[House Hearing, 113 Congress]
[From the U.S. Government Printing Office]
PREVENTING A NUCLEAR IRAN
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HEARING
BEFORE THE
COMMITTEE ON FOREIGN AFFAIRS
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
MAY 15, 2013
__________
Serial No. 113-34
__________
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COMMITTEE ON FOREIGN AFFAIRS
EDWARD R. ROYCE, California, Chairman
CHRISTOPHER H. SMITH, New Jersey ELIOT L. ENGEL, New York
ILEANA ROS-LEHTINEN, Florida ENI F.H. FALEOMAVAEGA, American
DANA ROHRABACHER, California Samoa
STEVE CHABOT, Ohio BRAD SHERMAN, California
JOE WILSON, South Carolina GREGORY W. MEEKS, New York
MICHAEL T. McCAUL, Texas ALBIO SIRES, New Jersey
TED POE, Texas GERALD E. CONNOLLY, Virginia
MATT SALMON, Arizona THEODORE E. DEUTCH, Florida
TOM MARINO, Pennsylvania BRIAN HIGGINS, New York
JEFF DUNCAN, South Carolina KAREN BASS, California
ADAM KINZINGER, Illinois WILLIAM KEATING, Massachusetts
MO BROOKS, Alabama DAVID CICILLINE, Rhode Island
TOM COTTON, Arkansas ALAN GRAYSON, Florida
PAUL COOK, California JUAN VARGAS, California
GEORGE HOLDING, North Carolina BRADLEY S. SCHNEIDER, Illinois
RANDY K. WEBER SR., Texas JOSEPH P. KENNEDY III,
SCOTT PERRY, Pennsylvania Massachusetts
STEVE STOCKMAN, Texas AMI BERA, California
RON DeSANTIS, Florida ALAN S. LOWENTHAL, California
TREY RADEL, Florida GRACE MENG, New York
DOUG COLLINS, Georgia LOIS FRANKEL, Florida
MARK MEADOWS, North Carolina TULSI GABBARD, Hawaii
TED S. YOHO, Florida JOAQUIN CASTRO, Texas
LUKE MESSER, Indiana
Amy Porter, Chief of Staff Thomas Sheehy, Staff Director
Jason Steinbaum, Democratic Staff Director
C O N T E N T S
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Page
WITNESSES
The Honorable Wendy R. Sherman, Under Secretary for Political
Affairs, U.S. Department of State.............................. 5
The Honorable David S. Cohen, Under Secretary for Terrorism and
Financial Intelligence, U.S. Department of the Treasury........ 19
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
The Honorable Wendy R. Sherman: Prepared statement............... 8
The Honorable David S. Cohen: Prepared statement................. 21
APPENDIX
Hearing notice................................................... 68
Hearing minutes.................................................. 69
The Honorable Gerald E. Connolly, a Representative in Congress
from the Commonwealth of Virginia: Prepared statement.......... 71
The Honorable Eliot L. Engel, a Representative in Congress from
the State of New York: Material submitted for the record....... 73
Written responses from the Honorable Wendy R. Sherman to
questions submitted for the record by the Honorable Dana
Rohrabacher, a Representative in Congress from the State of
California..................................................... 74
Written responses from the Honorable David S. Cohen and the
Honorable Wendy R. Sherman to questions submitted for the
record by the Honorable Adam Kinzinger, a Representative in
Congress from the State of Illinois............................ 75
Written responses from the Honorable Wendy R. Sherman and the
Honorable David S. Cohen to questions submitted for the record
by the Honorable Mark Meadows, a Representative in Congress
from the State of North Carolina............................... 78
PREVENTING A NUCLEAR IRAN
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WEDNESDAY, MAY 15, 2013
House of Representatives,
Committee on Foreign Affairs,
Washington, DC.
The committee met, pursuant to notice, at 1:19 p.m., in
room 2172, Rayburn House Office Building, Hon. Ed Royce
(chairman of the committee) presiding.
Chairman Royce. This committee will come to order. Today we
are here to discuss Iran's growing nuclear threat as well as
U.S. and allied efforts to stop it. For this committee there is
no higher priority.
The committee last heard from Under Secretary Sherman and
Under Secretary Cohen in October 2011. We welcome them back.
Since that time, thanks to the bipartisan work of this
committee, several sanctions aimed at Tehran's financial
lifeline have been implemented, many of them over the
objections of the administration. But Iran has seen its oil
revenue drop by 40 percent. Official inflation has climbed to
30 percent, with unofficial estimates being twice as high. So
well done, but not enough.
In the year and a half since our witnesses last appeared,
the International Atomic Energy Agency tells us that the total
installed centrifuges at the facilities at Natanz and Fordow
have increased from 8,500 to more than 15,700. That is an 85
percent increase since the last hearing. Some of these
centrifuges are more advanced, perhaps five times as powerful
as earlier models. A key facility is buried deep under the
mountain.
Iran continues to stonewall the IAEA on its development of
nuclear explosive devices. It does not take a physicist to
comprehend Iran's intentions, developing a nuclear arsenal.
I am convinced that Iran will continue on this path until
the sanctions bite so bad that the regime must relent or face
upheaval. That is where we need to get.
Meanwhile, Iran works to undermine governments in the
region and around the globe. Iran's support is keeping the
brutal Assad regime afloat. It has resupplied Hezbollah with at
least 25,000 new rockets, and I saw the impact of some of those
rockets in Haifa in 2006 when they were raining down on the
city, targeting the trauma hospital, targeting civilian sectors
of that city.
In recent years there have been Iranian-sponsored attacks
on plots in Bulgaria, India, Thailand, Georgia, Azerbaijan,
Cyprus, Kenya, and one here in Washington, DC, as well, and I
would hate to see an Iran emboldened by nuclear weapons.
There are also real concerns about Iran's interaction with
North Korea, because earlier this year the committee heard
testimony that Iran and North Korea had signed a scientific
cooperation agreement, the same type of agreement that North
Korea had signed with Syria before building their reactor, the
reactor that was destroyed by Israel.
But it is not just the sharing of missile and nuclear
technology that has us concerned. It is the sharing of a
diplomatic playbook. Even the head of the United Nations has
recognized that Iran, like North Korea, will use talks as a
cover to build a bomb.
From day one the Obama administration has reached out to
the Iranian regime. Unfortunately, that hand has been met with
more centrifuges, more missiles, and more stonewalling. We
don't yet seem to realize that this regime, which beats and
imprisons its own people, is determined to keep its nuclear
program.
So I am convinced, as are 325 of my colleagues, that only
when the Iranian leadership truly feels a choice between
maintaining power and the bomb does our diplomacy have a chance
to succeed. That is why Ranking Member Engel and I have
introduced H.R. 850, The Nuclear Iran Prevention Act, to
continue to turn up the economic and political heat on the
regime. We look forward to moving this legislation out of
committee next week.
It is cliche to say the clock is ticking. I just hope we
are able to act before the clock stops ticking.
I will now turn to Ranking Member Engel for his opening
remarks.
Mr. Engel. Mr. Chairman, thank you for calling this very
timely hearing on our strategy to deny Iran a nuclear weapons
capability. I know both our witnesses, and I am impressed by
their work and their credentials, so I would like to thank both
of you for appearing today and for your hard work on this very,
very important issue.
I believe that ending the Iranian nuclear weapons program
is the greatest national security challenge facing our Nation.
A nuclear-armed Iran or one with a perceived nuclear weapons
capability would gravely undermine the foundations of the
nuclear nonproliferation regime and the peace, security and
stability of the entire Middle East. And since the Iranian
leadership has threatened to destroy the State of Israel, the
dangers from this nuclear scheme are of the highest order.
Over the last several years this committee has been at the
forefront of efforts to enact the strongest sanctions ever
levied against Iran's nuclear program. I continue to hope that
we can achieve a peaceful resolution of the Iranian nuclear
crisis, and these sanctions are a critical and indispensable
element of our two-track diplomatic strategy, pressure and
negotiations.
Secretary Sherman, in early April you represented the
United States at the latest round of P5+1 negotiations with
Iran in Almaty, Kazakhstan. At that meeting Iran rejected yet
another offer from the P5+1 in which some international
sanctions would reportedly be lifted in return for Iran
suspending some of its most sensitive uranium-enrichment work.
And once again we walked away from negotiations virtually
empty-handed.
Let us face it, it wasn't our willingness to talk that
brought Iran to the negotiating table. The Iranian regime will
only respond to pressure. And I don't think they will ever
negotiate in good faith unless we continue to ratchet up the
pressure, and we will do that when the committee marks up the
bipartisan Nuclear Iran Prevention Act next Wednesday. I am
pleased and honored to work on that with our chairman, Chairman
Royce, and we do it with one mind. There is no difference
between the two of us on this very important issue of Iran and
nuclear weapons.
We must act with a sense of urgency. While the regime
feigns sincerity on negotiations for the international press,
they continue to move full speed ahead with their nuclear
weapons program. According to the IAEA, Iran is installing
advanced centrifuges faster than expected, dramatically
increasing the pace of uranium enrichment. There has been no
progress on the IAEA's effort to resolve outstanding questions
about the nuclear program's military dimensions, and Iran has
still not allowed IAEA inspectors access to Parchin, where the
regime is almost certainly concealing illicit nuclear
activities from the international community.
So, with another failed round of negotiations in our rear-
view mirror, and with this information from the IAEA in mind, I
look forward to hearing from our witnesses on what exactly is
the administration's strategy to end Iran's nuclear weapons
program. I would also like to hear our witnesses discuss what
tools they have at their disposal to increase pressure on the
Iranian regime, but have yet to utilize.
Finally, my most sensitive question: I am convinced that
President Obama is serious when he says Iran will not develop a
nuclear weapon on his watch, but I believe that Congress must
know the following: When will the administration be forced to
abandon the diplomatic option? Secretary Kerry says we cannot
let the talks become an interminable process. At what point
should they be terminated if no progress is made?
I want to make something clear to Iran: Your nuclear
weapons program is not necessary, nor will it succeed. The
United States will not allow this to happen. Congress will
continue to insist on a full and sustained suspension of
enrichments. On this we have bipartisan and strong support. We
will demand clarity on the military dimensions of Iran's
nuclear program, and we will insist that the IAEA have complete
access to do its job.
If rapid progress is not made in all of these areas, we
will continue to press forward with even stronger sanctions.
Again, that is what the chairman and I are trying to do, and we
have over 300 cosponsors to our bill.
I am eager to hear how our witnesses assess the
effectiveness of our current sanctions, and, most importantly,
I look forward to hearing about the administration's strategy
to end Iran's nuclear weapons program once and for all.
Thank you, Mr. Chairman.
Chairman Royce. Thank you, Mr. Engel.
We will now go to Ms. Ros-Lehtinen, chairman of the Middle
East subcommittee, for 1 minute, and followed by Mr. Deutch,
ranking member of that subcommittee.
Ms. Ros-Lehtinen. Thank you so much, Mr. Chairman, and
thank you for the witnesses as well.
Iran continues to pose one of the greatest threats not only
to U.S. national security, but also to global peace and
security. Tehran continues to provide financial, material and
logistical support for terrorist groups like Hezbollah, who
undermine our interest in Syria. It remains an ally of Assad,
the murderous thug in Syria, arming the regime, and sending its
own Quds Force soldiers to fight alongside Assad's troops.
Negotiations have been useless. Iran refuses to honor its
international obligations related to its ballistic missile and
nuclear programs, and yet we continue down this road. Iranian
authorities deny access to those investigating the terrible
human rights violations that are rampant in the country.
We have got to learn from the mistakes of the past so that
we don't keep making them, and I am interested in hearing from
Mr. Cohen about the actions that his agency has taken to
discourage Iran from using Venezuela and other areas to
circumvent U.S. sanctions.
Thank you, Mr. Chairman.
Chairman Royce. Thank you, Ms. Ros-Lehtinen.
Mr. Deutch.
Mr. Deutch. Thank you, Mr. Chairman. Thanks to you and
Ranking Member Engel for calling this hearing today.
Secretaries Sherman and Cohen, we greatly appreciate your
being here with us today, though it seems, frankly, that we
have been here before discussing the efficacy of U.S. sanctions
and the status of Iran's quest for nuclear weapons.
I want to commend each of you for the work that you have
done and the undeniable effect that sanctions have had on
Iran's economy. Iran is virtually isolated from the
international financial markets. Its oil exports have been
halved. But where are we now?
The only bar for success, the ultimate judge of success of
sanctions is Iran ending its nuclear weapons program, and thus
far we are no closer to stopping Iran's brutal human rights
abuses, its support for Assad's heinous crimes in Syria, or
preventing Iran's sponsorship of terror around the world.
This unfortunately leaves many to wonder how our policy of
sanctions and diplomacy ultimately can work. There are
discussions that diplomacy with Iran must be on hold until
after Iran's elections in June. Well, what happens for the next
6 weeks, and how long can we afford to wait as Iran continues
to install centrifuges increase its enriched uranium stockpile?
I look forward to your insights into the coming weeks and
months and the discussion we will have today. Thanks for being
here.
Thank you, Mr. Chairman.
Chairman Royce. Thank you, Mr. Deutch.
We will now go to Mr. Sherman, ranking member of the
Terrorism, Nonproliferation, and Trade Subcommittee.
Mr. Sherman of California. Since the late 1990s, I have
been calling for the toughest sanctions on Iran. Various
administrations have disagreed. Often this House has passed
tough bills, only to see them die or get watered down in the
Senate. The administration has sanctioned 23 Iranian banks, but
has failed to sanction the rest.
Those who say soft sanctions will cause Iran to abandon its
nuclear program cannot explain the first decade of this century
during which we had soft sanctions and fast centrifuges. This
committee will be taking up the Nuclear Iran Prevention Act,
which I have joined with many others in introducing, especially
our chairman and ranking member, and we need to make that bill
as tough as possible, and let us go into conference with the
Senate with the strongest possible bill.
Let us say that in order to have a contract with the U.S.
Government, you must certify on behalf of all of the corporate
group that you sell nothing to Iran except agricultural and
medical products, and let us include in whatever bill we send
to the floor and the Senate the strongest possible sanctions.
Thank you, Mr. Chairman and Ranking Member.
Chairman Royce. Thank you, Mr. Sherman.
This afternoon we are joined by senior representatives from
the State and Treasury Departments. Under Secretary Sherman has
held numerous positions at the State Department, including
Counselor for the Department and Assistant Secretary for
Legislative Affairs.
Under Secretary Cohen's career at the Treasury Department
has been focused on fighting money laundering and financing of
terrorism. Prior to his Senate confirmation in 2011, he served
as Assistant Secretary for Terrorist Financing.
Welcome again to both of you. Without objection, the
witnesses' full prepared statements will be made part of the
record. Members are going to have 5 legislative days to submit
statements or questions or any extraneous materials for the
record.
We again would ask that you summarize your statements to 5
minutes, and we will begin with Ambassador Sherman.
STATEMENT OF THE HONORABLE WENDY R. SHERMAN, UNDER SECRETARY
FOR POLITICAL AFFAIRS, U.S. DEPARTMENT OF STATE
Ambassador Sherman. Thank you very much, Mr. Chairman,
Ranking Member Engel, and Members of Congress and of this
committee. Good afternoon, and thank you for the invitation to
testify about one of our top foreign policy and national
security priorities, Iran.
Iran's leaders want the world to think of their country as
a legitimate power and a regional leader, yet the costly and
destructive decisions the regime is making day after day
undermine Iran as a credible player on the world stage. What is
more, Iran's policies, from its nuclear weapons ambitions to
its destabilizing regional activities to its abysmal record on
human rights create a range of challenges to the United States
and to every country committed to peace and stability.
The Obama administration takes every single one of these
challenges seriously. We know that our success depends on
effective collaboration here in Washington and with our allies
and partners around the world.
We are pursuing a number of avenues to deal with Iran:
Resolutions and other actions at the United States, the Human
Rights Council, the IAEA and other multilateral organizations;
wide-ranging and deep sanctions, ensuring we have the
appropriate force posture; leveraging bilateral relationships
to raise a red flag when Iran seeks to open a new Embassy, and
engaging the Iranian people through virtual diplomacy. Every
day every bureau in the Department of State and virtually every
department in the U.S. Government has their eye and their
actions on Iran.
We are making clear that Iran's international legitimacy
and the end of their isolation depends on the choice Iran's
leaders are facing right now: Change course or continue to pay
the cost of intransigence. Indeed, we meet here today on the
day that High Representative Ashton is having dinner with Dr.
Jalili of Iran, now a Presidential candidate, to push hard on
the basis on which negotiations might go forward. We meet on
the day that the IAEA is meeting with Iran in Vienna to press
again in advance of the June Board of Governors meeting. And we
meet on a day when the U.N. General Assembly is debating Syria
and Iran's role in it.
I would like to discuss a few details about the
administration's policy toward Iran. I will begin with the
nuclear program. From the start of this administration,
President Obama has been clear the United States will not allow
a nuclear-armed Iran. He has also been clear that Iran's
leaders have a choice: Live up to their international
obligations, or continue down the path toward isolation.
As Iran's leaders have continued to defy international
consensus, we have put in place a dual-track policy of
ratcheting up pressure in the form of sanctions and other
measures while pursuing a diplomatic solution.
The sanctions, as many of you have said, have hit the
Iranian economy hard. Iran's crude exports have plummeted,
costing $3 billion to $5 billion per month to Iran. The rial
has depreciated more than 50 percent over the past few months,
and official inflation is at 32.2 percent, although informal
estimates are significantly higher. Even with sanctions in
place, we are making sure that humanitarian trade continues so
that the Iranian people aren't facing impossible hardship.
At the same time, we and our P5+1 partners are pushing for
a diplomatic solution. We have offered Iran the opportunity to
reduce tensions and move toward a negotiated solution.
Unfortunately, so far the Iranians have fallen far short with
their response. As I mentioned, a meeting is happening probably
as we are meeting to see whether Iran is really ready to put
substance on the table.
We are clear-eyed in our approach to the P5+1 talks and
seek concrete results. After all, while the window for
negotiation is still open, it will not remain so forever. We
will give diplomacy every chance to succeed because it is the
only way to maintain international support for whatever options
we must take, but it cannot go on forever, and ultimately the
onus is on Iran.
Beyond Iran's nuclear ambitions, we are also concerned
about their destabilizing influence across the entire Middle
East and beyond, support to the Assad regime and sustaining the
campaign of violence against the Syrian people. Their aid to
terrorist organizations is threatening our ally, Israel, and
innocent civilians worldwide. That is why we are deepening our
military partnerships across the region, particularly with
Israel in the gulf, to defend against attacks from the very
groups supported by Iran's leaders.
I know I am running out of time, so I am going to talk
fast--faster.
I want to reiterate our commitment to seeing the safe
return of Robert Levinson, Saeed Abedini and Amir Hekmati,
American citizens missing or detained in Iran. Today and every
day in this country families are wondering where their loved
ones are, whether they are safe, and when they might come home.
We are not going to back down until those Americans are home
safe and sound.
We are, of course, deeply concerned about the campaign of
repression Iran's rulers are waging against their own people:
Abuse of those who speak out against their government and
harassment of their families; students, lawyers, journalists
and bloggers facing endless intimidation, discrimination and
incarceration.
Over 5,000 years Persian civilization has given the world
innovations in culture, art, medicine and government, but today
that historic greatness has been set far, far back. Iranians
are owed the rights, freedom and dignity that we cherish here
as the bedrocks of our Nation and all people around the world
deserve.
I will finish by saying that we are closely watching the
upcoming election. Four years ago the Iranian people spoke out
for human rights, basic dignity and greater opportunity. The
regime responded by shooting demonstrators in the streets and
frightening families in their homes. And today Iran's Guardian
Council, unelected and unaccountable, is sorting through
Presidential contenders, eliminating hundreds of candidates. We
take no sides in the election, but we know that the desires and
aspirations of the Iranian people must start with free, fair
and transparent elections.
We are clear-eyed about the challenges that lie ahead
dealing with the Iranian regime. Congress and this
administration have stood side by side in dealing with this
threat to our security and to global security. I am confident
we can continue to work together on this critical concern.
Thank you.
Chairman Royce. Thank you, Ambassador Sherman.
[The prepared statement of Ambassador Sherman follows:]
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Chairman Royce. Mr. Cohen.
STATEMENT OF THE HONORABLE DAVID S. COHEN, UNDER SECRETARY FOR
TERRORISM AND FINANCIAL INTELLIGENCE, U.S. DEPARTMENT OF THE
TREASURY
Mr. Cohen. Chairman Royce, Ranking Member Engel,
distinguished members of the committee, thank you for the
opportunity to testify today.
No issue is of greater concern or urgency than preventing
Iran from obtaining a nuclear weapon. As Under Secretary
Sherman said, that is why from our first days in office this
administration has pursued a dual-track strategy that offers
Iran the opportunity for diplomatic engagements, while at the
same time making abundantly clear that if Iran continues to
refuse to comply with its international obligations, we, along
with our partners in the international community, will apply
increasingly powerful sanctions on Iran. That is exactly what
we have done, and that is what we are committed to continuing
to do, in close collaboration with Congress, so long as Iran
refuses to engage meaningfully with respect to its nuclear
program.
In my written testimony I describe in detail the expanding
scope, intensity and impact of U.S. sanctions on Iran and how
these new authorities, coupled with robust implementation and
enforcement, have had a very significant impact on Iran. I
would like to highlight just a few points.
First, and most importantly, creating this powerful
sanctions regime has been and must continue to be a joint
effort between the Congress and the administration. Through the
enactment and energetic implementation of key pieces of
legislation, including CISADA and the NDAA, we have isolated
Iran from the international financial system and driven down
Iran's oil exports by some 50 percent, depriving Iran of a
critical source of revenue.
In addition, to enhance the sanctions pressure on Iran,
over the past year the President has adopted five Executive
Orders that extend and strengthen the legislative sanctions
framework, including orders that block the property of the
entire Government of Iran, including its central bank, that
make dealings with the National Iranian Oil Company and its
trading arm, NICO, subject to sanctions, and that enhance the
NDAA by authorizing sanctions on foreign banks that facilitate
the acquisition from any party of Iranian petroleum, petroleum
products or petrochemicals.
A few months ago the Iran Threat Reduction Act went into
effect, which effectively locks up Iran's oil revenues in the
few countries that still buy Iranian oil by requiring that that
revenue can only be used to pay for bilateral trade or for
humanitarian imports. As of February 6 of this year, Iran's
dwindling oil revenue cannot be repatriated to Iran,
transferred to a third country, or used to facilitate third-
country nonhumanitarian trade.
Second, we have aggressively implemented and enforced the
entire sanctions framework. Since the beginning of 2012, we
have imposed sanctions on 22 individuals and 54 entities, and
added almost 200 aircraft and ships to the sanctions list. We
have imposed sanctions on banks, businesses, government
entities and individuals involved in Iran's WMD proliferation
activities, its support for international terrorism, and its
support for the brutal Assad regime.
We have also targeted Iran's increasingly desperate efforts
to evade our sanctions, and just this morning we imposed
sanctions on an exchange house and a trading firm in the UAE
for providing services to designated Iranian banks, taking
direct aim at a growing mechanism of sanctions evasion, nonbank
financial institutions.
Third, we see clear evidence that these efforts are having
an impact. As I noted, Iran's crude oil and condensate exports
have dropped by roughly 50 percent between January 2012 and
early 2013, costing Iran between $3 billion and $5 billion a
month. In 2012, Iran's GDP fell by some 5-8 percent, the
largest drop since 1988, the final year of the Iran-Iraq war,
and the first contraction in 20 years. The value of Iran's
currency, the rial, has plummeted, losing over two-thirds of
its value in the last 2 years.
And we also see the impact of our sanctions in less
tangible, yet more significant ways. During the negotiating
sessions in Almaty, Kazakhstan, the Iranian side sought
sanctions relief in exchange for concessions on their nuclear
program. They would not have done so had the impact of
sanctions not affected their calculus.
Finally, we are committed to doing more. We will work to
increase Iran's economic and financial isolation through the
implementation, as of July 1, of the Iran Freedom and
Counterproliferation Act of 2012. We will work to target
additional sources of Iranian revenue, including from the
petrochemical sector. With our colleagues at State, we will
maintain our robust outreach efforts to foreign governments and
the private sector to explain our sanctions, to warn them of
the risks of doing business with Iran, and to encourage them to
take complementary steps. We will continue aggressively to
target Iran's proliferation networks, support for terrorism,
sanctions evasion, abuse of human rights and complicit
financial institutions. And we will continue to work closely
with Congress in each and every one of these endeavors because
we know that we share a common objective, ensuring that Iran
does not obtain a nuclear weapon.
Thank you.
Chairman Royce. Thank you, Mr. Cohen.
[The prepared statement of Mr. Cohen follows:]
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Chairman Royce. I will make a quick announcement here.
Members, following this committee hearing, Ambassador Sherman
and Mr. Cohen will make themselves available to answer
questions requiring a classified setting. We will do that in
the SCIF. Everyone is encouraged to attend. We will go now to
questions.
I am encouraged by the fact, actually in both testimonies
of Ambassador Sherman and yours, Mr. Cohen, that you express a
willingness to work with the committee to continue to give the
administration more options to pressure the Iranian regime.
However, turning to the P5+1 negotiations that you referenced
in your written testimony, I know that many committee members
were concerned to read in the press that we had been offering
to ease precious metal sanctions. And as you put it, Mr. Cohen,
in your testimony, Iran is desperate for sanctions relief. So
now is the time, we feel, to step up the pressure. And on that
note you testified that we will actively investigate any sale
of gold to the Iranian regime.
With its currency now in free fall, the Iranians
desperately need to acquire gold, and as you note, you have an
Executive Order that would allow you to target those who would
provide gold to the regime. As of July 1, the law will allow
you to go after those providing gold to anyone inside Iran.
There have been reports that there has been a pickup in
gold sales, and that is the question I want to ask of you. Who
specifically have you sanctioned for gold or related
transactions with the Government of Iran, and given that the
transfer of any precious metals or gold to Iran will be in
violation of U.S. law after the 1st of July, what is the Obama
administration going to do before July 1 to prohibit transfer
of gold to Iran?
Mr. Cohen. Mr. Chairman, we are obviously aware of those
reports, and we are tracking very closely the sale of gold to
Iran, because, as you note, as of last July the Executive Order
adopted by the President makes sanctionable the sale of gold to
the Government of Iran.
We have been very clear with our counterparts around the
world and with the private-sector actors that this provision is
one that we take very seriously and that we intend to enforce,
and I can assure you that we are looking very, very carefully
at any evidence that anyone outside of Iran is selling gold to
the Government of Iran.
If I could have just one more moment, I think there is some
important information on this topic that I want to share with
you in the closed session afterwards that I think bears on your
question.
Chairman Royce. Okay. We will look forward to that.
There is a new report that estimates that between July
2012, when the Executive Order was signed, and last month, Iran
received over $6 billion in gold. Now, that is about 10 percent
of Iran's total $60 billion oil exports for 2012. So for the
first quarter of this year, gold exports to Iran amounted to
$1.33 billion.
The other question I would just ask you is what action is
the Obama administration prepared to take against Turkey's
state-owned bank, Halkbank, whose continued business dealings
with Iranians through gold fly in the face of international
sanctions?
Mr. Cohen. Mr. Chairman, this administration, I think, has
demonstrated that it will apply our sanctions without fear or
favor. We have applied sanctions to persons and entities in
countries that are our allies, in countries that are not so
much our allies. We pursue the facts, we pursue the evidence,
and we will continue to do so.
With respect to the gold provision in the legislation that
goes into effect on July 1, we have also been out around the
world making certain that anybody who is engaged currently in
the sale of gold to Iran, to the private citizens in Iran,
understand that as of July 1 any sale of gold to Iran, whether
to the government or to private citizens, is sanctionable under
the new provision that goes into effect as of July 1. We have
been clear that that July 1 date is a real date, and that after
July 1 any sale of gold to Iran is something that we will
pursue vigorously.
Chairman Royce. Let me go to Ambassador Sherman for a
question.
Last month's talks in Kazakhstan did not seem to achieve
any progress toward curbing the ambitions in Iran toward their
weapons, and in response Secretary Kerry said the talks cannot
be allowed to become a process of delay. We have heard similar
statements over the last 5 years, yet, of course, we continue
to talk, and Iran continues to enrich.
I was going to ask you about press reports that have
indicated that the P5+1 offered to ease some level of sanctions
on Iran if it demonstrated seriousness. In order for Iran to
receive relief from the U.S. sanctions, what actions, then, are
we demanding of Tehran, and is it still the position of the
U.S. that Iran must suspend all nuclear activity as required by
several U.N. Security Council resolutions? I don't think we are
relenting on that. Let us hear from you.
Ambassador Sherman. Thank you very much, Mr. Chairman.
Indeed, the ultimate goal of any negotiation is that Iran
come into full compliance with U.N. Security Council
resolutions, as you suggest. So that is the goal. What we have
put on the table, and did so a couple of meetings ago with Iran
in Baghdad, was a proposal that is a confidence-building
measure to address their over 5 percent enriched uranium
efforts, their stockpiles in Fordow, in return for very, I must
say, small but with some meaningful actions in the sanctions
regime, as well as to assist in a couple of other efforts
around nuclear cooperation, in part to follow through on the
safeguards that are necessary.
We did this because we want to get some time to negotiate a
comprehensive agreement to come into full compliance, and that
takes time, as you know, Mr. Chairman, because you understand
this problem quite well. Stopping their nuclear program and all
the components of it is a very highly technical matter. And so
everything that we do takes a lot of implementation, a lot of
monitoring and verification to ensure that there is compliance.
When we were at Almaty this last time, it was much better
in process terms in that there were quite substantive
discussions, all on the nuclear program, all on the elements of
the nuclear program we have been discussing, and quite a bit of
direct back-and-forth with each one of us, including with me.
And as Secretary Cohen indicated, for the first time Iran
evidenced their concern about sanctions and the need for
sanctions relief to come into compliance. So it is a measure of
the importance of sanctions, no doubt about it.
But the P5+1, we are entirely united. We thought that what
Iran offered in response to our confidence-building measure was
far too little. As one of my colleagues put it, we are on 100-
kilometer--this was a European--a 100-kilometer effort. Our
confidence-building measure maybe is 20, 25 kilometers along
the way, and we thought our package was balanced with 25
kilometers in return. To be generous, Iran put 5 kilometers on
the table and wanted 75 to 100 kilometers in return, and that
is not going to happen.
Even though some of my colleagues in the P5+1 obviously
have a variety of views, we stood united. We told Iran we could
not schedule another meeting until they went back and talked to
their government and were ready to put more substance on the
table. Then we would consider meeting again. And, indeed, that
is the message that the High Representative is delivering at
dinner tonight, to see what the Iranians are coming to the
table with and whether it is worth pursuing a meeting.
The one last thing I want to say is we must ensure that we
do everything we possibly can to show that diplomacy has or has
not worked, because whatever actions we ultimately may have to
take will require international support. So we must show that
we have taken every last opportunity at a peaceful solution.
Chairman Royce. Thank you, Ambassador Sherman.
We will go to Mr. Engel of New York.
Mr. Engel. Thank you, Mr. Chairman.
I want to piggyback on a couple of the chairman's
questions.
Can you confirm whether Turkey continues to send gold to
Iran in exchange for natural gas?
Mr. Cohen. Congressman, there is no question that there is
gold going from Turkey to Iran. In large measure what we see is
Iranian citizens purchasing gold as a way to protect themselves
from the declining value of the rial. So in some respects this
gold trade that we see that is increasing is a reflection of
the success of our sanctions in driving down the value of the
rial.
With respect to whether Turkey is paying Iran for its gas
imports in gold, we can go into this in greater detail in the
closed session, but I think the short answer to that is we do
not see that occurring.
Mr. Engel. Wouldn't you agree--I mean, I would think that
such an arrangement is a violation of U.S. law. Wouldn't you
agree?
Mr. Cohen. I think it would be.
Mr. Engel. Thank you.
We talk about Iran, Ambassador Sherman, you mentioned that
they weren't really putting much on the table, and that was the
message that Lady Ashton is going to be conveying today at that
talk. At what point, though, do we say, enough? You know, I
know it is a difficult question, obviously, because there are a
million nuances, but when will the administration no longer
consider diplomacy to be an option? At some point I think
obviously we need to make a judgment on that.
Ambassador Sherman. Sure, and we make those judgments on a
constant basis every time we sit down to talk with the
Iranians.
Congressman, what I would say is that the President has
said that he believes there is still time for diplomacy, as
does Secretary Kerry. In fact, our close ally, Israel, the
Prime Minister of Israel has said there is still time for
diplomacy.
But we all know that the clock is ticking, and in our
classified session we can talk about more the various clocks
that are ticking and at what point we will even increase our
concern beyond what it is today. But I don't think the time has
run out yet for diplomacy, and as I indicated to the chairman,
we have to give it every effort. The world needs to know we
have tried in every way to reach a peaceful solution.
Mr. Engel. Thank you.
I want to ask a question about Russia. How cooperative is
Russia regarding Iran sanctions and other aspects of the Iran
issue? Have our disagreements with Russia over Syria affected
our ability to cooperate with them vis-a-vis Iran? Let me ask
you that question, and then I have a follow-up question.
Ambassador Sherman. Sure.
We actually have a very, very good working relationship
with Russia when it comes to Iran. They are obviously producers
of oil, so oil has not been an issue with Russia. They are, in
fact, enforcing the U.N. Security Council resolutions and have
not come into conflict with us on our unilateral sanctions.
Sergey Ryabkov, who is my counterpart in Russia, is quite a
terrific professional. He represents his country's interests
vigorously, but works in a very united fashion with the P5+1 in
a very professional manner.
Mr. Engel. I am concerned with Russia's support for Assad
in Syria. In your view, why is Russia backing Assad so strongly
even at the cost of their reputation in the Middle East and
fanning the flames of Islamic extremism? Is it primarily to
show themselves to be an alternative to the U.S.? Because
recent reports have shown that Assad is gaining, and my fear is
that we could end up with an Assad regime, just without Bashar
Assad at the helm.
I believe that the falling of Assad would be a blow to
Iran, because Assad is obviously Iran's proxy, weapons going
from Iran through Syria into Lebanon, weapons that Israel just
took out, but that has been a constant. So what is Russia
doing? Is it primarily showing themselves to be an alternative
to the United States?
Ambassador Sherman. Well, I think, Congressman, Russia has
many both geostrategic and commercial interests in Syria, and
Syria has been its anchor in the Middle East, and so it has a
lot invested.
I don't believe, as Secretary Kerry has noted after his
meeting with President Putin and Secretary Lavrov, that Russia
is necessarily tied to any one individual in Syria, but rather
wants to protect its interests in Syria. I think that it is a
positive thing that the United States and Russia, under the
auspices of the U.N. and working with partners and allies
around the world, are moving to organize a Geneva II to have
the opposition sit down with representatives of the regime to
get to a transitional government with full executive powers by
mutual consent. And by that very definition, it will not
include Assad, because the opposition would never consent to
Assad being part of that transitional government.
So we think this is a positive thing. There is no cease-
fire attached to this. The actions on the ground will continue.
I think that both General Idres and the Syrian opposition
coalition are trying to organize and strengthen their efforts.
There are many players in the world that are helping them to do
that. We are with nonlethal means. So I think that we are on a
path working with Russia to get to a better place and to end
the violence that has cost at least 82,000 lives, millions of
refugees and internally displaced people, and horrific attacks.
Mr. Engel. Let me just say in conclusion, I really believe
that we have a vital national security interest in ending the
strategic relationship between Iran and Syria and severing
Hezbollah's lifeline to Tehran, and I hope we all continue to
work toward that goal.
Ambassador Sherman. I quite agree.
Mr. Engel. Thank you.
Thank you, Mr. Chairman.
Chairman Royce. We go now to Ileana Ros-Lehtinen of
Florida.
Ms. Ros-Lehtinen. Thank you very much, Mr. Chairman.
As you know, for years this committee has led the Congress
in efforts to stop Tehran's nuclear progress. We have enacted
several rounds of sanctions, legislation that has worked to
stun the regime, exacting pain on Iran's economy.
Under Secretary Cohen, I would like to commend and applaud
the Office of Terrorism and Financial Intelligence for its work
in enforcing and improving sanctions on the Iranian regime.
Last week Treasury designated an Iranian financial institution,
the Iranian Venezuelan Bi-National Bank, using authorities
aimed at freezing the assets of proliferators of weapons of
mass destruction and their supporters. Keep it up. Thank you.
For years I have been concerned about Iran's increased
efforts in the Western Hemisphere, especially the strong
footprint that it continues to have in Venezuela. Several
Presidential candidates in Iran right now have arrest notices
issued by Interpol because of their participation in the
bombing of the AMIA Jewish Community Center in Argentina. What
further actions can your Department take to discourage Iran
from using Venezuela, and from getting into other countries to
circumvent U.S. sanctions? What is your assessment of Iran's
activities in the Western Hemisphere?
We have got to continue to ensure that companies or
financial institutions that are violating U.S. sanctions are
not overlooked, are held accountable, but I have been more than
dismayed by the lack of urgency from the administration on this
threat to our national security, and the security of our ally,
the democratic Jewish State of Israel, that is in jeopardy.
Without learning from the mistakes that we have made with
the North Korean nuclear program and the Six-Party Talks, the
administration still believes that Iran can be disarmed with
diplomacy. It views Iran's nuclear program through rose-tinted
glasses, refusing to see what is self-evident to all:
Diplomatic overtures have not and will not ever work with Iran.
Ambassador Sherman, when you testified before this
committee in October 2011, you said correctly, sanctions are
most effective when they are severe and when they are enforced.
Yet 2 years later the administration continues its engagement
policy. Do you believe that engagement with Iran will yield
positive results? What concessions has the administration
offered to keep negotiations on the table, if any?
And the latest round of P5+1 negotiations with Iran have
ended in failure yet again, as you pointed out. The only thing
that has changed is Iran being closer to nuclear weapons
capability. It is like Charlie Brown and the football. When
will the administration learn that Lucy will still pull that
football away?
I agree that sanctions must be fully and vigorously
enforced. Why then does State continue to not fully implement
certain sanctions? Why do you provide waivers on others, like
repeatedly providing 20 sanction waivers to countries buying
Iranian crude oil?
Also this week the administration announced that the U.S.
will not participate at the ambassadorial level in the upcoming
conference on disarmament upon hearing that Iran is set to
chair this session, but stopped short of saying that we will
withdraw completely, and so we miss yet another opportunity to
bring about change at the U.N. Iran chairing the disarmament
conference is like allowing the inmates to run the prison. We
should make it clear to the U.N. that it must immediately
remove Iran from chairing this conference, bar it from
attending, or lose U.S. support and funding. Will we ever do
that?
I will start with you, Mr. Cohen, 1 minute.
Mr. Cohen. Well, first, Congresswoman, let me say thank you
very much for your kind words. I know that for the hundreds of
dedicated career civil servants who work in the Treasury
Department, what you have to say is very much appreciated, and
I appreciate your words.
With respect to the actions that we take in Venezuela, and
the Western Hemisphere more generally, as you note, we
designated the Iranian Venezuelan Bi-National Bank last week.
We have in the past designated IRGC-related entities that are
involved in the construction industry in Venezuela.
We are very much focused on any efforts by Iran to expand
its footprint in South America and Central America. Whether it
is through the IRGC, through their intelligence services,
through their efforts to export oil, whatever it may be, this
is something we are tracking extremely closely and are poised
to respond.
Ms. Ros-Lehtinen. Thank you very much. My time is up. Thank
you, Ambassador.
Chairman Royce. We will go now to Mr. Sherman of
California.
Mr. Sherman of California. First let me say that there is
no contradiction among those of us who believe in maximum
sanctions and continued negotiations. In 1918, we negotiated
with the Kaiser's Germany while not only sanctioning, but also
waging all-out war.
The sanctions we have now are clearly insufficient, but
they are stronger than the ones we had 3 years ago, which begs
the question why weren't we doing 10 years ago, 15 years ago
what we are doing today, certainly after 2002 when we were
aware of the Iranian nuclear program? The reason for that is
that there have been advocates in the last three
administrations of soft sanctions, of ``be nice to them, and
they will be reasonable to us.''
And I don't know what our policy is now. I know that more
sanctions are going to require methodology and technical work.
We have to think of new ones. You have to get them applied. But
we first face the policy issue. Do we want strong sanctions, or
do we want ``pedal to the metal, absolute everything we can
do'' sanctions? I heard from Mr. Cohen about increasing
sanctions. Gee, shouldn't we have them at the pedal-to-the-
metal level now? And I wonder whether there is still support in
the foreign policy agencies for being less than totally tough
on Iran, or is it our policy to be absolute pedal to the metal,
to sanction and pressure the Iranian Government and economy in
every way we possibly can as we develop new methodologies?
Are we being softer than maximum in an effort to curry
favor with Iran? Ambassador Sherman?
Ambassador Sherman. Congressman Sherman, we are absolutely
pedal to the metal, because it is a dual-track policy----
Mr. Sherman of California. Thank you. I don't know whether
Mr. Cohen has a response as well.
Ambassador Sherman. I just want to, if I may, sir, add one
thing to that. We have to be pedal to the metal, but make sure
that the pain is felt on Iran first and foremost. So we have to
do it in a way that makes sure that as we work with our friends
and allies around the world, they are not getting more pain
than Iran is. And I know you are working carefully with us to
do so.
Mr. Sherman of California. Okay. Let us see about pedal to
the metal.
Mr. Cohen, we have got the Bank Kunlun of China, which has
been sanctioned, but it doesn't do any business with the United
States, so the sanction is meaningless. Its parent corporation
is the China National Petroleum Corp., which does do business
with the United States and has not been sanctioned. Are we in
effect telling all of international business, you can do all
the business you want with Iran, as Kunlun Bank has, just do it
in a separate subsidiary so your parent corporation can do
business in America, and you will have a separate subsidiary to
do business with Iran?
Are we going to sanction China National Petroleum Corp., or
are we just going to say, you can do business with Iran; just
set up a separate subsidiary?
Mr. Cohen. Congressman, the sanction against Bank of Kunlun
has had real effect. As you know, Kunlun did not have any
corresponding accounts with the United States, but it did have
a number of corresponding accounts with other banks around the
world.
Mr. Sherman of California. Mr. Cohen, if I can reclaim my
time, it is obvious that the sanctions could be much tougher
and much more significant. You can say there was some slight
effect on Bank of Kunlun, but why have we not sanctioned the
China National Petroleum Corp., which would obviously have a
much bigger impact than the little bit of impact that may or
may not have occurred with regard to Kunlun?
Mr. Cohen. The conduct at issue that led to the sanction of
the Bank of Kunlun was transactions by a financial institution
with designated Iranians banks. We applied sanctions to the
Bank of Kunlun, and then we went to every one of Kunlun's
correspondents around the world and----
Mr. Sherman of California. Mr. Cohen, you are not answering
the question. Why haven't we sanctioned China National
Petroleum Corp., the parent corporation?
Mr. Cohen. Well, the technical answer, Congressman, is that
the authority to sanction Bank of Kunlun is an authority to
sanction a financial institution. That is the authority we
have.
Mr. Sherman of California. So are you going to be
advocating in our next bill that we give you any authority you
might need? Is the administration in favor of giving you the
tools to sanction the China National Petroleum Corp.?
Mr. Cohen. I think the answer, Congressman, is what
Ambassador Sherman----
Mr. Sherman of California. Let me sneak in one more
question, and that is why haven't we sanctioned all Iranian
banks? You have done 23. Why haven't you done the rest?
Mr. Cohen. We have sanctioned 28 Iranian financial
institutions. We have sanctioned those institutions where we
have evidence that they have either supported Iran's nuclear
program or supported its international terrorist activity.
Every single one of the banks for which we have evidence, we
have applied that.
Mr. Sherman of California. Excuse me. All these banks are
operating under the regulation and control of the Iranian
Government, which is a terrorist organization. You should
sanction all the banks immediately. If you are going to have to
wait for a smoking gun on every Iranian bank, all they have to
do is create three or four more, and they can continue to do
business. Every bank that responds--if you are going to say you
are pedal to the metal, you got to do all Iranian banks, not
just say, well, they created a new one, and we don't have a
smoking gun for that one yet.
I believe my time has expired.
Chairman Royce. We go now to Mr. Smith of New Jersey.
Mr. Smith. Thank you, Mr. Chairman.
Thank you, Ambassador Sherman, for raising the issue of the
Levinson, Abedini, and Hekmati cases, which are very, very
important.
A few weeks ago Naghmeh Abedini testified before a Lantos
Commission hearing that Frank Wolf chaired and said that she
had asked the State Department for help, and she said they told
her, nobody can do anything for you. All of us welcomed with
gladness and gratitude when Secretary Kerry made a very strong
statement on behalf of Saeed Abedini, an American pastor who is
now in prison. I wonder if you could update us as to exactly
how he is doing and what has been done to try to effectuate his
release.
Ambassador Sherman. Thank you.
We remain very concerned about Mr. Abedini. He was
spearheading, as some of your colleagues may not know, the
construction of an orphanage in 2009 when the Revolutionary
Guard detained him and threw him into prison. And it really is
an incredible outrage. And as you noted, on March 22, Secretary
Kerry issued a statement expressing his concern over reports
that Mr. Abedini had suffered physical and psychological abuse
in prison; that Iran had continued to refuse consular access by
Swiss authorities, who is our protecting power in Iran; and
calling for his immediate release.
We condemn, and I will again here today, Iran's continued
violation of the universal right of the freedom of religion,
and call on the Iranian authorities to respect Mr. Abedini's
human rights and release him. I quite understand why his family
feels that not enough has been done. As a wife, as a mother, if
one of my children or my husband were in a prison, I would
never think there was enough until they were home safe and
sound with me.
Mr. Smith. Thank you. I appreciate that very much.
In December, Secretary Clinton renewed an exemption to our
Iran sanctions that targeted Chinese financial transactions
with the Central Bank of Iran, citing significant reduction of
Beijing's purchases of Iranian oil over the prior 6 months. But
the publicly available data suggests that no such reduction had
taken place.
I would ask you, has it? Will you provide the committee
with the data that supports the Department's exemption
decisions? And my understanding is we are talking about between
1-1.4 million barrels in totality that are being exported a
day. If you could respond to that?
Ambassador Sherman. Indeed, China reduced its oil imports
from around by 21 percent in 2012 compared to the previous
year, and I think, as part of his written testimony, Under
Secretary Cohen offered a chart to show the downturn in oil
imports overall from out of Iran, exported out of Iran.
In terms of the next exception that China would be eligible
for, which comes up in June, we are looking at the data. The
data always lags behind. We are waiting for April data,
obviously. It will probably be the last month we will get to
see. And we will look at that data and make a decision about
how to proceed. As you know, China is the largest importer of
Iranian oil. Is larger--probably is the largest importer of oil
in the world, given its growing development----
Mr. Smith. Can I ask you on that--only because I only have
so many minutes. Isn't the export of Iranian oil to China its
lifeline? You know, when you talk about ratcheting up the kinds
of sanctions, will it really cause the change?
Ambassador Sherman. Indeed. And we press China constantly,
and it is significantly reduced because it doesn't want to bear
the risk of importing Iranian oil, but its needs are growing
and huge. I will say one thing that is very important: Because
of the volume, as you point out, is so large, any reduction by
China would be as a percentage equal to volume reduction twice
that of a reduction by India, three times a reduction of South
Korea, four times a reduction of----
Mr. Smith. But is there a concern that if we really were
dead serious and were not looking to provide an exemption and
didn't play into the idea of reductions versus elimination,
that China would not adhere to the sanctions? Is that a
concern?
Ambassador Sherman. Well, China, like many countries in the
world, even friends and allies and partners, doesn't appreciate
what they see as unilateral sanctions. But they are trying to
diversify their oil supply, they are trying to reduce their
risk. Their energy needs, as you can imagine and as you know
well, are enormous.
Mr. Smith. Very quickly, because I am running out of time.
As we all know, Chairman Emeritus Ros-Lehtinen wrote the Iran
Threat Reduction and Syria Human Rights Act of 2012, a very
comprehensive and significantly strengthening law; it
strengthens Iran Sanctions Act and other relevant laws. I could
ask you questions about various sections of it because there is
so much to it. But part of it directs the President to impose
five or more sanctions with regards to vessels. And it also
authorizes the President to ban ships from entering a port in
the U.S. for up to 2 years if they violate it. Where are we on
implementing that part of the sanctions?
Ambassador Sherman. We are looking at those. In every one
of these cases, and it is true for all of the sanctions, we
have to have evidentiary documentation that will stand up in
court. And so we are working to do this. And I should note that
Secretary Clinton, before she left, and this has been enforced
and strengthened even further by Secretary Kerry, named a
sanctions coordinator in the State Department because she felt
we were not focused enough on the enforcement that we needed to
and didn't have a strong enough partner for Undersecretary
Cohen, and Ambassador Dan Fried is that coordinator.
Mr. Smith. Is it proactive or reactive or a combination of
both?
Ambassador Sherman. It is proactive.
Mr. Smith. Thank you.
Chairman Royce. Go now to Mr. Deutch of Florida.
Mr. Deutch. Thank you, Mr. Chairman.
First, as I stated in my opening remarks, I do want to
commend you both again for the extraordinary job that you have
done on sanctions enforcement.
And Ambassador Sherman, I want to thank you for noting in
your testimony that finding my constituent Robert Levinson
remains a priority for the department. It is incredibly
encouraging for me and I know for his family to hear you say
that. And I appreciate it. And I urge you to continue doing all
that you are committed to doing.
You said that in your testimony that you are looking for
signs that Iran is serious about talks. And I want to ask you
what those signs are. But I want to walk through how we have
gotten to this point first. Since the 2009 elections in Iran,
there have been nine political-level meetings between the P5+1,
plus a 15-month break between 2011, 2012. That number doesn't
include technical-level meetings or meetings like today's
between Lady Ashton or the where the U.S. isn't present.
At the end of the 2010 Geneva talks, State Department
spokesman said that he hoped it would be the start of something
serious. In 2011, in Istanbul, a Western diplomat was quoted as
saying, ``The meeting was about finding out if Iran was serious
about negotiating and that hasn't been answered yet.''
Fast forward to April of last year, after talks in
Istanbul, when Catherine Ashton called them ``the start of a
sustained process of serious dialogue.'' And by June of last
year, after talks in Moscow, Secretary Clinton said that
``there are gaps on each side; the choice was Iran's to close
those gaps.'' In your testimony, you said that after the April
talks in Almaty that you didn't feel another round of meetings
of P5+1 was necessarily warranted. So some have suggested that
Iran won't be serious about negotiating until after its
elections. Couple of questions. Are we willing to wait until
the end of the summer for another round of talks? And, how can
we tell if they are serious? Is there a difference between
sustained political dialogue and negotiations? Is talking for
the sake of talking getting us any closer to Iran giving up its
nuclear program? If you could try to respond to those, I would
appreciate it.
Ambassador Sherman. All very good questions, Congressman.
In terms of the election, we assess--and we can talk about this
further in the closed session--that there is one decision maker
when it comes to Iran's nuclear program, and that is the
Supreme Leader. And he will remain the Supreme Leader after the
June 14 Presidential election. So, in absolute terms, the
election will make no difference. The election may make some
difference, however, to the extent that, depending upon who is
elected and what their economic--domestic, economic situation
looks like, may put pressure on the attention, the time and the
focus and the efforts by the Supreme Leader to hold onto the
regime. We don't know what the outcome will be, so we don't
know what impact it will have on his nuclear decision-making.
As I said, or implied, we do not believe the Supreme Leader
has yet made the strategic decision to make the deal that needs
to be made with the international community about Iran's
nuclear ambitions. What will make him make that change? I
believe it will be a combination of very severe, very well
enforced international sanctions led by the U.S. and the
European Union, but internationally enforced. And it will come
about because the Supreme Leader will decide that the risk to
his survival is too great and that he wants to show his people
that their economy will improve.
Mr. Deutch. So let me ask you. Let me just put something on
the table that has not been discussed. Every discussion that we
have about stopping Iran's nuclear weapons program says that we
have to have the toughest possible sanctions coupled with a
credible military threat. Every discussion. And I acknowledge
that we have worked hard to do both.
The question is, the credible military threat, if it is
credible, means that the possibility of military action, with
all that that entails, between where we are now and the use of
military force, it seems there is also the most extreme form of
economic power that we could wield, which would be a full-scale
international embargo with the necessary carve outs for
humanitarian aid. That is never discussed. Yet we seem okay to
talk about the military option. Is that something that should
be on table for the Supreme Leader to understand that we are
serious about this?
Ambassador Sherman. We have all, in fact, discussed this,
and I know you have discussed it up on Capitol Hill. And we
have discussed it with some of our allies and partners. It is a
very complex undertaking because it requires the international
community. There are some legal issues involved with taking
such action. I think that we are going as far as we possibly
can go in working with Congress. We will see what other sectors
we can, in fact, sanction and endorse and to move forward with.
And I think we can ratchet up the pressure probably without
confronting some of the difficulties and achieving what we have
discussed, and that is whether that is a viable option.
I think the other thing we have to do is look at whether
there is any other way that Iran could find itself out of the
quagmire it has created for itself. And the President has long
said that if Iran ever, ever meets its international
obligations, as President Bush said as well, they have a right
to a peaceful civilian nuclear program under the NPT. And of
course, there would have to be additional safeguards and
monitoring. And if, in fact, the Supreme Leader means what he
says by the fatwa that Iran does not--shouldn't have a nuclear
weapon because it is not allowed by his declaration by the
fatwa, then they have a way to show that is the case.
Mr. Deutch. Ambassador, I would just simply suggest that
all of the difficulties that may come with analyzing how to
impose the maximum level of sanctions pale in comparison to the
difficulties the international community would face if Iran
became a nuclear power. That is just something that I would
remind you of.
I yield back. Thank you Mr. Chairman.
Chairman Royce. We will go now to Mr. Rohrabacher of
California.
Mr. Rohrabacher. Thank you very much, Mr. Chairman.
And I want to thank our witnesses for coming here. I will
have to say that several of the issues that I planned to ask
about have been covered.
I want to congratulate some of my friends, even on the
other side of the aisle. Mr. Sherman certainly looked at an
issue that I was concerned about and continue to be concerned
about.
Let me see if I get this right. At this point, China is
not--has not been given a waiver in its relationship to buy oil
from Iran? Is that correct? So China----
Ambassador Sherman. It is not a waiver; it is an exception.
Because the idea of the NDAA and of the oil sanctions is that
if a country significantly reduces their importation of Iranian
oil, they get an exception from other sanctions that could be
imposed upon them if they weren't making those significant
reductions. So China will be up for another 180-day exception
if they have continued their reductions on the beginning of
June.
Mr. Rohrabacher. And how much oil has been reduced,
consumption, China?
Mr. Sherman. We do not know yet because the data is not all
in for the month of April, which will be the last month we will
be able to look at before----
Mr. Rohrabacher. What has given you the reason for--yes.
Ambassador Sherman. For the first 180 days, they did do a
significant reduction of 21 percent. That was based on a great
deal of information, including publicly available data.
Mr. Rohrabacher. So you are convinced and we are convinced
that the Chinese have significantly decreased their consumption
of Iranian oil. Is that correct?
Ambassador Sherman. They have. And their total volume of
the need of oil has gone up. So whatever importation they are
doing is a smaller percentage of their total as well.
Mr. Rohrabacher. No. They decreased their actual
consumption.
Mr. Sherman. Yes. They have. And we will see whether they
have in the second 180 days as well.
Mr. Rohrabacher. I am not talking about some complicated
formula here. Their consumption of Iranian oil has decreased.
Is that correct?
Ambassador Sherman. Yes.
Mr. Rohrabacher. Okay. Thank you very much.
I have been concerned that this administration from day one
has not been as tough on the regime in other ways, other than
these sanctions, which are debatably tough one way or the
other.
But, for example, in support of those people who opposed
the regime, it appears to me that we have sent the wrong
message if we want to encourage those who oppose the regime.
And, for example, you see some people out here in these yellow
coats. I think that they represent the MEK. They recently have
been pushed into a camp in Iraq, which I am sure you are aware
of. And that camp was recently attacked. Do you think that the
mullah regime in Iran has played any role in trying to initiate
these types of attacks on the MEK, which I might add is an
exiled group that is unarmed?
Ambassador Sherman. Congressman, I am very, very concerned
about the people in Camp Liberty.
Mr. Rohrabacher. Right.
Ambassador Sherman. And we are concerned about the threat
to their lives.
Mr. Rohrabacher. And do you think the Iranian Government
has played a role in initiating these attacks?
Ambassador Sherman. We can talk about that in the
classified session.
But what I will say, Congressman, is there are
opportunities for the people of Camp Liberty to resettle. There
have been offers made by countries like Albania to take many of
them. And, to be very frank, Congressman, the leadership of the
MEK, both in Camp Liberty and in Paris, has kept the people of
Camp Liberty from knowing what their options are. And I so care
about their lives and the threat to their lives in the camp
that I hope that the leadership of the MEK will allow them to
know their options.
Mr. Rohrabacher. My time is going up. And it is interesting
that you spent your time that you just allocated attacking the
victim instead of the person who--instead of the people
launching rockets into an unarmed group of exiles, you spent
your time attacking the exiled leader.
Ambassador Sherman. No. I am actually--I actually want to
protect that from that.
Mr. Rohrabacher. I have got 23 seconds left. And I am sorry
that is the way we have to do it here.
I would give you an extra 10 minutes if I could.
But let me just note--what I just said is in keeping and
consistent with the fact that after the Green Revolution, which
you have noted was a response, these demonstrations in response
to a corrupt election, and a brutalization of those people who
managed to speak up, that we did not impose great hardship on
that regime. I didn't hear us step forward at that time.
They were chanting in the streets, ``Which side are you on,
Mr. Obama?'' They didn't know which side the United States was
on. And if we are going to have the people of that country
eliminate this threat to the entire world, which is their
responsibility and our responsibility to help, we have got to
show more strength than that. We have got to be doing more than
attacking the victim or ignoring the victim.
And the last thing, we don't even have our broadcasting to
Iran in Azeri and Beluch, languages that could resonate with
the people who oppose that regime.
There is a lot more we could be doing, Madam Ambassador. I
appreciate the good job that you are trying to do, and we will
cooperate with you.
Ambassador Sherman. Thank you.
Chairman Royce. We go now to Mr. Cicilline of Rhode Island.
Mr. Cicilline. Thank you, Mr. Chairman.
And thank you to our witnesses.
I think it should be clear that everyone on this committee,
and I think everyone in Congress who has given this thought,
recognizes that a nuclear Iran is a threat to the peace and
stability of the region and, frankly, peace and stability of
the world.
And I appreciate the seriousness of the sanctions effort
that both of you have exhibited and the excellent work that you
have done and the bipartisan approach that Congress has taken
to this issue.
And I would like to ask you both, first and foremost, to
follow up on Congressman Deutch's question, you know, as we
ratchet up sanctions, which, of course, we need to do, while we
are engaging in activities, so is Iran. And so I wonder if some
of the recommendations that some have made about, for example,
a complete ban on international lending, with the International
Monetary Fund withdrawing all holdings in Iran's Central Bank
and suspending Iran's membership in that body, whether
sanctions, which would include virtually all trade with Iran,
with the exceptions of food and medical products, whether or
not we should be at least actively pursuing those and talking
about that kind of set of sanctions, whether that would
significantly increase our leverage. Because I recognize we
want to continue to hope that diplomatic efforts will work, but
for those who are looking at this from outside, it may appear
that we just ratchet up a little, and it is going to be too
late because we get--so I would love to hear your thoughts on
whether or not an approach that would look at more
comprehensive and a complete kind of isolation of Iran ought to
be the goal, knowing that is complicated to achieve but would
take some time but for Iran, Iranian leadership to see it as a
real threat.
Then the second question--I will ask both questions and
then ask you to answer them--relates really to Afghanistan.
There has been some evidence presented that Iranian currency
traders are using Afghanistan to acquire U.S. currency,
particularly wealthy Iranians. And that the Iran-owned bank in
Afghanistan, Arian Bank I believe is the name, is being used to
facilitate this. And, in fact, the Special Inspector General
for Afghanistan Reconstruction reported in late January 2013
that Afghan security forces might be using some U.S. funding
for the purchase of fuel from Iran. That would, obviously, I
think, be very disturbing to learn. So I would like to know
what the status of that is and how we might be prevent that
from happening.
And thank you again for being here.
Mr. Cohen. Congressman, your first question about how to
ratchet up sanctions is a very good one. And I am going to try
to answer it succinctly. Because I think there are two
different threads that need to come together here.
On the complete ban idea, I think it is very important to
recognize that our financial sanctions, the way that we have
locked down Iranian revenue, the way we have cut off access of
Iranian banks to the international financial system, is broad
based. It is--it affects the Iranian economy across all sectors
and has a very significant impact, some of which we have
already detailed.
I think it is critically important that we continue to
pursue broad-based financial sanctions in that fashion.
The second thread, though, is targeting particular
commercial transactions, in particular, sectors of activity in
Iran. So the new law that is about to come into effect on July
1, IFCA, targets the energy sector, the shipping sector, the
shipbuilding sector. As we look at ways to ratchet up sanctions
on commercial activity, looking at it as a sectoral approach on
commercial activity makes sense. I think together a sectoral
approach with the broad-based financial sanctions work in
tandem in a way that really does create a tremendous amount of
pressure on the Iranian leadership. Obviously, we are very much
engaged with----
Mr. Cicilline. Is there any reason we shouldn't do all
those sectors now, rather than building one after the other?
Mr. Cohen. The question, Congressman, is efficacy. And as
we move and look at different sectors, it is important that we
target the ones that have a real impact on the Iranians, that
we can maximize that impact without, frankly, spending a lot of
ammunition shooting at things that have little, little good to
be--little impact.
On the--the question of the Arian Bank/fuel issue, if I
could, I think it is probably better to talk about that in the
classified session.
Mr. Cicilline. Thank you.
Chairman Royce. We will go to Mr. Brooks of Alabama.
Mr. Brooks. Thank you, Mr. Chairman. I turn to some of the
written statements that the witnesses have provided us. And,
first, I will read from Ambassador Sherman's remarks:
``A nuclear-armed Iran would pose a threat to the
region, to the world, and to the future of the global
nuclear proliferation regime. A nuclear weapon would
put the world's most dangerous weapons into the hands
of leaders who speak openly about wiping one of our
closest allies, the state of Israel, off the map. As
President Obama has stated unequivocally, we will not
allow Iran to obtain a nuclear weapon, and there should
be no doubt that United States all elements of American
power to achieve that objective.''
Ambassador Sherman, I want to explore what you mean by the
phrase ``we will not allow,'' I repeat, ``not allow Iran to
obtain a nuclear weapon, and there should be no doubt, no doubt
that the United States will use''--will use--``all elements of
American power''--again, I'll repeat that--``all elements of
American power to achieve that objective.'' That is very strong
language. When you state ``all elements of American power,''
are any of America's military capabilities off the table?
Ambassador Sherman. Congressman, I think the President has
been very clear that all options are under consideration. I
think that everyone in the world would prefer there be a
peaceful resolution to this situation. But no one should have
any doubt about where the President of the United States stands
on this. He will not allow Iran to have a nuclear weapon. He
has stood side by side with many of our partners and allies
around the world, including Israeli Prime Minister Netanyahu,
and said as much. So there is no pulling back from that stance,
at all.
Mr. Brooks. So when you say ``all elements,'' you mean all
elements.
Ambassador Sherman. I do.
Mr. Brooks. That being the case, then, is it fair to say
that President Obama is prepared to use, if necessary,
America's nuclear arsenal to stop Iran from building nuclear
weapons?
Ambassador Sherman. I think it is probably most useful not
for me to elaborate point by point on a situation that we have
not yet faced. We have many elements of American military
power, and we are able to achieve results in many, many ways.
Mr. Brooks. Let me go to a second one, although I
anticipate you will give a similar response. Then, President
Obama is prepared to launch, if necessary, an Iraq- or
Afghanistan-style ground invasion in Iran to stop Iran from
developing nuclear weapons.
Ambassador Sherman. Again, you are quite right,
Congressman, we have many ways to fight Iran's efforts to gain
a nuclear weapon. And they are wide-ranging, and they are along
a very long continuum. And we will look at whatever we need to
do to ensure that Iran does not obtain a nuclear weapon.
Mr. Brooks. Just so that there is no ambiguity about my
perception, when you use the phrase of ``all elements of
American power,'' to me, that means, if necessary, America's
nuclear arsenal or, if necessary, an invasion of Iran ala
Afghanistan, Iraq style. So I am not sure if that is what you
intended. But that kind of language means that to me, and that
is what I was trying to clarify.
Not long ago, I met with Israeli Prime Minister Benjamin
Netanyahu in Jerusalem. He said unequivocally that Iran will
not, will not get nuclear weapons. My question is, if Israel
attacks Iran to destroy Iran's nuclear weapons program, will
America back Israel up with direct military assistance in order
to ensure, first, that Israel is successful in destroying
Iran's nuclear weapons program and, second, to help ensure that
Israel is able to protect itself from counterattacks?
Ambassador Sherman. I think you have heard the President of
the United States say, you have heard Secretary Kerry say, and
I will say that we stand shoulder to shoulder with Israel. And
Israel's security is important to us as our own security. And I
think that you have seen in our support and Congress' generous
support Iron Dome, that commitment. In the recently agreed-to
new set of weapons sales to Israel that----
Mr. Brooks. Okay. If I could interject, because I only have
15 seconds left. I understand that Israel is important. But my
question is, will we back them up militarily?
Ambassador Sherman. We have a relationship with Israel to
ensure their security.
Mr. Brooks. Thank you, ma'am.
Chairman Royce. Ms. Lois Frankel from Florida.
Ms. Frankel. Thank you very much.
And thank you to the panel.
And, first of all, I want to join with both colleagues
commended your activities and the sanctions, economic sanctions
in Iran. And I thank you for that.
As many of my colleagues have already stated, Iran is the
largest state-sponsor of terror, lending support to Hezbollah,
Hamas, and other anti-Western militant groups. Iran's extremist
regime is also a gross violator of basic human rights that
consistently suppresses political dissent through intimidation,
imprisonment, and torture.
And the international community is right to be greatly
concerned by the possibility of this, what we hear is a
radical, oppressive regime, acquiring the world's most
dangerous weapon. I am not going to ask--there have been a lot
of good questions today. I think a lot of people don't
understand, not necessarily in this room, but that Iran's drive
for nuclear weapons is a threat not only to the United States
and Israel but to the entire global community. And the question
I have is this: Could you tell us in your opinion what you
think the effect of Iran getting the nuclear weapon would have
on the proliferation of nuclear weapons in the Middle East and
any other place in the world, if you could be specific? And how
would it, for example, affect negotiations with a country like
North Korea?
Ambassador Sherman. Congresswoman, I think you make a very
important point, which is that we obviously don't want Iran to
have a nuclear weapon because of what it might do with a
nuclear weapon and how it would use to it project its power in
the region and in the world and the kind of world that Iran
would want it to be and the insecurity and instability that it
would wreak havoc, not only in the Middle East, but much
further, I believe. But also what it would mean in terms of
additional proliferation. So that one could imagine that Saudi
Arabia, Japan, even South Korea, Brazil, South Africa, many
countries that had foresworn nuclear weapons might decide for
their own security as deterrents that they needed to have a
nuclear weapon. And I think none of us would want to imagine a
world where there were more nuclear weapons powers as against
fewer of them. Indeed, the United States and Russia, which have
the greatest arsenal of nuclear weapons, have been on a
trajectory to reduce the number of nuclear weapons we have. And
as the President said in his Prague speech, it may not happen
in his lifetime, but he looks forward to the day when there
aren't any nuclear weapons left.
It is ironic, Congresswoman, that we had the last Almaty
session, the last two sessions in Almaty, Kazakhstan. Because
Kazakhstan, in fact, in the early 1990s, after the fall of the
Soviet Union, gave up its nuclear weapons because it thought
that it didn't bring them greater security, it brought them
more insecurity. And that is indeed the fact for Iran as well.
They should see it in what is happening to them now. They are
getting economic insecurity, if not fundamental insecurity,
because of their nuclear weapons ambitions.
Mr. Cohen. I would add only that I completely agree with
Undersecretary Sherman.
Ms. Frankel. Thank you, Mr. Chairman. I would waive the
rest of my time.
Chairman Royce. Thank you, Mrs. Frankel.
We will go now to Mr. Cotton, who took first place, fastest
time, for this morning's charity event benefiting the Wounded
Warriors. And I will mention in addition the Cottontail
Rabbits, which included bipartisan staff from this committee,
also won top prize as fastest team.
Mr. Cotton.
Mr. Cotton. Thank you, Mr. Chairman. As always, we work in
a bipartisan fashion on this committee.
Ms. Ambassador, are there IAEA inspectors at the uranium
mines in Saghand and Gachin?
Ambassador Sherman. No, not presently. My experts tell me.
Mr. Cotton. Do we know why that is the case, given the IAEA
inspector's presence at the other parts of Iran's nuclear
supply chain?
Ambassador Sherman. The young man who is behind me, Richard
Nephew, is a technical expert in this regard, as is Dr. Jim
Timbie, who is with me. And the Safeguards Agreement of the
IAEA only requires the presence at the most sensitive
facilities, where we do have quite an extensive inspection
regime. But, indeed, one of the things that we want from Iran
through the process with the IAEA is additional safeguards and
initial monitoring.
So we certainly understand your point. And, indeed, as I
mentioned in my testimony, the IAEA is meeting with Iran today
trying to move on a structured approach where they would agree
on, in fact, what could then be inspected by Iran--by the IAEA.
They have not been able to get that structured approach,
protocol agreed to. And there will be a Board of Governors
meeting of the IAEA meeting at the end of June, and my
suspicion is there will be great disappointment in Iran's
responsiveness.
Mr. Cotton. My point being that those start the supply
chain. And it is possible that there are conversion facilities,
like the one at Isfahan, or enrichment facilities, like the
ones at Natanz and Fordow, of which we are not aware. Is that
your understanding my point?
Ambassador Sherman. I do understand your point. And what I
would suggest is that perhaps you--hope your schedule will
allow you to join the classified session.
Mr. Cotton. Thank you.
Next question. We talk frequently about sanctions. Then
that leads to talk to acts of war. On most occasions, we are
talking about an offensive act of war, such as an air strike or
a strike with naval gunfire. There are also defensive acts of
war under international law, such as a naval blockade. Do you
have any assessment on the impact of Iran's economy as a whole
or the nuclear program in particular, the effects of a
hypothetical naval blockade?
Ambassador Sherman. I do not. But happy to discuss it
further in the classified session.
Mr. Cotton. Do you have any assessments of the scope and
number of scientists working on Iran's nuclear program.
Ambassador Sherman. Again, I would save that for the
classified session.
Mr. Cotton. I have seen reports of cooperation, scientific
cooperation agreements between North Korea and Iran. Those
reports suggest something along the lines of the 2002
cooperation agreement that North Korea had with Syria that led
ultimately to the destruction of the nuclear site in Syria,
2007. What is the scope of that potential agreement in your
assessment?
Ambassador Sherman. Again, we can talk further about the
detail of any of this in the classified session.
What I will say and it follows up on what Congresswoman
Frankel asked as well, we do know that the DPRK watches what
happens to Iran, and Iran watches what happens to the DPRK. And
we know historically about times where, either directly or
through other conduits, there has been cooperation among
countries. Everyone is very well aware of the history with
Pakistan, for instance, and A.Q. Khan in a network of
proliferation. So it is very important, and we think very
carefully about where there may be interactions that affect one
or the other of these situations. But happy to discuss it
further in a classified session.
Mr. Cotton. Shifting slightly somewhat. The President in
the past called Syria's use of chemical weapons a potential red
line or game changer. Given our reaction now that our
intelligence services, as well as those of allied Western
governments have confirmed the use, at least on a limited
scale, of chemical weapons in Syria, do you see potential for
Iran's Government being emboldened to believe that perhaps our
words are not as strong as we would suggest?
Ambassador Sherman. I actually don't think that is
happening at this time. But you are welcome to get the IC's
assessment when we do meet in classified session. What I would
say is the intelligence community, as we published, has agreed
with varying levels of confidence that chemical weapons were
used in small amounts in at least two instances in Syria. But
having high confidence in the intelligence community, for which
I have great admiration, is not in fact all that one needs to
take some of the actions that many people have contemplated.
And the President wants to be very prudent about the steps he
takes, as he should be.
We have unfortunate experience in our history where we have
taken action and it turned out that the intelligence assessment
was either misinterpreted or not accurate. So I think he is not
being very thoughtful about how he is proceeding here. But,
rest assured, we are gathering additional data and making
additional judgments.
Mr. Cotton. Thank you.
Mr. Cohen, my regrets, but thank you for your service.
Mr. Cohen. Thank you, Congressman.
Chairman Royce. Let's go to Mr. Keating of Massachusetts.
Mr. Keating. Thank you, Mr. Chairman.
Secretary Cohen, thank you for the time you have taken
today in your testimony. I would like to follow up on an issue
that has been raised before the Departments of State, Commerce
and Treasury by the members of this committee, as well as by
members of the Permanent Select Committee on Intelligence
regarding reports that two Chinese companies, Huawei and ZTE,
have exported millions of dollars worth of sensitive
technologies used to restrict and censor freedom of speech
within Iran.
In a report issued earlier this year, the U.S. China
Economic Security Review Commission referenced the Reuters
investigation in which it said that ZTE provided Iran with over
$130 million in communication surveillance equipment as well as
some U.S. IT products and subsequently agreed to transfer
additional embargoed U.S. communication system. Under Section
106 of the Comprehensive Iran Sanctions Accountability and
Divestment Act, U.S. Government agencies are banned from
procuring goods and services from a company that exports
technology to Iran that is used to disrupt, monitor, restrict
Iranian nationals' freedom of speech.
Can you provide us with an update as to whether or not the
Department of Treasury has found that these companies should be
subject to the procurement ban under CISADA? Can you elaborate
further on Section 106 and how it can be used to better ensure
freedom of speech in Iran? And are there examples of the
effective use of this?
Mr. Cohen. Congressman, I am aware of the inquiry as to ZTE
and Huawei. In part, I think we should follow up on this in the
closed session. But I can say that this is an issue that we
have looked at very carefully. We are committed here at
Treasury as well as the State Department to implementing--and
Congress also has a role in implementing Section 106 of
CISADA--in implementing of provision when we find evidence of a
violation and taking steps to--that are spelled out in the
statute.
More broadly, we have in place number of authorities that
address the use of information technology by the Iranian regime
to abuse the human rights of its citizens, to affect their
ability to communicate, to monitor their activities. We have
applied sanctions under what is known as the Gravity Executive
Order, which is focused on the abuse of information technology,
on close to a dozen entities. And we are looking very carefully
at what is coming up with the elections in Iran in the next
several weeks to see whether the Iranian Government uses its
control over the information networks in Iran in a way that
would lend themselves to additional actions under those
authorities. So to say we can follow up on this more in the
classified session, but this is an issue, the ability of
Iranian people to communicate with one another, to do so in a
free manner, that is very important to us.
Mr. Keating. Yes. I look forward to that, and thank you for
that. I look forward to the briefing. Because I think that it
is not just a human rights issue, which is extremely important,
it also undercuts I think the effectiveness of the sanctions,
too. When groups can't communicate fully and openly about their
perception of the results of the sanctions. And one of the
purposes of that is to share that kind of feeling among the
citizens there and hopefully have that bring pressure on a more
democratic approach and one that certainly will move them away
from nuclear procurement. So I look forward to that.
With that, I yield back, Mr. Chairman.
Chairman Royce. Thank the gentleman.
We will now need to go to 3 minutes for the remaining
members, but we will go Mr. Meadows.
Mr. Meadows. Thank you, Mr. Chairman.
And I thank you for not highlighting my time from this
morning's run, as I am sure I will be using more Bengay than
Mr. Cotton.
I want to go ahead and follow up a little bit on the P5+1
negotiations. And some analysts, Ambassador Sherman, have
indicated that as Iran walks away from these negotiations, the
deals typically get sweeter. Would you agree with that
assessment? Or I will let you clarify that.
Ambassador Sherman. Thank you for asking the question. No.
When we were--originally put the Baghdad proposal on the table,
as I said, it dealt with three elements as a first confidence-
building measure, the enrichment of over 5 percent uranium, the
stockpiles of that, and Fordow. There are many ways to skin
each of those cats. And so in our efforts to try to move the
negotiation, we made a couple of small but really insignificant
changes to what we were requiring.
I would also say, not to take your time, and I hope the
chair will allow you an extra minute. I just wanted to tell you
and the rest of the committee my colleague handed me a note
that after meeting with Iran in Vienna today, Mr. Nackaerts of
the IAEA said, ``We could not finalize the structured approach
document that has been under negotiation for a year and a
half,'' and acknowledged, ``our best he was have not been
successful so far.'' No date for a further meeting was set. And
so this means that the Director General Amano will go to
issuing a report at the end of this month, and there will be a
Board of Governors' meeting in early June to decide what, if
anything, further can be done.
Mr. Meadows. Thank you for that message.
And so let me switch a little bit to Europe and Iran.
Europe has been a valuable partner in working with us in terms
of sanctions, you know, billions of dollars worth of oil, you
know, and truly dried up, so to speak. However, it seems like
the European Union appears to still be handling transactions in
Euros, which essentially allows for the bypassing of some of
these sanctions. What are we doing to try to persuade the EU
from stopping this practice?
Mr. Cohen. Congressman, you are exactly right. The European
Union has been a tremendous partner in our efforts to apply
sanctions on Iran, and what they have done has made a dramatic
difference in the force and power of our sanctions. With
respect to euro transactions, we are very actively engaged with
the Europeans to ensure that there is no ability for Iran to
clear Euros through Europe in a way that would not be caught by
the existing European sanctions, the existing European
framework that very significantly restricts the ability of Iran
to transact. I think we are making good progress, and I would
say--I see my time is up. Just one final point. The ability of
Iran to move Euros through Europe depends on, in the first
instance, some country, some financial institution violating
our sanctions. Particularly the sanctions that went into effect
on February 6. So regardless of whether the Europeans have a
protection put in place, we have a protection put in place to
prevent Iran from getting access to those Euros. And we intend
to ensure that that does not get violated.
Mr. Meadows. I can see my time has expired. I appreciate
the chairman's indulgence, and I will submit the rest of the
questions for the record.
Chairman Royce. Very good. Thank you, Mr. Meadows.
We go now to Mr. Schneider of Massachusetts.
Mr. Schneider. Illinois.
Chairman Royce. Illinois. Thank you.
Mr. Schneider. Thank you, Mr. Chairman.
I thank both of you for your time here, your testimony, and
your service. I have read quite a bit lately about how Iranians
are adapting, trying to find ways, not just around the
sanctions but ways to live within the sanctions, diversifying
their economy, moving away from the dependence, overdependence
on the energy sector. I would be curious, Mr. Cohen, you talked
about--to me, it is a sense of increasing the intensity, the
force and power of the sanctions, as well as the frequency or
closing the time between ratchets as we increase that
intensity.
What efforts are there to eliminate the ability of the
Iranians to adapt their economy so the sanctions take less
bite? What opportunity is there to crease the pace as we go
forward?
Mr. Cohen. Well, Congressman, I think it is a very good
question. Because there is reporting that you see in the press
about, you know, Ahmadinejad, in particular, saying, and the
Supreme Leader saying we need to move away from an oil economy,
we need to, you know, transform the Iranian economy and not be
so dependent on oil revenue. Frankly, if they are ever able to
do that, it is not going to be anywhere close to the near term.
They are hugely dependent, hugely dependent on their ability to
sell oil. And there are a small number of additional revenue
sources in the Iranian economy. But I think two-thirds of their
earnings come from, historically, have come from their oil
sales, two-thirds or three-quarters. So what we are doing in
targeting in particular oil sales, targeting their ability to
get access to the revenue from the oil sales, is not something
the Iranian economy--the Iranians are going to be able to adapt
themselves away from in anything in the near term.
And in second part of your question is the pace, intensity
of the sanctions. We are committed to working with this
committee, working with Congress to put into place additional
measures. The administration itself is actively engaged in
looking at ways that we can take action to apply additional
sanctions. We are enforcing the sanctions in a very vigorous
way. So we are, if anything, picking up the pace of both our
enforcement efforts as well as the creation of new authorities.
Mr. Schneider. Let me take you in a slightly different
direction, and that is with Iranian supply of Syria transiting
weapons through Iraq. It is a grave concern. Today we saw that
there were rockets falling on the Israeli side of Mount Hermon.
This is an issue of, like you said, of great concern. What
actions are we taking? What can we do to reduce or eliminate
the ability of Iran to transfer weapons through Iraq?
Ambassador Sherman. We will discuss this further and in
more detail in the classified session. But what I can say,
Congressman, is Secretary Kerry has had very direct
conversation with Prime Minister Maliki, as have others. And as
a result of those talks, we are seeing more inspections of
planes that are flying over Iraq, headed toward Syria. Or
potentially headed toward Syria. We have seen a change in
behavior. Is it sufficient yet? In my view, not quite
sufficient yet. But we are putting on very serious talks with
the Iraqis about what they must do. And, in fact, what other
countries must do. And we have had instances, which we can talk
about in that session, where countries have been aware of
transiting, have interdicted, and stopped both weapons and
goods that are going to Syria as well as a lot of successful
interdictions in terms of abating sanctions toward Iran.
Mr. Schneider. Great. Thank you. And I will look forward to
speaking in the next session.
Chairman Royce. Mr. Radel from Florida.
Mr. Radel. Thank you, Mr. Chair.
One thing I love about this committee is the spirit of
bipartisanship that we have here. We are beyond R or D or party
lines. We work together for what is best for the United States.
That said, we had Secretary Kerry here not too long ago,
who said something I think we can all agree on. When it comes
to the talks that we have had over and over, he says, the talks
``cannot be allowed to become a process of delay which in and
of itself creates a greater danger.''
Let me take a step back here for a second. When we look at
North Korea, for example, we have seen decade after decade,
talk after talk. Now a change of regimes from father to son.
And yet we are still threatened by this dictatorship of North
Korea. The only American contact I think we have had is Dennis
Rodman, showing up there to play some basketball. Look, I love
Rodman as much as the next guy, having lived in Chicago in the
1990s. But I don't think that he is fit to be an Ambassador or
Representative of the United States.
When we go back to Iran, when do we say enough is enough?
Ambassador Sherman, I would ask you, do we have any kind of
clear-cut definition when we say that this is just stalling,
and we are done with talks?
Ambassador Sherman. Congressman, it is--I wish it were a
simple equation. And--but it is not. Because we have to
constantly calculate where Iran is in their nuclear program,
which we can discuss in detail in the classified session. We
have to consider where our international partners are, because
we have to exhaust every possibility for diplomacy for a
peaceful solution. Because if we are to take other action, we
must have international support to do so.
So this is not a simple equation. I wish it were direct,
linear, clear; I wish I could tell you today what the moment
will be. The President has said, the Secretary has said there
is still more time. Prime Minister Netanyahu has said that as
well. But that time is not definite, and we are in constant
assessments, not only within our own Government, with other
governments, including with Israel, on those assessments of
where we are on the various clocks to make those choices.
Mr. Radel. Agreed. And it is undoubtedly reassuring to hear
that from the Prime Minister Netanyahu in Israel. We would all
like a peaceful solution to this at the end of the day. I thank
you for your service.
Just real quick. Is there anything that, in terms of
looking and suspending nuclear activity, is there any clear-cut
answer to--are we asking for them to suspend it all? For the
record, could you state where we stand on that?
Mr. Sherman. For the record, we have said that the end of
this story is full compliance with U.N. Security Council
sanctions and all of their obligations under the NPT.
Mr. Radel. Great. And I look forward to our conversation
later. Thank you both, Mr. Chair.
Ms. Ros-Lehtinen [presiding]. Thank you very much.
Congresswoman Meng of New York is recognized.
Ms. Meng. Thank you, Mr. Chairman.
Thank you, Mr. Ranking member.
And thank you, too, Ambassador Sherman and Mr. Cohen for
being here today.
In 2009, it appeared that the Iranian people or a large
percentage of them truly rose up against are the regime. Iran
is a young country that is increasingly disaffected with its
regime. We are now upon another Iranian election, one without a
relatively liberal candidate. Can anything be done to, again,
galvanize and support the pro-democratic forces, and what is
your assessment of the Iranian public sentiment on the eve of
their Presidential elections?
Ambassador Sherman. Congresswoman, I wish I could tell you
that all of the voices of those who may not like where their
government is today are speaking up or feel that they can speak
up. But that is not the case. There is tremendous repression in
Iran. And the destructive actions that were taken in 2009 have
had a lasting impact. The Green Movement, as it was then, which
was actually most focused on undermining--getting rid of voter
fraud as the election approached, really does not exist as an
organized entity. There are, of course, other voices in Iran.
But they are often thrown in jail or their families are
harassed or their businesses are closed. The State Department,
along with other partners in the U.S. Government, are doing
everything we can to ensure that people can talk with each
other, that they have avenues for speech. We have a Virtual
Embassy Tehran, which is a Web site. And we do everything we
can to make sure that that isn't jammed and people have access
to it. We have Farsi speakers who communicate, and we will
certainly take Congressman Rohrabacher's suggestions about
additional languages into account. But we are trying to do
everything we can to support the space, not for us to take
sides--it is up for the Iranian people to decide who they want
as their leadership--but to make sure transparent, free, and
fair election. And it appears we are very far from that today.
Ms. Meng. Thank you.
I yield back my time.
Ms. Ros-Lehtinen. Thank you very much.
And now we go to Mr. Messer of Indiana.
Mr. Messer. Thank you. I thank the chair and the ranking
member.
I certainly want to say thank you to Ambassador Sherman and
Mr. Cohen.
I was encouraged by your testimony about the impact of
sanctions on the Iranian economy. Clearly, it is having a big
impact on their currency. But, of course, the goal of the
sanctions is not to just simply cripple the Iranian economy,
the goal of the sanctions is to change their behavior as to the
nuclear enrichment program. And I am not trying to throw this
out as a trick question, I just would ask for your assessment,
what impact or any impact have we seen on these sanctions as
their--to their behavior in the nuclear enrichment program.
Ambassador Sherman. I would say a couple of things. First
of all, Iran knows that they pay a cost for their continuing
intransigence. And that was not always true. You all have said
it yourselves, for many years, that was not true. But now there
is an international regime unlike any other. So every day they
pay a cost, and that cost only increases and ramps up. There is
only more cost to be held.
Secondly, as Undersecretary Cohen mentioned in his
testimony, in the last round, at Almaty 2, as we call it, Iran
really put the need for sanctions relief on the table. In the
past, there had been quite a bit of happy talk along the lines
of what Congressman Schneider mentioned, which is, you know,
Iran saying, oh, you helped us diversify our economy. This is
great. We are doing greater scientific technology. It has made
us create new things. This time, all of that was gone. It was
all about, ``we need sanctions relief, and let's talk about how
little we can do to get it.''
Mr. Messer. So, I don't want to put words in your mouth,
but I am hearing you say we see some diplomatic movement.
Ambassador Sherman. Yes.
Mr. Messer. We are aware of no efforts that have changed as
far as their efforts to obtain a nuclear bomb.
Ambassador Sherman. No. I think I said earlier, my own
assessment--and we can talk in the classified about the
intelligence community's assessment--is that the Supreme Leader
has not made the strategic decision to really give his people
what they need, which is security and prosperity, rather than
face the continued cost----
Mr. Messer. Just to follow up in my limited time, kind of
following up on the comments by Representative Meng, do we have
any indication that public sentiment in Iran--do they blame the
West for their economic troubles, or are they beginning to
understand it is their own leadership's fault?
Ambassador Sherman. Again, we can ask the intel community.
But the public polling data that I have seen shows a mixed bag.
I think that Iranian people are frustrated with the economic
mismanagement of Iran, which is, quite frankly, also a major
factor here. But there is, obviously, a great deal of
nationalism in Iran as well.
Ms. Ros-Lehtinen. Thank you very much.
Dr. Bera is recognized.
Mr. Bera. Thank you, Madam Chairwoman, Ranking Member.
Thank you Ambassador and Mr. Cohen.
I think we have touched on a number of issues, and both
Democrats, Republicans, House, Senate, administration clearly
understand that a nuclear-armed Iran is not a possibility. We
clearly understand where that red line is. And we will do what
is necessary to prevent that.
Do we believe that the Iranian leadership understands where
the red line is and understands what we are saying?
Ambassador Sherman. One of the things I learned a long time
ago as a diplomat is it is always hard to know exactly what the
other side is thinking, because their history, their culture is
different than ours.
And I often sit on the opposite side of the table with Dr.
Jalili and his delegation. And it is hard work for us to talk
with each other as opposed to past each other. I think they
understand the United States is the last remaining--military
super power in this world and the last remaining super power in
this world. And that we mean business. I think they are clear
that we will do whatever is necessary to keep them from having
a nuclear weapon. But at the same time, this is a culture of
resistance that is based much in its history. So I wish I knew
with exactitude the answer to that question.
Mr. Bera. Now, let's assume we are successful in preventing
Iran from developing and obtaining their own nuclear
technology. We on this committee have talked about North Korea,
and we have touched on it. Is there any evidence that there is
conversation between North Korea and Iran or any technology
transfer that is going on?
Ambassador Sherman. As I said a few moments ago, I am not
sure you were here yet, Congressman, I think we should talk
about this further in the classified session. There have been
historic networks largely led by A.Q. Kahn out of Pakistan that
have had an impact on all of the nefarious actions of countries
around the world in terms of proliferation, but I think further
discussion we should hold for a classified discussion.
Mr. Bera. Great. I look forward to that discussion and I
yield back.
Chairman Royce [presiding]. I now recognize Mr. Weber.
Mr. Weber. Thank you.
Madam Ambassador, you said in your exchange with
Congressman Brooks that there was no pulling back from that
stance. How about going forward? Are you prepared--or let me
back up.
You read a statement from today that said we have been at
the negotiating table for a year and a half. Do you believe we
have another year and a half timeframe before they get nuclear
weapon capability?
Ambassador Sherman. What the President said, Congressman,
is from the time Iran makes a decision to go for a nuclear
weapon----
Mr. Weber. I am asking you, and I am short of time, forgive
me, do you believe that from today----
Ambassador Sherman. I think we don't know the answer to
that. There are many factors----
Mr. Weber. I think that is naive. We don't have a year and
a half. We just don't have a year and a half. Let me make that
point.
In response to the other Congressman who said, We need the
pedal to the metal, will you go back to the Secretary of State
and will you say, Mr. Secretary, I recommend that we give the
Israelis the bunker-busting bomb, that we give them the
technology now, not to wait, because it is your recommendation
that we don't have a year and a half? And I agree with the
tenor of what many of our colleagues are saying, is that we
have had a lot of talk for a long time, and I think it is
getting down to the ninth inning. Don't you agree?
Ambassador Sherman. I will certainly let the Secretary know
your recommendation, Congressman.
Mr. Weber. Okay, that sounds like a good diplomatic answer.
A very specific question. There is a $30 million
administration request for funding of the Near East Regional
Democracy Fund, a fund which is geared specifically toward
helping support democratic reform in Iran. Isn't it true, or
why is it that that funding has gone almost exclusively toward
Internet circumvention and technology updates? Why not to boots
on the ground? Why not to the opposition reformists or
democratic activists that are operating on the ground?
Ambassador Sherman. Well, in fact, what we are trying to do
is what we can do, which is to help people to create the open
space for the kind of organizing that you are discussing. And
in those who have talked with us about what the needs are, this
is very high on the list.
Mr. Weber. Well, thank you. And I really do expect for you
to go back to Secretary Kerry and to tell him that we don't
have a lot of time left. And he knows that, and I suspect we
will talk more about it in the SCIF, but I hope we come up with
concrete ideas to take countries like China and quit giving
them exceptions, whatever you want to call them, and to make
sure that they understand that we are fully committed to all of
the sanctions. And if they are not complying with those, then
they need to feel some of the weight of that as well.
And I yield back a whopping 13 seconds.
Chairman Royce. We now stand adjourned.
I want to thank Ambassador Sherman and Mr. Cohen for their
testimony. They have agreed to make themselves available to go
into closed session, so we will do that immediately and ask
members, you are all encouraged to attend. Thank you. We stand
adjourned.
[Whereupon, at 3:19 p.m., the committee was adjourned.]
A P P E N D I X
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