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THE IMPLICATIONS OF U.S. 

AIRCRAFT SALES TO IRAN 

HEARING 

BEFORE THE

SUBCOMMITTEE ON MONETARY 

POLICY AND TRADE 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

JULY 7, 2016 

Printed for the use of the Committee on Financial Services 

Serial No. 114–95 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

JEB HENSARLING, Texas, Chairman 

PATRICK T. MCHENRY, North Carolina, 

Vice Chairman 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

SCOTT GARRETT, New Jersey 

RANDY NEUGEBAUER, Texas 

STEVAN PEARCE, New Mexico 

BILL POSEY, Florida 

MICHAEL G. FITZPATRICK, Pennsylvania 

LYNN A. WESTMORELAND, Georgia 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

SEAN P. DUFFY, Wisconsin 

ROBERT HURT, Virginia 

STEVE STIVERS, Ohio 

STEPHEN LEE FINCHER, Tennessee 

MARLIN A. STUTZMAN, Indiana 

MICK MULVANEY, South Carolina 

RANDY HULTGREN, Illinois 

DENNIS A. ROSS, Florida 

ROBERT PITTENGER, North Carolina 

ANN WAGNER, Missouri 

ANDY BARR, Kentucky 

KEITH J. ROTHFUS, Pennsylvania 

LUKE MESSER, Indiana 

DAVID SCHWEIKERT, Arizona 

FRANK GUINTA, New Hampshire 

SCOTT TIPTON, Colorado 

ROGER WILLIAMS, Texas 

BRUCE POLIQUIN, Maine 

MIA LOVE, Utah 

FRENCH HILL, Arkansas 

TOM EMMER, Minnesota 

MAXINE WATERS, California, Ranking 

Member 

CAROLYN B. MALONEY, New York 

NYDIA M. VELA ́ ZQUEZ, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

GWEN MOORE, Wisconsin 

KEITH ELLISON, Minnesota 

ED PERLMUTTER, Colorado 

JAMES A. HIMES, Connecticut 

JOHN C. CARNEY, JR., Delaware 

TERRI A. SEWELL, Alabama 

BILL FOSTER, Illinois 

DANIEL T. KILDEE, Michigan 

PATRICK MURPHY, Florida 

JOHN K. DELANEY, Maryland 

KYRSTEN SINEMA, Arizona 

JOYCE BEATTY, Ohio 

DENNY HECK, Washington 

JUAN VARGAS, California 

SHANNON MCGAHN, Staff Director 

JAMES H. CLINGER, Chief Counsel 

(III) 

SUBCOMMITTEE ON MONETARY POLICY AND TRADE

BILL HUIZENGA, Michigan, Chairman 

MICK MULVANEY, South Carolina, Vice 

Chairman 

FRANK D. LUCAS, Oklahoma 

STEVAN PEARCE, New Mexico 

LYNN A. WESTMORELAND, Georgia 

MARLIN A. STUTZMAN, Indiana 

ROBERT PITTENGER, North Carolina 

LUKE MESSER, Indiana 

DAVID SCHWEIKERT, Arizona 

FRANK GUINTA, New Hampshire 

MIA LOVE, Utah 

TOM EMMER, Minnesota 

GWEN MOORE, Wisconsin, Ranking Member 

BILL FOSTER, Illinois 

ED PERLMUTTER, Colorado 

JAMES A. HIMES, Connecticut 

JOHN C. CARNEY, JR., Delaware 

TERRI A. SEWELL, Alabama 

PATRICK MURPHY, Florida 

DANIEL T. KILDEE, Michigan 

DENNY HECK, Washington 

(V) 

C O N T E N T S 

Page 

Hearing held on: 

July 7, 2016 ....................................................................................................... 1 

Appendix: 

July 7, 2016 ....................................................................................................... 45 

WITNESSES 

THURSDAY, JULY 7, 2016 

Dubowitz, Mark, Executive Director, Center on Sanctions and Illicit Finance, 

Foundation for Defense of Democracies ............................................................. 5 

Goldman, Zachary K., Executive Director, Center on Law and Security, New 

York University School of Law ........................................................................... 8 

Lorber, Eric B., Senior Associate, Financial Integrity Network .......................... 6 

APPENDIX 

Prepared statements: 

Dubowitz, Mark ................................................................................................ 46 

Goldman, Zachary K. ....................................................................................... 65 

Lorber, Eric B. .................................................................................................. 75 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Huizenga, Hon. Bill: 

Letter from Timothy Keating, Senior Vice President, Government Operations, Boeing, dated July 6, 2016 ............................................................... 96 

Letter to Hon. Peter Roskam and Hon. Jeb Hensarling from Timothy 

Keating, Senior Vice President, Government Operations, Boeing, dated 

June 23, 2016 ................................................................................................ 97 

Guinta, Hon. Frank: 

Lettter to Senator Marco Rubio from Thomas Patrick Maloney, Senior 

Advisor, Office of Legislative Affairs, U.S. Department of the Treasury, 

dated June 7, 2016 ........................................................................................ 99 

Sherman, Hon. Brad: 

Letter from Fred P. Hochberg, Chairman and President, Export-Import 

Bank of the United States, dated November 4, 2015 ................................ 101 

Dubowitz, Mark: 

Federal Ministry of the Interior report entitled, ‘‘2015 Annual Report 

on the Protection of the Constitution’’ ........................................................ 102 

Article entitled, ‘‘German intelligence: Iran seeks illegal nuclear technology, Germany’s Merkel says Iran violating UN missile regulations. .. 134 

(1) 

THE IMPLICATIONS OF U.S. 

AIRCRAFT SALES TO IRAN 

Thursday, July 7, 2016 

U.S. HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON MONETARY

POLICY AND TRADE, COMMITTEE ON FINANCIAL SERVICES, Washington, D.C. 

The subcommittee met, pursuant to notice, at 10:03 a.m., in room 

2128, Rayburn House Office Building, Hon. Bill Huizenga [chairman of the subcommittee] presiding. 

Members present: Representatives Huizenga, Pearce, Stutzman, 

Pittenger, Messer, Schweikert, Guinta, Emmer; Moore, Foster, 

Perlmutter, Murphy, Kildee, and Heck. 

Ex officio present: Representatives Hensarling and Waters. 

Also present: Representatives Royce and Sherman. 

Chairman HUIZENGA. The Subcommittee on Monetary Policy and 

Trade will come to order. Without objection the Chair is authorized 

to declare a recess of the subcommittee at any time. 

Today’s hearing is entitled, ‘‘The Implications of U.S. Aircraft 

Sales to Iran.’’ 

I now recognize myself for 3 minutes to give an opening statement. 

The U.S. State Department has consistently labeled Iran a state 

sponsor of terrorism, and in a report most recently released last 

month called Iran ‘‘the world’s foremost state sponsor of terrorism.’’ 

In fact, Iran’s state-owned national carrier, Iran Air, was sanctioned by Treasury in 2011 for transporting fighters and weapons 

of war on behalf of Iran’s Revolutionary Guards. 

Under the Iran Nuclear Deal, formerly referred to as the Joint 

Comprehensive Plan of Action (JCPOA), the Obama Administration 

agreed to authorize exports of commercial aircraft to the Islamic 

Republic of Iran while keeping all other existing trade restrictions 

in place. 

These aircraft sales to Iran, purportedly meant to upgrade the 

country’s aging fleet, expanded from 150 to 500 airplanes over the 

next 3 to 5 years. 

On March 24, 2016, the Treasury Department’s Office of Foreign 

Assets Control (OFAC), issued a general license permitting Boeing 

to begin negotiations with Iran. 

On June 21st, Boeing announced it had reached a tentative sales 

agreement with Iran Air, the country’s flagship state-owned carrier. Iran Air intends to purchase 80 commercial planes with a 

value of $17.6 billion, along with the leasing of 29 737s. 

2 

However, any orders will remain contingent on the additional 

OFAC license authorizing the sale. OFAC regulations stipulate 

that such a license can also authorize financing ‘‘incident to a 

transaction.’’ And last month OFAC Acting Director Johnny Smith 

suggested that Boeing sales may draw on U.S. banks. 

Opponents of Boeing’s deal with Iran point to the country’s continued sponsorship of terrorism, the use of its financial sector for 

international money laundering, and its support of the Assad regime in Syria, which has committed atrocities over the course of a 

5-year-long civil war. 

Critics also argue that U.S. financing of aircraft sales, be it 

through a U.S. bank or agencies such as Export-Import Bank, 

would go far beyond the Administration’s obligations under the Nuclear Deal. 

Today’s hearing will examine the Obama Administration’s nuclear agreement with Iran and how it opened the door for the sale 

of American-made aircraft to the world’s leading state sponsor of 

terror. The subcommittee will also discuss legislation to prevent 

the facilitation of certain transactions by American financial institutions with Iran, as well as the prohibition of the Export-Import 

Bank from financing projects in Iran. 

I am extremely concerned that by relaxing the rules, the Obama 

Administration has allowed U.S. companies to be complicit in 

weaponizing the Iranian regime. I will look forward to hearing 

from our witnesses. 

With that, I yield back the balance of my time, and recognize the 

ranking member of the subcommittee, Ms. Moore from Wisconsin. 

Ms. MOORE. Good morning, Mr. Chairman, and good morning to 

all of our witnesses. It is such a privilege to serve in Congress 

when you realize that you are going to be able to hear from really 

just experts on these topics. And I do welcome you here today. 

I just want you all as our witnesses to know that this committee 

had jurisdiction over the Iran deal and we waived it when the Iran 

deal was before Congress. 

The sale of these aircrafts to Iran is legal and it is transparent, 

and it is under close supervision of the U.S. Government in accordance with the express terms of the Iran deal, which China, Britain, 

France, all of our allies were party to. 

In accordance with the express terms of it. And it actually includes a special aircraft snapback provision, unlike the Reagan 

deal with Iran, which you might all recall, where there were arms 

traded for hostages. This, again, is transparent. 

And as Ronald Reagan said during the time, ‘‘I told the American 

people I did not trade arms for hostages. My heart and my best intentions still tell me that is true, but the facts and the evidence 

tell me that it is not.’’ 

I now yield 2 minutes to my good friend, Mr. Heck. 

Mr. HECK. Thank you very much, Ranking Member Moore and 

Chairman Huizenga, thank you very much. I have a lot of things 

that I worry about that come within the jurisdiction of this subcommittee. 

I worry about stubbornly stuck wage growth, 30 years in fact. I 

worry about GDP growth that is stuck at about 2 percent, more or 

less. I worry about that which I referred to the other day in a full 

3 

committee hearing, the U-6 measure of unemployment stuck at just 

under 10 percent. 

And this subcommittee has jurisdiction over a lot of issues that 

could impact those factors which so affect middle class Americans, 

whether it is our monetary policy jurisdiction, some banking, some 

international financial institution jurisdiction and the like. 

And yet what we are focusing on today, the only hearing of this 

week in this subcommittee, is proposed policy to interfere in a private market transaction that is, and please remember these words, 

fully legal, fully compliant and scandal-free—fully legal, fully compliant and scandal-free. 

I would much rather that we took our time focusing, frankly, on 

the things that create good paying jobs that put people to work in 

this country. In fact, what is happening here today is evident to everyone. We are relitigating JCPOA. Period. 

We are interfering in a private market transaction that is fully 

legal, fully compliant and scandal-free. 

Thank you Madam Ranking Member. With that I yield back the 

balance of my time to you. 

Ms. MOORE. I yield back my time. Thank you. 

I just wanted to point out before we continue with the hearing, 

just raise the safety concerns. There had been over a couple hundred airplane crashes in the commercial area. These planes that 

Iran has were so rickety and so ragged that the parts were unavailable anywhere in the world to repair them. 

And so it is really important to note that number one, we are 

doing something that is saving lives of really innocent people, and 

itcould also be Americans who are traveling in that space as well. 

In addition to that, Boeing will be doing the inspections, have the 

inspections contracts so that if there is any effort to weaponize 

these planes we will be the first to know. And I think that that is 

really, really important to elucidate to our members here. 

And with that, Mr. Chairman, I would yield back the balance of 

my time. 

Chairman HUIZENGA. The gentlelady yields back. 

And the Chair at this time recognizes the chairman of the full 

Financial Services Committee, Mr. Hensarling of Texas, for 2 minutes. 

Chairman HENSARLING. Thank you, Mr. Chairman, and thank 

you for calling this hearing. For the past year this committee’s bipartisan Task Force on Terrorism Financing has done excellent 

work in shedding light on sources of terror financing and offering 

legislation to improve U.S. Government efforts to choke off these 

funds. 

Undermining this work, news broke a few weeks ago that Boeing 

had reached a deal to sell and lease billions of dollars’ worth of aircraft to Iran. This is the same Iran which the U.S. State Department in a report last month again called, ‘‘the world’s foremost 

state sponsor of terrorism.’’ 

And the Treasury Department has labeled Iran ‘‘a jurisdiction of 

primary money laundering concern.’’ This is the same Iran behind 

the 1983 bombing in Beirut that killed 241 American service members. The same Iran that fuels atrocities in Syria, where half a milVerDate Nov 24 2008 16:29 Mar 08, 2018 Jkt 025850 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 K:\DOCS\25850.TXT TERI
4 

lion lives have been lost. This is the same Iran whose government 

calls again and again for the annihilation of our ally, Israel. 

And yet, this Administration plans to authorize these transactions with Iran Air, the state-owned national carrier, which has 

been sanctioned by the United States for transporting fighters and 

weapons of war on behalf of Iran’s Revolutionary Guard. 

The Administration also seems poised to allow U.S. financial institutions to provide financing for the deal, despite explicit assurances that Iran would not have access to the U.S. financial system 

when selling its nuclear deal. 

One of the last things we should be doing is allowing Boeing to 

export military fungible aircraft and providing access to the U.S. 

financial system to the Iranian regime. 

Boeing has been an iconic American company with a proud heritage. And I awoke just the other morning to watch Boeing’s 100th 

anniversary television commercial, which I have seen on numerous 

occasions. On it were patriotic images of Martin Luther King and 

one of the space shuttle rockets. 

Mr. Chairman, how tragic it would be for Boeing if, on its next 

anniversary, truth in advertising compelled it to replace Martin 

Luther King’s image with that of the Ayatollah Khomeini, and to 

replace the space shuttle rocket image with that of Hezbollah rockets instead raining on Israel. 

Let us hope Boeing rethinks their decision, and if they do not, 

our work is clear. We must ensure that American taxpayers and 

depositors will not have their funds used to back financing for the 

Ayatollahs and the world’s greatest state sponsor of terrorism. 

Thank you, Mr. Chairman. And I yield back the balance of my 

time. 

Chairman HUIZENGA. The gentleman yields back. 

And today, we welcome the testimony of Mark Dubowitz, executive director of the Center on Sanctions and Illicit Finance at the 

Foundation for Defense of Democracies; Eric Lorber, senior associate at the Financial Integrity Network; and Zachary Goldman, executive director of the Center on Law and Security at the New 

York University School of Law. 

I might also note that there was a fourth intention, and you will 

see an empty Chair that is sitting there. Timothy Keating, senior 

vice president at Boeing, was asked to join this panel. 

He was invited. He declined. He sent a letter that I would like 

to insert into the record, explaining that he had explained Boeing’s 

position in a letter to Chairman Hensarling and to Representative 

Peter Roskam dated June 23rd. 

Unfortunately, I don’t find that adequate. We would love to have 

had that opportunity to ask Boeing a few questions and let them 

explain where they were coming from. But their choice was to not 

be here today. 

So with that, each of you will be recognized for 5 minutes to give 

an oral presentation of your testimony. And without objection, each 

of your written statements will be made a part of the record. 

With that, Mr. Dubowitz, you are recognized for 5 minutes. 

5 

STATEMENT OF MARK DUBOWITZ, EXECUTIVE DIRECTOR, 

CENTER ON SANCTIONS AND ILLICIT FINANCE, FOUNDATION FOR DEFENSE OF DEMOCRACIES 

Mr. DUBOWITZ. Thank you, Mr. Chairman. Chairman Huizenga, 

Vice Chairman Mulvaney, Ranking Member Moore, Chairman 

Hensarling, and committee members, on behalf of FDD and its 

Center on Sanctions and Illicit Finance, thank you for the opportunity to testify. It is an honor to be here and to testify alongside 

these two superb experts. 

There are a $25 billion deal between Boeing and Iran Air, and 

a similar size deal with Airbus, demonstrates the risk that companies and banks face in doing business with a regime with a long 

and continuing rap sheet of illicit conduct. 

These deals are a multi-billion backed by the Obama Administration and the Europeans for the economic benefits from the JCPOA 

will moderate Iran’s behavior before the nuclear restrictions start 

expiring in 2023. That is a bad bet given Iran’s aggressive behavior 

since the nuclear deal. 

By selling planes to Iran Air, Boeing and Airbus are partnering 

with an Iranian aviation company and an industry complicit in the 

regime’s weapons proliferation and destabilizing adventurism. 

These Western aviation giants and the banks financing this deal 

face a due diligence nightmare. 

They cannot prevent the planes from being used by the IRGC for 

deadly airlifts to Syria’s Bashar al-Assad, Lebanese Hezbollah and 

other terrorist entities. 

And it seems that Iran Air is not keeping out of trouble. Three 

times in June Iran Air flew routes known to be used by the IRGC 

to resupply Assad and Hezbollah. 

As recently as June 9, an Iran Air jet landed in Abadan, Iran, 

the logistical hub of the IRGC’s airlifts, and then flew on to Damascus. The airline frequently uses false transponder information to 

hide these flights. So much for legal compliance and scandal-free. 

We know that Iran Air will not be the only recipient of these 

planes. It alone does not have the capacity to absorb the large orders from Boeing and Airbus. And it is likely that it will transfer 

these planes to the IRGC’s Mahan Air and three other sanctioned 

airlines. 

These aircraft sales are not necessary. Iranian citizens and foreign travelers have other alternatives to Iran Air and Mahan Air, 

companies that are racked with corruption and mismanagement 

and implicated in a range of illegal activities. 

Indeed, over the past 3 years, Gulf and Turkish Airlines have increased their domestic and international routes in Iran by nearly 

60 percent. And numerous European airlines are also resuming 

service. Iranians have other alternatives. 

These deals present another problem. They are preference of aircraft over smart state craft. They undermine the Obama Administration’s much-touted economic snapback mechanism for enforcing 

the JCPOA. 

Last summer some of us raised concerns that Iran would view 

any imposition of non-nuclear sanctions as a violation of the deal 

and grounds to snapback its nuclear program. We warned that 

6 

these threats would neutralize new non-nuclear sanctions. This is 

what I call Iran’s nuclear snapback. 

These warnings have come to pass. Already, over the past year, 

the Obama Administration has failed to push back with meaningful 

sanctions against Iran’s malign activities. And the Boeing and Airbus deals create a powerful lobby against any return to sanctions. 

If Iran Air illegally transfers planes to Mahan Air, for example, 

the U.S. and Europe will be constrained by concern that Tehran 

will walk away from both the nuclear deal and its outstanding 

debts to Western companies and banks. 

These threats are likely to motivate Boeing, Airbus and their 

banks to lobby against any return to sanctions to protect their investments. 

The financing of these aircraft sales provides another advantage 

to Iran. It is essential to the regime’s demands for economic legitimacy. Iran wants American banks to finance the Boeing deal and 

for the Administration to permit the use of the U.S. dollar. 

Tehran wants to get the planes now. pay later, borrow the money 

from Western lenders, and secure its access to dollarized transactions. If the Administration provides this dollarized access and in 

the future Iran Air legally resells Boeing planes to Mahan Air, the 

next Administration will not be able to revoke Iran’s access to 

dollarized transactions. 

Indeed, Tehran will argue that Washington provided this concession under the Nuclear Deal so it cannot later revoke it for nonnuclear reasons. Iran will threaten to walk away from the deal and 

deploy its nuclear snapback. This will effectively paralyze America’s Iran policy for the next Administration. 

The Boeing and Airbus deals only serve to increase the Iranian 

regime’s leverage over the Nuclear Deal while diminishing Western 

appetite for rigorous enforcement. 

I would conclude by noting that it is no small irony that the com- bined value of the Boeing and Airbus deals, about $50 billion, is 

around the exact same amount that Iran refuses to pay to settle 

outstanding judgments for victims of Iranian terrorism, including 

Americans. 

Look for lawyers pursuing justice for these victims to target 

these aircraft deals. If these deals are permitted to proceed, the Administration will make two of the world’s most respected companies 

and their banks accomplices to the world’s leading state sponsor of 

terrorism. 

Thank you for the opportunity to testify. I look forward to your 

questions. 

[The prepared statement of Mr. Dubowitz can be found on page 

46 of the appendix] 

Chairman HUIZENGA. Thank you, and the gentleman yields back 

his time. 

Mr. Lorber, you are recognized for 5 minutes as well. 

STATEMENT OF ERIC B. LORBER, SENIOR ASSOCIATE, 

FINANCIAL INTEGRITY NETWORK 

Mr. LORBER. Thank you, Mr. Chairman. Chairman Huizenga, 

Chairman Hensarling, Vice Chairman Mulvaney, Ranking Member 

Moore, and distinguished members of the subcommittee, I am honVerDate Nov 24 2008 16:29 Mar 08, 2018 Jkt 025850 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 K:\DOCS\25850.TXT TERI
7 

ored to appear before you today to discuss the implications of U.S. 

aircraft sales to Iran. 

I would like to focus my testimony on the threats posed by Iran, 

both to the region and to the international financial community 

and the risks that the private sector faces when considering re-entering Iranian markets. 

I will also speak to the risks in providing commercial aircraft to 

the Islamic Republic. I would be happy to discuss my suggestions 

for the three legislative proposals during the question and answer 

period. 

Make no mistake. As we approach the 1-year anniversary of the 

signing of the JCPOA, Iran has not changed most of the underlying 

illicit activity that has led respectable financial institutions across 

the world to refuse to do business there. Iran continues to actively 

support Syrian President Bashar al-Assad and international terrorist organizations including Hezbollah. 

Indeed, because of this underlying illicit activity, the international financial community remains broadly reluctant to re-enter 

the Iranian market, even if legally permitted to do so. This reluctance is justified. Doing business in Iran poses a unique and toxic 

combination of risks related to bribery, corruption, money laundering, and illicit finance. 

Such risks include, first, financial crime risk. Iran is well-known 

to present serious risks related to bribery and corruption and was 

recently ranked 130th out of 175 countries in Transparency International’s Corruption Perception Index. 

In addition, the Financial Action Task Force continues to keep 

Iran on its black list as a jurisdiction lacking necessary financial 

crime compliance controls. 

Second, sanctions risk. The United States continues to maintain 

primary U.S. sanctions on Iran, which pose significant risks for any 

multinational corporation considering doing business there. U.S. jurisdiction is broad and U.S. regulators can use it to target transactions that may not initially appear to touch U.S. markets or involve U.S. persons. 

Similarly, U.S. secondary sanctions remain in force, particularly 

if foreign financial institutions do business with the Islamic Revolutionary Guard Corps. 

Given that the IRGC controls upwards of 35 percent of the Iranian economy and has established opaque corporate structures to 

hide its true ownership interests, companies returning to Iranian 

markets run a high risk of dealing with prohibited entities and 

running afoul of those regulations. 

Likewise, though it signed the JCPOA, Iran has not changed 

much of its underlying illicit conduct. It actively supports terrorism 

and engages a wide range of destabilizing activities, including ballistic missile development. Given such activities, a serious risk exists that additional sanctions will be imposed on the country. 

And third, snapback risk. If Iran cheats on the JCPOA, the U.S. 

Treasury Department has clear that it can partially snap sanctions 

back into place, meaning that firms that have re-entered those 

markets would be suddenly forced to exit, likely at a significant financial loss. 

8 

These risks, among others, are a significant part of the reason 

that the world’s most reputable financial institutions have been unwilling to return to Iran. 

When speaking with these banks, the response has been remarkably uniform. While the banks recognize that there are commercial 

opportunities in Iran, the real and regulatory risks remain far too 

high to consider re-entering the country. In the case of Boeing’s proposed sale of $25 billion worth of aircraft and associated services to Iran Air, these risks are even higher. Iran Air is well-known to have engaged in illicit activities on 

behalf of the IRGC and, as you noted, was designated by the Treasury Department in 2011. 

While Iran Air was delisted as part of the JCPOA, the illicit activity that led to the designation does not appear to have changed. 

As my fellow witness, Mr. Dubowitz, has noted, Iran Air continues 

to fly well-known arms and militant resupply routes to Damascus 

and into Lebanon. 

The heightened risks of dealing with Iran Air and other Iranian 

airlines are also likely the reason that Boeing and Airbus have reportedly had difficulty finding financial institutions willing to bank 

these sales. Financial firms’ fears are well-founded. 

Foreign financial institutions can be subject to U.S. secondary 

sanctions if they provide services to the IRGC or its affiliates. If a 

global bank provides financial services for this deal and Iran Air 

uses these planes to transport arms or militants to Syria or 

Hezbollah, the bank could lose its access to U.S. markets, a death 

sentence for an international financial institution. 

In conclusion, companies considering re-entering Iran, including 

Boeing, face serious risks of doing business with sanctioned parties 

or in ways that directly or indirectly support Iran’s destabilizing 

activities. Congress should take steps to limit that risk. 

The three legislative proposals are steps in that direction and 

with minor modifications can help the United States shape Iran’s 

behavior and limit its ability to use this equipment for illicit purposes. 

I look forward to discussing them during our question and answer session. Thank you for your time. I look forward to your questions. 

[The prepared statement of Mr. Lorber can be found on page 75 

of the appendix.] 

Chairman HUIZENGA. The gentleman’s time has expired. 

And Mr. Goldman, you are recognized for 5 minutes. 

STATEMENT OF ZACHARY K. GOLDMAN, EXECUTIVE DIRECTOR, CENTER ON LAW AND SECURITY, NEW YORK UNIVERSITY SCHOOL OF LAW 

Mr. GOLDMAN. Chairman Huizenga, Chairman Hensarling, Vice 

Chairman Mulvaney, Ranking Member Moore, and members of the 

committee, thank you very much for the honor of appearing before 

you today with my friends and colleagues, Mr. Lorber and Mr. 

Dubowitz. 

Last year, the United States and its partners in the P5+1 realized an important diplomatic accomplishment when they agreed to 

the Joint Comprehensive Plan of Action with Iran. 

9 

In the JCPOA, Iran committed that it would never seek, develop 

or acquire nuclear weapons, and the agreement represents the first 

time in over a decade that Iran’s nuclear program is subject to limits agreed upon with the international community. 

Under the terms of the JCPOA Iran limited the number of centrifuges that are operating, limited the degree of enriched uranium 

it can possess, limited the amount of enriched uranium that can be 

in the country at any given time, substantially modified its existing 

nuclear facilities, all under the supervision of the IAEA. In exchange, the United States and its partners agreed to limited sanctions relief. 

The agreement does not resolve all concerns about Iran’s behavior. Indeed, Iran remains one of the principal strategic adversaries 

of the United States in the Middle East. Since 1984 Iran has been 

and today remains designated as a state sponsor of terrorism. It 

provides substantial support to the regime of Bashar al-Assad as 

he prosecutes Syria’s brutal civil war. 

It routinely engages in gross human rights abuses, commits malicious cyberattacks inside the United States, and continues its support for terrorist groups like Hezbollah and the Houthi rebels in 

Yemen. 

Until the adoption of the JCPOA last year, Iran’s pursuit of an 

advanced nuclear program compounded these other ways in which 

Iran threatened American interests and the stability of the Middle 

East. 

Seen in this context, however, the JCPOA ameliorates one of the 

most important components of the threat from Iran, namely the 

menace posed by its nuclear program and the possibility that its 

nuclear program could have been used to intensify the other ways 

in which Iran threatens the U.S., its allies and its interests. 

And there was a significant chance that Iran’s further development of its nuclear program would have sparked an arms race in 

the Middle East. 

The constraints embodied in the JCPOA lengthen the time needed for Iran to break out from 2 months at the time the deal was 

signed to roughly a year under the terms of the agreement. In exchange for these concessions, the U.S. committed to lift nuclear-related secondary sanctions on Iran while it retained its primary 

sanctions program with some exceptions. 

One of those exceptions is at issue today, the commitment by the 

U.S. Government to establish a licensing regime for the sale of aircraft and related parts and services to Iran. 

To be clear, such sales are risky for the reasons Mr. Lorber and 

Mr. Dubowitz identified. Iran Air was designated in 2001—or 2011, 

excuse me, for providing support to the IRGC and other proliferation-related entities. 

And that is why it is incredibly important to focus on contractual 

and licensing conditions and stringent monitoring and enforcement 

in the event a sale of aircraft goes forward. 

And indeed, the JCPOA itself states that any licenses to sell aircraft to Iran will be contingent on those aircraft being used exclusively for commercial passenger aviation. 

10 

The U.S. has put Iran on notice that a breach of those conditions 

would be grounds for the U.S. to cease performing its obligations 

under that section of the JCPOA. 

The risks involved in selling aircraft to Iran are similar to the 

risks generally attendant with doing business there, the risks of becoming involved in illicit financial activity and the reputational 

risk that comes from doing business in a regime that routinely represses the human rights of innocent people at home and abroad. 

These risks and Iran’s failure to address the shortcomings of its 

own financial system are some of the reasons that Iran says it has 

not gotten as much benefit from the JCPOA as it had anticipated. 

It is Iran’s responsibility to address those shortcomings. 

But as long as Iran adheres to the terms of the JCPOA and the 

IAEA has not raised concerns that Iran is out of compliance, the 

JCPOA has significant value in the U.S.’s overall national security 

strategy, even while the U.S. must continue to act to limit Iran’s 

malign influence elsewhere in the region. 

And the U.S. retains the full suite of national security tools including sanctions to enable it to do so. For as long as that is true 

we must work to maintain the integrity and viability of the JCPOA 

and to resist efforts to undermine it. 

Thank you very much for allowing me to join you today. I look 

forward to your questions. 

[The prepared statement of Mr. Goldman can be found on page 

65 of the appendix.] 

Chairman HUIZENGA. The gentleman yields back the balance of 

his time. 

And with that, I would like to ask for unanimous consent that 

any member of the full Financial Services Committee who is not 

a member of the subcommittee be allowed to participate and ask 

questions of the witnesses. Without objection, it is so ordered. 

The Chair now recognizes himself for 5 minutes. I was hoping to 

address this to Mr. Keating from Boeing. I have a series of questions from his letter to our chairman, Chairman Hensarling and 

Peter Roskam. 

First of all, it is in his first opening paragraph, he talks about 

from the onset that consultation with Boeing the Administration 

‘‘made it clear that implementation of the JCPOA was critical to 

the national security interests of the United States.’’ 

Then later, at the bottom of this first page, it says, ‘‘Boeing will 

continue to follow the lead of the U.S. Government with regard to 

working with Iranian airlines.’’ I was hoping to ask him what kind 

of pressure they had been feeling from the Administration to do 

this deal? 

I also wanted to ask him as he was talking about the Memorandum of Understanding or of Agreement to express Boeing’s intent to help Iran Air lease 29 737s, how were they going to do that? 

What structure? Was it going to be directly or third-party? 

And finally, at the end they have stated repeatedly, ‘‘Should the 

U.S. Government reinstate sanctions against the sale of commercial passenger airlines to Iranian airlines we will cease all sales 

and delivery activities as required by U.S. law.’’ 

And I wanted to get their opinion on what that would look like? 

What would Boeing do if a new Administration did come in and do 

11 

that? Would they be passive? Would they be aggressive to push 

back against that, that snapback? 

And then finally, there is quite a bit of discussion about where 

this financing is going to be going? And this is something I would 

like to have you all address. 

They say, ‘‘We have not reached any decisions on how payment 

from Iranian Airlines will be affected,’’ as they are looking at the 

financing of it. 

And that they do properly lay out Export-Import Bank as prohibited from any dealings with Iran. So I think we all ought to be 

agreeing that we are going to be able to codify that. 

But they are talking about other financing options pursued by 

the customer. And I think that leads into those bank situations 

that Mr. Lorber was talking about. 

And Mr. Lorber, you talk about that. You write in your testimony 

it is an underlying mix of money laundering and financial crime in 

Iran remains in place and that even after sanctions relief the list 

of Specially Designated Nationals remains long. 

In your testimony you note that there is a big difference between 

permitting the sale of commercial aircraft and proactively telling 

U.S. and foreign banks that they can finance these sales. 

You are a former Treasury lawyer, I believe, and did the the U.S. 

Government commit to the JCPOA to provide Iran with economic 

benefits and facilitating transactions or merely will they not prohibit the trade? I am curious what your take is on that. 

Mr. LORBER. Thanks, Chairman. It is a great question and in 

fact this goes to the heart of the JCPOA because much of the language within the agreement itself is actually fairly ambiguous. I 

think it is paragraph number 26 of the agreement says, and I can 

quote it for you here if you would like? 

Directly on this point it says, ‘‘The United States will make best 

efforts in good faith to sustain this JCPOA and to prevent interference with the realization of the full benefit by Iran of the sanctions lifted specified in annex two.’’ 

I read that to mean that the U.S. Government must ensure that 

the sanctions specified in annex two are lifted. Full stop. That does 

not mean the United States needs to go above and beyond and facilitate U.S. financial institutions providing financing in this way. 

Chairman HUIZENGA. And you would view this as above and beyond? 

Mr. LORBER. Correct. I would consider permitting U.S. financial 

institutions to bank this deal as above and beyond the obligations 

contained in this. 

Chairman HUIZENGA. Now, in a letter to Senator Marco Rubio 

last month, Treasury Department wrote, ‘‘The administration has 

not been and is not planning to grant Iran access to the U.S. financial system.’’ But I am curious. They seem to leave doors open as 

you walk down that hall all the time. And I would like someone 

to address this as well. 

From a financial institutions perspective, what kind of risks are 

there and what are the dangers if the United States is seen as advocating for trade with Iran? 

Mr. LORBER. Mark, do you want to— 

12 

Mr. DUBOWITZ. The problem with the Treasury Department’s answer is they left the door open for offshore dollarization. And so 

that there may not be what is called a U-turn transactions for the 

U.S. financial system, but it is possible then to provide access to 

dollarization through offshore dollar trading. 

Chairman HUIZENGA. Like a third party? 

Mr. DUBOWITZ. Right. And so the issue of course with that is that 

Iran never negotiated that as part of the JCPOA. So now we are 

going above and beyond what was committed to in the JCPOA. 

We are giving Iran access to the U.S. dollar offshore. And in 

doing so we are effectively neutralizing the ability to use non-nuclear financial sanctions in the future. 

So the next Administration’s hands are going to be tied. If they 

try to take away dollarization the Iranians will cry foul, that that 

is a violation of the JCPOA and the Iranians will threaten to snapback their nuclear program. 

And we won’t be able to use financial sanctions in the future to 

deter Iranian behavior, whether it is on the nuclear side or on the 

non-nuclear side. 

Chairman HUIZENGA. So my time has expired, but it is your understanding or your belief that any new Administration coming in, 

whomever that may be, will have their hands tied by this if this 

moves forward? 

Mr. DUBOWITZ. That is correct. 

Chairman HUIZENGA. With that, my time has expired. 

And I now recognize the gentlelady from Wisconsin for 5 minutes. 

Ms. MOORE. Thank you so much, Mr. Chairman. And I appreciate you are going to add this to the record, the letter that you 

read from Boeing, right? Yes. 

Chairman HUIZENGA. Without objection so moved. 

Ms. MOORE. Okay. I guess what we are hearing, at least if we 

are to follow the lead of the chairman’s questions, that Boeing did 

not have to make these sales in order to be in compliance with the 

agreement. 

So I guess I would ask you, Mr. Goldman, to comment on why 

commercial passenger aircraft were included in the deal related to 

preventing Iran from acquiring the nuclear capacity? 

And how central were these provisions in terms of lifting the 

sanctions related to Iran’s willingness to give grounds in other 

areas? How key was this to an agreement? 

Mr. GOLDMAN. Thank you, Ranking Member Moore. I think you 

identified earlier an important reason the provision committing the 

U.S. to establish a licensing regime for aircraft sales was permitted 

in the agreement, and certainly a core reason was questions of aircraft safety. 

In 2010 the E.U. actually went so far as to bar certain Iran Air 

aircraft from overflying the European Union because of concerns 

about aircraft safety. And indeed, a licensing regime for parts and 

services was included in the Joint Plan of Action, the interim 

agreement that was reached in 2013. 

I read the provision that allows the licensing of aircraft sales to 

Iran effectively as standing on its own. The U.S. committed to esVerDate Nov 24 2008 16:29 Mar 08, 2018 Jkt 025850 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 K:\DOCS\25850.TXT TERI
13 

tablishing a licensing regime contingent on certain restrictions on 

how the aircraft parts and services would be used. 

And in a footnote to that provision said that if those conditions 

are violated the U.S. would view itself as freed of the obligations 

in that specific provision. So to my mind I think that that provision 

can be seen as somewhat self-contained. 

Ms. MOORE. Mr. Goldman, just let me continue to pursue this 

line of questioning. The other witnesses have talked about the Gulf 

and Turkish Airlines as being able to provide the air capacity and 

that there would be no need essentially for there to be an Iranian 

commercial fleet. 

I guess my question is is that under the terms of the G-5 agreement would Airbus and other makers of aircraft be able under the 

terms of the agreement to make these sales to Iran were Boeing 

to step out of the picture? 

Mr. GOLDMAN. Certainly as a legal matter if they are appropriately licensed Airbus would be permitted to sell the aircraft to 

Iran. My sense, however, is that the U.S. Government’s ability to 

monitor and enforce whatever deals are ultimately struck might be 

greater in the event a U.S. company makes the sales than in the 

event that the foreign company makes the sales. 

Ms. MOORE. So it gives us greater leverage— 

Mr. GOLDMAN. Sure. 

Ms. MOORE. —for an American company to make these sales 

than it would be to just leave it out there for other countries to do 

it. 

Let me just ask you one other question. Would you regard it as 

kind of a breach of the deal if there were legislation that would 

somehow clawback the sale of aircraft to Iran? Is that in our best 

interests and would it be a breach of the agreement? 

Mr. GOLDMAN. Iran thus far, as certified by the IAEA, has adhered to its nuclear-related obligations under the deal. The U.S. 

committed to establishing a licensing regime for aircraft sales to 

Iran. It did not commit to actually issue those licenses. It committed to establish a licensing regime. 

If legislation were to bar the U.S. Government from establishing 

such a regime, that could put at risk our obligations under that 

specific provision of the JCPOA. 

Ms. MOORE. And just your comment, your opinion perhaps, on 

the timeliness of this hearing? As you may recall, I indicated that 

this committee had jurisdiction to have had this hearing prior to 

the execution of the deal. Is this kind of an untimely hearing in 

your opinion? 

Mr. GOLDMAN. Ranking Member Moore, the Boeing deal was just 

announced in the last several weeks and certainly this is an issue 

on which this committee has been and is appropriately very focused. And so this hearing seems to me to be an important exercise 

in oversight. 

Ms. MOORE. Thank you so much. 

And I yield back, and thank the chairman for his indulgence. 

Chairman HUIZENGA. The gentlelady yields back. 

And just to be clear, it really wasn’t a motion but I am happy 

to enter into the record without objection the June 23rd letter from 

14 

Boeing to Congressman Roskam and Chairman Jeb Hensarling. 

Without objection, it is so ordered. 

Chairman HUIZENGA. With that, I recognize the chairman of the 

full Financial Services Committee, Mr. Hensarling from Texas, for 

5 minutes. 

Chairman HENSARLING. Thank you, Mr. Chairman. 

Some who defend the Boeing Iranian Air deal point to the commercial and civilian nature of of these airplanes. I would note, Mr. 

Dubowitz, that a senior fellow at your organization, Emanuele 

Ottolenghi, has written just last month that Iran Air flew ‘‘known 

weapons resupply routes to Syria,’’ not just once but three times. 

And I believe it is for this very reason that Iran Air was sanctioned by Treasury in 2011. So this is the ‘‘civilian airline.’’ 

Could I have the first slide please? 

In addition, Jane’s Defense Weekly has written that Iran is capable of reverse engineering from its planes. They write, ‘‘The country’s domestic aerospace industry has made great strides in indigenously manufacturing what it requires to sustain the country’s 

military capabilities.’’ 

And then this is a publication of Boeing itself, and I know it is 

a little difficult to read. This was from a few years ago, a Boeing 

Frontiers publication. 

In the upper left-hand corner, it says, ‘‘Building on success, 

Boeing’s commercial jetliners make an ideal platform for a variety 

of military derivative aircraft.’’ This is in Boeing’s words. 

Next slide, please? And this apparently is a picture of the P8, 

which is a derivative of the Boeing 737 commercial jet. This is also 

in Boeing’s words: ‘‘I believe we are well-postured to take commercial military development to the next level.’’ This is the Royal Australian Air Force using Boeing’s 737 platform. 

So I guess my question is, do the Boeing sales risk weaponizing 

Iran directly or giving the country technology that can be used to 

strengthen its military know-how? 

Mr. Dubowitz, would you please comment on that? 

Mr. DUBOWITZ. Mr. Chairman, the short answer is absolutely. It 

is only in the month of June that Iran Air flew three flights, its 

resupply flights through Abadan, Iran, an IRGC resupply base, to 

Assad and Hezbollah. Iran Air was listed for reasons that had to 

do with the IRGC and missile proliferation. 

It was wrongly delisted because this was a nuclear deal and that 

sanction should have remained because we promised to keep our 

non-nuclear sanctions relating to the IRGC and missile proliferation. But even if Iran Air is considered to be a legitimate airline, 

which it clearly is not, Iran’s entire fleet is only 36 planes. 

So the order for Airbus and Boeing is 200 planes. And the Iranian minister who is responsible for this says it could go up to 500 

planes. So even if Iran Air were to double their fleet to 70, they 

would still be somewhere in the neighborhood of 130 to 430 planes 

that they are not going to be using. 

So the question is where do those planes go? Well, there are four 

other sanctioned airlines in Iran, Mahan Air and three other Iranian sanctioned airlines that still remain sanctioned under U.S. 

law. There is every reason to believe that those planes are going 

to go either in a lease or a sale to these other sanctioned airlines. 

15 

Chairman HENSARLING. My time is running out. On page 12 of 

your testimony, Mr. Dubowitz, you write, ‘‘The financing of 

Boeing’s aircraft sales through access to the U.S. dollar is central 

to Iran’s demands for economic legitimacy.’’ 

You go on to say, ‘‘But Iran wants the U.S. Government to specifically authorize payments for aircraft sales in dollars with each 

class of transactions that are dollarized, Iran is slowly undermining 

the ban on Iranian access to the U.S. financial system.’’ Would you 

please elaborate? 

Mr. DUBOWITZ. The Administration claims that they have prohibited Iran’s access to the U.S. dollar. We know from press reports 

that Secretary Kerry and his team had been briefing reporters that 

they were going to offer a general license to provide access to the 

U.S. dollar entirely. 

That got essentially stalled when Congress found out about it. 

Now what they are trying to do is try to provide access to the U.S. 

dollar through a class of transactions approach. And this is one of 

the central classes of transactions which is access to the U.S. dollar, to facilitate the financing of these aircraft sales. 

If that happens, Iran is going to get access to the U.S. dollar for a major transaction, $25 billion, Airbus as well, $50 billion. Iran 

is effectively now moving into our dollar. The Administration is 

greenlighting the greenback and we will never be able to revoke 

that access again. 

And as I testified earlier, that undercuts our ability to use financial sanctions in the future against the IRGC, against missile proliferation, things that Hillary Clinton herself has actually promised 

to do if she were president. 

Chairman HENSARLING. My time has expired. Thank you. 

Chairman HUIZENGA. The gentleman’s time has expired. 

The Chair recognizes Mr. Foster of Illinois for 5 minutes. 

Mr. FOSTER. Thank you, Mr. Chairman, and thank you to our 

witnesses. Just first sort of a big picture question, so you mention 

one future where Iran is operating a potentially large fleet of Airbus and Boeing planes, completely dependent on the spare parts 

and technical support, all this sort of stuff, for that continued operation. 

And then they say maybe we are going to break out for all of the 

reasons that people are worried about, for good reason. Does that 

increase or decrease the leverage that the West has that the moment that they break out they will be in violation with all this. 

Presumably their spare parts and everything will be cut off immediately. And their potentially very large airplane fleet will not 

be serviceable anymore. Compared to, say, an alternate future 

where they buy Chinese and Russian airlines to accomplish the 

same thing. 

Which do you think gives the West the largest leverage to prevent a breakout scenario? 

Yes, Mr. Lorber, that would be you. 

Mr. LORBER. Sure. I will take it. Thank you, Representative Foster. I think that the first situation you mentioned if we do sell Boeing aircraft and then have service contracts there, that actually 

doesn’t provide us with much leverage in case they do decide to 

break out. 

16 

And the logic is Iran has become fairly adept, excuse me, over 

the past 30 years for finding workarounds to service the current 

Boeing aircraft that they do have. 

And so I would fully expect them to attempt to stockpile spare 

parts, attempt to stockpile expertise, frankly, on how to maintain 

these aircraft such that if you did see a circumstance where they 

broke out and Boeing did cut off the contracts they would be able 

to keep those airplanes flying for a significant amount of time. 

Mr. DUBOWITZ. And Congressman, if I could just add to that? If 

Iran is breaking out to a nuclear weapon, I don’t think we are 

going to be worrying about servicing Boeing aircraft. I think we are 

going to be worrying about servicing U.S. fighter jets to stop that 

break out. 

So I think that the area of breakout means that we will have 

zero economic leverage to stop Iran from pursuing a nuclear weapon. I think to your question is do we have leverage in the context 

of Iranians cheating on the deal, where they are trying to incrementally cheat, and I think Mr. Lorber is exactly right. 

The reality is that in May of 2015 the U.S. Treasury Department 

sanctioned nine aircraft that were being delivered from Iraq Air to 

Mahan Air. And despite that sanction, right, which was supposed 

to be a powerful sanction, those planes not only were delivered but 

they are currently landing in European airports. 

So we have had no leverage despite the fact that we have had 

those sanctions in place. 

Mr. GOLDMAN. Congressman, if I may? I think that the dynamic 

that you identified is an important one. I would add a few more. 

One, I would just to respond to Chairman Hensarling’s comments, 

the dynamics that he identified are undoubtedly a risk. 

I would also say that equally they would be a clear violation of 

the JCPOA, either redirecting aircraft to SDNs or repurposing civilian passenger aircraft for other purposes would be a clear violation of Iran’s obligations under the terms of the deal. 

Mr. FOSTER. Sure. No. 

Mr. GOLDMAN. That is not absolute— 

Mr. FOSTER. No. It is my understanding that Boeing at this point 

has a letter of intent and not final agreement. So you could have, 

for example, it is not unreasonable to expect that there be very detailed monitoring agreements in terms of making sure the jets 

aren’t repurposed or sold to someone else. 

Mr. GOLDMAN. I would expect— 

Mr. FOSTER. As part of the leasing and/or sales agreements. I 

don’t know that that is going to be a fact, but it is an entirely reasonable expectation. 

Mr. GOLDMAN. Congressman, I also don’t know. I haven’t seen 

the term sheets, but I would expect that those would be conditions 

both of the license and of the contract between Boeing and whatever Iranian entity is its counterparty. 

I would also note that the size of the deal provides some degree 

of leverage to the United States and to Boeing. And so I don’t expect 109 airplanes to be delivered on day one to the extent that 

these planes are delivered over a course of many years, involve prepayment, involve large down payments, involve escrow payments to 

Boeing, things like this give Boeing additional leverage. 

17 

Again, none of this eliminates the risk. There are substantial 

risks, as my colleagues have noted, of engaging in business in Iran 

as a general matter and of engaging in this deal specifically. 

Mr. LORBER. Representative Foster, do you mind if I weigh in on 

your question as well? 

Mr. FOSTER. Certainly. 

Mr. LORBER. Thank you. So I think that the question of what is 

contained in the contract is going to be incredibly important between Boeing and Iran Air. 

But I think given that we don’t know what will be contained in 

that contract this committee does have an important responsibility 

to play to actually pass legislation which requires OFAC issue certain licenses pursuant to particular conditions. 

So for example— 

Mr. FOSTER. Oh, right. Yes. I agree, but I see a very large difference between legislation that effectively has us walk away from 

the JCPOA and something that sets significant conditions on the 

sort of contracts, the monitoring, provisions like that, to make sure 

that these are exclusively civilian for the exclusive intended end 

user. 

Mr. LORBER. I— 

Mr. FOSTER. That is where I see our main oversight role. 

Mr. LORBER. But Congressman, the problem is of course is that 

in theory that sounds good. In practice the reality is Mahan Air 

has been under U.S. sanctions. The U.S. Treasury Department has 

been traveling around the world trying to convince our European 

and Gulf allies to stop Mahan Air from landing in their airports. 

And if you bring Adam Szubin here, who is the under secretary 

of Treasury, he will tell you that he has had no success in convincing the Europeans, our Gulf allies, to block the landing of a 

designated airline, Mahan Air, which is controlled by the Revolutionary Guard. 

So you can put all the provisions you want and monitoring provisions you want in the contract, but the reality of what is happening 

on the ground today is the U.S. Government has been unable to 

stop sanctioned airlines from traveling to even allied airports. That 

is the reality. 

Chairman HUIZENGA. The gentleman’s time has expired. 

With that, the Chair recognizes Mr. Pearce of New Mexico for 5 

minutes. 

Mr. PEARCE. Thank you, Mr. Chairman. I have been listening 

with great interest. I really appreciate the viewpoints expressed by 

my friends on the other side of the aisle. 

I probably draw a different conclusion because the suggestion 

was made that we shouldn’t be having the hearing. And really one 

of the intersections of probably an important discussion for the 

country and that is the need for jobs as opposed to the national security concerns. 

Now, for me it is somewhat more personal. Back in 1970 I went 

into Airforce training, pilot training, and we had in our class several Iranian pilots, became good friends with several of the people 

during my year there. 

When the Shah was overthrown I have tried randomly through 

the years to try to find out what happened to any of my friends 

18 

and have never been able to contact, even as a Member of Congress, been able to establish a trail for any of them. 

And so the idea of a sponsor of terrorists, of a government like 

that is one that is personal to me. And so I think that it would be 

important for us to drill down. 

But I do understand what our friends are saying about the jobs. 

Now, one of the things that I have a concern about is, and Mr. 

Goldman, I am probably going to ask you to address this, but after 

the deal was done, the JCPOA, Ben Rhodes, who is the National 

Security Advisor for Strategic Communication for the president 

said, yes, we had to lie to the American people in order to get their 

consent. 

His further quote quoted as saying in the spring of last year, and 

that was some time back, ‘‘The legions of arms control experts 

began popping up in think tanks. We literally created an echo 

chamber that became key sources for often clueless reporters and 

reporters who literally knew nothing.’’ 

Now, given that background for the underlying agreement, how 

can we believe anything that the Administration says about the 

use of the airplanes or the intended use of the airplanes? 

You surely understand that we come with a bit of skepticism, but 

then when the President’s own adviser says yes, we did this, do you 

understand why we might have some concerns on this side? 

Mr. GOLDMAN. Congressman, thank you for your question. I look 

to the terms of the agreement itself. 

Mr. PEARCE. No, I am just talking about Mr. Rhodes’ comment 

that—forget the terms. The people were lied to about the terms 

and what will make sure that we are not being lied to about the 

elements of this agreement? 

Mr. GOLDMAN. Congressman, I think your committee and those 

of your colleagues is well-positioned to request information about 

monitoring of the agreement, both in public settings and in private 

settings from the Administration. 

Mr. PEARCE. Okay. With all respect, we request a lot of information from the Administration and almost never, never get anything, 

whether it is CFPB, the Treasury or whoever. And so my question 

then, just a rhetorical question is how in the world can our allies 

trust us if this thing moves forward? 

So I would like to separate in the rest of the time separate the 

discussion into two pieces. You have one the sale of the assets, but 

then the secondly is the financing of the assets. Now, if we don’t 

finance those here internally in the U.S. who is going to finance 

those? 

Mr. Lorber, do you have an opinion about that? 

Mr. LORBER. I do. So I don’t think it is going to be any of sort 

of the major international financial banks, the Wolfsburg Group, 

so-called Wolfsburg Group. I think you have been seeing in the 

case of other aircraft sales to Iran, so some of the smaller aircraft 

companies, Embraer, APR— 

Mr. PEARCE. Okay. I am maybe running out of time so I am 

going to— 

Mr. LORBER. Yes. It is smaller German, Austrian, Italian banks, 

for example, that are not nearly as reputable and cannot— 

19 

Mr. PEARCE. So do you think it is better that we have the financing done from in the U.S. if the sale occurs rather than forcing the 

financing there? 

Mr. LORBER. I don’t. No. I don’t think the United States should 

be in the position of— 

Mr. PEARCE. Mr. Dubowitz, do you have an opinion on that? 

Mr. DUBOWITZ. I don’t think U.S. financial institutions should be 

risking their reputation and risking potential illegalities by financing a deal to airlines that are controlled by terrorist organizations. 

And if you want to know someone who is telling the truth to you, 

Congressman, listen to Angela Merkel’s speech to the Bundestag 

today, where based on German intelligence she said Iran is violating the deal because they are continuing to procure nuclear and 

missile technology in Germany in violation of the requirement of 

the JCPOA to use their procurement channel. 

Mr. PEARCE. Wait, which kind of feeds back into my initial point 

that the whole deal was sold to the American public based on lies 

and now then there appear to be lies that are—it is a very difficult 

question. 

Again, I respect our friends on the other side pointing out the 

balance between national security and jobs. At the end of the day, 

truth does matter, so thanks. 

And I yield back, Mr. Chairman. 

Chairman HUIZENGA. The gentleman’s time has expired. 

It has come to my attention that we have been talking about a 

number of letters, and in an effort to make sure everybody has all 

the information about the various letters, I would like to enter into 

the record without objection the letter to Dennis Muilenburg of the 

Boeing company dated June 16, 2016, by Peter Roskam and Chairman Jeb Hensarling that was the basis of a number of the letters 

that we were discussing earlier. 

And without objection, it is so ordered. 

The Chair now recognizes Mr. Perlmutter of Colorado for 5 minutes. 

Mr. PERLMUTTER. Thanks, Mr. Chairman. 

So is it true, gentlemen, that the JCPOA is—and I am just going 

to call it the agreement, okay, is in effect today? 

Mr. Lorber, is it in effect? 

Mr. LORBER. Yes, I believe so. 

Mr. PERLMUTTER. Okay. 

Mr. Dubowitz: 

Mr. DUBOWITZ. It is and it is being violated. 

Mr. PERLMUTTER. Okay. So you think it would be your position 

that Iran has breached the agreement? 

Mr. DUBOWITZ. Actually it is Angela Merkel’s position in her 

speech today because— 

Mr. PERLMUTTER. I asked for your position? 

Mr. DUBOWITZ. In my view that is exactly right. Iran is supposed 

to be using— 

Mr. PERLMUTTER. And you are a lawyer, right? 

Mr. DUBOWITZ. I am. 

Mr. PERLMUTTER. Okay. 

Mr. Goldman? 

Mr. GOLDMAN. Yes, it is in effect. 

20 

Mr. PERLMUTTER. Okay. 

Mr. Lorber, do you think it has been breached by Iran? 

Mr. LORBER. I think that Iran has generally lived up to the 

terms, though I think that there are points on the margin where 

Iran definitely is pushing the boundaries and may be in slight 

breach, yes. 

Mr. PERLMUTTER. All right. Now, none of you disagree—well, let 

us see if you do or you don’t, because there is the legislative piece 

which is obviously us and what we might do about agreements 

going into the future. 

There is also the judicial piece which Mr. Dubowitz thinks it has 

been breached and he has quoted the German prime minister. Is 

Angela Merkel a prime minister or— 

Mr. DUBOWITZ. Chancellor. 

Mr. PERLMUTTER. Yes. 

Mr. DUBOWITZ. German chancellor. 

Mr. PERLMUTTER. So my question is I looked at what Mr. Lorber 

referred us to Section 5.1.1 of the agreement which seems to be 

pretty straightforward. And maybe I am missing something. ‘‘The 

United States commits to allow for the sale of commercial passenger aircraft and related parts and services to Iran by licensing 

the export, re-export, sale, lease or transfer to Iran of commercial 

passenger aircraft for exclusively civil aviation end use.’’ 

And then it goes on, ‘‘export, re-export,’’ keeps going and then it 

has a footnote: ‘‘Licenses issued in furtherance of Section 5.1.1 will 

include appropriate conditions to ensure that licensed activities do 

not involve and no licensed aircraft goods or services are resold or 

re-transferred to any person on the SDN list.’’ 

That is the operative language. That is what we are dealing with 

in this hearing, is it not? 

Mr. GOLDMAN. But Congressman, it is fully in the purview of the 

U.S. Congress and the U.S. Treasury Department to put in a condition— 

Mr. PERLMUTTER. Is this, this the— 

Mr. DUBOWITZ. So— 

Mr. PERLMUTTER. —operative language that we are dealing with? 

Mr. DUBOWITZ. It is the operative language, but let me explain 

the operative language. 

Mr. PERLMUTTER. I just—is that a yes? 

Mr. DUBOWITZ. That is the language, but— 

Mr. PERLMUTTER. Thank you. All right. Now, you can expand on 

that if you will? 

Mr. DUBOWITZ. It is entirely within the purview of the U.S. Government, both Congress and the Executive Branch, to put, for example, in a certification that the President has to make that Iran 

is not using these civilian aircraft for illicit military purposes. 

It is also entirely within your purview to put in a requirement 

that these sales not be made until Iran is no longer a state sponsor 

of terrorism. 

And since Iran is in violation of the agreement, as we learned 

today from Ms. Merkel, in illicitly procuring missile technology 

from Germany in violation of the procurement channel, Iran is in 

clear violation of the agreement— 

Mr. PERLMUTTER. All right. So— 

21 

Mr. DUBOWITZ. —in the letter in spirit. 

Mr. PERLMUTTER. —and I appreciate that. So if they are in violation then it may allow us to not have to proceed further with our 

obligations under the agreement. Okay. So I appreciate that legal 

position. I got it. 

Because we are dealing with a contract. Okay? And I appreciate 

from a legislative point of view we may want to change that contract in the future. We may want to add some things. But we do 

have a contract today, but you say it has been breached. 

Mr. DUBOWITZ. The contract has been breached. 

Mr. PERLMUTTER. And therefore it might eliminate any responsibility for the U.S. to have to fulfill Section 5.1.1? 

Mr. DUBOWITZ. No. You can fulfill that provision to the letter by 

putting in a certification requirement and a condition that this only 

take place once the president has certified and once Iran is no 

longer a state sponsor of terrorism. 

Mr. PERLMUTTER. So— 

Mr. DUBOWITZ. That is entirely within the purview of that agreement. 

Mr. PERLMUTTER. All right. All right. Wait a second. We either 

have responsibilities under this agreement or we don’t. And we can 

always amend the agreement in the future if you get Iran and the 

other countries to agree to the amendment. Isn’t that true? 

Mr. DUBOWITZ. No, because the licensing construct that is contemplated in that agreement gives Treasury and gives the U.S. 

Congress the ability to set up the licensing regime with conditions 

as the footnotes explains. 

Those conditions could be and should be that Iran is not violating 

the requirement that these aircraft not be used to support the Revolutionary Guard and Bashar Assad and designated terrorist organizations. 

Mr. PERLMUTTER. So if a— 

Mr. DUBOWITZ. That is not a violation of the agreement. 

Mr. PERLMUTTER. So if that were placed in the license, okay, and 

I appreciate that point, if that were placed in the license you are 

not going to use this for any bad purposes, then would you say go 

forward with this sale Boeing or not? 

Mr. DUBOWITZ. So my recommendation would be that there be a 

certification put in, that there be a 5-year rehabilitation period so 

that we can actually track these planes to make sure that they are 

not being used for illicit purposes. 

If Iran satisfies that certification requirement after 5 years and 

the President can then certify, then we can move ahead on a incremental basis allowing certain planes to be delivered. 

But I think it is actually foolhardy that the day after Iran is— 

June the 9th, 1 month after Iran has continued to conduct illicit 

activities with these planes, we greenlight the sale and we hope 

and a prayer that Iran will change its conduct when there has been 

no evidence that Iran is going to be conducting itself— 

Chairman HUIZENGA. The gentleman’s time has expired. 

Mr. DUBOWITZ. —in a legal way. 

Chairman HUIZENGA. The gentleman’s time has expired. 

Mr. PERLMUTTER. And I appreciate your answers. Thank you. 

I yield back. 

22 

Chairman HUIZENGA. The gentleman’s time has expired. 

With that, the Chair recognizes Mr. Schweikert of Arizona for 5 

minutes. 

Mr. SCHWEIKERT. Thank you, Mr. Chairman. And I know you 

had touched on this earlier, but I would like to get my head around 

the financing mechanics. And so I thought we would do just a little 

experiment. What is the total value that would be financed first on 

the U.S. aircrafts to be sold? Anyone throw that out for me? 

Mr. LORBER. So the total value of the deal, we have heard two 

numbers. We have heard $17.8 billion for the actual sale of aircraft 

and then a leasing provision with a total market value, we are not 

sure what it is, but market value is up to $25 billion. 

Mr. SCHWEIKERT. Okay. Just for the fun of it, 25. The Airbus 

products? 

Mr. LORBER. I believe the Airbus deal was initially valued at $27 

billion. 

Mr. SCHWEIKERT. Okay. So now we have $27 billion. Airport improvements, runways, fuel delivery systems, fire suppression, all 

the list of the other infrastructure that goes when you have updated a fleet, updated the types. Everything from the jet ways— 

Mr. LORBER. Yes. 

Mr. SCHWEIKERT. —will have to all be updated. Has there been 

any estimate of how much additional infrastructure borrowing 

there will be needed? 

Mr. LORBER. Not that I have seen as public source or have been 

released by Iranian authorities, who I think would be responsible 

for that. 

Mr. SCHWEIKERT. Okay. So we are already basically at just our 

quick calculation here, we know there is somewhere around $52 

billion. 

Mr. LORBER. It is actually more than that because there are 

other airline companies or other airplane companies that are selling airlines to Iran, too. Embraer I know— 

Mr. SCHWEIKERT. Okay. Embraer? 

Mr. LORBER. —ACP and a couple other smaller ones. 

Mr. SCHWEIKERT. Okay. So do we have a guess of the total if we 

were to look back a decade from now how much international borrowing would ultimately come from, let us call this opening up. 

Mr. LORBER. If I had to back of the envelope guess I would say 

probably between $65 and $70 billion. 

Mr. SCHWEIKERT. Okay. So just for the fun of it let us use the 

70 because it is an easy number. So $70 billion and how much of 

that is going to come from the international marketplace? Almost 

all of it. 

Mr. LORBER. I would assume, yes. 

Mr. SCHWEIKERT. If for the three panel members, are we comfortable that this is money that is substantially going to be inbound 

capital into Iran? 

Mr. GOLDMAN. Presumably some portion would be. 

Mr. SCHWEIKERT. Okay. 

Mr. GOLDMAN. I couldn’t speak to what portion. 

Mr. SCHWEIKERT. Okay, but we are sort of doing a thought experiment here. What is the risk premium? What is the threat to the 

23 

financial markets of the world when at any given moment a bad 

actor, international sanctions come back. 

How do you insure this sort of debt? How do you actually design 

an understanding of the risk mechanics on it? Are, is Iran going 

to be paying some huge interest rate premium because of their risk 

profile? 

Mr. LORBER. So there is— 

Mr. GOLDMAN. Oh, go ahead. 

Mr. LORBER. This is actually exactly the reason that most of the 

major global financial institutions have not gone back into Iran is 

that they don’t—for a variety of reasons, but one important one is 

that they do not know how to appropriately price that risk. 

Mr. SCHWEIKERT. Okay. So— 

Mr. LORBER. Financial— 

Mr. SCHWEIKERT. —so are they going to have to use alternative 

sources of capital to raise $70 billion? 

Mr. LORBER. I think that is exactly why I think Iran is trying 

to go to smaller banks with less U.S. sanctions exposure in order 

to try to sort of create a hodge podge financing scheme to pay for 

the sales. 

Mr. SCHWEIKERT. Okay. Now— 

Mr. DUBOWITZ. Congressman, it is also why the Export-Import 

Bank and other export development banks in Europe, for example, 

are probably going to have to backstop these deals because the private financial institutions are not willing to risk their money. So 

instead you are going to risk taxpayer money on this. 

Mr. SCHWEIKERT. So functionally then you have just sanctified 

with populations in the Western world a guarantee on the risk premium of a regime that we already know is an international bad 

actor? I guess where I am going from this is, look, other members 

of the committee have done a much better job than I can on the 

types of bad acts that we believe come through the regime. My concern is do you hand $70 billion, whether it be taxpayer 

guaranteed dollars or smaller institutions that you would have to 

at least conceptualize would be much more fragile if all of a sudden 

there becomes, oh, sanctions went back on because of this bad act 

and the Iranian government because these are functionally an Iranian-owned airline, government-owned airline, says, well, fine. We 

are just not going to pay our debt. 

Mr. DUBOWITZ. Yes. There is going to be— 

Mr. LORBER. Congressman, you are absolutely right that the financing I think is going to be the trickiest piece of the puzzle 

should Boeing decide to actually proceed with the sale. 

Mr. SCHWEIKERT. And I want to keep this in context of even beyond Boeing. The— 

Mr. GOLDMAN. Absolutely. 

Mr. SCHWEIKERT. The savings, the capital, the infrastructure we 

have built to finance our society in the West is now going to functionally be financing— 

Mr. GOLDMAN. Right. 

Mr. DUBOWITZ. Yes. 

Mr. SCHWEIKERT. —really dodgy debt. And yet the number, the 

hundreds and hundreds of hours we have in this committee 

screaming at each—excuse me—discussing with each other—on we 

24 

don’t believe we should finance this type of bad actor called Wall 

Street, or we shouldn’t finance this or finance this. If you actually 

take the types of rhetoric that have been in this room— 

Mr. GOLDMAN. Yes. 

Mr. SCHWEIKERT. —the discussion we are having here should be 

absurd on the financing. So look, that is the benchmark I am laying down. 

I yield back, Mr. Chairman. 

Mr. GOLDMAN. Congressman, I would just note— 

Mr. SCHWEIKERT. I’m sorry. It— 

Chairman HUIZENGA. The gentleman’s time has expired. 

Mr. GOLDMAN. $70 billion— 

Chairman HUIZENGA. So far, there is no yelling. That is good. 

But with that, the Chair does recognize Mr. Heck of Washington 

for 5 minutes. 

Mr. HECK. Thank you, Mr. Chairman. I would like to begin by 

correcting the record of my own remarks that I delivered at the top 

of this discussion in which I asserted that it was self-evident what 

we were really doing here today was relitigating passage of the 

JCPOA notwithstanding the fact that this proposed transaction is 

fully legal, fully compliant and scandal-free. 

But it is also pretty clear to me by the remarks made by several 

people that it is a red herring to relitigate reauthorization of the 

Export-Import Bank despite the fact that both the Export-Import 

Bank and Boeing have asserted clearly, explicitly and definitively 

that the EX-IM will not be involved. Let us get that on the record. 

One of my premises is that passage of this package of bills, 

which would effectively block this transaction, would have no effect 

insofar as Airbus would just fill the void. So we wouldn’t have a 

real world effect and that that would cost America a lot of jobs. 

The U.S. Department of Commerce estimates that for every billion in exports, 6,000 jobs are created. So we are talking about 

100,000 jobs. 

Some of my friends who are supportive of this package of bills 

respond, well, no, Denny. That is not true because the Office of 

Foreign Asset Control would not authorize the Airbus sale because 

more than 10 percent of the content of them would come from G.E. 

engines. 

However, Mr. Goldman, I think I prefer to direct this to you. Sir, 

I recognize that you are a legal expert on trade sanctions, but 

doesn’t it seem plausible if not likely that given that both Rolls 

Royce and CFM, a combined G.E. and French-based company make 

engines that would be suitable for this Airbus frame would just fill 

this void, especially given the fact that the magnitude of this sale 

would make it kind of a smart financial and economic move? And 

that therefore Airbus would find a way to rejigger production to in 

fact fill the void? 

Mr. GOLDMAN. Congressman, I can’t speak to the requirements 

of Airbus planes. I understand though that they do presently contain greater than 10 percent U.S. parts, therefore they require a 

license from OFAC. And it is my understanding that that license 

application is pending. 

Mr. HECK. And that you have no opinion on whether or not if 

they did not approve it that the market would do what the market 

25 

often does, which is just adapt by having either Rolls Royce or the 

CFM? 

All right. Let me go to another point. 

Mr. LORBER. Congressman, can I— 

Mr. HECK. No, because I have other questions. 

Mr. Goldman, I read your testimony essentially to be the world 

is safer as a consequence of Iran not acquiring nuclear weapons 

under the JCPOA and that generally speaking therefore we are 

better off with the JCPOA to monitor this so that the world is 

safer, not more dangerous. Is that fair? 

Mr. GOLDMAN. That is my belief, Congressman. And I would note 

that the U.S. Government retains all of the tools at its disposal including sanctions to address all of the other malicious behavior on 

the part of the Iranian government that we abhor, its support for 

terrorism, its cyberattacks, its human rights abuses. 

And that several times this year the Administration has imposed 

sanctions on Iranian entities for ballistic missile procurement and 

other misdeeds. 

Mr. HECK. Okay. So let us take this one step further. If the 

transaction, fully legal, fully compliant, scandal-free goes through, 

given a sales or a service and part contract that would be a part 

of that sale, not speaking to Dr. Foster’s inquiry about leverage. 

But doesn’t it seem more plausible to you that American employees of an American company or contractors of an American company providing either parts replacement or servicing on the part of 

the purchase by Iran would give us a better opportunity to discover 

whether or not there had been some adaptation of that airplane for 

a sanctionable purpose? 

As opposed to if there are no eyes on these aircraft over time? 

Mr. GOLDMAN. That would be my assumption, as would my assumption be that the monitoring and reporting conditions that 

could be imposed in a license or in Boeing’s contract with Iran— 

Mr. HECK. Okay. So that is a clear answer to my question. So 

let me just summarize. Passage of these bills which would effectively block this sale will cost America up to 100,000 jobs and 

render both the world and the immediate geographic region of Iran, 

where they do bad things, fully acknowledge, less safe? Fewer jobs, 

less safe. 

With that I yield back the balance. 

Chairman HUIZENGA. The gentleman’s time has expired. 

The Chair now recognizes and welcomes Mr. Royce from California, chairman of the House Foreign Affairs Committee. 

Mr. ROYCE. Thank you, Mr. Chairman, and I thank the panel 

here. Let me begin with this question because I am going to the 

June 2011 Treasury designation of Iran Air that it was used by the 

Iranian Revolutionary Guard Corps and Iran’s Ministry of Defense 

to transport military-related equipment. 

Iran Air has shipped military-related equipment on behalf of the 

IRGC, says the report, ‘‘since 2006. And in 2008 Iran Air shipped 

aircraft-related raw materials to a Ministry of Defense-associated 

company, including titanium sheets, which have dual use military 

applications and can be used in support of advanced weapons programs.’’ 

26 

It further stated that ‘‘rockets or missiles have been transported 

via Iran Air passenger aircraft.’’ So I would ask Mr. Dubowitz, from 

what you know has Iran Air continued in its process of engagement 

here in prohibited activities related to Iran’s support for terrorism 

to include the transport of conventional weapons and ballistic missiles within the last 2 years? Do we have the intel on that or information about it? 

Mr. DUBOWITZ. Chairman Royce, in fact just last month three 

Iran Air flights went from the IRGC’s resupply base in Iran to Damascus. So that illicit activity continues. 

Mr. ROYCE. So in terms of the question, has Iran provided weapons to the Syrian government using Iran Air? I take it the answer 

is probably— 

Mr. DUBOWITZ. It appears to be so unless they are ferrying civilians on sightseeing tours from a resupply base from the IRGC. And 

probably we need to look into that. 

Mr. ROYCE. So has Iran Air engaged in activities within the last 

2 years in support of the Iranian Revolutionary Guard Corps? 

Mr. DUBOWITZ. Yes. 

Mr. ROYCE. Okay. Now my second question, last question has to 

do with the ownership status because despite these clearly terrorism-related designations, the Administration removed sanctions 

on Iran as part of the nuclear deal as we all know. 

And in addition, Iran Air has not been designated as being 

owned or controlled by the government of Iran despite the fact that 

we have seen little evidence that Iran Air has either been 

privatized or changed its ownership structure. 

So Mr. Lorber or Mr. Dubowitz, I would ask what is Iran Air’s 

ownership structure? Is it still owned or controlled by the government of Iran? And are any members of the—and I guess this would 

be of great interest to me, of the Iranian Revolutionary Guard 

Corps specifically designated nationals, shadow SDNs, or other political exposed persons in any of the senior management positions? 

Mr. DUBOWITZ. So Chairman Royce, Iran Air is still used by the 

Revolutionary Guards. Iran was designated in 2011 because it was 

being used by the Revolutionary Guards. 

There is every evidence it continues to be used by the Revolutionary Guards. And there was no reason it was delisted since that 

was not part of a nuclear agreement. And there is no reason why 

it should remain unlisted. 

And I just would note one other thing very quickly. There are 

four other airlines being used by the Revolutionary Guards that remain sanctioned. And there are no—as we have no ability to stop 

Iran Air from transferring leasing or reselling those aircraft to four 

other Revolutionary Guard aircraft. 

Mr. ROYCE. Mr. Lorber? 

Mr. LORBER. Thank you, Chairman Royce. I would also add to 

that that there is a provision of secondary sanctions regulations 

which are still in force that prohibit foreign companies from doing 

business not just with Iran Air but also with agents and affiliates 

of the IRGC. 

So if Iran Air is transporting goods on behalf of the IRGC it is 

an agent and an affiliate and therefore entities doing business with 

it are also subject to U.S. secondary sanctions. 

27 

Mr. ROYCE. And Mr. Dubowitz, when was that last flight or the 

last three flights that you referenced? 

Mr. DUBOWITZ. It was— 

Mr. ROYCE. —to Damascus? 

Mr. DUBOWITZ. —June the 9th. 

Mr. ROYCE. June the 9th. 

Mr. DUBOWITZ. One month ago. 

Mr. ROYCE. Okay. My time is expiring. I— 

Chairman HUIZENGA. But will the gentleman yield? 

Mr. ROYCE. I will yield. 

Chairman HUIZENGA. Thank you. I appreciate that. 

Mr. Lorber, I just wanted to give you a quick opportunity. Mr. 

Heck had a line of questioning that you wanted to jump in on and 

I thought you could take this last 30 seconds? 

Mr. LORBER. Thank you, Chairman. It was to your point, Representative Heck, as to whether or not the market would prevail 

and whether they could, for example, simply swap out engines from 

European manufacturers. 

It would depend on the type of aircraft, but my understanding 

is that aircraft engines are generally manufactured specifically for 

a particular aircraft. And so there might not be, for example, a different manufacturer to be able to swap in an aircraft very easily. 

Thank you. 

Chairman HUIZENGA. All right. The gentleman’s time has expired. 

Mr. ROYCE. I think—Mr. Dubowitz, were you seeking time to 

reply on that as well? 

Mr. DUBOWITZ. Yes. I just wanted to add as well that—and it 

gets to a previous question before. My big concern is that we may 

face in the coming years a $70 billion Iran bailout where the U.S. 

taxpayer is going to have to stand behind all of the unpaid debts 

from Iran Air and other Iranian airlines. 

So when you think about jobs and exposure of the U.S. economy, 

I would hate to have U.S. taxpayers have to step up for a $70 billion bailout when Iran reneges on its commitments or alternatively 

we have to snapback sanctions because of Iranian cheating— 

Mr. ROYCE. I thank the panel. My time has expired. Thank you. 

Chairman HUIZENGA. The gentleman’s time has expired. 

With that, the Chair recognizes the ranking member of the full 

Financial Services Committee, Ms. Waters, for 5 minutes. 

Ms. WATERS. Thank you, Mr. Chairman. 

To Mr. Goldman and Mr. Lorber, I would like to raise this question to the two of you. Although the Iran deal clearly commits the 

U.S. to license the sale of commercial passenger aircraft and related parts and services to Iran, the deal also makes clear that any 

license for the sale of passenger aircraft will, ‘‘include appropriate 

conditions to ensure that licensed activities do not involve, and no 

licensed aircraft goods or services are resold or re-transferred to 

any person on the Special Designated National list.’’ 

So I would welcome the views of any of the witnesses, really, 

with respect to what kind of conditions should be included in any 

potential license to ensure that aircraft sales do not involve persons 

subject to U.S. sanctions. 

28 

Mr. GOLDMAN. Thank you, Congresswoman. I would divide the 

types of leverage that we might have should Boeing continue down 

this path and sell aircraft into two different categories. One are 

business dynamics, and those include the ongoing contracts for 

maintenance services and spare parts, as well as the length of time 

required to actually deliver the planes. 

The second are both licensing and contractual conditions. Contractual conditions to address a concern that Mr. Dubowitz raised 

might include things like liquidated damages provisions if Iran Air 

violates the terms of the contracts, prepayment requirements, large 

down payments, escrow arrangements, things like this that would 

prevent financing for this type of deal should it go through from 

being a burden on any financial institution sufficiently large to constitute a systemic concern. 

From the licensing perspective, you could include requirements 

that any company selling aircraft into Iran describe due diligence 

processes, issue ongoing reports, potentially even contain route restrictions, certainly full clarity and transparency as to the banking 

and financing arrangements involved, things like this. 

Ms. WATERS. Let me just deviate for a minute and say that my 

greatest desire is to avoid a nuclear disaster in this world. And so 

I was very pleased when we finally reached an agreement with 

Iran that I believe will allow us to avoid a nuclear disaster and 

would create better relationships and allow us to live in this world 

even if there are some different philosophies about religion, about 

life in general. 

Don’t you think it is worth it to honor this agreement and let it 

go forward and make it work for the good of all of us rather than 

try and pick it apart and undo the hard work that has been done 

by all of the nations that were involved in this agreement? Don’t 

you think it is better to give it a chance? Anybody. 

Mr. GOLDMAN. Congresswoman, while I share the concerns that 

everybody has articulated about Iran’s malicious and destabilizing 

activities throughout the world, I do agree with you that the limitations imposed on its nuclear program by the JCPOA are significant 

and I would not want to see as long as Iran is adhering to the 

terms of the agreement I would not want to see anything jeopardize the ability of the United States to uphold its end of the bargain. 

Ms. WATERS. Anyone else? 

Mr. DUBOWITZ. Congresswoman—yes. If I could answer that? I 

agree with you that we should uphold the agreement. The agreement allows us to put in provisions in the licensing structure that 

I think are sensible. 

For example, how about a provision that says none of Iran’s airlines are designated by the U.S. Government for malign activities, 

and only after the U.S. Government can certify that has taken 

place should these sales be allowed to proceed. 

I would also add—and I am not sure if you were here when we 

talked about this, but today Chancellor Merkel rose in the Bundestag and made it very clear that according to German intelligence 

Iran is violating the JCPOA by procuring missile and nuclear technology from Germany in contravention of the procurement channel 

29 

that they are supposed to be using and that they agreed to under 

the terms of the JCPOA. 

So we had the ability in the agreement to put in sensible restrictions on the licensing. At the same time, Iran is today flagrantly 

violating their requirement. 

Ms. WATERS. Have we done our own verification? 

Mr. DUBOWITZ. Of what, Congresswoman. 

Ms. WATERS. Of what you just described, about Ms. Merkel— 

Mr. DUBOWITZ. I don’t know if the CIA has. This was based on 

a German intelligence report that Chancellor Merkel referred to. 

Ms. WATERS. This is I believe a six-nation agreement. And where 

we are supposed to be cooperating and if one nation has some complaints I don’t know what the agreement says, but it would make 

good sense to me if we would come together and there would be 

verification before we attempted to do anything to modify or undermine the agreement. Does that make good sense? 

Mr. DUBOWITZ. In fact, it makes good sense. So I would call the 

German ambassador and I would ask him about Chancellor 

Merkel’s speech. I would ask him about German intelligence findings that the Iranians are contravening the JCPOA. 

And I would also have Congress use its statutory authority to 

provide requirements that are allowed by the JCPOA to ensure 

that we are not transferring Boeing aircraft to the Revolutionary 

Guards to be used to kill Syrian women and children. I think that 

is our obligation. 

Chairman HUIZENGA. —the gentlelady’s time has expired. 

Ms. WATERS. I think it is how and when. 

Chairman HUIZENGA. The gentlelady’s time has expired. 

Ms. WATERS. Thank you. I yield back. 

Chairman HUIZENGA. All right. We are minute over, but thank 

you for yielding back. 

With that, the Chair recognizes Mr. Pittenger of North Carolina 

for 5 minutes. 

Mr. PITTENGER. Thank you, Mr. Chairman, for this important 

hearing. I would like to clarify, Mr. Dubowitz, right over here to 

your right, good morning. Angela Merkel and Germany, they were 

a central player in the JCPOA agreement. Is that correct? 

Mr. DUBOWITZ. Yes, sir. 

Mr. PITTENGER. In fact, she was a strong advocate of this agreement. Was that not correct? 

Mr. DUBOWITZ. That is correct. 

Mr. PITTENGER. So in that spirit of her advocacy, her judgment 

was counted on and followed and applauded by this Administration. Is that not correct? 

Mr. DUBOWITZ. That is correct. 

Mr. PITTENGER. To that end, now we learn that she finds that 

Iran is breaching this agreement by their own intelligence. Yes, we 

do need to follow up with our own intelligence, but it seems to me 

that the better part of wisdom is to appreciate the leadership that 

she gave at that time at the formation of this agreement and the 

leadership that she is showing today. Would that make sense to 

you? 

Mr. DUBOWITZ. Congressman, it makes sense, and I think what 

it reveals is something more profound. As we set up this very soVerDate Nov 24 2008 16:29 Mar 08, 2018 Jkt 025850 PO 00000 Frm 00035 Fmt 6633 Sfmt 6633 K:\DOCS\25850.TXT TERI
30 

phisticated procurement channel that would provide all the checks 

and balances to make sure the Iranians don’t engage in illicit activity, everybody agreed to it. The Iranians were supposed to use the 

procurement channel to buy things legally. 

What have they done? They have gone around the procurement 

channel, and according to Angela Merkel, they are procuring nuclear and missile technology illicitly in Germany. So when we all 

talk about these great sophisticated monitoring schemes that we 

are going to set up for Boeing aircraft, we should keep that in 

mind. 

The Iranians have a long rap sheet of sanctions evasion and illicit activity. They don’t stick to sophisticated monitoring regimes. 

They in fact violate them egregiously. 

Mr. PITTENGER. So the same person who was a strong advocate 

for this agreement now is the one who is stating we have a major 

problem. 

Mr. DUBOWITZ. She is saying according to German intelligence 

the Iranians are illicitly procuring missile and nuclear technology 

in her country. 

Mr. PITTENGER. Thank you. 

With Iran receiving these 200 aircraft, up to 200, what you do 

you believe will be the effect in terms of regional instability of the 

impact, and not only in Syria, but in Iraq, Libya, Yemen, Sudan, 

all—the entire region where there is enormous instability? And you 

find a more provocative Iran? Could you kind of outline to us what 

your concerns may be? 

Mr. DUBOWITZ. So my concern is that Iran is going to get upwards of about 500 aircraft. 

Mr. PITTENGER. Hmm. 

Mr. DUBOWITZ. Iran Air needs 36. So that leaves the remaining 

464 aircraft, if my math is right, for other airlines who are sanctioned by the U.S. Government to use them. 

Now, some percentage will be used for civilian flights, but if past 

is prologue they are going to use some percentage of those for military transport of Revolutionary Guard fighters, Hezbollah militants, missile technology and weapons to continue to destabilize 

the Middle East and contribute to what we have already seen, 

which is the slaughter of Syrians and the instability in Iraq, the 

arming of the Houthis in Yemen and an environment that suits the 

JCPOA. It has not gotten better but it actually has gotten worse. 

Mr. PITTENGER. Mr. Lorber, would you like to comment on this? 

Mr. LORBER. Thank you, Representative. Yes, I think that Mr. 

Dubowitz is exactly right. 

I think that the stated need for the number of aircraft seems a 

bit exaggerated for civilian purposes and that at the very least 

what you would continue to see is with the delivery of aircraft if 

they are used for illicit activities the sustaining of Iran’s position 

in Lebanon, the sustaining of Iran’s position in Syria in a way that 

we have seen over the past few years, longer than the past few 

years but in particular in Syria in the past few years, has helped 

prop up Syrian President Bashar Assad and contributed significantly to frankly the large scale death of Syrian civilians. 

31 

Mr. PITTENGER. Mr. Goldman, if Chancellor Merkel’s assessment 

is correct and is validated, do you believe that that warrants us no 

longer being obligated to this agreement? 

Mr. GOLDMAN. Congressman, I have not unfortunately had a 

chance to read her speech. 

Mr. PITTENGER. If she has, if what she has stated is correct what 

would your— 

Mr. GOLDMAN. If Iran violates its commitments under the 

JCPOA we should take appropriate action, absolutely. 

Mr. PITTENGER. Yes, sir. Do you also concur with the role that 

Iran can plan in terms of instability in the region? 

Mr. GOLDMAN. Iran is certainly a destructive influence throughout the region. 

Mr. PITTENGER. Thank you. 

I yield back. 

Chairman HUIZENGA. The gentleman yields back. 

The Chair now recognizes Mr. Sherman of California for 5 minutes. 

Mr. SHERMAN. I want to thank the chairman for allowing me to 

participate although I am not a member of this subcommittee. Iran 

Air continues to support the Iran Revolutionary Guard force, its 

Quds forces and Assad and Hezbollah and other terrorist groups. 

We should at a minimum not license the sale of the aircraft 

knowing that they are going to go to an airline that is likely to use 

them to support terrorism. 

The United States designated Air Iran under Executive Order 

13382 in June 2011, that is President Obama’s executive order, for 

providing material support to the Iran Revolutionary Guard Corps. 

There is no reason to believe that Iran Air is going to change its 

conduct. 

But we have to visualize how much blood is on the hands of Iran 

Air. Think of that boy on the beach in Turkey fleeing the deaths 

in Syria. 

Hundreds of thousands of people killed, millions of people internally displaced, millions of people made so desperate that they are 

willing to risk their lives to flee from this civil war, all because 

Assad gets aid ferried to him on Air Iran. It shouldn’t be on newly 

provided American planes. 

And we should remember that in 1990 Air Iran was there as the 

transport arm for a terrorist case, a terrorist assassination of an 

opposition leader in Switzerland. 

There are three bills before us. One is the easiest and that is to 

prohibit EX-IM Bank financing. I have been in this room. I have 

supported EX-IM Bank, but not if it finances the air force of the 

Iran Revolutionary Guard Corps. 

And that is why before I voted I obtained a letter from the chairman of the EX-IM Bank saying that they do not anticipate any scenarios in which the bank would seek the necessary waiver for a 

transaction involving a state sponsor of terrorism. And there are 

three such state sponsors; one is Iran. 

Without objection, I would like to put this letter into the record. 

Chairman HUIZENGA. Without objection, it is so ordered. 

Mr. SHERMAN. I think that legislation which locks this decision 

in is beneficial and it saves time over at the EX-IM Bank. They 

32 

won’t even have to think about whether to seek such a waiver that 

they have already said that they would not seek. 

The second issue is whether we should provide financing. Nothing in the JCPOA says we are supposed to finance Iran or any of 

its entities. If American banks make multi-billion dollar loans to 

Iran, two things happen. 

First, that is bad prudential management by our banks, and second, those banks then have to become advocates here in Congress 

for the U.S.-Iranian relationship. We don’t need that. We didn’t 

promise that. 

The third issue is whether we should even allow the sale of these 

planes. And I am focused on prohibiting Airbus and Boeing. There 

has been some difference here as to whether a Airbus would require a license, but there is one way to cut the Gordian Knot here. 

I believe that they would because of the U.S. technology. 

But we could ask if there is any doubt on this we could have 

companion legislation. No American airline can buy a plane from 

any airline manufacturer that sells to Iran Air. That would eliminate any issue and make sure that this is put on an even playing 

field. 

Finally, there is the issue of whether we have this obligation 

under the JCPOA. The JCPOA 5.1.1 makes it clear that we would 

transfer planes exclusively for civil aviation use. Now, if Iran wants to provide $5 billion or $10 billion in gold to 

be held as a security deposit by the United States, provide U.N. 

monitors 24/7 on every plane, and contract that if one of these 

planes is used for anything that helps the Syrian regime that all 

that gold becomes the property of the American taxpayer, then 

maybe we could comply with 5.1.1. 

Iran has offered none of that. We are being asked to transfer 

planes to a company or an entity, Iran Air, that has served as an 

air force for terrorism. And we are being told, oh, but just trust 

them or just trust that we will be able to do something if they violate. 

And when Iran comes forward with a plan to guarantee that 

these planes are not used for terrorism or to support Assad, then 

we could consider changing any statute that we consider now. But 

I don’t see any such plan being proposed by the Islamic Republic. 

I yield back. 

Chairman HUIZENGA. The gentleman’s time has expired. 

The Chair recognizes Mr. Stutzman of Indiana for 5 minutes. 

Mr. STUTZMAN. Thank you, Mr. Chairman and I thank the panelists for being here today and for helping us gain some more insight 

on this particular transaction, which I frankly find concerning. And 

I would like to talk a little bit about H.R. 5608, that no EX-IM financing for Iran that Congressman Peter Roskam from Illinois has 

sponsored. 

First of all I would just ask all of the witnesses if you would 

agree that the Export-Import Bank should not subsidize any aircraft exports to Iran? 

Mr. DUBOWITZ. Should not. 

Mr. LORBER. Should not. 

Mr. STUTZMAN. Should not? 

Mr. DUBOWITZ. I agree. 

33 

Mr. GOLDMAN. Should not. 

Mr. STUTZMAN. So, to follow up on that position, if the Administration claims that U.S. banks should finance aircraft because the 

legal and reputational and regulatory risks are manageable, then 

what is the Administration’s argument against involving the Export-Import Bank, which in 2014 devoted 40 percent of its authorizations to Boeing? 

Mr. GOLDMAN. Congressman, EX-IM Bank is already prohibited 

by statute from financing deals involving Iran because Iran remains designated as a state sponsor of terrorism. 

Mr. STUTZMAN. So, would you support 5608 then and codify that 

into law? 

Mr. LORBER. So I think that I would support and codify in 5608 

in particular because the current statutory basis for EX-IM Bank 

being unable to deal with a state sponsor of terrorism permits a 

presidential waiver. 

And obviously H.R. 5608 does not allow for that waiver so it codifies and makes sure that the President cannot in certain circumstances provide for EX-IM financing for this deal. 

Mr. STUTZMAN. Mr. Goldman, would you support 5608? 

Mr. GOLDMAN. I do not support EX-IM Bank financing a deal like 

this. 

Mr. STUTZMAN. Okay. Mr. Dubowitz, any comments? 

Mr. DUBOWITZ. I support the bill and I would also note on the 

waiver issue that the President has used the waiver through the 

JCPOA to waive sanctions that were not nuclear sanctions. They 

were sanctions that were imposed for terrorism, money laundering, 

missile development, et cetera. 

And so it is of great concern to me that the President has already 

used his waiver to waive sanctions that were not nuclear sanctions 

and that contravene his commitment to you and to Congress and 

the American people that he would only waive nuclear sanctions. 

Mr. STUTZMAN. Well, yes. I think if we don’t want taxpayers— 

this is what I think is really important. Can we guarantee that to 

the American taxpayer, that there is no backdoor deal that we have 

seen in previous years EX-IM has financed Boeing sales to large 

leasing companies abroad including China and Russia? 

The end user airline for these planes were not identified. Is there 

a risk that Iranian carriers will lease planes from such companies 

including carriers that remain sanctioned? Is there some way that 

Export-Import financing to another entity would find its way into 

Iran deals? 

Mr. Lorber? 

Mr. LORBER. I absolutely do think that that risk exists. I know 

there have been considerations of finding third-party leasing companies. I am—and the concerns that EX-IM Bank could finance 

those as a way to facilitate the sale. 

So I do think in addition that there is no guarantee that if EXIM decides or if EX-IM finances this deal through a presidential 

waiver that the aircraft are for sure certainly not going to end up 

being used by the IRGC or its agents or affiliates to help support 

Iran’s terrorism. 

Mr. DUBOWITZ. And Congressman, I would add to that, Boeing 

is already punting the responsibility to the U.S. Government where 

34 

they said a few weeks ago that the U.S. Government has much 

greater intelligence capabilities than they have with respect to due 

diligence. 

So they are already starting to maneuver themselves into a position where they can claim in the future, look, we don’t have the intelligence capabilities to do that kind of due diligence. That is up 

to the U.S. Government to do. 

So you could imagine a scenario of he said, she said when U.S. 

Government and Boeing get into a dispute in the future over who 

had responsibility to prevent the transfer of that aircraft to designated entities. 

Mr. STUTZMAN. So do you believe then that if 5608 were to become law that that would prevent any of this potentially happening 

or not? 

Mr. DUBOWITZ. I think with respect to this legislation at least it 

prevents the U.S. taxpayers from being on the hook for a $70 billion bailout when that actually happens. With respect to some of 

the other pieces of legislation here, again, the certification requirement on a rehabilitation period I think makes sense. 

Again, as Congressman Sherman said, Iran continues its illicit 

conduct. Why are we betting the farm that on the day after that 

deal all of a sudden Iran and the regime are going to turn to the 

side of good— 

Mr. STUTZMAN. Right. 

Mr. DUBOWITZ. —and stop conducting these illicit activities? At 

least give them a 5-year cooling period like we do in the criminal 

justice system where there is a rehabilitation period before you are 

‘‘released’’ into the general population? 

Mr. STUTZMAN. Thank you. 

I yield back, Mr. Chairman. 

Chairman HUIZENGA. The gentleman yields back. 

Seeing we are in the first round of questioning here, we are contemplating a second round if the witnesses are able to stay. And 

seeing no other Members on the Democrat side, we will go back to 

the Republican side and recognize Mr. Guinta of New Hampshire 

for 5 minutes. 

Mr. GUINTA. Thank you, Mr. Chairman, and thank you to the 

witnesses for being here today. 

Are you all familiar with the letter the Treasury sent on June 

7, 2016 to Senator Rubio? 

Mr. GOLDMAN. I am familiar with it but don’t have a copy of it 

in front of me. 

Mr. GUINTA. Okay. 

Mr. LORBER. Yes, same here. 

Mr. GUINTA. Maybe before the hearing concludes, we can provide 

the witnesses with a copy. And I would like to make sure it is entered into the record without objection. 

Chairman HUIZENGA. Without objection, it is so ordered. 

Mr. GUINTA. Thank you, Mr. Chairman. 

Here is my concern. It seems like there is general agreement 

that there should not be taxpayer-funded dollars going to support 

or assist Iran in any way. Is that clear? Is that in agreement, Mr. 

Goldman? Do you agree with that? 

Mr. GOLDMAN. Yes. I agree with that. 

35 

Mr. GUINTA. I am particularly interested in your response because I have read your testimony and in your testimony you refer 

to the JCPOA as a ‘‘significant diplomatic accomplishment.’’ You 

also then state, ‘‘Since 1984 Iran has been and remains designated 

as a state sponsor of terrorism,’’ which you have stated verbally. 

But then you also note a couple paragraphs later that, ‘‘Iran retains the ability to enrich uranium subject to international supervision.’’ So I guess my question would be this. 

First to Mr. Dubowitz, in your opinion has Iran lived up to the 

agreement? 

Mr. DUBOWITZ. So again, Iran is in violation of the agreement in 

two ways. One, it is procuring illicit nuclear missile technology outside of the established procurement channel established by the 

JCPOA. 

Two, it is in violation of the implementation U.N. Security Council resolution that actually implements the deal by continuing to 

test missiles capable of carrying a nuclear warhead. So no, in my 

assessment Iran is in violation both of the JCPOA and the underlying U.N. Security Council resolution. 

Mr. GOLDMAN. Congressman, I believe that was in my testimony 

that you were reading. 

Mr. GUINTA. Yes. 

Mr. GOLDMAN. So the IAEA has certified that Iran is in compliance with all of its obligations under the JCPOA. It has done so 

on three occasions. First on implementation day and then subsequently in two quarterly reports submitted by the director general 

to the board of governors. 

Mr. DUBOWITZ. So I would just add that the IAEA is not required 

to certify about Iran’s missile tests so that is irrelevant. And the 

second issue is based on the procurement channel issue that has 

been raised by Chancellor Merkel, we will have to see what the 

IAEA’s response will be, but that actually is a matter for the Joint 

Commission of the JCPOA, which is supposed to determine whether Iran is in violation of the provisions of the JCPOA, specifically 

in this case the procurement channel provision. 

Mr. GUINTA. And quite honestly I am not sure that the IAEA 

shares or enjoys the same credibility today that it has in the past. 

And I know that there are members in this House on both sides 

of the aisle that question their capacity to provide an honest and 

true and fair assessment of the agreement. But that is a different 

debate. 

I want to go back to this letter of June 6. In the second paragraph from Treasury to Senator Rubio. It says, ‘‘To be clear, until 

Iran has addressed other concerns we have with its behavior outside of the nuclear file, the U.S. financial system, including the 

branches of U.S. financial institutions abroad, will remain off limits 

to Iran.’’ 

Based on that, I read the last paragraph of that same letter, 

which says, ‘‘When we speak to the private sector, including financial institutions about the sanctions relief under the JCPOA, it is 

not to encourage them to do business with Iran, which is a business decision that they need to make on their own. Rather, the 

purpose of such discussions is to provide further clarity on what is 

permitted in the sanctions that remain in place.’’ 

36 

It seems like the letter doesn’t synch. The first page and second 

page. On the one hand they are saying a business needs to make 

a decision whether they are going to do business with Iran, however, on the first page of the letter it says, ‘‘We ensure that that 

will not occur. 

So that is the concern I have with the letter from Treasury to 

a Senator just last month. So I think the frustration and concern 

relative to the need for passage of 5608 is not only necessary but 

it needs to expand to third-party leasing companies because there 

is a possibility and a potential that EX-IM could do business with 

Iran and they might not even know it. Was that a fair assessment, 

Mr. Dubowitz or Mr. Lorber? 

Mr. DUBOWITZ. So correct. So not only can EX-IM do business 

with Iran if the President uses the national security waiver, but if 

you look at the last sentence of the second paragraph of that letter 

where it says, ‘‘without explicit authorization’’— 

Mr. GUINTA. Correct. 

Mr. DUBOWITZ. —permits the U.S. Treasury Department to authorize— 

Mr. GUINTA. Exactly. That is what I wanted. 

Mr. DUBOWITZ. —the U.S. dollar through the U.S. financial system. And by the way, the letter is also not quite precise in that we 

do actually have jurisdiction over dollars that circulate around the 

world because those dollars actually originate in our financial system and return to our financial system. 

And so banks are not going to put dollars in or take dollars out 

unless they have gotten authorization from OFAC that they won’t 

be hit with penalties in doing so. 

So the letter provides, as you would imagine, a series of outs for 

the Administration to do exactly what we are concerned about, 

which is to provide dollarized transactions for the Boeing deal and 

other deals as well as providing EX-IM financing to put U.S. taxpayers on the hook. 

Mr. GUINTA. Thank you. I yield back. 

Chairman HUIZENGA. The gentleman’s time has expired. 

And with the indulgence of the witnesses we would like to continue with a second round. We have a bit less of a stacked list of 

questions, but if there is no objection I would like to continue and 

recognize myself for 5 minutes. 

Again, and I don’t mean to harp on this, but I would love to have 

had Boeing here to start talking about what they are going to do 

if the terms of the JCPOA are not being upheld has been asserted 

by Angela Merkel and what does that mean? I would love to have 

the Administration here talking about this to find out what this 

would mean for this particular deal. 

We have already seen bipartisan support for making sure that 

the indications that EX-IM has given would be codified. I think 

that that is a positive. 

There has been some discussion about the role that the United 

States has in not just stopping or questioning the Boeing transaction but also the Airbus transaction and what that would mean. 

And as has been pointed out by my colleague from Arizona and 

my colleague from California on the other side of the aisle, this 

37 

could very well be some bad prudential management decisions if we 

see financial institutions move forward. 

And I would like to—I was starting to talk about this, Mr. 

Lorber, with you earlier and I want to touch on this. And I also 

want to go back to talk about how some of this works with leasing 

through other companies. 

But let us talk a little bit about that financial responsibility and 

risk that comes with these and for these institutions that may 

choose to be a part of this. 

Mr. LORBER. Thank you, Mr. Chairman. So I think that the risks 

facing financial institutions for banking is particularly—this deal 

in particular and then doing business in Iran more generally, are 

very significant. 

As I mentioned in my opening statement there are at least three 

risks relating to sanctions, relating to illicit finance, risks that underpin the Iranian economy, and then also specifically to risks of 

future sanctions. So snapback, for example, or additional sanctions 

that are a result of Iran’s continued support of terrorism or its ballistic missile tests. 

In this particular case I think the primary risk that foreign financial institutions, so non-U.S. financial institutions, face is that 

they could be doing business with an agent or an affiliate of the 

IRGC and therefore lose their access to U.S. markets. I think that 

is a very significant risk that is frankly coloring their decision to 

engage or not engage in any of these types of transactions. 

It is why, for example, you have seen a large number of the European banks refuse to bank the Airbus deal. You had Airbus a 

couple of months ago, I think it was in February, publicly pleading 

and telling European banks to get back in the game and yet the 

major ones have not moved in. 

Chairman HUIZENGA. In fact and under secondary sanctions enacted in 2010, the U.S. told foreign banks you can deal with Iran 

or you can deal with the United States, but the choice is yours. 

And it— 

Mr. GOLDMAN. That is not quite— 

Chairman HUIZENGA. —it seems to me that maybe that also 

ought to apply to EX-IM and if a foreign company wants to be eligible to work with EX-IM, I don’t believe it should be making profits 

with the Iranians. It would seem to make sense for me that would 

also hold especially on a leasing company’s fleet. And would that 

not seem to be a good idea? 

And I know, Mr. Goldman, you have been defending the transaction but have stated that you would not support EX-IM support 

of advancing that. I am curious if the three of you would care to 

weigh in about making sure that we can maybe belt and suspenders this particular EX-IM provision that we are talking about 

today? 

Mr. GOLDMAN. Sure. Chairman, just to clarify one point, whether 

the transaction proceeds or not is a business decision that is for 

Boeing to make. It is clear to me that issuing licenses to Boeing 

should it wish to proceed with the deal is consistent with the 

JCPOA and consistent with U.S. law. 

I would agree with my colleagues— 

38 

Chairman HUIZENGA. But you also said if we could show and 

demonstrate that they violated it as Angela Merkel has asserted 

today or we believe has asserted, then you would also support that 

those sanctions being re-imposed, correct? 

Mr. GOLDMAN. If Iran violates the JCPOA we should take appropriate action in response absolutely. 

Chairman HUIZENGA. Okay. 

Mr. GOLDMAN. I am completely also in agreement that any entity, if the deal proceeds, any entity involved in that deal whether 

it is a bank or a leasing company or an agent, needs to steer clear 

of the kinds of risks that Mr. Lorber and Mr. Dubowitz have identified. And as the Treasury Department in its letter noted, there are 

a couple of different ways in which those risks can materialize. 

The U.S. Government has jurisdiction over transactions involving 

U.S. persons or that touch the U.S. financial system. As the department notes, it does not have jurisdiction over physical dollars held 

outside the United States not in the possession of U.S. persons. 

So somebody walking down the street in Johannesburg with a $10 bill in his pocket does not for that reason alone become subject 

to U.S. jurisdiction. 

Chairman HUIZENGA. I fully understand. I think this chairman 

would like to make sure that everybody watching and listening to 

this understands that we will be watching very closely what our financial institutions are going to be doing and trying to hold them 

responsible for those decisions. 

My time has expired. The Chair recognizes the ranking member 

of the subcommittee for 5 minutes. 

Ms. MOORE. Thank you, Mr. Chairman, and I am not sure I am 

going to use the entire 5 minutes. 

I just want to reiterate how grateful I am to the witnesses for 

their appearance here today and for withstanding this second 

round of questioning. I do know that I have learned a great deal 

and it has been very provocative in terms of some stuff that we 

might really want to do with regard to tightening up on the licensing. 

We have talked an awful lot about Boeing, which is an American 

company. We have talked a little bit more about Airbus and about 

the perhaps dearth of funding that Airbus would suffer were they 

to try to fill that void and fill the order for the Iranians. 

But I am wondering, Mr. Goldman and others, if there is anything—the P5+1 agreement which includes, of course, China, 

France, Russia, of course us, and the U.K., Germany in the E.U., 

well is there anything that would prohibit China, which is being 

said to be developing some of these wide-body planes, could China 

fulfill the commitment under the JCPOA to supply aircraft? 

Mr. GOLDMAN. The provision of the agreement that we have been 

discussing this morning, 5.1.1, speaks specifically to obligations of 

the United States, which are ‘‘to establish a licensing regime that 

could permit the issuance of licenses to sell U.S. origin aircraft, 

parts, equipment, services, et cetera. 

I can’t off the top of my head think of any specific provision of 

the JCPOA that would prohibit China, Russia or any other party 

from selling and aircraft to Iran— 

Ms. MOORE. But— 

39 

Mr. GOLDMAN. —as long as—sorry. Go right ahead. 

Ms. MOORE. Right. And I guess that is my point, that this was 

a historic deal struck. Everybody was amazed at how we get Russia 

and China into this kind of international agreement. 

But to the extent that there has been some sort of agreement 

that this was a central piece of it, is there anything that would prohibit China from filling that gap if somehow we were to legislate 

here in the United States, prevail against providing those? Would 

there be anything that would prohibit China from filling that? 

Mr. GOLDMAN. So the only thing would be the remaining secondary sanctions. So for example if China sold a plane to the 

IRGC, the Chinese entity that it sold that plane could be subject 

to U.S. secondary sanctions. 

Ms. MOORE. Okay. 

Mr. Lorber, yes. 

Mr. LORBER. There are two other points I would add to that as 

well. Another potential way that China could be prohibited from 

selling aircraft to Iran or the IRGC would be if, for example, components, as we were discussing before, of those Chinese aircraft 

were manufactured in the U.S. or contained U.S. technology. 

And in sort of the interconnected globalized manufacturing world 

that is fairly likely so you have to actually look at the underlying 

technology and components. 

The one other point I would also make is that just from a technical and feasible perspective the likelihood that China and Russia 

in the short term anyway can deploy attractive wide-bodied aircraft 

that Iran is going to want to buy probably in the next 5 years I 

think is fairly low. But after that I think it is a very valid point. 

Mr. DUBOWITZ. And Congresswoman, I would just add to this. 

What we are really talking about here from a humanitarian point 

of view is can we get safe, non-corrupt, compliant, transparent airlines to fly in and out of Iran to service Iranians? And I would just 

note again that today 44 percent of the flights are provided by Gulf 

and Turkish Airlines. 

In the past few months Air France, British Airways, Lufthansa 

and Alitalia have all resumed service to Iran, both international 

and domestic routes. And there are reportedly nearly 30 carriers 

operating in Iran. 

So a good alternative to this would be encouraged, transparent 

compliance, legal airlines with a good safety record to service the 

Iranian market, but have a period of time where we are not actually allowing our companies to provide aircraft to the Iranians to 

set up their own domestic fleet when we have outstanding concerns 

about how that fleet will be used in corrupt, non-transparent, noncompliant, illicit ways. 

Ms. MOORE. Okay. Well, thank you. 

I would yield back the balance of my time. Thank you, gentlemen. 

Chairman HUIZENGA. The gentlelady yields back. 

With that, the Chair recognizes Mr. Stutzman of Indiana for 5 

minutes. 

Mr. STUTZMAN. Thank you, Mr. Chairman, and I just want to go 

back again to H.R. 5608. A report last month revealed that Iran 

40 

was able to purchase Boeings even before sanctions were lifted 

thanks to backdoor deals with foreign airlines. 

And I am just reading a part of this report that was uncovered, 

that these backdoor dealings were uncovered by International Business Times. Sales data obtained by IBT shows that seven Iranian 

airlines purchased a combined 23 or more Boeing and Airbus aircraft before the historic nuclear deal between Iran and the U.S. 

was signed in October. 

So while Iranian citizens were suffering under U.S. and European sanctions that affected a range of goods, the country’s airline 

industry bypassed U.S. export laws and purchased aircraft through 

international intermediaries. 

And it goes on down to describe how flights disappear from 

tracking systems once they enter Syrian airspace, but radar reveals 

that they have landed in Damascus and are, according to David 

Cohen, the U.S. under secretary for Terrorism and Financial Intelligence, ‘‘ferrying Islamic Revolutionary Guard Corps along with 

weapons and funds.’’ 

So it appears that there is plenty of evidence out there. So 

doesn’t this just underline the risk that U.S. aircraft can find their 

way into Iranian hands even if they haven’t subsidized by EX-IM 

in an unrelated transaction? 

Mr. DUBOWITZ. It not only underscores that, Congressman, but 

it also shows because the U.S. Treasury Department, as I mentioned, in May 2015 it actually sanctioned some of those illicit purchases. And despite those sanctions Iran continued to fly those airlines. 

It also underscores that the Iranians have for years used false 

transponders, not only for planes but for the national Marine Tanker Company for the Islamic Republic of Iran shipping lines in order 

to actually hide their deceptive behavior. And they are continuing 

to do so as of June the 9th. 

So this is the issue that you have an Iranian industry, the airline 

industry, that has been historically and is currently engaged in illicit and deceptive conduct and yet we are being asked to support 

through EX-IM a multi, multi-billion dollar deal using the U.S. taxpayer money on the hope and the prayer that somehow it is all 

going to change for the better. And I think that is an enormous 

risk for the U.S. economy. 

Mr. STUTZMAN. So, Mr. Chairman, I am trying to understand— 

we go back to what the Administration has said regarding the U.S. 

banks financing aircraft. So it is okay for accountholders at U.S. 

banks to do the dirty work where obviously we are not giving Export-Import Bank legal means to participate in any of these transactions when we do know that there is some backdoor dealings. 

Mr. Chairman, I guess I just conclude that it seems to me that 

this—I appreciate your hearing of this particular transaction but 

we need to continue to dig even deeper and ask more questions. 

So I don’t know what the intelligence from the White House—or 

what our intelligence departments and what the White House— 

what does the White House say when they have evidence of this 

that doesn’t that cause them some concern to pause or to do something about it, I guess is frankly what I am asking. 

41 

Why do we move forward with this deal with Iran and doing 

more business with them when we know they are more than likely 

messing with the equipment and continuing to move around the 

Middle East supporting terrorism? 

Mr. DUBOWITZ. Congressman, I mentioned earlier in my testimony this notion of a nuclear snapback. And I think what it has 

done is it has deterred the White House from actually using sanctions at all to push back in any meaningful way against Iran’s malign behavior because Iran has set up a dynamic where they keep 

threatening to walk away from the deal if we take any steps 

against their malign activity. 

Mr. STUTZMAN. Yes. 

Mr. DUBOWITZ. And so the White House has gotten ourselves in 

a position which I fear the next President is going to have to try 

to unwind where we can’t even use non-nuclear sanctions against 

terrorism, against missiles, against the illegal procurement of nuclear missile technology or planes or any kinds of sanctionable activity. 

The White House is actually not using non-nuclear sanctions. 

There have been no human rights sanctions since the JCPOA. 

There have been a handful of procurement sanctions relating to 

missiles that do nothing because the Iranians can reconstitute 

those sanctions. 

There have been no terrorism sanctions. So the White House actually I am afraid today for whatever reason, lives in fear that the 

Iranians will walk away from the deal if we do anything. 

Mr. STUTZMAN. Yes. 

Mr. DUBOWITZ. That is a very troubling dynamic that I think the 

next President is going to have to deal with in ways that I hope 

won’t paralyze his or her statecraft. 

Mr. LORBER. I would just add to that. 

Mr. STUTZMAN. Sure. 

Mr. LORBER. I think we are potentially even beyond a position 

of just refraining from engaging in enforcement action. Our designations as a result of Iran’s behavior and to the point now where 

we are significantly concerned that, based on Iranian officials’ comments that they are not seeing the economic benefits of the deal 

and therefore they are considering walking away. 

And so you move from sort of what was promised to be an aggressive enforcement posture almost to a situation where you have 

the United States actively trying to go out and assure European 

companies, for example, that they can absolutely go back into Iran, 

basically being a cheerleader. 

Mr. STUTZMAN. I thank the witnesses for your insight and the information on this today. 

Chairman HUIZENGA. The gentleman’s time has expired, and the 

Chair duly notes that the gentleman from Indiana I think is correct. There are a number of questions that remain and should be 

pursued with the Administration and others. 

The Chair now recognizes Mr. Perlmutter of Colorado for 5 minutes. 

Mr. PERLMUTTER. Thanks again, Mr. Chairman, and thanks for 

this hearing. It has been very interesting, gentlemen. Appreciate 

your testimony. I want to correct my calling the chancellor the 

42 

prime minister so let us get that out of the way. That has been 

bothering me for the last half hour. So I am sorry about that. 

And Mr. Goldman, I would like to ask you a couple questions I 

didn’t get a chance to ask you. So, Mr. Dubowitz and I were sort 

of jousting about breaches and anticipatory repudiation and who 

has violated this and who has violated that. 

Now, under the agreement there is some kind of dispute resolution process, is there not? 

Mr. GOLDMAN. Under the JCPOA there— 

Mr. PERLMUTTER. Yes. 

Mr. GOLDMAN. —is a dispute resolution process. 

Mr. PERLMUTTER. So I am calling JCPOA— 

Mr. GOLDMAN. Yes. 

Mr. PERLMUTTER. —the agreement. You guys can use the letters. 

I am going to call it the agreement. 

Mr. GOLDMAN. Great. 

Mr. PERLMUTTER. Is there? 

Mr. GOLDMAN. Yes. 

Mr. PERLMUTTER. Okay. And do you know if that provision has 

been in any way exercised or by any of the parties in connection 

with the chancellor’s comments? Has Germany done anything? Has 

China? Has the U.S.? 

Mr. GOLDMAN. To my knowledge no, but—and I was not aware 

of the chancellor’s speech. According to Mr. Dubowitz it took place 

today, so— 

Mr. PERLMUTTER. So and I guess that then turns to a couple of 

housekeeping items I would ask of you, Mr. Dubowitz. Do you have 

a copy of her remarks? Do you have a text of her remarks? 

Mr. DUBOWITZ. Congressman, I have the text. I also have the 

German intelligence report on which her assessment is based. 

Mr. PERLMUTTER. So you have the 317-page report? 

Mr. DUBOWITZ. I do. 

Mr. PERLMUTTER. Okay. 

Mr. GOLDMAN. In German and a— 

Mr. PERLMUTTER. I would rather have it in English. 

Mr. DUBOWITZ. I was about to say and a summary of it in 

English. 

Mr. PERLMUTTER. Okay. Mr. Chairman, if we could have those 

things be part of the record since there has been such extensive 

conversation about them? If you could provide those to us— 

Mr. DUBOWITZ. Sure. It would be my pleasure. 

Mr. PERLMUTTER. —would you do that? 

Chairman HUIZENGA. Yes. We will be getting to that as we wrap 

up about written additional questions and so we can probably orchestrate that, get a written question and for them to request that. 

I think there are going to be a number of other inquiries that the 

Chair plans to do as well with the Germans. 

Mr. DUBOWITZ. And Congressman, could I just add to this? The 

chancellor, in her speech, is not making a determination based on 

what the JCPOA says. She is not making a determination based 

on the dispute resolution mechanism. 

I am assuming that she is going to then reach out to her partners and maybe they will then invoke this joint commission that 

43 

Mr. Goldman talked about. She is merely presenting the evidence 

of the German intelligence services that have been— 

Mr. PERLMUTTER. Right. And that is why I am asking you for a 

copy of her text, but you and I were sort of talking about breaches 

and who has responsibility— 

Mr. DUBOWITZ. Right. 

Mr. PERLMUTTER. —to do what. And at this point the dispute 

resolution mechanism has not been invoked. 

Mr. DUBOWITZ. To the best of our knowledge—it may have been 

done so privately and we don’t know, but there has been no public 

reporting on any invocation of it. 

Mr. PERLMUTTER. Okay. So let us go back, Mr. Goldman, if I 

could to you on the licensing process. So where are we in the licensing process to actually conduct a sale of one, two or 20 planes? 

Mr. GOLDMAN. So my understanding is that Boeing was issued 

a license I believe in March to conduct the negotiations. Several 

weeks ago they announced that there had been a Memorandum of 

Understanding, a Memorandum of Agreement reached for the Iran 

Air. In order to actually consummate the sale there would need to 

be another license issued and I don’t know where that stands with 

OFAC. 

Mr. PERLMUTTER. And each of us I think has some level of skepticism, some level of suspicion. These have been two very different 

countries, the United States and Iran, for a lot of years where 

there hasn’t been any dialogue or any conversation other than 

saber rattling. 

What kinds of things would you expect to see in the license to 

make sure that planes are not available for any kind of illicit or 

illegal activities under the agreements or under any of our other 

sanction legislation or regulations? 

Mr. GOLDMAN. So I might expect to see requests about the type 

of due diligence Boeing did, a description of what the financing arrangements are, perhaps some reporting requirements, things of 

that nature. 

And then I think there is a second category of conditions which 

would be the conditions that exist in any contract between Boeing 

and whatever its Iranian counterparty would be. 

I would think that there would be terms in that contract to ameliorate some of the financial risks that Mr. Dubowitz and other of 

your colleagues have identified this morning. 

Those would involve things like liquidated damages provisions, 

perhaps requirements for upfront payments or escrow payments of 

things of the like to ensure that in the event Iran violates its undertakings under the JCPOA or the contracts, that they stand not 

to reap a windfall. 

Mr. PERLMUTTER. Okay. And I thank you. 

I would yield back, but with this closing remark, Mr. Chairman. 

There has been a lot of discussion, a lot of kind of interesting conversation, a lot of it at this point conjecture and I think we have 

to do some additional research into these kinds of things. And I 

thank you very much. 

Chairman HUIZENGA. I appreciate that, and the Chair duly notes 

that it sounds like we have tentative support for another hearing 

about this. 

44 

Mr. PERLMUTTER. Sure. 

lLaughter] 

Chairman HUIZENGA. Which I think would actually be an excellent question. We need to hear from Treasury. Has Germany 

reached out? We need to hear from OFAC. What are their timeframes? What is their process that they would go through both for 

Boeing and for Airbus in this situation. 

So it seems to me that there are a number of unanswered questions, but gentlemen, thank you. You have spent a tremendous 

amount of time and given us a lot of education about a number of 

questions that have been put forward today. And I would like to 

thank our witnesses for their testimony. 

Mr. Dubowitz, you can anticipate a question from the Chair for 

a copy of the report both in German and the English summary. 

And so it is the report and I am sorry, Mr. Perlmutter, what else 

had you— 

Mr. PERLMUTTER. And the text of the speech. 

Chairman HUIZENGA. And the text of the speech. Well, I think 

that will be— 

Mr. DUBOWITZ. Mr. Chairman, if I could just add to that, I would 

also want to send for the record, if it is okay, the evidence that 

there are still $50 billion in outstanding judgments against Iran on 

behalf of victims of terrorism that the Iranians are refusing to pay. 

They are challenging the $1.7 billion decision of the U.S. Supreme Court to hand over monies to American victims of the 

Khobar Towers, the Marine barracks bombing, so it is very interesting. 

We are talking about $50 billion, $60 billion that the Iranians 

are going to get and yet they refuse to not only pay victims of Iranian terrorism, they are taking us to the international court of justice challenging that. I would like to just add that to the record. 

Chairman HUIZENGA. The Chair duly notes that and the Chair 

will be asking you that question formally for you to respond to. 

The Chair notes that some Members may have additional questions for this panel, which they may wish to submit in writing. 

Without objection, the hearing record will remain open for 5 legislative days for Members to submit written questions to these witnesses and to place their responses in the record. Also, without objection, Members will have 5 legislative days to submit extraneous 

materials to the Chair for inclusion in the record. 

And with that, again I would like to say thank you to our witnesses for your time here today and the attention of our Members 

on this very important issue. 

With that, we are adjourned. 

[Whereupon, at 12:15 p.m., the hearing was adjourned.] 

(45) 

A P P E N D I X 

July 7, 2016 

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