very poor in terms of meeting its obligations fulfilling its commitments so we remained skeptical about their behavior but there's a difference between iran and north korea it's important difference north korea's leaders don't seem to mind being isolated in fact they may believe that isolation is the only way their regime can survive iran has different priorities yes they want to move their nuclear ambitions forward but they also want to be seen as a respected member of the international community they need commerce they need trade they need to engage with the world we need to demonstrate to them that they can't have their cake and eat it too they can't have their nuclear ambitions and have these good relations with the west of the world thank you my time has expired mr chairman i would at least take this opportunity to say i agree with everything that mr einhorn said that they want to be respected i would strongly suggest that as we continue looking at future sanctions we recognize that as long as the world allows them to have embassies and allows them to hold our embassy hostage that we are in fact still allowing them to have normalized relationships with virtually every country on earth and then hope that sanctions will work i for one believe that we need to take another step and a step that is far greater than sanctions before we do military but i certainly believe we need to take another step and i would hope that as we continue looking at this program if we see it fail that you'll join with me in trying to find additional steps to give pressure against iran yield back mr chairman thank you very much and that's the reason why we are having this hearing and no question about it i now yield have five minutes to congresswoman marcy kaptur from the great state of ohio in fact my classmate that's right thank you mr chairman very much glad to see you with the gavel thank you gentlemen for appearing now mr glazer i just wanted to ask you to whom do you report at the us department of treasury who's your superior my direct superior is assistant secretary cohen and he in turn reports under secretary assistant secretary who david cohen david cohen what is his title assistant secretary for terrorist financing and financial crimes and he reports to under secretary levy he reports to who who under secretary stuart levy who's the under secretary for terrorism and financial intelligence thank you for placing that on the record let me just state that i believe history will show that since world war two us relations with iran have been very counterproductive to our own interests both in terms of the advancement of democratic ideals across at vast region along with the lack of promotion of competitive markets for goods sadly so much of that history i think will show that oil has been a great diversion for this country i keep thinking to one of the commandments in my own faith thou shall not covet thy neighbor's goods my question is how does one implement sanctions in a manner that supports us democratic ideals and reform across an undemocratic and mercantilist middle east i think one can argue geo strategically the impact of current sanctions actually operates against us long term interests because what we're seeing is a backfill of connectivity by us by china by russia you've admitted in your own testimony about the united arab emirates one can look at other countries so it must be really frustrating for you to enforce a sieve i also wanted to just place on the record for history sake back in one thousand nine hundred and fifty three since world war two really our relations with iran we never seem to get it right there was a coup back in the early 50s when someone by the name of mohammad masadeck was installed well he had actually taken office earlier in a democratic election but then in fifty three by spontaneous combustion he was removed and the shabby ran when we were growing up we remember him as children became head of that country but the reason the other guy was removed is he was actually trying to change attempting to reform the monopoly control that one company had over the extraction of oil from iran that company was called the anglo persian oil company commonly known now is bp bp so i think it's important for us to remember a little bit of history here and through the decade of the 50s 60s and 70s the shah's rule became more and more repressive and i can remember the slovak studying the slovak when i was in college and try and understand what that was all about then in seventy nine some of us lived through the uranian revolution when the shah was removed and us hostages were taken and the american people were just stunned by and terry anderson from my own state an abc reporter was taken in that and ultimately released thank god but then after all that happened and i remember those hostages were returned on the day ronald reagan became president remember that some of the people here remember that then for the next decade we enlisted iraqi dictator saddam hussein to do some dirty bidding and there was a terrible war between iran and iraq millions of people died so you know there's a little backdrop to why the iranians also looking through whatever lens they're looking through as they look at us and they look across that region might feel vulnerable i'm not defending their government i don't defend any government in that region and i certainly don't defend the economic interests that try to exploit all of them but in thinking about the future if in fact we are to be a democratic nation one that also believes in competitive markets the report from the gao shows that well guess who's got their fingers in the till over there halliburton that's the largest if you look at the amount of money that they get in government contracts halbert number of two hundred and seventy one billion well who's the big investor in halliburton the former vice president of our country for heaven's sake and their fingers aren't clean it seems like the public and private interests get all mixed up here and then we try to use these pitiful sanctions which look good on paper and look like we're really doing something but they don't do anything to promote our geo strategic interest they don't do anything to bring competitive markets they don't do anything to promote democracy in that part of the world and i feel sorry for our country i feel sorry for the road that we're on here because i don't see that it's really hurting iran in any way and it's certainly most importantly not advancing the cause of democracy so in terms of two way trade my question goes to the future generation that is a literate country there were hundreds of thousands of students demonstrating for democracy in that country and there were some sanctions that apparently made it very difficult for them to be able to communicate with the west with others in their efforts to try to democratize inside that country and my question is is the administration or has the administration taken action to allow hardware software and technology used to access the internet to be legally exported to iran how do we incentivize future democratic reforms and many of the literate people in that country that can connect to the rest of the world who are part of the future so they don't stub their toe and kill millions of more people as the last generation has done for fifty years in that extremely important but troubled region what are we doing to promote connectivity between those who love democracy thank you congresswoman we very much support you are a strong statement of support for human rights in iran very important to us it's also important that civil society in iran be able to express themselves that they have a free and secure access to the internet the state department has worked very closely with the treasury department to ensure that us sanctions do not prevent access to tools that allow the iranian people to freely access the internet state did a waiver recently that enabled treasury to publish a general license in the federal register in march that authorizes us companies to make a mass market personnel personal communications software available inside iran it's very important that they have the tools to communicate with one another and we're trying to make that possible and any adjustments in the sanctions laws that are necessary we will seek to adopt and you know i just wanted to say for the record finally mr chairman i represent many people who have immigrated from that part of the world and you know this they always have mine tv and he goes to the un and really doesn't do a very good job for his own people but the people that hold the real power in their country are many of the clerics and it just seems to me that anything we can do to bridge walls is extraordinarily important i don't share many of my colleagues views that the answer to everything is military action against any troubled state but i think that the power of literacy inside that country unlike afghanistan is so important anything one can can do to encourage kind of activity and enhance those individuals within that country that are trying to meet the rest of the world in a peaceful way is worth the effort and i would hope you would think hard about that in the important roles that you have and also on the oil side to promote competitiveness general woman's time has long expired thank you mr chairman i now recognize the gentleman from illinois counsel davis thank you very much mr chairman and let me thank you for calling the hearing mr einhorn let me ask you how does the state department measure success in terms of what would be a successful implementation of sanctions against iran could you share that with us i mean ultimately the measure of success is whether iran changes its behavior that's what we're looking for but intermediate steps involve putting a serious economic pressure on iran so that it recompute its calculation of costs and benefits and realizes that the future is gonna look bleaker and bleaker unless it alters its behavior and stops its defiance of the international community that's what we're looking for so one could reasonably say that the purpose of sanctions is to change behavior exactly of whoever it is that's being sanctioned let me ask are there any items that are not covered in terms of what are we trying to prevent iran from doing the combination of the law the congress recently gave to us as well as the recent security council resolution as well as our own executive authorities the combination of all those tools i think give us what we need to pursue an effective strategy of pressure against iran are there any items that we would say it's quite all right if we were to interact with those items getting into the country there are many items for humanitarian purposes to deal with medical problems they are all kinds of items that are legitimate we're not trying to interrupt legitimate trade certainly not trade having to do with humanitarian civilian kinds of uses but we're primarily going after their programs to acquire weapons of mass destruction advanced conventional weapons and other sensitive items we're not interested in a total embargo of iran that's not what we're trying to do so there is a humanitarian component to the sanctions especially as it relates to medicine or medical technology or life saving instruments or advances that may have been made in one country that have not necessarily been made in another country we're saying that it's quite all right that's right we don't intend to block around access to those let me ask and if each one of you perhaps would address this question our government has awarded more than one hundred and seven billion in contract payments grants and other benefits over the past decade to foreign and multinational american companies while they were doing business in iran is there any way that one could suggest that this is somewhat a conflict in terms of the overall purpose of sanctions to try and change the behavior of another nation i mean this development these interactions were what led to an important provision of the new comprehensive sanctions law i think it was ms newrider who spoke to that and can describe to you what's involved but the idea is to avoid such contractual arrangements between the united states government and these other entities that have dealings with iran especially dealings that are sanctioned under our law mr davis if i could add to that that connection is changing behavior and i'll give you the best example repsol which is a spanish conglomerate had based on our report over three hundred and forty three million in contracts with the us government they also were investors in iran's energy sector they have since made the decision this week to pull out of this ten billion south pars project and no longer invest in iran so we would agree though that this whole business of sanctions does have a level of complexity that sometimes the average citizen unless they take a good look may not fully understand what has taken place in relationship to them and what they've actually accomplished and what they have actually met absolutely and i would also note that one of the other decision that repsol made was the divestment clause is in the new app they were concerned about shareholders divesting in their firm as one of the reasons why they pulled out of the south pars project thank you very much and that too is one of the reasons mr chairman that i appreciate your calling this hearing to try and bring as much clarity to actions that are taken so that the only way we experience this democracy that my representative friend from ohio ms kaptur was talking about is that people be able to understand what it is that their government is doing what it is that the government is trying to do and what the intents are so i thank you again for the hearing and i yield back the balance of my time thank you very much for your participation as well i now yield to the gentlemen from california the ranking member counsel thank you chairman just to wrap up a little bit mr kristoff in the committee's report hopefully you've looked at it ms kaptur really sort of talked to this point when she said halliburton two hundred and seventy one billion first of all just for the record my understanding is the vicepresident when he became vicepresident relinquished all stock in the company most of which all of which was not by purchase but by having been an executive there and is not an investor but not withstanding her not understanding what an investor is perhaps halliburton's two hundred and seventy one billion that's how much they got for servicing the needs of the us government do you know what they received some subsidiary of halliburton received for participation with iran during that same period of time i don't know those details sir so actually how much money somebody got from the us isn't particularly important at all what's important is how important was iran to these subsidiaries and if i understand correctly under prior law a subsidiary wholly owned not wholly owned joint venture controlled uncontrolled to be honest they were allowed to do this so everything everything that's here about these companies prior to just a short period ago they were doing things that were perfectly routine legal and not prohibited by executive order or any other law the new act has changed that subsidiaries are now affected but previously they were not so back to the sanctions and i've been very tough on mr einhorn but i want to go to you based on past performance compliance with the past laws by companies seems to be reasonably good and the past service and sales and how everyone was circumventing they were simply complying with the law and using meaning their responsibility to their stockholders which haven't we with the last sanction regime changed the message to them relative to the best interest of their stockholders you've definitely changed the message i think particularly with the divestment clauses because they are hearing opportunities for shareholders to speak with their voices and pull out of those companies that continue to invest in iran well mr glazer i'm gonna close with just a question to you the us financial system is a relatively open system the chairman no we might agree but disagree with treasury on whether or not we've given you all the tools of transparency that we'd like you to have in the way of databases and so on but the us companies companies with a presence and reporting in the us wouldn't it be fair to say that you get good transparency on them and if they continue directly or indirectly to trade with iran you will be able to detect that and thus sanction them in other words you have those tools yes i think that we know what's going on in closing for me our partners in europe on this measure who have promised to do the same thing do they have the same tools and that's the final question if you answer that they do is are they going to use them as aggressively as you will look i've been at this for a few for a few years now i really do think they have come a long that's why you get to be here before us we ask for experts it's an honor i think europe has come a long way and i again this has been a very surprising six weeks the un went farther than i personally thought they would the eu went considerably farther than i would have predicted if you had asked me three months ago how far will the eu go in all sincerity i think there is a real growing international consensus that something needs to be done and that countries need to take responsibility does that mean we're not gonna have issues to work out with particular european countries i was talking to mr van hollen about one of those there's gonna continue to be issues but i do think europe is serious about this and i think they've been a good partner thank you mr einhorn the last word goes to you as long as you include in it letting us know how our former colleague ms tauscher is doing i think look you know ellen tauscher she's got a lot of spirit a lot of fight a lot of grit you know she's gonna have a rough patch but she's gonna come out of it fine and i'll send to her your best wishes thank you very much please do thank you for your please associate me with that as well let's close with you mr glazer and i guess mr einhorn and both first of all gao has identified forty one foreign firms with commercial activity in iran do you agree with that forty one the number this is really something that is outside of the treasury department's jurisdiction we target with our particular authorities entities that are engaged in illicit activity be it proliferation or terrorism the treasury department is not keeping track of foreign companies that are doing business in iran as a broad matter that'd be for the commerce department or others mr einhorn do you agree with the numbers i'm sorry could you repeat that mr chairman gao has identified forty one foreign firms with commercial activity in iran's energy sector first of all do you agree with the number we examined all of those cases very carefully and as i mentioned before we winnowed that number down to less than ten these are a number of entities that are very problematic i have to say that a number of them have been engaged in sanctionable activity but as i also said before we're reaching the conclusion of this process it's out for interagency views and secretary clinton will make her decisions on this in a short period ahead yes what can you do about these companies even the ten that you well it's important to recognize that a number of the entities in this small list have already stopped or are in the process of stopping their engagement in iran petroleum sector so i think what we found is the law is working the threat of penalties has encouraged these countries to get out of the business of dealing with iran so it's quite effective let me just close by is there anything more that we need to do on this side of the aisle in terms of from a legislative standpoint in order to make this effective i think you've just given us a big and important tool to tackle this threat and you did that only less than four weeks ago we have to work hard within the administration to figure out how best to implement this law to maximum effect so for the time being we have nothing else to request of you thank you i agree with mr einhorn i think that you just passed a very important new piece of legislation we're in the process of implementing that and i think it's going to have a powerful impact chairman we're proceeding to implement the rule required by the act and we will do so i would encourage vigorous and continuous oversight on the part of the congress to ensure not just that the old sanctions are being enforced which many had not been but the host of new sanctions that are on the plates of the executive branch thank you very very much for actually thank you very much i really would like to ask mr newton garter and mr kristoff something that has come up throughout this hearing and that is the report that throughout the last decade gsa spent roughly one hundred and seventy billion of taxpayers money contracting with seventy four companies doing business in iran at the exact same time we were trying to put pressure on iran and my question is basically how did this happen did the fact that these companies were doing business with iran ever come up when you were reviewing the contracts or signing contracts in gsa did anyone from anywhere in the federal government point out that we shouldn't be giving part of our federal procurement to companies that were really in direct violation of our stated foreign policy goals did anyone ever talk to you mr newton garter about these contracts and that they should not be getting a one hundred and seventy billion in taxpayer money when we're trying to impose sanctions the short answer is no i have not been involved in these matters i will be happy to look into this and get back to you for the record i returned to gsa two years ago as the director of the office of acquisition and integrity with my duties as suspension and debarment official but before that i was at hud as the senior procurement executive and was not aware of any such matters at hud but i will be happy to look further into this for if you couldn't get back to us mr kristoff do you want to comment on it how did this happen that we're handing out billions and federal contracts to companies in direct violation of our stated policy goals foreign policy and stated laws of the country well first i would state that as we all know it's the responsibility of the executive branch to investigate companies determine what is credible evidence and try to impose the sanctions the number that i think you're referring to is a new york times article where there was over a hundred billion dollars in contracts when i looked at their list many of those companies are companies that would not be sanctionable under what was then the laws of the land companies that were in the automobile industry for example would not have been would they be sanctionable now under this law not necessarily why not because it still doesn't cover items such as the automobile industry and there was a lot of companies on that list that dealt in the automotive community well maybe we should cover them with sanctions i just want to mention mr glazer that the treasury department has done a very good job and i compliment you on the work you've done as a member of financial services committee my time is up and we don't have time to go further we have another panel but i have a series of questions respectfully i'd like to place in writing to you so that we can get these answers and i congratulate you on your work and also that object is ordered also the state department your international work too get compliance thank you very much thank you very much and actually let me just say to the members that within a few minutes we will have two votes on the floor so what i would like to do is to adjourn until one hundred and thirty pm and we will reconvene at one hundred and thirty pm i'm sorry about that but we have to vote around here and if we don't vote they talk about us so this panel is actually dismissed and the committee will adjourn until one hundred and thirty pm and we'll come back