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ASSESSING THE P5+1 INTERIM NUCLEAR 

AGREEMENT WITH IRAN: ADMINISTRATION 

PERSPECTIVES 

HEARING 

BEFORE THE

COMMITTEE ON 

BANKING, HOUSING, AND URBAN AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

ON 

EXAMINING THE PROSPECTS FOR REACHING A LONG-TERM 

COMPREHENSIVE SOLUTION DESIGNED TO BRING AN END TO IRAN’S 

ILLICIT NUCLEAR ACTIVITIES 

DECEMBER 12, 2013 

Printed for the use of the Committee on Banking, Housing, and Urban Affairs 

( 

Available at: http://www.fdsys.gov/ 

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS 

TIM JOHNSON, South Dakota, Chairman 

JACK REED, Rhode Island 

CHARLES E. SCHUMER, New York 

ROBERT MENENDEZ, New Jersey 

SHERROD BROWN, Ohio 

JON TESTER, Montana 

MARK R. WARNER, Virginia 

JEFF MERKLEY, Oregon 

KAY HAGAN, North Carolina 

JOE MANCHIN III, West Virginia 

ELIZABETH WARREN, Massachusetts 

HEIDI HEITKAMP, North Dakota 

MIKE CRAPO, Idaho 

RICHARD C. SHELBY, Alabama 

BOB CORKER, Tennessee 

DAVID VITTER, Louisiana 

MIKE JOHANNS, Nebraska 

PATRICK J. TOOMEY, Pennsylvania 

MARK KIRK, Illinois 

JERRY MORAN, Kansas 

TOM COBURN, Oklahoma 

DEAN HELLER, Nevada 

CHARLES YI, Staff Director 

GREGG RICHARD, Republican Staff Director 

LAURA SWANSON, Deputy Staff Director 

COLIN MCGINNIS, Policy Director 

PATRICK GRANT, Counsel 

RIKER VERMILYE, Legislative Assistant 

GREG DEAN, Republican Chief Counsel 

JOHN O’HARA, Republican Senior Investigative Counsel 

DAWN RATLIFF, Chief Clerk 

TAYLOR REED, Hearing Clerk 

SHELVIN SIMMONS, IT Director 

JIM CROWELL, Editor 

(II)

C O N T E N T S 

THURSDAY, DECEMBER 12, 2013 

Page 

Opening statement of Chairman Johnson ............................................................. 1 

Opening statements, comments, or prepared statements of: 

Senator Crapo ................................................................................................... 2 

Senator Tester 

Prepared statement ................................................................................... 27 

WITNESSES 

Wendy Sherman, Under Secretary for Political Affairs, Department of State ... 4 

Prepared statement .......................................................................................... 27 

Responses to written questions of: 

Senator Tester ........................................................................................... 36 

Senator Toomey ......................................................................................... 38 

David Cohen, Under Secretary for Terrorism and Financial Intelligence, Department of the Treasury .................................................................................... 7 

Prepared statement .......................................................................................... 30 

(III)

(1) 

ASSESSING THE P5+1 INTERIM NUCLEAR 

AGREEMENT WITH IRAN: ADMINISTRATION 

PERSPECTIVES 

THURSDAY, DECEMBER 12, 2013 

U.S. SENATE, 

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS, 

Washington, DC. 

The Committee met at 10:06 a.m., in room SD–538, Dirksen Senate Office Building, Hon. Tim Johnson, Chairman of the Committee, presiding. 

OPENING STATEMENT OF CHAIRMAN TIM JOHNSON 

Chairman JOHNSON. I call this hearing to order. 

Yesterday all Senators had a chance to hear directly from Secretaries Lew and Kerry and senior intelligence officials on the first 

step nuclear agreement reached in Geneva between the P5+1 and 

Iran. Today we will delve into the agreement in greater detail, assess prospects for a final agreement, and explore the likely effects 

of congressional action on new sanctions legislation at this time, to 

which the President and his Secretary of State strongly object. 

I have talked with various Members of the Committee about 

these issues and ensured that all Members have had opportunities 

to be briefed repeatedly by Secretaries Kerry and Lew, and the intelligence community, on the ongoing Geneva negotiations. 

Let me be clear. I support strong sanctions and authored many 

of the U.S. sanctions currently in place. I have negotiated a new 

bipartisan sanctions bill with my Ranking Member that could be 

finalized and moved quickly if Iran fails to comply with the terms 

of the first step agreement in Geneva or if negotiations collapse. 

Sanctions have been an effective tool of coercive diplomacy, crippling Iran’s economy, sharply curtailing its oil revenues, and helping to persuade the Iranian people to vote for new leadership. 

It now appears that some of Iran’s leaders have recognized that 

the only way to relieve the economic pressure and lessen Iran’s 

international isolation is to reach agreement with the West to halt 

its illicit nuclear activities. Time will tell if that is true—but only 

if Congress is willing to provide some time. 

Some have argued that acting on a bill now, as long as it does 

not become effective in 6 months, gives the Administration additional leverage in negotiations. The President disagrees, arguing 

that congressional action on new sanctions would be taken as a 

sign of bad faith by our P5+1 partners and by Iran, and could erode 

or even unravel the sanctions regime. 

2 

The history of our relationship with Iran is littered with missed 

opportunities on both sides. I want to assess the formal analysis 

the Committee is to receive today from the Director of National Intelligence on the effects on negotiations and on our P5+1 partners 

of congressional action on new sanctions, but I agree that the Administration’s request for a diplomatic pause is reasonable. A new 

round of U.S. sanctions now could rupture the unity of the international coalition against Iran’s nuclear program. Existing sanctions will continue to bite, and to bite hard. Commentators from 

left to right and all of my colleagues involved in this effort have 

acknowledged this; it is not a matter of controversy. 

Now that Iran has come to the table and entered into this first 

step agreement, I believe this may well be the last best chance to 

resolve this crisis by diplomacy, and so the President is absolutely 

right to fully test Iran’s leaders. And I will be vigilant to ensure 

that the Joint Action Plan is strictly enforced. I have requested, 

along with Chairmen Levin and Feinstein, regular briefings on 

compliance from the intelligence community. In the meantime, we 

should not do anything counterproductive that might shatter Western unity on this issue. We should make sure that if the talks fail, 

it was Iran that caused their failure. We should not give Iran, the 

P5+1 countries, or other Nations a pretext to lay responsibility for 

their collapse on us. Ultimately, while some of us might differ on 

tactics, it is clear we all share the same goal: to ensure that Iran 

does not achieve a nuclear weapon, and to do that diplomatically 

if possible, while recognizing that other alternatives remain on the 

table. 

I now turn to Ranking Member Crapo for his opening statement. 

STATEMENT OF SENATOR MIKE CRAPO 

Senator CRAPO. Thank you, Mr. Chairman. I appreciate your 

comments and agree with you that although there may be some differences on tactics, we all have the same common goal in mind. 

And on this issue, as well as so many others in this Committee, 

I appreciate your friendship and our working relationship as we 

work together on sanctions legislation. 

This hearing provides us an opportunity to consider the Administration’s perspective on negotiations, and perhaps it may better understand ours as well. Congressional sanctions designed in a completely bipartisan fashion have successfully worked to bring Iran to 

the negotiating table. We must maintain that leverage going forward. 

The impact of sanctions on Iran’s economy is dramatic. In just 

the last 2 years, Iran’s oil exports have dropped by about 60 percent, to roughly 1 million barrels a day. Its gross domestic product 

shrunk by 6 percent while inflation shot up to 45 percent, and to 

even higher levels on certain products. And unemployment currently hovers around the 35-percent mark. 

Iran faced a stark choice earlier this year: continue to live under 

dire economic circumstances that would only worsen, or dismantle 

its entire nuclear program in an effort to regain control over its 

economy. 

In recent weeks, our witnesses returned from Geneva to present 

us with an agreed-upon Joint Plan of Action among the P5+1 and 

3 

Iran. As the ink lay drying on the agreement, voices in Congress 

and from among certain allies and friends could immediately be 

heard, raising objections and expressions of support alike. Most 

troubling is the reticence and concern our good friend Israel has 

with the deal. 

For my part, I was very disappointed to learn that the release 

of Idaho’s own Pastor Saeed Abedini and other Americans unjustly 

held by the regime were not made part of the deal. I could not 

imagine a better confidence-building measure on Iran’s part than 

for the regime to reflect some degree of humanity and principled 

justice by releasing these brave Americans. As the Administration 

embarks toward a final agreement, every effort must be made to 

bring Pastor Abedini and his fellow Americans home where they 

belong. 

I have several concerns with the plan of action. Language in the 

plan is vague on how the freeze, rollback, and sanction relief work 

together. I also have concerns about the enrichment and 

verification provisions. I worry that both the current plan and final 

agreement will permit Iran to maintain its enrichment program 

rather than direct it to join some 19 other Nations who purchase 

all of their nuclear fuel from traditional suppliers. 

I also worry that the plan does not seem to curtail Iran’s development of advanced ballistic missiles, which, again, is troubling in 

conjunction with its enrichment program. This is a Nation that will 

require the strictest monitoring and most aggressive diplomacy on 

terrorism and human rights violations for decades to come. There 

can be no question about what we expect of Tehran. Iran cannot 

be allowed even the possibility of nuclear weaponization in the context of its history of other destabilizing activities. 

The eventual lifting of nuclear-related sanctions in a final deal 

also raises a number of questions. First, which sanctions are to be 

defined specifically as nuclear related? Second, how will those sanctions be separated from a complex web of sanctions intended to address Iran’s sponsorship of terrorists, human rights violations, and 

certain kinds of advanced ballistic missiles? This lack of clarity 

may hamstring future U.S. policy options necessary to address 

Iran’s destabilizing activities. 

I hope that today’s witnesses can better clarify what precisely the 

mutual understanding is with Iran. Sanctions clearly worked to 

bring Iran to the negotiating table. I remain convinced that we 

must maintain that leverage moving forward. The United States 

must continue to vigorously enforce the existing core sanctions architecture and develop a sanctions plan of action in the event that 

negotiations do not produce the results that we all want. 

Should diplomacy fail in its mission to effectively control the apparent extent of the Iranian nuclear program, whether 6 months 

or a year down the road, there is simply no time available to waste 

then on creating bills or Executive orders. The United States must 

maintain existing multilateral sanctions pressure, and Congress 

and the Administration each need to prepare now for the possibility that an effective, final, comprehensive agreement may not be 

reached. 

Thank you, Mr. Chairman. 

Chairman JOHNSON. Thank you, Senator Crapo. 

4 

To allow for sufficient time for questions, we are limiting opening 

statements to the Chair and Ranking Member. All Senators are 

welcome to submit an opening statement for the record. 

Now I would like to introduce our witnesses. The Honorable 

Wendy Sherman is the Under Secretary for Political Affairs at the 

U.S. Department of State, and the Honorable David Cohen is the 

Under Secretary for Terrorism and Financial Intelligence at the 

U.S. Department of Treasury. 

Under Secretary Sherman, please begin your testimony. 

STATEMENT OF WENDY SHERMAN, UNDER SECRETARY FOR 

POLITICAL AFFAIRS, DEPARTMENT OF STATE 

Ms. SHERMAN. Thank you very much, and good morning, Mr. 

Chairman, Ranking Member Crapo, distinguished Members of the 

Committee. Thank you very much for inviting me and Under Secretary Cohen to discuss the details of the Joint Plan of Action 

agreed to by our P5+1 partners and Iran. I also want to especially 

thank you, Chairman Johnson, for your leadership on this issue 

over the past weeks and months and this Committee’s support 

through many months and years in bringing Iran to the table 

through unprecedented sanctions. 

Our collaboration on sanctions is what has brought Iran to the 

table. However, it is important to underscore that what we do from 

this point forward is just as critical, if not more so, in terms of testing Iran’s intentions. In that regard, I look forward to continued 

consultations over the coming weeks and months, and I am available to any Member of this Committee at any time for a conversation. 

Today I want to give you the facts about the Joint Plan of Action 

so you can judge its merits for yourself. 

The Iranian nuclear program is one of the most serious threats 

to U.S. national security and to our interests in the Middle East. 

Thanks to the sanctions and a firm and united position from the 

P5+1, we have reached an understanding that is the most significant step to curb Iran’s nuclear program in nearly a decade. Put 

plainly, this understanding is profoundly in America’s national security interest, and it does make our regional partners safer and 

more secure. 

The agreement establishes a sequenced 6-month framework designed to block near-term Iranian pathways to a nuclear weapon 

while creating space for us through a diplomatic process to reach 

a long-term comprehensive solution, which is what we all want. As 

the President has said repeatedly, we will ensure and he will ensure that Iran never obtains a nuclear weapon. 

The understanding ensures the development of Iran’s nuclear 

program will halt and the program will be rolled back as we negotiate that comprehensive solution. Indeed, upon implementation in 

the coming weeks, the agreement immediately halts progress of the 

Iranian nuclear program, rolls back key elements of that program, 

and introduces unprecedented monitoring in Tehran’s nuclear activities. Taken together, these measures will prevent Iran from progressing toward a nuclear weapon over the next 6 months and increase our ability to detect any move toward an Iranian nuclear 

breakout or diversion of materials to a covert program. 

5 

Let me now walk you briefly through the key elements of this 

first step in detail. 

First, Iran has committed to halt meaningful progress of its enrichment program. Under the terms of this agreement, Iran cannot 

increase its enrichment capacity. It cannot build new enrichment 

facilities. Iran cannot install more centrifuges of any type, operate 

more centrifuges, or replace existing centrifuges with more advanced types. Iran must limit centrifuge production to only those 

needed to replace damaged machines, meaning Iran cannot expand 

its stockpile of centrifuges. And Iran’s stockpile of 3.5 percent enriched uranium must be the same at the end of the 6-month period 

as it is at the beginning. 

Second, during this initial phase, Iran will roll back key aspects 

of its program. Specifically, Iran must cease all enrichment over 5 

percent. Iran must remove certain equipment that is used to more 

efficiently enrich uranium over 5 percent, and Iran must neutralize 

its entire 20-percent stockpile, diluting it to a lower level of enriched uranium or converting it to oxide for fuel for the Tehran Research Reactor. 

Third, Iran cannot advance work on the plutonium track. Iran 

cannot commission the heavy water reactor under construction at 

Arak. Iran cannot transfer fuel or heavy water to the reactor site. 

Iran cannot test additional fuel or produce more fuel for the reactor. Iran cannot install remaining components for the reactor, and 

Iran cannot construct a facility for reprocessing spent fuel. That is 

critical because, without reprocessing, Iran cannot separate plutonium from the spent fuel and, therefore, cannot obtain any plutonium for use in a nuclear weapon. 

In sum, even in this initial phase, this first step, this plan halts 

each of the three potential pathways to a weapon that has long 

concerned us and our closest allies. It eliminates Iran’s stockpile of 

20-percent enriched uranium. It stops installation of centrifuges, 

especially Iran’s most advanced centrifuge design, and prevents accumulation of more 3.5 percent enriched uranium. And it ensures 

that the Arak reactor cannot be brought online. 

Some have said we should be skeptical that Iran will live up to 

these commitments. Quite frankly, we completely agree. That is 

why the foundation of the agreement is not built on trust but on 

verification. The verification mechanisms are unprecedented and 

comprehensive. Iran must permit daily access by the International 

Atomic Energy Agency inspectors to the facilities at Natanz and 

Fordow. They must permit more frequent inspections at the Arak 

reactor. Iran must allow access to centrifuge assembly workshops, 

including rotor production workshops and storage facilities. 

Iran must allow access to uranium mines and mills and provide 

design information for the Arak heavy water reactor. Significantly, 

these monitoring measures will provide additional warning of 

breakout and add significant new checks against the diversion of 

equipment for any potential covert enrichment program. It will also 

help us to verify that Iran is, in fact, living up to the commitments 

outlined in detail under the agreement. 

In exchange for these concrete actions by Iran, as Under Secretary Cohen will explain in detail, the P5+1 will provide limited, 

temporary, and reversible relief while maintaining the core archiVerDate Nov 24 2008 13:56 Oct 20, 2014 Jkt 046629 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 L:\HEARINGS 2013\12-12 ZDISTILL\121213.TXT JASON
6 

tecture of our sanctions regime, including key oil and banking sanctions. Sanctions pressure, moreover, will continue to increase over 

the 6 months of this initial phase, and we will continue our vigorous enforcement of existing sanctions. 

Moreover, the U.S. trade embargo remains in place. U.N. Security Council sanctions remain in place. All sanctions related to 

Iran’s military program, State sponsorship of terrorism, and 

human rights abuses and censorship remain in place. 

And if Iran fails to meet its commitments, we are prepared to 

ramp up sanctions, and we will have then the international consensus that is essential for any increased pressure to work. 

As the President has said, as the Chairman outlined, now is not, 

we believe, the time to introduce new sanctions because doing so 

could risk derailing the promising first step outlined above, alienate our allies, and risk unraveling the coalition that enabled effective sanctions enforcement. 

Finally, in assessing the agreement on its merits, it is important 

to compare where we will be under its provisions compared to 

where we would be without it. 

Without this plan, Iran’s program would continue to advance: 

Iran would spin thousands of additional centrifuges; install and 

spin next-generation centrifuges that compress breakout times; advance its plutonium program by producing fuel for the Arak reactor 

and install remaining components; it could grow its stockpile of 20- 

percent enriched uranium—all without the powerful tools of intrusive and unprecedented inspections to help detect breakout. 

With this understanding, the Joint Plan of Action, as I have explained, we halt the progress of Iran’s nuclear program, roll it back 

in key respects, block the most likely pathways to weaponization— 

all while creating space over the next 6 months to pursue the comprehensive solution we all want. 

Finally, let me conclude by making one thing clear. Our policy 

with regard to Iran has not changed. We will stop Iran from acquiring a nuclear weapon. We will support our friends and partners 

in the region and counter Iran’s destabilizing activities around the 

world. And we will continue to support the fundamental rights of 

all Iranians. We are working hard, for example, to ensure the U.N. 

General Assembly condemns Iran’s human rights practices this 

month. Our sanctions on Iran as a State sponsor of terrorism remain in place. Our sanctions on human rights abusers will continue. And we will also remain committed, Mr. Crapo and all other 

Senators, to reuniting Saeed Abedini, Amir Hekmati, and Robert 

Levinson with their families. 

As Secretary Kerry has said, 1 day is too long to be in captivity, 

and 1 day for any American citizen is more than any American, including this American, wants to see anyone endure. 

So I look forward to consulting closely with Congress, and I welcome this opportunity to discuss these important issues with you. 

After Secretary Cohen, I am happy to take your questions. 

Chairman JOHNSON. Thank you. 

Under Secretary Cohen, please begin your testimony. 

7 

STATEMENT OF DAVID COHEN, UNDER SECRETARY FOR TERRORISM AND FINANCIAL INTELLIGENCE, DEPARTMENT OF 

THE TREASURY 

Mr. COHEN. Thank you, Chairman Johnson, Ranking Member 

Crapo, and distinguished Members of the Committee. I appreciate 

the opportunity to appear with Under Secretary Sherman today to 

discuss the impact of our sanctions on Iran, the limited, temporary, 

and reversible relief offered in the Joint Plan of Action, and the 

mounting sanctions pressure that Iran will face while the parties 

seek a comprehensive and long-term resolution to the international 

community’s concerns over Iran’s nuclear program. 

This Committee is well aware of the impact that our sanctions— 

in particular our oil, financial, and banking sanctions—have had on 

Iran, so I will highlight just a few data points that I think are particularly relevant. 

Iran today is in a deep recession. As Senator Crapo mentioned, 

last year its economy contracted by more than 5 percent, and we 

expect Iran’s economy to contract again this year. Its inflation rate 

was around 50 percent last year. Its currency has lost about 60 

percent of its value in the last few years. Iran has about $100 billion in foreign exchange reserves that is 

mostly or entirely inaccessible or restricted. And it has lost roughly 

$80 billion in the last 2 years from oil that it has been unable to 

sell because of sanctions. 

This is the picture of powerful sanctions pressure, and this sanctions pressure has begun to bear fruit. It brought Iran to the negotiating table in Geneva and helped our team obtain key terms in 

the Joint Plan that halt and in several important respects roll back 

Iran’s nuclear program, while also allowing increased transparency 

and monitoring. We were able to achieve these terms at very little 

cost. In fact, the relief package in the Joint Plan is economically 

insignificant to Iran. 

The package in the Joint Plan has several elements. 

First, we will grant Iran limited access in installments over the 6-month tenure of the Joint Plan to $4.2 billion of its own funds 

currently locked up in bank accounts outside of Iran. 

Second, during the 6 months of the Joint Plan, we will hold 

Iran’s exports of crude oil flat rather than requiring further significant reductions by the six countries currently importing oil from 

Iran. 

Third, we will suspend—not remove, suspend—U.S. sanctions on 

Iran’s petrochemical exports, its automobile sector, and its trade in 

gold. All together, this could be worth up to about $1.5 billion to 

Iran. 

Last, we will help facilitate humanitarian transactions, which 

are already permitted under U.S. law. 

I want to emphasize that in this relief not a single dollar of U.S. 

taxpayer money will be transferred to Iran. The relief is comprised 

mostly of allowing Iran access to its own money denied by sanctions. 

In light of the Iranian economy’s deep distress, the approxi- mately $6 to $7 billion value of the relief package, which would be 

realized over the half-year of the first step, simply will not move 

the needle on the Iranian economy. It is important to emphasize, 

8 

moreover, that the Joint Plan does not affect the overwhelming majority of our sanctions on Iran. Most importantly, the core architecture of our oil, financial, and banking sanctions remain firmly in 

place. I want to highlight several important aspects of that architecture. 

First, the revenue Iran earns from its oil sales during the duration of the Joint Plan will remain subject to the financial sanctions 

which have so effectively locked up those revenues overseas. With 

the exception of the $4.2 billion that is part of the relief package, 

Iran will be unable to transfer or repatriate any additional oil revenues it earns during the 6-month duration of the Joint Plan. 

Our banking sanctions and the EU’s banking sanctions remain 

in place, continuing the near total isolation of Iran’s financial sector. All U.N. and EU designations, as well as our sanctions on the 

more than 600 individuals and entities tied to the Government of 

Iran, its WMD programs, and its energy, shipping, and shipbuilding sectors remain in place. This includes our sanctions targeting Iran’s support for terrorism. And our longstanding U.S. 

trade embargo, which precludes Iran from engaging in business 

with U.S. companies and U.S. subsidiaries overseas, remains in 

place. 

And as the Joint Plan is implemented and our negotiators continue to work toward a long-term solution, we will continue to take 

action to maintain sanctions pressure on Iran, to thwart Iran’s efforts to evade sanctions, and to ensure that financial and commercial entities worldwide adhere to restrictions on dealing with Iran. 

Just this morning, Treasury and State announced the designations of more than a dozen companies and individuals around the 

global for evading sanctions and providing support to Iran’s nuclear 

program. The targets of today’s actions were involved in a variety 

of sanctionable activities, from illicit fund transfer to ship-to-ship 

oil transfers. 

No one should doubt our resolve to continue to hold accountable 

those involved in illicit conduct, and we will also continue to strictly enforce Iran’s sanctions, including by imposing strict penalties 

on those who violate them. 

Today’s designations as well as our recent enforcement actions 

emphasize that Iran is still off limits. Make no mistake. Foreign 

banks and businesses still face a choice. They can do business with 

Iran, or they can do business with the U.S.—just not both. 

We know there may be some who believe now might be a good 

time to test our resolve. I want to be clear. We are watching closely, and we are prepared to take action against anyone anywhere 

who violates our attempts to violate our sanctions. 

I look forward to continuing this important work with Congress 

and this Committee in particular as we pursue our shared objective 

to ensure that Iran does not obtain a nuclear weapon. 

Chairman JOHNSON. Thank you all for your testimony. 

As we begin questions, I will ask the clerk to put 5 minutes on 

the clock for each Member. 

Ms. Sherman, we know Iran’s foreign minister recently said, 

‘‘The entire deal is dead if Congress adopts new sanctions now, 

even with a delayed trigger.’’ But one of the most important factors 

9 

in making sanctions effective against Iran has been the cooperation 

of our international partners. 

What do you expect would be the effect of a new round of sanctions now on our allies and other P5+1 countries? And what have 

they said to us recently about this? 

Ms. SHERMAN. Thank you, Mr. Chairman. Although I hear as 

well what Foreign Minister Zarif said, my real interest and the Administration’s real interest in the Congress not pursuing new sanctions at this time has to do with our P5+1 partners and with our 

international partners around the world who have been enforcing 

sanctions. 

The reason sanctions have been effective is not just because you 

have taken the superb action you have and the President has 

moved Executive orders, and it is not only the terrific work that 

David and his colleagues have done on enforcement, it is because 

countries around the world have actually followed through on 

what, quite frankly, are unilateral sanctions on our part as well as 

the U.N. Security Council sanctions and the EU sanctions. And 

they have done that because we have said to them, if you, in fact, 

enforce the sanctions we have imposed, A, you will be able to continue doing business with the United States, the largest and most 

important economy in the world; but you will, more importantly, 

put pressure on Iran to change its strategic calculus and come to 

the negotiating table. And we are committed to negotiations as a 

first and best resort to resolve the concerns around their nuclear 

program. And so countries around the world did that. 

Now that we have this first step agreed to and are about to begin 

negotiations on the comprehensive agreement that we all want, if 

we indeed say, ‘‘Well, we did not really mean it, we are going to 

now impose additional sanctions that you all will have to live with 

around the world,’’ our partners are likely to say, ‘‘Well, wait a 

minute here. You are changing the rules. We agreed to harm our 

own economies in service to diplomacy, and you are not giving diplomacy a chance.’’ 

So our greatest concern here is if this Committee—and I know 

this Committee is for diplomacy, then we must test that diplomacy, 

and the way to do that is to see through the compliance of this first 

step and to negotiate that comprehensive agreement. Congress always has the prerogative to act. It can act very quickly. I know 

that, particularly when it comes to sanctions on Iran. And that is 

why the Administration is asking the Congress to keep its powder 

dry for this moment so we can keep our partners on board to enforce all of our sanctions that remain, since the vast majority do, 

so we can give diplomacy a chance, so our P5+1 partners stay 

united, which has been key to our diplomacy with Iran. 

Chairman JOHNSON. A question for both of you. I am concerned 

that if Congress were to enact new sanctions now, not only could 

we hand a potential PR victory to Iran, it could also lead to other 

countries who are cooperating with us to peel away from their commitment to sanctions. How difficult would it be to reinstate sanctions if major countries decided to do that? And what effect would 

a breakdown in negotiations attributable to premature congressional action have on our broader diplomatic efforts and our standing in the world? Ms. Sherman, let us start with you. 

10 

Ms. SHERMAN. On your first point, there is no question, Senator, 

that we do not want Iran to be in a position to say that the U.S. 

is the cause of the agreement not going forward. As I said, my 

greater concern is with our international partners and the P5+1, 

but there is no doubt that what you say is indeed the case, that 

Iran could use this as a propaganda point from their point of view. 

It does not mean we would accept it, of course, but, nonetheless, 

I am sure that they would, as Foreign Minister Zarif has already 

attempted to do. 

Chairman JOHNSON. Mr. Cohen. 

Mr. COHEN. Mr. Chairman, I think there would be a real risk to 

the effectiveness of our international sanctions regime if Congress 

were to pursue new sanctions legislation now, and it would be difficult, I think, if that regime frayed, to put it back together. 

Now, I am the last person to downplay the strength of our national sanctions. I think from our legislation to the Executive orders to the actions that we have taken, like the ones we took today, 

that has had real impact, and real impact around the world. But 

the overwhelming pressure on Iran today is due in part to what we 

have done and in part to what our international partners have 

done with us—some because they must, but many because they 

want to, because they are with us in this effort, as Under Secretary 

Sherman described, of pursuing a dual-track strategy of offering a 

diplomatic resolution while threatening increasing sanctions pressure as the alternative. 

And I am concerned that if we lose that international coalition, 

the effectiveness of our sanctions going forward will be weakened, 

and our ability to pull it back together, if our partners around the 

world think that we are not serious about pursuing a diplomatic 

resolution, will be difficult. 

Chairman JOHNSON. Thank you. Senator Crapo. 

Senator CRAPO. Thank you, Mr. Chairman. 

Ambassador Sherman, before we get into the plan itself, I want 

to talk with you about Saeed Abedini. I appreciate your comments 

this morning and the discussions we have had previously about the 

plight that Idaho’s Pastor Abedini, who has been imprisoned for his 

Christian beliefs in Iran, is dealing with. And as you have discussed today also, we have other Americans who are being held 

wrongly in Iran in an unjust legal system. 

As you know, I have discussed this personally with Secretary 

Clinton and with Secretary Kerry and have received their assurances that this matter will be given the highest priority, that they 

will not be forgotten, and that everything will be done that we possibly can do to obtain their release and return them to their families and to freedom here in the United States. And, again, I appreciate your comments today about it. 

One of the questions I have is that in the run-up to the October 

talks, the United States released a convicted Iranian proliferator 

from a California prison, but had no relief for these detained Americans. And, in fact, during that time Pastor Abedini was transferred to one of the worst prisons in Iran, just prior to the bringing 

home of the Joint Plan. 

Can you tell me why we are not negotiating with regard to joint 

releases or why we have not made progress in the context of the 

11 

release of our own citizens when we are releasing Iranian prisoners 

who are known proliferators? 

Ms. SHERMAN. Thank you very much, Senator Crapo. As I said, 

it is very hard to talk about these three Americans because it is 

heartbreaking and I have met with some of the families and I know 

what their lives are every day. So nothing I say is going to give 

them the comfort they need until Saeed Abedini, Amir Hekmati, 

and Robert Levinson are home. So I say that as a preface because 

I know it to be true. 

We vigorously pursue every avenue. Some of those avenues are 

best pursued in private to have a chance of success. The Secretary 

raised these cases directly with the Iranian foreign minister during 

their meeting at the U.N. General Assembly. President Obama 

raised all three Americans in his phone call with President 

Rouhani. On this last round in Geneva, I had a separate conversation with the deputy foreign minister responsible for this, going 

over each of these cases and trying to find out whether there might 

be some avenues for getting their release. And as I said, if there 

are, we will pursue them in every way possible. 

I also had breakfast with the Swiss State secretary who is our 

protecting power in Tehran, who has gone repeatedly and asked 

constantly for consular visits and went over some of the possibilities and some ideas that the Swiss had. We will pursue every idea 

that is brought to us. 

I know there is this notion about allegations of a prisoner exchange deal. They are, quite frankly, simply untrue. At this point 

we have asked for humanitarian release. We did not specifically 

talk about these three Americans in the context of the nuclear negotiation because, quite frankly, we do not want them to become 

pawns in the negotiation. We do not want Iran to up the ante either on the nuclear side or the American citizen side by mixing 

them up in this. Iran should free these three Americans because 

it is the right thing to do, it is the humanitarian thing to do. It 

should not be a deal regarding their nuclear program which they 

must deal with on its own terms. Their freedom should not be tied 

to the success or the failure of these negotiations. 

The three Iranians that you mentioned that had been released 

are not in any way related to the joint action, and the report that 

the two issues are connected is simply not true. These are folks 

who have gone through our judicial system and all of the judicial 

processes that we have. 

Senator CRAPO. Well, thank you. I do appreciate the efforts that 

you have undertaken, although we have some differences on whether some opportunities could have been pressed further. But can you 

give me, again, your reassurance that our State Department and 

our country will take every advantage at every stage and in every 

forum to assure the release as soon as possible for these citizens? 

Ms. SHERMAN. I absolutely guarantee it, and you have my personal commitment to do so. 

Senator CRAPO. All right. Thank you. I see my time has run out, 

so I will wait for the next round for the Joint Plan questions. 

Thank you. 

Chairman JOHNSON. Senator Reed. 

12 

Senator REED. Thank you very much, Mr. Chairman, and thank 

you, Secretary Sherman and Secretary Cohen. 

Secretary Cohen, you made the point that just this morning additional enforcement actions were taking place, and it seems to me 

that it is absolutely critical that very vigorous—in fact, even more 

accelerated enforcement take place on those existing sanctions. 

Without that, you could, either unwittingly or wittingly, signal that 

there is going to be an erosion of sanctions, slowly but inevitably, 

and that would be disastrous in many different respects. So can 

you give us assurances that you will, in fact, ramp up the enforcement and contact us if you need additional legislative enforcement, 

if penalties have to be increased? Because I think we really have 

to make sure that they get the idea that they are not going to get 

a pass here. This is not just a subtle sort of way to ease and erode 

these sanctions. 

Mr. COHEN. Senator, I completely agree with you, and I think 

the actions we took this morning, these designations of more than 

a dozen persons and entities, is the first step to really reaffirm and 

demonstrate our very strong intent to continue to enforce our sanctions very, very vigorously. The President said this when he announced the Joint Plan 2 weeks ago, that we would continue vigorous enforcement of our sanctions. We are going to do so. 

The vast bulk of our sanctions architecture remains in place. The 

critical sanctions, on oil, on banking, on financial activity, remain 

in place. Sanctions on anyone who thinks, you know, to try to develop Iran’s energy sector remain in place. 

We are going to very vigorously continue to enforce these sanctions, because I completely agree with you. One very important aspect of our effort going forward is ensuring that the pressure continues to mount on Iran, that they understand that the only way 

that they can get relief from the pressure on their economy is by 

negotiating over their nuclear program. That is the purpose of our 

sanctions, that has been the purpose of our sanctions from the beginning, is to create the leverage for the negotiations. And we are 

going to do everything possible to ensure that that sanctions pressure continues and mounts during this period. 

Senator REED. In that vein, there are discussions in the press of 

the Iranians reaching out to international oil companies to start 

looking at their long-term future. Obviously, since they have been 

deprived of critical equipment and infrastructure improvements, 

they are going to have to get investments to increase their capacity. 

Are we actively dissuading these companies from doing this? Because it would seem to be sending a very, sort of, complicated message. We are saying these sanctions are really tough, but you can 

talk about them, you know, when the day is over. 

Mr. COHEN. Very actively dissuading international oil companies 

and others who think that now may be a time to test the waters 

in Iran. Secretary Lew has over the last several weeks met with 

over a hundred business and bank CEOs to make the point that 

our sanctions remain in place. We have been meeting with foreign 

Governments, foreign banks, foreign businesses around the world 

through our embassies and through teams from here going out. I 

am traveling next week to reinforce this point. We are doing everyVerDate Nov 24 2008 13:56 Oct 20, 2014 Jkt 046629 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 L:\HEARINGS 2013\12-12 ZDISTILL\121213.TXT JASON
13 

thing possible to make sure that no one misunderstands that our 

sanctions remain in place and that we intend to enforce them, and 

that anybody who tests us will be taking a very, very serious risk. 

Senator REED. Will you on a regular basis notify the Senate of 

countries or companies that are not complying strictly, or whose 

compliance is suspect? You might not have sufficient evidence for 

some type of enforcement action, but it would be extremely helpful 

if the information was public of which countries were standing with 

us and which were not. 

Mr. COHEN. I commit to being available to this Committee at any 

time and communicating with this Committee on these issues. I 

think it is enormously important that we all work together on this 

issue. 

Senator REED. I have got very little time left, and, Secretary 

Sherman, this might be too big a topic, but in the issue of the preliminary agreement, there were suggestions about their military 

programs, particularly around Parchin. Can you very quickly give 

us a sense of where we are with that? 

Ms. SHERMAN. Actually, there are three places in the agreement 

that speak to the possible military dimensions of Iran’s program. 

In the first paragraph, it talks about having the comprehensive 

agreement address all remaining concerns. That is a reference to 

their possible military dimensions. It talks about the need to address past and present practices, which is the IAEA terminology for 

possible military dimensions, including Parchin. The agreement 

also says that the U.N. Security Council resolutions must be addressed before a comprehensive agreement is agreed to, and the 

U.N. Security Council resolution specifically addressed their ballistic missile capability. 

So we have had very direct conversations with Iran about all of 

these. They understand completely the meaning of the words in 

this agreement, and we intend to support the IAEA in its efforts 

to deal with possible military dimensions, including Parchin. 

Senator REED. Thank you, Madam Secretary. 

Thank you, Mr. Chairman. 

Chairman JOHNSON. Senator Corker. 

Senator CORKER. Thank you, Mr. Chairman, and I thank each of 

you for your testimony and your work. 

I think all of us want to see a diplomatic solution to Iran and 

have been encouraged by the fact that the Administration has been 

dealing with them in this way. 

I think what has shocked folks has been the text of the interim 

agreement, and I think it calls many of us to want to become involved. Your own former nuclear czar has said that, based on the 

way this interim agreement was negotiated, what he actually sees 

is a series of rolling agreements that go on for a long, long time. 

And I think what Congress—the reason Congress has been wishing 

to weigh in is to try to make sure that we get to an end state that 

is appropriate and we do so over a very short amount of time, 

which to me seems to be a very reasonable place for Congress to 

want to be. 

I would like to ask you this. When does the clock, Wendy, actually start? Very succinctly, if you do not mind. 

14 

Ms. SHERMAN. Sure. Senator, our experts are in Vienna this 

week working with the P5+1, the IAEA, and Iran to determine that 

start date and to make sure that the sequence happens in the 

order in which we all believe it should, which is—— 

Senator CORKER. So we have negotiated a 6-month agreement a 

month ago. 

Ms. SHERMAN. Yes. 

Senator CORKER. But we do not know when the actual start date 

is. 

Ms. SHERMAN. It will happen in the next few weeks. I do not 

want to set a date today because they are finalizing the discussion. 

Senator CORKER. Senator Levin in a meeting at the White House 

suggested that, to keep us from being in a series of rolling agreements, we ensure that this interim agreement has an end date in 

6 months. Of course, that 6 months has not begun. But instead of 

that, you guys agreed to a 6-month deal. And I am just—again, you 

can understand why folks on our side would be concerned, because 

we understand sort of the elements of the program. 

Let me ask you this: Arak—I know that it cannot be commissioned, but it is my understanding based on the document that 

work can continue on elements of this plutonium facility. Is that 

correct? 

Ms. SHERMAN. None of the issues that would make Arak function 

as a nuclear reactor can move forward. 

Senator CORKER. I understand. 

Ms. SHERMAN. None. 

Senator CORKER. But there is still construction that is—— 

Ms. SHERMAN. They could build a road. They could put up a wall. 

That is correct. 

Senator CORKER. Let me ask you this: A country that is interested in peaceful activities only with a plutonium facility of its size 

that has no commercial purpose, does it not raise a little bit of an 

antenna that they are continuing to do those things? I mean, people generally act in their own self-interest. Why would an economically starved country blow money on a plutonium facility that has 

no commercial interest if their intentions are good? 

Ms. SHERMAN. Senator, we agree with you. There is no reason I 

can see that a 40-megawatt heavy water reactor has a peaceful 

purpose that I know of, and we have been very clear with Iran that 

this will have to be addressed in full in any comprehensive agreement. 

Senator CORKER. Let me ask you this: The U.N. Security Council 

resolution that I think—I know this Administration negotiated one 

element, an agreement actually in 2010. Why within the four corners of this agreement are we already agreeing to things tacitly 

that are in opposition to the U.N. Security Council agreement? I 

think that is what has everybody alarmed, that we have tacitly 

agreed to the fact that Iran will be enriching down the road. And 

I think you know we negotiate all kinds of one-two-three agreements around the world. We try to get to a gold standard. Here we 

have a rogue Nation—a rogue Nation—that is wreaking havoc, that 

is using a portion of our sanctions proceeds that we are alleviating 

right now to kill people in Syria, and you know that. They are 

15 

using a portion of this to funnel is to Hizballah to kill people in 

Syria. 

I guess I do not understand why you would already agree on the 

front end to them not having the gold standard, if you will, as it 

relates to enrichment. We do not let Vietnam and other countries 

that have been better actors do that. Why have we done that? And 

I think, again, that raises alarms that—you know, a lot of people 

think that Secretary Kerry is so anxious to make a deal for lots of 

legacy reasons that he is willing to overlook some of the details 

that are so important. Why have we done this? 

Ms. SHERMAN. Let me say several things, Senator. First of all, 

we have not conceded anything. The comprehensive agreement, 

nothing is agreed to until—— 

Senator CORKER. Let me, if I could, you do not think that in a 

preamble where we talk about—you do not think—well, let me just 

put it this way: Do the officials in Iran think that we have agreed 

to allowing them to enrich? I mean, every press statement they 

have made says that. How could there be such a big misunderstanding over such an important issue? 

Ms. SHERMAN. Right. What I was about to say, Senator, is nothing is agreed to in a final agreement until everything is agreed to. 

What we have said to Iran and what this says is that, yes, we will 

talk with them about the potential for a very limited enrichment 

program, matched to practical needs, with staggering constraints, 

monitoring, and verification, if—if—they agree to everything else 

that we want agreed to. That is totally consistent with the U.N. Security Council resolution, which does not talk about stopping enrichment. It talks about suspending enrichment and saying that 

once the IAEA and others confirm that Iran has met all its responsibilities and obligations, it could be treated like any other NPT 

State. So it is not about ending. It is about suspending enrichment. 

That said, Senator, I completely agree with you, we all do, that 

there are many questions here about what Iran is up to. That is 

why the Secretary of State, the President of the United States in 

his address at the Saban Forum, as well as the Secretaries, said 

we are quite skeptical whether we will get to the comprehensive 

agreement that we all wish to see. But we must test Iran because 

that is how we keep the international community together; that is 

how, if we have to choose other options, we will have the international community with us to do so. 

Senator CORKER. Mr. Chairman, I just want to make one quick 

statement in closing. I do think that we are stepping away from 

base U.N. Security Council agreements, and I think what Congress 

wants to see happen is that not occur. And I think that is why you 

have seen such a reaction. I realize we are sort of going through 

a rope-a-dope here in the Senate and that we are not actually going 

to do anything. I understand that that is sort of baked in, the 

blockage, and I know we are participating in a little bit of a ropea-dope today. But I just want to say to David Cohen, I was just in 

the region, and I concur with Senator Reed. Once you begin loosening sanctions and people begin to see that Iran is now going to 

become not a rogue country but part of the international community—I mean, we are basically ceding much of Middle Eastern activities to them. We have been now for about a year. Once they see 

16 

that there is a rush, as Senator Reed mentioned, to do business 

with them—and I think that is why we are all concerned, that we 

did an interim deal that has no sacrifice on their part whatsoever. 

None. They are still spinning 19,000 centrifuges every single day. 

And they are not going to violate this agreement. It is an outstanding agreement for them, because in 6 months they are going 

to be a normal international entity. I do not see any way you hold 

the sanctions. But, again, obviously we are disappointed, but hopeful that somehow you can put the genie back in the bottle and end 

up with some type of agreement that averts warfare, because all 

of us do want to see this succeed. We just do not know how we get 

there with an interim deal framed the way this one is. But thank 

you. 

Chairman JOHNSON. All Members are now required to report to 

the Senate floor for two votes. 

Senator Menendez has a Committee hearing, a markup, quite 

soon, and will the Senator—— 

Senator MENENDEZ. Mr. Chairman, I understand there are 15 

minutes on this vote, so my 5 minutes would be more than enough. 

Chairman JOHNSON. OK. 

Senator MENENDEZ. Thank you, Mr. Chairman. 

You know, I have been pursuing Iran since 1996 when I learned 

as a member of the House Foreign Affairs Committee that the 

United States was sending voluntary contributions to the IAEA in 

addition to our membership dues, whose voluntary contributions 

were going for what? To create operational capacity at the Bushehr 

nuclear facility. That was not in the national interest and security 

of the United States, and I led an effort to stop that. 

Now, I have been continuing to pursue Iran for 17 years when 

it was not in the spotlight, and what I have seen is Iran deceive, 

delay, and over various administrations march forward to the point 

that it seems that we are now ready to accept some form of an enrichment program in Iran. And so some of us are very skeptical not 

because of wide-eyed skepticism but of reality of what is the history 

so far. 

And I have to say, part of my challenge in trying to listen to the 

Administration is some of the same statements I have heard in the 

past. I was looking at a transcript of the Senate Foreign Relations 

Committee on December 1, 1991, and many of the arguments I 

heard then against the pursuit of any sanctions regime are the 

ones I am hearing now. Let me quote from the transcript. 

‘‘Secretary Cohen. The concern we have with this amendment’’— 

which was the Menendez-Kirk amendment—‘‘is that we think it 

risks two things we want to avoid. One is that it risks fracturing 

the international coalition that has been built up over the last several years to bring pressure on Iran, and we would rather consider 

voluntary action against the Central Bank of Iran rather than the 

threat of coercion that is contained in your amendment.’’ 

You went on to say, ‘‘We think that, to be clear, our judgment 

is that the best course to pursue at this time is not to apply a 

mechanism that puts at risk the largest financial institutions, the 

central bank of some of our closest allies.’’ 

And you went on to say, ‘‘Our position is that the right course 

is not to adopt this amendment.’’ 

17 

Now, you know, that is basically what I heard then. That amendment went on to pass 100–0, and it is one of the things that you 

all, the Administration, heralds today as the essence of what has 

gotten Iran to the negotiating table. So you will forgive me if I, 

having heard many of the same arguments—we will break our 

international coalition, we will not have partners—that has been 

the arguments as of 2 years ago, and it is the arguments today. 

I also look at the question of what is really this interim agreement or plan of action all about, and what we hear is versus what 

the Iranians say. The Iranians say in published reports—Iran said 

that, according to the agreement, the text of the agreement, Iran 

said it would not make any further advances of its activities—it did 

not say its nuclear core. It said any further advances of its activities at the Arak reactor. And then Zarif told the parliament in 

translated comments that it means no nuclear fuel will be produced, but construction will continue there. 

Now, you say a road or a wall. The reality is if you can continue 

to construct all the elements except for the nuclear core, that is a 

fundamental difference. And it is not insignificant. Especially if our 

view is that Arak really is not to be allowed, at the end of the day, 

why would we allow them to even move to any form of construction 

which puts a greater and greater investment on their part to 

achieve their ultimate goal? 

Then we see today that the Iranians are launching a rocket next 

week, and though this was supposedly made as their space program, it is well known that this is just a cover for a military ballistic weapons program. I think that is a provocative action in the 

midst of such negotiations, should be interpreted as a sign of bad 

faith, and only reaffirms in our mind why we need to proceed with 

some efforts here. 

So I am beginning increasingly—I know I have been a proponent 

of pursuing additional sanctions prospectively at a timeframe beyond the scope of the intended 6-month period that we think is an 

insurance policy, but I am beginning to think, based upon all of 

this, that maybe what the Senate needs to do is to find the end 

game, and at least what it finds as acceptable as the final status, 

because I am getting nervous about what I perceive will be acceptable to us as the final status versus what, in fact, I think the— 

when I say ‘‘to us,’’ meaning the Administration—versus what the 

Congress might view as acceptable. It may be defining that 

through a resolution, maybe a course of action that would affect the 

ultimate outcome here, which is obviously the most important one. 

So I just want to put on the record my skepticism based on the 

history that we have had here, one for 17 years, the other maybe 

more recent, that I have heard many of these arguments, and they 

are the arguments nonetheless that have had the Senate act and 

have actually helped the Administration achieve some of its goals. 

Chairman JOHNSON. We will resume the hearing immediately 

following the votes. This hearing is in recess. 

[Recess.] 

Chairman JOHNSON. I will give you an opportunity to respond to 

the remarks by Senator Menendez. Ms. Sherman and Mr. Cohen, 

would you like to respond? 

18 

Ms. SHERMAN. If I may, Mr. Chairman, let Under Secretary go 

first, and then I will go second. Thank you. 

Ms. COHEN. And thank you, Mr. Chairman, and I know that Senator Menendez is not here, and so I would make the offer to Senator Menendez that I am happy to follow up with him directly. But 

what I would say is that I do not think anyone can deny the importance of the international coalition of countries that we have been 

able to put together and hold together. It has magnified enormously the strength of our sanctions, and we have been able to do 

that over the years working with Congress in a way that ensures 

that the legislation that is enacted strengthens rather than threatens that international coalition. 

After the testimony that Senator Menendez referenced, we met 

with Senator Menendez and others and expressed our concern with 

the provision that would impose sanctions on the Central Bank of 

Iran that was directed at Iran’s ability to export its oil, and we 

worked with Senator Menendez and others and very much appreciate his working with us to modify the provision that gave us the 

greatest concern in a way that when it was ultimately enacted, it 

was enormously effective. This is the significant reduction provision that has over the course of the past 2 years resulted in Iran’s 

ability to export its oil being significantly impaired. It was exporting 2.5 million barrels per day of oil at the beginning of 2012. It 

is now down to about a million barrels per day. 

We were able to implement that provision in a way that brought 

along our partners rather than leading them to fight us as we were 

trying to drive down Iran’s oil revenues. So I appreciate Senator 

Menendez’s work with the Administration in crafting that legislation in a way that was enormously effective. 

Today we have this very strong international coalition. The risk 

of legislating right now is that it weakens that coalition. Now, I 

cannot sit here and say that it will blow apart the coalition, but 

I do not think anyone can deny that there is a risk that if we legislate now, the coalition will weaken. If it weakens, the effectiveness 

of our sanctions weaken. And the concerns that Senator Corker and 

Senator Reed expressed about the interests of the business community, the international business community going into Iran become 

more real. And if our sanctions weaken, the leverage that our negotiators have is diminished, and our ability to reach the long-term 

agreement that is what we are all trying to achieve becomes more 

difficult. 

So I would just say that, given the absolute certainty that Congress can legislate if the Iranians do not fulfill their obligations 

under the Joint Plan or are unable to reach a long-term agreement, 

as well as the certainty that the Administration will work with this 

Congress, with this Committee, with Senator Menendez, and others 

on legislation that could be enacted at the appropriate time, it just 

seems to me that it is not a risk worth taking right now. 

Ms. SHERMAN. Thank you, Mr. Chairman. Let me just add, I totally understand Senator Menendez’s and all Senators’ skepticism 

about Iran. Iran does not do good things around the world for the 

most part. We are concerned about what they have done regarding 

missing Americans. We are very concerned about their destabilizing activities, about their terror, about their human rights 

19 

abuses, their censorship. We are very skeptical about whether we 

can reach a comprehensive agreement that fully addresses all of 

the international community’s concerns about their nuclear program. But we are equally convinced that we must test and try to 

see whether, in fact, we can resolve this peacefully, because that 

is what the American people want, that is what the U.S. Congress 

wants, that is what the Senate wants, and that is the right thing 

to do. 

We are at a somewhat different place than we have been in the 

lead-up to this moment where sanctions have been so staggeringly 

effective. We now have a Joint Plan of Action. We now have an understanding with Iran of actions it is to take in order to get very 

limited, targeted, and reversible sanctions relief, and to enter into 

a comprehensive negotiation for a comprehensive agreement. 

Because we are at this different place, we should react and respond somewhat differently, which is to say we should test that 

agreement. And one of the provisions of the agreement is that the 

European Union, the U.N. Security Council, and the United States 

not impose new nuclear sanctions during the 6-month period while 

we negotiate that comprehensive agreement. It seems to us that it 

is worth complying with the provisions of that understanding, testing Iran, and then coming to the Congress, to this Committee and 

the Senate, as Under Secretary Cohen has said, to take action if 

and when needed. 

Thank you. 

Chairman JOHNSON. Senator Tester. 

Senator TESTER. Yes, thank you, Mr. Chairman. 

Very quickly, and if you could be as concise as possible, I have 

got a bunch I would like to get through. Mr. Cohen, following up 

on what Senator Reed had said, more than a dozen—were these 

American companies that sanctions were put on? 

Mr. COHEN. The actions today were not against American companies, but within—yesterday we applied sanctions—applied an enforcement action in the settlements with World Bank of Scotland, 

and about 2 weeks ago, there was an action that was settled with 

an American company called—— 

Senator TESTER. OK. And just to be clear, is this public information? 

Mr. COHEN. Absolutely. 

Senator TESTER. OK. And could you tell me, do any of these businesses do business with the U.S. Government? 

Mr. COHEN. I do not know. I would be very surprised if any did. 

But we will check into that. 

Senator TESTER. OK. I just think that, you know, if we are going 

to do something, they ought not be doing business with us, the U.S. 

Mr. COHEN. I completely agree. I think it is very unlikely this 

company—— 

Senator TESTER. OK. To Wendy, I happened to be over in Iran 

when—in Israel, I am sorry, when this agreement was announced. 

Prime Minister Netanyahu was not happy, as you well know. In 

your estimation, though, it seemed like everybody in the Middle 

East was not happy with it—not just Israel but everybody. Why? 

Ms. SHERMAN. Senator, I understand everyone in the region’s 

anxiety because it is our anxiety, and that is that Iran is a destaVerDate Nov 24 2008 13:56 Oct 20, 2014 Jkt 046629 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 L:\HEARINGS 2013\12-12 ZDISTILL\121213.TXT JASON
20 

bilizing influence in the region. They obviously are financing Lebanese Hizballah. They are sending their own military advisers into 

Syria. They are financing actions in Yemen. They are not good actors in the region, and so there is a concern among people in the 

region that this nuclear agreement or this understanding is going 

to lead to us normalizing our relationship with Iran. That is so 

many years off. 

Senator TESTER. Yes. The hope is for that, but we are a ways off. 

Ms. SHERMAN. A long way off. A long way off. 

Senator TESTER. OK. In relation to the IAEA inspectors, are they 

there on a daily basis or a weekly basis or—— 

Ms. SHERMAN. Right now, the IAEA inspectors go to Fordow and 

Natanz I believe on a weekly basis, and this agreement now will 

require them to go daily. 

Senator TESTER. OK. Do they have access to everything they 

need to see? 

Ms. SHERMAN. They do have and now will have additional access 

to things they need to see. 

Senator TESTER. And do these inspections have to be 

preannounced? 

Ms. SHERMAN. They will have—because they are there every day, 

Iran will now know that they will be there every day. 

Senator TESTER. OK. You had talked about the Iranian policy in 

regards to Hizballah and Hamas and, to be quite honest with you, 

pretty much the funding for a lot of the terrorism that happens in 

not only the Middle East but the world. Part of my concern is you 

have got Iran that is acting very improperly over on one side, and 

then a hope that on this side they are going to act separate from 

the rest of their foreign policy. 

What gives you any sort of confidence that that even could happen? 

Ms. SHERMAN. Well, it is not about confidence. It is not about 

trust. It is about verification in the first instance. 

Second, quite frankly, the MFA and Foreign Minister Zarif have 

responsibility for the nuclear negotiation. The IRGC Quds Force 

has the leadership on their activities that destabilize so much of 

the region in parts of the world. So President Rouhani has been 

given license by the Supreme Leader to then give license to Foreign 

Minister Zarif to try to address the concerns of the international 

community about the nuclear program. The reason for that is because of the horrific economic situation that Under Secretary 

Cohen outlined. 

Senator TESTER. You know, one of the things that was kind of 

ironic to me—and I was not aware of what Ranking Member Crapo 

was talking about with folks being held hostage. One of the things 

that would seem—where is the good will that comes out of Iran? 

I mean, we have seen good will come out of this country. We always see good will come out of this country. Where is the good 

will—because these guys have been the ones that have been blowing up the world, not us. 

Ms. SHERMAN. Senator, I wish I could tell you that I thought that 

there was a lot of good actions coming our way. There was an 

American who was briefly held and then let go by Iran. They saw 

that as a good will gesture. They saw their letting go of our hikers 

21 

as a good will gesture. But, quite frankly, there is a long way to 

go before we see the good will that you are referring to. 

Senator TESTER. OK. Last question. Iran sits on the fourth largest oil reserves in the world, second largest natural gas reserves. 

Why should Iran even be interested in nuclear power? 

Ms. SHERMAN. This is an excellent question. It is one we have 

asked them repeatedly, and it is why this Joint Plan of Action says 

we want to understand what their practical needs are because, 

quite frankly, it is not clear to us why they need 19,000 centrifuges, why they need a stockpile of 3.5 percent enriched material, why they need the Arak nuclear reactor. And so that is what 

we are going to have to work through to get to a comprehensive 

agreement. 

Senator TESTER. Just in closing, I would just say I wish you the 

best. I think that there is not a soul at this table that does not 

want to see these negotiations work. On the other hand, we do not 

want to see Iran become more powerful either. 

Ms. SHERMAN. We quite agree. Thank you. 

Senator TESTER. Thank you, Mr. Chairman. 

Chairman JOHNSON. Senator Heitkamp. 

Senator HEITKAMP. Thank you, Mr. Chairman. 

You know, I thought I came to a hearing on sanctions, and what 

we are really having is a hearing on the legitimacy of the proposed 

agreement, which presents really kind of three categories of my 

kind of analysis. 

Number one, the Congress obviously plays a very large role in 

providing policy advice and certainly participating, and I think 

there is a lot of people, certainly in this room, who have expressed 

dissatisfaction with the agreement, dissatisfaction with whether we 

have mutuality of goals, whether we have kind of speaking with 

one voice, which is critically important if we are going to be successful. 

And so I understand and share your concern about the international community and your international sanctions. I share your 

concern about whether we can continue to test the waters, so to 

speak, in little interim steps. But I also share the concern of very 

many members we have heard today about not having mutuality 

about the end goal, about not really appreciating and understanding what—and, you know, we can all say we do not want 

them to have the capability, but the bottom line is the devil is in 

the details in any negotiation. 

And so I would really advise and caution the Administration— 

certainly both of you, through the Syria discussion you have been 

very forthcoming. I think you probably have an office somewhere 

in the United States Capitol you have been up here so much. But 

I just really believe that there needs to be better listening to the 

concerns that have been expressed here today. 

I want to cover something that has not really been covered yet, 

which is the internal conditions in Iran for the development of this 

agreement. There is a lot of discussion—just as you are going 

through this process here internally, there is a lot of discussion 

about the internal politics of Iran and whether, in fact, there is a 

mature enough diplomatic situation in Iran to actually deliver anything that we might hope for as we pursue peace in the region. 

22 

And so I would like comments from both of you about how you 

see the internal politics and how you see this—how fragile is this 

agreement in Iran? 

Ms. SHERMAN. Well, thank you very much, Senator. First of all, 

I take to heart your imprimatur to us to listen better and to understand the concerns here of the U.S. Senate, and we will work and 

endeavor to do so. 

Second, as regards the internal politics, I would urge you, if you 

have not had a classified briefing with our national intelligence 

manager for Iran, to avail yourself of that. I think you have heard 

some of it because you will get some insights into what is going on. 

But in this unclassified setting, let me say my own understanding—— 

Senator HEITKAMP. And I think I have a pretty good idea, but 

I also think it is really important for the American public to understand at least some characteristics of who we are negotiating with. 

Ms. SHERMAN. Thank you. The Supreme Leader is the only one 

who really holds the nuclear file, makes the final decisions about 

whether Iran will reach a comprehensive agreement to forgo much 

of what it has created in return for the economic relief it seeks. The 

Supreme Leader has, however, given to President Rouhani, who 

was elected to get that economic relief and was quite clearly not 

the Supreme Leader’s first choice to be president of Iran, but was 

acceptable and is himself a conservative cleric. No one should misunderstand or believe that President Rouhani is not anything but 

a very conservative cleric. He is about preserving the regime, not 

changing it, not changing the Supreme Leader. So none of this is 

about regime change for him, nor is U.S. policy headed and about 

regime change. It is about addressing the concerns about Iran’s nuclear program. 

So Rouhani was given a license by the Supreme Leader to go and 

try and see what he could do to get economic relief, with some red 

lines in place, including making sure that Iran could keep some of 

its capability. Indeed, then Rouhani passed off to Foreign Minister 

Zarif, who knows the United States very well, having lived here 

and studied here and worked for Iran here for nearly 30 years, to 

see whether, in fact, he could move the negotiation forward. So it 

is in that setting that we have begun to really make some progress 

because they want this economic relief. 

Additionally, I have to add that they do have differences among 

their country. There are hard-liners who are much more conservative than the conservative cleric president of Iran, President 

Rouhani, who do not think that they should be talking with the 

United States, or anyone else for that matter, about their nuclear 

program. 

There are some people who are more reform-minded, but there 

is a general belief among the Iranian people that they have a right 

to enrich. The United States does not believe any country has a 

right to enrich. But the Iranian people do, and they have a great 

deal of pride and a culture of resistance to change and do not particularly want to adopt all that the United States stands for, so 

they very much hold on to their own tenets. 

Under Secretary Cohen may want to add something from an economic point of view. 

23 

Mr. COHEN. If I could just very briefly, Mr. Chairman, Senator 

Heitkamp, just picking up on what Under Secretary Sherman said 

about the election of Rouhani, it was, I think, generally understood 

as an expression by the Iranian people of a desire for relief from 

the economic conditions that they are currently facing. Among the 

skewed list of candidates, he was the one who was sort of most 

likely to try to bring about improved economic conditions through 

engagement with the West, understanding full well that the only 

way that he can get improved economic conditions in Iran is to get 

the sanctions lifted, and the only way to get the sanctions lifted is 

to address concerns with their nuclear program. 

This initial first step Joint Plan of Action will not improve the 

economic conditions in Iran, but it was greeted with excitement 

among the people of Iran, because I think they saw this as showing 

the potential, the prospect for economic improvement down the 

road. Frankly, I think this next 6 months, as the Iranian people 

see through this Joint Plan of Action that there is the potential if 

their Government negotiates in a serious fashion about the nuclear 

program to get real sanctions relief, can create additional internal 

pressure of the kind that we saw that led to the election of 

Rouhani, additional pressure to push their Government to do what 

is necessary to address the concerns. 

Chairman JOHNSON. Senator Warren. 

Senator WARREN. Thank you, Mr. Chairman. Thank you for 

being here. 

So America and its allies are committed to preventing Iran from 

obtaining nuclear weapons, and we are committed to protecting our 

allies throughout the region, including Israel. This dual-track policy that we are on now—imposing tough sanctions on Iran while 

engaging them diplomatically—I think reflects this commitment, 

and that approach has clearly brought Iran to the negotiating 

table, produced an interim deal that is a promising first step toward achieving our goals in the region. 

Of course, the interim deal does not give us everything that we 

want. That is the nature of a negotiation. Each side has to give a 

little. But it is certainly no giveaway to Iran. They made critical 

concessions. The core existing sanctions on their oil and banking 

sectors remain fully in force. And all the sanctions relief in the deal 

provide—are time limited and fully reversible. More importantly, it 

seems to me the interim deal is a necessary step in reaching a final 

deal. 

So I would like your view on that, Under Secretary Sherman. 

Could the U.S. plausibly hope to get a final agreement that prevents an Iranian nuclear weapons program without an interim deal 

of this kind? 

Ms. SHERMAN. Thank you very much, Senator. You know, I think 

Secretary Kerry has said, I have said, and the President of the 

United States has said we wish we could have gotten a comprehensive agreement in the first stage. There is no doubt we would all 

be happier to have a comprehensive agreement, but it simply was 

not available. It was not possible. 

And so what we thought was critical was to get this first step 

and stop the advance of their nuclear program, to put time on the 

clock to negotiate that comprehensive agreement—not too much 

24 

time on the clock because we did not want them to play games, but 

enough time to really see if we could get that negotiation underway 

and fulfilled. 

So, in our view, we needed this first step to put that time on the 

clock. We understand that our very strong ally, partner—Israel— 

tactically believes we should have waited for a comprehensive 

agreement, that we should have kept sanctioning and hope that 

Iran would capitulate. But our concern with that is, because it is 

a culture of resistance, as we were just discussing, that it would 

take a very long time. And although it might ultimately happen, 

though it might not, all that while they would be advancing their 

nuclear program. And since the time for breakout was already 

short, it would become shorter and shorter, leaving us with very 

difficult options and diplomacy fading away. 

Senator WARREN. Good. And if I can just follow up just a little 

bit here, to be clear, Under Secretary Cohen, the value of the temporary sanctions relief, I take it from all you have said, is minuscule in comparison to Iran’s economy, even in its greatly weakened 

state. Is that correct? 

Mr. COHEN. Yes, Senator Warren. The total value of this deal is 

in the $6 to $7 billion range; that is about 1 percent of Iran’s GDP. 

It does not come close to closing the budget deficit that Iran faces, 

which is in the $35 billion range. It does not come close to providing the funds necessary for Iran’s foreign exchange needs, which 

run about $60 to $70 billion a year. 

So as I said, it is economically insignificant to Iran, and it is insignificant in particular because of what remains in place: the 

banking sanctions, the oil sanctions, the financial sanctions, the 

fact that their ports are largely cutoff. You know, this relief will 

not improve the economic situation in Iran in any significant way. 

Senator WARREN. And then one last question that I want to ask 

about this. President Rouhani was elected in part because, unlike 

his predecessor, he was interested in negotiating with the international community. But he still has to contend with a significant 

number of hard-liners who oppose negotiations. So, Under Secretary Sherman, if Congress passes additional sanctions now, even 

sanctions that do not kick in unless the negotiators fail to reach 

final agreement in 6 months, would that make it more difficult or 

easier for President Rouhani to make a final deal? 

Ms. SHERMAN. I think there is no doubt that if, in fact, sanctions 

were passed, the hard-liners would say, ‘‘See, you cannot deal with 

the United States. You cannot deal with the P5+1. There is no good 

faith.’’ And although that might indeed tank the agreement, as I 

have said, our greater concern is keeping the P5+1 and the international coalition together for the enforcement of the sanctions that 

remain on the books, which are vast. 

Senator WARREN. Thank you. 

Thank you, Mr. Chairman. 

Chairman JOHNSON. Ms. Sherman and Mr. Cohen, can you explain specifically how the U.S. will ensure that Iran complies with 

the terms of the first step agreement? And can you describe the different verification and monitoring roles played by the State Department, the intelligence community, and the IAEA? Ms. Sherman, let 

us start with you. 

25 

Ms. SHERMAN. Sure. First of all, the IAEA will be working with 

us. We are a member of the Board of Governors of the IAEA, and 

so we are part of the regular meetings. They will help do the 

verification of the agreement—in fact, will lead the verification of 

the agreement; as I have stated, daily access to Fordow and 

Natanz, more frequent access to Arak, managed access to uranium 

mines and mills, to centrifuge production, getting the plans of the 

Arak reactor. So in many ways, they will provide the compliance 

oversight for this. 

In addition, of course, through our own means as a Government, 

both national intelligence means as well as diplomatic means, we 

will be monitoring the compliance, and we will, of course, be available to this Committee and to the U.S. Congress for ongoing briefings, consultations, and hearings to keep you apprised of compliance. 

Chairman JOHNSON. Mr. Cohen. 

Mr. COHEN. Yes, Mr. Chairman, with respect to compliance, I 

would just make one point. The relief that is afforded to Iran in 

this package does not begin until Iran begins to comply with its obligations under the agreement. So none of the relief in the petrochemical sanctions or the auto sanctions, any of that, begins until 

we see the Iranians complying with their commitments under this 

agreement. And, moreover, the financial aspect, this $4.2 billion 

that Iran will be allowed access to, that is doled out in installments 

over the 6-month duration of this deal. And so the Iranians will 

need to continue to comply with their obligations under this first 

step in order to get access to those funds. 

Chairman JOHNSON. Senator Crapo. 

Senator CRAPO. Thank you, Mr. Chairman. 

Ambassador Sherman, the United States and the other members 

of the P5+1 are apparently bound in the agreement to the principle 

of no new nuclear-related sanctions. Can you or have you specifically defined what that means? What are ‘‘nuclear-related sanctions’’? 

Ms. SHERMAN. Well, there are both practices and legal definitions 

that accrue with that, Senator, and I would be glad to get you a 

briefing from a team at State about how we will sort of work 

through those issues. But it is quite clear sort of in the nomenclature of how we proceed what are considered nuclear related 

versus what would be terror related or human rights abuses or censorship or military sales related. 

Senator CRAPO. This just generates another series of questions 

for me, and let me pose it this way: Given that there are different 

kinds of sanctions and the agreement focuses on nuclear-related 

sanctions, assuming we can specify exactly what that is and distinguish between the different sanctions, does that mean that Congress would be free to pass other sanctions measures while we are 

considering the plan? 

Ms. SHERMAN. We have said to Iran that we will continue to enforce all of our existing sanctions, and we have said that this agreement pertains only to new nuclear-related sanctions in terms of 

what we, the European Union, and the U.N. Security Council will 

forgo. 

26 

Senator CRAPO. And you are confident that can be delineated 

as—— 

Ms. SHERMAN. Yes. And, indeed, right now there are considerations by the Human Rights Council about a resolution on human 

rights abuses in Iran. We fully support that. So on an ongoing 

basis, in all of the international fora where we have ongoing concerns about counterterrorism, human rights, censorship, we will be 

active as we always have been. 

Senator CRAPO. All right. Let me ask it in another context. 

Should we proceed and should Iran succeed in proving that it can 

run a purely civilian program and move forward with the resolution of the issue as you have discussed is our objective and as we 

all hope will be achieved, would the United States then be able to 

use all of the tools in its toolbox—and what I am referring to here 

is something such as petroleum sanctions—to address the destabilizing nature of other aspects of Iran’s conduct such as its State 

sponsorship of terrorism or its advanced ballistic missile production 

or its human rights abuses? 

Ms. SHERMAN. I think, Senator, we would have to look at what 

the specific language was attacking what specific problem, so I 

think the best I can do today, without specific language sitting in 

front of me and in front of our lawyers, is to say to you that the 

only commitment we have made in this agreement is no new nuclear-related sanctions, is the only commitment we have made. 

Senator CRAPO. All right. I would like to pursue that a little further with you following the hearing to see how we distinguish between the two and what kind of limitations would be on the United 

States as we move forward in that context. 

Just another couple quick questions, and these questions relate 

to the U.N. Security Council resolutions and the U.S.–UAE Civilian 

Nuclear Cooperation Agreement. Can we assume or can you confirm to us that those resolutions and agreements would be required 

to be complied with by Iran as we move forward in any final negotiations? 

Ms. SHERMAN. Indeed, the Joint Plan of Action says that all U.N. 

Security Council resolutions must be addressed before a final 

agreement is agreed to. 

Senator CRAPO. All right. Thank you, Mr. Chairman. I have no 

further questions at this point. 

Chairman JOHNSON. Stopping Iran’s illicit nuclear activities is 

vital to our national security and that of our allies, including 

Israel. If no final deal is reached, Iran fails to comply with the first 

step agreement, this Committee will act swiftly to impose a new 

round of sanctions. In the meantime, I agree with today’s witnesses 

that a pause on new sanctions legislation is justified to see if such 

a deal is possible. 

I would like to thank the witnesses for their testimony, and this 

hearing is adjourned. 

[Whereupon, at 12:16 p.m., the hearing was adjourned.] 

[Prepared statements and responses to written questions supplied for the record follow:] 

27 

PREPARED STATEMENT OF SENATOR JON TESTER 

Thank you Chairman Johnson and Ranking Member Crapo for convening this important hearing. I would also like to thank Ms. Sherman and Mr. Cohen, and Secretary Kerry, for their tireless diplomatic efforts. All of us here are deeply committed to preventing Iran from acquiring a nuclear weapon. 

Your hard work is a critical first step in this endeavor. 

I was in Jerusalem when this agreement was announced on November 24th. That 

evening, I met with Israeli Prime Minister Netanyahu. For me, visiting Israel during this critical time highlighted the gravity of the issue before us. 

As Secretary Kerry said in the House yesterday, ‘‘there’s no more important issue 

in American foreign policy.’’ I could not agree more. That’s why we have to get this 

right. 

While I fully support diplomatic efforts to prevent Iran from getting a nuclear 

weapon, I remain deeply skeptical of Iran’s leadership and their intentions. Simply 

put, the Iranian regime still poses a threat to American interests, our allies, and 

to the stability of the region. 

I look forward to hearing from each of you about the details of the agreement 

reached in Geneva, and the prospects of reaching a long-term comprehensive solution as we move forward. 

Again, I thank Chairman Johnson and Ranking Member Crapo for calling this 

hearing, and I look forward to the testimony of the witnesses. 

PREPARED STATEMENT OF WENDY SHERMAN 

UNDER SECRETARY FOR POLITICAL AFFAIRS, DEPARTMENT OF STATE

DECEMBER 12, 2013 

Good morning, Chairman Johnson, Ranking Member Crapo, distinguished Members of the Committee. Thank you for inviting me to discuss the details of the Joint 

Plan of Action (JPA) concluded with Iran and our P5+1 partners on November 24 

in Geneva. 

Let me begin by noting that the diplomatic opportunity before us is a direct result 

of the cooperation between Congress and the Administration to put in place and implement a comprehensive and unprecedented sanctions regime designed to press 

Iran to address international concerns with its nuclear program. 

Our collaboration on sanctions is what brought Iran to the table. However, it is 

important to underscore that what we do from this point forward is just as critical, 

if not more so, in terms of testing Iran’s intentions. In that regard, I look forward 

to our consultations over the important weeks and months ahead. 

Today, I want to give you the facts about what was agreed to in Geneva, so you 

can judge the merits of the JPA for yourself. 

Iran Commitments 

We have long recognized that the Iranian nuclear program constitutes one of the 

most serious threats to U.S. national security and our interests in the Middle East. 

Thanks to the sanctions pressure, and a firm and united position from the P5+1 

(China, France, Russia, UK, U.S., and Germany, in coordination with the EU), we 

have reached an understanding that constitutes the most significant effort to halt 

the advance of Iran’s nuclear program in nearly a decade. As a consequence, the 

JPA agreed to in Geneva is profoundly in America’s national security interest, and 

makes our regional partners safer and more secure. 

The JPA is sequenced, with a 6-month period designed explicitly to block nearterm Iranian pathways to a nuclear weapon, while creating space for a long-term 

comprehensive solution. The goal of that comprehensive solution is to resolve the 

international community’s concerns with Iran’s nuclear program. What this initial 

plan does is help ensure that Iran’s nuclear program cannot advance while negotiations towards that solution proceed. 

Upon implementation in the coming weeks, this initial step will immediately: halt 

progress of the Iranian nuclear program; roll it back in key respects; and introduce 

unprecedented monitoring into Iran’s nuclear activities. Taken together, these measures will prevent Iran from enhancing its ability to create a nuclear weapon and 

increase the confidence in our ability to detect any move towards nuclear break-out 

or diversion of material towards a covert program. 

The details demonstrate why this is the case. First, as stated, Iran must halt the 

progress of its enrichment program. This means, under the express terms of the 

JPA, that Iran cannot increase its enrichment capacity. Iran’s stockpile of 3.5 percent enriched uranium hexafluoride (UF6) cannot grow—it will be the same amount 

28 

or less at the end of the 6-month period as it is as the beginning. Iran cannot build 

new enrichment facilities for the production of enriched uranium. Iran cannot install 

additional centrifuges of any type in their production facilities, operate more centrifuges, nor replace existing centrifuges with more advanced types. Moreover, Iran 

must limit centrifuge production to those needed to replace damaged machines; thus 

Iran cannot expand its stockpile of centrifuges. 

Second, during this initial phase, Iran will roll back or neutralize key aspects of 

its program. Iran must cease all enrichment over 5 percent. The piping at Fordow 

and Natanz that is used to more efficiently enrich uranium over 5 percent must be 

dismantled. Iran must neutralize its entire 20-percent stockpile of enriched uranium 

hexafluoride by diluting it to a lower level of enriched uranium hexafluoride or converting it to oxide for fuel for the Tehran Research Reactor. 

Finally, Iran cannot advance work on the plutonium track. At Arak, Iran cannot 

commission the heavy water reactor under construction nor transfer fuel or heavy 

water to the reactor site. Iran cannot test additional fuel or produce more fuel for 

the reactor nor install remaining components for the reactor. Iran cannot construct 

a facility for reprocessing spent fuel. Without reprocessing, Iran cannot separate 

plutonium from spent fuel and therefore cannot obtain any plutonium for use in a 

nuclear weapon. As such, this first step freezes the timeline for beginning operations 

at the Arak reactor and halts progress on any plutonium pathway to a weapon. 

Significantly, the monitoring measures outlined in the JPA will provide much 

more timely warning of a breakout at Iran’s declared enrichment facilities and add 

new checks against the diversion of equipment for any potential covert enrichment 

program. Some have rightfully asked why we should trust Iran to live up to these 

commitments. As Secretary Kerry has said, the JPA is not based on trust, it is 

based on verification—and the verification mechanisms set forth in the JPA are unprecedented. 

Under its express terms, Iran must permit daily access by International Atomic 

Energy Agency (IAEA) inspectors to the facilities at Natanz and Fordow and allow 

more frequent access to the Arak reactor. Iran must allow IAEA inspectors access 

to sites related to centrifuge assembly and production of centrifuge rotors (both key 

aspects of the program). Iran must allow IAEA inspectors access to uranium mines 

and mills. Iran must provide design information for the Arak heavy water reactor. 

These monitoring mechanisms will provide additional warning of breakout or diversion of equipment all along the nuclear fuel cycle and would not be in place without 

the understanding reached in Geneva. 

In summary, even in its initial phase, the JPA stops any advances in each of the 

potential pathways to a weapon that has long concerned us and our closest allies. 

It eliminates Iran’s stockpile of 20-percent enriched uranium hexafluoride. It stops 

installation of additional centrifuges at production facilities, especially Iran’s most 

advanced centrifuge design, together with freezing further accumulation of 3.5-percent enriched uranium hexafluoride. And it ensures that the Arak reactor cannot 

be brought on line while we negotiate a comprehensive solution. 

P5+1 Commitments 

In return for these concrete actions by Iran and as Iran takes the required steps, 

the P5+1 will provide limited, temporary, and reversible relief while maintaining 

the core architecture of our sanctions regime—including key oil and banking sanctions. And we will vigorously enforce these and all other existing sanctions. 

We estimate that this limited relief will provide approximately $6–7 billion in revenue. 

First, we will hold steady Iran’s exports of crude oil at levels that are down over 

60 percent since 2011. This means that Iran will continue to lose $4–5 billion per 

month while the JPA is in effect compared to 2011. Let me be clear, however. We 

will not allow Iran’s exports to increase and we will continue collaboration with our 

international partners to ensure that they understand that any increases in Iranian 

oil purchases—or any new purchases of Iranian oil—remain subject to sanctions. 

Second, we are prepared to allow Iran to access $4.2 billion in its restricted assets, not in a lump sum, but in monthly allocations that keep up with verified Iranian progress on its nuclear commitments. Remember, Iran will continue to lose $4– 

5 billion a month due to our oil sanctions compared to 2011, so this access to funds 

is less than 1 month of those losses. And this is a fraction of Iran’s total needs for 

imports or its budget shortfall. 

Third, the P5+1 agreed to suspend certain sanctions on gold and precious metals, 

Iran’s auto sector and on Iran’s petrochemical exports. The suspension of the sanctions on gold and precious metals will not allow Iran to use restricted assets to purchase gold and precious metals, rather it allows Iranians to import and export gold 

and precious metals. The suspension of the sanctions on the auto industry will allow 

29 

Iran to obtain support and services from third countries for the assembly and manufacturing of light and heavy vehicles. The suspension of sanctions on petrochemical 

exports means Iran will be able to sell petrochemicals and retain the revenues from 

these sales. We estimate that Iran will earn approximately $1.5 billion in revenue 

from the temporary suspension of these sanctions. 

We will also license the supply and installation of spare parts for the safety of 

flight for airplanes to occur in Iran. We will also license safety inspections and related services to occur in Iran. Notably, this will not apply to any airline subject 

to sanctions under our counterterrorism authorities. 

In addition, solely for the financing of humanitarian transactions and tuition assistance for Iranians studying abroad, we will facilitate access to Iran’s overseas accounts for these specific transactions. Even before the JPA, we never intended to 

deprive the Iranian people of humanitarian goods, like food and medicine. In fact, 

Congress has explicitly exempted these transactions from sanctions. 

There have been some that have incorrectly represented the limited relief as being 

far more. So, let me reiterate. The total relief envisioned in the JPA amounts to between $6–7 billion—nowhere near the $20 or $40 billion that some have reported. 

The total relief for Iran envisioned in the JPA would be a modest fraction of the 

approximately $100 billion in foreign exchange holdings that are inaccessible or restricted because of our ongoing sanctions pressure. This sanctions pressure, moreover, will continue to increase over the 6 months of this initial phase through the 

continued enforcement of our sanctions. 

Continued Enforcement of Sanctions 

It is important to understand that the overwhelming majority of our sanctions remain in place and we will continue to vigorously enforce those sanctions to ensure 

that Iran receives only the limited relief that we agreed to. This will include aggressive enforcement of sanctions under the Comprehensive Iran Sanctions Accountability and Divestment Act of 2010 (CISADA), the Iran Sanctions Act, the Iran 

Threat Reduction and Syria Human Rights Act of 2012, and the Iran Freedom and 

Counter-Proliferation Act of 2012. This means that sanctions will continue to apply 

to broad swaths of Iran’s economy including its energy, financial, shipping, and 

shipbuilding sectors. By rigorous monitoring we will also prevent abuse of the relief 

that is part of the JPA. Were we to see increased purchases of oil or sanctions evasion, we are prepared to act swiftly to sanction the offenders. 

Moreover, the U.S. trade embargo remains in place and U.N. Security Council’s 

sanctions remain in place. All sanctions related to Iran’s military program, State 

sponsorship of terrorism, and human rights abuses and censorship remain in place. 

Our vigilance will continue. 

What is also important to understand is that we remain in control. If Iran fails 

to live up to its commitments as agreed to in Geneva, we would be prepared to work 

with Congress to ramp up sanctions. In that situation, we would be well-positioned 

to maximize the impact of any new sanctions because we would likely have the support of the international community, which is essential for any increased pressure 

to work 

In comparison, moving forward on new sanctions now would derail the promising 

and yet-to-be-tested first step outlined above, alienate us from our allies, and risk 

unraveling the international cohesion that has proven so essential to ensuring our 

sanctions have the intended effect. 

The Way Ahead 

In assessing this deal on the merits, we must compare where we would be without 

it. 

Without the JPA, Iran’s program would continue to advance: Iran could spin thousands of additional centrifuges; install and spin next-generation centrifuges that reduce its breakout times; advance on the plutonium track by fueling and commissioning the Arak heavy water reactor and install remaining components ; and grow 

its stockpile of 20-percent enriched uranium hexafluoride. It could do all of that, 

moreover, without the new inspections that are part of this deal and give us new 

tools to help detect breakout. 

With the JPA, we halt the program in its tracks, roll it back in key respects, and 

put time on the clock to negotiate a long-term, comprehensive solution with strict 

limits and verifiable assurances that Iran’s nuclear program is solely for peaceful 

purposes. 

In a perfect world, we could get to such a comprehensive solution right away. But 

the reality is that in the absence of the JPA, we would have had an Iranian nuclear 

program that could double its enrichment capacity, grow its stockpile of enriched 

uranium, and make progress on starting up the Arak reactor. 

30 

We are now moving forward to prepare for implementation. This week, our experts are in Vienna discussing with their P5+1 counterparts, Iran, and the IAEA, 

the mechanisms and timeframes for beginning implementation and setting a start 

date. These are technical and complex discussions, and it is critical that we do them 

well and right—working to protect our national security interests at every step 

along the way. 

At the same time, the JPA and its implementation is only a first step. There are 

still many issues related to Iran’s nuclear program that must be addressed, and in 

the process, Iran must work with the IAEA to resolve all past and present issues 

of concern. That is why our ultimate aim is a comprehensive agreement that fully 

addresses all of our longstanding concerns. 

Conclusion 

Finally, let me be clear about one thing: Our policy with regard to Iran has not 

changed. The President has been clear that he will not allow Iran to acquire nuclear 

weapon. While his strong preference is for a diplomatic solution, he is prepared to 

use all elements of American power to prevent that outcome. 

Our commitment to working with our partners, in the region and elsewhere, to 

hold Iran accountable for all its actions also remains firm. These negotiations will 

solely focus on Iran’s nuclear program. So we will continue to counter Iran’s destabilizing activities in the region. We will continue to hold Iran accountable for its 

support for terrorism. Iran remains listed as a State Sponsor of Terror and our sanctions for their support of terror remain in place. 

Our sanctions on Iran’s human rights abusers will also continue and so will our 

support for the fundamental rights of all Iranians. Last week, National Security Advisor Rice reiterated our support for the UN Special Rapporteur on Human Rights 

and called on Iran to allow him to visit Iran. We will continue to speak forcefully 

for the oppressed inside Iran, including through our support, later this month, for 

a resolution before the UN General Assembly condemning Iran’s human rights practices. 

We call on Iran to release Saeed Abedini and Amir Hekmati and support our efforts to bring Robert Levinson home. As Secretary Kerry has said, one day is too 

long to be in captivity, and one day for any American citizen is more than any 

American wants to see somebody endure. Mr. Abedini, Mr. Hekmati, and Mr. 

Levinson have been gone too long and we will continue to do everything we can, 

using quiet diplomacy. 

And we will prevent Iran from obtaining a nuclear weapon. That is what these 

negotiations are all about. We have been encouraged that nearly 70 countries have 

expressed support for the understandings reached in Geneva, including statements 

of support from our partners in the Gulf Cooperation Council, with whom we remain 

closely engaged. The sentiment from our partners has been clear: give this process 

a chance. If Iran lives up to its commitments then the world will become a safer 

place. If it does not, then we retain all options to ensure that Iran can never obtain 

a nuclear weapon. The coming months will be a test of Iranian intentions, and of 

the possibility for a peaceful resolution to this crisis. 

Throughout, and as always, we look forward to working closely with the Congress 

to ensure that U.S. national security interests are protected and advanced. 

Thank you. 

PREPARED STATEMENT OF DAVID COHEN 

UNDER SECRETARY FOR TERRORISM AND FINANCIAL INTELLIGENCE, DEPARTMENT OF

THE TREASURY

DECEMBER 12, 2013 

Introduction 

Chairman Johnson, Ranking Member Crapo, and distinguished Members of the 

Committee: Thank you for the opportunity to appear before you today to discuss the 

Department of the Treasury’s ongoing efforts, along with our colleagues throughout 

the Administration, to isolate and pressure the Iranian economy; the temporary, 

limited and reversible relief offered Iran in the Joint Plan of Action (JPA); and the 

mounting sanctions pressure that Iran will face while the parties seek a comprehensive and long-term resolution to the international community’s concerns over Iran’s 

nuclear program. Our continued collaboration with Congress and this Committee in 

particular, is critical to our success in addressing this pressing national security 

issue. 

31 

The Impact of Sanctions 

From the outset of the Obama administration, we have pursued a dual-track 

strategy that pairs an offer to Iran to reclaim its place among the community of Nations with increasingly powerful and sophisticated sanctions if it continues to refuse 

to satisfy its international obligations with respect to its nuclear program. 

As this Committee is well aware, for several years Iran resisted and refused multiple opportunities to engage in a meaningful fashion. And so, as we made clear 

from the outset, the Administration, working alongside our international partners, 

has imposed on Iran the most comprehensive, powerful, and effective set of sanctions in history. Today, Iran stands isolated from the international banking and financial system with slashed oil revenues, a withering energy production infrastructure, and a significantly diminished economy. 

The enormous pressure presently applied on the Iranian economy did not come 

about overnight. We have worked hand-in-hand with Congress—including with this 

Committee—to construct a complex and comprehensive set of sanctions that focuses 

on those supporting Iran’s nuclear and ballistic missile programs and, more broadly, 

Iran’s key sources of economic strength. We maximized the impact and efficacy of 

our sanctions’ framework through robust engagement and outreach to foreign Governments and the private sector. And we have aggressively enforced these sanctions 

by targeting illicit actors and their networks both inside and outside Iran. 

While sanctions have proved to be a very potent tool, we have not imposed sanctions for sanctions’ sake. One of the key purposes of sanctions always has been to 

induce a shift in the policy calculus of the Iranian Government and to build the necessary leverage for serious negotiations about Iran’s nuclear program. 

Our dual-track strategy has begun to bear fruit. Sanctions pressure brought Iran 

to the negotiating table in Geneva and provided our negotiators with bargaining 

power to secure important limitations on Iran’s nuclear program in the JPA. These 

limitations are the first meaningful limits Iran has accepted on its nuclear program 

in nearly a decade. But the deal is only a first step. 

The limitations on Iran’s nuclear program under the JPA create the time and 

space to test whether Iran is prepared to negotiate a comprehensive, solution that 

would give us assurance that Iran is not producing a nuclear weapon. Over the next 

6 months, while we test this proposition, we will continue to apply intense pressure 

on Iran’s economy by aggressively enforcing the vast majority of our sanctions that 

will remain in place. Unless Iran takes concrete and verifiable steps to prove that 

its nuclear program is exclusively peaceful, it will face increasing sanctions pressure 

and deeper isolation. 

Limited, Temporary, and Reversible Relief 

My colleague, Under Secretary Sherman, provides a detailed description in her 

testimony of the various commitments made by Iran in the JPA to halt, and in several important respects roll back, its nuclear program, while also allowing increased 

transparency and monitoring. 

In short, Iran has committed to neutralize its entire stockpile of near 20-percent 

enriched uranium; cap its stockpile of 3.5-percent low-enriched uranium; halt all enrichment of uranium above 5 percent; limit its production and installation of centrifuges; and not make any further advances in its activities at the IR–40 Heavy 

Water Reactor near Arak. Tehran further committed to open its nuclear facilities 

to increased IAEA inspector access to give the world confidence that it is meeting 

its commitments under the JPA and is taking the required steps to halt its weapons 

program. And it committed to this in exchange for limited, temporary, and reversible relief. 

Let me explain what I mean by ‘‘limited, temporary, and reversible relief.’’ 

The relief offered Iran is limited in several important respects. First, under the 

JPA, we will allow Iran access to a set amount of its own money—$4.2 billion in 

installments over the 6-month course of the JPA—in a carefully controlled manner. 

Second, we will suspend some sanctions to allow Iran to engage in specified additional commercial activity—petrochemical exports, imports for its automobile industry, and gold trade—that altogether have at best marginal economic value to Iran. 

And third, the vast bulk of our sanctions, including the core oil, financial, and banking sanctions that have had such a dramatic impact on Iran’s economy, remain in 

place and will continue to exert pressure on Iran’s decision makers over the next 

6 months. 

The relief offered Iran in the JPA is also temporary in that it expires at the end 

of 6 months. At the end of 6 months, no additional funds will be made available 

to the Iranians, and the suspended sanctions will snap back into place. Because the 

JPA is renewable only ‘‘by mutual consent,’’ at the 6-month mark we could then consider whether, and to what extent, to provide additional relief to the Iranians in 

32 

light of the circumstances. But if we decide not to provide additional relief, the relief 

described in the JPA expires at the end of 6 months. 

And the relief in the JPA is reversible. If Iran fails to fulfill its commitments 

under the JPA, or refuses to enter into a comprehensive, long-term solution, we can 

stop the gradual release of funds, reimpose the suspended sanctions, and impose 

new and enhanced types of sanctions. 

The Relief Package 

The relief package described in the JPA is composed of several discreet elements, 

as follows: 

Access to Restricted Funds 

The majority of the relief will come from granting Iran access, in installments over the 6-month tenure of the JPA, to $4.2 billion of its own funds currently held 

in bank accounts outside of Iran—funds to which Iran has limited access and which 

right now can only be used for bilateral trade or humanitarian purchases. Let me 

underscore this point. These funds already belong to Iran, but under the international sanctions framework cannot be moved to third countries (except to facilitate humanitarian trade) nor repatriated to Iran. Not a single dollar of U.S. taxpayer money will be provided to Iran. 

Temporary Pause in Reduction of Iran’s Crude Oil Sales 

We have agreed to hold Iran’s exports of crude oil flat for a period of 6 months 

rather than requiring further significant reductions in the amount of Iranian oil 

purchased by oil-importing countries. To be clear, this will not allow Iran to increase 

its oil exports. To the contrary, Iran will be held to its currently depressed levels, 

down 60 percent from what it was selling in early 2012. This provision, moreover, 

will apply only to Iran’s six current crude oil purchasers—Japan, Republic of Korea, 

China, Taiwan, India, and Turkey. They will not be allowed to increase their purchases and no other country will be allowed to begin importing Iranian oil. 

Temporary Suspension of Petrochemical Sanctions 

U.S. sanctions on Iran’s petrochemical exports will be temporarily suspended as 

part of this first step deal. We estimate that this will allow Iran to generate a maximum of $1 billion in new revenue over the next 6 months, but only if Iran is able 

to produce additional petrochemicals for export (some of its petrochemical plants 

have been retrofitted to boost gasoline production capacity for the domestic market) 

and only if Iran is able to find additional petrochemical customers—who typically 

prefer stable, long-term supply contracts—willing to sign contracts with Iranian exporters knowing that the sanctions are suspended under the JPA for only 6 months. 

Temporary Suspension of Sanctions on Iran’s Auto Industry 

We will also temporarily suspend U.S. sanctions on exports by third countries to Iran’s automobile industry. We estimate that this could provide Iran some $500 million in revenue, assuming Iran can resume prior levels of production and revitalize 

its car exports. Iran’s automobile industry, however, is riddled with structural problems and was in steep decline even before our auto sanctions were put in place. 

Moreover, if Iran hopes to revive its auto sector, it would need to spend some of 

its limited foreign currency to pay for car kits from abroad. 

Temporary Suspension of Gold Sanctions 

Sanctions on Iran’s ability to buy and sell gold will also be temporarily suspended. 

However, we expect that this provision will be of limited value to Iran because the 

only funds Iran can use to buy gold are its limited unrestricted hard-currency reserves. Because of the sanctions architecture that remains in place, Iran will be permitted to use neither its restrained foreign reserves nor its own currency, the rial, 

to buy gold. As a consequence, any gold Iran purchases would be offset by the hard 

currency it would spend to buy it, resulting in negligible economic benefits. 

Limited Access to Funds for Tuition Purposes 

Under strict guidelines, we will allow Iran to transfer $400 million of restricted 

Iranian funds to defray tuition costs for Iranian students studying outside of Iran, 

and will ensure that these funds are used for their intended purpose. 

License Safety-Related Repairs and Inspection for Certain Airlines in Iran 

We will license the supply and installation of spare parts for safety of flight, as 

well as safety-related inspections and repairs for certain Iranian aircraft, to occur 

in Iran. Previously, we had licensed these activities for Iranian aircraft only outside 

of Iran. Notably, Mahan Air, an Iranian airline that has been designated by Treasury for providing financial, material and technological support to Iran’s Islamic RevVerDate Nov 24 2008 13:56 Oct 20, 2014 Jkt 046629 PO 00000 Frm 00036 Fmt 6621 Sfmt 6621 L:\HEARINGS 2013\12-12 ZDISTILL\121213.TXT JASON
33 

olutionary Guard Corps-Qods Force and Lebanese Hizballah, will not be permitted 

to benefit from these repairs, nor would any other entity subject to sanctions under 

our counterterrorism authorities. 

Financial Channel To Facilitate Humanitarian Trade 

Finally, we will assist in establishing a financial channel to facilitate humanitarian trade in food, agricultural commodities, medicines, medical devices for Iran’s 

domestic needs, and to pay for the medical expenses of Iranian citizens incurred 

abroad. This will not provide Iran access to any new source of funds, because humanitarian trade with Iran is not targeted under existing sanctions authorities and 

because we intend that funds for medical expenses will come from Iran’s limited 

stores of unrestricted hard currency. Humanitarian transactions have been explicitly exempted from sanctions by Congress and U.S. law places limits on the President’s ability to regulate such trade. 

The Relief Package in Context 

The total value of the relief package—approximately $6 billion to $7 billion—will 

not materially improve the condition of the Iranian economy. Indeed, at the end of 

the 6-month period, we expect that Iran will be even deeper in the hole economically 

than it is today due to the continuing and mounting impact of the sanctions we have 

in place and that we will continue to energetically enforce. 

Indeed, the limited relief offered Iran in the JPA is dwarfed by the depths of 

Iran’s economic distress. Our oil, financial and banking sanctions, in particular, 

have driven Iran into a deep recession. Since 2011, oil sanctions imposed by the EU 

and the U.S. have forced Iran’s oil exports to decline from about 2.5 million barrels 

per day at the end of 2011 to about 1 million barrels per day today—costing Iran 

roughly $80 billion in lost sales. In that same period, Iran’s currency, the rial, has 

lost around 60 percent of its value against the dollar. Approximately $100 billion 

of Iran’s foreign exchange holdings are restricted or inaccessible due to our financial 

and banking sanctions. Over the last year, inflation in Iran has been about 40 percent. All told, last year Iran’s economy contracted by more than 5 percent, and we 

expect Iran’s economy to contract again this year. By contrast, according to the IMF, 

the economies of Iran’s neighboring oil exporting competitors expanded last year by 

an average of over 5 percent and are expected to grow by an average of almost 4 

percent this year. 

These macroeconomic indicators reflect the impact of sanctions on, and the deep 

structural problems with, Iran’s economy, none of which will be solved by the limited relief agreed to in Geneva. Indeed, over the 6-month duration of the JPA, our 

oil sanctions alone will cost Iran an additional $30 billion (i.e., 4–5 billion per 

month) in lost revenue, which far surpasses the total sum of the relief package. 

Even taking into consideration the modest relief package, these staggering figures 

represent a bleak reality for Iran’s economy, which we expect will continue to deteriorate over the next 6 months. 

The International Sanctions Regime Remains Robust 

We and our international partners will continue to impose increasing pressure on 

Iran’s economy through the implementation and enforcement of sanctions, the overwhelming majority of which are not affected at all by the JPA. This includes the 

core architecture of our oil, financial, and banking sanctions, which remain firmly 

in place. 

Throughout the duration of this first-step deal, we will continue to enforce sanctions to ensure that Iran’s oil sales are held down at their current, greatly depressed 

levels. Moreover, our financial sanctions remain fully in place, in particular the 

sanctions imposed by section 504 of the Iran Threat Reduction and Syria Human 

Rights Act of 2012, which became effective on February 6, 2013, and that ‘‘locks up’’ 

Iran’s oil revenue in the few jurisdictions that still import oil from Iran. As a result, with the exception of the $4.2 billion in funds that we will allow Iran 

to access in stages over the next 6 months, the revenue that Iran earns from its 

oil sales during the 6-month duration of the JPA will remain subject to our financial 

sanctions. Those sanctions prevent Iran from using those funds for any purpose 

other than paying for goods from the oil importing country or humanitarian transactions. And any financial institution that facilitates a payment to Iran for oil imports beyond what is provided for in the JPA risks being cut off from the United 

States financial markets. In other words, over the next 6 months Iran cannot sell 

any more oil than its current levels, and any additional oil revenue it does earn 

(other than the limited funds to be made available under the JPA) will be lockedup and unavailable for transfer or repatriation. 

In addition, the key banking sanctions imposed by the U.S. and the EU, which 

have resulted in the near-total isolation of Iran’s financial sector, remain fully inVerDate Nov 24 2008 13:56 Oct 20, 2014 Jkt 046629 PO 00000 Frm 00037 Fmt 6621 Sfmt 6621 L:\HEARINGS 2013\12-12 ZDISTILL\121213.TXT JASON
34 

tact. That means that under Section 104 of the Comprehensive Iran Sanctions Accountability and Divestment Act of 2010, any foreign bank that engages in a significant transaction with Iran’s designated banks risks losing its correspondent account 

access to the U.S. And it also means that all the banks designated by the EU will 

remain cut off from specialized financial messaging services, denying them access 

to critical networks connecting the rest of the international financial sector. Taken 

together, these sanctions—which remain fully in force—will ensure the continued 

isolation of Iran from the global banking system, and will continue to make it extraordinarily difficult to do business with Iran. 

We also are focusing on enforcing additional elements of the U.S. sanctions program that deprive Iran of other sources of revenue. For example, sanctions will continue to constrict Iran’s energy sector. Not a single prohibition or sanction on investment in Iran’s energy sector will be suspended—for U.S. or international companies. 

All of the United States’ sanctions on long-term investments in Iran’s energy sector 

will remain in effect, as will the related sanctions on providing technical goods and 

services to the energy sector. This will ensure that Iran’s oil and gas infrastructure 

remains severely impaired and increasingly obsolete. 

Furthermore, all UN and EU designations, as well as our targeted sanctions on 

the more than 600 individuals and entities tied to the Government of Iran, its nuclear and ballistic missile programs, and its energy, shipping, and shipbuilding sectors, remain in effect. Among other things, these sanctions mean that selling Iran 

cargo ships and tankers, providing insurance services or support for most Iranian 

shipping activities, providing flagging and classification services to Iranian ships, 

and helping Iran build port terminals or other facilities remain sanctionable activities. 

In addition, sanctions remain in place against Tidewater Middle East Company, 

an IRGC-owned port operating company that manages the main container terminal 

at Bandar Abbas—which has been responsible for some 90 percent of Iranian container traffic and has operations at six other Iranian ports. These sanctions will continue to deter the export of products to Iran as well as the import of products from 

Iran. 

This first-step deal also does not affect the longstanding U.S. trade embargo, 

meaning that Iran will continue to be shut out of the world’s largest and most vibrant economy and precluded from engaging in business with U.S. companies and 

U.S. subsidiaries overseas. 

Finally, it remains the case that Iran is the leading State sponsor of terrorism 

in the world today. Nothing in the JPA affects our continued efforts to contest and 

combat Iran’s support of terrorism, its abhorrent human rights practices, or its destabilizing activities in Syria. All of our sanctions programs aimed at undermining 

this loathsome Iranian conduct remain active and energetic. 

Vigorous Enforcement of Existing Sanctions 

As President Obama said when he announced the JPA on November 23, ‘‘the 

broader architecture of sanctions will remain in place and we will continue to enforce them vigorously.’’ This vigorous enforcement will be accomplished through the 

continued dedicated, resolute and creative work of professionals in our intelligence 

community, in the Treasury and State Departments, and across the Administration. 

We understand well the important role that sanctions pressure on the Iranian economy played in the lead-up to the JPA, and how important maintaining that pressure 

will be over the next 6 months as we explore the possibility of a long-term, comprehensive solution. 

As I have just discussed, the vast majority of our sanctions remain in place, which 

we will continue to vigorously enforce, even as implement the JPA. We are determined to continue—in the days, weeks, and months ahead—to respond to Iran’s evasion efforts, wherever they may occur, and to continue to aggressively enforce our 

sanctions. 

For example, just yesterday, Treasury reached a $33 million settlement with the 

Royal Bank of Scotland plc for, among other things, apparent violations of U.S. 

sanctions on Iran and other sanctioned parties, including removing material references to U.S.-sanctioned locations or persons from payment messages sent to U.S. 

financial institutions. A few weeks ago we announced Treasury’s largest settlement 

outside of the banking industry for violations of U.S. sanctions on Iran. As part of 

a combined $100 million settlement with several Federal Government partners, 

Weatherford International, Ltd. agreed to pay $91 million to settle its potential liability for extensive oilfield services provided in Iran from 2003 to 2007. 

We believe our actions have put the international business community on notice: 

Iran is still off limits, including designated Iranian banks and businesses. Foreign 

banks and businesses still have to make a choice—they can do business with Iran, 

35 

or they can do business with the U.S.—not both. I can assure this that we will continue to take action against those who evade, or attempt to evade, our manifold 

sanctions on Iran. 

New designations and enforcement actions, moreover, are only one part of our 

strategy to ensure that the international business and banking community understands that now is not the time to expand activity in Iran. We have already begun 

a global campaign to ensure that foreign Governments and the international private 

sector understand that the relief in the JPA is limited and targeted and that we 

and our partners are committed to ensuring that the pressure brought to bear on 

the Iranian economy remains robust. This campaign will continue in the weeks and 

months ahead, so that no one makes the mistake of believing that Iran is now open 

for business. It is not. 

I have a clear message for every Government, bank, business, or broker that 

thinks now might be a good time to test our resolve: We are watching closely, and 

we are prepared to take action against anyone anywhere who violates, or attempts 

to violate, our sanctions. 

Conclusion 

As our negotiators seek a comprehensive solution to ensure that Iran’s nuclear 

program is exclusively peaceful, Treasury and our partners across the Administration will continue to forcefully implement our sanctions programs to maintain crucial leverage at this pivotal moment. I look forward to continuing our work with 

Congress and this Committee as we pursue this vital objective. 

36 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR TESTER 

FROM WENDY SHERMAN 

Q.1. There’s a concern that in the past the Iranian regime has used 

negotiations as cover to advance their nuclear program. How will 

the Interim Agreement prevent Iran from using negotiations to 

continue advancing their nuclear program? 

A.1. The Joint Plan of Action (JPOA) halts progress of Iran’s nuclear program and rolls it back in key respects. These are the first 

meaningful limits that Iran has committed to on its nuclear program in close to a decade and, without them, Iran would have otherwise continued to advance critical aspects of its program. The 

limits established under the JPOA begin to address our most urgent concerns, including Iran’s enrichment capacity; existing stockpiles of enriched uranium; and Iran’s prospective ability to produce 

plutonium using the Arak reactor. Iran committed in the JPOA to 

provide increased transparency and allow for intrusive monitoring 

of its nuclear program. Taken together, these measures will prevent Iran from using the cover of negotiations to continue advancing its nuclear program, as we negotiate a long-term, comprehensive solution that addresses fully the international community’s 

concerns regarding Iran’s nuclear program. 

Q.2. A key component of the Interim Agreement is that Iran provides International Atomic Energy Agency (IAEA) inspectors with 

access to Natanz and Fordow, as well as other facilities, mines, and 

mills. Given the size of Iran, a concern is whether the IAEA has 

the capacity to handle the task. Are there enough inspectors to provide daily visits to the wide range of nuclear sites across Iran? 

Also, let’s imagine IAEA inspectors are denied access to an Iranian nuclear facility. Are there measures in the implementation 

plan of the Interim Agreement to report this? Please provide the 

Committee with the oversight process and authorities in the implementation plan of the Interim Agreement. 

Finally, if Iran’s actions on granting access to inspectors are inconsistent with the letter or spirit of the Interim Agreement, what 

measures can the P5+1 take? 

A.2. The International Atomic Energy Agency (IAEA) will be responsible for verifying and confirming that Iran is complying with 

all nuclear-related measures under the Joint Plan of Action 

(JPOA). The IAEA has confirmed it has the technical capacity to 

provide the necessary verification, and we are confident the IAEA 

will carry out its JPOA-related activities with the highest degree 

of professionalism and impartiality. 

The JPOA established a Joint Commission to monitor implementation of the JPOA near-term measures and address issues that 

may arise, with the IAEA solely responsible for verification of nuclear-related measures. The Joint Commission will be composed of 

technical experts of the P5+1 countries, the EU, and Iran. The 

Joint Commission will meet to discuss the implementation of the 

JPOA and any issues that may have arisen during the preceding 

month. Any problems will be referred to the Political Directors of 

the P5+1 and Iran to resolve, as appropriate. 

The enhanced monitoring measures contained in the JPOA will 

enable the IAEA to provide regular updates to the Joint CommisVerDate Nov 24 2008 13:56 Oct 20, 2014 Jkt 046629 PO 00000 Frm 00040 Fmt 6602 Sfmt 6602 L:\HEARINGS 2013\12-12 ZDISTILL\121213.TXT JASON
37 

sion on the status of Iran’s implementation of its commitments. 

The IAEA said it would need to nearly double the staff resources 

devoted to Iran, and several member States, including the United 

States, have pledged additional contributions to support this effort. 

If Iran does not meet its JPOA commitments, backslides, or does 

not negotiate in good faith, we can reimpose all of the sanctions. 

And since we are not allowing Iran lump-sum access to its funds, 

we can turn off that flow during the 6-month duration of the JPOA. 

As we have noted, we will continue to watch closely to ensure Iran 

complies with the nuclear-related provisions in a timely and faithful manner. 

Q.3. While speaking at the Saban Center on December 7, 2013, 

President Obama said that there was a ‘‘fifty-fifty chance’’ that an 

end-deal with Iran could be reached. He said, ‘‘[it] is not the choice 

between this deal and the ideal, but the choice between this deal 

and other alternatives.’’ Addressing the ‘‘fifty-fifty’’ remarks, what 

is causing such doubt? Is it Iran? Moreover, could you please define 

the ‘‘alternatives’’ mentioned in President Obama’s statement? 

A.3. We are approaching these negotiations in good faith and with 

the intent to reach a comprehensive agreement in the 6-month 

timeframe. We acknowledge this will not be an easy task. We also 

remain concerned about any effort to undercut the negotiations and 

the prospect of reaching a comprehensive resolution, particularly 

from hardline elements in Iran. If Iran does not meet its JPOA 

commitments, backslides, or does not negotiate in good faith, we 

can reimpose all of the sanctions. And as President Obama has repeatedly stated, we remain committed to preventing Iran from acquiring a nuclear weapon. 

Q.4. You have said that the Interim Agreement for the P5+1 and 

Iran is, essentially, a trust-building exercise. As you are well 

aware, since 1984 Iran has been designated a State sponsor of terrorism. Iran has armed, trained, and financed terrorist groups and 

is the leading sponsor of Hezbollah and Hamas. Additionally, Iran 

has armed insurgents who have fought and killed U.S. troops in Afghanistan and Iraq. 

In your hearing, you mentioned that the Iranian Ministry of Foreign Affairs and Foreign Minister Zarif have responsibility for the 

nuclear negotiations, while the Iranian Revolutionary Guard Corps 

Quds Force leads Iranian activities that destabilize the region. Do 

you see Iran’s foreign policy evolving as a result of the P5+1 negotiations over their nuclear program? Also, do you see the P5+1 negotiations leading to other diplomatic openings with Iran? 

A.4. Our discussions with Iran through the P5+1 and bilaterally 

throughout this process have focused exclusively on the nuclear 

issue. We believe that the Supreme Leader empowered President 

Rouhani to negotiate with the United States and the international 

community to resolve the nuclear issue. However, we assess that 

there are other Iranian elements outside the MFA that have influence and control over other aspects of Iran’s foreign policy. 

Progress on the nuclear issue does not change our resolve in 

pushing back against Iranian support for terrorism, threats against 

our friends and partners, and violations of human rights. However, 

progress on the nuclear issue may lead to progress in other areas. 

38 

As the President said on September 24 at the United Nations, ‘‘I 

do believe that if we can resolve the issue of Iran’s nuclear program, that can serve as a major step down a long road towards a 

different relationship, one based on mutual interests and mutual 

respect.’’ 

If Iran wants to move in a different direction as part of the reorientation of its foreign policy, we would welcome that change. However, the international community must see concrete actions to that 

effect. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR TOOMEY 

FROM WENDY SHERMAN 

Q.1. When the interim agreement with Iran was announced, I understood there to be a 6-month clock to work towards a final deal. 

When does the 6-month clock begin, and is this date the same 

for all parties? 

A.1. Pursuant to the Joint Plan of Action (JPOA) and related technical understandings between the P5+1 and Iran, the International 

Atomic Energy Agency (IAEA) on January 20 verified that Iran 

had initiated or completed a number of technical steps required for 

the JPOA to be implemented. As a result of Iran’s meeting its initial commitments, implementation of the JPOA began on January 

20. In return for important steps to constrain Iran’s nuclear program, the P5+1 committed to provide Iran with limited, temporary, 

and targeted sanctions relief for a period of 6 months, starting on 

January 20, 2014, and concluding on July 20, 2014. 

Q.2. Iran has insisted on the international community recognizing 

its right to enrich, while United Nations Security Council resolutions require that Iran verifiably suspend all enrichment-related 

activities. 

With the Geneva agreement essentially permitting Iran to enrich 

uranium up to 5 percent, how will future agreements deal with this 

inconsistency? 

Can you explain what sort of enrichment program Iran will have 

if you get what you consider to be a good final deal? 

A.2. The United States has not recognized that Iran has a ‘‘right’’ 

to enrich, and the Joint Plan of Action (JPOA) in no way conveys 

recognition of any ‘‘right to enrichment.’’ As negotiations on a comprehensive solution are set to begin later this month, we are prepared to consider in the end state a strictly limited enrichment program, but only if the Iranians accept rigorous limits on and transparent monitoring of the scope and level of enrichment activities, 

capacity, where it is carried out, and stocks of enriched uranium. 

The JPOA specifies that the comprehensive solution would involve 

a ‘‘mutually defined enrichment programme with practical limits 

and transparency measures to ensure the peaceful nature of the 

programme.’’ Therefore, any Iranian enrichment capability would 

be entirely conditional on reaching agreement on its scope. If we 

can reach an understanding with Iran on strict constraints, then 

we can contemplate an arrangement that includes a very modest 

amount of enrichment that eliminates Iran’s capacity to obtain a 

nuclear weapon in any reasonable way. Moreover, it is also imporVerDate Nov 24 2008 13:56 Oct 20, 2014 Jkt 046629 PO 00000 Frm 00042 Fmt 6602 Sfmt 6602 L:\HEARINGS 2013\12-12 ZDISTILL\121213.TXT JASON
39 

tant to stress that Iran must satisfy the United Nations Security 

Council (UNSC) as part of any comprehensive solution. The UNSC 

sanctions will continue until the United States and P5+1 judge 

that Iran has resolved all concerns satisfactorily. 

Q.3. If the 6-month moratorium expires and no permanent deal is 

struck, do you believe that it will be possible to reorganize effective 

global sanctions to prevent Iran from achieving nuclear capability? 

A.3. To be clear, the Joint Plan of Action suspended sanctions on 

only a handful of very specific activities for the 6-month period. All 

of those suspensions are reversible, and on July 20, the full range 

of sanctions will snap back into force absent progress on negotiation of a comprehensive solution. Moreover, the vast majority of our 

sanctions, including those on Iran’s energy sector, its connections 

to the international financial system, and its access to sensitive 

technologies, remain in place. In addition, if the Iranians prove unwilling to negotiate credibly toward a comprehensive solution, then 

we will be in a much stronger position to lead the world to impose 

an even tougher set of sanctions on Iran than we would be if we 

had not negotiated the JPOA and given it a credible, reasonable 

chance to succeed. 

Q.4. Hard currency frozen by sanctions in overseas bank accounts 

may soon be transferred back to Tehran under the deal. President 

Rouhani may be aiming to gain time and money to advance Iran’s 

nuclear program. Multiple IAEA reports, including those from 

March 2011 and November 2011, have provided extensive descriptions of Iranian research involving activities related to the development of a nuclear explosive device and noted that some research 

may still be ongoing. 

How has the recent deal addressed such concerns? 

A.4. The Joint Plan of Action (JPOA) is clear that Iran, in conjunction with the Joint Commission, will ‘‘work with the IAEA to facilitate resolution of past and present issues of concern,’’ which is a 

reference to the possible military dimensions (PMD) of Iran’s nuclear program. In parallel, the International Atomic Energy Agency 

(IAEA) and Iran adopted the ‘‘Joint Statement on a Framework for 

Cooperation’’ that is also aimed at resolving these past and present 

issues of concern, including PMD. Finally, Iran must also address 

relevant United Nations Security Council resolutions related to its 

nuclear program—which call for Iran to cooperate fully with the 

IAEA to resolve all outstanding concerns as part of any comprehensive solution. During the next 6 months of negotiations, all sanctions on more than 600 individuals and entities targeted for supporting Iran’s nuclear or ballistic missile program will remain in effect. 

As we have made clear, issues related to the possible military dimensions of Iran’s nuclear program must be resolved to the satisfaction of the United States and P5+1 in negotiations on a comprehensive solution. We continue to urge Iran to work with the 

IAEA to resolve the Agency’s investigation into past and present 

concerns without delay.