[House Hearing, 111 Congress]
[From the U.S. Government Printing Office]
IMPLEMENTING TOUGHER SANCTIONS ON IRAN: A PROGRESS REPORT
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HEARING
BEFORE THE
COMMITTEE ON FOREIGN AFFAIRS
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
DECEMBER 1, 2010
__________
Serial No. 111-136
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Printed for the use of the Committee on Foreign Affairs
[GRAPHIC(S)] [NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.foreignaffairs.house.gov/
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COMMITTEE ON FOREIGN AFFAIRS
HOWARD L. BERMAN, California, Chairman
GARY L. ACKERMAN, New York ILEANA ROS-LEHTINEN, Florida
ENI F.H. FALEOMAVAEGA, American CHRISTOPHER H. SMITH, New Jersey
Samoa DAN BURTON, Indiana
DONALD M. PAYNE, New Jersey ELTON GALLEGLY, California
BRAD SHERMAN, California DANA ROHRABACHER, California
ELIOT L. ENGEL, New York DONALD A. MANZULLO, Illinois
BILL DELAHUNT, Massachusetts EDWARD R. ROYCE, California
GREGORY W. MEEKS, New York RON PAUL, Texas
DIANE E. WATSON, California JEFF FLAKE, Arizona
RUSS CARNAHAN, Missouri MIKE PENCE, Indiana
ALBIO SIRES, New Jersey JOE WILSON, South Carolina
GERALD E. CONNOLLY, Virginia JOHN BOOZMAN, Arkansas
MICHAEL E. McMAHON, New York J. GRESHAM BARRETT, South Carolina
THEODORE E. DEUTCH, CONNIE MACK, Florida
FloridaAs of 5/6/ JEFF FORTENBERRY, Nebraska
10 deg. MICHAEL T. McCAUL, Texas
JOHN S. TANNER, Tennessee TED POE, Texas
GENE GREEN, Texas BOB INGLIS, South Carolina
LYNN WOOLSEY, California GUS BILIRAKIS, Florida
SHEILA JACKSON LEE, Texas
BARBARA LEE, California
SHELLEY BERKLEY, Nevada
JOSEPH CROWLEY, New York
MIKE ROSS, Arkansas
BRAD MILLER, North Carolina
DAVID SCOTT, Georgia
JIM COSTA, California
KEITH ELLISON, Minnesota
GABRIELLE GIFFORDS, Arizona
RON KLEIN, Florida
Richard J. Kessler, Staff Director
Yleem Poblete, Republican Staff Director
C O N T E N T S
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Page
WITNESSES
The Honorable William J. Burns, Under Secretary for Political
Affairs, U.S. Department of State.............................. 12
The Honorable Stuart A. Levey, Under Secretary for Terrorism and
Financial Intelligence, U.S. Department of Treasury............ 22
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
The Honorable Howard L. Berman, a Representative in Congress from
the State of California, and Chairman, Committee on Foreign
Affairs: Prepared statement.................................... 5
The Honorable William J. Burns: Prepared statement............... 16
The Honorable Stuart A. Levey: Prepared statement................ 25
APPENDIX
Hearing notice................................................... 66
Hearing minutes.................................................. 67
The Honorable Dan Burton, a Representative in Congress from the
State of Indiana: Prepared statement........................... 68
The Honorable Russ Carnahan, a Representative in Congress from
the State of Missouri: Prepared statement...................... 70
The Honorable Joe Wilson, a Representative in Congress from the
State of South Carolina: Prepared statement.................... 72
The Honorable Theodore E. Deutch, a Representative in Congress
from the State of Florida: Prepared statement.................. 73
The Honorable Gene Green, a Representative in Congress from the
State of Texas: Prepared statement............................. 74
Questions for the record submitted by the Honorable Russ Carnahan
to the Honorable William J. Burns (responses not received prior
to printing)................................................... 75
IMPLEMENTING TOUGHER SANCTIONS ON IRAN: A PROGRESS REPORT
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WEDNESDAY, DECEMBER 1, 2010
House of Representatives,
Committee on Foreign Affairs,
Washington, DC.
The committee met, pursuant to notice, at 9:33 a.m. in room
2172, Rayburn House Office Building, Hon. Howard L. Berman
(chairman of the committee) presiding.
Chairman Berman. The committee will come to order.
And in a moment I will recognize myself and the ranking
member for up to 7 minutes each for purposes of making an
opening statement. I will then recognize the chairmen and
ranking members of the Middle East and South Asia Subcommittee
and the Terrorism, Nonproliferation and Trade Subcommittee for
3 minutes each to make their opening statements.
We have to end today's hearing by noon. So, without
objection, all the members may submit opening statements for
the record.
Before I begin my statement, I want to say a few words
about Steve Solarz, one of our most distinguished former
colleagues, who passed away on Monday after a long battle with
cancer.
Steve had struggled for several years with this terrible
illness, but with his typical discipline and good humor he
maintained an active and productive schedule. He served in
Congress from 1975 to 1992. On this committee he was chairman
of the Africa Subcommittee and later chairman of the Asia
Subcommittee, where his hearings and activism played a key role
in ending the dictatorship of Philippine President Ferdinand
Marcos.
Steve was one of the most creative legislators I have ever
worked with. Time after time, the committee would be debating
an amendment to a bill that was resisted by the committee
leadership; arguments would be made on both sides; and then
Solarz would seek recognition, offer the perfect synthesis
between the two positions, and get the unanimous backing of the
committee for his compromise. He was a unique talent.
After leaving Congress, Steve continued his activism as a
leader of the International Crisis Group. Those of us who had
the privilege of calling Steve both a friend and colleague will
remember him for his sharp insights, good humor, and
willingness to push American foreign policy beyond the
boundaries of conventional thinking.
We express to his wife Nina and his family our deepest
regrets and condolences at this loss to them and to our Nation.
And I ask for us just to sit to take a moment of silence while
we remember Steve.
Now to my opening statement.
Iran's nuclear program is a fundamental threat to the
United States, our friends and allies, and to the global
consensus on halting and reversing the spread of nuclear
weapons.
As we meet this morning, Iran's centrifuges continue to
spin, making more and more enriched uranium that could
ultimately be turned into fuel for nuclear weapons. This threat
continues to grow with each passing day.
This summer, in response to that threat, Congress passed
the most rigorous sanctions ever imposed on Iran, the
Comprehensive Iran Sanction, Accountability, and Divestment
Act, or CISADA, as it is widely known.
The overwhelming vote for CISADA--408 to 8 in the House, 98
to nothing in the Senate--was a powerful demonstration of the
bipartisan commitment to a tough approach to halting Iran's
nuclear program.
This act broadly expanded the applicability of the original
Iran Sanctions Act, including sanctioning third-country
companies and banks involved in activities such as sales of
refined petroleum to Iran, assistance to Iran's domestic
refining capacity, and financial dealings with the Iranian
Islamic Revolutionary Guard Corps, or IRGC.
The fundamental premise of our approach is that companies
should choose the U.S. market over the Iranian market. It is a
sound approach but by no means a silver bullet for addressing
Iran's desire to acquire a nuclear weapons capability.
Our legislation, even before the President signed it into
law on July 1, helped to galvanize international opinion
regarding the Iranian nuclear issue. The European Union,
previously a key source of Iranian commerce and investment,
passed its own set of tough sanctions in late July. Other
states--Canada, Australia, South Korea, Japan, and Norway--
followed with their own national sanctions.
As a result of our sanctions and additional financial
measures pursued by the administration, most major Western,
Japanese, and South Korean energy companies have ceased selling
Iran refined petroleum and investing in Iran's energy sector,
and the doors of much of the financial, insurance, and shipping
worlds have been closed to Iran.
Major oil companies, such as Royal Dutch Shell, Total of
France, Italy's ENI, Vitol, Norway's Statoil, Spain's Repsol,
and Japan's INPEX, have all ended or are in the process of
ending their energy projects in Iran. And there are numerous
reports that these sanctions have seriously hurt the Iranian
economy and deepened political fissures in the Iranian
leadership. But is that, in fact, the case? And, if so, how
much closer does it bring us to our real objective, which is to
persuade Iran to suspend its nuclear enrichment program and end
its nuclear weapons program?
[Audio difficulties.]
Chairman Berman. Roll the clock back. I get 10 more seconds
for the last play.
The purpose of this hearing is to attempt to answer these
very questions. I would like to hear the witnesses' candid
assessment of the current sanctions regime. Is it helping us to
achieve our goal of an Iran without nuclear arms? Are sanctions
having the desired impact on Iran's economy, and are we getting
closer to persuading Iran to suspend its uranium enrichment
program, as repeatedly demanded by the international community?
In particular, is international support for sanctions holding
firm? How much back-filling is there by companies whose
governments have not imposed national sanctions?
On that last point, there seems to be no doubt that Chinese
companies are pursuing energy investments in selling Iran
refined petroleum. The Chinese acknowledge it. I would like
know why we haven't sanctioned any of the Chinese companies
engaged in clearly sanctionable actions. I am concerned that we
will not be able to sustain a robust sanctions regime if we
don't impose sanctions in an evenhanded manner.
Many leading Western, Japanese, and South Korean companies
have pulled out of Iran because they feared we would otherwise
impose sanctions. Will they stay out if they see that others
are getting off scot-free? Is the problem that we lack leverage
over the Chinese companies? What kind of message do we send if
we fail to sanction companies that are transparently engaged in
sanctionable activities?
I know the administration did impose sanctions on one
company, NICO, which is based in Switzerland. But since NICO is
an Iranian state-owned company that, by definition, would be
barred from dealing with the U.S. market, that action doesn't
seem to me to have much of a deterrent effect. I hope
Undersecretary Burns, in particular, will address these issues.
And, in addition, I would welcome Under Secretary Burns's
views on other key aspects of Iranian nuclear issue, such as
the recent interruption in Iran's enrichment activities and the
general diminishing of its enrichment efficiency, as reported
by the IAEA. How meaningful is that slowdown? Should it alter
our previous calculations regarding Iran's nuclear program?
Have the recent revelations regarding North Korea's apparently
enhanced nuclear facilities affected those calculations? What
can you tell us regarding upcoming negotiations in Iran, now
scheduled to commence in a few days in Geneva?
Lastly, this month marks the 1-year anniversary of the last
major demonstrations by Iran's reformist Green Movement, which
mushroomed in the wake of the June 2009 hijacking of the
Presidential elections by Ahmadinejad. Where does the Green
Movement stand today? What can we do to affirm our clear
support for the pro-democracy forces in Iran?
And I would like to close by reaffirming my own strong
support for our sanctions effort. It is our last best hope for
resolving the Iran nuclear issue in a peaceful manner. As I
have said on many occasions, the alternatives are military
action and, even worse, acquiescence to a nuclear-armed Iran.
Both of these alternatives are unpalatable.
And I also want to really commend the administration for
placing such a high priority on the Iranian nuclear issue and
for the effectiveness of its policies thus far. Thanks to this
administration's artful diplomacy, we have far more
international support on this issue than most of us thought
even remotely possible as little as 6 months ago.
From the outset, this administration has made Iran a top
priority item in virtually every meeting with foreign leaders,
and the results show. The administration's successful jawboning
of many banks and energy companies have also made a significant
contribution to the effort to isolate Iran economically.
So, 5 months to the day since CISADA became law, I look
forward to your candid assessment of the effectiveness of our
sanctions effort, and how it can be improved, as well as your
assessment of the prospect that we will succeed in our larger
goal of preventing Iran from achieving nuclear-weapons status.
I also want to give the witnesses every opportunity, should
they choose, to comment on the significant number of documents
concerning Iran which were unfortunately released by Wikileaks.
However much one might deplore the unauthorized release of
internal U.S. diplomatic communications, they do disclose the
very high priority that this President, from the outset, has
put on ending the Iranian nuclear weapons program.
I am very pleased to recognize the ranking member, the
gentlelady from Florida, Ileana Ros-Lehtinen, for her opening
remarks.
[The prepared statement of Mr. Berman follows:]
[GRAPHIC(S)] [NOT AVAILABLE IN TIFF FORMAT]
Ms. Ros-Lehtinen. Thank you very much, Mr. Chairman.
I would like to start by recognizing some of my
constituents who are in the audience. They are Iranian
Americans who are staunchly opposed to the Iranian regime, who
have shed light on Iran's nuclear program through the unveiling
of information on different Iranian nuclear facilities. Many
have relatives in Camp Ashraf. I raised with Assistant
Secretary of State Feltman a few weeks ago the need for the
administration to ensure that the Iraqi Government lives up to
its human-rights commitment and protects the residents of Camp
Ashraf.
Welcome.
With respect to Iran, Mr. Chairman, as we all know, the
United States must have one vital objective, and that is to
stop the regime's pursuit of nuclear and other unconventional
weapons and the missiles to deliver them, its sponsorship of
terrorism, and other activities that threaten Americans, our
interests, and our allies.
However, since the 1990s, the U.S. and international
efforts to stop the growing Iranian threat have been half-
hearted at best, with results to match. The problem is not that
a tough approach has failed but that it has yet to be fully
tried. The sanctions were not fully implemented or enforced.
The focus was not on measures the U.S. could easily take but,
instead, on persuading the so-called international community to
act ``collectively,'' meaning agreeing to the lowest common
denominator while continuing to cultivate ties with the regime
in Tehran.
Russia, of course, has a long record of cooperation with
Iran on missiles and on nuclear matters, particularly its
construction of the Bushehr reactor, which is scheduled to come
on-line in January. To secure Russian cooperation, the current
and previous administrations resorted to a series of
concessions to Moscow. What did we buy at so great a price?
Tacit support for U.N. sanctions and ``assurances'' that Russia
will wrap up investments in Iran's energy sector and that
Russia will not, at this time, proceed with its sale of advance
missiles to Iran. Of course, despite all of our concessions,
Russia has indeed offered a nuclear cooperation agreement and
advance missile sales to the Syrian regime.
China is another key ally and protector of Iran and has
made it clear that it will prevent significant pressure being
placed on Tehran. Chinese companies are eagerly expanding their
trade with and investments in Iran, many taking advantage of
opportunities created by Western and other companies which are
curtailing or finally severing their ties. Recent reports
indicate that China has actively facilitated North Korea's
providing Iran with advanced missiles and ingredients for
chemical weapons in violation of U.N. Security Council
sanctions.
But support for Iran comes from other places as well.
Determined to demonstrate its growing distance from the U.S.,
Turkey has publicly embraced Tehran, increased its economic
cooperation, signed a major gas pipeline deal, and tried to
undermine U.S. efforts to stop the Iranian threat, including
voting against U.N. Security Council Resolution 1929. Turkey
recently prevented NATO from designating Iran as a missile
threat to be countered with a proposed anti-missile shield,
despite Tehran's expanding missile capabilities. Armenia is
expanding financial trade, transport, and energy cooperation
with Iran.
Unfortunately, securing effective action by one
administration after another has been an uphill battle. For
over 14 years, since the passage of the Iran Sanctions Act,
only one determination of sanctionable activity has ever been
made, and the resulting penalties were immediately waived.
Efforts to strengthen existing laws were opposed by each
administration, citing a reluctance to tie the President's
hands or upset other countries who want to keep doing business
with Tehran.
This past June, after a long, hard-fought struggle, the
Comprehensive Iran Sanction, Accountability, and Divestment
Act, CISADA, was enacted. Although weaker than some of us had
hoped, this law could represent a major step forward,
especially through its energy, refined petroleum, and financial
sanctions. This congressionally driven effort has led some
countries, including the EU, Japan, Australia, and South Korea,
to finally impose their own, albeit more limited sanctions on
Tehran.
On the financial front, the actions taken by foreign
governments to sever their ties with the Iranian financial
institutions and other Iranian entities designated as involved
in Iranian proliferation and sponsorship of terrorism is
encouraging.
Under Secretary Levey, let me again thank you and your team
at Treasury for your pivotal role in these developments and
your years of dedication in acting against the Iranian regime
and its enablers. Thank you, sir.
I am, however, concerned that history may be repeating
itself regarding the State Department's implementation efforts.
For example, the law requires the administration to investigate
upon receiving credible evidence of suspected sanctionable
foreign investment in Iran's energy sector. The U.S. has known
for years about Chinese energy investment in Iran, but only
this past September did the administration initiate
investigations of sanctionable activity. Yet State still
refuses to publicly disclose whether Chinese companies are
among the targets.
The State Department has issued one determination under
CISADA, just one, imposing the minimum number of sanctions on
NICO, an Iranian subsidiary, for its role in Iran's petroleum
sector. Likewise, the administration has listed and sanctioned
just eight Iranian regime officials responsible for human-
rights abuses.
We have wasted enough time, 14 years. No more waivers,
exceptions, or excuses. We cannot live with a nuclear Iran. We
must ensure that the tools we have are used to their maximum
effectiveness and look for new means of compelling Iran to
cease activities that threaten our security, our interests, and
our allies.
I am not just referring to this nuclear pursuit but also to
its state sponsorship of terrorism. Of particular concern is
Iran's support for Hezbollah in Lebanon, Mr. Chairman, which
has threatened violence if, as expected, its operatives are
indicted for the assassination of former Lebanese Prime
Minister Hariri, has amassed an arsenal of about 50,000
rockets, and participates in and has veto power over the
current Lebanese Government. I would ask Under Secretary Burns
what the U.S. is doing to address this situation before it
becomes a full-blown crisis and Hezbollah takes over
completely.
Thank you, Mr. Chairman. And I will ask the administration
also about the continued military assistance to the Lebanese
armed forces.
Thank you very much, Mr. Chairman. And I thank the
witnesses.
Chairman Berman. Well, thank you.
And now I am pleased to recognize for 3 minutes the
chairman of the Middle East and South Asia Subcommittee, the
gentleman from New York, Mr. Ackerman.
Mr. Ackerman. Thank you, Mr. Chairman.
In the 112th Congress, the challenge before our witnesses
and before those of us returning in January will be the same:
How do we prevent Iran from acquiring nuclear weapons? It is, I
believe, the most critical national security question facing
our Nation today, and the success or failure of our efforts
will determine what kind of world our children will inherit.
Iran's drive to acquire nuclear weapons is near to success,
but it has not yet succeeded, and it must not. The consequences
of a successful effort by Iran to acquire nuclear weapons, in
open defiance of numerous U.N. Security Council resolutions,
solemnly undertaken treaty obligations, and amid an endless
stream of genocidal rhetoric against the state of Israel, would
change the world. And this must not happen.
The implementation of new sanctions so far has been
surprisingly successful, with the combined effect of U.N.
sanctions and the new CISADA sanctions imposing real economic
pain on the ayatollahs' regime. But for pressure to succeed, it
must be comprehensive.
And here there are two points to make. First, the economic
pain must be as severe as we can make it. Sanctions must be
applied without exception or distinction. The Congress will
accept nothing less.
Second, economic pain is not enough. By luck or providence,
the mullahs' regime is facing an internal political crisis more
severe than any since the creation of the Islamic Republic.
While it is true the Green Movement has been effectively
suppressed by the tools of repression, the legitimacy of the
Iranian regime has been permanently undercut in the eyes of the
Iranian people. Elections whose results have to be forced down
an unwilling population's throat by means of mass murder, rape
and torture are a sign of weakness, and that weakness needs to
be aggressively exploited.
I again call upon the Obama administration to emulate
President Reagan's approach to the Soviet Union, which applied
comprehensive, across-the-board pressure, combining economic,
political, diplomatic, cultural, and military pressure, with
arms control negotiations--what we might call today
``engagement''--that advanced American interests.
The Iranian regime is likewise ripe for comprehensive
pressure. Multilateral forums and multinational institutions
need to be pushed to focus on Iran's deplorable human-rights
record. Our broadcasting into Iran must be ramped up to let the
Iranian people know that they are not alone. The President and
the Secretary of State need to consistently remind the world of
the oppression of the Iranian people by the illegitimate
Iranian regime.
The Armed Forces of the United States need to be deployed
and exercised with key partners to demonstrate our ability to
respond overwhelmingly to aggression and provocation. Those
willing to take up arms against Iranian influence should have
our material support. Iranian agents attempting subversion or
the acquisition of illicit materials or arms must feel the
shadow of the United States pursuing them with vengeance.
It is not too late to stop Iran, to roll back their nuclear
program, to aid the Iranian people in taking back their
country. But we must engage in this great and necessary
challenge with even greater effort and vigor than we have
managed so far. Time is running out.
Thank you, Mr. Chairman.
Chairman Berman. Time has run out. And the ranking member
of the Subcommittee on Middle East and South Asia is not here,
so I am going to recognize the chairman of the Terrorism,
Nonproliferation and Trade Subcommittee of this committee, the
gentleman from California, Mr. Sherman, for 3 minutes.
Mr. Sherman. Thank you for holding these hearings, Mr.
Chairman. I believe that CISADA and its implementation is the
most important work for us to do this month. I think that we
need to see even more enforcement of existing law and the
adoption of new statutes. I hope that later this month or early
next year we consider the Stop Iran's Nuclear Program Act,
which would strengthen the sanctions still further.
In addition, I should note that our colleague, Congressman
Filner of California, has a bill with over 106 co-sponsors to
take the PMOI off the terrorism list. And I hope that respect
for our 106-plus colleagues that have co-sponsored that bill
would lead to a serious consideration of the bill and hearings
on it. So we have much legislating to do, just as is our
friends from the administration have much to do, as well.
Major oil companies from the West for the most part won't
invest in Iran's oil sector or sell refined petroleum. This is
a success. It is a success that comes, perhaps, a dozen years
too late.
At this point, we have to not only prevent investment in
the energy sector of Iran, we have to prevent Iran from getting
refined petroleum products. Had the executive branch of
government decided to follow the law when it was passed over a
dozen years ago, we would be in a much better position now. Now
the only way to stop Iran's nuclear program is not only what is
already being done, but the much, much more difficult job of
preventing Iran from getting refined petroleum.
And I would point out that we are where we are not because
there has been a radical change in State Department policy. The
policy has been, since the Iran Sanctions Act was adopted, to
follow the law only to the extent that its implementation did
not offend any foreign government except that of Iran. This is
described by our ranking member as the ``lowest common
denominator'' of policy. The good news is the lowest common
denominator is now a higher number than it used to be,
especially for Japan and western Europe. And we have obtained a
lot of cooperation, and it is now difficult for Iran to find
partners to invest in its oil fields.
We also ought to give credit, however, to the wisdom of our
allies, but especially to the corruption and ineptitude of
those who are running Iran, who make doing business with that
country so difficult.
As to the Stop Iran's Nuclear Program Act, it would, for
example, prevent--or sanction the $5 billion euro sovereign
bond issuance that Iran is now engaged. They have realized that
they may not be able to get Western investment in their oil
fields, so they feel they will borrow the money and do the
investment themselves. The way to stop that is new legislation,
which I look forward to taking up expeditiously.
I yield back.
Chairman Berman. Time of the gentleman has expired.
The ranking member of the Terrorism, Nonproliferation and
Trade Subcommittee, the gentleman from California, Mr. Royce.
Mr. Royce. Thank you.
Chairman Berman. You are recognized for 3 minutes.
Mr. Royce. There is no mike?
Chairman Berman. I got one.
Mr. Rohrabacher. Does this one work? There. You can take
this one, Ed.
Mr. Royce. Mr. Chairman, I want to thank you for holding
this hearing because we face a crisis. And this has to sink in.
Here is the headline from The Washington Post recently: ``The
Obama administration has concluded that Chinese firms are
helping Iran to improve its missile technology and develop
nuclear weapons.'' That represents a crisis.
When we learned yesterday that China declined to act on
multiple--multiple--U.S. requests that it stop shipments of
ballistic missile components from North Korea that were going
through Beijing on Korean airlines, North Korean airlines, on
Iranian carriers as well; when we learn that our Secretary of
State has asked China to act on the fact that Iran was trying
to buy gyroscopes and carbon fiber for its ballistic missiles
from Chinese companies; when we find that Chinese companies
were supplying Iran with precursors for chemical weapons; when
we find that Iran gets both its parts and its technology from
China, we face a crisis.
And I am appreciative of the fact that Mr. Levey is here,
because, as he puts it in his testimony, foreign financial
institutions have a choice. If you conduct certain business
with Iran, you risk losing access to the U.S. financial system.
The message we need to convey, Republicans and Democrats
alike, is this conduct on the part of China, in terms of
violating these sanctions and helping give Iran the wherewithal
to develop the missile technology and the nuclear weaponry, has
to stop immediately. And if it does not stop, there certainly
is going to be legislation from this Congress to bring it to a
halt. The way to do it is to simply have an understanding that
this is now the law on the books of the United States. It needs
to be followed by China, and it needs to be followed now.
Thank you, Mr. Chairman. I yield back.
Chairman Berman. The time of the gentleman has expired.
And now I am quite pleased and honored to introduce our two
witnesses, two people who I think are among the most
exceptional public servants we have working for the United
States Government. The first is Ambassador William Burns, the
Under Secretary of State for Political Affairs.
Previously, Ambassador Burns served as Ambassador to
Russia, Assistant Secretary of State for Near-Eastern Affairs,
and Ambassador to Jordan. A career Foreign Service officer, he
has also served as Executive Secretary of the State Department
and as a special assistant to Secretaries of State Christopher
and Albright.
Ambassador Burns is a central player in the Obama
administration's Iran policy team. In October 2009, he led the
U.S. negotiating team in the P5-plus-1 talks with Iran in
Geneva, where he struck an agreement with the Iranian
negotiators that would have removed significant amounts of low
enriched uranium from Iran stocks. The agreement was widely
praised internationally at the time but was subsequently
rejected by the leaders in Tehran. As I understand, he will
once again be leading the U.S. negotiating team at upcoming P5-
plus-1 talks with Iran scheduled to begin in a few days in
Geneva.
Stuart Levey is the Under Secretary of Treasury for
Terrorism and Financial Intelligence, a position he has held
since 2004. In this position, he has played a central role in
the efforts of both the Bush administration and the Obama
administrations to combat Iran's illicit conduct in the
international financial system. In fact, he is widely
considered a key architect of those efforts. That, no doubt, is
why the Obama administration asked him to remain in his
position.
Previously, Mr. Levey served as the principal associate
deputy attorney general in the United States Department of
Justice and, before that, as an attorney in a private law firm.
Gentlemen, thank you for coming this morning. We look
forward to hearing your testimony. If you decide to, you can
summarize. Your entire statements will be part of the record.
And, under Secretary Burns, why don't you lead off?
STATEMENT OF THE HONORABLE WILLIAM J. BURNS, UNDER SECRETARY
FOR POLITICAL AFFAIRS, U.S. DEPARTMENT OF STATE
Mr. Burns. Thank you very much. And good morning, Chairman
Berman, Congresswoman Ros-Lehtinen, members of the committee.
Thank you for the opportunity to appear before you again with
my friend and colleague, Under Secretary Levey.
We meet today at a moment of great consequence in the long
and complicated history of international concerns about Iran
and its nuclear ambitious. In recent months, working closely
together, the administration, Congress, and our international
partners have put in place the strongest and most comprehensive
set of sanctions that the Islamic Republic of Iran has ever
faced. It is a set of measures that we are determined to
implement fully and aggressively. It is a set of measures that
is already producing tangible results. And it is a set of
measures that we reinforces or collective resolve to hold Iran
to its international obligations.
A great deal is at stake for all of us. A nuclear-armed
Iran would severely threaten the security and stability of a
part of the world crucial to our interests and to the health of
the global economy. It would seriously undermine the
credibility of the United Nations and other international
institutions and seriously weaken the nuclear nonproliferation
regime at precisely the moment when we are seeking to
strengthen it.
These risks are only reinforced by the wider actions of the
Iranian leadership, particularly its longstanding support for
violent terrorist groups like Hezbollah and Hamas, its
opposition to Middle East peace, its repugnant rhetoric about
Israel, the Holocaust, 9/11, and so much else, and its brutal
repression of its own citizens.
In the face of those challenges, American policy is
straightforward: We must prevent Iran from developing nuclear
weapons. We must counter its destabilizing actions in the
region and beyond. And we must continue to do all we can to
advance our broader interests in democracy, human rights,
peace, and economic development across the Middle East.
President Obama has made clear repeatedly that we will
stand up for those rights that should be universal to all human
beings and stand with those brave Iranians who seek only to
express themselves freely and peacefully. The simple truth is
that a government that does not respect the rights of its own
people will find it increasingly difficult to win the respect
that it professes to seek in the international community.
We have emphasized from the start that what is at issue
between Iran and the rest of the world is not its right to a
peaceful nuclear program but, rather, its decades-long failure
to live up to the responsibilities that come with that right.
If Iran is sincere, it should not be hard to show the rest of
the international community that its nuclear program is aimed
at exclusively peaceful purposes.
Facts are stubborn things, however. And it is a telling
fact that Iran, alone among signatories of the NPT, continues
to fail year after year to convince the IAEA and the United
Nations of its peaceful nuclear intentions.
Nearly 2 years ago, President Obama began an unprecedented
effort at engagement with Iran. We did so without illusions
about whom we were dealing with, with the scope of our
differences over the past 30 years. We sought to create early
opportunities for Iran to pursue a different path and to build
confidence in its intentions. This was both a serious
demonstration of our good faith and also an investment in
partnership with a growing collation of countries profoundly
concerned about Iran's nuclear ambitions.
When, regrettably, those early efforts made little headway,
we and our partners were left with no choice but to respond to
Iran's intransigence by employing another tool of diplomacy:
Political and economic pressure.
The cornerstone of this campaign was U.N. Security Council
Resolution 1929, passed early last June. By far the toughest of
the four Chapter 7 resolutions enacted in recent years, 1929
broke important new ground in curbing arms transfers to Iran;
targeting the central role of the IRGC in Iran's proliferation
efforts; banning for the first time all Iranian activities
related to ballistic missiles that could deliver a nuclear
weapon; sharply limiting Iran's ability to use the
international financial system to fund and facilitate nuclear
and missile proliferation; and, for the first time,
highlighting formally potential links between Iran's energy
sector and its nuclear ambitions.
Russia's partnership was particularly crucial to passage of
such an effective resolution, which led directly to its
enormously important cancellation of the S-300 surface-to-air
missile sale to Iran.
The significance of 1929 is only partly about its content.
It is also about the message of international solidarity that
it sent and the platform that its carefully crafted language
has provided for subsequent steps.
Barely a week after the passage of 1929, the European Union
announced by far its most sweeping collection of measures
against Iran, including a full prohibition of new investment in
Iran's energy sector, bans on the transfer of key technology,
and the strictest steps to date against Iranian banks and
correspondent banking relationships.
Canada, Australia, Norway, Japan, and South Korea have
followed the EU's example. New provisions in 1929 regarding
cargo inspections are already being applied, resulting, for
example, in the recent seizure by Nigeria of an illicit Iranian
arms shipment.
None of this is accidental. We have worked intensively with
our partners, in conversation after conversation and trip after
trip, around the world to produce an unprecedented package of
measures and to ensure robust enforcement.
Central to our strategy have been the efforts made by the
Congress, by all of you, to sharpen American sanctions. When
the President signed into law CISADA in early July, the
administration and the Congress sent an unmistakable signal of
American resolve and purpose, expanding significantly the scope
of our domestic sanctions and maximizing the impact of new
multilateral measures.
We are enforcing the law rigorously and energetically.
Already, more foreign investment in Iran has been curbed than
at any time since Congress enacted the original Iran Sanctions
Act nearly 15 years ago. In late September, Secretary Clinton
imposed sanctions for the first time in the history of the ISA
on a Swiss-based Iranian-owned firm involved in hundreds of
millions of dollars' worth of deals in Iran. Deputy Secretary
Steinberg announced that we have opened formal investigations
into other firms.
Just as importantly, we have used the powerful instrument
provided by CISADA's ``special rule'' to persuade major
European and Asian firms, including Shell, Statoil, ENI, Total,
and INPEX, to terminate existing sanctionable activities in
Iran and provide clear assurances that they would not undertake
any such activities in the future. According to reliable
estimates, Iran may be losing as much as $50 billion to $60
billion overall in potential energy investments, along with the
critical technology and know-how that comes with them.
Faced with new international concerns and the choice
between doing business with Iran and doing business with
America, more and more foreign companies are pulling out of the
Iranian market. Major energy traders like Lukoil, Reliance,
Vitol, Glencore, IPG, Tupras, and Trafigura have stopped sales
of refined petroleum products to Iran.
Until last July, according to open sources, Iran imported
roughly 130 barrels per day of refined petroleum products. In
October, that figure had dropped by 85 percent to 19,000
barrels per day. Large shipping companies like Hong Kong-based
NYK are withdrawing completely from the Iranian market. Major
firms like Lloyd's have stop insuring Iranian shipping.
Daimler, Toyota, and Kia have stopped exporting cars to Iran.
Major banks like HSBC and Deutsche Bank have pulled out.
Stuart will address the impact of these developments in
more detail. And his own personal efforts with firms and
governments around the world remain hugely important. But the
short answer is that the net result of all of the measures that
we have applied in recent months is substantial--far more
substantial than any previous set of steps.
I would also like to emphasize that we take very seriously
CISADA's provisions regarding human-rights concerns in Iran.
Earlier this fall, we designated eight senior Iranian officials
for human-rights abuses, and we are working with Treasury on
other potential designations. One of the best ways in which we
and others can support the cause of universal human rights in
Iran and the brave people who defend them is to hold
accountable people who deny them.
I cannot honestly predict for you with any certainty how
all these collective and individual measures will affect the
choices that Iran's leadership makes. We will continue to
sharpen those choices. We will show what is possible if Iran
meets its international obligations and adheres to the same
responsibilities that apply to other nations. We will intensify
the cost of continued noncompliance and show Iran that pursuit
of a nuclear-weapons program will make it less secure, not more
secure.
And, in the meantime, we will continue to reassure our
friends and partners in the Gulf of our long-term commitment to
their security, a commitment clearly reflected in the visits to
the region that both Secretary Clinton and Secretary Gates will
be making in the next 2 weeks.
Let me conclude by emphasizing two simple but important
realities. First, Iran is not 10 feet tall. Its economy is
badly mismanaged. Iran's leaders have tried very hard to
deflect or divert the international pressures building all
around them, itself an acknowledgement of their potential
effect.
Second, and just as significant, sanctions and pressure are
not an end in themselves. They are a compliment, not a
substitute, for the diplomatic solution to which we and our
partners are still firmly committed.
There is still time for diplomacy if Iran is prepared to
engage in serious discussions. There is still room for a
renewed effort to break down mistrust and begin a careful,
phased process of building confidence between Iran and the
international community. There is still an opportunity for an
outcome which ensures both Iran's rights and the fulfillment of
its responsibilities.
The P5-plus-1, led by EU High Representative Ashton, will
approach next week's meeting with Iran with seriousness of
purpose and a genuine readiness to engage constructively on
international concerns about Iran's nuclear program. The door
is open to serious negotiation if Iran is prepared to walk
through it.
Thank you.
[The prepared statement of Mr. Burns follows:]
[GRAPHIC(S)] [NOT AVAILABLE IN TIFF FORMAT]
Chairman Berman. Thank you very much, Secretary Burns.
And Secretary Levey.
STATEMENT OF THE HONORABLE STUART A. LEVEY, UNDER SECRETARY FOR
TERRORISM AND FINANCIAL INTELLIGENCE, U.S. DEPARTMENT OF
TREASURY
Mr. Levey. Thank you, Mr. Chairman, Ranking Member Ros-
Lehtinen, members of the committee. Thank you for inviting me
here today to discuss the current status of the global effort
to impose sanctions on Iran. I appreciate the true partnership
we have had with this committee over many years.
And I am happy to be here with Under Secretary Burns, who
has been an excellent leader on this issue and on many others.
And he has given an excellent overview of our overall Iran
policy. I can assure you that we share the sense of urgency
that you all expressed and we have the same priority placed on
this challenge.
I can report to you today that we have made significant
progress in implementing our strategy to impose sanctions on
Iran, and the strategy is beginning to have the effect it was
designed to have. By sharpening the choice for Iran's leaders
between integration with the international community, premised
on their living up to their international obligations, and
ever-increasing isolation, we are beginning to create the
leverage we need for effective diplomacy.
The strategy we designed and are now implementing has
several critical elements.
First, we recognized from the outset that no one measure
would put enough pressure on Iran, and so we are imposing a
variety of measures simultaneously.
Second, as Bill pointed out, we took steps in advance to
generate the support necessary for a broad coalition of
governments and the private sector to support us on sanctions.
Third, we focused our measures on Iran's illicit conduct,
such as WMD proliferation and its support for terrorism, since
that has proven to be an effective way to build the broad
coalition.
And, finally, we designed a strategy that uses Iran's
expected attempts to evade sanctions to our advantage, by
aggressively exposing Iran's deceptive conduct and, thus,
underscoring Iran's riskiness as a commercial partner.
It is difficult to overstate the importance of Security
Council Resolution 1929 in building our international coalition
and in implementing this strategy. In addition to the
provisions that Bill mentioned, the resolution's financial
provisions are particularly powerful, as they call upon member-
states to prevent the provision of financial services if there
are reasonable grounds to believe that such services could
contribute to Iran's nuclear and missile programs.
And given the vast body of public information demonstrating
the scope of Iran's illicit conduct and deceptive practices, it
is virtually impossible for banks and governments to assure
themselves that transactions with Iran could not contribute to
proliferation-sensitive activities.
Indeed, in the aftermath of the resolution's adoption, many
of our partners, as was mentioned by several of you and Under
Secretary Burns, have enacted robust sanctions programs. These
sanctions regimes impose asset freezes and financial
restrictions on a wide range of illicit Iranian actors,
including the IRGC and IRISL, the Iranian shipping line, and
they have enacted broad measures to protect their financial
systems from Iranian abuse, such as reporting or pre-approval
requirements for transactions involving Iran.
Also critical to our strategy is the passage and
implementation of CISADA. As you know, the financial provisions
of CISADA are quite powerful, as they indeed force the stark
choice that Mr. Royce pointed out: If you conduct certain
business with Iran, you risk losing access to the U.S.
financial system. It is a very draconian potential sanction.
We have moved quickly to implement CISADA. We published
required regulations promptly. And we have traveled to 24
countries since June, both to educate governments and the
private sector about CISADA and also to share information about
Iran's illicit conduct. We have reached out to governments and
financial institutions in more than a dozen countries to
investigate conduct that could be sanctionable under the act.
What we have seen thus far is very dramatic. Even banks that
had previously been willing to do business with designated
Iranian banks are now reversing course and cutting ties with
Iran altogether.
Beyond this outreach, Treasury has used its authorities to
designate a wide range of Iranian actors involved in illicit
conduct. As I mentioned earlier, we expected Iran to try to
evade any sanctions we imposed, and continued actions, such as
designations, are critical to counteract this evasion and to
maintain the effects of our sanctions. Just since June, we have
designated 53 IRISL-related entities, 9 IRISL-linked
individuals, 10 individuals or entities linked to the IRGC, and
2 Iranian-owned banks, Post Bank and the Hamburg-based EIH. We
have also identified 43 entities as being that of the Iranian
Government.
The cumulative effect of sanctions has been to increasingly
isolate Iran from the international financial system. Iran is
effectively unable to access financial services from reputable
banks and is finding it increasingly difficult to conduct major
transactions in dollars or euros. Iran's reduced access to the
international financial system has also made it very difficult
for Iran to make payments on loans and maintain insurance
coverage on IRISL's ships and is having an impact on IRISL's
ability to continue operations. It has even led to the seizure
of some IRISL ships by its creditors.
As the chairman indicated in his opening statement, with
great regularity, major companies across a range of
industries--finance, engineering, energy, manufacturing,
automobile, insurance, accounting firms--they are all
announcing that they are curtailing their business dealings
with Iran.
There are clear signs that the speed, scope, and impact of
sanctions have caught the Iranian regime by surprise. In the
face of pressure, the Iranian Government has increasingly
turned to the IRGC for key economic projects. That trend meshes
perfectly with our conduct-based strategy, since it is hard to
imagine a better sanctions target than the IRGC. Relying on the
IRGC is likely to exacerbate Iran's isolation, as companies
around the world have begun to shun all business with the IRGC,
given its support for terrorism and involvement in Iran's
proliferation activities and human-rights abuses.
Our efforts to consistently expose Iranian sanctions
evasions are also paying off. In September, a high-ranking
Iranian Government official underscored exactly the effect we
have tried to create when he said, ``We have never had such
intense sanctions, and they are getting more intense every day.
Whenever we find a loophole, they block it.''
In order to maintain and even increase the impact we have
created, we need to remain vigilant and intensify our efforts.
By doing so, we can continue to create the leverage needed for
our diplomacy to be effective. I look forward to continuing our
work with this committee to achieve that goal.
Thank you.
[The prepared statement of Mr. Levey follows:]
[GRAPHIC(S)] [NOT AVAILABLE IN TIFF FORMAT]
Chairman Berman. Well, thank you very much, Secretary
Levey, for the testimony and the overview.
I will now yield myself 5 minutes to begin the questioning.
Neither of you mentioned China in your testimony. Are
Chinese companies involved in Iran's energy sector? And, if so,
why are we not sanctioning them?
I understand the dilemma. What are the implications for our
relations with China if we were to sanction a state-owned
energy company? But I would also throw out the alternative
proposition: What are the implications for our entire sanctions
regime if we don't?
How important are Chinese companies to Iran's energy sector
and refined petroleum products? And are there other countries
or companies that are currently supporting Iran's energy
sector?
Mr. Burns. Well, Mr. Chairman, first, we take very
seriously, just as you and Congressman Royce emphasized,
concerns about Chinese involvement in the Iranian energy
sector. We have, at the very highest levels, including in
President Obama's most recent meeting with President Hu a few
weeks ago, emphasized the importance that we attach to
restraint on the part of China in its dealings in the Iranian
energy sector.
We have seen reports--and also the importance we attach to
not only slowing down existing investments, not engaging in new
ones, but not backfilling behind companies, the large number of
companies that are pulling out of the Iranian energy sector.
We have seen reports since then in the trade press and
other open sources of slowdowns in Chinese activities in the
Iranian energy sector. It may be that the Chinese are
concluding that the Iranians, as so many other companies around
the world have found, are not reliable energy partners. The
Chinese are clearly trying to diversify their energy
partnerships around the world.
It is also clear, with regard to your question about
refined petroleum products, that rising domestic demand in
China is occupying a much greater proportion of the attention
of Chinese refined-petroleum producers.
So, for all those reasons, we will continue to push very
hard on this issue, which remains quite significant, I think,
to our hopes to apply the sort of pressure that is going to be
needed.
Chairman Berman. Thank you.
I don't like raising points based on revelations from
WikiLeaks, but I am going to make an exception here because it
concerns a matter of potentially great significance. And I
think both the ranking member and Mr. Royce made references to
this.
Do you wish to comment on the New York Times claim, based,
it says, on WikiLeaks documents, that Iran has acquired 19
medium-range nuclear-capable missiles from North Korea?
According to the article, these missiles can reach Berlin or
Moscow. The article also says that possession of these missiles
can facilitate Iran's development of intercontinental ballistic
missiles. And I should point out that that claim was treated
skeptically today in today's Washington Post, based on the
Post's interpretation of the same WikiLeaks documents.
Rather than take one or the other slant, what are your
thoughts about this issue?
Mr. Burns. Well, I mean, just several quick comments, first
on WikiLeaks in general.
I think, you know, the reality is that the despicable
breach of trust that we have seen through the WikiLeaks
disclosures has done substantial damage to our ability to carry
out diplomatic efforts like the one we have just described to
you. Confidentiality of conversations is at the core of what we
do as diplomats, just as it is for journalists or doctors or
lawyers or others.
And it has done damage. Secretary Clinton is literally
working night and day, in conversations with countless leaders
around the world, to try as best we can not only to express
regret but to work through these issues. And we have also taken
some quite stringent measures to ensure that information in the
State Department that doesn't need to go to other agencies of
the U.S. Government isn't going to people who don't need to
know it. So that is the first general point on WikiLeaks.
I can't comment on the contents of, you know, particular
alleged cables that WikiLeaks has referred to. What I will,
however, stress--and this is in response to Mr. Royce's, I
think, you know, very serious reinforcement of concerns about
any evidence that we come across of support for Iran's illicit
missile or nuclear activities--we take seriously every piece of
information that we see. We have, on a number of occasions,
raised that information with the Chinese Government as well as
with other governments. In some cases, we have seen them act on
it, but the record is a mixed one, to be honest.
And we are continuing to press those specific concerns that
we have. Because I agree with you that it is extremely
important to fully implement the provisions, particularly in
Resolution 1929, which add significantly to the flat
prohibition of any support, technical or otherwise, for
ballistic missile activity in Iran that is capable of
delivering a nuclear weapon. So we will continue to take this
very seriously and follow up on it vigorously.
Chairman Berman. My time has expired. And I yield now 5
minutes to the ranking member.
Ms. Ros-Lehtinen. Thank you so much, Mr. Chairman.
Thank you, gentlemen, for your testimony.
As you pointed out, Secretary Burns, the next round of the
P5-plus-1 negotiations with Iran is tentatively scheduled to
take place in just a few days in Geneva. However, in the lead-
up to these talks, Iranian leaders have reiterated their
commitment to continuing their uranium-enrichment program.
Given these statements and the position of the Iranian
leadership, what does the administration expect to accomplish
with these upcoming negotiations?
And related to that, previous negotiations were aimed at
reaching an agreement that would require Iran to suspend its
uranium-enrichment activity, as mandated by the United Nations
Security Council. So is a complete halt to enrichment a
prerequisite, or is the administration willing to consider a
partial halt?
Also, there are rumors of a new P5-plus-1 offer to the
Iranians. Does such an offer exist? And what type of incentives
and disincentives are included in the proposals?
Also, what is the administration's plan regarding the
uranium that Tehran has enriched to the 20 percent level? Will
we insist that Iran surrender the entire amount, or is a deal
in the works allowing Iran to keep some portion of what it has
already amassed? And how do you plan to deal with Iran's using
the negotiations as a stalling procedure by the U.S. and other
countries?
And then lastly, I know the chairman has talked about the
energy and refined petroleum activities with Iran, and China
being a repeat offender, but we also have the Iran, North
Korea, Syria Non-Proliferation Act, INKSNA, and that is also a
sanctionable procedure that we can use. And I wanted to ask
about the administration possibly taking action against Russia
and their entities implicated in the proliferation assistance
to Iran.
I don't know if we will have time for all of that, but
thank you, sir.
Mr. Burns. Sure, no, thank you. And I will try as best I
can, very briefly, to go through four or five points.
First, in terms of our general approach, as I emphasized in
my opening statement, the P5-plus-1 will go into what we hope
will be a serious round of discussions with the Iranians,
prepared to engage seriously about our very profound concerns
about Iran's nuclear program. We will continue to emphasize the
importance of taking tangible steps to address those concerns,
tangible steps which are necessary as a result of Iranian
noncompliance over many years and the mistrust that that has
created.
We will be guided--and this is in response--this is my
second point--in that approach, the P5-plus-1 will be guided by
a whole series of Security Council resolutions and IAEA
decisions--Security Council resolutions which include the
mandate in the provision that you mentioned.
Third, we will certainly look for ways in which we could
build confidence and steps the Iranians could take, that could
be taken together to build confidence. Last year, as you know,
we made an attempt through the original Tehran research reactor
proposal to do that. We are still prepared to consider the P5-
plus-1 or the possibility of making use of that concept. But
last June, we made clear to Mr. Amano, the director general of
the IAEA, that we, the Russians, and the French, our partners
in the so-called Vienna Group on the TRR issue, had several
concerns that would have to be addressed if the TRR is to be a
real confidence-building measure, because circumstances have
changed since this was originally proposed last October.
Ms. Ros-Lehtinen. You talked about the steps. Are they
tangible steps? And is there a deadline? Are we really
providing these deadlines for them to make good on what they
supposedly offer, or just keep stalling and stalling and run
out the clock?
Mr. Burns. No. Well, first, in terms of the tangible steps,
you mentioned the issue of enrichment, almost 20 percent. That
is one of the concerns that we made clear. I mean, that is
something that would have to be addressed.
In terms of----
Ms. Ros-Lehtinen. Thank you. We will discuss that later.
And I wanted to ask about the Russian entities. Any movement in
sanctioning those?
Mr. Burns. Well, on INKSNA, which was the question I think
you had asked----
Ms. Ros-Lehtinen. Right.
Mr. Burns [continuing]. The State Department has finished
its draft of the report for 2008. We are trying quickly to
catch up. We have provided the 2007 report, I think, a few
months ago, and that is in circulation interagency right now.
So we take very seriously the importance of following
through on INKSNA and hope to have that report to you early
next year.
Ms. Ros-Lehtinen. Thank you very much.
Sorry I ran over time. Thank you, Mr. Chairman.
Chairman Berman. The time of the gentlelady has expired.
The chairman of the Middle East and South Asia
Subcommittee, the gentleman from New York, Mr. Ackerman, is
recognized for 5 minutes.
Mr. Ackerman. Thank you, Mr. Chairman.
Thank you for your testimony.
Several thoughts first. It seems that the evil twins of
Iran and North Korea had been separated at birth and have now
reunited and found each other and have certain things in common
and certain things that are different, with Iran insisting that
its nuclear program is for energy only, and the North Koreans
protesting very, very loudly that theirs is absolutely for
nuclear weaponry, and demonstrating that at every moment that
they can. The combination of the two of them joining in their
mutual interests is very lethal.
It seems to me that, among terrorists and terrorizing
nations, it almost seems that possessing a nuclear program is a
rite of passage to becoming a respected member of the
international community. And they are pursuing that at all
costs.
Trying to evaluate the effectiveness of placing sanctions
on Iran to drive it to the point where they become an economic
basket case such as North Korea--where we really don't have to
have too many economic sanctions because they are there already
at the bottom of wherever they have to be, but still not giving
up their program--I think we should reflect a bit on what
happens when the Iranians are driven to that economic low
point, should the program of imposing strangling sanctions, as
the successes seem to indicate that we will have, whether or
not that produces the goal that we are looking for.
Some of the things we have seen in these leaks that have
appeared in the media a lot of us have found to be true. Those
of us who have spoken personally to world leaders, especially
in the Middle East, who tell you you have to impose tough
sanctions and when you ask them the question, ``Will they
work?'' they say, ``Hell no, there is no way that they are
going to work.''
At what point do we make the determination that the
sanctions, no matter how successful in measurable aspects, are
not going to prevent the Iranians, whose game is intent to just
run the clock on us till they have the weapon, that we have to
find and exercise an alternative means? Where is that point?
Mr. Burns. Well, Mr. Ackerman, I can't give you a precise
point. I mean, all I can say is that I think there is still
time to continue the approach that we have used, to tighten
pressure, to try to make clear that there is an alternative
pathway through which Iran could have a peaceful nuclear
program and enjoy the benefits of contacts with the
international community, but it is going to have to take some
very concrete steps to address international concerns about its
nuclear program. I think there is still time for a serious
diplomatic effort to try to produce that outcome.
Mr. Ackerman. And I will ask the same question, as well, to
Secretary Levey.
Mr. Levey. I was just going to comment, Mr. Ackerman, I
think the distinction that you have drawn between North Korea
and Iran, and also--that there are differences, I think, also
in the potential effectiveness of sanctions. And the basic
point, I think, is that Iran doesn't want to be isolated, and
perhaps that is not so much the case with North Korea.
Iran doesn't want to be isolated. They are facing
situations--as they look out from where they are now, they see
a lack of investment coming in. They see the inability to do
business with major financial firms. They see the inability to
do business with first-tier energy firms. They see that that
has potential impact on their oil and gas production in the
medium term, the inability to create jobs, et cetera. They
don't want to be this kind of pariah.
And while, as Bill pointed out, there is no guarantee here,
that at least gives us some reason for confidence that they
will want to change that dynamic.
Mr. Ackerman. Let's assume that you are wildly successful
and in a period of, I will give it 90 days, you have cut their
GNP, their economy, and everything else by 99 percent, and they
have an atomic weapon, they have a nuclear weapon, where are
we?
Mr. Levey. I think the point is----
Mr. Ackerman. I think your clock runs faster than theirs,
is the point I am making. And I think that we have to have a
plan B. Because plan A, by anybody's estimation, even if
successful beyond our wildest dreams in a real quick time
frame, is not going to change the dynamic.
Chairman Berman. The time of the gentleman has expired.
The gentleman from Florida, Mr. Mack, is recognized, the
ranking member of the Western Hemisphere Subcommittee,
recognized for 5 minutes.
Mr. Mack. Thank you, Mr. Chairman. And thank you to the
ranking member, as well, and for the witnesses today for being
here.
Someone earlier said that they didn't hear you talk about
China in your opening statements. I also didn't hear you talk
about Venezuela in your opening statements. And let me suggest
that Venezuela is in violation of the Iran Sanctions Act.
That being said, if both of you could answer, why have we
not sanctioned Hugo Chavez? That is question one. And I will
let you answer that real quick, and then I have a couple
follow-ups.
Mr. Burns. Well, sir, I will just start by saying we did
sanction one Venezuelan bank because of its connection to an
Iranian bank, the Export Development Bank of Iran, which we had
already sanctioned.
We will continue to monitor very carefully the Venezuelan-
Iranian relationship and, particularly, Venezuelan compliance
with U.N. Security Council resolutions and hold them to their
international obligations.
Mr. Mack. Secretary Levey?
Mr. Levey. As Bill pointed out, we have taken action when
we identify conduct that is in violation of the sanctions and
will continue to do so.
Mr. Mack. What information do you have on the allegations
that gasoline in excess of 1 million U.S. dollars has been sent
from Venezuela to Iran, utilizing China's National Petroleum
Corporation and the Emirates National Oil Company?
Mr. Burns. I will have to try to get you an answer on that,
sir. I don't know.
Mr. Levey. I have no further information at my fingertips.
Mr. Mack. Okay. Well, let me suggest that Venezuela has
violated the Sanctions Act by its shipment of gasoline to Iran.
Next question. What is the status of the joint Venezuela-
Iranian international development bank and its U.S.-alleged
connections to Iranian military entities and nuclear ambitions?
Mr. Levey. I will get back to you with a more complete
answer, but, in general, let me say that we have been looking
very carefully at banking ties between Iran and Venezuela. When
we have identified sanctionable activity, we have taken action.
There was a subsidiary of the Export Development Bank of Iran
in Venezuela which we have sanctioned.
But there is also a fair amount of bluster that we have
also seen from Venezuela, where they are playing up some of
these ties and sometimes there is not as much substance behind
the bluster as they would like us to believe. And we have to
make sure that we cut through all of that and act based on the
evidence.
But we will have to get back to you with a more detailed
answer on the----
Mr. Mack. Well, let me suggest this. That is their problem.
If they choose to bluster about it, then we need to hold them
accountable. I mean, I think that, you know, as you have
listened to some of the other members, the clock is running--
they are trying to run the clock out. And so, let's take their
word for it. If Hugo Chavez says that he is sending gasoline,
let's take his word for it. If his banks are in violation with
this Iran Sanctions Act, let's take his word for it.
Now, if you don't want to take his word for it, I think
there is plenty of evidence, also, to suggest that in both
those cases he is in violation. And the problem that I have is,
when you have an act like the Iran Sanctions Act and you apply
it to some and you don't apply it to others and you are slow on
the draw, others figure out a way to game it.
So if we are going to be serious about the Iran Sanctions
Act, it starts with countries like Venezuela. We need to hold
Hugo Chavez accountable. I think that, as you look through, you
will find even more connections that are in direct violation of
the Iran Sanctions Act.
Let me ask you this, Secretary Levey. Will you set up a
task force on PDVSA involving the developing of Iran's nuclear
capacity and other corrupt activities?
Mr. Levey. I guess the question of PDVSA would be more of a
State Department lead, but we are happy to take a look at it in
detail and take whatever action is appropriate.
I want to assure you, there will be no hesitation to take
action against Venezuela, or any other country for that matter,
but no hesitation to take action against Venezuela if we
identify sanctionable activity. This is not--no question about
that.
Mr. Mack. Well, I will suggest again that he is in
violation, and so actions need to be taken.
Secretary Burns?
Mr. Burns. Just to reinforce what Stuart said, we will
devote all the resources we need to get to the bottom of all
the concerns that you rightly raised. And where we come across
evidence, we will certainly hold the Venezuelan Government
accountable.
Mr. Mack. Thank you.
Chairman Berman. The time of the gentleman has expired.
The gentleman from California, chairman of the Terrorism,
Nonproliferation and Trade Subcommittee, Mr. Sherman, for 5
minutes.
Mr. Sherman. The chair and several members have focused on
China. China attacks us in a hundred ways: Attacks the economic
security of Americans, attacks the national security of our
country, cooperates with and subsidizes rogue regimes. And this
is best exemplified in the example from the ranking member of
our subcommittee, where China facilitates the transfer of
missile technology from North Korea, which it subsidizes, to
Iran, which it uses the threat of its U.N. veto to protect.
And I don't blame so much Beijing as I blame Washington.
We, in Congress, have a choice between two approaches. One is
to continue to denounce China, in this room and others, in the
hopes that our words will sting so badly that Beijing will
change its policies. And occasionally we grant to the
administration the authority to actually hit China a little
bit, just as CISADA would allow you to sanction Chinese
companies. But we know you are not going to do it to any
significant degree.
So one approach is to continue our current policy. The
other is to take a radical approach, such as the bill I have
proposed, which within 6 months would end most-favored-nation
status for China. Given the power of Wall Street, I think it is
clear that at least at the present we are going to continue our
present policy.
As to plan B, the King of Saudi Arabia told us what our
plan B was. I am hoping plan A works.
Secretary Burns, I was struck by your opening comment in
which you said that sanctions were a mere complement to
negotiations. Now, one view is that Iran really wants a Kumbaya
moment with the United States. Another view is that Iran wants
nuclear weapons so badly that nothing but the prospect of the
brutal murder of all regime leaders by their own people would
cause them to abandon their nuclear program.
Assume--and I realize I may be less optimistic than you--
assume the second Iran. Are our sanctions policies enough not
to just encourage a Kumbaya Iran to join us in negotiations;
are you building toward sanctions strong enough to force a
determined, belligerent Iran to choose between regime survival
and abandonment of their nuclear program?
Mr. Burns. Well, Mr. Chairman, Kumbaya moments are not
something I have ever associated with doing business with this
Iranian leadership. It is a pretty unsentimental leadership,
and I think our approach is also pretty unsentimental. What we
are----
Chairman Berman. A little closer to the mike, Bill.
Mr. Burns. Sorry. What I said is that Kumbaya moments are
not something that I normally associate with dealings with the
Iranian leadership.
What we are determined to do is to sharpen the choices that
that leadership faces to try to ensure that it sees both the
possibilities of addressing international concerns about its
nuclear program but also the costs. And the costs are rising.
Mr. Sherman. Secretary, the question is, do you have a plan
A that will force this regime to choose between regime survival
and a nuclear program? Or do you only have a plan of sanctions
that would encourage a rational regime to try to reduce the
sanctions?
Mr. Burns. Yeah, as we have described to you, Mr. Sherman,
what we have is an approach which is very unsentimental which
seeks to sharpen the choices for that leadership and imposes a
stiffening set of costs. And I think what we have seen----
Mr. Sherman. Let me move on. The idea of stiffening implies
that we have a lot of time. Had the executive branch complied
with the law back in the mid-1990s, we might have that time,
but we don't. We have to take action that immediately bites the
Iranian economy.
Toward that, the recently enacted law provides for
sanctions for those who provide gasoline to Iran. The standards
are a million, five million in the law.
Is the failure to launch formal investigations and actually
sanction firms due to a lack of will or just a belief that we
don't know who it is that is providing this gasoline? Do we not
know which tankers are arriving at Iranian ports? Do we not
know who owns those tankers? Even if we don't know who owns the
oil on them, do we not know from which refineries they arrive?
What do we have in intelligence? Why have you not sanctioned or
even begun formal investigations against any entity taking
gasoline to Iran?
Mr. Burns. With regard to gasoline, refined petroleum
products, I think it is pretty striking that, just in the few
months since CISADA was passed, you have seen an 85 percent
drop, according to open sources, in the amount of refined
petroleum product that Iran is importing. We all have mentioned
a number of companies which have pulled out of that business.
So I think what we have seen is a quite significant move in the
direction that we have all intended----
Mr. Sherman. Secretary, thank you for your answer, but it
wasn't to my question.
Chairman Berman. The time of the gentleman has expired.
The gentleman from Texas, Mr. Poe, 5 minutes.
Mr. Poe. Thank you, Mr. Chairman.
And I want to thank all of the Iranian Americans that are
here in the audience today, concerned about a mutual concern
that we all have, and that is Camp Ashraf and a delisting of
the MEK as a foreign terrorist organization.
I know the State Department and Foreign Affairs Committee
are supposed to work very close together. My question,
Secretary Burns, is, why has the State Department refused to
brief the subcommittee chaired by Mr. Sherman on the delisting
of the MEK?
Mr. Burns. Well, sir, we are in the midst of a review that
was ordered by the court last summer, as I understand it, in
which----
Mr. Poe. I guess my question is this: Will the State
Department brief this committee and the subcommittee on
information it has on the MEK and why the State Department
relentlessly believes it should still be on the FTO list?
Mr. Burns. The first thing is----
Mr. Poe. No. Just answer my question.
Mr. Burns. Sure. Yesterday afternoon, we provided an
intelligence briefing, as I understand it. Second, I would be
glad to take back your question and see if, in addition to the
briefing we provided yesterday afternoon, there is more that we
can provide at this stage. The only----
Mr. Sherman. Will the gentleman yield? I would point out
the State Department has refused to do a classified briefing at
the request of our subcommittee for over a month, but did
arrange for the classified briefing from the CIA, which
couldn't address many of the questions but did address some.
Mr. Poe. Reclaiming my time, that is exactly my point. That
briefing yesterday, which I attended, was not by the State
Department; it was by the CIA. And those two agencies aren't
the same.
I am just curious why the State Department, it appears to
me, is so obstinate, even after going to court and the court
ruling against the State Department, ordering them to provide
information about the MEK in this lawsuit, information that is
required to be delivered in January, which is next month, the
way I figure it, and why Secretary Clinton in 2009 said that
she would review the whole designation of the MEK in the next 2
years. That has not been done. The 2 years is up in January.
I want to know what information the State Department has
that is so relentless on your part that they should remain on
this list. Do you know that information?
Mr. Burns. We are reviewing in response to what the court
said and what Secretary Clinton said. One step in that review
is to allow the MEK to have an opportunity to review the
unclassified material which led to former Secretary Rice's
decision in January 2009. We have provided that to the MEK. We
await their input, and then we will complete the review as we
promised.
And if there are other questions beyond the briefing that
was conducted yesterday afternoon, as I said, sir, I would be
glad to take that back and see if we can provide further
answers in the meantime.
Mr. Poe. The situation in Camp Ashraf appears to me to just
be getting worse, not better. People are very concerned about
their relatives that live there. What are some hardline new
procedures that we are taking, as the United States, to ensure
the safety of those people at Camp Ashraf?
Mr. Burns. As Assistant Secretary Feltman said when he
testified before you, we take very seriously the concerns that
have been raised about inadequate availability of medical
treatment and other kinds of activities at Camp Ashraf. There
were two individuals in particular who had been raised in that
hearing, and we made sure afterwards that they did have access
to the cancer treatment that they needed.
We, along with the U.N. mission in Iraq, meet regularly
with the Iraqi Government to hold them to their obligation to
ensure that the basic human and individual rights of the
residents of Ashraf are protected. And we will continue to do
that.
Mr. Poe. In other words, our position is we are just
encouraging the Iraqis to do the right thing. I mean, is there
hardline evidence that we are really encouraging in a way, I
guess a diplomatic way, that they protect the safety of the
people at Camp Ashraf, other than talking about it?
Mr. Burns. We and the U.N. mission will continue to insist
that the Iraqi Government meet its obligation to ensure the
human rights of the residents of Ashraf. And that is to say
that they are not subject to forcible repatriation to a place
that might persecute them; that is to say that they have access
to the medical treatment that they need. And we will continue
to push that hard.
Mr. Poe. Lastly, my own opinion is that the greatest hope
for Iran and the world is a change, peaceful change, in regime
in Iran. It is not to go to some type of military conflict.
And, hopefully, the good folks in Iran will change their own
rogue, unauthorized, illegitimate government, in my opinion.
What are we doing to encourage that, if anything?
Mr. Burns. Well, sir, as I said in my opening statement,
the President and the Secretary take very seriously the
importance of supporting universal human rights of Iranians. We
do that in several ways: First, by applying CISADA, designating
individual senior Iranian Government officials who are guilty
of human-rights abuses, to hold them accountable; second----
Mr. Poe. Reclaiming my time, Mr.----
Chairman Berman. No, the time has----
Mr. Poe. Mr. Chairman, may I have that answer in writing?
My question was, what are we doing to promote the opposition in
Iran, not human rights. And I would like to have an answer to
that, Mr. Chairman.
Chairman Berman. Okay. Would the administration be willing
to lay out a number of the different things that you are
involved in doing in communication to the committee or to Mr.
Poe. Thank you.
And the time of the gentleman has expired. The gentleman
from Florida, Mr. Deutch, is recognized for 5 minutes.
Mr. Deutch. Thank you, Mr. Chairman.
Mr. Chairman, I would like to commend you and Congresswoman
Ros-Lehtinen for your leadership on these issues. And thank
you, Secretary Burns and Secretary Levey, for your testimony.
On September 30th, Deputy Secretary Steinberg announced
that Total, Statoil, ENI, and Royal Dutch Shell have pledged to
end their investments in Iran's energy sector. And, as a
result, pursuant to the special rule provided for in CISADA,
there would be no investigation into their activity. The
special rule provides that, and as the notice sent to our
committee stated, that they are either no longer engaging or
have taken significant verifiable steps toward stopping
activity.
My question, first question is: To what extent do those
four companies continue to operate in Iran's energy sector?
Mr. Burns. Well, just to add, sir, there is a fifth company
since then to which the special rule has applied, INPEX, a
Japanese company. So I think, broadly speaking, it is a
demonstration that that instrument, which is a very important
one, is working to produce the outcome that we want.
With regard to the companies that you mention, I can try to
get you a more detailed answer, but we have had quite detailed
conversation with those companies. They are winding down their
operations quite rapidly. And they have given us very clear
assurances that, not only are they winding them down, the
current operations, but they are not going to engage in any
sanctionable activity in the future.
Mr. Deutch. All right. Do we know how quickly they will
wind down? When will they stop doing business in Iran?
Mr. Burns. I can't give you that precise answer, but it is
in the very near term and, in some cases, I think, already
wrapped up. But I will try to get you a clearer answer.
Mr. Deutch. If you could, for each of those. And, I mean,
do you know, though, is it weeks, is it months? Are they
finishing existing contracts?
Mr. Burns. No, it is--you know, I can't give you a precise
answer. I promise I will get you one. But it is in the very
near future. I mean, these are companies that are pulling out
of the Iranian energy sector and have also, as I said,
committed not to engaging in future activity.
Mr. Deutch. Okay. I would----
Mr. Burns. So I think in most cases we are talking about
weeks. I, you know, can't tell you if it stretches much beyond
that, but I will certainly try and get you as clear an answer
as I can.
Mr. Deutch. If you could, I would appreciate that, Mr.
Secretary. If you could confirm that those companies that, at
the end of September, had certified that they would be leaving
will no longer be doing business in Iran within the next
several weeks, I would appreciate that very much.
That, then, leads to the next question, again, with respect
to what companies have said they are going to do and when they
are going to do it and what constitutes credible evidence. The
Boston Globe reported on November 12th that Schlumberger has
promised the United States Government that it will end
operations in Iran upon completion of existing contracts. But
then it cites internal Schlumberger documents that existing
contracts worth hundreds of millions of dollars will keep them
in Iran until 2013. And, in fact, according to that report,
they had entered into 12 new contracts, valued at more than
$400 million, even after telling U.S. officials in February
2009 that they would cease activities.
First of all, do you have anything further on their efforts
and when Schlumberger will be leaving Iran?
Mr. Burns. No. We remain concerned about Schlumberger for
all the reasons that you just described and will continue to
press those concerns. I don't have anything further to add on
that, at this point, unless you do, Stuart.
Mr. Deutch. Mr. Secretary, then, does this report--and this
is, I think, the main question I have today. Does a report that
cites internal documents of the company, like this report that
was published in the Boston Globe, does this constitute
credible evidence that either has or will cause an
investigation to be launched against Schlumberger?
Mr. Burns. Well, you know, in trying to determine what the
threshold is for credible evidence, I mean, we go through all
of those reports. We also talk to companies, themselves. We
talk to governments, you know, of which those, you know,
companies are hosted. We also, obviously, go through all the
information in our intelligence community. So I can't give you
a simple answer on that, except to say that we try to exhaust
all the information we have at our disposal to make a
judgment----
Mr. Deutch. Right, I understand. If you determine that
these internal documents are valid and actually come from the
company itself, and the broader question then is, if any one
company identifies, self-identifies, as a company that is doing
business in Iran, does that constitute credible evidence? And
if it is not clear, shouldn't that constitute credible
evidence?
Mr. Burns. Well, it is certainly a very important factor in
coming to that judgment, just as you said. I mean, I think,
just to take a step back for a second, you know, last summer
when we were asked the question about, you know, how many
instances are there where there may be sanctionable activity, I
mentioned in a hearing that there were 7 to 10 that we were
looking at carefully.
That was in July. Since July, we have actually formally
sanctioned one company; five, through the use of the special
rule, have pulled out or are pulling out of the Iranian energy
sector; and we have launched formal investigations into several
others. So we are trying to follow through quite energetically
and thoroughly on these issues.
Chairman Berman. The time of the gentleman has expired.
I am just going to interject here. It is probably not the
way you should do it, but I will, sort of, take it as the
privilege of the last hearing of my chairmanship, at least for
a while, and just point out: The law provides for this
credible-evidence threshold, and then it provides for a 180-day
investigation.
I don't know if that was what Mr. Deutch was getting at,
but, to my mind, there is a difference between the finding that
comes at the end of a 180-day investigation, or within that 180
days, and the threshold of credible evidence. And we shouldn't
fall into the trap of needing enough evidence to make the final
determination about a sanction in order to decide whether or
not to launch an investigation.
And, with that, I think I have exhausted whatever privilege
I gave myself, and I better go on to the next member. The
gentleman from California, Mr. Royce, is recognized for 5
minutes.
Mr. Royce. Thank you, Mr. Chairman.
The story that I pointed out from the Post actually
predated WikiLeaks, the story on the Obama administration,
concluding that Iran was being helped by China, in terms of the
development of its nuclear weapons and its missile technology.
And it comes from a story last month. Our State Department
special advisor for nonproliferation presented Chinese
officials with what was called a significant list of companies
and banks that were assisting Iran with its missile and nuclear
technology.
I think what concerns us is, as the Wall Street Journal
said yesterday, China's role in Iran's procurement activities
is growing; it is on the upswing. And we know that China looks
the other way as weapons trade between North Korea and the
Islamic Republic of Iran, ends up entrenching both regimes. And
that reality pours cold water on the latest U.N. Sanctions
resolution that the administration lodged this morning, a
resolution that put congressional sanctions on the back burner.
And I can't help but feel a sense of lost time.
But, as Stuart Levey has pointed out, the new legislation
does include potent new financial sanctions. And these are
patterned after section 311 of the PATRIOT Act, which was once
used to great effect on North Korea.
Which brings me, Stuart, to my question. I remember when
that was imposed on the Bank of Delta Asia, and it had a
certain effect on the hard currency that ended up being
constricted from the hands of the regime.
And I thought you might want to lay out for us what the
effect was on North Korea at the time. And it worked, probably,
because there was some concern about reputational risk on the
part of the banks that participated in that effort. But I would
also ask you, is it possible that Chinese banks today would be
concerned about reputational risk and, therefore, this could be
just as effective?
But let's go through the effect of it, if you would.
Mr. Levey. Well, thank you, Mr. Royce.
You are referring to an action that we took under the
PATRIOT Act back in 2005, I believe, to designate a bank in
Macau as being a primary money-laundering concern under the
PATRIOT Act, under section 311. And to summarize quickly, the
overall effect was it led banks around the world to stop doing
business with North Korea because we had put into the public
domain a catalog of the kind of illicit activity that North
Korea engages in. And the fear that banks had that they might
be inadvertently swept up into that led the responsible
financial institutions to say it wasn't worth the risks to
continue doing business with North Korea.
I think, as I said to Mr. Ackerman, I think North Korea was
a more contained target, if you will. And so we have applied
some of the same principles in going after the Iranian
strategy, in that there is a much broader integration into the
financial system that we are already dealing with, and I think
just one action like that wouldn't have had the same dramatic
effect. But we have drawn upon the same principle, which is
that reputable financial institutions will not want to do
business if they fear that they might get caught up in illicit
activity like Iran's nuclear procurement, its missile
procurement, its support for terrorism, and so forth.
And that is the reason why we have had the ability to have
the effect we have had thus far on the banks. And we had
already had a significant effect, and then CISADA dramatically
increased it, because it created a situation where any bank
that continued to do business with the banks that we had
already pointed out is now at risk of losing access to the U.S.
financial system. It made, if you will, a multiplier effect on
our designations, and it has had a dramatic effect thus far.
And to come down to your final point, which is I think that
that effect even applies with respect to Chinese banks. As many
people have expressed and as Bill has said, we are quite
concerned about the role of China in this whole strategy, and
we are continuing to press it.
But we do have one thing going in our favor, which is that
Chinese financial institutions seek to have a global business
model and a global footprint, and, therefore, they do take
these sort of reputational concerns seriously. And that gives
us the ability to be somewhat persuasive with them.
Mr. Royce. My only regret, Mr. Chairman, was that those
sanctions were ultimately lifted. And I think, you know, it is
sanctions enforcement, it is sanctions enforcement. The stakes
are too high for subtlety. It is the enforcement that is going
to get the demonstrative effect.
Thank you, Mr. Chairman.
Chairman Berman. The gentleman from California, Mr. Costa,
is recognized for 5 minutes.
Mr. Costa. Thank you very much, Mr. Chairman and the
ranking member, for this timely hearing. Unfortunately, I don't
think that time is necessarily on our side.
Clearly, as has been noted by many of the members here on
the dais, China continues to be a key and a challenge as we try
to impose these sanctions. And sanctions, I agree with Mr.
Royce, must be enforced. I would like to move this a little
westward on another country that I think is an important
participant, a NATO ally, Turkey.
Secretary Levey, how have the Turkish banks reacted to the
new sanctions? And are Turkish banks continuing to conduct
business with entities that the U.S. has sanctioned?
Mr. Levey. With respect to Turkey, I think there are a
couple of points worth making.
One is that, while Turkey did vote against the resolution,
as we all know, they have stated that they will implement the
resolution. And they have also stated that they will leave to
their private sector decisions about what business the private
sector will do.
And I have been to Turkey since CISADA was passed, and
other Treasury officials have also been to Turkey since CISADA
was passed. And we have engaged with the private sector there.
We have engaged with their banks, their banking association. We
have engaged with their government officials. And what we are
finding is that the private sector, the banks in Turkey are
reacting similarly because they are concerned about the
potential of losing access to the U.S. financial system and
they are concerned about their reputation.
I can't give you more detail in an open setting about that,
but that is the general trend.
Mr. Costa. Will it be our policy to enforce sanctions if,
in fact, we find that their banks continue to do business, and
would we impose the CISADA sanctions?
Mr. Levey. Yes.
Mr. Costa. Secretary Burns, I would like to bring this back
around--we discussed earlier Russia's role in making these
sanctions work.
Do you believe that there is a correlation or a connection
with regards to our efforts to secure the START treaty that is
pending over in the Senate as to how Russia's behavior will be
as we go forward on enforcing these sanctions? Do you think
there is, in your view, a direct correlation here?
Mr. Burns. Well, just two points, sir. First, I think
Russia's partnership in the diplomacy which led to Resolution
1929 and to its own decision to cancel the S-300 sale was
crucial. Without Russia's partnership, I don't think we would
have had Resolution 1929. Without Resolution 1929, I think it
is most unlikely that we would have seen as significant a set
of measures from the EU and from many others.
So that painstaking effort to work together with regard to
a shared concern about Iran's nuclear ambitions has been right
at the core of our relationship with Russia over the last
couple of years.
Certainly, the START agreement is in the interests of both
of our countries. It is very much in the American national
interest. And as the President and the Secretary have made
clear, we hope very much that it can be ratified this month,
because I think it is an important demonstration of a
partnership with Russia, which has also produced important
dividends with regard to our shared concerns about Iran.
Mr. Costa. I would like to ask a final question, and I
noted it earlier. The Revolutionary Guard in Iran, how
effective are these sanctions in trying to impact their ability
to continue to operate? Have we made any determination?
I mean, clearly they are, in essence, a part of the
government. But, obviously--and I don't know whether, Secretary
Levey, you feel best prepared to respond to this. But it seems
to me that the Revolutionary Guard in Iran is at the head of
many of the problems we deal with here.
Mr. Levey. The short answer is that you are right that they
are involved in many of the problems, but the only good news I
have is that that is now something that is not just recognized
by the United States but recognized by the international
community.
So one of the most significant pieces of 1929, which I
think was widely underestimated when it was first passed, one
of the significant pieces of 1929 is its designation of a
number of IRGC companies for sanctions in the resolution. That
led to other countries, including the EU, designating the IRGC
as an organization. Similar action was taken by Japan and South
Korea. The overall effect of this has been to create a dynamic
that has companies around the world saying they won't do
business with the IRGC.
And if you add to that the way Iran engages in deceptive
conduct so you don't know who you are really dealing with in
Iran and the increasing likelihood that if you are doing
business with Iran you are doing business with the IRGC, this
adds to the overall effect of sanctions.
I will give you a good example of this.
Chairman Berman. I think----
Mr. Levey. But I don't have to.
Chairman Berman. Well done.
The gentleman from California, Mr. Rohrabacher.
Mr. Rohrabacher. Thank you very much, Mr. Chairman. And let
us note the good job that you have done in conducting, being
chairman of these hearings over the last 2 years. And it has
been an honor to work with you, knowing and also considering
the fact that we are demonstrating for the world that, here in
the United States of America, people can disagree but we have
respect for one another and we treat each other fairly in
trying to decide policies. So thank you, Mr. Chairman, for your
leadership over these years.
I would like to associate myself with the concerns of
Congressman Poe in terms of the citizens of Camp Ashraf. And I
think that it is disconcerting to understand that we have to
play games with the Government of Iraq after we have invested
such a massive amount of treasure and blood.
We need to hear from Iraq, from the Government of Iraq, a
solid commitment that they will not betray the people of Camp
Ashraf to the Mullah dictatorship. That would be a terrible
sign for anyone opposing the Mullah dictatorship in Iran. We
would lose leverage, et cetera. So if you could pass that on, I
would appreciate that.
What we hear today--and thank you, Secretary Burns, for
your analysis there of the relationship we have with Russia in
dealing with the Iran. It is easy to put this in one-
dimensional to understand, the Russians built that nuclear
power plant. We also understand that, when they signed the
contracts, they were in a horrible economic situation and felt
that they were being pushed to make such deals.
So you have testified today that we have cooperation from
Russia now in dealing with Iran, but I think also this hearing
has demonstrated that our China policy has been a dismal--
dismal--failure. Not only are the Chinese not cooperating, but
we can see that not just Iraq and Iran and that area but the
Chinese, of course, provided the nuclear weapons for Pakistan
through Korea, and the Chinese seem to be using Korea as a
puppet. And the Chinese, of course, have just been playing a
very negative role in the world.
And my compliment to the chairman also should suggest that
in his opening statement he outlined the problem with China. If
we are going to have a peaceful world, we are going to have to
start dealing with China in a more forceful way.
One last note, and then I would like you to answer this.
But I understand that oil now is being transferred--some of the
sanctions you are talking about have been working, but oil is
now being transferred, and a large amount of oil, from Iraq,
from the Kurdish areas of Iraq. Is that true?
And let me just note, if it is, that we passed a resolution
that I authored that would establish a consulate in Arbil, for
a Kurdish consulate. We passed that, and that would not have
passed had we known that the Kurds were shipping large amounts
of oil to Iran.
So what is going on with that oil shipment?
Mr. Burns. Well, sir, we share the concerns about reports
of oil smuggling across the border in northwest Iraq. We have
had a State Department-Treasury team in Baghdad, as well as in
Arbil recently, to talk specifically about those concerns and
emphasize the need for this practice to stop.
I don't know if Stuart wants to add to it. But we take it
very seriously. We have followed up, and we will continue to.
Mr. Rohrabacher. Well, is this oil smuggling, or is this a-
wink-and-a-nod-with-the-government oil smuggling?
Mr. Burns. Well, there have been reports of smuggling that
are worrisome, you know, whatever their origins or content. And
it needs to stop because it runs counter to obligations.
Mr. Rohrabacher. Okay.
One last note here about this WikiLeaks. I find it
disconcerting that I have to find out information about
wrongdoing of other governments and other countries through
these type of leaks of classified documents.
Mr. Chairman, one of the things we are going to have to
work on is the fact that we, as Members of Congress, deserve to
know--if hostile countries know what is going on and our
Government is protesting something that is going on with the
hostile government, meaning our Government knows about it, the
American people and certainly Congress should know about these
things.
And, for example, there is a--we know that at least one
weapons system from China has been shipped over where we
protested it. The American people don't know anything about it.
Thank you very much.
Chairman Berman. The time of the gentleman has expired.
The gentlelady from Nevada, Ms. Berkley, 5 minutes.
Ms. Berkley. Thank you, Mr. Chairman. I appreciate your
holding this hearing.
And thank you, gentlemen, very much for being here. It is a
very important issue, and I appreciate all of your efforts on
behalf of our country.
I was an early supporter of tough sanctions at the U.N. and
an original cosponsor of our Iranian sanctions bill here. I
think they are working. Obviously, not as fast as any of us,
including yourselves, would like. But you just can't----
Chairman Berman. Shelley, why don't you come up here? Your
mike is not working.
Ms. Berkley. I hope you heard all the accolades.
Chairman Berman. Take 30 seconds off for the accolades.
Ms. Berkley. Sorry I mentioned it.
I had an interesting exchange of ideas with a high-ranking
Turkish official yesterday. And in the discussion, he assured
us, the members of the Foreign Affairs Committee, that Turkey
was, in fact, doing everything they can to help implement the
sanctions against Iran and have a successful result from the
implementation.
That seemed to me a bit out of sorts with the fact that
they voted against the sanctions, and it is my understanding
that they have done just about everything they can not to be
helpful.
My question to you is, do you think that they have done
anything to hamper U.N./U.S. efforts to make these economic
sanctions successful?
Mr. Burns. Well, let me start, ma'am, and then Stuart may
want to add to this.
The Turkish Government has made clear, as it did to you,
that they are determined to implement Resolution 1929 and all
the other sanctions. Whatever their vote in the Security
Council, they are obligated to do that, and we will work
closely with them to ensure that.
We have already seen evidence of some Turkish companies--I
mentioned earlier Tupras, which has pulled out of the supply of
refined petroleum products to Iran. You know, the truth is that
the total volume of Turkish trade with Iran is not that great.
I think something like 2 percent of Turkish exports go to Iran
and 2 percent of Turkish imports come from Iran. So, beneath a
lot of the public statements, I think, as Stuart said, you
know, Turkish firms, banks, and businesses have a lot more at
stake, in a sense, in their business with the rest of the
international community and with the United States than they do
with Iran right now.
I think Turkey has made clear that they share our profound
concern about a nuclear-armed Iran. We have had technical
differences sometimes over this, but I think they have a lot at
stake in this, too. I think they have played a constructive
role in Iraq, for example, in working with us to help Iraqis
produce a broadly inclusive government. I think they are very
mindful of the danger sometimes of Iranian behavior in Iraq.
So I think there is a partnership with Turkey that is not
perfect but that we need continue to work at, because it is
significant for us in a lot of different ways.
Ms. Berkley. Let me ask you a question. Is there anything
more that Congress can provide you so that you can make the
sanctions more effective? Are there any loopholes in the law
that need tightening? Is there anything we can do as a Congress
that can help the State Department implement these sanctions?
Mr. Burns. No, ma'am. We are just trying to make the best
possible use of the instruments that have been provided,
especially in CISADA. And as we have both described today, that
is what we are working very hard to do.
Ms. Berkley. If there is a glaring--as you work through
this and do what you are doing, if there is something glaringly
missing or a tool that you find could be helpful, would you
share that with Congress so we can remedy that situation?
I think it is very important, and the ramifications of this
not working are catastrophic, in my mind. And while I think
nothing should be taken off the table--and I have been very
vocal about that the reality of not taking everything off the
table is challenging.
So these sanctions have to work, because the alternatives
are far more dire. So, anything we can do to help you to make
this work and bring the Iranian economy to its knees, I think
you need to share with us.
Thank you very much, again, for your service.
Chairman Berman. The time of the gentlelady has expired.
The gentleman from Nebraska, Mr. Fortenberry, is recognized
for 5 minutes.
Mr. Fortenberry. Thank you, Mr. Chairman. And let me add my
voice to those who have thanked you for your leadership over
these few years. We are grateful for your service; look forward
to continuing to work with you.
And thank you, gentlemen, for coming today. I appreciate
your hard work, and I do think the administration's dual-track
policy is very important.
With that said, the Iranian people have a deeply historic
and deep cultural sensitivity to the fundamental notions of
justice. And yet, they are ruled by a religious autocracy that
is bent on repressing its people and preventing Iran from
taking its place among the members of the responsible
international community.
We will all soon awaken to the headline that Iran has the
bomb, and this will be a geopolitical game-changer. And if we
look back at this, we see a pattern here where Russia, in its
previous engagement, has empowered this development; China is
clearly committing a sin of commission; North Korea has an
exchange program with the country; and the European business
interests are still involved there.
Having Iran obtain nuclear weapons in the most volatile
region of the world is going to leave very, very difficult
defense questions for countries like Saudi Arabia and the
Egyptians and the Turks and may spark a nuclear arms race,
again, in this most difficult part of the world.
And no one in the international community is going to be
served if Iran uses a bomb or gives it to a proxy and it goes
off in Berlin or Chechnya or Tel Aviv or New York. I just don't
think that we can get our minds around the horror that would
ensue.
So, with that said, again, I appreciate your hard work on
this, but here we are, as a committee in the United States
Congress, holding hearing after hearing on this. And we are
talking about the minutiae of Iran sanctions, which is
important; it is an important part of the dual-track strategy.
Is this going on in the EU? Is the Russia Duma doing the same
thing? Expound upon your discussions with the Chinese. You had
earlier said, we have emphasized restraint with China. Okay,
thank you, but ``restraint.''
The nature of this dilemma and the probability of what is
coming has to compel us all to act swiftly. And the burden of
this shouldn't just fall to this committee and on you. This has
to be an international effort of the highest urgency.
So, again, the question primarily being, give me the
disposition of your counterparts in Russia and the European
Union and talk further about China's engagement here.
Mr. Burns. Sure. Let me start.
First, I absolutely agree with you, there is an enormous
amount at stake here. I think what is striking about the last
year is the growing realization on the part of many other
partners around the world, in the EU, in Russia, parts of Asia,
about what is at stake and about the dangers of a nuclear-armed
Iran.
And what that has led to is an unprecedented set of
measures, not only Resolution 1929--that provided the
foundation for it--but a truly unprecedented set of steps that
the EU took, steps that they had been reluctant to take before;
that, as Stuart said, Australia, Japan, South Korea, Canada,
Norway, and other countries have taken; steps that Russia has
taken that it hadn't been prepared to contemplate in the past,
like significant curbs on arms transfers to Iran in a U.N.
Resolution and canceling of a major arms sale. All that
reflects, I think, a widening realization of what is at stake.
And we will continue as energetically as we can to work
with our partners to drive home to Iran the choice that it
faces and the importance of it choosing a path that is going to
allow its people that connection to the rest of the world, as
you rightly said, that I think they thirst for and that we saw
very vividly in the rioting and the other concerns that played
out on Iran's streets the summer before last.
Mr. Fortenberry. Do we have the time?
Mr. Burns. We feel a real sense of urgency. And we need to
see action as quickly as we possibly can. And that is why we
are going to drive this as energetically as we possibly can.
Mr. Fortenberry. Who else is driving it outside of the
United States?
Mr. Burns. Well, I think, as I said, in the European Union
you see a much greater recognition of what is at stake and a
willingness to act. You see that on the part of Russia. You see
that on the part of our major allies in Asia. You certainly see
that on the part of many of our partners in the Gulf.
So, you know, I think there is a growing recognition of
what is at stake here, and we are going to do everything we can
to build on that.
Mr. Fortenberry. All right. Thank you.
Chairman Berman. The time of the gentleman has expired.
The gentleman from Georgia, Mr. Scott, is recognized for 5
minutes.
Mr. Scott. Thank you very much, Mr. Chairman.
Again, welcome to the committee.
So, it is without any question in both of your minds that
Iran is after a nuclear weapon?
Mr. Burns. I think we see increasing concerns which lead
people toward that conclusion. I mean, if Iran wanted to
demonstrate the exclusively peaceful purpose of its program, it
wouldn't be hard to do it. It can answer questions the IAEA has
posed over the years and the U.N. Security Council has posed.
Mr. Scott. So, without question, you will go on record
saying they are after a nuclear weapon? That is your conclusion
and your conclusion; is that correct?
Mr. Levey. I think we have to, as policymakers, we have to
make that assumption, because we have to pursue a policy that
assumes that that is what they are doing.
Mr. Scott. Okay. We have talked about China, we have talked
about Russia, we have talked about North Korea, and all of this
presents a very dangerous geographical, geopolitical scenario
of an impending, sort of, axis. Within that context, we have
not touched upon another country which I think could hold the
balance here, and that is India.
And I would like to ask you--India fascinates me, in terms
of their approach to this. I think it is very important for us
to examine India, particularly in view of the fact that they
now are, from some information, rejecting the sanctions. And
that is particularly peculiar in view of the fact that, just a
few years ago, 2005, 2006, they supported the sanctions that
were put forward under the Bush administration.
Tell me what is going on in India.
Mr. Burns. Well, sir, I mean, the Indian Government has
made very clear its commitment to uphold the new U.N. Security
Council sanctions resolution, 1929. And everything we see of
its behavior suggests that it is serious about that commitment.
For example, one Indian company, Reliance, which had
supplied a considerable amount refined petroleum product to
Iran, has pulled out of that business already. India vote has
voted three times in the IAEA Board of Governors to condemn
Iranian behavior. In its last vote last November, it voted to
condemn the Iranians at a moment when a number of other
countries were on the other side of the vote, including Brazil,
Turkey, Egypt, and South Africa.
So the Indians, I think, have made very clear their
determination to do everything possible to ensure that Iran
does not develop a nuclear weapon.
Mr. Scott. That is what bothers me. I have information here
that says, for example, India's foreign secretary, Nirupama
Rao, made India's position explicit early this month, when she
said restrictions on investments in Iran's energy sector could
have a direct and adverse impact on Indian companies. And, in
fact, that they look forward to more investment by Indian
companies directly into that energy sector. And, sort of, goes
on to say that the United States is thousands of miles away;
they are next-door and have a long, centuries-old relationship.
That seems to run counter to what your assessment just
said.
Mr. Burns. Well, sir, I would just say two things briefly.
First, the Indians at the very highest level have made
clear their concern about a nuclear-armed Iran.
Second, I think you have to judge by the practice on the
ground. Reliance, one of the major Indian firms, has
essentially pulled out of business in Iran. Secondly, in the
South Pars gas field, an Indian company that was involved in
the past in development there has also begun to pull out.
So I think the facts suggest a real concern on the part of
India.
Mr. Scott. Do you think that the sanctions are going to
work? There is some worry about that. And, particularly, as I
mentioned earlier, with North Korea, China, even with Russia,
we wouldn't be in this position with Iran if it weren't for
Russia investing first of all in the Bushehr plant, which seems
to me might have been a convenient cover for them to pursue.
So I guess my point is that I would like to--is a military
option on the table, in your opinion? And how realistic is
that?
Mr. Burns. Well, let me just make a quick comment first on
Bushehr.
I mean, I think it is significant--the last administration
recognized this, as well--that Russia has significantly
adjusted the terms of the Bushehr project so that it would not
only supply the fuel for the reactor but it also would take
back the spent fuel, all under IAEA safeguards, which just
simply helps to reinforce the point that Iran doesn't need a
domestic enrichment capability in order to have a peaceful
nuclear program.
That is the first point. Then the second----
Chairman Berman. Finish the answer to the last question,
but the time has expired.
Mr. Burns. All I can say is on the second point you made,
sir, is the President has made clear we haven't taken any
options off the table, but what we are focused on now is making
diplomacy in all of its dimensions--engagement and negotiation,
but also political and economic pressure--work.
Chairman Berman. The time of the gentleman has expired.
The gentleman from Illinois, Mr. Manzullo, is recognized
for 5 minutes.
Mr. Manzullo. Thank you.
If you take a look at the Iranian Sanctions Act, passed in
1996 I believe, and then the latest act that we passed this
spring--all, of course, dealing with sanctions--can you give an
opinion or at least some thoughts on the best way to, as it
were, toughen up these laws, to give them real teeth, to come
up with the real results that we are looking for?
Mr. Burns. I would just start simply by saying that I think
what we have before us now in the laws passed by Congress,
signed by the President, but also in Security Council
resolutions, steps that other countries have taken, is a very
broad array of instruments.
What we need to do now and what we, as we have described,
have been doing very energetically in recent months is to apply
those and enforce those as vigorously as possible. I think we
can continue to have a significant impact if we do that.
Mr. Levey. I would agree with that. The sanctions that we
have on Iran are the toughest in the world. And we have made it
a very, very high priority to implement them.
One thing that--when we say that CISADA has had a very
positive impact, I think, to put that in context, the effect
that CISADA is having is on behavior of companies outside of
the United States. It does have that impact. And so, if we go
ahead and continue to implement that, I think it can have a
great effect, because now there is a broader recognition of how
important this is. Going beyond the United States, we have a
much broader set of governments that agree with us in the
fundamental principle that this is a very high priority.
Mr. Manzullo. If these sanctions don't work, then the next
step would be a blockade, and the next step would be some type
of--you hate to use the word, but military action. Do other
countries around the world realize to the extent that the
United States does the importance of complying with these
sanctions?
Mr. Burns. I think so. As I mentioned before, there is an
increasing recognition of that. You see that in the behavior of
many other countries--I won't say all of them, but many other
countries, in recent months in particular. I think there is a
growing awareness of what is at stake here and of the
importance of trying to make this approach work.
Mr. Manzullo. I agree 100 percent with what you are saying,
but how do you increase the awareness? How do we get the
message across to other countries in the world that this is
probably the last best shot that we have diplomatically to do
something?
Mr. Burns. Well, as I said, I mean, I think many other
leaderships around the world have already come to that
conclusion. They have concluded that because of Iranian
behavior itself. They have concluded that because they also see
the concerns of many others in that part of the world, whether
it is in the Gulf or in other parts of the Middle East. And
they understand the risk that a nuclear-armed Iran would pose
to a part of the world that is central to the health of the
global economy. So I think many other leaderships are coming to
those same conclusions.
Mr. Manzullo. Mr. Levey, did you want to comment on that?
Mr. Levey. I entirely agree with what Under Secretary Burns
said.
Mr. Manzullo. Okay. Well, I appreciate your time on it. It
is obviously an issue of utmost concern to our country and,
actually, to the stability of the whole area. Thank you.
I yield back.
Chairman Berman. I thank the gentleman and recognize the
representative from American Samoa, Eni Faleomavaega.
Mr. Faleomavaega. Thank you, Mr. Chairman and our ranking
member, for calling this important hearing.
I certainly want to commend both Secretary Burns and
Secretary Levey for not only testifying before the committee,
but too often I think we don't say enough on this side of town
about how much we appreciate the services that you gentlemen
provide not only to our President but to our Nation.
On the important question of whether implementation of
stronger economic sanctions against Iran have been proven
effective or not--and I think this seems to be the question
that we are trying to determine here--I would like to share
with you a statement from research that was conducted by the
Congressional Research Service. And I want to share this with
you, and I certainly would like to add your comment on it.
It says, and I quote:
``Because so many major economic powers have imposed
sanctions on Iran, the sanctions are, by all accounts,
having an effect on Iran's economy. However, data on
Iran's economy is often sparse or incomplete, and it is
difficult to form a precise picture on the impact of
sanctions on it.''
Now, officials have spoken and said that it has this
effect, and yet it says again,
``However, there is not a consensus that sanctions are
causing a demonstrable shift in Iran's commitment to
its nuclear program, the key strategic objective of the
whole idea of sanctions.''
Would you care to comment on that?
Mr. Burns. I would be glad to start. I think in terms of--
--
[Audio difficulties.]
Mr. Burns. Can you hear me? Now ours are going out.
I will be very brief, and I will turn to Stuart since it is
his microphone.
Chairman Berman. That is not working.
Mr. Levey. We promise we are pressing the buttons.
Chairman Berman. How come mine works?
Mr. Faleomavaega. I think these mikes are bugged, Mr.
Chairman, or something.
Well, I am losing time, Mr. Chairman, and I know the
gentlemen----
Chairman Berman. We are told there is a rebooting process
going on, which take a minute or so.
Try yours.
Mr. Burns. I think we are back in.
Mr. Faleomavaega. So much for modern technology. Please
proceed.
Mr. Burns. Sir, let me just start to answer your question
about the impact of sanctions in Iran.
I mean, I think in terms of objective impact on the Iranian
economy, I think sanctions clearly have amplified what is
already considerable mismanagement of the economy. And you can
look at a number of indicators: The fact that oil revenues for
the Iranian Government have declined steadily over the last 3
or 4 years----
Mr. Faleomavaega. Let me ask--I don't mean to interrupt
you, Mr. Secretary, but how much is the estimate of the value
of the oil reserves that Iran currently has? And I also would
like to know how much oil reserves Iraq has worldwide, in terms
of its capacity for whatever it has.
Because it seems to me that this is one of the fundamental
reasons why we are in the Middle East, the concern about
whoever is going to take possession of this oil supply. And,
ironically, if I am correct that when 30 companies offered bids
on the oil in Iraq, it was a Chinese company that won the
bidding. They didn't even lift a finger. After all the billions
and billions of dollars that we expended, the Chinese got the
oil.
And I wanted to ask you, Mr. Secretary, how much oil
reserve does Iran have?
Mr. Burns. Iran has considerable reserves of both oil and
gas. I will have to get you the specific figures. And, of
course, Iraq does, too, particularly in terms of oil reserves.
So I don't know whether Stuart wanted to add to the answer
on the economic impact on Iran.
Mr. Faleomavaega. Well, I know from the administration's
point of view, you feel that sanctions have proven successful.
But here is the problem that I have and that has been raised by
my friend from Florida, as well as Mr. Ackerman.
China is in this mix in the most important way, to the fact
that it is in China's national interest to get as much energy
resources it can get. And I don't think Iran is any other
exception in all the efforts that have been made worldwide--
Africa. Wherever they can get energy supplies, they will do
this. And so is India.
So is it in China's national interest that they get this
oil from Iran one way or another?
Mr. Burns. Sir, I think it is clearly in China's national
interest to have stable access to energy reserves in the Gulf.
And if you have a nuclear-armed Iran or greater instability
caused by Iranian behavior in the Gulf, then you can easily put
at jeopardy access to energy resources in a part of the world
that is critical not only to the global economy but to Chinese
economic growth. So I think that strategic concern has very
much focused attention in Beijing.
Mr. Faleomavaega. Here is one question I would like--and I
know I have 6 more seconds, Mr. Chairman.
It is very, very difficult for us----
Chairman Berman. It will get answered, though.
Mr. Faleomavaega [continuing]. Very, very difficult for us
to tell the Chinese what to do. And I think this is the biggest
problem we are faced with.
Thank you, Mr. Chairman.
Chairman Berman. That is an observation.
The gentleman from Florida, Mr. Klein, is recognized for 5
minutes.
Mr. Klein. Thank you, Mr. Chairman.
And, again, I want to thank the chairman and the ranking
member for the opportunity to serve on this committee, and the
staff for being great support, making us all look good. And, of
course, Mira Resnick, Mira Kogen Resnick, who has worked with
me for the last 4 years, has been an invaluable tool.
And I would like to thank our guests today, who have really
provided a tremendous amount of resources, going back to the
last administration to the current administration. So thank you
for your work.
A few thoughts. Number one, there has been a lot of talk
about China, which--I certainly support a consistent and
aggressive enforcement across the board. I think we saw that
even before the sanctions were actually passed word was already
getting out and we already started seeing some anticipated
reaction by businesses around the world. But more particularly
since the sanctions have passed, the United Nations, United
States, European Union, and other countries--we are starting to
see more. And I would heartily and aggressively encourage you
as fast and as quickly as possible to continue that process.
As it relates specifically to China, though, we have lists
of China National Petroleum, China Petroleum and Chemical, and
other companies that specifically and very openly are doing
things that would be considered sanctionable, as I understand
it. So it is not so much of a question, but it is a very strong
statement that I would make and I think would be joined by most
of the members of this committee: We need to go after them.
I know there are a lot of delicate issues between China and
the United States relating to a whole variety of things. But if
China supported this at the United Nations level and
understands, for all the reasons you just explained, the
importance of why a stable Middle East and a non-nuclear Iran
is essential to its future and everyone else's future, they
have to get on board, and they have to be held accountable just
like every other country in the world. That is my first point.
Number two, the Central Bank of Iran has been a
facilitator, if you will, in stepping in the void when other
banks are being sanctioned. What is it that we can do, and why
are we not sanctioning the Central Bank of Iran?
Mr. Levey. With respect to the Central Bank of Iran, for
the first time the U.N. Security Council resolution actually
expressed concern about the activities of the Central Bank of
Iran, which had previously been something that we had been
expressing some concerns about, in that we had seen it engaging
in the sorts of deceptive conduct that other Iranian banks were
engaging in.
With respect to the Central Bank, though, it is already, in
the United States, a violation of sanctions to do business with
the Central Bank of Iran. In fact, it is a crime for a U.S.
person to engage knowingly in a transaction with the Central
Bank of Iran.
Mr. Klein. And to take it to next level. Other countries,
our allies, or----
Mr. Levey. Well, I think that having this in the Security
Council resolution helps to bolster us when we do what we do
all the time, which is to go and share information and express
concerns and try to raise awareness.
Now it is not only a U.S.-expressed concern, but it is one
where we can point to the Security Council resolution. And that
does help the conversation considerably. And we will continue
to do that and continue to raise those concerns.
Mr. Klein. How big a problem is that, though, in terms of
them stepping in and, you know, facilitating transactions when
other banks are being sanctioned? How big a problem is it in
terms of the overall scheme of clamping down and isolating
Iran?
Mr. Levey. I would speak more generally, that Iran is going
to do whatever it can--that is our presumption, that they will
do whatever they can to evade the sanctions. And that is a
presumption that we had going in.
And so, what we have tried to do is continue to expose
that, so that not only do we make that more difficult for them,
but we also, in the process, make the private sector around the
world even more wary of doing business with Iran.
So the Central Bank of Iran is one concern that we have in
that regard, but it is not the only one. And so our engagement
on this issue, you know, has a number of concerns that we would
raise.
Mr. Klein. Okay, again, I would encourage that.
Also, there are a number of examples that have been brought
forward, the UAE as being one country, where companies are
getting around restrictions in terms of----
[Audio difficulties.]
Mr. Klein [continuing]. By shipping through, facilitating
through UAE and other countries. That is something--obviously,
we are trying to close every door that is opening.
How big a problem is that?
Mr. Levey. I would say that we have--is my mike working it?
Chairman Berman. Yes.
Mr. Levey. We have engaged very intensively with the UAE.
They take the implementation of 1929 very seriously. They take
very seriously their desire not to be abused by Iranian illicit
conduct. And so, that seriousness of purpose has been
reflected, I think, in recent months in their actions, as well.
Chairman Berman. The time----
Mr. Klein. Can I just make one last comment--it is not a
question, but just--as it relates to this? It is my closing
comment.
It relates to--the anticipation of what happened with the
sanctions coming online I think were very indicative of a
process. We are now in the enforcements stage, and, again, we
all feel very strongly about that. But you heard from some of
the members about the notion of layers of additional things
that can come down the road.
Now, we all know time is of the essence, and we want to
continue that process. But to the extent that ideas can
continue to come forward from the experts about additional
things that we can and should be doing, even in the form of
``these are the next steps we will continue to take,'' I think
they will continue to build layers of enforcement and message
that are very, very substantively important at getting the
possibility of change of behavior.
Thank you.
Chairman Berman. The time of the gentleman has expired.
The gentlelady from California, Ambassador Watson, is
recognized.
Ms. Watson. Thank you so much. And I am very conscious----
[Audio difficulties.]
Chairman Berman. I just want to say--oh, boy.
Ms. Watson. I think my mike has just--is it on?
Chairman Berman. Yes. We know you have to leave soon, and--
--
Ms. Watson. As time grows short in many ways, I want to get
to a bottom line. We have talked about sanctions. We have
worked with the EU and the surrounding countries of Iran. This
is really going to Ambassador Burns.
You see Ahmadinejad--and I have been told by a panel of
British parliamentarians, who were able to go into the back
door of Iran, that the people in the streets don't necessarily
go along with the ideology of Ahmadinejad.
Do you think that we can converge on the current leadership
of Iran to sit down and negotiate with us about the sanctions,
about nuclear power and so on? Are we at that point?
And is there a separation of the top leaders, the ones that
are speaking, and the common people in the street? I remember
Iran in other decades, and we have a very--the czar came here,
if you remember. And we had a very good working relationship
with the Carter administration.
What do you project in the very near future in terms of the
ideology that comes from Ahmadinejad?
[Audio difficulties.]
Mr. Burns. Ambassador Watson, can you hear me? No, sorry.
Chairman Berman. Just speak as loud us you can.
Mr. Burns. Can you hear me?
Ms. Watson. I can hear you.
Mr. Burns. Two comments. First, what was made clear in the
summer of 2009 and all the discontent you saw unfolding on the
streets of Iran was a real disconnect between the first of
many, many Iranians for connections to the outside world and
for the individual rights that are so important to us and to
any society in the world.
I think what the leadership has done since then is quite
ruthlessly suppressed the Green Movement, but I don't think it
has eliminated those concerns, that discontent, that thirst for
connections to the rest of the world.
Second, with regard to the prospects for negotiations, I
mean, all I can tell you is that we will approach--we and our
P5-plus-1 partners will approach the next set of discussions
with the Iranians with real seriousness of purpose. And what we
will emphasize is that there is a choice available here.
We are not taking issue with the right of Iran or any other
country to a peaceful nuclear program. What is at issue here is
its responsibility, like any other country in the world, to
demonstrate that it is going to conduct a purely peaceful
program. And because of all the mistrust that has been built up
because of Iranian behavior in recent years, it is going to
take time and hard work to build some confidence.
But we are going to approach this with real seriousness and
with a clear focus on that choice. Because there is a path
whereby Iran and its people can have access to peaceful nuclear
power, just like any other country in the world. They just have
to convince the international community of the seriousness of
their willingness to live up to their responsibilities. And
that is really what is at issue here.
Ms. Watson. Just yesterday, several members of this
committee, under the leadership of our great chair, met with
Turkey--the minister from Turkey, the ambassador, et cetera.
And the gist of it, to me, is that they are acting as a go-
between between Iran and the countries of the West.
And I felt a little differently after hearing them, Mr.
Chairman, than what we felt before we went into that meeting. I
think it was explained quite clearly that they wanted to
continue trade with Iran, they wanted to continue to address
them in terms of being, shall I say, more cooperative in terms
of the sanctions and looking at their nuclear development of
uranium as something that cautions the rest of the world
because we feel the irresponsibility of the leadership.
I somewhat applaud the Turks for playing that role for us.
We are going to continue our discussions with them, hoping that
they will have an impact.
And can you comment?
Mr. Burns. Simply to say that, you know, whatever our
technical differences with Turkey in the past, Turkey is an
important partner for the United States in many, many areas.
Certainly, Turkey has made very clear that its interest argues
very strongly against a nuclear-armed Iran. Turkey has a border
with Iran. You know, Turkey has as much at stake as anyone in
that region in avoiding the instability and the risk that would
come from a nuclear-armed Iran.
So we are going to continue to work with the Turks on these
issues, not just on that issue but on Iraq, on Lebanon, many
other areas where I think the Turks can continue to play a
constructive role.
Ms. Watson. Thank you very much.
Chairman Berman. The time of the gentlelady has expired.
And our last questioner is the gentlelady from Texas, Ms.
Sheila Jackson Lee.
Ms. Jackson Lee. Mr. Chairman, let me thank you very much.
And, Mr. Chairman, do we believe this will be our last hearing
for the month, or will there be greater opportunities?
Chairman Berman. Let's put it this way: It is my hope this
is the last hearing.
Ms. Jackson Lee. Well, allow me the personal privilege to
thank you for your leadership----
Chairman Berman. Thank you.
Ms. Jackson Lee [continuing]. And to add my appreciation
for my dear friend, Ron Klein, who has been such a value to
this committee.
I will follow--and thank you again--the line of questioning
that some of my colleagues mentioned regarding China and the
value of sanctions. One lieutenant general in the Israeli
defense forces asked a question, do sanctions really work? And
I would like to pose that question to you, particularly as it
relates to human rights.
And we note, in particular, that we have had a series of
stoning deaths that have occurred, particularly Sakineh
Mohammadi Ashtiani, the verdict of death by stoning. We know
that there is discrimination, religious discrimination.
So my question is, what do we in the United States expect
to get out of sanctions, strong or not-so-strong?
Mr. Burns. Well, I think, ma'am, we are aiming for the
strongest possible set of measures that produces changes in
behavior, certainly with regard to the nuclear issue, so that
Iran chooses a path of demonstrating to the rest of the world
that it wants to pursue a responsible, peaceful nuclear
program, but also on issues like human rights.
And I think on human rights we will try to take full
advantage of the provisions you have provided in CISADA. I
think identifying individual officials who are responsible for
abuses is a way to hold them accountable and demonstrate our
commitment.
I think the truth is that the Iranian leadership would like
nothing better than to paint opposition movements as foreign
agents, and we need to be careful of that, because the Green
Movement, for example, has made clear that it is a homegrown
movement, and it can't afford to be seen as an instrument of
anybody outside the country. So we are very mindful of that. We
don't support particular opposition groups or political
factions. But what we do--what we are determined to do is stand
up for universal human rights.
And finally I would say, it is important for us to work to
mobilize others in the international community to make those
same points.
Ms. Jackson Lee. Do you see any direct movement as a result
of sanctions, any direct changes in behavior as a result of
sanctions?
And let me just--as my time runs out, let me conclude with
the fact that I would like to receive the same answers that
Congressman Ted Poe asked for. And you might want to comment on
whether or not any----
[Audio difficulties.]
Ms. Jackson Lee. Let me just finish so you can take up the
rest of my time. And thank you. Do we have any movement--a lot
of my colleagues have asked about China, India, and others. Do
we have any ability to impact their behavior as they seek a
very necessary resource, and that is the energy that they are
using for their----
[Audio difficulties.]
Mr. Burns. I think we have seen some movement, for example,
on the part of India, as I mentioned to you before, as a
result, as they look at not only Resolution 1929 but what other
countries in the world are doing. I think you have seen an
interest in diversifying their sources of energy in the world.
I think, with regard to human rights, we have from time to
time seen some movement and changes in behavior when you have
had a strong international chorus of concern, in particular
cases. In the Third Committee in the United Nations a few weeks
ago, there was by far the largest vote yet of countries
condemning Iran for human-rights abuses. So the more that other
countries speak out, I think the more impact it may have on
concrete behavior.
Ms. Jackson Lee. If we speak directly to the Iranian
people, for example, they will listen. The world is frustrated
by the inertia of the Iranian Government. Certainly we are not
in support of the efforts to dismantle it in a nondemocratic
manner, but there has to be some movement for this country to
come into the world forum of the 21st century, meaning
democracy, trade, and interaction with the other world
countries. I hope the Iranian people are listening and will not
accept human-rights abuses and begin to demand that Iran work
with the world community.
I yield back.
Chairman Berman. The time of the gentlelady has expired.
And I am going to just--you won't get off quite that easy--
ask one last question. In September, the Treasury Department
sanctioned Iranian-owned bank EIH, incorporated in Germany, for
providing financial services to Iranian WMD proliferators and
facilitating transactions on behalf of other sanctioned banks.
Why has the German Government refused to take action
against the bank? What are we doing to convince the German
Government to close them down? And are we considering any
sanctions against any entities doing businesses with EIH?
Mr. Levey. Mr. Chairman, you are right, we did take that
action against EIH in September. We consulted in detail with
our German colleagues on that action. They are looking at the
evidence that we were able to share and looking into it
themselves.
We do, as you know, have authorities that go beyond what
most other countries have, in our ability to take action on
administrative record and to rely on information that we don't
have to make public. But the Germans have been good partners on
this, and they are looking at this seriously.
The answer to your final question, though, is answered by
the effect of CISADA, which is, now that we have designated
EIH--which, for those who are not familiar with it, was a very
big financial facilitator for Iran in Europe and was one of the
main ways in which they were accessing euro transactions--but
now that we have designated EIH for its involvement in Iran's
proliferation program, any bank that does substantial business
or engages in substantial transactions with EIH puts at risk
their access to the United States financial system. And we will
take that provision very seriously and enforce it as
appropriate.
Chairman Berman. Well, thank you.
And thank you both very much for coming here. I know how
busy you are. I know how much is coming up even on this subject
in the near future. We appreciate you very much taking the time
to come to us. And also, for what is really--I mean, so much of
it is quiet. Some of it is government-to-government. And the
time you are spending on this--I think the other aspect of
WikiLeaks, as terrible and deplorable as that was, is it
demonstrates that this administration's commitment to this
issue is intense, sincere, enduring, and hopefully, at the end
of the day, successful.
Thank you.
[Whereupon, at 12:13 p.m., the committee was adjourned.]
A P P E N D I X
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