the private sector and foreign governments to amplify the
impact of these measures. As part of this effort we will also target
Iran's attempts to evade international sanctions through the use of
nonbank financial institutions, such as exchange houses and money
services businesses. And we will explore new measures to expand our
ability to target Iran's remaining links to the global financial
sector.
In particular, we are looking carefully at actions that could
increase pressure on the value of the rial. In that connection, we will
continue to actively investigate any sale of gold to the Government of
Iran, which can be used to prop up its currency and to compensate for
the difficulty it faces in accessing its foreign reserves. We currently
have authority under E.O. 13622 to target those who provide gold to the
Iranian Government and, as of July 1, IFCA will expand that authority
to target for sanctions the sale of gold to or from anyone in Iran for
any purpose.
Targeting Additional Sources of Revenue
Second, we will continue to target Iran's primary sources of export
revenue. In addition to oil and petroleum products, Iran exports
substantial volumes of petrochemicals. Current authorities allow us to
target those who purchase or acquire these commodities, as well as the
financial institutions that facilitate these transactions. We believe
targeting these actors, as well as those on the supply side of the
equation in Iran, may offer a meaningful opportunity to gain additional
leverage.
Engaging with International Partners
Third, with State, we will maintain our robust engagement and
outreach efforts to foreign governments and the private sector.
Treasury regularly meets with foreign officials and financial
institutions to explain our sanctions, to warn them of the risks of
doing business with Iran, and to encourage them to take complementary
steps. In response, we have seen jurisdictions and companies the world
over respond positively to these overtures, multiplying the force of
our sanctions many times over. As we have for CISADA and the NDAA, we
have already begun to engage with foreign countries, banks, and
businesses on the implications of IFCA, and will continue to do so as
we move forward in our implementation of this important legislation.
Aggressive Enforcement
The administration campaign to target Iran's proliferation
networks, support for terrorism, sanctions evasion, abuse of human
rights, and complicit financial institutions is without precedent. It
will only continue and grow more robust as Iran's failure to meet its
international obligations persists. As I believe we have amply
demonstrated, we are relentless in pursuing those who facilitate Iran's
illicit conduct or otherwise enable the regime. That will continue
unabated.
conclusion
Despite our efforts to isolate and pressure Iran, we know there is
far more to do.
As Secretary Lew has said, ``We will exhaust all diplomatic and
economic means we can.'' What remains to be seen, he noted, is whether
this will ``change the mind of the regime so that it [is] ready to, in
a diplomatic process, give up the pursuit of nuclear weapons. That is
the goal.''
I know this committee shares this objective, and I look forward to
working with you and your colleagues in the Congress to advance our
efforts to achieve it.
The Chairman. Well, thank you both very much.
Let me start off with: Our challenge is that so far this
has not changed Iran's calculus or, I should say, the Supreme
Leader's calculus. So peaceful diplomacy tools are limited.
Sanctions is one element of that. The question is, Is there
anything more that we should be considering doing that would
make it ever more clear that the consequences of continuing on
a path to a nuclear weapons program is not sustainable for them
and at the same time be able to keep the unity that we have of
a coalition that we have built, which I personally think is
very important?
In that regard, Madam Secretary, there is reputable
reporting that oil markets are now predicted to be loose for
the coming year because of Iraqi, Libyan, and other lines
coming back on the market. It would seem that this is the time
to press our allies to further reduce crude purchases from
Iran. So what is your view, meaning the administration of
course, with reference to seeking further reductions, which was
envisioned in the legislation that was unanimously passed by
the Congress, from countries that are still purchasing
petroleum, have made some reductions, but which we have also
given waivers to along the way because we have considered their
reductions to be a significant amount? But at this point, with
the market seeming to be well positioned to accept further
cuts, what is the view of the administration in that regard?
Ms. Sherman. Thank you, Mr. Chairman. As you noted, when we
began all of this, working with you, there were 20 countries
who imported Iranian oil. We are now down to only six countries
who continue to import any Iranian oil, and all of those six
countries, which are China, India, Turkey, South Korea, Japan,
and Taiwan, have made significant reductions in their
importation of Iranian oil.
We are continuing, of course, to press them for further
significant reductions, as is required under the law. One of
the things that you mentioned is that we have worked very hard
to keep the international coalition together and we have worked
very hard to keep the P5+1 countries together in a unified
force, because that unity, whether it is at the U.N. Security
Council or the IAEA or in negotiations, allows us to enforce
sanctions, keep the pressure on Iran, and shows that Iran
cannot split off people and find allies and partners in the
world for their destructive actions. So that coalition is very
crucial.
So if we want reductions beyond what is in current
legislation, we have to work very carefully with countries. I
know that for many in Congress there is great concern about
China, which is the single largest consumer of Iranian oil. But
China has made significant reductions. They are up for a
further exception and we will be looking at the data that is
coming in from April--it always is a lagging indicator--before
making a judgment and notifying and consulting with Congress.
But I think it is important, using China as an example, to
note that--I am going to read this because it is hard to keep
it straight--``A given percentage reduction in China would be
approximately equal to a volume reduction twice as large as the
same percentage reduction from India, three times from South
Korea, and four times from Turkey.'' That is how much the
volume matters, because China's importation is so large.
So any reduction China makes has an outsized impact on
Iran's oil consumption. So we are pressing China. We have
ongoing conversations. We expect them and we expect every other
of the six importers to continue their significant reductions.
The Chairman. We will be looking forward to seeing where we
are at with these other countries. And I recognize the volume
question. However, I also recognize that, considering where the
oil market is today, that it seems to me that we have the
wherewithal to vigorously advocate with these countries for
reductions because they can offset their purchases in a way
that really would not domestically harm them. So I hope that we
will do that as part of our effort her.
Let me turn to Secretary Cohen and ask about two different
elements. We have, as a result of a law that we passed, new
sanctions coming on line on July 1--you mentioned it in your
remarks--with respect to transactions with certain Iranian
economic sectors, like the shipping and shipbuilding sectors.
First of all, I want to hear from you how you intend to
vigorously enforce those sanctions.
Second, I would like to hear whether, because there is
reporting that Iran is using its automotive sector particularly
to produce dual-use items for its nuclear program, are you
looking to add additional sectors by Executive order?
Then last, the administration issued an Executive order
banning gold sales to the Government of Iran and that
initiative, along with a ban on sales of other precious metals,
was codified late last year by the Congress. Reporting
estimates, however, show that Iran has received $6 billion in
gold since last summer, an amount equivalent to about 10
percent of Iran's total 2012 oil exports of $60 billion. This
also represents about 6-to-10 percent of Iran's estimated
foreign exchange reserves.
The P5+1 process reportedly offered Iran relief from the
ban on gold sales during the last rounds of talks. With the
talks--I think generally viewed as not having succeeded; some
may suggest failed, but their not having succeeded--will we now
see robust enforcement of the ban on sales of precious metals
to Iran?
Mr. Cohen. Mr. Chairman, let me take those questions in
reverse order and address the gold issue first----
The Chairman. That is not to confuse me, is it? (Laughter.)
Mr. Cohen. No.
First with respect to gold, obviously you are correct that
the Executive order adopted last summer authorizes the
administration to impose sanctions on anyone who is selling
gold to the Government of Iran. Now, regardless of what may, or
may not, have been offered in Almaty, we are actively enforcing
that provision. We have been very clear with the countries that
are exporting gold to Iran, principally Turkey and the UAE, on
precisely what the law permits and what it forbids, and we are
following the information very carefully.
I would note that there is also substantial reporting that
there is a tremendous demand for gold among private Iranian
citizens, which in some respects is an indication of the
success of our sanctions. They are dumping their rials to buy
gold as a way to try to preserve their wealth. That is, I
think, an indication that they recognize that the value of
their currency is declining. And as of July 1 when the
provision in IFCA comes into effect, that activity will also be
subject to sanction. As of July 1, the sale of gold to any
person in Iran, whether it is the Government of Iran or a
private citizen, is forbidden, and we have been very clear with
the Governments of Turkey and the UAE and elsewhere, as well as
the private sector, that are involved in the gold trade, that
as of July 1 it all must stop, not just the trade to the
government.
With respect to whether we are considering additional
sectors to target through Executive order, one thing that we
are very much committed to is enhancing sanctions pressure
through a variety of means. The watchword that we are pursuing
in how we are looking at enhanced sanctions is revenues,
reserves, and the rial. That is what we are focused on, and
that means we are looking at a variety of different means to go
after Iranian revenues, to lock down their reserves, and to
affect the value of the rial. And if that means additional
sectors, we will consider that.
Finally--I know I am substantially over time--with respect
to the implementation of IFCA on July 1, we are working very
closely with our colleagues at State to put into place the
mechanisms for the enforcement of that law, which targets the
energy, shipping, shipbuilding sector, targets insurance,
requires that gas sales, the revenue from gas sales, be treated
the same way as the revenue from oil sales under the TRA, so
that the gas sale revenue will also be locked down.
All of these provisions we are looking forward to
implementing as of July 1. We have been out around the world
explaining what this new provision, what IFCA provides, so that
our partners around the world understand what the new rules
will be and we will enforce that law vigorously.
The Chairman. I appreciate your answer.
Before I turn to Senator Corker, enforcement of sanctions
is as important, if not even more important, than the sanctions
themselves. Otherwise they are toothless tigers. So we will be
looking forward to a continuing oversight as to how we are
moving in the enforcement side.
I want to just correct the record. I had said ``waivers''
earlier; I meant ``exceptions,'' as it relates to some of the
countries that we are dealing with.
Senator Corker.
Senator Corker. Thank you, Mr. Chairman.
Again, thank you for your testimony. We have had a number
of settings both publicly and privately where we have talked
about the sanctions. For what it is worth, I am impressed with
what the sanctions have done thus far. I am very unimpressed
with the behavior change that it is actually created. I am just
curious. I know you have to be frustrated with that. You look
at the results of what is happening and yet no behavior change.
What are some of the things that you talk about internally?
If we continue down this road for the next 3 or 4 months, again
with no behavior change, what are the additional sanctions,
actions by the U.S. Government, that you discuss internally if
this continues on the path that it is?
Ms. Sherman. Well, let me begin and then let David pick up.
First of all, both to your point, Senator, and to the
chairman's point as well, I should have mentioned that before
Secretary Clinton left office she made a change in the State
Department. She created a sanctions coordinator and that office
is being held by Ambassador Dan Fried, with a small team that
sits in the Deputy Secretary's office and also works with me
and all of the regional bureaus, so that State has a stronger
partner to work with Under Secretary Cohen in the enforcement
of sanctions.
So I think that one of the things that you will see in the
coming year, because Secretary Kerry has his eye very much
focused on this, is that we increase our diplomacy even more to
ensure that all of the sanctions authorities we have are fully
enforced and that people understand the risks that they face by
dealing with Iran. That is not only the sanctions enforcement,
but that is when Iran comes and wants to open an embassy in
their country, to make them understand that they are going to
get the MOIS, the intelligence services, they are going to get
the IRGC-Quds Force, the military arm of Iran, at the same
time, and they are going to increase the destabilization in the
region.
Senator Corker. If you don't mind, I do not really want to
talk about some of the processes. If you will, focus more on
tangible things, our actions toward Iran, that you will be
considering if we continue down this path for the next 4-to-6
months and there is no behavior change. I appreciate all of the
procedural things.
Ms. Sherman. Sure, sure.
Senator Corker. But I am not really that interested in
that.
Ms. Sherman. We are looking at additional sanctions
enforcement and more sanctions and more sectors.
Senator Corker. What do those sanctions look like?
Ms. Sherman. I think that probably what we need to do is
consult with you, with the pending legislation that is up here
on the Hill. Many of the things----
Senator Corker. Do you generally support the pending
legislation?
Ms. Sherman [continuing]. Many of the things you are
looking at are things that we support as well, and we are
having ongoing, I think, staff-to-staff consultations in that
regard. We are looking at additional Executive orders. We are
looking at our military posture and making sure that we
continue to send signals. We are looking at our actions in
Syria, which is very crucial to Iran's position in the world,
and how we can bring that violence to an end and help the
opposition get the future they want in Syria.
So there are many vectors to this approach, Senator.
Senator Corker. What kind of reserve does the Government of
Iran have on hand for their internal use?
Mr. Cohen. Senator, I am going to push my button and then I
am going to say I cannot answer that question in this setting.
I know we are going to try and----
Senator Corker. You cannot tell us? I mean, we talk all the
time about the reserves that Syria has in public settings. You
cannot tell us what kind of reserves Iran has in a public
setting?
Mr. Cohen. I think it is better that we discuss this in the
closed session. The one point I will make about Iran's
reserves: Whatever the total amount is, we also know that their
access to those reserves is substantially impaired. So the
sanctions that we have in place, in particular----
Senator Corker. So in a private setting you could probably
tell us how much longer they can survive; is that correct?
Mr. Cohen. We can discuss the total amount of reserves,
what we think they have access to, and how long we think those
reserves will hold out, Senator.
Senator Corker. One of the things that we are doing is
place pressure on their currency. Obviously with their currency
being devalued the way that it is it can facilitate exports,
which many central bankers around the world are trying to do.
What impact are we having on the other sectors such as the
manufacturing sectors? Are we actually enhancing Iran's ability
to export around the world because of the depreciating rial?
Mr. Cohen. The depreciating rial does have the effect of
making Iran's exports somewhat more attractive. However, we
also have a range of sanctions focused on exports from Iran,
including exports of petrochemicals from Iran, that work
against whatever----
Senator Corker. How much of an offset is it creating
whereby the other parts of their domestic economy are
flourishing as a result of the policies, and how much is that
offsetting the petrochemical component and petroleum component?
Mr. Cohen. Senator, our assessment is that the Iranian
economy is not flourishing in any respect. Their GDP, as I
mentioned earlier, is contracting anywhere from 5-to-8 percent
in the last year, and it will contract again this coming year.
Their ability to transact internationally, to receive payments
for exports, is substantially impaired because of the whole
raft of financial sanctions that are in place. So I think
whatever collateral benefit there may be from a depreciating
rial to the export of Iranian goods is more than offset by the
other actions we have taken.
Senator Corker. I do look forward to the classified setting
and you talking more about the reserves.
Let me ask two additional questions. I know you do not want
to mention names because we do not want to hurt candidates, if
you will, in the Presidential races that are taking place. But
is there any qualitative difference from your perspective in
the candidates that we think will be seeking to lead Iran as it
relates to this issue?
Ms. Sherman. I would say, Senator, that there are probably
some candidates who would be perceived by us as more interested
in looking at the nuclear negotiations in a more positive vein.
However, the nuclear file is held by the Supreme Leader and no
one else, and he is the final decisionmaker regarding the
nuclear file.
We have seen today that conservative commentators are
pushing very hard against Mashaei and Rafsanjani because they
do not see either of those candidates as tough enough, and
obviously Jalili is a candidate himself, who is the negotiator
opposite us right now. So I think there is a lot to play out
here. As I said, there are over 600 candidates. By the 23rd of
May, the Guardian Council will winnow that down to just a
handful, maybe four or five. There will be a lot of gaming that
goes on. Some people speculate Rafsanjani might drop out in
favor of Rouhani. But I think we do not know yet, and I think
we do not know the impact. As you may recall, in 2009 everyone
thought Ahmedinejad was going to be one kind of leader, and he
has turned out to be quite another kind of leader.
I might add, Senator, just on your last question, as an
interesting data point, the IMF projects that FDI--foreign
direct investment--in Iran dropped to $1.1 billion in 2012 from
$4.1 billion in 2011. So there has been a substantial decline
in the economy.
Senator Corker. Look. Again, the effect of the sanctions is
pretty remarkable. It is just unremarkable as far as the
behavior change. I know we are going to be looking at deeper
sanctions. But I do appreciate the efforts that you are putting
forth and for being here today.
Secretary Sherman, one of our goals and missions as we work
with other countries is to ensure that we have the rule of law
and that we rout out corruption; is that correct?
Ms. Sherman. Absolutely.
Senator Corker. I have inquired recently of the
administration regarding the fact that President Karzai in
Afghanistan has continued to talk about the fact that we are
delivering suitcases full of cash to him and he expects that to
continue. I have asked about that and I have been told by the
administration that in essence this is none of my business and
it is not in my jurisdiction.
Now, I am the ranking member on Foreign Relations, which
does not mean a lot, but based on what you just said, I guess
that is in my jurisdiction. Let me just ask this question: Do
you think that delivering cash to a government that has been
around for many, many years and is democratically elected aids
us in fighting corruption?
Ms. Sherman. Well, I would say, Senator, that I appreciate
your concern. What we seek in Afghanistan is a stable
government going forward. The United States has made a
substantial investment in helping that country get to a place
where----
Senator Corker. Does delivering cash to a leader, an
elected leader, does that help us rout out corruption in that
country?
Ms. Sherman. I think, Senator, we of course want to rout
out corruption every way we can. My sense is the particular
instance that you are discussing is better discussed in a
classified session.
Senator Corker. Well, you know, if it has to be discussed
in a classified setting then I cannot talk about it. And yet
the President of Afghanistan is talking about it, and so it is
in a public setting, and I expect a public response. So I thank
you. I guess I will have to ask the President of Afghanistan
what is happening with this cash.
But thank you so much.
The Chairman. Or maybe on your next golf outing.
Senator Cardin.
Senator Cardin. Thank you, Mr. Chairman.
Let me thank both of our witnesses. It is very clear,
United States policy in regards to Iran and I thank you both
for being unequivocal in the manner in which you have presented
this. Our strategies are clearly to isolate the Iranian regime
as long as it continues to deny compliance with international
obligations, and to strengthen that by increasing sanctions and
isolation and enforcement, which I fully support.
At the same time, you will continue on the diplomatic side,
if I understand, with the P5+1, but not to allow that to weaken
or delay the isolation efforts. That is how I understand the
administration's policy, which, I think, is totally consistent
with the support that you have here in Congress.
So let me get to, I think, the chairman's point. There are
two aspects to isolation. We can strengthen the sanctions, and
Congress is looking at legislation today to give you additional
tools. One thing that we have seen from the international
community is they look to the United States to show how we can
increase the pressure on Iran. We are the leader. We have many
countries around the world that are very willing to work with
the United States and to take our leadership, and that is why
these resolutions that we consider and the sanctions
legislation that we pass becomes particularly important,
because it becomes the standard for what other countries are
willing to do.
But then there is another group of countries that sort of
say, well, you know, we are with you, but we have our own
agenda. We got into somewhat of a discussion as to the
countries that are still importing crude oil, are still doing
business with Iran. I would hope that you could supply us some
additional information as to what is reasonable for us to
expect.
I chair the East Asia and Pacific Subcommittee and we will
have conversations with the Chinese and the Japanese and the
Koreans, and it would be, I think, important for us to know
what we could further expect. I was very interested in your
analysis on China, how important China is to Iran in regards to
a market for its crude oil. It is not just the volume level,
but under what conditions they are doing business with Iran,
that we could seek stronger enforcement.
So if you could share that with us, so that we have a game
plan of our expectations. With Japan and Korea, we are talking
about close allies. It would seem to me that as we look at
imposing new sanctions the first order of business is to
enforce the current sanctions. I know they may be in compliance
with the law, but we would like it to be--the intent of our
sanctions is to isolate as much as possible the Iranian regime.
So any information you could supply in that regard I think
would be particularly helpful.
Then of course, it has been several years since the
Security Council has acted in regards to Iran. What is the
prognosis of getting help from Russia and China to pass a
stronger message from the Security Council, which I think would
have an incredible message on Iran?
Ms. Sherman. Thank you very much, Senator. I indeed met
with my Japanese counterpart yesterday and we had a very
vigorous discussion about further enforcement and reductions of
oil. This has been very tough for Japan because one of the
things that I have learned in not quite the 2 years I have been
in this job is there are many versions of crude oil, there are
many different ways that refineries can deal with crude oil. So
making the mixes and matches that work with the supplies that
are available is very complicated to achieve these reductions.
So I am very grateful for what Japan has done, and for what
China has done as well. Indeed, China reduced its oil imports
from Iran by 21 percent in 2012 compared to the previous year.
They are doing that not just because of our unilateral
sanctions, which they do not support--many countries do not
support our unilateral sanctions, not just China--but because
it is in their interest to reduce their risk and Iran is a
risky place from which one should import oil.
We also believe, however, that we have to enforce our laws
and that if that means penalizing entities in a country,
including China, we will do so. On February 11, 2013, we
announced the imposition of nonproliferation sanctions on four
Chinese entities. On July 31, 2012, the Department of Treasury
imposed sanctions under CISADA against the Bank of Kunlun,
which David can talk about further, and Zhuhai Zhenrong as
well. So we will do what we need to do----
Senator Cardin. But can we get China to work with us with a
new Security Council resolution, that perhaps then they will,
since they are part of the development of these sanctions, we
get compliance?
Ms. Sherman. I think that right now it probably would be
difficult to get all of the members of the Security Council to
move on a new resolution. What I think may change that calculus
is not only our sanctions and the enforcement, but actually
what is happening with the IAEA and what is happening with the
IAEA today. They are meeting with Iran around a structured
approach. I do not think they are going to get a positive
response.
The Board of Governors will meet in early June. At some
point, the Director General of the IAEA will have to return to
the Security Council and say: I can go no further; there has
been no response; you have to take further action. Whether that
will happen this June or whether that will happen in September,
I am not sure. But there will come a point at which all of the
international community, all of the Security Council, will have
to confront that the IAEA is not able to move forward in
finding out the dimensions of Iran's nuclear program.
Senator Cardin. I had a chance to meet with the Secretary
General of the IAEA recently and I was very impressed that the
information that they were sharing was very similar to the
information that we had in the United States. So there is
really no difference here about the assessment of where Iran is
on the scale.
I think you are right, getting IAEA more actively engaged
with the United Nations and the Security Council puts this at a
level that, if we expect Iran to comply with its international
obligations, the Security Council is going to have to take
stronger measures.
Thank you, Mr. Chairman.
The Chairman. Thank you.
Senator Johnson.
Senator Johnson. Thank you, Mr. Chairman.
Can either of you just kind of bring me up to speed a
little bit in terms of the condition of the opposition forces
there, especially after the 2009 uprising?
Ms. Sherman. Quite frankly and sadly, Senator, the Green
Movement virtually is nonexistent as an organized force inside
of Iran. The repression, the killings, the efforts to close
down any possibility to organize, has really depressed that
capability.
That said, I do not think any of us know what will happen
in the runup to this election. We had not expected fully what
the Green Movement did, and the Green Movement actually, quite
frankly, was focused more on voter fraud than it was focused on
regime change at the time of the 2009 election. So we are doing
whatever we can in the runup to this election to encourage
voices in Iran to press for the kind of freedom and fair
election that the Iranian people deserve.
There are a variety of things, some of which we can talk
about when we have our classified session, but in public we are
not only using our virtual Embassy to share information, but we
are helping to make sure that technology cannot be jammed, so
that people have access to cell phones and computers so they
know what is going on, so that they can use the tools that
might be valuable to give them a possibility of a future and of
a free and fair election.
We do not expect one, but we want to help the Iranian
people to be able to speak with the voice that they should
have.
Senator Johnson. Do we have any assessment of how many of
those opposition leaders were killed, how many are jailed? Any
kind of numerical assessment?
Ms. Sherman. I do not have those numbers off the top of my
head, but I would be glad to try to see if we can get them for
you.
[The State Department's written reply to Senator Johnson's
question follows:]
The Iranian Government officially confirmed that 36 people were
killed during the post-election protests in 2009, although many
opposition figures and activists contend that more than 100 were killed
in the weeks and months following the vote.
The Iranian Government also officially confirmed that at least
4,000 people were detained during the 2009 protests. Among those
arrested were numerous student leaders and other figures within the
Green Movement, many of whom remain in jail today.
It is difficult to determine the exact number of those killed or
arrested in the post-2009 election period, given the lack of
transparency by Iranian authorities, but certainly dozens died and
thousands were jailed during this time. Hundreds of activists
associated with the Green Movement or other civil society groups have
since fled the country. Many activists report there currently are at
least 500 political prisoners in Iran, including Green Movement
leaders, Mir Hossein Mousavi, Mehdi Karoubi, and Karoubi's wife, Zahra
Rahnavard, who remain under house arrest since February 2011 on
unspecified charges.
Senator Johnson. Secretary Cohen, so we actually do have an
assessment; you just do not have them off the top of your head?
OK.
Mr. Cohen. If I could just add one thing to what Wendy
said, one of the Executive orders that the President adopted
this past year is known as the gravity Executive order. It
focuses on gross human rights abuses through the use of
information technology both in Iran and in Syria. We have
designated a number of entities in Iran, some in Syria as well,
for the use of information technology in a way that restricts
the free communication among the people in Iran.
We are obviously very interested to see what transpires in
the course of this election and will be prepared to apply that
authority if we see evidence that the use of information
technology is affected by the regime in a way that it restricts
the communications among the people during the election.
Senator Johnson. Do we have an assessment of how many
fighters Iran has operating in Syria right now?
Ms. Sherman. We do not have an exact number. When you have
the classified session, the intern intelligence community
briefer can give you his assessment. There is no question, I
believe, that the IRGC-Quds Force is present, is training
militia, is providing a lot of dollars, has financed Hezbollah
as a proxy force. We all heard Nasrallah's speech last week in
which he laid down the gauntlet that anyone who wants the
destruction of Israel should join forces in the fight in Syria.
We take this very, very seriously.
Senator Johnson. Logistically, how are those fighters, how
is the material, getting to Syria from Iran?
Ms. Sherman. It is getting to Syria from Iran in many ways.
I assume, Senator, that one of your questions regards
overflights of Iraq on its way to Syria. We are very focused on
interdicting not only those overflights and urging the
Government of Iraq to inspect those flights.
Senator Johnson. How would we interdict those flights?
Ms. Sherman. We have pressed very hard for the Government
of Iraq to inspect those flights and they have begun to do so.
Is it effective as we want it to be? No.
Senator Johnson. If we had a status of forces agreement in
Iraq, would we be interdicting them ourselves?
Ms. Sherman. I dout that. There is now a sovereign
government in Iraq.
Senator Johnson. So you do not think--there is no regret on
the part of the administration that we did not negotiate a
status of forces agreement, so we had a presence there in Iraq
to be able to possibly affect this?
Ms. Sherman. I think, Senator, you remember that we had
tried to negotiate a status of forces agreement. We said it was
the only way and the only basis on which we could have a
continuing presence in Iraq. The government did not want to do
that. We are not going to put our military or our people at
risk in that fashion.
But even so, this is a sovereign government. We can use the
pressure and leverage that we have and we are to making sure
that all of those planes are inspected.
Senator Johnson. That is all the questions I have. Thank
you, Mr. Chairman.
The Chairman. Thank you.
Senator Casey.
Senator Casey. Thank you, Mr. Chairman.
Under Secretary Sherman and Under Secretary Cohen, we
appreciate your testimony today and your public service on a
set of really difficult issues.
I wanted to focus on two areas in the time that I have. One
is Syria and second, similar to what Senator Johnson raised,
the issue of human rights and Iran and steps that we have taken
but, frankly, further steps that we can take. I noted in your
testimony--and I know when you have comprehensive testimony you
do not get to all of this in your opening remarks, but you did
speak to this. Both of you did. Under Secretary Sherman, on
page 8 you talked about, with regard to the human rights
situation, ``a culture of fear in Iran.'' You say: ``We're
committed to raising the cost of repression and helping
Iranians break through the electronic curtain that the regime
has put in place.''
You talked about sanctioning 30 Iranian individuals and
entities for engaging in serious human rights abuses and
censorship activities. Later you talk about the virtual Embassy
in Teheran and
the way we have brought technology to bear on opening up that
country.
We know from what happened in 2009 a couple of things were
evident to me at that time. No. 1 is, despite the brutal
repression of that Green Movement and efforts like it, I do not
think there is any question that what stirred in the hearts of
Iranians at that time is enduring. It might be repressed, it
might be dampened, but once that happens, I think, in the
hearts of any people, I think it is very difficult to suppress
it over time, even though here we are 4 years later and it
still has not really flourished.
A couple of years ago, I guess it was back in 2009, a $20
million effort was made in the so-called VOICE Act. Senator
McCain and others were very active in that, led that effort.
That $20 million was a darn good expenditure when we consider
the impact it can have on the people of Iran.
So I guess I would ask you--let me just add one quick
editorial comment, then ask you a question about it. Members of
Congress could do a lot more to speak to this. As much as it is
important that we lead with a focus on Iran's nuclear program,
as much as it is important that we focus on other elements of
our strategy, this part of our strategy, on human rights, we do
not talk about enough. Candidly, the President does not talk
about it enough. I think we have got to make it a central
feature of our strategy, because if we do not talk about it it
really is not enough of a strategy.
I would ask you, in addition to what you have already done,
and you have highlighted that, for both witnesses: What more
can we do, meaning the Congress and the administration, and
what more do you have planned to not only put pressure on the
regime as
it relates to human rights, but also to do everything we can to
open up that country by the use of technology and a more
focused strategy?
Ms. Sherman. Thank you very much, Senator. Clearly, as we
approach the election June 14 in Iran, making sure that we do
everything we can so that the people of Iran have a way to make
their voices heard is crucial. Some of those I can talk about
here, some of those when we are in classified session. But we
are trying to make sure that things, as I said earlier, cannot
be jammed, that people have cell phone access, that they have
ways to talk to each other, communicate and organize to the
extent that they want to. We do not take sides. We just want a
free and fair and open election for the people of Iran.
We have also worked very actively in the Human Rights
Council and will continue to do so. We led the efforts in 2011
to create the mandate for a U.N. Special Rapporteur for Iran.
We think this is very important. We have increased the support
for that over the years. We have issued our own Iran human
rights report in our overall human rights report and tried to
point out what is happening, again saying Iran is a country of
particular concern.
We have pressed very hard in both public comments as well
as through the Swiss, who represent us in Iran, to free the
three American citizens, the two that are held in prison and
Robert Levinson, for whom we do not know where he is, in every
way we can, working with the FBI as well on Mr. Levinson, to
raise these issues up and to make the world aware of the
repressive actions of Iran.
I agree with you, Senator, there is not really enough we
can do about the human rights abuses in Iran, and I quite agree
with you that we all need to speak about them more, because it
is that kind of repression that does not allow the people of
Iran to speak their minds and ensure their future.
Senator Casey. Under Secretary Cohen.
Mr. Cohen. Senator, I completely agree with Under Secretary
Sherman's description of the importance of focusing on human
rights abuses in Iran. For our part, working with the State
Department, we have the authority to apply sanctions on human
rights abusers in Iran and we have done so. Candidly, those
sanctions are most important for exposing those who are
involved in human rights abuses. These are not sanctions that
we expect to freeze substantial amounts of money here in the
United States, but they do shine an important light on human
rights abusers in Iran, and we are going to continue to
implement that and designate people for human rights abuses.
Earlier this year, following the passage of IFCA, we
applied sanctions on the Islamic Republic of Iran Broadcasting
Company and its leader, in part because of their distortion of
the communications in Iran. But this is an area where we are as
an administration very focused and quite intent on continuing
to expose human rights abuses in Iran.
Senator Casey. I think if we--and I know I am running out
of time in about 30 seconds. But I like to think about it as
kind of a three-part strategy. You could probably add another
element to it. One is the obvious focus on the nuclear program.
You outlined in your testimony the impact on GDP and their oil
production, so we are seeing results there.
We talked about human rights and I think it has to be a
second element of our strategy. But also just the daily threat
that both Iran, Hezbollah, and all the terrorist organizations
you have outlined in your testimony that they work with. They
are the--as I like to say--the backer and banker of all the bad
guys we can think of.
That brings me--and I know we are out of time, but I will
just put this on the record--brings me to Syria, because if the
Assad regime falls it is obviously a bad day for Iran, a bad
day for Hezbollah, and undermines their ability to plot against
us, as both of them do each and every day. I know our folks
work very hard to confound those plots.
So we will talk more about the impact on Iran that our
policy in Syria can have. Thank you very much.
The Chairman. Thank you.
Senator Risch has deferred to Senator McCain.
Senator McCain. Thank you, Mr. Chairman.
If I could just follow up on Senator Corker's question, it
is well known that we are delivering bundles of cash to
President Karzai. It has been published. Would we object if
other nations delivered bundles of cash to President Karzai?
Ms. Sherman. Senator, I think what we are focused on is
how----
Senator McCain. I would like you to answer the question.
Ms. Sherman. Well, Senator, it is a hard question to
answer.
Senator McCain. All right.
Ms. Sherman. We are, of course, concerned about what other
governments do all over the world.
Senator McCain. But it is OK for us to do it, but not for
others?
Ms. Sherman. I think this is a discussion that is better
had, as I said, in a classified session.
Senator McCain. I think the American people need to know
what is being done with their tax dollars. I think that--and
they should know in open session. And the fact is that we have
billions of dollars in aid programs that are open, transparent,
subject to the scrutiny of this committee and the Congress of
the United States, but somehow we cannot talk about the fact
that bundles of cash--and I happen to be a strong supporter of
President Karzai in many ways--but it is not OK for us to talk
about bundles of cash that are being delivered to President
Karzai, and we would not--none of us would know about it if it
had not been, obviously, in the media.
So hard question to answer, but I think it should be
answered. Would we object if other countries or other entities
or other organizations were delivering bundles of cash to
President Karzai?
Ms. Sherman. I hear your question, Senator. Thank you.
Senator McCain. As the U.S. representative for the P5+1
talks, what progress has been made in advancing our goal of
preventing Iran from achieving nuclear weapons since the
negotiations resumed last year? I couched that question in the
context that I note that in January 2009, according to the
IAEA, the Iranians had 1,000 kilograms of uranium enriched to
3.5 percent; today they have more than 8,000 kilograms. And in
January 2009 they had not enriched to 20 percent; and today
they have almost 280 kilograms.
So I repeat the question: What progress has been made in
these talks?
Ms. Sherman. Senator, I share, I think, your deep
disappointment that we have not made more progress in the talks
in the P5+1. The P5+1, all countries have stood united in
putting what we think is a very reasonable and balanced
confidence-building measure proposal in front of Iran so that
we could address their over 5-percent enriched uranium in the
short term, to ultimately get to full compliance with the U.N.
Security Council resolutions, which is our objective.
Iran has responded to that proposal by putting very little
on the table and asking a lot in return. When Cathy Ashton has
dinner with Jalili this evening, her message to him will be
that we are united, that unless Iran is ready to have serious
talks where they put substantial response on the table it will
be very difficult to sustain the P5+1 negotiations.
Senator McCain. At any time are we going to say enough is
enough?
Ms. Sherman. I'm sure that time will come. As the President
has said, he----
Senator McCain. You are sure the time will come that enough
is enough and we will take action in order to----
Ms. Sherman [continuing]. The President has said, as have
leaders around the world, including the Prime Minister of
Israel, that there is still time for diplomacy, but that time
is not indefinite. We are in very close consultation with our
partners and allies around the world on that clock, on that
timetable, on our considerations, and the President means what
he says when he says that we will not allow Iran to have a
nuclear weapon.
Senator McCain. On the overflights that were mentioned, I
think we should be frank with the American people and the
Congress. We are not stopping those overflights and we are not
getting inspections, and those that are inspected are
preplanned so that the inspection shows that there are no
weapons being delivered from Iran to Syria. And the fact is we
know, absolutely know, that roughly one flight a day is going
into Damascus filled with arms and weapons for the use of
Bashar Assad.
Again--and by the way, I vigorously dispute your depiction
of events of why we did not leave a residual force behind, and
I can tell you that Lindsey Graham, Joe Lieberman, and I were
in the middle of that. In the words of the Chairman of the
Joint Chiefs of Staff, the number of people we were going to
leave behind, in the words of the Joint Chiefs of Staff,
``cascaded down'' to 3,500 and Malaki decided it was not worth
it to continue that. We refused steadfastly to give them a
number for a long period of time when we could have concluded
an agreement, and we are paying a very, very heavy price for it
as Iraq begins to unravel. But that is not the subject of this
meeting.
When the President of the United States has a redline on
use of chemical weapons in Syria and the evidence is pretty
strong that they are using chemical weapons, and yet now the
President says that the United Nations would have to
substantiate that usage, when the United Nations cannot get
into Syria, there is a certain lack of credibility there if we
are going to rely on the United Nations to corroborate whether
Bashar Assad has used chemical weapons when the United Nations
cannot get into Syria to find it out.
Ms. Sherman. Senator, we are continuing our own efforts. We
are not just relying on the United Nations. That certainly
would be one avenue. But we are relying on our own avenues to
substantiate the intelligence community's assessment, which was
made public, that they believe, with varying levels of
confidence, that at least on two occasions small quantities of
chemical weapons were used by the regime.
We take this extremely seriously, as we do the Scud
launches, as we do the destruction of that country, as we do
the 82,000 deaths and the millions of people who have been
displaced or become refugees.
Senator McCain. None of which were the redline articulated
by the President of the United States.
Do you believe that the Iranians have continued to
dramatically increase their assistance to Bashar Assad, say in
the last year?
Ms. Sherman. I would have to look more carefully, but I
would suspect that they have.
Senator McCain. I thank you.
Thank you, Mr. Chairman.
The Chairman. Thank you.
Senator Kaine.
Senator Kaine. Thank you to the witnesses. The committee--
I think we are all together on the national mission to block
Iran from getting a nuclear weapon, and we have to have
military options on the table to do that because it would be
too destabilizing in the region. But we do all want to prefer
the point that the Prime Minister of Israel made, which is if
there is still a window for diplomacy or sanctions, nonmilitary
options, to work, we need to give them our best.
I am wondering a little bit. If you look at the history of
when sanctions work and how or when nations have voluntarily
turned away from the development of mass destruction weapons,
nuclear weapons, you can derive some lessons from it. It
strikes me that if we are pursuing the diplomatic, the
nonmilitary option, to look at it in a clear-eyed way, to use
your phrase, Secretary Sherman, Iran is not likely to back away
from a nuclear program because the United States sanctions were
so successful that we were forced to do it. Backing away for
that kind of reason would mean a complete loss of internal
political legitimacy.
So they have to have a reason to back away from a nuclear
program other than, OK, the United States beat us. If it is a
game of arm-wrestling, they are not going to admit that they
lost. They have to have a reason to back away that can maintain
some political legitimacy within their political context.
As you are engaging in the diplomatic effort surrounding
this, how creative are you being about not just we will let up
on the sanctions, but other things that would enable internal
face-saving, essentially, because I think that is part of any
negotiation. Do not completely paint your opponent into a
corner from which they have nothing to do but aggressively come
out fighting.
Ms. Sherman. Well, thank you for your question, Senator.
Actually, I think that the dual-track approach provides that
way out for Iran should the Supreme Leader decide to take it,
because he could say if he accepted the terms of our
confidence-building measure that he has begun--although the
sanctions relief we put on the table is not significant, it is
meaningful, he could say to his people that he has started back
down the road for economic possibility for his country, after
facing a devastating economy, which is devastated, quite
frankly, not only by our sanctions, but by extraordinary
economic mismanagement by President Ahmedinejad. It is not just
our sanctions that have undermined Iran's economy.
I think if we look back at the history of Iran and the
Iran-Iraq war, it was at the point at which the then-Supreme
Leader, not the same one as today, believed that he might lose
control of his country when he thought that the devastation was
too great for him to hold on that he, in fact, ended things and
came to a settlement.
So it is our belief, and the intelligence community
supports this and can talk about more in closed session, that
increased pressure is part of the solution here; that this is a
culture of resistance, but at some point they will and can make
the strategic decision to truly deal on their nuclear weapons.
I think we can give them an avenue out, but they have to decide
to take it and, sadly, I do not think they have yet made that
choice.
Senator Kaine. How do you interpret the Supreme Leader's
comment that nuclear weapons are contrary to the religion? Is
that just happy talk? Is it PR? Is it an effort to open up a
little window for discussion? What is your best interpretation
of those comments?
Ms. Sherman. It is indeed so that a fatwa has standing
until the Supreme Leader might issue another fatwa which would
have another standing. So it is meaningful, but it is not
sufficient to ensure that, in fact, they are not going to move
to a nuclear weapon.
Senator Kaine. Do you interpret it as just complete PR or
do you actually view it as some statement that is possibly
meant to create some space for dialogue?
Ms. Sherman. I think it has some meaning in Iranian
culture. I think the Supreme Leader believes that he is
conveying a message to us. But at the end of the day the only
thing that matters is concrete results, not just words.
Senator Kaine. One of the next results or bits of evidence
we will see is who the Guardian Council clears to be
Presidential candidates first, and then what happens in the
elections. You probably will not see any major change in
direction until after the elections, but you will be able to
derive some maybe feel for the situation from seeing who the
Guardian Council clears as Presidential candidates, is that not
the case?
Ms. Sherman. I think it will give us some indications, but,
as I said earlier, the nuclear file is held by the Supreme
Leader and the Supreme Leader only.
Senator Kaine. But the Supreme Leader would have a
significant hand as well, if I am right, with the Guardian
Council's approving of Presidential candidates.
Ms. Sherman. Absolutely. He will have a significant hand.
And the other thing I will say is, depending upon what happens
in the Presidential election and their domestic economy means
that he will have to make some calculations about how at risk
his domestic economy is and what that means for the nuclear
negotiation.
Senator Kaine. I want to switch to Syria for a minute. The
chairman has a resolution that I think the committee is going
to be wrestling with next week dealing with Syria. So here is a
question and probably the only right answer is ``It depends.''
But in looking at what we might want to do vis-a-vis Syria, the
effect of actions in Syria on Iran is obviously a significant
factor we ought to consider. So if the Assad government were to
fall, that could mean a number of different things, but play
that forward in terms of an Assad government falling in terms
of some likely consequences in Iran, either generally or as it
pertains to the specific question of the Iranian nuclear
program?
Ms. Sherman. I would urge you to put that question to the
briefer when you have the classified session for the
intelligence community assessment. But I would say that clearly
Syria matters enormously to Iran. We are obviously most
concerned about their nuclear program because Iran with a
nuclear weapon would increase their ability to create regional
instability and hegemony in the world. Their efforts in Syria
are really more about gaining a strategic foothold regionally
and projecting their power and their influence.
So to lose in Syria is to lose their position with
Hezbollah to some extent, to lose their position with their
ally Assad. Whether that would increase their resistance on the
nuclear file in the short run or create an opening I think
remains to be seen.
But we all have to understand that what Iran is trying to
do is not just about a deterrence of a nuclear weapon. It is
about projecting power and getting a foothold from Persia to
the Arabian Peninsula.
Senator Kaine. Thank you.
Thank you, Mr. Chair.
The Chairman. Thank you.
Senator Risch.
Senator Risch. Thank you, Mr. Chairman.
First of all, I think Senator Kaine makes an excellent
point and that is that we can turn the screw as tight as we
want, but that probably is not going to do the job. It is going
to be some kind of an internal situation where their
administration feels they are losing a handle. The only place I
would part ways with you is for us providing the door. I do not
know that we can provide the door. I think if they make the
decision that they are not going to proceed with this, they
will find their own door. They are much better at finding a
door than we are. Nonetheless, we need to give them every
opportunity to do that.
This is what troubles me. I do not know how many hearings I
have been to on this here, in the Intelligence Committee, in
other committees, and we talk and we talk and we talk, and it
is always the same. Nothing changes. This has been going on for
years. The longer we talk, as Senator McCain pointed out, the
larger the stockpile they get of the materiels they need to
construct a weapon.
Every one of us had--not all of us, but I suppose most of
us in our class when we were little kids--had that kid that
just misbehaved. And every day the teacher warned him, and the
teacher warned him over and over and over, but nothing ever
changed. He was always a problem and it just continued. And
then all of a sudden they decided to do something about it.
Well, then there was this huge shock by everybody involved:
Well, how come they are expelling him, or how come they are
doing this, or how come they are doing that?
My fear is that is where we are headed here. I mean, it
astounds me, but I do not believe that the leadership in Iran
believes that somebody is going to pull the trigger on them. I
really do not believe it, because it is gone on so long. They
get up every morning, they enrich, they enrich all night long,
they enrich all day long. The sun goes down, the sun comes up,
and every day is the same.
But I believe somebody is going to pull the trigger on
them, and then we are all going to be sitting here wringing our
hands.
What can we do to change this dynamic? I am just, I am
tired of it. I am exasperated with it. And I guarantee you
someone else in the world feels the same way about this and it
is going to end and it is not going to end happy.
So give me your thoughts on that?
Ms. Sherman. Senator, I think all of us share your frustra-
tion and share your concern. I will say this. In the time that
I
have been doing the P5+1 negotiations and, as Under Secretary
Cohen mentioned in his testimony, there is some slight
movement. Whether that is going to amount to a hill of beans I
do not know yet. But by that I mean, in this last session that
we had in Almaty there was a lot of direct conversation all
about their nuclear program in a way it had not before.
The Iranians did put something on the table. It was just
too small. They have taken steps to convert some of their
enriched uranium into oxide so that now they have, according to
the IAEA, about 167 kilograms of above 5 percent, near 20
percent, enriched uranium that has been converted, so that they
stay below the infamous line that the Prime Minister of Israel
drew at the U.N. Security Council. So they are trying to, in
essence, respond in their own way to the international
community's concerns.
It is not what we want as a response, but it shows they are
paying attention. As the Under Secretary mentioned, in this
last Almaty session they raised for the first time wanting
sanctions relief. They talked about specific sanctions relief
they wanted. So clearly now they are willing to say, yes, the
sanctions matter. They do want to see an end to them.
So these are very slight, very, very slight cracks. As I
said, I do not know whether they will amount to a hill of
beans.
While that is happening, we are not stopping with the
sanctions alone nor the negotiations alone. Whether it is our
military force posture or things that we can discuss in a
classified session, we are using every vector we possibly can
to put pressure on what Iran is doing and to stop them from
doing it.
Senator Risch. I appreciate that, but again what you just
described is exactly what has happened before. They give you
just enough to slow you down, just enough. You said, well, they
talked about wanting sanctions off. They do not need to talk
about wanting sanctions off. All they have got to do is do and
then the sanctions will come off.
Ms. Sherman. Quite agree. The onus is on them. Quite agree.
Senator Risch. And you talk about now, well, they have got
this stockpile now of 20 percent. I remember when the redline
was going over 5 percent. I mean, everybody in this room
remembers that: By golly, they better not go over 5 percent. It
is like the little kid in the classroom: By golly, you better
not throw another spitball. But somehow he does, and life goes
on.
So it is discouraging. At some point in time it is just
going to end, and everybody is going to be wringing their hands
and saying, how did this happen? You know, if you keep doing
the same thing you are going to keep getting the same results,
and that is exactly what has been happening here for years and
years.
Mr. Cohen, I would like your thoughts in the short time we
have left.
Mr. Cohen. Well, Senator, I think one thing that has
changed in the last several years is the intensity and the
effect of the sanctions, and in particular the financial
sanctions. I want to return to a point that I made earlier,
which is the impact of a provision that went into effect
earlier this year which, as we have talked a lot this morning
about Iran selling less oil, we have also now put into place
through legislation and through actions that we have taken a
mechanism that makes it very difficult for Iran to get access
to the revenue that it is earning from its dwindling oil sales.
So even as its sales are going down, it is now being
stressed in a much more significant way because it cannot get
access to those revenues in a way that the Iranian Government
wants. That is different. It is different than what we had in
place last year. It is certainly different from what we had in
place several years ago.
We are looking for additional mechanisms, working with
Congress, working through our own authorities, to continue to
increase the pressure on their access to revenues, their access
to their reserves. That is all designed to put pressure in
particular on the value of the rial. One thing that we have
seen in the course of
the last year is when the rial depreciates and depreciates
rapidly
that begins to create a dynamic in Iran that has an effect. It
has
an effect on the elites and their perception of how the country
is
behaving.
I think we have an opportunity through increased pressure,
particularly on the reserves, on revenue, on the rial, to
create a dynamic that creates the incentive for the
negotiations that Under Secretary Sherman is engaged in to
potentially work. No one knows whether ultimately they will
succeed. But I do think this dual-track strategy creates the
environment in which there is some potential for a diplomatic
resolution.
Senator Risch. Mr. Cohen, I hope you are right. But
unfortunately, these are the same things we heard when we
originally put the sanctions on. They are the same things we
heard when we ramped up the sanctions the first time. They are
the same things we heard when we ramped up the sanctions the
second time.
I mean, there is no doubt that we are making life somewhat
inconvenient for them. But for crying out loud, over this long
period of time, if we cannot do it with those sanctions they
obviously are not getting the job done to the point that we
want to see the job done.
With that, my time is up. Thank you very much, Mr.
Chairman.
The Chairman. Senator Coons.
Senator Coons. Thank you, Chairman Menendez. I just want to
start by thanking you, Mr. Chairman, for your tireless,
unrelenting, and focused leadership in this body on ensuring
that we are working in partnership to impose on the Iranian
regime the strongest, most sustained sanctions regime possible.
That is to Senator Corker and to my other colleagues as well,
those who are new to the committee and those who have served in
previous Congresses.
I am encouraged to hear, Under Secretary Sherman, in your
written testimony that you are determined to face one of the
greatest global challenges the United States and our allies
face in Iran. In their support for terrorism, in their support
for the murderous Assad regime, and in their demonstrated
efforts to achieve a nuclear weapons capability. That you are
determined to use, and I quote, ``all elements of American
power'' to prevent them from achieving those objectives.
I share that goal. I share the frustration expressed by my
colleague from Idaho that this seems to go on and on and on
and, while diplomacy is the preferred outcome, I am distressed
by what seems to be endless cycles of negotiations. So in my
view we need to be unrelenting in imposing tougher and tougher
sanctions and in being willing to use force in order to prevent
the acquisition of a nuclear weapons capability by Iran.
Let me move, if I might, to Africa. I am the subcommittee
chair. We have seen both in recent arrests in Kenya and in a
variety of efforts, that the Iranians are trying to use their
oil, their resources, in a so-called ``charm offensive'' across
the continent. They are seeking diplomatic allies and they are
seeking economic allies.
What are we doing to ensure that our allies, that our
potential partners in Africa, are not enmeshed in their
efforts? And what more could we be doing to engage our allies
on the African Continent in our efforts insisting on the
toughest sanctions possible?
Ms. Sherman. Thank you, Senator. We very much share your
concern about what Iran is doing around the world to create
destabilizing activities and to, in fact, through proxies like
Hezbollah really commit terrorist acts. As you mentioned, Kenya
has just rolled up a potential cell in their country. Other
countries have as well. Every one of our ambassadors is aware
of and made aware of any activity by Iran in their country.
We try to go into countries where Iran is trying to
establish a foothold and tell them what to expect and what will
be coming at them. So we are very vigorous, all of our
embassies are in this regard.
I know that you must be concerned, for instance, that
Iranian President Ahmedinejad visited Niger in April. That was
the first time an Iranian President had gone to Niger. We were
very concerned about this. Everyone here is well aware of
uranium because Niger is the world's fourth-largest producer of
uranium, a source of uranium for France. And we are glad to say
at least that President Issoufou confirmed that this was not
discussed with Iran and that they were both members of the
Nuclear Nonproliferation Treaty and it wouldn't be appropriate.
However, we are going to stay on top of this both in normal
channels and intelligence channels to make sure that there is
no development of a relationship that would increase the risks
that we all face, that you and Senator Risch and everyone on
this panel has discussed regarding Iran's ambitions in the
world. So we are very focused on this.
Senator Coons. Thank you, and I look forward to hearing
from you and from our chair for other opportunities for us to
continue to strengthen and enforce sanctions. I frankly think
that we are only going to see progress in this relationship if
sanctions multilaterally are sustained and imposed in a broader
and tougher way.
Let me ask just one other question if I might. You
reference in your written testimony three Americans. I wanted
to particularly raise Amir Hekmati, an American veteran, a
United States marine who served in Afghanistan, had never
previously traveled to Iran and has now been in prison several
years without representation, mostly in solitary confinement. I
understand his father was diagnosed with terminal brain cancer.
I recognize that United States-Iranian relations are in many
ways at their lowest ebb in recent years. What, if any,
prospects do we have for securing the release of Amir Hekmati,
and what else might we do?
Ms. Sherman. As I mentioned earlier, we are concerned about
Amir Hekmati, Saeed Abedini, and of course Robert Levinson.
Hekmati, as you know, was sentenced to death before having that
sentence mercifully remanded. We are very concerned about him.
We have on multiple occasions asked the Swiss, who are our
protecting power in Iran, to ask for consular access, to ask
after his welfare. They have done that. They have not been
allowed to have consular access because Mr. Hekmati is a dual
national citizen and they do not recognize dual nationalities.
We remain very troubled by reports about his health
condition. We understand that he was held in solitary
confinement, endured a hunger strike. So we will continue to
pursue through diplomatic engagement every way we can that Mr.
Hekmati is returned safely to his family.
For each of these families, we have someone in Consular
Affairs who stays in touch with families on a regular basis. We
look for things that we can do in any format. Of course, in the
case of Mr. Levinson we work very closely with the FBI. We just
do everything we possibly can.
Senator Coons. Thank you.
I want to thank you both for your service and for your
relentless focus on this most significant security threat. Not
just regionally to many of our allies, but I think to our
Nation directly as well.
Thank you, Mr. Chairman.
The Chairman. Senator Murphy.
Senator Murphy. Thank you very much, Mr. Chairman. I want
to add my thanks to Senator Coons and others on this committee
for your laser-like focus on preventing Iran from obtaining a
nuclear weapon, and I want to thank our guests here today for
what I think has been a very statesmanlike focus on this
problem, and appreciate their continued willingness to leave
military options on the table as a last resort.
I also want to thank my colleagues for turning some of this
focus to Iran's role in Syria. Having just returned from the
region, one of the things that I came back disturbed by was the
impressions given to some people visiting the region about a
very optimistic assessment about what would happen with respect
to Iran's role in the region should Assad fall. I know you
talked a little bit about that earlier, but I think we are
deeply naive if we believe that the Iranians are going to walk
away after Assad's fall and I think we should educate our
decisions as policymakers as we think about what level of
military participation we are going to have in the region. I
came back convinced that we could potentially find ourselves
simply arming one side of a long-term civil war there.
I wanted to ask you both about your assessment of the
specific status of the nuclear program. I think Senator McCain
talked a little bit about this, but it has been our
government's assessment that Iran has not made a decision yet
to develop a nuclear weapon. I guess my questions are multiple.
I would like to ask you what you believe are the
circumstances that would prompt the regime to make a decision
to obtain a weapon? What would be the short-term likely outcome
of that decision, and then an assessment of how long it would
take them to obtain a weapon once they have made that decision?
If you could speak to your general assessment of the status of
their internal decisionmaking processes and then timetables if
they were to make a different decision than we believe they
have made today?
Ms. Sherman. Thank you, Senator. As the President and
others have noted, we currently assess that it would take Iran
a minimum period of approximately 1 year if it made a decision
today to acquire a nuclear weapon, and we assess that they have
not yet made that decision and it would be made by the Supreme
Leader.
That effort to acquire a nuclear weapon would involve both
reduction of a sufficient amount of highly enriched uranium for
one nuclear weapon and the completion of various weaponization
activities needed to fashion a working nuclear device that
could be fitted into a ballistic missile. When you have your
classified briefing, the briefer can go into more detail about
what those clocks might look like.
Right now, as I said earlier, we believe they have about
167 kilograms of near 20 percent. They have converted a great
deal of their 20 percent into oxide. This is based on a report
from the IAEA. We are very concerned--and again, you can get
this in a classified briefing, how quickly they, in fact, could
break out to get to highly enriched uranium, which they would
need to build a nuclear weapon.
So we are very concerned about this timetable. As the
President said, there is time for diplomacy, but it is not
indefinite.
Senator Murphy. So then if you could speak to what we know
today about the internal politics that will drive this ultimate
decision. Obviously, that is directly connected to our
discussion about sanctions. As you mentioned earlier at least
once, they have clearly made a decision to stay on one side of
this line. What are the things that will change that decision,
and amongst those what are the things that may be outside of
our control that relate to the internal political dynamics of
an upcoming election and a very fluid political situation on
the ground within Iran?
Ms. Sherman. Senator, I wish I knew for certain the answer
to all of those questions. If I did I might be able to know the
best route to get there. So I can give you our assessments, and
again I think the briefer will give you the intelligence
community's deeper assessment.
But I do not think the Supreme Leader has made the
strategic decision to, in fact, deal on their nuclear program.
I believe it is all part of a broader projection of power and
assertion of Iranian authority and point of view, not only in
Iran but in the region and ultimately in the world.
I think that we do believe that the imposition of sanctions
and the pain that is being put on the Iranian regime is having
an effect, perhaps not yet enough of an effect to change the
calculus of the Supreme Leader, but on its way potentially to
doing so. I think we do have to say a thank-you to the European
Union for the enormous action they have taken to intensify and
follow the lead of the United States, but also what they were
able to do with the swift procedure that is used to deal with
financial banking has helped enormously as well.
Senator Murphy. But I guess I am asking you a different
question. I am not asking a question of what prompts them to
make a decision to drop their weapons program. I am talking
about what prompts a decision to actually move forward with the
weapons program. My question is in part, What are the things
that may be outside of our control? What are the developments
in the region that could occur that would change their calculus
to move forward?
Ms. Sherman. I think that we do not know the answer to all
of that question, but I certainly think that the fall of the
Assad regime will have an profound impact. It will either make
them feel more or less secure. I think that you are quite right
that they will look for a way to maintain a presence even after
Assad falls, because Assad will most decidedly fall at some
point in this process, and they will look for a way to recover
because they need that position in the region.
I think there are other actions that could be taken and
other agreements made. If there is an agreement between Israel
and the Palestinian Authority for peace in the Middle East, it
may change the calculus of many players in the world. Where we
are in Afghanistan, what happens to DPRK's program is watched
by Iran.
So there are any number of factors that I think probably
affect their calculus. But at the end of the day, my own
experience is that this is ultimately about regime survival and
survival of the choices they have made about how their country
is governed, ones that we find extraordinarily repressive to
their people, and it will be that regime survival that will
affect their calculus.
Senator Murphy. Thank you, Mr. Chairman.
The Chairman. Very briefly, as we have a few minutes left
before the vote closes, Senator Risch.
Senator Risch. Thank you very much.
Ms. Sherman, one of my constituents is one of the three
people that are in Iran that are being held. He has been
sentenced to 8 years in prison. The prison conditions there, as
you know, are absolutely deplorable. He has just been put in
solitary confinement for some time, was released. His health is
questionable.
First of all let me say I understand the frustration in
dealing with this. It is very difficult to explain to people
back home in Idaho. He is a pastor there. His only crime is
preaching the Christian religion and for that he has received 8
years in these awful conditions.
I want to underscore for you that people really want to see
this brought to an end. Now, having said that, I understand
because of the relationship between the two countries it is
almost impossible to deal with this, particularly when we are
dealing through back channels and through third parties. But on
behalf of Idahoans, I want to communicate to you how incredibly
important this is to us, and we want to enlist you, as I know
you have done, to make every effort you possibly can to secure
his freedom.
Ms. Sherman. Senator, we will absolutely do so. As you say,
Mr. Abedini was spearheading the construction of an orphanage
in 2009 when he was detained and thrown into prison. Just as
recently as March 22, Secretary Kerry issued a written
statement expressing his concern over reports that Mr. Abedini
had suffered physical and psychological abuse in prison, that
Iran continues to refuse consular access by Swiss authorities,
who is the United States protecting power in Iran, and calling
for his immediate release.
The Swiss have been terrific. They have gone back
constantly to ask for consular access, because we do assess
that when we keep asking we at least put a spotlight on the
treatment that is being given to prisoners and hopefully lessen
the horrible situation under which they are held. But we will
not stop for Mr. Abedini, for Robert Levinson, for Mr. Hekmati,
until they can be returned to their families.
Senator Risch. I appreciate that, and I agree completely
that by spotlighting this that does a tremendous amount of good
in the world court of public opinion. Thank you very much.
Thank you, Mr. Chairman.
The Chairman. Thank you.
Just one or two final questions and then a final comment.
One is, I assume that when we go into closed session on the
questions about the money given to Karzai that you will be able
to say how long that has been going? I understand it's been
going since the Bush administration.
Ms. Sherman. I think that indeed the briefer will be able
to do so, and I will ensure that he can.
The Chairman. Thank you.
Second, observations made by Senator Kaine with reference
to the council's selection of Presidential candidates. At the
end of the day, you have consistently made an observation that
it is the Supreme Leader who holds the nuclear folder. In that
regard, would not it be safe to say that, regardless of who
they allow to run, that that is unlikely to shape the results
of the Supreme Leader's thinking in this regard?
Ms. Sherman. Yes. The one thing I would say, Mr. Chairman,
is that depending upon how the elections go and what that does
to the domestic environment and the domestic economy, it will
either open or close more space for the Supreme Leader in his
decisionmaking. It will be another data point for his
decisionmaking. But at the end of the day it is him and him
alone.
The Chairman. In that regard, you mentioned regime change,
regime survival. Is it not really one of our challenges here,
much as I may not care and I do not care for this regime,
however, is not one of our challenges here convincing the
Supreme Leader that this is a legitimate effort, a global
effort, about their nuclear weapons program and not about
regime change?
Ms. Sherman. Correct. What we say, and I should have said
it more explicitly at the start, we are about changing the
behavior of the regime, not the regime. I agree with you, I
find the regime odious and certainly not a place I would want
to live and raise my family. But nonetheless, this is the
choice of the Iranian people and was the choice of the
revolution way back when some 30-some odd years ago.
This is about changing the regime's behavior around their
nuclear program, meeting their international obligations,
responding to the concerns of the international community, the
Universal Declaration of Human Rights, and how we expect
governments to treat their people, and not to be a state
sponsor of terrorism.
The Chairman. Then finally, I appreciate and I think there
are many who share Senator Risch's frustrations. I am sure the
administration shares to some degree those frustrations. But is
it not important if the final option, if all peaceful diplomacy
tools ultimately yield no result, the result we want to see,
which is deterring Iran from its nuclear program and its
nuclear weapons program, and if we have exhausted every
possible sanction that we could levy, and we come to that point
in which the clock has ticked to its final moment, is it not
important to have exhausted all of those efforts before we get
to that final moment in terms of what may have to be a military
option, in which then the international community will come to
the conclusion that we have done everything we could through
peaceful diplomacy options?
Ms. Sherman. I could not have said it better, Senator.
Exactly.
The Chairman. You can continue on.
So let me ask--let me just make this final observation. I
look forward to working with the administration to the extent
that we can, and I think we can, about some additional efforts
here to give tools that might continue to perfect our sanctions
regime in a way that creates further challenges for the regime
and gets the Supreme Leader to think in a different way, while
at the same time preserving the coalition that we have, which I
think is incredibly important in terms of sending a global
message to Iran.
With that, you have the thanks of the committee for your
service and your testimony. The record will remain open until
the close of business on Friday.
This hearing is adjourned.
[Whereupon, at 10:49 a.m., the hearing was adjourned.]
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Additional Material Submitted for the Record
OFAC Publication Submitted by David Cohen as an Attachment to his
Prepared Statement
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