[House Hearing, 112 Congress]
[From the U.S. Government Printing Office]
IRAN SANCTIONS: STRATEGY, IMPLEMENTATION, AND ENFORCEMENT
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HEARING
BEFORE THE
COMMITTEE ON FOREIGN AFFAIRS
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
__________
MAY 17, 2012
__________
Serial No. 112-161
__________
Printed for the use of the Committee on Foreign Affairs
Available via the World Wide Web: http://www.foreignaffairs.house.gov/
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COMMITTEE ON FOREIGN AFFAIRS
ILEANA ROS-LEHTINEN, Florida, Chairman
CHRISTOPHER H. SMITH, New Jersey HOWARD L. BERMAN, California
DAN BURTON, Indiana GARY L. ACKERMAN, New York
ELTON GALLEGLY, California ENI F.H. FALEOMAVAEGA, American
DANA ROHRABACHER, California Samoa
DONALD A. MANZULLO, Illinois DONALD M. PAYNE, New Jersey--
EDWARD R. ROYCE, California deceased 3/6/12 deg.
STEVE CHABOT, Ohio BRAD SHERMAN, California
RON PAUL, Texas ELIOT L. ENGEL, New York
MIKE PENCE, Indiana GREGORY W. MEEKS, New York
JOE WILSON, South Carolina RUSS CARNAHAN, Missouri
CONNIE MACK, Florida ALBIO SIRES, New Jersey
JEFF FORTENBERRY, Nebraska GERALD E. CONNOLLY, Virginia
MICHAEL T. McCAUL, Texas THEODORE E. DEUTCH, Florida
TED POE, Texas DENNIS CARDOZA, California
GUS M. BILIRAKIS, Florida BEN CHANDLER, Kentucky
JEAN SCHMIDT, Ohio BRIAN HIGGINS, New York
BILL JOHNSON, Ohio ALLYSON SCHWARTZ, Pennsylvania
DAVID RIVERA, Florida CHRISTOPHER S. MURPHY, Connecticut
MIKE KELLY, Pennsylvania FREDERICA WILSON, Florida
TIM GRIFFIN, Arkansas KAREN BASS, California
TOM MARINO, Pennsylvania WILLIAM KEATING, Massachusetts
JEFF DUNCAN, South Carolina DAVID CICILLINE, Rhode Island
ANN MARIE BUERKLE, New York
RENEE ELLMERS, North Carolina
ROBERT TURNER, New York
Yleem D.S. Poblete, Staff Director
Richard J. Kessler, Democratic Staff Director
C O N T E N T S
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Page
WITNESSES
The Honorable Mark D. Wallace, president and chief executive
officer, United Against Nuclear Iran (former United States
Representative to the United Nations for Management and Reform) 11
Mr. Mark Dubowitz, executive director, Foundation for Defense of
Democracies.................................................... 20
Ray Takeyh, Ph.D., senior fellow for Middle Eastern Studies,
Council on Foreign Relations................................... 34
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
The Honorable Mark D. Wallace: Prepared statement................ 13
Mr. Mark Dubowitz: Prepared statement............................ 22
Ray Takeyh, Ph.D.: Prepared statement............................ 36
APPENDIX
Hearing notice................................................... 66
Hearing minutes.................................................. 67
The Honorable Ileana Ros-Lehtinen, a Representative in Congress
from the State of Florida, and chairman, Committee on Foreign
Affairs: Material submitted for the record..................... 69
The Honorable Allyson Schwartz, a Representative in Congress from
the Commonwealth of Pennsylvania: Prepared statement........... 72
The Honorable Christopher H. Smith, a Representative in Congress
from the State of New Jersey: Prepared statement............... 73
Written responses from Mr. Mark Dubowitz to questions submitted
for the record by the Honorable Connie Mack, a Representative
in Congress from the State of Florida.......................... 74
IRAN SANCTIONS: STRATEGY, IMPLEMENTATION, AND ENFORCEMENT
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THURSDAY, MAY 17, 2012
House of Representatives,
Committee on Foreign Affairs,
Washington, DC.
The committee met, pursuant to notice, at 10 o'clock a.m.,
in room 2172 Rayburn House Office Building, Hon. Ileana Ros-
Lehtinen (chairman of the committee) presiding.
Chairman Ros-Lehtinen. The committee will come to order.
After recognizing myself and the ranking member, Mr. Berman,
for 7 minutes each for our opening statements on today's
hearing topic, I will recognize the chairman and ranking member
of our Middle East and South Asia Subcommittee for 3 minutes
each for their opening statements. I will then recognize any
member for 1-minute opening statements. We will then hear from
our witnesses. Thank you, gentlemen.
And I would ask that you summarize your prepared statements
into 5 minutes each before we move to the question and answers
with members under our 5-minute rule.
Without objection, the prepared statements of the witnesses
will be made part of the record, and members may have 5 days to
insert statements and questions for the record subject to the
length limitation in the rules.
I would like to point out that we are privileged and
honored to have a distinguished group of Americans with us in
the audience. They are the loved ones, the survivors from the
terrible bombing of the Marine barracks in Beirut, Lebanon that
occurred in October 1983 that resulted in 241 dead and we are
working for justice for them. If you could stand up and let us
applaud you. Thank you. Thank you, ladies and gentlemen, for
joining us today.
The Chair now recognizes herself for 7 minutes for an
opening statement.
Today's hearing is part of a broader oversight effort by
the committee to examine U.S. policy options to address the
Iranian threat. And this particular hearing will focus on U.S.
policy and sanctions implementation and enforcement. Economic
sanctions are inflicting damage on Iran's long-term oil
production potential.
Continuous reinvestment in upstream production is required
to offset a natural decline. Sanctions on Iran's oil industry
and its banking system are curtailing foreign partnerships that
the Iranian oil industry has relied upon.
With these trends in place, it is not unreasonable to
contemplate the end of net oil export from Iran within a few
years and its resulting effect on government finances, on
foreign exchange earnings, and presumably the larger economy.
But much more remains to be done.
I am deeply concerned that the administration's foolish
embrace of yet another round of negotiations will only embolden
the regime. The administration has made already concession
after concession in its negotiations with Iran only to come up
empty handed.
The Iranian approach seems to be what is mine is mine, and
what is yours is negotiable. Unfortunately, the administration
seems to be playing along.
Last month the Los Angeles Times reported that U.S.
officials are now willing to let Iran continue enriching
uranium in the face of multiple U.N. Security Council
resolutions demanding that Iran immediately halt uranium
enrichment. Rather than embarking on this dangerous and
foolhardy course, we must accelerate and expand our sanctions
to compel the Iranians to verifiably and permanently abandon
their dangerous policies.
We know what must be done, and today we are here to explore
what additional measures we must take in order to achieve our
vital national security objectives.
Ambassador Wallace, thank you for joining us today. I would
greatly appreciate your views on what additional measures we
can take to prevent insurance and reinsurance companies that
operate in the U.S. from providing services to entities that
facilitate Iran's ability to trade or develop its energy and
infrastructure projects. Also, what specific disclosure
requirements are currently required? Have they been
implemented, and what additional measures can and should we
pursue? What additional measures beyond sanctioning the
National Iranian Tanker Corporation do you recommend taking to
effectively sanction the Iranian energy sector, both crude oil
and downstream petrochemical products?
Additionally, we have previously discussed the idea of
mandating that automakers receiving Federal Government
contracts must certify with the U.S. Department of
Transportation that they are not engaged with business in Iran,
or engaged in the implementation of any agreement with Iranian
entities. So, if you could elaborate on your estimates of the
impact that this action would have on the coffers of the
regime.
And, Mr. Dubowitz, thank you also for joining us with your
smashed shoulder and all. And I would greatly appreciate your
thoughts on two specific issues. With respect to sanctions
against Iranian shipping, you state in your testimony,
``Sources reveal that China, in the past few weeks, has engaged
in covert purchases of Iranian oil estimated to be about 1
million barrels in excess of their committed purchased volumes
under agreement between Chinese traders and the national
Iranian Oil Company.'' You said, ``This may be one reason for
the Iranian decision to turn off ship locating systems so that
Western authorities cannot track those shipments.'' And lastly,
you state, ``Iran may also be reluctant to expose the extent of
their floating storage, which is a sign of the difficulty they
may be facing in selling their oil.''
Now, Iranian tankers have been turning off their onboard
vessel tracking systems even though the International Maritime
Organization requires that those systems stay on. Can
multilateral actions be taken against the National Iranian
Tanker Company to penalize Iran for its activities? And what
specific role does the National Iranian Tanker Company play
within the IRGC supply chain?
And, additionally, you recommend that the United States
pass measures to establish the U.S. as an Iranian oil-free zone
to provide U.S. leverage in enforcing the EU oil embargo. What
is the projected impact of this course of action on the
regime's finances? And could you also comment on the possible
impact of integrating prohibitions on the purchases of Iranian
oil futures contracts into the Iranian Sanctions Act structure?
And, Mr. Takeyh, you make the cogent observation in your
written testimony that a multi-staged diplomatic process plays
into the Ayatollah's inclination to simply muddle through, or
to quote you, ``as he can trade some modest compromises for a
measure of sanctions relief.'' You add that this helps the
regime protect the essential aspects of its nuclear program
while gaining some breathing room. If you could expand upon
your statement, and what modest compromises do you believe the
Iranians will attempt to trade for this actions relief? What
are the essential aspects of the nuclear program, and what
measures do you recommend that congress take to counter these
efforts?
Unfortunately, time is of the essence, and this year may
mark our last chance to prevent Iran from crossing the nuclear
threshold. History has taught us that failing to act, and
relying on hope, when threatened by a deadly foe like Iran,
usually ends in an avoidable tragedy.
Iran's nuclear weapons program, its unconventional and
ballistic missile development programs, and its political and
military involvement across the Middle East and South Asia, and
indeed in our own hemisphere, is a force to be reckoned with.
We must take the necessary measures through sanctions
development, implementation and enforcement that will finally
address the threat posed by the Iranian regime.
Again, I thank you gentlemen for appearing before the
committee today. I look forward to your testimony.
I now turn to my good friend, the ranking member, Mr.
Berman of California.
Mr. Berman. Well, thank you very much, Madam Chairman, for
calling this timely hearing on Iran sanctions. In less than 1
week, representatives of the five permanent members of the U.N.
Security Council and Germany, the so called P5+1, will meet
with Iranian negotiators in Baghdad in pursuit of a resolution
to the ongoing nuclear problem.
The administration has appropriately pursued a two-track
approach, diplomacy and pressure. Those tracks are supposed to
be mutually reinforcing, but most people agree that it is the
pressure track that has brought Iran back to the table.
The point of sanctions has always been an effort to change
Iran's calculus in pursuing a nuclear weapons program. Without
rigorous enforcement, sanctions have no value. Let us be clear,
the Obama administration has done far more than any previous
administration to implement U.S. sanctions and to build support
for multilateral sanctions.
For more than a decade we urged successive administrations
to follow the law and implement sanctions against energy
companies that invest in Iran, but to no avail. Now, with the
implementation of CISADA, all of the major oil companies have
ceased developing energy fields in Iran. The EU is about to
implement a boycott on the purchase of Iranian crude, and
Tehran is finally financially isolated, reduced in some cases
to signing barter agreements in order to sell its oil.
The administration has rallied the international community,
and especially the European Union, to tighten its sanctions
against Iran's nuclear weapons program in an unprecedented
fashion.
As we all know, congressional focus on sanctions has been
crucial in this regard with this committee leading the way.
That said, the administration has yet to use all the tools at
its disposal. The sanctions have had an impact on Iran's
economy, but they are still far from crippling. With oil prices
so high, Iran is still expected to earn significant oil revenue
this year.
In addition, some nations have not been as helpful as they
should be in terms of enforcing sanctions. Take China, for
example. Chinese oil companies continue to buy Iranian oil.
Chinese Oil Services Company is still helping Iran develop its
oil fields. Chinese banks continue to finance sanctionable
transactions with Iran, and Chinese shipyards are building oil
tankers for Iran. It is time, in fact, it is long past time to
impose sanctions on the entities involved in these activities.
Last year this committee marked up and the House passed the
Iran Threat Reduction Act which strengthens our sanctions
regime in several ways. For example, it would ban foreign
subsidiaries of American firms from engaging in commerce with
Iran, just like their American parent companies. But if we are
to persuade Iran to suspend uranium enrichment and end its
quest for nuclear weapons, we must do more than pass
legislation. That legislation must also be implemented and
enforced.
With regard to negotiations, the most immediate goal of the
talks must be to turn back the nuclear clock to set back Iran's
timetable for achieving nuclear weapons capability. Some have
suggested the possibility of an interim agreement where Iran
would agree to ship out its most highly enriched uranium and
agree to close its underground bunker facility near Qom, Fordo,
which is set up for production of high-grade enriched uranium
and may be virtually impervious to conventional military
attack.
That would be a useful start, but I think it is important
to make clear that such an agreement would not warrant the
easing of sanctions. And most importantly, I believe we should
not compromise on the fundamental goal demanded by the Security
Council six separate times since 2006, that Iran fully suspend
its uranium enrichment.
In a New York Times article earlier this week, an Iranian
advisor to Supreme Leader Khamenei gloats that the Iranian
regime through sheer passage of time has won Western
acquiescence to its uranium enrichment program. The headline of
the article which accurately characterized the official's view
was, ``Iran See Success in Stalling on Nuclear Issue.''
The official posted that Iran has ``managed to bypass the
redlines the West has created for us.'' Well, we need to make
clear that Iran is not going to wear us down. We are going to
insist on full and sustained suspension of enrichment. We are
going to demand that Iran answer all of the outstanding
questions about the history of its nuclear weapons program;
questions asked repeatedly by the International Atomic Energy
Agency, questions that Iran has been stonewalling for years. We
are going to insist on far more intrusive inspections;
otherwise, we will keep moving forward with stronger and
tougher sanctions.
I am eager to hear the witnesses' assessments as to how
effective the current sanctions regime is, how effectively the
sanctions have been implemented, and what other sanctions we in
Congress should pursue. But most of all, I would like to hear
their thoughts on whether and how the sanctions are achieving
our primary goal, ending Iran's nuclear weapons program once
and for all.
I yield back, Madam Chair.
Chairman Ros-Lehtinen. Thank you very much, Mr. Berman.
Please yield 3 minutes to the chairman of the Subcommittee on
the Middle East and South Asia, Mr. Chabot of Ohio.
Mr. Chabot. Thank you, Madam Chairman, for calling this
timely and important hearing. I look forward to hearing the
testimony of the witnesses here today.
I remain very skeptical about the administration's current
policy which continues to be a combination of engagement and
pressure. The theory, as I understand it, is that if we are
able to put enough pressure on the Iranian regime, not the
people but the regime, we may be able to alter its calculation,
and either entice it or coerce it into negotiating away the
nuclear program that it continues to pour resources into.
We are, however, now over 3 years into this policy, and as
far as I can tell, the regime is no closer to complying with
its international obligations. Nevertheless, the administration
continues to pursue this questionable policy, the next chapter
of which will play out in 6 days at the next round of
negotiations.
I don't think I am alone when I say that I will not be
holding my breath for a breakthrough, at least not a real one,
but I am concerned that the administration is so desirous of
progress that it may end up manufacturing through unwise
concessions something it can parade around as success.
Along these lines, I was deeply disturbed to read recently
that according to one report the administration ``might agree
to let Iran continue enriching uranium up to 5 percent
purity.'' The Non-Proliferation Treaty may give its signatories
the right to peaceful nuclear energy, but it does not give them
the right to the full nuclear fuel cycle, including domestic
enrichment.
Allowing Iran to enrich on its own soil even with the
appropriate safeguards would allow the regime to continue to
stockpile low-enriched uranium and would bring it ever closer
to a breakout capability. Just this morning I read a report
which suggests that Iran is installing additional centrifuges
at an underground facility.
As one analyst recently noted, getting within weeks of
acquiring a bomb by making nuclear fuel, especially when doing
so is uneconomical and is now tactically required in order to
produce nuclear power ought not to qualify as peaceful nuclear
energy.
As I have said before, it is my belief that Iran's nuclear
program is a symptom of the disease rather than the disease
itself. I want to be clear, Iran's illicit nuclear program is a
paramount challenge to U.S. core national security interests
and it must be addressed. But to speak of a nuclear program
independently of the regime which pursues it is to put the cart
before the horse. A nuclear program is not in and of itself
what makes the regime nefarious, it is the perverse nature of
the regime that makes the nuclear program so dangerous. And it
is my belief that any regime that threatens to wipe Israel off
the map or so wantonly shirks its international obligations
cannot be allowed to enrich on its own soil.
As we sit here today, Iran's centrifuges continue to spin
and the regime inches closer to a nuclear weapons capability.
That we would permit this is anathema to me, and I yield back.
Chairman Ros-Lehtinen. Thank you very much, Mr. Chabot.
Honored to yield 3 minutes to the ranking member of the same
subcommittee, Mr. Ackerman of New York.
Mr. Ackerman. I think it important that we consider the
context in which both the upcoming P5+1 negotiations and the
sanctions are taking place.
There has been bipartisan concern about this issue since
the 1990s. Some of us here voted on a bipartisan basis for the
first sanctions investment in Iran's petroleum sector, and we
have been working together on this committee to strengthen
those sanctions ever since.
Bipartisan frustration regarding the implementation of
those sanctions by the Clinton and Bush administrations
culminated almost 2 years ago with the passage of the
Comprehensive Iran Sanctions Accountability Divestment Act
which significantly boosted pressure on Iran.
But more than just supporting CISADA, the Obama
administration broke with its predecessors which,
unfortunately, viewed further U.S. sanctions an unwelcome
impediment. In contrast, the Obama administration, wisely in my
view, embraced sanctions as a critical element of a
comprehensive strategy, and skillfully unified the
international community as never before behind our policy of
seeking to engage Iran while also cranking up serious pressure
on the Ayatollah's regime to back down.
The Obama administration has worked to make sanctions more
effective by improving U.S. enforcement, enhancing
international participation and successfully moving a Sanctions
Resolution, one with further unilateral sanction supporting
language through the United Nations Security Council.
Previously, we had painless sanctions, feckless
negotiations, and no real leverage. Iran was seen as a rising
power in the Middle East and the United States was seen as
failing in a morass of endless war in Iraq and Afghanistan.
Today, the picture is nearly 180 degrees reversed and that
is no accident. While our economy continues to add jobs, Iran's
economy has been choked by sanctions that are only getting
stronger, and the bottom has fallen out of their currency.
Rather than being mired in Iraq, we have successfully
disengaged militarily. We are reducing our liabilities in
Afghanistan, far from being viewed as the vanguard of a new
Middle East built upon the so called axis of resistance, Iran
has made itself the enemy of the Arabs by aiding the Assad
regime's slaughter and terror.
Admittedly, I have low expectations for the upcoming
negotiations, but only because I have such low expectations of
Iran's leaders. Unfortunately, I think they would rather see
their own country fail than accept any deal, no matter how
reasonable. But even though I doubt Iran will negotiate in good
faith, I believe we must continue as we have by strengthening,
sharpening, and broadening sanctions, by improving
international cooperation on their enforcement, and by insuring
that we have a truly viable military option so that no matter
what Iran absolutely does, not acquire a nuclear weapons
capability. The bottom line is that, and the mullahs need to
know it.
Chairman Ros-Lehtinen. Thank you so much, Mr. Ackerman.
We will now move to the 1-minute statements by our members.
Pleased to yield to Mr. Smith, the chairman of the Subcommittee
on Africa, Global Health, and Human Rights.
Mr. Smith. I thank my good friend, the distinguished chair.
Madam Chair, a nuclear weapons capable Iran poses an
unprecedented and absolutely unacceptable threat to Israel, its
neighbors, the United States, Europe, the world. Some have
naively suggested that the Mutually assured destruction Theory
or MAD theory that mitigated the threat of nuclear annihilation
with the Soviet Union is somehow applicable to a nuclear Iran.
It isn't. Unlike Moscow's penchant for survival, the Iranian
dictatorship savors, even welcomes individual and mass suicide
as somehow noble and worthy of eternal paradise.
I congratulate Chairman Ros-Lehtinen and the ranking member
Howard Berman for working tirelessly to strengthen sanctions,
especially the potentially most effective sanction of all,
shutting down Iran's banking capabilities.
In his testimony, Ambassador Mark Wallace says, ``First we
must fully end Iran's access to international banking system.''
I couldn't agree more.
Chairman Ros-Lehtinen. Thank you. Mr. Sherman, the ranking
member on the Subcommittee on Terrorism, Nonproliferation, and
Trade.
Mr. Sherman. I agree with Mr. Chabot that non-nuclear
states do not have the right to the full fuel cycle under the
NPT, but with Iran, there is another reason; they are already a
violator of the NPT and should not be allowed to enrich.
It is said that this administration has done more than
prior administrations. That is way too low a standard. It is
like we used to have the record spinning at 33 revolutions for
an LP, and now we have adjusted it up to that old 78. The
centrifuges spin at 90,000 revolutions per minute, and we have
to have sanctions that move just as fast.
We need, and I hope to have co-sponsors in this committee
of my bill to punish those banks in swift, that do not vote for
the complete shutoff of all Iranian banks from the inter-bank
communication system, and it is time for the administration to
sanction all Iranian banks, not just the Central Bank. There is
so much more we could do and so little time to do it. I yield
back.
Chairman Ros-Lehtinen. Thank you, sir. Mr. Rohrabacher is
recognized, chairman of the Subcommittee on Oversight and
Investigations.
Mr. Rohrabacher. Thank you very much, Madam Chairman. Thank
you for holding this hearing.
It is time for us to admit that our strategy about Iran, a
nuclear armed Iran, is not working. I mean, here we are. It
just keeps getting worse and worse, closer and closer to the
time when Iran, these mullah, the crazy mullah regime will have
a nuclear weapon.
We have focused actively on China, on our allies, on U.S.
corporations, we have focused on economic sanctions, diplomatic
pressures, negotiations with the mullahs themselves, but we
left out the significant player who could make the difference,
how about the Iranian people? This administration has been
noticeably quiet when the first Arab Spring demonstrations
happened where, in Tehran. We didn't even give them any
support. We haven't supported any of those elements in Iran. We
are willing to fight against the mullah regime. That would be
the most successful strategy, but yet we have been talking
about China trying to enlist our allies, doing everything but
going to the people and forming an alliance with those people
who could make a difference. Thank you very much, Madam
Chairman.
Chairman Ros-Lehtinen. Thank you. Mr. Sires of New Jersey
is recognized.
Mr. Sires. Madam Chair, I don't have a statement at this
time.
Chairman Ros-Lehtinen. Thank you very much. Mr. Murphy of
Connecticut.
Mr. Murphy. Thank you, Madam Chair. During the 5 to 10
years before President Obama took office, we didn't stand
still, we went backwards. During that period of time year by
year the balance of power tipped every year in favor of Iran.
Why? Because we decided to empower Iran by fighting an
unjustified war in Iraq that essentially elevated their
presence in the region. By being distracted both in the war in
Iraq, and by mismanaged war in Afghanistan we essentially
pursued absolutely no policy of sanctions, no policy of multi-
lateralism. In fact, the Bush administration didn't enforce one
single sanction against Iran during their time in office.
So, the historical context for this hearing is important
because over the past 3 years, the Obama administration has
done something different. They have engaged the international
community. They have put in place sanctions that have never
been tougher, and they have pursued a policy backing it up to
talk to the Iranians about something different, a way forward
that is different. That is the historical context that this
hearing takes place in today.
Chairman Ros-Lehtinen. Thank you so much. Mr. Joe Wilson of
South Carolina.
Mr. Wilson. Thank you, Madam Chair. I am particularly
appreciative of the survivors of the Beirut barracks bombing. I
want to thank you for being here. What a tribute to your loved
ones, persons on October 23rd, 1983, 241 U.S. Marines, sailors
and soldiers were killed clearly by an Iranian attack. The
American people need to remember this. Sadly, so many people
have forgotten. But thank you for being here. The American
people need to know that the resulting explosion was the
largest non-nuclear explosion ever detonated on the face of the
earth. It was a force of 15 to 21,000 pounds of TNT.
The court ruling of 2009 made it clear that because of the
Iranian connection with Hezbollah, that there was no question
that the material and technical support was from the Iranian
Government.
Thank you for being here. Thank you for reminding the
American people. We must not repeat this. I agree with
Congressman Rohrabacher, we need to be encouraging the people
of Iran to encourage change, and there has been a failure by
this administration. Thank you, Madam Chair.
Chairman Ros-Lehtinen. Thank you, sir. Mr. Deutch of
Florida.
Mr. Deutch. Madam Chairman, I would like to thank you and
Ranking Member Berman for your leadership and your commitment
to preventing a nuclear Iran. And thanks for our witnesses whom
I have had the pleasure of working with on this issue.
In the last 3 years, the U.S. has gone from having
essentially no impactful sanctions policy to the most robust
targeted Iran sanctions program in the world, and we have
amassed a broad international coalition of partners. We are
finally seeing sanctions severely strangle the Iranian economy,
but we can and we must do more.
I encourage the administration to stay the course and
proceed with the implementation of crude export sanctions at
the end of next month. I, along with several of my colleagues
on this committee have proposed additional legislation to
strengthen sanctions even further, and I hope the Senate moves
forward with its new package today.
Madam Chairman, we cannot allow the Iranian regime to use
negotiations simply to buy time while thousands of centrifuges
continue to spin.
I look forward to the testimony of our witnesses, and I
yield back.
Chairman Ros-Lehtinen. Thank you very much. Mr. Turner of
New York.
Mr. Turner. Thank you, Madam Chair. If the purpose of the
sanctions is to stop the Iranian nuclear weapons program, I
would be anxious to hear what our witnesses have to say about
the efficacy of this program, particularly in view of the
timeline. By year end, we expect a weaponization program. Which
do you think will work, sanctions or will the Iranians win on
the time? I yield back, thank you.
Chairman Ros-Lehtinen. Thank you. Mr. Meeks, the ranking
member on the Subcommittee on Europe and Eurasia.
Mr. Meeks. Thank you, Madam Chair, for convening this
timely hearing on Iran sanctions.
Let me just say that I strongly support and supportive of
President Obama's efforts to establish what is unprecedented
international sanctions against the regime of Iran. In order
for sanctions to be successful, first you have to have a
coalition of individuals. You know, you do certain things on a
bilateral or unilateral basis, generally that means you can
pass all the sanctions you want. It will not have the intended
effect. The way to be successful is to make sure you do it on a
multilateral effort.
What the Obama administration has been doing that has been
successful is now they have brought in a number of our European
allies who I also want to congratulate, who have implemented
wide-ranging sanctions despite even difficult economic
situations that they are in. This is a real achievement, I
think, for the Obama administration and for the rest of the
world, as now everyone can be focused and united to make sure
that Iran does not a nuclear weapon. This is not about
containment, it is about making sure they do not obtain a
nuclear weapon.
Chairman Ros-Lehtinen. Thank you, sir. Mr. Marino of
Pennsylvania.
Mr. Marino. I have no statement.
Chairman Ros-Lehtinen. Thank you. Mr. Bilirakis of Florida.
Thank you. Mr. Connolly of Virginia.
Mr. Connolly. Thank you, Madam Chairman. I think we need to
be careful as Members of Congress that we don't talk ourselves
out of a very strenuous and robust sanctions regime to bring
Iran to the table and to resolve the issue of its nuclear
capability.
The fact of the matter is, and I respectfully disagree with
my friend, Mr. Berman from California, and Mr. Rohrabacher from
California. I don't think we have ever seen a sanctions regime
as strict and as tightly controlled as we are seeing under the
Obama administration with respect to Iran.
There is mounting evidence it is working. It is working in
cutting off its ability to supply oil to its customers. It is
working in terms of the banking system and its access to
credit. It is working in terms of mounting domestic pressure
within Iran among consumers and among the people of Iran who
are seeing the negative consequences of this folly. And I think
the Obama administration deserves credit and a little more time
to make it all come home. I thank the chair.
Chairman Ros-Lehtinen. Thank you very much. And now the
Chair is pleased to welcome our witnesses. We will start with
Ambassador Mark Wallace, who is the chief executive officer,
co-founder and former president of United Against Nuclear Iran.
He is also the CEO of Tigris Financial Group.
Ambassador Wallace previously served as our Ambassador to
the U.N. in the field of management and reform. How did that
work out? He also served as principal legal advisor to the
Bureau of Immigration and Customs Enforcement, and the Bureau
of Immigration and Citizenship Services in the Department of
Homeland Security. Welcome, sir.
Mr. Mark Dubowitz is the executive director of the
Foundation for Defense of Democracies where he is the head of
FDD's Iran Energy Project, and directs its Iran Human Rights
Project. He is also a principal at the Iran Advisory Group. Mr.
Dubowitz previously served in software management as director
of International Business Development in Double Click. Thank
you, sir.
And lastly, we will hear from Ray Takeyh. He is a former--
he is a senior fellow for Middle Eastern Studies at the Council
of Foreign Relations. Dr. Takeyh is also an adjunct professor
at the Center for Peace and Security Studies at Georgetown.
Before that, he was a professor at the National War
College, and at the National Defense University, as well as a
fellow at Yale, and the Washington Institute for Near East
Policy. He recently contributed to the work of the special
advisor for the Gulf and Southwest Asia at the Department of
State. Welcome.
I would like to kindly remind our witnesses to keep your
testimony to no more than 5 minutes. And without objection, the
witnesses' entire written statements will be inserted into the
hearing record. And we will begin with you, Ambassador Wallace.
STATEMENT OF THE HONORABLE MARK D. WALLACE, PRESIDENT AND CHIEF
EXECUTIVE OFFICER, UNITED AGAINST NUCLEAR IRAN (FORMER UNITED
STATES REPRESENTATIVE TO THE UNITED NATIONS FOR MANAGEMENT AND
REFORM)
Ambassador Wallace. Thank you, Madam Chairman. Madam Chair,
Congressman Berman, distinguished members of the committee, it
is an honor to have the opportunity to appear before you again
today to discuss what is unquestionably the most serious
national security challenge confronting the United States.
Thank you for having me, and I would like to acknowledge the
important work of my colleagues on the panel, Mark and Ray.
I am proud that my colleagues from UANI are here today,
David Ibsen and Lara Pham. They and their other UANI colleagues
do the hard important work so well. I must acknowledge the UANI
Advisory Board and the intimate role they play in our work,
including prominent foreign policy experts such as Graham
Allison, Les Felb and Fouad Ajami, and former government
officials like former CIA Director, Jim Woolsey, former
Homeland Security Advisory, Fran Townsend, former head of the
Mossad Meir Dagan, former head of the German Intelligence
Service, Dr. August Hanning, and the former head of the United
Kingdom's MI6, Sir Richard Dearlove, among many others. I am
lucky to have colleagues like UANI's president, Kristen
Silverberg, and European partners in the London-based Institute
for Strategic Dialogue.
The international and transatlantic character of our
organization is a testament to the consensus belief that a
nuclear armed Iran is the preeminent global security challenge.
The threat of a nuclear armed Iran is difficult to overstate.
If Iran acquires nuclear weapons, the threat environment that
the United States faces will be changed in dramatic,
fundamental, and irrevocable ways.
With bold action, we still have an opportunity to thwart
Iran's nuclear ambitions. We must seek the most robust
sanctions in history. And we must consider much more than
tweaks to current sanctions. We have made real progress. The
U.S. and EU passed financial sanctions against Iran's central
bank and pressured SWIFT to bar Iranian bank access to the
international banking system. And, of course, the very
important decision by countries to either ban or significantly
curtail oil imports from Iran has been a very key development.
The consequences to Iran have been significant. Iran's
rial, its currency, has been in free fall, a reliable indicator
of the economic impact of sanctions.
This committee has been at the forefront in championing
sanctions, and I would like to discuss some concepts for
consideration to achieve an economic blockade of Iran.
Our proposed strategy focuses on four areas; namely,
banking, insurance and reinsurance, disclosure and debarment,
and shipping. We give it an acronym called BIDS, B-I-D-S.
First, we must fully end Iran's access to the international
banking system. All Iranian financial institutions and banks
should be sanctioned, and there should be no exceptions to the
areas of prohibited banking activity. Moreover, any institution
that engages in sanction work-arounds, including participating
in elaborate barter-type arrangements should be penalized and
sanctioned.
Second, we must increase pressure on Iran through the
insurance sector. Insurance and reinsurance companies that
operate in Iran should be identified and prohibited from doing
business in the United States, and precluded from entering into
insurance or reinsurance agreements with any entities in the
United States.
Third, companies that avail themselves of U.S. capital
markets should be required to disclose the business that they
conduct in Iran and with Iranian entities, not limited just to
the energy sector or after some threshold amount. And if a
company conducts business in Iran, any type of business, it
should not be eligible to receive U.S. Government contracts.
Finally, international cargo and crude shippers that
service Iranian ports should be barred from docking in U.S.
ports for 10 years. Vessels arriving in U.S. ports should
certify that they have not docked at an Iranian port, or
carried Iranian crude oil, or downstream petrochemical products
in the previous 36 months. Some vessels have also worked to
conceal their movements including by disabling their GPS
tracking devices, and thus are actively facilitating the
illegal practices of the Iranian regime. Such violations should
result in permanent bans from U.S. ports.
Some may say that the above measures are too hard,
particularly on the Iranian people, while others will say that
it is too late for economic pressure, and that the only option
is a military one. But Iran's economy is controlled by the
regime and the IRGC which profit at the expense of the Iranian
people. This regime will never change course due to half-
measures. As for the other argument, I cannot under oath with
certainty, state with certainty that sanctions and pressure
will finally compel the Iranian regime to change course. But
before we would take military action against Iran, we should be
willing to test the most robust sanctions in history. Doing so
will show the regime that we are serious, committed, and
willing to do what is necessary to stop Iran's pursuit of a
nuclear weapon, but we must act, and act now.
Thank you for allowing my longer statement to be submitted
for the record. It includes our detailed BIDS proposal that we
hope may achieve an economic blockage of Iran, and it is an
honor to be here today, particularly before the survivors of
the 1983 attacks in Beirut, something that we all so frequently
talked about as one of the reasons why we should oppose a
nuclear armed Iran. But to have these people in this room, it
is an honor for me to be here. Thank you, Madam Chairman.
[The prepared statement of Ambassador Wallace follows:]
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Chairman Ros-Lehtinen. Thank you, Mr. Ambassador.
Mr. Dubowitz.
STATEMENT OF MR. MARK DUBOWITZ, EXECUTIVE DIRECTOR, FOUNDATION
FOR DEFENSE OF DEMOCRACIES
Mr. Dubowitz. Thank you very much. Chairman Ros-Lehtinen,
Ranking Member Berman, distinguished members of the committee,
on behalf of FDD it is an honor to be here today, and an honor
to be testifying with Mark and Ray.
The topic of my testimony is sanctions relief as the Obama
administration prepares for the P5+1 talks in Baghdad. Now,
administration officials publicly and privately are making a
tough case for relieving sanctions on Iran, but these officials
have, nevertheless, made it clear that these talks are part of
a process that will require confidence-building measures and
reciprocal concessions.
To be meaningful to Tehran, concessions will have to come
in the form of sanctions relief which are threatening the
regime's oil wealth, and perhaps even its survival in ways not
seen since the Iran-Iraq War.
Supreme Leader Ali Khamenei badly needs to relieve this
economic pressure. He is seeking to buy his country enough hard
currency from oil sales to withstand soaring inflation and a
crumbling currency. He also seeks to use the P5+1 negotiations
to buy more time to reach breakout capacity, which would enable
him to build a nuclear weapon within a few months.
Now, Iran sees the negotiations as an opportunity to force
the international community to accept its enrichment
activities. In the face of five UNSC resolutions and a U.S.
commitment to stop Iran from crossing previously established
red lines, Iran has simply moved the goal posts. Bushehr, Arak,
Natanze and Fordo are a testament to the success of this
Iranian strategy.
Khamenei likely will continue the strategy of playing for
time by dangling incremental nuclear concessions before the
negotiators, such as the cessation of 20 percent uranium
enrichment. This concession will be portrayed as an important
confidence-building measure putting pressure on the
administration and its partners for a similar gesture of
goodwill in return.
As eager, however, as President Obama is for a deal he
cannot take the risk of offering too much relief for too few
concessions. Once these sanctions start to unravel, the fear of
U.S. penalties that held them together will become difficult to
re-establish. The multi-lateral sanctions regime, the
centerpiece of the President's Iran strategy, will be gone. In
order to make concessions to Iran, the President or our allies
may be tempted to offer sanctions relief in the shadows.
In my written testimony, I detail some of the ways in which
Iran could be offered sanctions relief without inviting public
scrutiny. These are just a few examples of what should not be
allowed. They include reducing by even a few percentage points
what constitutes a significant reduction to the volume of
petroleum purchased from Iran, as provided in 1245 of the NDAA.
Doing so would provide Iran with additional hard currency.
Allowing the 14 or so Iranian financial institutions to
continue using SWIFT. Supporting Europe in relaxing the
Maritime insurance sanctions that are so effective in slowing
down Iranian oil shipments. Looking the other way as Europe
allows sanctions busting of its oil embargo. Keeping open
financial channels that allow the Iranians to access the global
financial systems and repatriate its oil profits. Permitting
sanctionable transactions to take place through barter trade to
help Iran reverse the decline in its energy production.
Delaying sanctions against critical elements of the oil supply
chain like NIOC or NITC. Providing less rigorous enforcement of
shipping sanctions that allow Iran to covertly sell more of its
oil.
Now, these are just a few of the ways that the U.S. or our
allies could provide sanctions relief in the shadows. President
Obama must not allow this. Instead, the recommended course is
for the President to engage openly with the American people,
with Congress, with this committee, and with key allies like
Israel during the negotiating process with Iran.
He needs to green light the passage of the Senate's
sanctions bill before the Baghdad talks begin. He needs to
support additional sanctions proposed by members of this
committee, and by members of the Senate Banking Committee on an
expanded energy and commercial embargo, broader insurance
sanctions, and Iranian oil-free zone, expanded financial
sanctions, and the lifting of CBI immunity to allow victims of
Iranian terrorism to finally receive justice.
He should provide detailed reports to this committee and to
Congress on the type of sanctions relief being offered, and on
the nature of the Iranian concessions that they are offering.
And he has considerable flexibility under the National Interest
Waiver in Section 1245 of the NDAA to provide sanctions relief
in the open. But the President needs to be careful. Sanctions
relief needs to be coordinated with the EU, and an EU
suspension of sanctions is not likely to be easily and quickly
reversed. Real sanctions relief should only be offered in
response to meaningful Iranian concessions.
Congress, and this committee, in particular, has played a
critical role in the development and implementation of
sanctions. Your next task is to ensure that sanctions relief,
if it is to be provided at all is only provided in the open,
not in the shadows, and only in exchange for meaningful,
verifiable and irreversible Iranian nuclear concessions.
Thank you very much for inviting me here today.
[The prepared statement of Mr. Dubowitz follows:]
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Chairman Ros-Lehtinen. Thank you so much.
Dr. Takeyh.
STATEMENT OF RAY TAKEYH, PH.D., SENIOR FELLOW FOR MIDDLE
EASTERN STUDIES, COUNCIL ON FOREIGN RELATIONS
Mr. Takeyh. Thank you very much for inviting me, Madam
Chairman, Congressman Berman. I am also very privileged to be
here with Ambassador Wallace and Mr. Dubowitz, who have done
much to draw attention to this particular issue.
As has been discussed, diplomacy has resumed its place in
the Iranian drama. I would like to draw attention to some of
the Iranian calculations as I understand them, because I think
little is being paid to contradictions that are likely to
complicate Tehran's path to a prospective settlement.
The objectives of the United States and the Western powers
are as seamless as they are obvious. We hope for confidence-
building measures yielding a durable arms control agreement. Al
Khamenei's path, however, the Supreme Leader's path is beset by
contradictions.
For long, Iran's Supreme Leader perceived that he could
advance his program at a tolerable cost to his economy. Today
he stands at crossroads of conflicting ambitions. On the one
hand, the Supreme Leader needs America as an enemy and a robust
nuclear infrastructure to legitimize his rule. Yet, such
convenient enmities further erode his economy and potentially
threaten his hold on power. Whether he can untangle these
contradictions will determine the success or failure of the
latest diplomatic efforts.
As a revolutionary, Al Khamenei has long pursued a
confrontational foreign policy as a means of reinforcing the
regime's ideological identity. What many observers often miss
about the Islamic Republic is that its leaders may rationally
opt for self-defeating policies abroad in order to buttress a
certain ideological character at home. The theocratic state
needs an American enemy, and it needs some degree of
estrangement from the international community as a means of
sanctioning its hegemony of power. In contemplating his moves,
Supreme Leader has to calibrate how transacting an agreement
with nefarious Westerners impact his need for such useful
enemies.
Nuclear empowerment has emerged as a core element of
Islamic Republic's strategic conception. Iran's quest for
nuclear capability is not really predicated on ideological
assumptions. An enhanced nuclear capacity gives Iran ability to
assume a more dominating role in the region that is beset by
political transitions.
Moreover, unfortunately, the history of proliferation
suggests that nuclear weapon states ordinarily receive better
treatment from the international community in terms of resumed
contracts and diplomatic recognition, whether it is Pakistan,
China, so on and so forth.
The argument that a nuclear armed nation is too dangerous
to remain isolated and must be reintegrated in the global
system has proven compelling over time.
Despite these frequent professions of autonomy and self-
sufficiency, Iran is profoundly dependent on global economic
structures. After all, Iran subsists on revenues derived from
an export commodity whose price and the means of transport are
determined by actors beyond its control.
For Iran to successfully sell its oil it requires access to
global financial institutions, tankers that are insured by
European firms largely, and customers that have alternative
suppliers. Can a stage really reject global norms yet benefit
from the prevailing mechanisms of international trade? And here
lies Khamenei's dilemma as his revolutionary foreign policy and
his quest for nuclear capability are increasingly clashing with
the vulnerabilities of his state.
Al Khamenei today faces a choice he would rather not make.
He Supreme Leader would much prefer to persist with brandishing
his anti-Western slogans, incrementally expanding his nuclear
apparatus, and somehow managing Iran's economy. Protracted
diplomacy may actually serve his cause and his inclination to
muddle through where he can attempt to offer some compromises
for a measure of sanctions relief. In such a format, he can
protect essential aspects of the nuclear program.
Despite the limitations of the diplomatic process, there is
still much the West can do. My colleagues have highlighted some
of these issues. I think after decades of sanctions and
pressure, the international community is finally placing the
Supreme Leader in a position where he can no longer afford both
his enmities and his economy.
The Western powers would be wise to stress that sanctions
will not be lifted until there is a fundamental different
Iranian approach to the issue of proliferation. As such, the
European boycott of the Iranian oil scheduled to take place in
July should be implemented irrespective of offers that Iran is
likely to dangle between now and then, and the same can be said
about the central bank sanctions that are designed to take
effect.
It must be said that it is entirely possible that the
Supreme Leader will opt to preside over a country that has
greater nuclear capability and a permanently degraded economy.
He may opt for that choice. Still, the objective of the Ally
Diplomacy should be to compel him to make a choice and deprive
him of his uncanny ability to continuously square his many
circles. Thank you very much.
[The prepared statement of Mr. Takeyh follows:]
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Chairman Ros-Lehtinen. Thank you for excellent testimony
the three of you. Thank you.
When you talk about the Supreme Leader, as we know, in July
2011 Treasury sanctioned and designated six al-Qaeda terrorists
and reported that they are working for a network that would be
headquarters in Iran operating under an agreement between al-
Qaeda and the Iranian regime. Do you think that the
administration should sanction senior Iranian political
leadership folks, including Ahmadinejad and the Supreme Leader?
He has the authority under Executive Order 13224 because they
are providing material support to al-Qaeda?
And let me ask you the additional question. Now, a lot of
individuals in the international community are under the
impression that the United States has done everything we can to
fully sanction the Iranian regime. And, as we know, and we
discussed right here, nothing could be further than the truth.
And you have pointed out in your testimony we must fully end
Iran's access to international banking system, increase
pressure on Iran through the insurance sector, require
companies that avail themselves of U.S. capital market to
disclose the business that they conduct in Iran, and with the
Iranian regime, bar international cargo and crude shippers that
serve Iranian ports from docking in U.S. ports for 10 years.
There is so much more that needs to be done, in addition to
sanctioning the Supreme Leaders, tell me what you think will
come out of this upcoming negotiations on May 23rd in Baghdad.
What has been accomplished with previous negotiations? What
could be accomplished with this, and why is there that sense
incorrect that we have done all the sanctions that could
possibly be had, and that is why there is nothing else to do
but to negotiate for some settlement. If you could comment on
any of those. We will start with Ambassador Wallace.
Ambassador Wallace. Thank you, Madam Chairman. It is a very
important question, and a good question.
This committee has really led in the area of sanctions and
dragged, frankly, much of the rest of the sanctions community
along with it over the years. And it is a problem we have been
dealing with since 1978-79, and we have seen really bad
behavior from Iranian regime. And we haven't dealt with Iran
effectively through successive administrations.
We called for something very clear, United Against Nuclear
Iran, and I am hoping to convince you all that it is possible.
We have to have an economic blockade of that government.
As Ray testified very accurately, this is an economy that
is very dependent upon outside forces. We can do that, and our
focus has been on banking, insurance, disclosure and debarment,
and shipping, and importantly, oil. And if we say no more
banking, no more insurance, deny any shipping opportunity, and
force all Iranian businesses to disclose and continue to pursue
the oil embargo, you will see that economy continue to be
stressed.
When this committee did such important work on SWIFT, my
colleagues at the table, as well, we tracked the rial, the
Iranian currency. And when you looked at the precipitous drop
of the rial at the time of the sanctioning of SWIFT, and the
discussion even of sanctioning of SWIFT it was an incredible
and precipitous drop.
If we were able to cut them off fully and completely from
the banking industry, deny their oil exports in a fundamental
way, continue to do so, and their ability to ship, have an
impact on their automotive industry. We have a plan to sanction
their automotive industry. It is a dirty little secret, but it
is the 13th largest automotive producer in the world. It is the
fastest growing in the Middle East. It is the largest part of
their economy other than oil. We have to do more to sanction
these areas of the economy.
Chairman Ros-Lehtinen. Thank you, Ambassador Wallace. And I
will let the other gentleman go.
Mr. Dubowitz. I think the most effective sanction that is
available that is out there is the sanction that decreases the
global price of oil, because the Iranian budget today is set at
a price per barrel at $85. So, while I absolutely agree with my
colleague here that we should seek the most robust sanctions,
we have to also be cognizant of the fact that anything we do
that spooks oil markets and drives up the price of oil will
only enrich Al Khamenei, only buy him more time, will only
embolden him. So, we should be very careful about threading the
needle when it comes to oil market sanctions, and financial
sanctions.
I would argue that with spare capacity still very tight in
the market, the best thing we can do is turn Iranian oil into a
toxic asset, into a distressed asset, and in doing so force the
Iranians to offer price discounts on every barrel.
Chairman Ros-Lehtinen. Thank you. And I apologize, maybe
somebody will get to you, Dr. Takeyh. I am out of time. Thank
you, sir. Mr. Berman is recognized. Thank you.
Mr. Berman. Dr. Takeyh, you spoke of an ideological regime
in your written testimony. But ideological regimes, I mean, I
think of the Soviet Union in 1939 cut deals to insure survival.
Do you think that there is a real chance that the economic
pressures, the damage to the economy, the growing unrest, the
factionalization within the regime offers some prospect of, if
we stay the course and pursue this, getting them to shift their
calculus?
Mr. Takeyh. As you mentioned, Congressman Berman, this is
intensely an ideological regime. It is kind of animated by
certain ideological spirit.
I think that what could compel the Supreme Leader and a
narrow circle of advisors to change their calculus would be if
they fear they are going to lose power, if they feel all the
walls are closing in and they have no option but to engage in
some sort of diplomacy in order to relieve that particular
status. So, it would have to be strenuous enough to threaten
the regime's hold on power.
We think of economic sanctions as one of the tools in the
toolbox. There are other things I think we can do. For
instance, Iran--we have to work harder to make sure they remain
regionally isolated and largely isolated from the international
community. I think as has been mentioned by members of this
committee, there are some we can do to support forces of
domestic dissent. And there is a relationship between domestic
dissent and economic debilitation. So, it has to be a multi-
pronged process to compel this particular regime to agree to
some sort of an agreement. It would have to be quite a
strenuous policy.
Mr. Berman. All right. Mr. Dubowitz, you made an
interesting point as we talk about an additional litany of
sanctions. There are also sanctions in place that have not yet
been--there is legal authority in place to impose sanctions
that have not yet been imposed, even if there were to be no
additional sanctions beyond what existed CISADA and the central
bank sanctions. What would you suggest the administration do
here? And put into that that they haven't yet done with the
existing authority they have now.
Mr. Dubowitz. Well, Congressman Berman, I think that that
is really the key. You know, we talk a lot about new sanctions,
and we all like to develop or help develop new legislation, but
the key for sanctions is enforcement.
Mr. Berman. We are not paid on a commission basis.
Mr. Dubowitz. Exactly.
Mr. Berman. But I get your point.
Mr. Dubowitz. There already is existing authority under
U.S. law. The President has the power to really crack down on
the Iranian economy, on the Iranian oil sector. We should be
designating the National Iranian Oil Company and all its
subsidiaries. We should be designating the National Iranian
Tanker Company and make it very difficult for the Iranians to
ship. We should be imposing a much broader insurance embargo on
Iran, and we should be kicking off banks from SWIFT, on the one
hand. But on the other hand, what we need to do is be very
careful about threading the needle because there are sanctions
that make us feel good, and there are sanctions that do good.
And any sanction that actually creates the perception that
there is going to be a physical supply disruption of Iranian
oil too quickly is going to spook oil markets and drive up the
price, and in doing so, neuter all the sanctions that we are
actually trying to impose.
Mr. Berman. Your organization put out a paper which
affected my thinking, which was you don't have to achieve the
absolute boycott of Iranian petroleum worldwide to have massive
impacts on the Iranian economy. And if other countries, oil-
producing countries help make up the difference, less impact on
price, greater impact on Iran.
Mr. Dubowitz. Well, that is exactly right. I mean, I think
the goal here is to get the Iranians to sell their oil at a
discount. The goal is to cut Iranian supply up to the point at
which the Saudis and others can replace it, and effectively
turn Iranian oil into, as I said, a toxic asset.
I think one of the most effective sanctions that we have
actually put in place is a sanction that didn't get much
attention. It was actually implemented by the administration in
convincing Norr Islamic Bank out of Dubai to stop repatriating
oil profits back to Iran. You know, you can sell all the oil
you want, but if you are getting Rupees and Yuan in a barter
trade, and if you are getting all of these dollars in Euros
that you can't repatriate, all of that is useless. So, I think
that the goal should not be on an oil embargo; the goal should
be in focusing on cutting hard currency oil revenues from Iran,
which can be done in a variety of precise ways that don't
ultimately and inadvertently enrich the regime.
Chairman Ros-Lehtinen. Thank you very much. Thank you, Mr.
Berman. Mr. Smith is recognized.
Mr. Smith. Thank you very much, Madam Chair.
Let me first, note and thank for their service those who
are survivors from the terrible bombing in Beirut. I would note
that Paul Innocenzi who was from my district, I remember being
at his funeral. He was one of the victims who died in that
terrible, terrible act of terrorism, and we all remember him.
And thank you again for your service.
Let me ask a couple of questions. First, I notice again,
Ambassador Wallace, you make the point that this regime will
never change course due to half-measures. And I would note,
Mark Dubowitz, you point out something I think many of us are
concerned about, and that is the idea of sanctions relief in
the shadows. And I really thank you for bringing that, and
giving some very specific possibilities that would evade press,
and maybe even congressional scrutiny the way it shouldn't.
I do believe the President should have some flexibility but
I am very worried, and I think we all are, that in the time
frame there may be an effort to postpone sanctions, maybe
wittingly or unwittingly, thinking it is going to do the issue
better, but you have got to wonder.
And I think your first point, the standard--relaxing the
standard of what constitutes a significant reduction to the
volume of petroleum purchased from Iran as provided under
Section 1245 of the NDAA, and you did point out again in your
statement--I think this is very important, that the
administration has refused to specify how much of a cut
qualifies as significant. And I think you might want to expand
on that, and perhaps our other witnesses, I would appreciate
it.
Secondly, Youcef Nadarkhani has, as you know, posted a very
important statement. He apparently is getting 9 years for
simply believing in Christianity and being a pastor. I think,
and I would hope the Iranians would sit up and take notice,
maybe they don't care. But some of us have raised this issue
directly to Iranian leaders. We believe in religious freedom,
and that includes Muslims' freedom to establish mosques, to
practice their faith in an unfettered way, and the mistreatment
of this pastor is emblematic, I would suggest, and I think you
would agree, of an intolerance that brings dishonor to Iran.
So, our belief would be that 9-year sentence is absolutely
unwarranted. Obviously, the death sentence was an absolute
outrage, but this is not good, as well. Perhaps, if you could
speak to that issue of the sanctions relief in the shadows
especially as it relates to the upcoming conversation with the
Iranians.
Mr. Dubowitz. Thank you, Congressman Smith. I mean, I guess
my concern with sanctions is so much of it happens in the
shadows with respect to implementation. So, we can pass all the
new sanctions we want and issue press releases, and be proud of
what we have done, but in the shadows at a level of detail and
granularity that is often not visible, the Iranians could be
circumventing sanctions and getting the sanctions relief that
they most desperately need, which is hard currency from oil
earnings.
Now, on the significant reduction threshold, one way to
give the Iranians hard currency is to lower the standard. Now,
as you pointed out, the administration has refused to adhere to
a specific number, despite requests from Congress that that
number be at least 18 percent. And it is entirely possible that
come June 28th, that the standard would be lowered by 3-5
percentage points, really would mean $3-5 billion of extra hard
currency in Iranian coffers. And I think it is critical that
Congress play its oversight role in holding the administration
accountable for what really constitutes a significant
reduction, and that we don't give concessions to the Iranians,
as I said, in the shadows in ways that I think will help them
survive all of the other sanctions that we put in place.
Ambassador Wallace. Just as to one point. Unfortunately,
the global economic slowdown is giving us a bit of a gift. You
see China cooling problems still in Europe and oil prices being
somewhat deflated. We agree on so many things. I think we have
a slight disagreement. I am less concerned about the rising
price of oil to benefit the Iranians. The market is already
adjusting for it, and I think the market would explode if Iran
got a nuclear weapon, or God forbid there was a military
strike.
I do see a heightened sense of supply in the market. We
have seen commitments from oil producers to make up the
difference in Iran. I think what we have to do is make as
airtight as possible boycott on Iranian oil. And to the extent
that Iran is selling oil to, in fact, third countries, they
have to discount is so dramatically, if we impose these other
restrictions that they won't be getting the benefit of a rising
oil price.
Mr. Takeyh. I will just say briefly on your question of
human rights, which has significantly deteriorated in Iran
since the disputed election of 2009 with show trials,
imprisonment of dissidents and summary executions. I think most
of our sanctions effort has been focused on proliferation. I
think we should highlight also how Iran treats its own
citizens, is a factor in its reintegration into the global
economy.
The United Nations does have a Human Rights representative,
and we have to ask him to support that particular effort. But
the entire human rights issue and repression of the Iranian
citizenry has dramatically escalated and intensified, not just
the case that you mentioned, but an entire spectrum of issues.
Chairman Ros-Lehtinen. Thank you very much. Mr. Ackerman,
the ranking member on the Subcommittee Middle East.
Mr. Ackerman. Thank you. I have just been making little
marks as to the word ``goal,'' and so far the goal has been
nine different things from affecting the price of oil to
talking directly over the heads of the mullahs to the Iranian
people, to everything that you could think of. If you have been
listening to our opening statements, our goal is to affect a
fictitious race between President Obama and President Bush, and
who gets credit for what. And I think that what we are
forgetting is regardless of what we are all doing here, is that
the real goal that we think we are discussing is stopping Iran
from getting a nuclear bomb. And all of these other things are
ways to get them to do that, and ways to affect their thinking
and, ultimately, their behavior.
The discussion that I have been trying to figure out or the
two options, and I don't know that it is an either/or, and that
is what I want to ask you, is whether we exclusively continue
to apply the choke hold that all on this committee, or almost--
I think all on this committee have agreed to over several
administrations, and to apply the type of economic pressure
continuously, unilaterally if we have to, internationally as we
must, to get them into a position where they have no option,
but to weigh the merits of whether it is advantageous to have a
bomb or to have a country. And that is the way to do it, and
only that way, and ascribe that to the goal of one President or
another, or to employ just having discussions that one side
would like to portray, the other side is saying that you just
want to talk to these people who you can't talk to, and get
them to agree, which they never will. Or should we have both?
It seems to me one side would portray it that if you are
having one of these extreme fighting or boxing matches, or
whatever, and you are sitting on your opponent's chest and
pummeling him about the head, if you say to him you give up?
The other side accuses you of having a dialogue. Can you get
them to a place without having a dialogue, and just having the
economic sanctions, or do you need some intelligent application
of both?
Mr. Takeyh. I would say the two-track policy that offers
dialogue as well as pressure track. I do think that has
benefitted us in the international community in the sense that
the impasse in U.S.-Iran relations is no longer blamed on the
United States.
Mr. Ackerman. And the international community is important
because we want to seem to be popular, or because they are
needed in order to accomplish----
Mr. Takeyh. Well, I think a successful sanctions regime
need to be multilateralized, because all the things that have
been talked about, the insurance issue that has been talked
about. These are largely European companies, so the United
States has largely estranged itself from the Iranian economy
for the past 20 years, so if we are going to have measurable
sanctions really we have to have allied coalitions.
Now, I do worry about our ability to maintain this
international coalition with the reassertion of President
Putin, with the changes that are taking place in France where
President Sarkozy was really the steel behind this issue. So,
as we go forward I think it may be more challenging for us to
hold this coalition together.
Mr. Dubowitz. Congressman Ackerman, I would say two things.
First, on the sanctions front, it is not really an either/or.
We need a robust multilateral sanctions regime. We need
unilateral U.S. sanctions. It is only unilateral U.S. sanctions
and the penalties that have actually helped create a
multilateral sanctions regime. So, I think like many bipolar
debates in Washington, it is both rather than either/or.
On the question of what the goal is, I think the goal is
regime change in Iran. I don't think this regime can be trusted
to adhere to any agreement, no matter how tight, no matter how
much accountability we impose on them. This regime is dedicated
to having a nuclear weapon, and they will find workarounds in
any way they can. The goal has to be to change the regime to
support the Iranian people, and I think one of the ways we can
do that----
Mr. Ackerman. How do you do that? I saw a lot of nodding of
heads on your side of the table when people on my side of the
table said we have to talk to the Iranian people. I mean, if we
are having a difference of opinion with Iran and they want to
get around our administration, how do they talk to the American
people? Can they convince Joe Six-Pack in America to go along
with it? How do you talk to the Iranian people?
Mr. Dubowitz. Well, I think some of the practical things we
can do----
Mr. Ackerman. Sign an agreement with who?
Mr. Dubowitz. Well, I think number one, we should designate
Al Khamenei and the top Iranian leadership for Human Rights
abuses. I think that sends a message to the Iranian people.
Mr. Ackerman. I will talk to Time Magazine.
Mr. Dubowitz. I'm sorry?
Mr. Ackerman. I will talk to Time Magazine end of the year.
Mr. Dubowitz. I think we should also declare, for example,
the entire Iranian technology and telecom sector is a zone of
electronic repression. I mean, one of the things we see now----
Chairman Ros-Lehtinen. Thank you.
Mr. Dubowitz [continuing]. Is tremendous Human Rights
abuses. Let us put an end to that.
Chairman Ros-Lehtinen. Thank you very much. Mr.
Rohrabacher, the chairman of the Subcommittee on Oversight and
Investigations.
Mr. Rohrabacher. Thank you very much, Madam Chairman. And
let me just say that this has been a valuable hearing for me.
If nothing else, one point that has opened my eyes to a
fundamental truth in how we are trying to drum in policy. And
as Dr. Takeyh's observation that in the long run if the
Iranians hold out they know they can expect better treatment
because they are now a nuclear armed country. And we have a
history of playing up to and trying to then placate countries
that have nuclear weapons. So, it would seem to me that the
strategy of basically trying to make it hurt right now isn't
going to work if they know there is going to be benefit for
holding out in the long run; not just the ending of the
sanctions, but actually better treatment in the long run.
Let me just for our friends who have come here who are the
survivors of the Marine families, let me note, I worked in the
White House during that time period. I take that whole issue
very, very seriously.
The Iranians and the Iranian support for Hezbollah did not
cause the death of your loved ones. What caused the death of
your loved ones was a State Department that insisted on a
mission that should have never been taken. And we handed to the
Marines a mission that they couldn't fulfill, and then they
were ordered not to have bullets in their guns. I don't know if
you--how many people here are aware that the Marines did not
have bullets in their guns by order of the Commanding Officer
as demanded by the State Department.
I worked for Ronald Reagan. I was his Special Assistant,
and he frequently admitted that sending the Marines into
Lebanon was his worst decision of his presidency, and how much
he regretted it. And afterwards he was told by his advisors,
again the foreign policy gurus, that we should send in 20,000
more Marines in order to show these guys they can't kill
Marines and get away with it. And he made the best decision of
his presidency when he said no, we are not going to send in
more Marines. We are going to get our butts out of there, and
we did; otherwise, we would have been in quagmire for the rest
of the administration. And what happened after that debacle?
Ronald Reagan turned to a policy and a strategy that worked. It
was called the Reagan Doctrine. And the Reagan Doctrine had us
supporting the enemies of our enemy and letting the enemies of
our enemy do the fighting. It was a strategy that worked then,
and it ended up destroying the Soviet Union without a military
confrontation between American troops and the loss of so many
lives that that would have taken. Instead, we helped the people
in Poland, Lech Walesa, in Afghanistan, in Nicaragua. That is
how we ended the Cold War.
Now, we should try to take a look and maybe there is a
message for us in this, a message for what works, a strategy
based on sanctions is not going to bring about the end we want,
but let us take a look at Iran. There are Kurds, there are
Turkmen, that are Azaris, there are Baluchs, there are Arab
speaking Azaris, as well as young Persians, all of whom can be
mobilized against the mullah regime, and we have done nothing
to mobilize them against the mullah regime. Instead, we sit
here talking about strategies, economic strategies which,
again, the testimony today suggests will be ineffective because
in the long run they will benefit by holding out.
Let us go to our roots. Let us go to where America is the
supporter of people who are struggling for freedom, and
liberty, and justice, and the people of the world will unite
with us and overthrow these people who threaten the stability,
and peace, and freedom of humankind as the fanatical mullah
regime in Iran does.
That is just a thought. And, by the way, this
administration, again, who is quiet, quiet about the
demonstrations by those people in Iran, they are the same ones
who are now insisting that we keep a terrorist designation for
the MEK so that we can then eventually, the Iranians mullahs
know we are labeling their opponents as bad guys, as
terrorists. This is not a strategy that will work, and I would
hope that--I have had my say, and I have got 15 seconds. I am
sorry I have used up my time, but that is my time. Thank you.
Chairman Ros-Lehtinen. Thank you, sir. Mr. Deutch of
Florida is recognized.
Mr. Deutch. I thank the chairman. Before asking my
questions, I don't know if my friend was simply trying to use
the reference as some sort of rhetorical flourish or not, but I
take--I think it is wrong and does a disservice to, and is on a
whole host of levels offensive to suggest that the State
Department is responsible for the bombing of the Marine
barracks and not Hezbollah, and Iran, and Syria. And I hope the
gentleman will please clarify that that wasn't actually the
intent.
Mr. Rohrabacher. When we send our troops into battle, those
people who send troops into battle for a no-win battle are
responsible----
Mr. Deutch. Reclaiming my time.
Mr. Rohrabacher [continuing]. For those lives.
Mr. Deutch. Reclaiming my time, Madam Chairman. Reclaiming
my time. Thank you.
Now, if I could focus first on the issue of proliferation
and what is going to happen between now and July 1st, July 2nd.
And if I could just ask you to address, number one, if--as
these negotiations are getting ready to start again, what will
come next, June 28th, July 1st, what will happen under this, if
the Senate were to take up the sanctions bill and pass it
today, we were to have something to the President's desk to be
signed quickly. What is the most biting piece of sanctions that
will come from those three first? Let me ask that question of
whoever would like to comment.
Mr. Dubowitz. Well, I think the dates are very important.
On June 28th, the President, under 1245 of the NDAA, has to
make a determination about whether countries should be granted
exceptions to the sanctions law based on whether they have
satisfied the significant reduction threshold. Are they
significantly reducing their purchases of Iranian oil? And I
think it is critical that on that date that we hold these
countries to account. We have granted exceptions to Japan and
Europe right now, but what is key is India, China, Turkey, and
other countries. So, it is important that we see what that
determination looks like, and that significant reduction really
means significant.
July 1st is the date that the European Oil Embargo is
supposed to kick in. I think what we want to look at is, as Ray
said, we want to make sure July 1st is when it actually
happens, and that we don't actually concede that as sanctions
relief in Baghdad and delay the imposition of that oil embargo.
But an oil embargo is only as good as enforcement, and we have
to be careful that 100 percent embargo doesn't turn into a 50
percent embargo by allowing Iranian oil to be disguised as non-
Iranian oil and sold to Europe.
And finally, the Senate bill--I think the most important
provision in that Senate bill is actually send a powerful
message that the Iranian energy sector is a no-go zone because
of the link between energy revenues and proliferation. So, I
would hope that at the Conference Committee that bill would be
strengthened with that in mind.
Mr. Deutch. Can the--Ambassador Wallace, when you spoke of
extending sanctions to the entire Iranian economy, and if you
could focus on natural gas and the sale of natural gas, and
why--actually, this is for any of the three of you, why it is
important to focus on the sale of natural gas, and while there
is legislation that has been introduced that I am working on
that is trying to expand this, is that something that can be
done by Executive Order? Can CISADA, for example, be expanded
to cover natural gas sales by Executive Order?
Ambassador Wallace. Thank you. Sitting here, I haven't
chimed in. I do note, we underestimate the impact that our
economy has on the world. The lesson--maybe we didn't learn any
lessons in the 2008 financial crisis, but one of the lessons is
that what happens in America affects the entire world. And if
we impose a true economic blockage with bright lines it will
have a dramatic impact. And Mark very accurately talks about
these shadowy things that you can do on the margins of these
very complicated sanctions proposals.
I think bright lines of having bans on these certain
sectors are the way to go. If you have a very bright line,
transparent blockade in certain sectors, it is very much harder
to break that blockade.
In terms of natural gas, I think the focus is obviously on
petrochemicals, which the downstream petrochemical companies
have really dramatically expanded their sales in Iran. We
designated the National Petrochemical Company in Iran, but all
the quasi-state and other state-related authorities have not
been designated. We need to do that, and stop the growing
petrochemical sector in Iran, which has been a huge source of
revenue.
Chairman Ros-Lehtinen. Thank you very much. Thank you, Mr.
Deutch. Mr. Chabot is recognized, the chairman of the
Subcommittee on Middle East.
Mr. Chabot. Thank you, Madam Chair. Before I ask my
question, the gentlemen from California has asked that I yield
to him, and I yield 15 seconds to the gentleman.
Mr. Rohrabacher. To clarify my position, President Reagan
was responsible for the death of the Marines in Lebanon. He was
the one who gave the order. He accepted that responsibility. We
in political life owe a great deal to our defenders, and we owe
them our very best judgment, but we are responsible for those
judgments of where we send our troops. Thank you very much.
Mr. Chabot. Reclaiming my time. A question I would like to
focus on, Iranian enrichment. As I mentioned in my opening
statement, I am deeply disturbed to hear that the
administration is even considering offering the regime in
Tehran the ability to enrich domestically, even with so called
safeguards and supervisions. Doing so would allow Iran to
stockpile low-level enriched uranium making it significantly
easier for the regime to break out if it were to decide to do
so. And offering this, it seems to me, could have ramifications
not just for the Iranian nuclear program, but for the entire
non-proliferation regime.
I would be interested if any of you gentlemen would like to
share your thoughts specifically what it would mean for Iran's
ability to actually advance toward a nuclear weapons capability
this idea that the administration may be considering. Anyone in
particular would like to answer that?
Mr. Dubowitz. Well, I just want to point out, I think it
has been misrepresented in the media, that no country is
actually entitled to domestic enrichment under the NPT. You are
entitled to nuclear fuel, so the notion that we have to give
the Iranians domestic enrichment because it is the fair thing
to do is actually inaccurate. I think the Iranians if they have
domestic enrichment, and if they even have the capacity, they
don't need nuclear weapons to create enormous difficulties, and
enormous risks for the international community. If Khamenei is
at capacity, he can do anything he wants. He can threaten the
region. He can threaten the United States and Israel. I think
it is key to insure that he doesn't get to capacity, which is
why I would again reiterate, I think the only deal that is
worth having is a deal with a new government.
Mr. Chabot. Doctor?
Mr. Takeyh. Sure, I will just say a few things. The Iranian
nuclear program as we understand and see it today is an illicit
program in the sense that it, to use a Catholic phrase, it was
born in sin, in a sense that Iran has always been in violation
of its arms control obligations in violation of the NPT. And
there are a series of international agreements that it has to
abide by.
Most of the discussion recently has been about the NPT, but
there are about six U.N. Security Council Resolutions, as well,
that impose demands on Iran beyond the NPT. They call for
suspension of all its activities, a real suspension. They call
for Iran to come to terms with its previous weaponization, and
acknowledge those. And all these things have to happen before
Iran comes back to conformity with the NPT. And once it comes
back to the NPT, as Mark was suggesting, there are varying
interpretations of it.
There is no explicit right to enrich in the nuclear non-
proliferation treaty. There is right to have access to nuclear
fuel, and most countries that actually use nuclear fuel don't
actually enrich indigenously. You know, that purchase it from
abroad and so on. So, once Iran comes back to the NPT, that is
a conversation we can have, but it is not there yet. It doesn't
conform with the NPT; it doesn't conform with the U.N. Security
Council Resolution. And today there are contentious
negotiations between Iran and the IAEA about access to military
facilities, such as Porchine and so forth.
Mr. Chabot. Thank you. I have only got a little over 1
minute left. Let me ask something if I could in a different
direction real quickly. We oftentimes discuss this dynamics of
sanctions, and with Iran in particular, the sanctions we want
to affect the regime, and not necessarily the people of Iran.
But in this particular case, the argument is that the regime
really doesn't care too much how the effect is on the people
because they make out fine. It is kind of the same thing with
North Korea on food. They give it to the military, and the
people suffer. Would one of you gentlemen talk about that
dynamic and what actually happens in Iran, Mr. Ambassador?
Ambassador Wallace. I think the leadership of Iran, as I
think everyone has testified here today, is very fractured and
is diffuse, but the regime has done a better job of almost any
very dictatorial-like regime of permeating its economy with
thugs of the regime that control its key businesses. So, when
we are actually taking steps to pressure that economy, you are
not seeing any of the major businesses that are operating in
Iran that don't have--that aren't either owned by IRGC or
controlled tacitly or explicitly by the IRGC. And to the extent
that you can undermine confidence of their thugs, you will make
a real impact, potentially, on the regime. So, I think it is
very important to hit these key businesses and their economy.
Mr. Chabot. Thank you. My time has expired, Madam Chair.
Chairman Ros-Lehtinen. Thank you very much. Mr. Sherman,
the ranking member on the Subcommittee on Terrorism.
Mr. Sherman. Thank you. Mr. Dubowitz, thank you for the
work of FDD. We are going after their energy sector to some
degree, their banking sector, but they do have cash reserves.
China is willing to buy their oil. China can sell them many
products, but what China cannot sell is the spare parts for
everything in Iran, whether it be the airplanes that the Shah
bought from the U.S. producers, where GE is seeking a license
to repair them, or inspect them, whether it be any elevator in
any building in Iran where the equipment was imported from
Europe.
Now, our closest allies say that they want to maintain what
they call legitimate trade. Under American law the only
legitimate trade is food and medicine. If Iran can't buy
machines, and more importantly, spare parts, that would have a
more immediate effect than taking away their export markets
because they have a cash reserve, so even if we cut off all
their exports they would have the cash.
What measures and secondary sanctions can we adopt here in
Congress to convince our European and Asian friends to withhold
these non-lethal exports, particularly spare parts?
Mr. Dubowitz. Well, thank you, Congressman Sherman. This is
where I do agree that we should have an embargo. We should have
an import embargo on Iran. And, as you mentioned, there are an
array of goods that we should deny the Iranians, with the
exception of humanitarian goods and services.
Mr. Sherman. You are saying--you mean an export embargo
where we don't export to Iran?
Mr. Dubowitz. Right.
Mr. Sherman. I think we already have that, don't we?
Mr. Dubowitz. Well, I am talking about a multilateral
embargo.
Mr. Sherman. We, the big we.
Mr. Dubowitz. We, the big.
Mr. Sherman. All the good countries.
Mr. Dubowitz. And I think what would be very useful, and it
is in the House bill right now, and it is in the Senate package
is to accelerate the designation of IRGC entities that are
active in Iran's broader commercial sector. As Mark mentioned,
the IRGC controls much of the Iranian economy.
We have gone after the financial sector, increasingly gone
after the energy sector. But, there is a broader commercial
sector. And the ability to actually designate and accelerate
the designation of the IRGC companies that control Iran's
broader commercial sector, and then impose secondary sanctions
on any company, any international company doing business with
those IRGC companies would go a long way to establishing from
an Iranian perspective an import embargo.
Mr. Sherman. What if we were to go further and say no
company in the world could get a Federal or state contract if
they sold anything to Iran other than food or medicine?
Mr. Dubowitz. Exactly right. We should be putting these
companies to a fundamental choice between doing business in
Iran and doing business in the United States. If you are doing
business in Iran, you are doing business with the Revolutionary
Guards, and that is bad for your reputation. There will be
serious financial penalties. And in doing so, you are
supporting terrorism, proliferation, and human rights abuses.
Mr. Sherman. Ambassador Wallace, have we actually imposed
sanctions on any company that had any political clout in either
the United States or any of our friendly governments? As I
understand it, we have sanctioned some very small Chinese
traders who don't do business in the United States, are now
prohibited from doing what they never thought of doing. And we
have sanctioned one Swiss corporation that was full owned by
the Iranians. Have we actually had the guts to impose the Iran
Sanctions Act?
Ambassador Wallace. It is a very good question,
Congressman. And you, of course, are aware that success of
administrations have not adequately enforced probably what was
good law from the state of the Iranian revolution in terms of
sanctions. But don't underestimate something, Congressman. When
you speak and ask me a question like that, and call on all
businesses around the world to stop selling goods into Iran for
fear of not being able to do business in the United States,
that is a sanction. You just sanctioned that government,
because when I go out and I challenge businesses around the
world and I say we are going to make public the business that
you do in Iran, and you are not going to be able to do business
in the United States, you know what they do? They pull out of
Iran, because they want to do business with the biggest economy
in the world, so don't underestimate the power I think of these
statements. But you are very right, sir, successive
administrations have failed.
Mr. Sherman. We will keep repeating them but we need to do
more than just talk. We need legislation. What would be the
reaction--I mean, I think our administration has gone as far as
it can in persuading foreign governments that are our friends
to do what they are willing to do. What would be the reaction
if we sanction, say Siemens, in a way that the German
Government didn't like?
Chairman Ros-Lehtinen. And I will persuade you to not
answer that right now.
Mr. Sherman. Then please answer that for the record.
Chairman Ros-Lehtinen. Thank you. Mr. Kelly is recognized,
our vice chair on the Subcommittee on Asia and the Pacific.
Mr. Kelly. Thank you, ma'am. And thank you for being here
today. I have actually had the opportunity to travel with our
chairwoman to the Mideast right after the first of the year,
and in all the countries we visited they talked about being in
the same neighborhood with Iran, and the dangers of Iran
actually developing nuclear weapons. And when we asked them so,
what can we do to help? They kept coming back with the United
States needs to be in a stronger position. It is nice to have
coalitions but only if somebody is going to be the lead in the
coalition.
And I was reading the Op Ed in the Wall Street Journal
today. We are kind of on some kind of a crash course eventually
with Iran. And I know we have been working on sanctions for
many decades now, and trying to come up with something that is
going to keep Iran at bay.
Ambassador Wallace, I mean, how strong is this coalition?
And how--I know we keep talking about strong sanctions, and I
know you answered Congressman Berman saying when we tell people
you are not going to be able to do business with us, so we can
walk softly and carry a big stick, but the other idea is the
only way a big stick works is every once in a while if you
swing it and hit somebody. So, tell me how would we approach
this?
And all three, I need you to weigh in because I think the
disconnection here is we think the longer we stay at the table
and the longer we talk that somehow we are going to arrive at
an answer. I don't think that works. I think that in this part
of the world kindness is interpreted as weakness, and the
longer we talk the more it gives them opportunities to get
ready to do something more drastic. So, if you could all just
kind of weigh in on that for me.
Ambassador Wallace. I think we all have it wrong. I think
that we have to--multilateral sanctions are very, very
important, and that is where we should give our diplomats and
the President discretion to come up with some sort of U.N.
framework or the like. There should be no discretion. This is
the dominant economy in the world right now. Do not
underestimate the power of our ability to do things on a
unilateral basis that will have an incredible effect.
This committee has always dragged administrations and
governments to tougher sanctions. If you impose an economic
blockade here in the United States and deny the ability of
other countries and businesses to do business here in the
United States if they do business in Iran, you will be sending
a huge and powerful message.
Don't underestimate it. If you require companies that come
to the U.S. capital markets, that is nearly everyone.
Certainly, there are some small companies out there that don't
avail themselves of the U.S. capital markets. To disclose their
business, if they do it in Iran, they will stop doing that
business. The reputational risk is too great, but we can't
underestimate the benefit of having a bright line economic
blockage and using the power of our economy to impose that
blockade.
Mr. Dubowitz. Congressman, let me give you a specific
example of what Mark is talking about. With respect to
financial sanctions, the U.S. administration has not sanctioned
any international financial institution for violations under
CISADA. And despite the fact that there are numerous banks in
places like Russia, Azerbaijan, South Korea, Dubai that act as
Iran's extraterritorial bankers, under current House bills and
the Senate legislation it would require international financial
institutions that have corresponding banking relationships in
the United States that are doing business with Iran to disclose
the nature and extent of their Iranian business.
If that was passed and enforced, we would know what those
banks are doing with Iran. And, in doing so, we should take the
step of sanctioning those banks under CISADA and cutting them
off from the U.S. financial market. I think that would send
shockwaves through the financial community and send a signal
that the United States is serious about sanctions enforcement.
Mr. Takeyh. I would agree with you, Congressman, that the
diplomatic process that yields no tangible benefits cannot
persist and it cannot persist forever. There is going to be
some discussions in the next meeting maybe in Baghdad or the
one following it about doing something about Iran's 20 percent
enriched stockpile, and perhaps a session of further 20 percent
enrichment and closure of Fordo as an interim step.
I wouldn't necessarily suggest that interim measures are a
bad thing. I don't think they are a substitute for a deal. I
don't think they are a substitute for arms control agreement
that is real, but in some way they do arrest Iran's nuclear
trajectory which has been going unabated for a long time.
So, if this process can yield that, and then we can
continue to build upon it, I am not quite sure if it is
effortless. Now, we may not be able to get that through this
particular process, and that will clarify itself that the
diplomatic process that we have embarked upon is deficient, and
we think about other measures of approaching it.
One of the problems with this particular issue has been
that the way it is framed is that diplomacy versus war. And if
you frame it that way, then the inclination by international
community and many international actors to persist with
diplomacy is quite great. And we have to kind of offer some of
the things that have been said, that there is an alternative.
If this diplomacy is stalled or breaks down we go back, have
additional course of steps, and maybe we can put Iran in a
position where it once again makes compromises.
I don't think the situation is the question that we often
is what would Iran accept? The relevant question is, will Iran
accept what its predicament suggests? The question is how do we
put Iran in a position where it accepts an arms control
agreement that would be U.S. satisfactory?
Mr. Kelly. Okay. So, just real quickly, how close to
midnight are we?
Mr. Takeyh. The physics of this largely eludes me, having
failed physics twice, well, same class twice, so I don't know
if that counts as twice.
I think we probably have more time than we think. I think
the nuclear program of Iran is still embryonic. It is still
having some technical problems. We are not at the point when
they are ready to detonate, but we are--they are incrementally
getting closer to that. But I think we can build more time into
this effort as it goes on.
Mr. Kelly. Thank you.
Chairman Ros-Lehtinen. Thank you so much.
Mr. Kelly. My time has expired. Thank you.
Chairman Ros-Lehtinen. Thank you, sir. Mr. Meeks, ranking
member on the Subcommittee on Europe.
Mr. Meeks. Thank you, Madam Chair.
I am having all kinds of questions in my head. First, from
my viewpoint, I agree that our economic power is tremendous. I
agree that the whole idea is to have regime change. I equate it
to, and my hopes are that we can do this without bombing. When
I look at the Soviet Union and how it no longer exists as we
knew it, says that there can be pressure that can be applied to
force economies to disintegrate, and thereby compel the regime
change.
I don't see how we do that just unilaterally. I think that
we have to do it multilaterally, and that is why it is
important to have our partners, and I think that particularly
right now our European partners playing a major role as opposed
to them leaving windows of opportunities for the Iranian
Government to skirt around. They need to be intricately a part
of what we are doing.
So, I know that our European allies have implemented not
only the United Nations sanctions toward Iran, but they have
gone toward the whole EU sanctions. My question then is, first,
let me try to figure out, how do you evaluate the EU's efforts?
I know we have been focused on ours. I want to know how you
evaluate the EU's efforts in bringing sanctions, applying
sanctions to Iran so that we know that we do--we have a real
teammate in working collectively together to accomplish the end
of what we want to accomplish. How would you evaluate the EU?
Ambassador Wallace. I think the EU has been very, very
important, and it has taken some very, very important steps.
Just three quickly. Obviously, the oil--ban on oil purchases
has been of monumental importance. Its role in SWIFT has been
very, very important, so I think that the EU's actions in some
ways have led.
I think what my testimony previously, Congressman, was I
think that the United States can take even a more robust stance
in also leading and cutting off, and establishing this blockade
that I talked about. But I think it is very important between
now and the negotiations and the implementation of the EU ban
that we encourage our European allies to not walk back those
very important steps that they have taken.
Mr. Dubowitz. I completely agree with Mark. I think that
the key when it comes to Europe has really been France. And I
think that the real X factor in the negotiations in Baghdad and
beyond will be what happens under a Hollande government. I
mean, under Sarkozy, for those of us who have dealt with
Europeans, have been to Europe, we have always been amazed at
how tough the French have been on sanctions. I think they have
dragged many of their European partners with them. The question
will be, will Hollande continue France's tough non-
proliferation stance and enforce these sanctions, or will the
Hollande government become like too many of its European
counterparts willing to go along, but not willing to lead?
Mr. Takeyh. I do agree that the European sanctions have
been quite instrumental and significant. And much of the
Iranian diplomatic effort right now will be focused on trying
to address the Europeans. Perhaps not the entire EU oil
embargo, but the insurance-reinsurance provision that is
actually supposed to go into effect on July 1st. And that may
actually happen.
Right now, there are negotiations taking place between the
Europeans and the Asian markets, the Japanese, the South
Koreans, and others who have been complaining----
Mr. Meeks. What about the non-EU nations like Georgia,
Armenia, Azerbaijan, Turkey?
Mr. Takeyh. The main Iranian trading partner used to be EU.
I mean, that is gone now in terms of level of economic
arrangement it has. Otherwise, it is with countries like India,
China, Japan, South Korea, and so forth, those are its other
main trading partners now as it is focused toward the Asian
markets. But I do think one of the reasons why the insurance-
reinsurance of cargo shipping may actually lapse is not so much
because of Iranian-European negotiations, but because of the
Asian markets that are now appealing, the Japanese and others.
And even beyond that, I think you can see--Mark can talk
about this notion of sovereign guarantees, where there is a
bill in Japanese Parliament, and so forth. So, I think even
without insurance, the Iranian oil cargo may move as countries
move to sovereign guarantees.
Chairman Ros-Lehtinen. Thank you very much. Mr. Bilirakis,
my Florida colleague.
Mr. Bilirakis. Thank you, Madam Chairman. I appreciate it
very much. And thank you for your testimony.
Well, human rights have been systematically violated by the
Iranian regime, and there seems to be no sign that the
situation is improving. I know we touched on this, but I want
you to elaborate if you can for the entire panel. Women,
ethics, religious minorities such as Kurds, Bahai, Christians
and Jews, political protestors, journalists, human rights,
lawyers and others have been repressed and persecuted.
In 2010, the Comprehensive Iran Sanctions Accountability
and Divestment Act included a provision that for the first time
imposed sanctions against Iranian officials responsible for the
country's human rights abusers. This provision has been used in
at least 15 cases to my knowledge, targeting many of those who
perpetrate human rights violations against the Green Movement.
Additionally, in July 2011, the U.S. and Britain imposed
visa restrictions on more than 50 Iranian officials for their
roles in political repression in Iran. Can you speak to the
effectiveness of these targeted sanctions? I know you touched
upon it, but if you can elaborate, I would appreciate it very
much. Have we seen a change in Iran's approach to human rights
due to this? And I probably know the answer, but I want to hear
from you. Can we tailor this newest round of sanctions to more
effectively pressure Iran to comply with the human rights
obligations? For the entire panel, please.
Ambassador Wallace. Obviously, I am sure it is probably the
consensus of this group, I don't want to testify for my
colleagues, but Iran's human rights situation is deplorable,
and it has not improved. And if anything, Iran--when the
Persian Spring, if you will, was the first of what you saw in
the Middle East, started in 2009, and then what has happened
around the Arab world, Iran has shown that it is willing to be
more brutal and more repressive against its own people in order
to retain its power than really almost any other government,
perhaps Syria. But you have a very restive minority population,
42 percent minority there, so it is a tenuous hold,
particularly as this economic pressure has been put in place.
We ran a campaign, United Against Nuclear Iran, we ran a
campaign on human rights abuses where we highlighted
international crane manufacturers. One of the great methods of
horrible repression is Iran would stage gruesome public
executions of hanging dissidents, homosexuals from cranes in
public squares. And these were international crane
manufacturers. And we succeeded in using those human rights
violation abuses to highlight what we think are some economic
measures that we can take in order to continue to isolate that
regime for those very same human rights abuses.
Mr. Dubowitz. I would just say quickly that I do think
human rights sanctions work. I don't think the Iranian regime
is like the North Korean regime. I think many top level Iranian
officials like to travel to Europe. They like to ski in Gstaad.
They like to shop at Harrods in London.
I think the difficulty has been that we haven't--we have
slapped on travel bans and asset freezes, and then we've
relaxed them when these same Iranian officials become the
Foreign Minister or the Defense Minister and travel to an IAEA
meeting in Vienna, or an OPEC meeting, or a U.N. meeting. So,
those travel bans are great in theory, but in practice they are
not being enforced.
I think the human rights sanctions are important, but I
would argue that we need to go that next step. We need to
sanction Al Khamenei. He is the greatest human rights abuser in
Iran. It doesn't mean we still can't negotiate with this
regime. But, let us send a message to the Iranian people that
we agree with 75 percent of them, that Al Khamenei is a
torturer, and a murderer, and should be called to account by
the United States of America.
Mr. Takeyh. This is a point that requires no reinforcement,
but I think it should be reinforced anyway. The human rights
situation in Iran is abysmal. You mentioned ethnic minorities,
women, I think it is Iranian citizens of whatever their gender
and ethnicity are being subject to harassment, repression,
arbitrary judicial tribunals, show trials, just an entire
spectrum of issues where Iran has emerged as one of the most
repressive states in the Middle East, and that is saying
something given the lofty standards of that particular region.
I think one of the limitations of our dialogue with Iran,
and it is a limitation of the 5+1 process is that it focuses on
proliferation, and proliferation transgressions. So, the issue
of human rights never gets aired at those particular meetings.
I am not quite sure if we can successfully--if you should
exclude it. I think we should bring it up to the Iranian
officials any time we have encounters with them, that the
international community is concerned not just because of their
violations of their international obligations under the NPT,
but also their international obligations in a variety of human
rights standards.
Iran is a signatory to various U.N. human rights documents,
international human rights documents. It is a violation of
Iran's international obligation to behave domestically in the
way it has, and that is something that should be highlighted.
Mr. Bilirakis. Thank you, Madam Chair. I yield back.
Chairman Ros-Lehtinen. Thank you very much. Mr. Griffin is
recognized. He is the Subcommittee on Europe and Eurasia vice
chair.
Mr. Griffin. Thank you, Madam Chairman.
Ambassador Wallace, I would like to--it is good to see you
here. Thanks for testifying today. I would like to dig a little
deeper on the issue of auto manufacturing in Iran. And I
apologize for any duplication there may have been when I was--
that I might have missed. But I would like for you to name
names in terms of the success that you as a group, and we
collectively have had in getting some of the auto manufacturers
to suspend. And I would like for you to talk about the actors
that are still engaged in production or commerce with Iran, and
what we can do to turn up the heat. Obviously, we can name
names, and we should. But could you elaborate a little more on
that, because it seems to me a lot of the commerce with Iran is
in the auto production area.
Ambassador Wallace. Thank you. It is good to see you, as
well.
It is not well known, but the Persian automobile sectors
are the 13th largest in the world. And as Mark testified
previously, we have to do better at preventing inflows of
products and goods, spare parts, Congressman Sherman asked
questions about this previously. And there are major auto
manufacturing facilities and employment in Iran. This is a huge
sector of their economy. Fifty percent of the country's GDP is
in the industrial sector, and 20 percent of it is their
automobile manufacturing. This is a sizeable part of their
economy.
We have had some successes in having automobile
manufacturers leave the Iranian market, the likes of Karsan,
Hyundai, and Porsche, but there are some real gaping holes.
Peugot right now is a major actor in Iran, major manufacturer
inside Iran in direct partnership with the IRGC. You cannot
manufacture an automobile in Iran without it being manufactured
by an IRGC company.
We all own parts of Peugot because own GM, and this
committee has the ability to contact the United States Treasury
Department, which is its major shareholder, and say to GM why
are you--if you are partnering with Peugot, impress upon Peugot
that it cannot be the partner of the United States of America
and also manufacture automobiles in Iran, and sell parts into
Iran. They have supposedly slowed down their imports of the
Peugot build kits, but we have to make that a permanent ban.
Another example is Nissan, a major manufacturer. Actually,
I have a picture of the Ahmadinejad I guess Pope mobile or
Dictator mobile which is a Nissan vehicle where he is riding in
a Nissan vehicle. Well, obviously, Nissan sells cars in the
United States, and I don't have anything personally against
Nissan, but Nissan is a major provider of vehicles to state
governments, governments around the country.
I would suggest, and I would respectfully request this
committee to write a letter to our friend, Mayor Bloomberg, in
New York. New York City just awarded a multi-billion dollar
contract to Nissan to build the most iconic American vehicle,
one of the most iconic American vehicles, the New York City
taxicab to Nissan. If they are going to build our New York City
taxicabs, they shouldn't be manufacturing cars with the IRGC in
Iran. And we should be able to use the power of New York's
pocketbook to impress upon Nissan to stop manufacturing
automobiles in Iran.
This is an important part of their sector, and follows on
what Mr. Sherman said, my colleagues on the panel have said,
and we can put a real dent in this part of the economy.
Mr. Griffin. I would be really interested in sitting down
and talking with you. I would be happy to help with a letter,
talk about legislation. I have some notes here that Mercedes is
also continuing to do business in Iran. I drive a Ford pickup,
so I hope there is no issue there. I am sure there is not. We
love Ford. By the way, they didn't take any bailout funds.
So, I also have some notes that some of the companies have
suspended auto trade production. Does that mean they still have
resources there? What exactly does--suspended doesn't mean--it
doesn't sound like they pulled completely out, Audi, General
Motors, Toyota. Do you have any information on that?
Ambassador Wallace. Yes, absolutely. We are concerned by
the suspension language because there is such a large presence
in Iran of this automobile manufacturing. Peugot we think is
the best example. It is the biggest manufacturer in Iran, and
they have ``suspended'' sending in Peugot build kits into Iran
for 5 months because of the GM partnership. That should be a
permanent ban.
Mr. Griffin. It looks like I am out of time but, Madam
Chair, I would just say that if the Federal Government owns
part of General Motors, and General Motors is doing business
with Peugot, and Peugot is in Iran, that is an outrage, and we
need to do something about it. Thank you.
Chairman Ros-Lehtinen. Thank you so much. Thank you. Mr.
Burton is recognized, the chairman on the Subcommittee on
Europe and Eurasia.
Mr. Burton. I love to listen to these discussions. We are
going to put pressure on Iran, and they are going to change.
And I start thinking about things that people don't talk about
in the history books any more. Lord Chamberlain, he was going
to negotiate with Adolf Hitler. Hitler violated the Treaty of
Versailles. Instead of having 100,000 troops, they had
millions. And while the allies were sinking their ships and
destroying their jeeps and their airplanes, because if we
didn't have weapons there wouldn't be any more war. Hitler was
building up. And Chamberlain goes to Munich and shakes hands
with Hitler. Comes back, peace in our time, and 50-60 million
people died.
There comes a point when you have to talk to these guys in
terms that they understand. You have got to say to them look,
if you keep this crap up, you are going to die. Now, everybody
wants to stay out of war. I hate war. I was shaving the other
day and I heard the commentator talking about this young man. I
came out and looked at the TV set and there was a good looking
young man with his wife and his child, and they announced that
he had both arms and legs blown off in Afghanistan with an IED.
And I thought why in the hell did that happen?
With the technology we have, you can fly over without a
pilot, have a hellfire missile on and put it right down
somebody's chimney. We don't have to send a whole bunch of
troops in. Through the technology we have, we can get anybody,
anybody, but like we did in World War I, we are sitting around
talking for hours, and days, and months, and years, saying oh,
my gosh, you guys better stop making this nuclear weapons or we
are going to sanction you.
Mr. Wallace, you talked about sanctions. We passed a
sanctions bill, but it had in it a waiver for the President.
So, we pass a waiver so he can do whatever he wants. And you
know, you have mentioned there were a bunch of waivers, so we
keep negotiating, and negotiating, and negotiating.
In Korea in 1994, we negotiated with the North Koreans. We
don't want them, we will not allow them to have nuclear
weapons, so we gave them the ability to get cold water nuclear
reactors. They got nuclear weapons. Didn't work, didn't work.
At that time, if we would said, listen, you keep this crap up
and you are in big trouble, buddy, it would have worked, but we
messed around and messed around. Now they have nuclear weapons.
And we are doing the same thing with Iran.
These guys aren't going to stop. There is always going to
be a way to get money and the things that they need. It ain't
going to stop, and we are heading toward a war over there. At
some point Israel, and I know Bibi Netanyahu, he is not going
to risk another holocaust. If they keep this stuff up, they are
going to attack, and it doesn't need to happen.
It seems like to me we could send a message to Ahmadinejad
and the mullahs and say look, we know where you are. We know
where you live, and we have got the technology to put one right
down your chimney. And if they knew we meant it, I think you
would probably have a change in attitude. But, no, we keep on
saying if we put this pressure on, and put that pressure on and
negotiate, it isn't going to work. It will not work.
I have been here 30 years, and I have heard it all. And I
am really disappointed that we continue down this path. One
thing that we say we ought to do to our kids is teach them
history. Well, we don't teach them history any more. If
everybody would study history they would know that you reach a
point when you can't negotiate with tyrants. When you have to
stand up and say look, you stop this stuff because you are
endangering humanity. We are talking about nuclear weapons now,
can kill--right here. We could kill 50 million people with just
a couple of bombs, so it is a lot worse than it was in World
War II. So, we have to learn from history. And the history is
you tell tyrants enough, while you still have time.
We had the time in Korea, but now we don't. They have got
nuclear weapons, and they are working on delivery systems, so
we have to do something now because they have the ability to
kill a bunch of people.
Iran is not yet in that position, so what we need to do is
we need to say very strongly look, we have put sanctions on
you. We have done all this stuff, now we are tired of it. And
the President or whoever the next President is, if we still
have time, needs to say very clearly we are not going to mess
with you. You keep this up, and you are going to go to
Valhalla, or wherever it is. We are going to put one down your
chimney. We have the ability to do it. You could be 2,000 miles
away with a computer and you can fire a hellfire missile down
somebody's--in somebody's car as they move along a road, or
down their chimney.
It is time that we do something to stop this nonsense
instead of talking about it, and killing everybody with paper.
I yield back.
Chairman Ros-Lehtinen. Thank you very much, Mr. Burton.
Always good to hear your strong voice, clarity. Thank you very
much, sir. Don't get frustrated. Mr. Duncan of South Carolina.
You are the guy that's going to clean it up here.
Mr. Duncan. Thank you, Madam Chairman.
Chairman Ros-Lehtinen. You are the last batter up. You have
got to hit a home run.
Mr. Duncan. I am going to bat clean up here, so I
appreciate the committee, appreciate the witnesses staying here
as long as you have.
I can't say it any more eloquently or strongly as Mr.
Burton did. And I want to echo his words. I think we should
heed the words of Winston Churchill when he discussed the
feeding of a crocodile hoping that he will eat you last. That
is exactly what it seems like we are doing with these policies
of sanctions, and they seem to be policies of appeasement.
And it is clear with the rhetoric, the posturing, and the
actions of Iran exactly what they are doing. They are just
buying time. They are buying time so they can do exactly what
they want to do, and that is acquire a nuclear weapon and be a
threat to the world, and the region, and the United States, the
great Satan, the little Satan, and all of the things because
that is in their rhetoric. I am not making this up personally,
this what they have said.
The free world doesn't want to see Iran get a nuclear
weapon. And it has been clear on that, the free world has been
clear on that with its rhetoric, but not necessarily with
actions that match the rhetoric. So, I guess the question for
Mr. Dubowitz, you state in your testimony that Khamenei is
seeking to buy his country enough hard currency from oil sales
to withstand the soaring inflation, now estimated to be as high
as 40 percent per year, a crumbling currency. At one point this
year it was down about 50 percent, I think.
So, with all these sanctions, what is the breaking point?
What do you see as the breaking point that is going to make
Iran allow inspectors to come in, will remove their nuclear
capability, will stop pursuing these paths of destruction?
Mr. Dubowitz. Well, thank you, Congressman. I would say
this, that there is no evidence to date that any sanction or
sanctions in their entirety have changed the risk-reward
calculus of Khamenei with respect to building a nuclear weapon.
I think to change that risk-reward calculus, as Ray has written
so eloquently, we have to put him to a fundamental choice
between a bomb and the survival of his regime. And we haven't
put him to that fundamental choice. And I think part of the
reason we haven't put him to that choice, as echoed by
Congressman Burton, is that the Iranians don't believe there is
a credible military threat. I mean, we haven't actually laid
out a serious military option. You know, there are choke holds
within the Iranian proliferation supply chain, particularly
where you fabricate centrifuges, that if we were to put a
missile down that chimney, we could do serious damage to the
Iranian nuclear program and set them back by years.
And I think we have failed to communicate that sufficiently
to Khamenei. I think he needs to be put to that fundamental
choice. He hasn't yet. And, as you said, he has played rope-a-
dope, and has successfully moved the goal post, not to mix
sports metaphors, but----
Mr. Duncan. I agree with you. And, you know, there are two
Presidents on these issues that I tend to subscribe to, one is
Teddy Roosevelt. I didn't agree with everything with Teddy
Roosevelt, but he did say he is going to speak softly and carry
a big stick. He truly meant that the big stick works, and that
you are very clear, when you speak softly to someone about your
intentions and it is not idle threats at that point. It is
taken very seriously. You look a person in the eye and you
speak softly, but you tell them what you are going to do if
they don't straighten up. That is how my dad talked to me, and
he meant it.
Ronald Reagan, the reason the Iranians let the hostages go
when Ronald Reagan was sworn into office is because they knew
he meant what he said on the campaign trail, as it was
approaching January 20th and being sworn in, they knew he meant
it. And I don't believe that Khamenei or Ahmadinejad, or the
Iranians as a whole truly believe what the free world is
saying, that we don't want them to acquire a nuclear weapon.
So, I agree with you, and I appreciate your testimony.
Madam Chairman, I don't have anything else. I think it has
all been said, so with that I will yield back.
Chairman Ros-Lehtinen. Thank you so much, and I thank the
witnesses, excellent testimony. I hope that we can move on
stronger sanctions. I hope that the Senate wakes up. I fear
these negotiations May 23rd in Baghdad just a lot of hot air,
and a lot of concessions. We have got to get tougher.
Thank you, gentlemen, and the hearing is adjourned. Thank
you, Mr. Berman.
[Whereupon, at 12:11:36 p.m., the committee was adjourned.]
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