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INCREASING THE EFFECTIVENESS OF 

NON-NUCLEAR SANCTIONS AGAINST IRAN 

JOINT HEARING 

BEFORE THE

SUBCOMMITTEE ON MONETARY 

POLICY AND TRADE 

AND THE

SUBCOMMITTEE ON TERRORISM 

AND ILLICIT FINANCE 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

APRIL 4, 2017 

Printed for the use of the Committee on Financial Services 

Serial No. 115–14 

( 

(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 

STEVAN PEARCE, New Mexico 

BILL POSEY, Florida 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

SEAN P. DUFFY, Wisconsin 

STEVE STIVERS, Ohio 

RANDY HULTGREN, Illinois 

DENNIS A. ROSS, Florida 

ROBERT PITTENGER, North Carolina 

ANN WAGNER, Missouri 

ANDY BARR, Kentucky 

KEITH J. ROTHFUS, Pennsylvania 

LUKE MESSER, Indiana 

SCOTT TIPTON, Colorado 

ROGER WILLIAMS, Texas 

BRUCE POLIQUIN, Maine 

MIA LOVE, Utah 

FRENCH HILL, Arkansas 

TOM EMMER, Minnesota 

LEE M. ZELDIN, New York 

DAVID A. TROTT, Michigan 

BARRY LOUDERMILK, Georgia 

ALEXANDER X. MOONEY, West Virginia 

THOMAS MacARTHUR, New Jersey 

WARREN DAVIDSON, Ohio 

TED BUDD, North Carolina 

DAVID KUSTOFF, Tennessee 

CLAUDIA TENNEY, New York 

TREY HOLLINGSWORTH, Indiana 

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 

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 

BILL FOSTER, Illinois 

DANIEL T. KILDEE, Michigan 

JOHN K. DELANEY, Maryland 

KYRSTEN SINEMA, Arizona 

JOYCE BEATTY, Ohio 

DENNY HECK, Washington 

JUAN VARGAS, California 

JOSH GOTTHEIMER, New Jersey 

VICENTE GONZALEZ, Texas 

CHARLIE CRIST, Florida 

RUBEN KIHUEN, Nevada 

KIRSTEN SUTTON MORK, Staff Director 

(III) 

SUBCOMMITTEE ON MONETARY POLICY AND TRADE

ANDY BARR, Kentucky, Chairman 

ROGER WILLIAMS, Texas, Vice Chairman 

FRANK D. LUCAS, Oklahoma 

BILL HUIZENGA, Michigan 

ROBERT PITTENGER, North Carolina 

MIA LOVE, Utah 

FRENCH HILL, Arkansas 

TOM EMMER, Minnesota 

ALEXANDER X. MOONEY, West Virginia 

WARREN DAVIDSON, Ohio 

CLAUDIA TENNEY, New York 

TREY HOLLINGSWORTH, Indiana 

GWEN MOORE, Wisconsin, Ranking Member 

GREGORY W. MEEKS, New York 

BILL FOSTER, Illinois 

BRAD SHERMAN, California 

AL GREEN, Texas 

DENNY HECK, Washington 

DANIEL T. KILDEE, Michigan 

JUAN VARGAS, California 

CHARLIE CRIST, Florida 

(IV) 

SUBCOMMITTEE ON TERRORISM AND ILLICIT FINANCE

STEVAN PEARCE, New Mexico Chairman 

ROBERT PITTENGER, North Carolina, Vice 

Chairman 

KEITH J. ROTHFUS, Pennsylvania 

LUKE MESSER, Indiana 

SCOTT TIPTON, Colorado 

ROGER WILLIAMS, Texas 

BRUCE POLIQUIN, Maine 

MIA LOVE, Utah 

FRENCH HILL, Arkansas 

TOM EMMER, Minnesota 

LEE M. ZELDIN, New York 

WARREN DAVIDSON, Ohio 

TED BUDD, North Carolina 

DAVID KUSTOFF, Tennessee 

ED PERLMUTTER, Colorado, Ranking 

Member 

CAROLYN B. MALONEY, New York 

JAMES A. HIMES, Connecticut 

BILL FOSTER, Illinois 

DANIEL T. KILDEE, Michigan 

JOHN K. DELANEY, Maryland 

KYRSTEN SINEMA, Arizona 

JUAN VARGAS, California 

JOSH GOTTHEIMER, New Jersey 

RUBEN KIHUEN, Nevada 

STEPHEN F. LYNCH, Massachusetts 

(V) 

C O N T E N T S 

Page 

Hearing held on: 

April 4, 2017 ..................................................................................................... 1 

Appendix: 

April 4, 2017 ..................................................................................................... 37 

WITNESSES 

TUESDAY, APRIL 4, 2017 

Maloney, Suzanne, Deputy Director, Foreign Policy, and Senior Fellow, Center for Middle East Policy, the Brookings Institution ....................................... 9 

McInnis, J. Matthew, Resident Fellow, the American Enterprise Institute ....... 7 

Ottolenghi, Emanuele, Senior Fellow, Foundation for Defense of Democracies 10 

Taleblu, Behnam Ben, Senior Iran Analyst, Foundation for Defense of Democracies ..................................................................................................................... 5 

APPENDIX 

Prepared statements: 

Maloney, Suzanne ............................................................................................ 38 

McInnis, J. Matthew ........................................................................................ 46 

Ottolenghi, Emanuele ...................................................................................... 52 

Taleblu, Behnam Ben ....................................................................................... 81 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Hill, Hon. French: 

Written responses to questions for the record submitted to Behnam Ben 

Taleblu ........................................................................................................... 104 

Perlmutter, Hon. Ed: 

Letter to FBI Director James B. Comey, Jr., Treasury Secretary Steven 

T. Mnuchin, and U.S. Attorney General Jeff Sessions from Senators 

Sherrod Brown, Ben Cardin, and Dianne Feinstein, dated March 30, 

2017 ................................................................................................................ 108 

Washington Post article entitled, ‘‘Blackwater founder held secret 

Seychelles meeting to establish Trump-Putin back channel’’ ................... 110 

(1) 

INCREASING THE EFFECTIVENESS 

OF NON-NUCLEAR SANCTIONS 

AGAINST IRAN 

Tuesday, April 4, 2017 

U.S. HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON MONETARY POLICY AND TRADE, AND

SUBCOMMITTEE ON TERRORISM AND ILLICIT FINANCE, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The subcommittees met, pursuant to notice, at 2:39 p.m., in room 

2128, Rayburn House Office Building, Hon. Andy Barr [chairman 

of the Subcommittee on Monetary Policy and Trade] and Hon. 

Stevan Pearce [chairman of the Subcommittee on Terrorism and Illicit Finance] presiding. 

Members present from the Subcommittee on Monetary Policy 

and Trade: Representatives Barr, Williams, Pittenger, Huizenga, 

Love, Hill, Emmer, Mooney, Davidson, Tenney, Hollingsworth; 

Moore, Sherman, Foster, and Vargas. 

Members present from the Subcommittee on Terrorism and Illicit 

Finance: Representatives Pearce, Williams, Pittenger, Rothfus, 

Messer, Tipton, Poliquin, Love, Hill, Emmer, Zeldin, Davidson, 

Budd, Kustoff; Perlmutter, Maloney, Lynch, Foster, Delaney, 

Sinema, Vargas, and Gottheimer. 

Chairman BARR. The subcommittees will come to order. 

Without objection, the Chair is authorized to declare a recess of 

the subcommittees at any time. 

Also, without objection, members of the full Financial Services 

Committee who are not members of the Subcommittee on Monetary 

Policy and Trade or the Subcommittee on Terrorism and Illicit Finance may participate in today’s hearing. 

Today’s hearing is entitled, ‘‘Increasing the Effectiveness of NonNuclear Sanctions Against Iran.’’ 

I now recognize myself for 21⁄2 minutes to give an opening statement. 

As chairman of the Monetary Policy and Trade Subcommittee, it 

is a pleasure for me to join Chairman Pearce and my colleagues on 

the Terrorism and Illicit Finance Subcommittee in holding this 

joint hearing. 

It is no secret that Washington has been deeply divided over how 

to confront Iran’s nuclear ambitions both before and after implementation of the Joint Comprehensive Plan of Action (JCPOA). 

This hearing, however, is not about the JCPOA per se, and I am 

hopeful that we can find common ground in addressing Iran’s nonVerDate Nov 24 2008 18:38 Mar 16, 2018 Jkt 028175 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 K:\DOCS\28175.TXT TERI
2 

nuclear activities, including terrorism, weapons procurements, and 

regional destabilization. 

Since the agreement’s implementation day in January of 2016, 

Iran has continued to sponsor Hezbollah and other militias in the 

region. Its support for the Assad regime alone, including the use 

of planes to airlift military supplies, has helped claim an estimated 

400,000 lives. 

Last April, even President Obama suggested that the Iranians 

were violating the spirit of the deal by engaging in these activities. 

Rather than be deterred, Iran went on in October to sentence three 

Americans to long prison terms on bogus charges. 

In January of this year, the country tested a ballistic missile, in 

violation of U.N. Security Council Resolution 2231. And this very 

morning, just as Boeing was announcing new sales to Iran, we 

learned that dozens of Syrian civilians, including at least 11 children, were gassed in a chemical weapons attack. 

If Republicans and Democrats can agree that intensifying nonnuclear sanctions is key for our national security, then we should 

think of new ways that deepen their impact on Iranian behavior. 

Iran’s continued illicit activities underscore that we must not be 

complacent. Non-nuclear sanctions are more than a form of condemnation. We should expect them to undermine Iran’s capabilities 

and influence Iranian policies. 

In closing, I want to emphasize that U.S. sanctions are directed 

against an authoritarian government, not the many ordinary Iranians who denounce terrorism and welcome closer relations with 

our country. These Iranians know the regime has failed them for 

decades, and they know that the only choice for Iran is to abandon 

its anti-Western, anti-Semitic, violent extremism. Our sanctions 

should make that choice as explicit as possible. 

The Chair now recognizes the gentlelady from Wisconsin, the 

ranking member of the Monetary Policy and Trade Subcommittee, 

Congresswoman Moore, for 21⁄2 minutes for an opening statement. 

Ms. MOORE. Thank you so much, Mr. Chairman. 

And I thank the panel for joining us. 

I have been on record in support of the Joint Comprehensive 

Plan of Action, negotiated and implemented by President Obama to 

derail Iran’s nuclear ambitions. That being said, I am going to use 

this time to discuss President Trump’s ongoing and increasingly 

problematic foreign and business entanglements. 

PBS reports that Trump engaged in a business deal with a 

money launderer with supposed ties to the notorious Iranian Revolutionary Guard Corps, a Mr. Anar Mammadov. The project was a 

hotel in Baku, Azerbaijan. Ivanka was involved, as well. 

That’s one example, but these political and financial entanglements between ‘‘bad hombres’’ and Trump keep cropping up. We 

have a Commerce Secretary who was former vice chair of the Bank 

of Cyprus, a bank that participated in deals with unsavory, criminal-backed individuals and the Russian state-run bank Sberbank, 

which is subject to U.S. and EU sanctions. 

We have jaw-dropping allegations that rise at least to a probable 

cause case against Trump associates and family members, such as 

Manafort, Page, Tillerson, Flynn, Stone, Ivanka, and her husband, 

Jared Kushner. These are troubling financial ties to the Kremlin, 

3 

Iran, or the Chinese government, saying nothing of his D.C. hotel 

or the Mar-a-Lago, which are gross conflicts that should not be permitted to continue for one more second. 

These communities should use our subpoena power to bring some 

of these people in to testify under oath to this joint committee so 

we can get a better understanding of these ties, and the American 

people deserve to know. 

It is a Pyrrhic exercise to go over the JCPOA over and over again 

when the Trump Administration has invited all of the world’s 

worst actors into the White House in order to enrich him and his 

family, like this Third-World-like kleptocracy that would make Ferdinand Marcos blush. 

And, with that, I yield my remaining 27 seconds to Mr. Perlmutter. 

Mr. PERLMUTTER. I have my own time, so keep going. 

Ms. MOORE. Oh, you do? No, I am done. I am yielding back. 

Chairman BARR. Okay. The gentlelady yields back. 

And the Chair now recognizes the gentleman from New Mexico, 

the chairman of the Terrorism and Illicit Finance Subcommittee, 

Congressman Pearce, for 11⁄2 minutes for an opening statement. 

Chairman PEARCE. Thank you, Mr. Chairman. 

New to the Financial Services Committee in the 115th Congress, 

the Terrorism and Illicit Finance Subcommittee has the direct mission of interpreting to the greatest extent possible the financial 

support networks of national security interests. Our new subcommittee is honored to join Chairman Barr’s Monetary Policy and 

Trade Subcommittee this afternoon to assess the current state of 

Iran’s non-nuclear sanctions. 

First designated as a state sponsor of terrorism in 1984, Iran has 

grown into the global leader in terrorist financing. The message is 

clear: Despite our Nation’s best efforts, Iran continues to be the 

foremost sponsor of terrorism globally. This is not anecdotal or subjective; the U.S. State Department’s annual country report on terrorism has continually listed Iran as the top illicit financier, and 

the most recent report stated that Iran remains the foremost state 

sponsor of terrorism. 

From its continued support and assistance to the Assad regime 

in Syria, to its financial backing of Hezbollah and its reliance on 

its intelligence and security arms, the Islamic Revolutionary Guard 

Corps, the IRGC, and its elite Quds Force, Iran has been near-impervious to U.S. and international sanctions. No silver bullet exists 

to prevent and impede Iran’s actions. Despite the U.S. and international sanctions, combined with a stagnant oil market in 2015, 

Iran continued to fund and supply international terror groups even 

when it was to the detriment of its own people and economy. 

Today’s hearing, therefore, begins a much-needed conversation: 

Where has the United States succeeded and where has it failed in 

its targeted actions against Iran? What actions, if any, can the Financial Services Committee take? What actions should be avoided? 

I thank our witnesses for being here today, and I thank Chairman Barr for holding this important joint hearing. I look forward 

to the conversation, and I yield back. 

Chairman BARR. Thank you. 

4 

The Chair now recognizes the gentleman from Colorado, the 

ranking member of the Terrorism and Illicit Finance Subcommittee, Congressman Perlmutter, for 21⁄2 minutes. 

Mr. PERLMUTTER. Thank you, Mr. Chairman. 

I would like to introduce into the record a letter dated March 30, 

2017, from Senators Brown, Feinstein, and Cardin to James 

Comey, and also an article from The Washington Post dated April 

3, 2017, concerning—both of them have as their subjects the Islamic Revolutionary Guard Corps that Congressman Pearce was 

just referring to. 

Chairman BARR. Without objection, it is so ordered. 

Mr. PERLMUTTER. I thank the gentleman from Kentucky. I also 

thank my friend from New Mexico and Ms. Moore from Wisconsin. 

There are several important questions before us today. First, I 

assume my friends on the other side of the aisle are going to bring 

forth some questions about the JCPOA, which I call a nuclear nonproliferation agreement. And we just want to see exactly how that 

has transpired or how it has worked so far. I think it has reduced 

nuclear tension in the world, but, even so, we all agree Iran and, 

in particular the IRGC, is a real threat and destabilizing force in 

the Middle East. 

The IRGC is heavily involved in just about every aspect of the 

Iranian economy, including oil, construction, and banking. And 

with vast shell corporations and commercial interests all over the 

world, the IRGC strategically and conspicuously moves money 

through its many front businesses, and we need to understand the 

beneficial ownership of those businesses. 

We also need to understand—to the degree that Russia is supporting Iran and the IRGC, we want to see exactly how that kind 

of funding exists. So the new subcommittee that we have formed 

here is Terrorism and Illicit Finance, and we want to see the connections to this potential money laundering that is going around 

that is funding terrorism around the globe. And I think, in particular, we have to see the activities of the IRGC as well as their 

connection to Russia, which is using Iran as kind of a place to advance its interests in the Middle East. 

And, with that, I yield back to the Chair, and I look forward to 

the testimony of our witnesses today. 

Chairman BARR. Thank you. 

The gentleman yields back. 

The Chair now recognizes the gentleman from North Carolina, 

the vice chairman of the Terrorism and Illicit Finance Subcommittee, Congressman Pittenger, for a 1-minute opening statement. 

Is Mr. Pittenger here? 

Mr. Pittenger is not here, so we will go ahead and turn to our 

witness testimony. 

Today, we welcome the testimony of Mr. Behnam Ben Taleblu. 

He is a senior Iran analyst at the Foundation for Defense of Democracies (FDD). Previously, Ben Taleblu served as a nonresident 

Iran research fellow and Iran research analyst at FDD. Ben 

Taleblu frequently briefs Washington audiences on a host of Iranrelated issues. Ben earned his master’s degree in international relations from the University of Chicago. 

5 

Mr. J. Matthew McInnis is a resident fellow at the American Enterprise Institute, where he focuses on Iran, specifically its intentions, strategic culture, military power, and goals. Previously, Mr. 

McInnis served as a senior analyst and in other leadership positions for the U.S. Department of Defense, including work with U.S. 

Central Command, from 2006 to 2013. Mr. McInnis has a master’s 

degree in European studies from NYU and a master’s degree in 

international relations from the Johns Hopkins School of Advanced 

International Studies. 

Dr. Suzanne Maloney is a senior fellow at the Brookings Institution. She is deputy director of the foreign policy program at Brookings. Dr. Maloney previously served as an external adviser to senior State Department officials on long-term issues related to Iran. 

Before joining Brookings, she served on the Secretary of State’s policy planning staff as Middle East adviser for ExxonMobil Corporation, and director of the 2004 Council on Foreign Relations task 

force on U.S. policy toward Iran. She holds a doctorate from the 

Fletcher School of Law and Diplomacy at Tufts University. 

And Dr. Emanuele Ottolenghi is a senior fellow at the Foundation for Defense of Democracies, and an expert at its Center on 

Sanctions and Illicit Finance, focused on Iran. Prior to joining 

FDD, Dr. Ottolenghi headed the Transatlantic Institute in Brussels, and taught Israel studies at St. Anthony’s College, Oxford 

University. Dr. Ottolenghi obtained his Ph.D. in political theory at 

the Hebrew University of Jerusalem. 

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. 

Mr. Behnam Ben Taleblu, you are now recognized for 5 minutes. 

STATEMENT OF BEHNAM BEN TALEBLU, SENIOR IRAN 

ANALYST, FOUNDATION FOR DEFENSE OF DEMOCRACIES 

Mr. TALEBLU. Thank you very much, Chairmen Barr and Pearce, 

Ranking Members Moore and Perlmutter, and distinguished members of the Committee on Financial Services. On behalf of the 

Foundation for Defense of Democracies, thank you for providing me 

with this opportunity to testify, particularly alongside such a distinguished panel. 

Today, I will discuss the Islamic Republic of Iran’s non-nuclear 

threats and how best to counter them. 

Despite being called comprehensive, the JCPOA nuclear deal 

overshadowing this discussion was anything but. It does not address delivery of vehicles for nuclear weapons like ballistic missiles. 

It also does not address Tehran’s illicit financial activities, support 

for terrorism, regional destabilization, and flagrant human rights 

abuses. 

These issues constitute Iran’s enduring non-nuclear threats. 

They are enduring because they are the same issues that have 

made and kept Iran an international pariah for over 3 decades. 

Worse, they are threats that the JCPOA accentuates. 

According to FDD’s survey of open-source English and Persian 

language reporting on Iran, Iran has launched up to 14 ballistic 

missiles since inking the deal. Such behavior defies the annex of 

UNSCR 2231 codifying the accord. These include two upgrades to 

6 

a solid-fuel, short-range ballistic missile, a new medium-range ballistic missile that allegedly has a maneuverable reentry vehicle, 

and a ballistic missile bearing a proclamation threatening the state 

of Israel with genocide. 

According to the former Director of National Intelligence, Iran 

currently possesses the largest arsenal of ballistic missiles in the 

Middle East. This arsenal of lethality is enhanced by flight testing 

and domestic refinement. 

Iran also continues to exemplify the ‘‘state sponsor of terrorism’’ 

epithet bequeathed to it by the State Department 3 decades ago. 

For the past 5 years, however, Tehran has furnished the Assad regime in Syria with money, men, and munitions so that it can continue the war against its own people. Iran is also creating something of a Shia internationale, marshaling zealous Shias from 

around the region, including Iraq, Pakistan, and Afghanistan, to 

fight and die in Syria. 

Elsewhere, Tehran relies on a tried-and-true method: distributing low-cost weaponry, like anti-tank missiles, to jurisdictions of 

weak central authority. Nowhere exemplifies this better than 

Yemen. Despite a ban on arms transfers in UNSCR 2231, weapons 

transfers to Yemen have been seized at least 4 times by coalition 

forces. 

Iran’s illicit financial activities also continue undermining the integrity of the rules-based financial order. These activities involve 

the movements of money to illicitly procure parts and technology 

for Iran’s missile program as well as sponsoring terrorist activities. 

However, even innocuous-looking transactions may involve illicit 

actors. Iran remains designated by the U.S. Treasury Department 

as a ‘‘jurisdiction of primary money-laundering concern.’’ The hesitancy exhibited by European banks towards doing business with 

Iran is indicative of this status, in addition to their concerns over 

institutions which lack anti-money-laundering controls. 

Fortunately, nowhere in the JCPOA is the U.S. restricted from 

using diplomatic, informational, military, and economic tools to 

challenge these activities. By enforcing existing sanctions and levying conduct-based nonnuclear ones, Congress and the Administration can signal that there is a strategy guiding Washington’s Iran 

policy. 

Such a policy would have three goals: punishment for past illicit 

activities; coercion to alter Iran’s calculus to cease its present bad 

behavior; and deterrence to forestall prospective bad behavior. 

In my written testimony, I have provided four likely scenarios 

that would require coercive economic measures based on Iran’s existing capabilities and intentions. I also offer 10 broader recommendations, like new reporting requirements to enhance existing sanctions; targeting Iran’s IRGC pursuant to two additional Executive Orders; using the Global Magnitsky Act to target corrupt 

Iranian entities; and developing graduated, sector-specific sanctions 

on Iran’s domestic ballistic missile supply chain to neatly complement the web of export controls already in place. I can also 

speak to nonstatutory measures, if asked, in the Q and A. 

In my written testimony, I similarly explain and refute Iran’s 

claims that such actions violate the deal. They do not. These arguments can be overcome if the U.S. adheres to three principles: one, 

7 

calling Iran’s bluff and walking away from the deal in response to 

such measures; two, contesting Iran’s narrative that it is a member 

of the international community in good standing; and three, putting the spotlight on Iran through sophisticated use of the bully 

pulpit. 

Additionally, the U.S. should not fall for arguments about a perceived lack of sanctions relief when it has already lived by its deal 

requirements. To quote Adam Szubin of the Treasury Department, 

‘‘The JCPOA is an international agreement, not a cashier’s check.’’ 

While sanctions relief has made it harder to influence Iranian behavior, it is still not impossible. Congress and the Administration 

have the capability to push for a change in behavior by imposing 

costs. However, as in most international crises, the balance of resolve will matter just as much, if not more, than the balance of capability. 

I thank you very much for your time and attention, and I look 

forward to answering your questions today. 

[The prepared statement of Mr. Taleblu can be found on page 81 

of the appendix.] 

Chairman BARR. Thank you. 

Mr. Matthew McInnis, you are now recognized for 5 minutes. 

STATEMENT OF J. MATTHEW MCINNIS, RESIDENT FELLOW, 

THE AMERICAN ENTERPRISE INSTITUTE 

Mr. MCINNIS. Thank you, Chairman Barr, Chairman Pearce, 

Ranking Member Moore, Ranking Member Perlmutter, and distinguished committee members. Thank you for this opportunity to testify today on this important issue. 

Some had hoped that after the implementation of the JCPOA, 

Iran would moderate its support to proxy and terrorist groups, restrict is ballistic missile testing and cyber activities, and refrain 

from risky and unprofessional actions at sea in the Persian Gulf. 

However, we have seen all of these activities not only continue but 

increase since the nuclear deal. 

As U.S. CENTCOM Commander General Joseph Votel stated in 

testimony before the House Armed Services Committee last week, 

‘‘Iran poses the greatest long-term threat to stability in this part 

of the world.’’ 

Why is Iran such a disruptive force in the region? 

Since the 1979 Islamic Revolution, reshaping the Middle East 

under its political and ideological image has driven Tehran’s foreign policy. The wars in Syria, Iraq, and Yemen, along with new 

resources from the nuclear deal, have brought us to an inflection 

point in Iran’s strategy in the region. Tehran is turning its traditional network of proxies, led by Lebanese Hezbollah, into a 

transnational army that can conduct hybrid warfare and operate 

from Beirut to Basra to Sana’a, with Shia militias drawn from 

across South Asia and the Middle East. These forces are led by the 

IRGC, with an estimated quarter-million personnel potentially responsive to their direction. 

In addition to proxies, Iran’s efforts to dominate the region extend to more traditional military forces. Tehran has historically 

lacked sufficient air and land forces to project conventional power 

beyond its borders. Ballistic missiles and its asymmetric naval 

8 

forces in the Persian Gulf have served as substitutes. A critical 

question following the JCPOA is whether Iran can or will use its 

new resources to successfully modernize its military and permanently alter the regional balance of power in the coming decades. 

So how do we stand up to Iran’s destabilizing activities and begin 

to dismantle Tehran’s global terror network? The United States 

needs to reinvigorate a well-coordinated political, economic, military, and intelligence campaign against Iran’s malign influence. A 

better sanctions strategy should be nested at the heart of this effort, given at least 20 percent of Iran’s GDP is now under the 

Guard’s control. 

The IRGC owns the state’s largest construction firm, Khatam-al 

Anbiya, and holds major stakes in the banking, energy, extractive, 

and manufacturing sectors. The Guard also operates most Iranian 

ports and is deeply involved in the commercial shipping and aviation sectors, which are critical elements in building and sustaining 

its proxy and terror networks in the Middle East. 

However, Washington needs to ask first what we want to accomplish with our sanctions, rather than focusing solely on the targets 

and means. With this in mind, any Iran sanctions strategy must 

first blunt and then diminish the foundations of the IRGC’s destabilizing activities. Consequently, the United States should aim for 

these five objectives: 

First, we should suppress Iran’s military modernization to maintain the U.S.’s and our allies’ military superiority in the region. We 

should prevent Iran from making major military breakthroughs 

and maintain our deterrence advantage against Iran. We should 

seek to deter Russian and Chinese and other sales of the most advanced equipment to Iran through new sanctions and prevent any 

efforts to evade U.N. conventional weapons sanctions while they remain. 

Second, we should starve the IRGC’s financial fuel to weaken the 

Guard’s ability to generate revenue from global markets and 

incentivize international divestment from IRGC-affiliated businesses. 

Third, we should disrupt the IRGC’s logistical abilities, including 

close monitoring of potential new sanctions and designations 

against Iranian commercial aircraft used by the IRGC for the illicit 

transport of weapons and personnel into Syria, Iraq, Yemen, and 

elsewhere. 

Fourth, we should disrupt and deter Iran’s ballistic missile program. We may not be able to stop the program entirely, but we can 

help push their program more in the box by disrupting their technological acquisition through additional sanctions. 

Fifth, we should drive down Iran’s internal confidence in the regime and its policies. To the degree that we can, the U.S. should 

expose, through sanctions, the regime’s internal contradictions, corruptions, massive expenses on overseas adventures, and human 

rights violations. 

There is an important caveat. Any new sanctions should not conflict, at least legally, with the JCPOA. However, any such sanctions 

can and likely should be part of a broader approach to shape the 

negotiating environment for a successor or supplementary agreement with Iran to address the key flaws of the nuclear deal. 

9 

I appreciate the opportunity to speak on this important topic and 

welcome your questions and comments. Thank you. 

[The prepared statement of Mr. McInnis can be found on page 46 

of the appendix.] 

Chairman BARR. Thank you. 

Dr. Maloney, you are now recognized for 5 minutes. 

STATEMENT OF SUZANNE MALONEY, DEPUTY DIRECTOR, FOREIGN POLICY, AND SENIOR FELLOW, CENTER FOR MIDDLE 

EAST POLICY, THE BROOKINGS INSTITUTION 

Ms. MALONEY. Thank you for the opportunity to appear before 

you today. I have submitted a statement for the record, noting that 

Brookings does not take institutional positions on policy issues. 

In considering the non-nuclear threats posed by Iran, we must 

also recognize the dividends of the nuclear agreement. The accord 

addressed only one dimension of the Iranian threat, and, in those 

narrow terms, it has succeeded. Amidst the turbulence and tragedy 

that besets the Middle East today, the absence of constraints on 

Iran’s nuclear capabilities would magnify the risks in terrible ways. 

However, as my fellow panelists have stated, we can’t ignore the 

finite ramifications of the deal. Hopes that the agreement would 

jump-start wider moderation in Iran’s approach to the world have 

proven unfounded. Instead, Iran has continued to do what it has 

done consistently since 1979, deploying violence and subversion to 

extend its influence across the Middle East. It is consolidating a 

predominant position in the region and tentatively reorienting the 

regional order in its favor. As a result, the challenges posed by 

Tehran to U.S. interests and allies remain as relevant and as 

alarming as ever. 

Understanding the motivations behind Iran’s regional ambitions 

and its ballistic missile program are vital. Historical memory and 

years of violent challenge to the theocracy’s existence have stoked 

an acute, abiding sense of insecurity amongst its leadership. 

Tehran prioritizes regime survival above all else, and self-preservation has become intertwined with a deeply ingrained conviction 

that the world, led by Washington, is bent on its eradication. 

The consequences of this dystopian vision can be seen in 

Tehran’s campaign to cultivate allies and proxies, bolster its indigenous deterrent capabilities, expand the revolution’s strategic death, 

and deploy violence and subversion across the region. Iran’s regional adventurism has never enhanced the security or prosperity 

of the Iranian people, but it has helped keep the regime in power. 

The experience of the past decade underscores the efficacy of 

sanctions when wielded wisely. Sanctions forced Iran to make concessions on its nuclear weapon program. However, it is not clear 

that new authorities are particularly useful or necessary for pushing back against Iran’s non-nuclear threats. 

The deal left intact significant restrictions on Iran’s economy. 

Iran’s worst actors, including those associated with the Revolutionary Guard, remain designated under existing sanctions, tainting, by extension, any company that deals with them. The Trump 

Administration can augment the list of designated entities at any 

time. The primary embargo on U.S. trade and investment in Iran 

10 

criminalizes even the most tangential involvement in the Iranian 

economy by U.S. firms, except for specific exemptions. 

And all of these measures benefit from a number of powerful 

force multipliers, including a decade of intensifying restrictions and 

rigorous enforcement that has created a culture of compliance in 

the international business community. 

The success of the nuclear sanctions has fostered the perception 

that these measures can serve as a silver bullet. However, there 

are few guarantees that new measures will provide sufficient disincentives to alter Tehran’s longstanding patterns of regional 

power projection or revise the broad calculus of opportunism and 

insecurity that underlines its policies. 

The long-term track record underscores the unfortunate reality: 

Iran’s support for terrorism has never been driven primarily or 

even substantially by resource availability. In fact, Iran’s most destructive regional policies have been undertaken and sustained 

even at times of epic constraints. Sanctions and lower oil prices 

have provided no remedy to Iran’s efforts to extend its influence or 

its substantial investment in fueling and fighting conflicts in Iraq 

and Syria. These policies have a very low funding threshold for the 

Islamic Republic and an existential importance to the regime. 

In addition, the sanctions regime that was constructed over the 

12-year nuclear crisis benefited from an exceptional degree of multilateral support and consensus. Compounded by concerns beyond 

the nuclear file, and encouraged by a well-coordinated campaign 

that highlighted the non-sanctions risks to business with Iran, 

many of Iran’s major trading partners gradually committed to 

sever economic ties with Tehran. 

Multilateralism is key to sanctions adherence and creates an 

interlocking and often redundant web of pressure that proves far 

stronger and more persuasive than the sum of its parts. At this 

time, Washington does not have, nor can we quickly instigate, anything close to the level of multilateral consensus that was built 

slowly and through fortuitous confluence on the nuclear issue. 

We must also anticipate Iran’s responses to sanctions, both in 

terms of bandwagoning to try to hedge by developing further business and diplomatic ties with Europe and the rest of the world, as 

well as its retaliatory capacity against U.S. Forces in the region. 

Like most complex challenges, the problem of Iran has resisted 

quick fixes for nearly 4 decades. American leadership will remain 

essential. 

Thank you. 

[The prepared statement of Dr. Maloney can be found on page 38 

of the appendix.] 

Chairman BARR. Thank you. 

And, Dr. Ottolenghi, you are recognized for 5 minutes. 

STATEMENT OF EMANUELE OTTOLENGHI, SENIOR FELLOW, 

FOUNDATION FOR DEFENSE OF DEMOCRACIES 

Mr. OTTOLENGHI. Chairmen Barr and Pearce, Ranking Members 

Moore and Perlmutter, and distinguished members of the committee, I thank you for the opportunity to testify today. 

The Joint Comprehensive Plan of Action, or JCPOA, has 

emboldened Iran. In theory, under the JCPOA, the United States 

11 

can use non-nuclear sanctions to counter Iran’s regional ambitions 

and ongoing support for terrorism. In practice, however, this measure has been rarely used, especially with regards to Iran’s ongoing 

airlifts to the Assad regime and Hezbollah. 

The JCPOA lifted U.S. sanctions against Iran’s civil aviation sector exactly at the time when the sector became vital to Tehran’s 

war efforts in Syria. Put simply, the JCPOA has made it legal to 

sell aircraft to airlines that are accessories to Assad’s war crimes 

and keep Hezbollah armed to the teeth. 

The activities of Iran’s aviation sector have exposed the inadequacy of the JCPOA caveat that licensed items and services must 

be used exclusively for commercial passenger aviation. 

Currently, at least five Iranian and two Syrian commercial airlines are engaged in regular military airlifts to Syria. These carriers have been crisscrossing Iraqi airspace since 2011 but have increased their tempo since the summer of 2015 when Iran and Russia coordinated their efforts to save Assad’s regime. Flight-tracking 

data indicate that from implementation day on January 16, 2016, 

to March 30, 2017, there were 696 flights from Iran to Syria, only 

6 of which were carried out by Iran’s Air Force. 

In 2011, the Department of the Treasury blacklisted Iran Air and 

Mahan Air because they colluded with Iran’s Islamic Revolutionary 

Guard Corps, or IRGC, in these military airlifts. It also blacklisted 

Syrian Arab Airlines in 2015 and Sham Wings in 2016 for transporting weapons and fighters to Syria. These airlines are not 

ferrying civilian passengers between Tehran and Damascus. 

The two primary Iranian actors in the airlifts are Iran Air and 

Mahan Air, with a combined 345 out of 696 flights, almost half of 

the total. 

Mahan Air remains under U.S. sanctions because of its support 

for terrorism. Iran Air, by contrast, is no longer sanctioned, despite 

its material support to the IRGC and Syria’s internal repression, 

despite weapons transfers to Syria and the use of deceptive practices to conceal its cargo. The U.S. Government delisted Iran Air 

because of a political agreement. There is no evidence that there 

has been a change of behavior. 

It is extremely likely that Iran Air is still an active participant 

in the airlifts. This conclusion is based on the following: There is 

no justification for frequent commercial flights to Damascus. Syria 

is a war zone with little tourism or commerce. Yet, it is served almost twice daily. 

Iran Air flies to Damascus twice a week. The flight cannot be 

purchased on Iran Air’s booking website or through travel agencies, 

and the booking website does not include Damascus among its destinations from Tehran’s international airport, where the flights 

usually originate. And, lastly, Iran Air flights to Damascus occasionally make unscheduled stopovers in Abadan, an IRGC logistical 

hub for the Syria airlifts. 

Iran Air’s participation in the Syria airlifts would make the airline eligible for renewed sanctions. Congress and the Administration should instruct the intelligence community to investigate this. 

If Iran Air’s participation is confirmed, the Administration should 

immediately revoke OFAC’s licenses authorizing sales of aviation 

12 

industry items and services to Iran Air, resanction the airline, and 

release its entire fleet. 

That is why Congress should also demand transparency about 

aircraft sales to Iran. The financial terms of the Boeing and Airbus 

deals are surprisingly opaque. If Iran Air is found to be ferrying 

weapons and fighters to Syria, the two manufacturers would unwittingly become accessories to war crimes. Congress should demand 

that Boeing and Airbus make those details fully public. 

The United States should also renew its focus on Mahan Air, 

Iran’s largest commercial carrier and the most active participant in 

the airlift. Existing U.S. sanctions have not stopped European and 

Asian companies from transacting with Mahan. It is not that U.S. 

sanctions are ineffective; it is rather that the U.S. has so far declined to impose sanctions against those who provide material support to Mahan. It is time to reverse that and punish Iranian and 

foreign providers of material support to Syria’s airlift and its participants—first and foremost, Mahan Air. 

FDD research has identified Abadan as the main IRGC logistical 

hub for the airlifts to Syria. Abadan and other airports where 

flights originate should also be designated. 

And, finally, to conclude, the U.S. also should consider: designating the Abadan Refining Company for selling jet fuel to the aircraft involved in the airlifts; sanctioning the insurers of the aircraft; and targeting the financial institutions involved. 

Thank you so much for your time, and I look forward to questions. 

[The prepared statement of Dr. Ottolenghi can be found on page 

52 of the appendix.] 

Chairman BARR. Thank you. 

The gentleman’s time has expired. 

And the Chair will now recognize himself for 5 minutes for questions. 

Mr. Taleblu, what specific non-nuclear sanctions and additional 

designations do you believe would be most effective in combating 

Iranian sponsorship of terrorism? 

Mr. TALEBLU. Thank you very much for your question, Congressman. 

The immediate one that comes to mind is to pursue sanctions on 

Iran’s Islamic Revolutionary Guard Corps pursuant to Executive 

Order 13224. Getting that listed, I think, is key because that is one 

of the major drivers of Iran’s non-nuclear threats. Iran’s Islamic 

Revolutionary Guard Corps Aerospace Force, for instance, is the 

force that oversees Iran’s ballistic missile program. 

Going after the IRGC pursuant to that executive order and then 

asking the intelligence community and the Administration for additional targets that liaise with the IRGC and can be targeted for 

being shells for this entity should be gone after, both at the statutory level and at the Administration. 

Chairman BARR. Mr. McInnis, on a related note, as you may 

know, Senator Ted Cruz in January introduced legislation calling 

on the State Department to assess IRGC’s suitability for designation as a foreign terrorist organization. 

What are your thoughts about that? And do you agree with your 

colleague that designation of IRGC under 13224 would be prudent? 

13 

Mr. MCINNIS. Yes. I think for designation as a foreign terrorist 

organization, as an FTO, there is certainly a moral argument to 

make for that. I think from a practical standpoint, designation 

under Executive Order 13224 is most likely sufficient to achieve 

your objectives. 

I think that there is a great consideration, as Dr. Maloney pointed out, that as we look at potential retaliation from the Iranians, 

not to say that should stop us from taking any of these measures, 

but we need to be very much prepared for potential repercussions 

insofar as how that may change rules of engagement with the 

IRGC, both at sea and with our forces there in places like Iraq and 

elsewhere. 

I think these are things that we need to be thinking through. 

And so these are areas that I think designation under EO 13224 

probably gives us what we want, but I am certainly very much 

drawn to the moral argument of designating under FTO. And I also 

agree that that is the pathway that will give us the most effect for 

pulling back on support for terrorism. 

Chairman BARR. Thank you. 

And, Dr. Ottolenghi, Dr. Maloney warned against downplaying 

the dividends of the nuclear deal and alleviating the urgency of 

Iran’s nuclear ambitions. But given the forward movement of Iran’s 

ballistic missile program, given the tests using missiles that are capable of carrying nuclear payloads, do you disagree with that analysis or do you agree with that analysis? 

And can you speak to whether or not these non-nuclear activities 

have been emboldened as a result of lingering questions about the 

reliability of the inspections regime? 

Mr. OTTOLENGHI. Thank you for your question. Two points. 

First of all, I think that when one looks at a nuclear program, 

of course the question of delivery systems is essential and a part 

of a nuclear program. The omission of the ballistic missile program 

from the JCPOA of course indicates that this is by no means a 

comprehensive arrangement, as my colleague pointed out in his 

statement, but it also creates an opportunity for the United States 

to target sectors of the Iranian economy that are complicit in the 

Iran ballistic missile program. 

Whether it is the financial institutions that facilitate the transactions for procurement, the companies that procure, the extracting 

activities for the raw materials, or the transport or the insurance 

of the vectors that carried the technology and the procurement for 

the missile program, all these are areas and opportunities for targeting. 

As for whether the regime has been emboldened, I think that 

that is very clear—not just emboldened but also provided additional resources to pursue its most nefarious activity more actively 

and assiduously. 

Chairman BARR. Thank you. 

My time has expired, so the Chair will yield back and now recognize the gentlelady from Wisconsin for 5 minutes. 

Ms. MOORE. Thank you so much. 

And I thank the panel again. As I expected, we have some excellent testimony here. So much information, so little time. Let me 

just start with Mr. McInnis. 

14 

You had a very well-prepared presentation. I was looking at your 

recommendations for the five things we need to do, and I was focusing in particular on starving the IRGC’s financial fuel. 

And so, in that context, would you agree that there might be 

some threat or some problem with the article that I believe Mr. 

Perlmutter entered into the record, where it demonstrates that 

there was a lot of contact between Donald Trump, in trying to establish the Baku tower, and not only this Mammadov family— 

would you see that as problematic? 

Mr. MCINNIS. In that particular incident, even though I was 

asked to comment on that particular situation earlier, I don’t know 

the full details of that situation— 

Ms. MOORE. Okay. Thank you, then. 

Mr. MCINNIS. Yes. 

Ms. MOORE. Thank you. 

Let me ask you about your ‘‘disrupt and deter Iran’s ballistic 

missile program.’’ You say that they are not going to even give up 

or meaningfully limit its ballistic missiles. And as I look through, 

just briefly peruse the Iran sanctions, even though I think Mr. 

Taleblu mentioned some things they are doing, they are still substantially in compliance. Is that your understanding, as well? Even 

though they are kind of showing off, because they have to show 

their people that they are not caving—but they are in compliance. 

Would you agree? 

Mr. MCINNIS. This has been the main point of contention. Certainly, the issue is with the new language under U.N. Security 

Council Resolution 2231 that implemented the JCPOA, the language there insofar as what they are doing with their ballistic missile program. That is, they are using their ballistic missiles—from 

their perspective, they are not nuclear-capable weapons. And, from 

their perspective, the new language that was used to implement 

the deal, from their perspective, allows them to do what they are 

doing. 

Ms. MOORE. Okay. 

Mr. MCINNIS. And, unfortunately, not all members of the U.N. 

Security Council interpret that the way we do. 

Ms. MOORE. Okay. Thank you for that. 

Dr. Maloney, we have talked a lot about Iran’s influence in Syria, 

but would you say that Putin also has a stake in keeping Assad 

in power? And do you think that the Russian banks can help facilitate financial transactions to Assad in Syria? 

Ms. MALONEY. The Russians are clearly a major player in Syria 

and in preserving and stabilizing the Assad regime. They do have 

distinct interests from those of the Iranians, and, clearly, that is 

an area where both Congress and the Administration might usefully try to separate those two parties. 

Ms. MOORE. Right. And so we need to continue to be vigilant and 

cautious about relationships with the Russians. We are focusing on 

the Iran sanctions, but a workaround could be Russia. Would that 

be correct? 

Ms. MALONEY. Russia would be key to any solution in the Syrian 

conflict, and we should be using all of the resources at our disposal 

to try to force the Russians to find a political solution rather than 

participating in what is effectively a war crime. 

15 

Ms. MOORE. Exactly. 

Okay. I think I have one more question. I think it is for Mr. 

Taleblu. 

Are you concerned that Iran is on the verge of being actively 

weaponizing their missile systems in the near future? 

Mr. TALEBLU. Thank you very much for your question. 

I am actually worried about the conventional and asymmetric 

threats that Iran’s ballistic missiles pose. This is because I, like 

most Members of Congress, read the yearly DNI statements before 

the body, and I worry that they are continuously assessed to be the 

largest force in the Middle East. 

So, regardless of weaponization, which we should have better access to but the Supreme Leader has not allowed inspections of military facilities, regardless of that caveat, which is a big one, I am 

concerned about the conventional and asymmetric capabilities of 

this force. 

Ms. MOORE. Thank you. 

And thank you, Mr. Chairman, for your indulgence. 

Chairman BARR. The gentlelady’s time has expired. 

And the Chair now recognizes the chairman of the Terrorism and 

Illicit Finance Subcommittee, Congressman Pearce of New Mexico, 

for 5 minutes. 

Chairman PEARCE. Thank you, Mr. Chairman. 

Mr. McInnis, your report deals more with the economic impacts 

of having, I guess, the IRGC involved in economic activities. What 

is the scope of that? In other words, you say about 20 percent of 

the economy, but is it import/export or domestic economy? Tell me 

a little bit about that. And I have several questions, so the brief 

version would be better. 

Mr. MCINNIS. Yes, I think that the IRGC—certainly their domestic economy, it could be a minimum 20 percent from their construction sectors, telecommunications, mining, manufacturing. But there 

is certainly plenty involved in the export/import as well, so, you 

have a full spectrum there. 

Chairman PEARCE. Who are their primary trading partners from 

outside the country? And when you study it, do you see any difficulties with that part of the economy being diverted? 

Mr. MCINNIS. Certainly, Iran’s major trading partners tend to be 

India or China. On arms sales, it is obviously Russia. And, of 

course, now that the sanctions are down, they are trying to grow 

significantly with the Europeans. 

Chairman PEARCE. How about oil sales? What are they doing in 

oil sales since the lifting of the embargo and the sanctions on that? 

Mr. MCINNIS. Oil sales are recovering up to almost pre-sanctions 

level, mostly to Asia and South Asia but also recovering with Europe quite nicely. 

Chairman PEARCE. About how many barrels a day? 

Mr. MCINNIS. I don’t have those right at— 

Chairman PEARCE. Do any of you have that information? 

Ms. MALONEY. They have hit 3 million barrels a day in exports. 

Chairman PEARCE. Okay. 

So, on page 4, Mr. McInnis, you talk about reinvigorated economic warfare campaign against the IRGC. And what would that 

look like, this reinvigorated economic warfare campaign? What 

16 

would that look like to us nonparticipants, the people who don’t 

study this every day? You all would see very minor changes; we 

wouldn’t, necessarily. 

Mr. MCINNIS. I think that we had during the sanctions period a 

fairly aggressive effort, especially prior to the negotiations beginning in 2013, we had a fairly aggressive effort against the IRGC 

on a variety of fronts, of which one was economics. And I think that 

there was certainly a decision to hold back on—partly tied to fears 

that provoking IRGC reaction would potentially disrupt the diplomatic efforts tied to the JCPOA. And I think there is still a degree 

of that. There was, up until the end of the Obama Administration, 

a certain fear of that continuing. 

I think the current Administration is weighing those types of policy options of how much pressure can be put against the IRGC and 

weighing potential reactions and being able to maintain the deal 

and what they want to do with the deal. I am not sure where those 

policy debates are right now. 

But I think those are all things that—what we were trying to do 

prior to the negotiations beginning in 2013, I think that can be reinvigorated and can be, frankly, made stronger. And that can be 

done against Hezbollah, against the Iraqi Shia militia groups. 

Chairman PEARCE. Yes, I— 

Mr. MCINNIS. It can be quite aggressive. 

Chairman PEARCE. I get the idea. 

Mr. Taleblu, in 2010 and 2011, Iran was financing Hezbollah at 

about $100 million to $200 million. Where was that money coming 

from? And has that flow increased now after the agreement? 

Mr. TALEBLU. Thank you very much for your question. 

The most popularly cited figure is $100 million to $200 million, 

as you mentioned, and that is pursuant to a 2010 military power 

of Iran report produced by the Department of Defense. It is the 

most popularly cited because most of Iran’s Hezbollah funding, like 

its illicit funding of other terrorist groups, is off the books. You 

can’t necessarily find it as an IRGC line item, even though a colleague of mine who did do an assessment of ‘‘the IRGC budget’’ 

noted that they are receiving a 24-percent windfall in their budget 

allocation this year. I would note, however, that it would be hard 

to find on Iran’s official reporting. 

Chairman PEARCE. Okay. 

Let me squeeze one more question in. Is it possible to know, kind 

of, where all the streams of funding are coming from, or is that a 

subject that is not easy to penetrate? I think you just alluded to 

that, but go ahead and touch on that, if you can. 

Mr. TALEBLU. It is challenging but not impossible. I think we 

should definitely task the intelligence community with finding 

these streams. 

You mentioned the funding in Syria, for instance. Hezbollah has 

been marshaled by Iran in Syria. Hezbollah was essential to helping bail out the city of Qusayr in 2013 and the siege of Aleppo in 

2016. So I would assume you would get significant funding spikes 

in those years. 

Chairman PEARCE. All right. 

Thanks, Mr. Chairman. I yield back. 

17 

Chairman BARR. The Chair now recognizes the ranking member 

of the Terrorism and Illicit Finance Subcommittee, Mr. Perlmutter 

from Colorado. 

Mr. PERLMUTTER. Thanks, Mr. Chairman. 

Dr. Ottolenghi, you said that there were coordinated efforts, I 

think were your words, to save the Assad regime between Iran and 

Russia. What did you mean by that? 

Mr. OTTOLENGHI. I mean that both governments, both regimes in 

Russia and in Iran, are invested in the survival of the Assad regime and its continuing control, if not of the whole country, at least 

of part of it. 

Mr. PERLMUTTER. So I guess one of the things that the Terrorism 

and Illicit Finance Subcommittee deals with are sanctions, whether 

it is North Korea, Russia, Iran, or a number of other players. 

In the coordination effort, do you see any assistance by Russia 

of Iran or the IRGC financially as they participate either with 

Hezbollah or Assad? 

Mr. OTTOLENGHI. Thank you. 

I have seen reports in the media, which I cannot personally confirm, of a variety of coordinated activities of this kind, particularly 

transfers of weapons from Russia. 

I also, when I monitor the airlifts from Iran to Syria, I do see 

frequently Russian planes crisscrossing the same air corridors. 

They follow the same routes. I am not in a position to tell you 

whether those planes are just supplying the Russian forces on the 

ground or supporting the Russian aviation operations inside Syria. 

We do know from open sources, public reports, that the Russians 

have used one airbase in Iran, so there obviously has been some 

type of transaction there. And I would highly recommend that in 

an intelligence review of the airlifts some attention is paid to what 

Russian Air Force planes are carrying to Syria as well. 

Mr. PERLMUTTER. Thank you. 

And I would turn to the other panelists. Coordination between 

Russia and Iran, particularly with respect to Hezbollah and Assad, 

are you aware of any funding streams from Russia to the IRGC or 

Iran generally? 

Dr. Maloney? 

Ms. MALONEY. The Russians play a relatively small role in the 

Iranian economy overall, but they have obviously been a long-term 

important supplier of weaponry to Iran. 

In terms of the management of Hezbollah and of the other Shia 

militias that are fighting under Iranian operational guidance in 

Syria, that is primarily Iranian-run, but clearly, there is coordination between the Iranians and the Russians on the overall state of 

the campaign—the Russians primarily from the air, and the Iranians primarily on the ground. And that coordination extends to 

Hezbollah and the other Shia groups. 

Mr. PERLMUTTER. Thanks. 

Would either of you two gentlemen like to comment? 

Mr. MCINNIS. I would just confirm what Dr. Maloney said and 

also add that what has been fascinating is watching how much 

Iran has learned from Russia in how to conduct and develop new 

forms of warfare as they have begun to do certain levels of integration of their campaigns there in Syria and, frankly, the fact that 

18 

the Russians are using Iranian air bases at times to launch their 

air strikes into Syria, which is from an Iranian ideological standpoint unprecedented. And it goes to the degree of how much the 

Iranians have had to shift their thinking and how they look at Russia as a potential ally. 

And, of course, their long term, as they look at post-sanctions, 

conventional weapons sanctions, after the nuclear deal, the big investments they want to make in transforming their military, they 

are going to be very Russian-centric on that. And that is what I 

particularly worry about, is that could transform the region if they 

are allowed to do major investments with Russia. 

Mr. PERLMUTTER. Mr. Taleblu? 

Mr. TALEBLU. Thank you very much. 

I want to echo most of the sentiments of the panel. High-level coordination could be seen by the visits of IRGC QF Commander 

Major General Qassem Soleimani’s flights to Russia. I assume that 

flight to Russia actually had more of an impact on Iranian strategy 

in Syria than the more public one, where President Rouhani recently went to Russia and met with President Putin. 

To Dr. Maloney’s comment, I actually think Iran and Shia militias in general in Syria have a perverse form of what Stephen Biddle has called the modern military system. It is a perverse form of 

combined arms, non-Arab Shia militias as cannon fodder 

supplementing Russian airpower. So it is odd to watch but horrifying. 

Mr. PERLMUTTER. Thank you. 

Thanks, Mr. Chairman. I will yield back. 

Chairman BARR. The gentleman yields back. 

The Chair now recognizes the vice chairman of the Monetary Policy and Trade Subcommittee, Mr. Williams from Texas. 

Mr. WILLIAMS. Thank you, Chairman Barr, and thank you, 

Chairman Pearce and all of our witnesses today. 

Since 2011, Iran has been classified by the Treasury Department 

as a jurisdiction of primary money-laundering concern, a finding 

that is unaffected by the JCPOA. The Treasury Department determined that Iran’s financial system, including the central bank, constitutes a threat to governments or financial institutions that do 

business with these banks. 

Iran is also labeled, alongside North Korea, as one of the two 

high-risk and noncooperative jurisdictions by the Financial Action 

Task Force. 

Last year, in his testimony before our Monetary Policy and Trade 

Subcommittee, Eric Lorber testified that, ‘‘the nature of the Iranian 

economy and the role of the government within the economy presents serious risks related to bribery and corruption, money laundering, and illicit financing.’’ That is a combination. 

But despite these multiple financial actions by Treasury, 

Hezbollah, which we know has sophisticated financial expertise, 

continues to exploit the internal financial system. Their ability to 

move and store illicit assets makes them dangerous to penetrating 

U.S. markets. 

Many of these finance schemes flow right through the United 

States, and our ability to combat them remains challenging. So 

19 

some might say, despite these designations, Hezbollah’s tradebased money laundering schemes have continued to expand. 

So my first question, to any of the witnesses today, is this: The 

designation carried no immediate penalty, but it imposed additional requirements on U.S. banks to ensure against improper Iranian access to the U.S. financial system. So, in one of your opinions, has this been an effective designation? Any of you? 

Mr. MCINNIS. I think the designation, especially when it comes 

to—if I am understanding the question correctly—Hezbollah, in 

particular, and Iran’s deep, deep problems with money laundering, 

this is something that, the more the U.S. can do when it comes to 

exposing the problems of Iran’s money laundering and toxifying, 

from my perspective, from the international community’s perspective, toxifying these assets or these financial institutions, so that 

they are avoided, that does benefit long-term. Because, even as 

Iran finds ways around it, it makes it harder for Iran to move 

money, even if Iran still finds ways to get money and Hezbollah 

finds ways to get money. But, again, I know it is extremely challenging to have those types of effects that we want. 

Mr. WILLIAMS. Okay. Thank you. 

Dr. Ottolenghi? 

Mr. OTTOLENGHI. Yes, thank you. If I may just add one point, at 

least 20 percent of Hezbollah’s annual budget actually comes from 

trade-based money laundering outside the region. It comes from 

Latin America, mainly from the tri-border area of Argentina, 

Brazil, and Paraguay. 

The U.S., through its Treasury designations, has targeted entities and individuals associated with Hezbollah involved in that 

type of trade-based money laundering, but those designations are 

more than a decade old. And because of collusion, complicity, or 

just plain negligence by local powers in that area of the world, 

most of these entities and individuals are still able to conduct business and remit finances back to Hezbollah. 

So I think that the broader point is, within the context of the 

power of designations and sanctions, I think that what you need 

to continue is to have monitoring, enforcement, and updating of 

this information so that compliance can be updated all the time 

and, as Hezbollah finds new ways to pursue its illicit financial activities, these designations can catch up. 

Thank you. 

Mr. WILLIAMS. Okay. 

Dr. Taleblu, should the new Administration consider any new 

non-nuclear sanctions, money laundering sanctions, cyber export 

controls? 

Mr. TALEBLU. Yes. And, unfortunately, I do not have a Ph.D., despite my deepest academic desires for one, but thank you. 

I actually think that there are a whole host of tools—military, 

economic, diplomatic, informational. But on the economic side, statutory specifically, we can go after ballistic missiles. 

Dr. Ottolenghi mentioned that there is a whole-of-government 

approach Iran is taking to develop this potent ballistic missile 

threat. That means institutions that engage in research, such as 

engineering and physics. That means the companies that produce 

the transporter erector launchers (TELs) that move Iran’s missiles 

20 

from silo to silo, from mobile launchpad to mobile launchpad. That 

means also going after the companies and entities that produce and 

procure solid and liquid fuel—this is the propellant that powers 

Iran’s missiles—to go after the companies that produce and procure 

the aluminum tubes and the carbon fiber that actually allow Iran 

to develop these longer and wider-diameter and more high-strength 

medium-range ballistic missiles. 

So there is plenty of space. The one of choice, I think, to deal 

with this threat—because Iran’s 14 missile tests since the deal I 

think is a blatant violation and something that should be addressed more urgently than some of the other threats you mentioned. This is one area I think we can do a lot of damage. 

Mr. WILLIAMS. Okay. 

I yield back. Thank you. 

Chairman BARR. The gentleman’s time has expired. 

The Chair now recognizes the gentlelady from New York, Mrs. 

Maloney. 

Mrs. MALONEY OF NEW YORK. Thank you, so much, Mr. Chairmen and Ranking Members, for calling this hearing, and I also 

thank all of the panelists. 

My first question is for Dr. Maloney. One of the key Iranian entities targeted by U.S. sanctions is the Islamic Revolutionary Guard. 

No sanctions have been lifted on the Guard. So business with the 

Revolutionary Guard remains off limits for U.S. companies. The 

CRS notes, however, that the exact relationship between the Revolutionary Guard and Iranian corporate or other entities is not always known precisely, which means that U.S. or European companies may be inadvertently doing business with Iranian companies 

that are fronts for the Revolutionary Guard. That would obviously 

undermine the effectiveness of U.S. sanctions against the Revolutionary Guard. What can we do to improve this, and how do we get 

better at identifying Iranian companies with ties to the Revolutionary Guard? 

Ms. MALONEY. Thank you very much for your question, Congresswoman Maloney. This is, I think, an inordinate challenge for 

the U.S. intelligence community. What the Iranian economy has 

done over the course of the past 38 years is effectively privatized 

through crony capitalism. That is not limited to the Revolutionary 

Guard, but the Revolutionary Guard’s expansion in the economy is 

very much emblematic of it. 

What this means is that there are hundreds, possibly thousands, 

of spinoff companies, companies that have evolved from some part 

of the official government entity or parastatal entities that are formally associated with the Revolutionary Guard and moved into 

what is ostensibly the private sector of the Iranian economy. This 

makes it very difficult to distinguish between companies that are 

associated with the Guard formally, companies that are run or 

managed or work to the benefit of those who are former guardsmen 

who, in fact, might cooperate and collude with the Guard. 

We have done an enormous amount of work, and some of my fellow panelists here work with organizations that can provide names 

of dozens and possibly larger numbers of companies that are associated with the Guard, but there is an almost infinite capacity within 

21 

the Iranian economy to proliferate economic organizations that 

have some connection with the regime in power. 

Mrs. MALONEY OF NEW YORK. In America, law enforcement has 

targeted and put a spotlight on beneficial ownership laws that 

allow terrorists and others, gun runners and everyone else, to hide 

their assets by buying assets, and under beneficial ownership, they 

don’t have to reveal who that person is. 

I am wondering, is that a problem in the Middle East too and 

in Iran? And is this another way that the Guard is hiding money 

or able to easily access money by quickly selling real estate for a 

million dollars or so and having money for weapons? And I would 

ask you and any of the panelists to answer if you would like. 

Ms. MALONEY. Let me just make a quick comment on that point, 

which is that what we have seen during the course of the year-plus 

of the implementation of the JCPOA is that the elected government 

within Iran does have an interest in trying to marginalize the role 

of the Revolutionary Guard and the economy, and some of the penalties that we have imposed on the Guard, including the FATF designation and the government’s desire to get a clean bill of health 

from FATF have, in fact, assisted the government in trying to 

marginalize the role of the Guard. There have been instances, in 

fact, with Iranian banks reportedly refusing to lend to companies 

affiliated with the Guard. 

And so I think a smart strategy of trying to marginalize the role 

of the Guard and particularly to penalize its economic activities 

would play into what are clearly divisions within the regime. 

Mrs. MALONEY OF NEW YORK. Yes. And on the beneficial ownership, sir. 

Mr. OTTOLENGHI. If I may add a point to reinforce what my esteemed colleague said and also provide an example which poses a 

dilemma to actually a U.S. company, we at FDD have identified an 

enormous number of IRGC-affiliated companies, but what we have 

seen clearly is that, oftentimes, the companies manage to keep well 

below the radar established by the criteria for ownership by the 

IRGC created by U.S. law and by the standards of the U.S. Treasury. In other words, oftentimes, although you can’t prove 50 percent ownership, you see that they control the majority of the board 

and the chairmanship. 

And here is the example that poses the great dilemma for a great 

U.S. company, and that is namely Boeing. Today Boeing has 

signed—or has announced a deal with Aseman Airlines to sell 30 

737 MAX to the third national carrier of Iran. And here is the 

problem that Boeing will face. The CEO of Aseman Airlines is the 

former commander of the IRGC Navy. He was the commander of 

the IRGC Navy during the Iran-Iraq war when the IRGC Navy was 

trying to sink U.S. ships in the Gulf. He is the former deputy minister of defense. He is the former CEO of the Iran Aviation Industry Organization, a company, an entity under U.S. sanctions still 

after the JCPOA. He is the former head of the IRGC general staff. 

He is a professor of strategic studies at Imam Hossein University, 

the university of the IRGC that is still under U.S. sanctions. And 

he was Rouhani’s first pick for Ministry of Defense before Dehghan 

was appointed. 

22 

This obviously is a great problem. Companies will go into the Iranian economy thinking that, because the ownership principle is 

met, they can deal with them, but actually they can’t, because 

IRGC— 

Chairman BARR. The gentlelady’s time has expired. 

Thank you. 

Mrs. MALONEY OF NEW YORK. Thank you very much. 

Chairman BARR. The Chair now recognizes the vice chairman of 

the Terrorism and Illicit Finance Subcommittee, Mr. Pittenger 

from North Carolina. 

Mr. PITTENGER. Thank you, Mr. Chairman, for your excellent 

leadership in this important mission. And I thank each of you for 

being with us today. We really appreciate your commitment to this 

important work. 

Addressing the issue of Section 311 and the JCPOA agreement 

as well, are there any banks, recognizing that there are no penalties involved for these—it is not very punitive of what has occurred with 311—that are still operating under the SWIFT authority to transfer money, that they are going about their business as 

usual? 

No response? Does that mean there aren’t any, or we don’t know? 

Mr. Ottolenghi? 

Mr. OTTOLENGHI. I would make two points. One is we don’t 

know. Three points, actually. One is we don’t know, at least I don’t. 

Two, I would make the point that that is why it is so important 

to ensure full transparency in all of the large business deals that 

are being negotiated and concluded with Iranian entities. This is 

a country that has been under sanctions for a decade, has engaged 

in some of the worst and most opaque illicit practices in the financial world. It is a country that is still the world’s foremost sponsor 

of terrorism. We do deserve to have transparency in the types of 

financial arrangements characterizing the deal. The Boeing and 

Airbus deal are obviously an example. 

And my third point, if you allow me, is not necessarily directed 

to Iran, but Hezbollah. I mentioned that Hezbollah finances a lot 

of its operations from trade-based money laundering around the 

world. A lot of the areas where they draw financing from are weak 

financial institutions. They are jurisdictions rife with corruption 

and sometimes collusion. One place that comes to mind, of course, 

is the Republic of Paraguay. I think that the U.S. Government 

should look into these jurisdictions as possible 311 designations 

precisely for the reason that sufficient compliance controls are not 

in place. Thank you. 

Mr. PITTENGER. This past year, FATF accepted an action plan 

from Iran to address the deficiencies that were found in 311. Do 

you think this was an advisable countermeasure? Was this an appropriate response? And do we anticipate Iran doing anything 

meaningful with their action plan? Yes, sir? 

Mr. TALEBLU. Thank you very much. Great question. The FATF 

suspension of countermeasures for 1 year, a period of 1 year of review, I think was more political than based on economic or Iran’s 

desires to produce more transparency in the companies that it 

owns, be they government of Iran-linked entities or private entities. 

I think the best argument for that would be the people who marVerDate Nov 24 2008 18:38 Mar 16, 2018 Jkt 028175 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 K:\DOCS\28175.TXT TERI
23 

shal the entities that Dr. Maloney mentioned, namely the banks 

that, in the fall of 2016, decided not to lend. 

But other than that, I believe it will be highly unlikely that you 

will see Iran comply with those countermeasures, and they might 

have to be put back on. And I think this is something that we 

should guard against and something that my colleagues have mentioned, which is don’t suspend conduct-based sanctions and conduct-based labels and restrictions purely for political purposes. 

Mr. PITTENGER. Recently, a Chinese-owned company based in the 

United States, ZTE, was fined a billion dollars for selling technology to Iran. What other countries are complicit in a like manner 

that we should be wary of? Yes, sir? 

Mr. OTTOLENGHI. I don’t want to name countries necessarily, but 

I do want to point out that, in my written testimony, I submitted 

what I think is a very comprehensive open-source-based list of entities and companies that are providing material support and services to Mahan Air. Many of these companies are based in allied 

countries, friendly countries to the United States. I think that is 

a perfect example of where the United States can put companies 

and countries to a choice not to help a designated entity under 

13224. 

Mr. PITTENGER. Thank you. 

We are tracking the mining of diamonds in Africa going to Dubai 

and then back to India to be cut and through some measure of 

trade-based money laundering. What awareness do you have of 

this, and what countries would be complicit in this effort? 

Mr. OTTOLENGHI. Are you asking me specifically or— 

Mr. PITTENGER. I am asking the four of you. If you want to respond, you have 20 seconds, please. 

Mr. OTTOLENGHI. I think that, once again, as you know, these 

networks are global. There is an established connection between 

West Africa and illicit trade-based money laundering activities by 

Hezbollah and the tri-border area and, more broadly speaking, 

Latin America. I think that that is where one should look, especially at the transport, both by ship and air connections, that move 

the merchandise from point A to point B. 

Mr. PITTENGER. Thank you. My time has expired. 

Chairman PEARCE. Thank you. The gentleman’s time has expired. 

The Chair now recognizes the gentleman from Massachusetts, 

Mr. Lynch, for 5 minutes. 

Mr. LYNCH. Thank you very much, Mr. Chairman, all the chairmen and all the ranking members. I think this is certainly a very 

deserving topic for the hearing. 

As part of the JCPOA, we agreed to lift sanctions on aviation 

equipment and aircraft. Specifically, it commits the U.S. to allow 

for the sale of commercial passenger aircraft and related parts and 

services to Iran, provided that licensed items and services are used 

exclusively for commercial passenger aviation. 

One of my contacts at the IAEA, Olli Heinonen, told me that one 

of the most dangerous things he did as an inspector in Iran was 

to fly internally in Iran. He said because of the sanctions, the quality of the aircraft was very, very poor. And the inspectors, to a person, thought they were putting their lives at risk every time they 

24 

flew internally. They are okay flying from Frankfurt into Tehran, 

but if they had to fly inside Iran, very big problems. 

Now, as Dr. Ottolenghi has pointed out, today, at about 4:00, Boeing has announced a $3 billion deal with Iran to provide, as you 

said, 30 737 MAX airplanes. 

Dr. Maloney—and I have heard—we will go back to you in a second. This is a big deal for Boeing in its commercial aircraft. Do you 

see any problems in this? I look at the assets that Iran has in 

terms of C-130s and other aircraft. They are still flying some of our 

F-14s that they bought under the Shah. If it is military aircraft we 

are worried about, they have that, and they have the ability to buy 

Russian aircraft as well. Is this a good thing for the U.S. or a bad 

thing? 

Ms. MALONEY. I think clearly it is both. I have flown on Iranian 

aircraft inside Iran, and I can share the assessments that you 

shared, that it is quite hair-raising. And the sale of passenger aircraft and airline parts was something that the Iranian people, that 

Iranian leaders have talked about and attached great importance 

to. I have never quite understood, since it doesn’t necessarily help 

their economy significantly, but certainly for ordinary Iranians, it 

was quite meaningful, given the history of commercial air disasters 

within Iran, but as Dr. Ottolenghi has cited, there is clearly some 

diversion of passenger aircraft for non-civilian purposes. The deal 

does not provide an adequate remedy for that. I think we need to 

continue to adhere to our obligations under the nuclear deal. Violating the deal would only leave us isolated from our diplomatic 

partners and make us less effective in trying to curtail Iran’s worst 

behavior. 

The most effective way that we can respond to the sorts of nefarious activities that Iran is undertaking and using its commercial 

aircraft would be to work with our P5+1 partners to amend the 

deal to find specific provisions to add to the deal that in fact prevent Iran from undertaking these actions or enable us to curtail 

our sale of passenger aircraft in response to the specific sorts of instances that Dr. Ottolenghi has described. 

Mr. LYNCH. Okay. The other aspect of this is I have always felt 

that having inspectors on the ground in Iran and having a tighter 

assessment of what their capacity is at a given moment was much 

better than what we were doing before, which was sort of trying 

to come up with a timeline, and several of those turned out to be 

completely false and inaccurate. Even our Israeli friends, the 

timelines they gave us turned out to be faulty, which is unusual. 

They usually have excellent intelligence. But I can’t see how we are 

worse off by having inspectors on the ground there and being able 

to make that determination in a more precise manner. Do you 

agree, Dr. Maloney? 

Ms. MALONEY. I do agree. At the end of the expiration of the provisions of the nuclear deal, we will have vastly greater information 

about Iran’s capabilities and intentions than we would have had 

without it. We are significantly advantaged by the continuous presence of intrusive verification and monitoring. 

Mr. LYNCH. Okay. Thank you. I see my time has expired. I yield 

back. 

Chairman PEARCE. The gentleman’s time has expired. 

25 

The Chair now recognizes the gentleman from Pennsylvania, Mr. 

Rothfus, for 5 minutes. 

Mr. ROTHFUS. Thank you, Mr. Chairman. 

Dr. Ottolenghi, on page 9 of your testimony, you cited a story 

from The Jerusalem Post about Iran smuggling weapons to 

Hezbollah on commercial flights. You also listed 67 service providers to Mahan Air in Europe, East Asia, Central Asia, and the 

Middle East. Do you have any concern about the opportunity for 

Iran to smuggle weapons and technology beyond the Middle East? 

Mr. OTTOLENGHI. I do not have any evidence that they would be 

using Mahan Air for smuggling weapons, say, to Europe or to Asia, 

but certainly they have a history of suborning their civil aviation 

sector to nefarious activities, wherever those activities might be. 

Actually, we know it for a fact, because that was part of the reason 

why so many of their airlines were designated before the JCPOA, 

that Iran Air Cargo and other operators were being used to ship 

illicitly procured technology from Western destinations back into 

Iran. So I wouldn’t rule it out, sir. 

Mr. ROTHFUS. Again, I would be concerned, given Hezbollah’s 

international presence, including Latin America. Would that be of 

any concern for you? 

Mr. OTTOLENGHI. My main concern when it comes to Hezbollah’s 

overseas activities is their deep, enduring involvement in all sorts 

of illicit criminal activities, first and foremost drug trafficking. 

There is an enormous amount of open-source evidence, including 

recent arrests in the tri-border region involving Hezbollah 

operatives trying to disguise drugs before shipping them overseas 

to Europe—mainly European and Middle Eastern markets. That is 

certainly the most pressing concern, but where you have mechanisms to disguise the shipment of drugs, you can also disguise 

weapons for sure. 

Mr. ROTHFUS. I want to talk a little bit about the announcement 

today with Boeing. Your testimony indicates that Iran has been 

talking about just replacing its aging fleets, and one might think 

they are arguing this is a way to increase their commercial capacity. Do you expect Iran to expand the number of nations it has 

service routes to through all these purchases? 

Mr. OTTOLENGHI. I do expect Iran to expand its commercial 

routes. 

Mr. ROTHFUS. Where would you expect them to be expanding to? 

Mr. OTTOLENGHI. Again, to go back to the point about Mahan 

Air, Mahan Air has already expanded its routes into European destinations, adding several destinations since the JCPOA was 

reached, despite the fact that Mahan Air is under sanctions. 

The problem I see is that a lot of these aircrafts that are being 

used in innocent, benign commercial routes to ferry civilian passengers are immediately repurposed once they come back to Iran 

to carry fighters and weapons to Syria or to Yemen or to potentially other destinations. They are used to carry back the wounded 

and the fallen in combat, and then, within hours, as the photographs showed, they are repurposed back for civilian use. That is 

something that just shouldn’t happen. The Russians are conducting 

their own airlift into Syria. They are strictly using military aircraft 

that belongs to the Russian Air Force. They do not allow Aeroflot 

26 

or other civilian carriers to participate. That is the very least we 

should expect. 

Mr. ROTHFUS. Do we know how Iran is going to be financing the 

purchases of these aircraft? 

Mr. OTTOLENGHI. That is part of the problem. A lot of these—by 

definition, the procurement by sanctioned entities was always 

opaque and hard to detect, but also when it comes to the deals that 

follow the JCPOA that have been based on licensing and are seemingly in compliance with the JCPOA, there is very limited public 

information available about the structure of the financing, the financial institutions involved, the leasing companies potentially involved, and I think that it behooves both Boeing and Airbus and 

potentially other aircraft manufacturers to actually come perhaps 

before Congress and make this information public and available. 

Thank you. 

Mr. ROTHFUS. Mr. Taleblu, you mentioned Iran’s sophistication 

with money laundering through oil exports and precious metals on 

page 9 of your testimony. Given the Islamic Guard’s past support 

for the Taliban in Afghanistan against the United States, is there 

any evidence of Afghanistan being used by Iran as a route for illicit 

trade and money laundering? 

Mr. TALEBLU. Thank you very much for your question. I definitely assume so. And I definitely assume that there would be, 

given the drawdown in U.S. forces. It is known that in Afghanistan’s westernmost city, Herat, where there is a population that 

speaks Dari, that one of the preferred currencies is the Iranian 

rial. I could totally see Iran offloading rials into Afghanistan and 

Iran looking to tap into those other networks, particularly precious 

metals in Afghanistan, but it would likely come at a time when it 

feels like it has the least to lose from an engagement with the U.S. 

there. 

Chairman PEARCE. The gentleman’s time has expired. The Chair 

now recognizes the gentleman from California, Mr. Sherman, for 5 

minutes. 

Mr. SHERMAN. Thank you. I would like to bring the committee’s 

attention to the No U.S. Financing for Iran Act. It passed this committee overwhelmingly, and it passed the House by a very significant margin, but it died in the Senate. It would provide that we 

would not allow U.S. banks to finance sales of airplanes to Iran. 

And I would ask the witnesses about it, but I think we have even 

more expertise on this side of the room in the sense of, do we really 

want Bank of America or Wells Fargo or Goldman Sachs to be lobbying Congress in favor of Iran, because otherwise, Iran may be 

unwilling or unable to pay the $10 billion, the $20 billion that they 

owe to U.S. banks. 

There is a tendency for us to believe in our normal affairs that 

if the lender has control over you—and I have had lenders that 

have had control over me—but in international affairs, it is almost 

the other way. The lender has to beg the borrower, please pay. And 

I have enough lobbyists on the Iranian side. 

I will ask each of our witnesses, is there any reason we wouldn’t 

designate the Iran Revolutionary Guard Corps as a terrorist organization? And does it make sense to say the Quds Force is a terrorist organization, but its parent company, the Revolutionary 

27 

Guard Corps, is not? Does that make any more sense than saying 

Osama bin Laden’s right hand is a terrorist hand, but his left hand 

was not? Should we designate? Does it make any sense to designate one without the other? We will go to the first witness. 

Mr. TALEBLU. Thank you very much for your excellent question. 

The United States Government actually had a similar debate in 

2007, and they were worried about designating the IRGC versus 

the Quds Force, so they took a risk-averse approach and only designated the Quds Force. I think that was a mistake then, given the 

role of the IRGC, and I think it remains a mistake now. IRGC nonQuds Force assets, such as its ground forces, are active in Syria. 

I think Executive Order 13224 designation for the IRGC is crucial 

more now than ever before. 

Mr. SHERMAN. Thank you for mentioning Syria because the face 

of this regime—or the face it would like the world to see is that 

of smiling, debonair Foreign Minister Zarif. The real face of this regime is Aylan Kurdi, that 3-year-old boy on the beach of the Mediterranean, who died along with nearly 500,000 other people as a 

result of Assad, but Assad would not be there today if it was not 

for Iran. 

Let’s go on to Mr. McInnis. 

Mr. MCINNIS. Yes. As I had stated previously, for moral reasons, 

I support a Foreign Terrorist Organization designation for the 

IRGC, but I recognize, given some of the potential repercussions of 

that at this point in time, an Executive Order 13224 designation 

for the IRGC is probably the most appropriate route as we assess 

potential repercussions. 

Mr. SHERMAN. Dr. Maloney? 

Ms. MALONEY. Iran is the leading state sponsor of terrorism. It 

is clear that its military is directly involved and complicit in those 

actions. It doesn’t seem obvious to me what the designation of the 

Revolutionary Guard does in terms of deterring Iran’s involvement 

in terrorism or deterring the IRGC from continuing the actions 

that it takes. I think that the Pentagon has greater influence over 

Iran’s regional activities than a designation would have. 

Mr. SHERMAN. I am a bit confused by the answer, but I will go 

on to the last witness. 

Mr. OTTOLENGHI. If I may address the question, and thank you 

for your point. I completely agree with the notion that sanctioning 

the Quds Force without sanctioning the IRGC is basically making 

a distinction without a difference. They are one and the same. They 

are part of the same structure. And I would make the further argument that sanctioning the IRGC under Executive Order 13224, 

which goes after the terror finance and providers of material support to terrorism, would enable and open up the possibility of sanctioning hundreds of IRGC companies inside Iran. This would be 

beneficial to the business community as it looks into trying to identify legitimate interlocutors inside the Iranian economy while staying away from illegitimate interlocutors, the ability to designate— 

Mr. SHERMAN. Let me try to sneak in one more question. 

Dr. Ottolenghi, your testimony includes an annex supplying 

names of service providers that do business with Mahan Air. The 

U.S. has urged countries in Europe and Asia to disallow the airline 

to serve their airports and has applied some secondary sanctions 

28 

to firms involved in aircraft transactions. Yet the airlines still operate in countries that are friendly to the United States, including 

Germany, France, and Japan. Is the Treasury doing enough, and 

should we be sanctioning those companies that service Air Mahan 

planes when they do land in Germany, France, or Japan? 

Mr. OTTOLENGHI. With your permission, very briefly, first of all, 

I think it is a very important question to ask Treasury what they 

have done so far to persuade these companies from stopping this 

type of service. 

Second of all, I think that the answer as to the effectiveness of 

these sanctions is very clear. When the United States imposed 

heavy fines on financial institutions that were allowing illicit transactions, the financial world got the message and stopped Iran from 

conducting illicit financing—or at least introduced very strict compliance standards. I think that a similar type of action with fines 

and penalties imposed on some of these companies would send a 

message across-the-board. Thank you. 

Mr. SHERMAN. I yield back. 

Chairman PEARCE. The gentleman’s time has expired. 

The Chair now recognizes the gentlelady from Utah, Mrs. Love. 

Mrs. LOVE. Thank you, Mr. Chairman. 

And thank you all for being here today. I am going to just jump 

into these questions as quickly as I can. 

Mr. McInnis, this is for you. Under the Obama Administration’s 

watch, Russia sold and transferred to Iran the S-300 advanced 

anti-aircraft system. Why do you think that the Obama Administration refused to sanction those Russian entities under the U.S. 

law? 

Mr. MCINNIS. The S-300, those particular entities, in essence— 

and I am trying to remember the history here. I may need some 

help with this, but— 

Mrs. LOVE. One of the most advanced anti-aircraft systems in the 

world. 

Mr. MCINNIS. No, no. I am familiar with the S-300. I am trying 

to remember the specific—the companies involved in this from the 

Russian perspective, because this is part of where I think our sanctions policies need to be going in the future, in particular when it 

comes to the Russian companies as they look toward potentially 

trying to work around the current existing U.N. Convention on 

Weapons Sanctions, that I worry that we are going to need to take 

very aggressive actions in the future to prevent such major advanced technology transfers in the future. But I do think that was 

a particular leverage that we were able to use with the Russians 

during that timeframe to prevent the transfer of something that 

was going to— 

Mrs. LOVE. Did we miss the opportunity to use efforts to actually 

sanction? 

Mr. MCINNIS. The thing is that was something that the Russians 

could do at that point in time, and we— 

Mrs. LOVE. So they weren’t—you don’t believe that they were in 

violation of the Iran Sanctions Act or the Iran-Iraq Arms Nonproliferation Act? 

Mr. MCINNIS. At that point in time, I think that they were—their 

authority—and correct me if I am wrong here on the panel—the 

29 

Russians were allowed to sell those particular conventional weapons at that point in time. 

Mrs. LOVE. Did you have a—you nodded your head at one 

point— 

Mr. MCINNIS. I mean, am I off on that? 

Mrs. LOVE. —Mr. Taleblu. Go ahead. 

Mr. TALEBLU. Yes. He is correct. Unfortunately, the Russian 

counterargument to those proposals was they cited the U.N. Conventional Registrar of Arms, which, in category 7 omits, ‘‘groundto-air missiles,’’ of which the S-300 SAM is one. 

Mrs. LOVE. Okay. And if we are going to—I just want to ask one 

more question, Mr. McInnis. In your testimony, you said that one 

way we can suppress the Iranian military modernization and 

growth is by deterring Russian and Chinese equipment sales to 

Iran. What would those sanctions or efforts look like, in your opinion? 

Mr. MCINNIS. And this is what I was referring to as we move forward, is that I am worried that we are going to need, as the 

JCPOA continue—under the implementation, that we are going to 

need to look at sanctioning and targeted sanctions against Rosneft 

and other subsidiaries that the IRGC—or that works with the 

IRGC or firms connected to the IRGC and the Iranian defense industry. That is where we need to focus and begin to look at secondary sanctions that affect the Russian defense industry to prevent Iran from gaining significant advanced equipment like that. 

That is what I am particularly worried about. And I think that 

those are things that we could construct here in the U.S. 

Mrs. LOVE. Mr. Taleblu, since the JCPOA was agreed to, how 

have Iran’s efforts to export terrorism changed, in your opinion? 

Mr. TALEBLU. Thank you very much for the question. I think, unfortunately, they have significantly been enhanced. The Iranian 

role, at least in Iraq and Syria and its ‘‘near abroad’’ has deepened. 

Iran now uses the argument in Iraq that, ‘‘You need us more than 

you need the U.S.,’’ which clearly isn’t true. The U.S. is the one 

leading most of the strikes against ISIS. Shia militias often unfortunately engage in sectarian slaughter on the back ends of the cities that U.S. Forces combined with the Iraqi Army actually liberate. So there actually needs to be a way to keep Iran out of this 

equation, but Iran is able to marshal these arguments and say, 

‘‘No, you need us; we are in the region longer,’’ and they will cite— 

you know, there is a quote from Qasem Soleimani that says, ‘‘We 

are not like the Americans; we don’t abandon our friends.’’ 

So I think now is the time to actually come to the aid of states 

like Iraq, the provincial government of Iraq in particular, to deny 

Iran this argument. 

Mrs. LOVE. Do you believe that there is a difference between conventional ballistic missiles and those which are designed to be nuclear-capable, a phrase which exists in the UNSCR? 

Mr. TALEBLU. Thank you for this question too. This is unfortunately complex. The Iranians have used the word ‘‘designed’’ in the 

resolution to kind of pooh-pooh any attempts by the U.S. and the 

international community to go after its ballistic missile testing. I 

think when we look at the word ‘‘nuclear-capable,’’ that is a word 

that comes from a specific metric in this international regime— 

30 

Mrs. LOVE. Right. 

Mr. TALEBLU. —the MTCRs, 300 kilometers over 500 kilograms. 

So it is range over payload. Most of the missiles that Iran has tested since the deal actually meet and far exceed that, but I think it 

is kind of an artificial metric to add, because there are many ballistic missiles that can carry a nuclear weapon, such as the Lance, 

which the U.S. sold to Israel; such as the Pakistani HATF IX; such 

as the French Pluton, which was deployed during the Cold War. 

These are important munitions that actually can carry a nuclear 

warhead that fall short of that metric, and I think limiting ourselves to that metric only concedes the argument to Iran. 

Mrs. LOVE. Thank you. 

Mr. Chairman, my time has expired. Thank you, Mr. Chairman. 

Chairman PEARCE. The gentlelady’s time has expired. 

The Chair now recognizes the gentleman from North Carolina, 

Mr. Budd, for 5 minutes. 

Mr. BUDD. Thank you, Mr. Chairman. 

Mr. Taleblu, one of Iran’s advantages, as you allude to in your 

testimony, is to provide weapons that acquire costly countermeasures from traditional forces in low-intensity conflicts. The 

U.S., while its allies are often disadvantaged by these tactics, has 

the ability to exert diplomatic leverage through additional sanctions in a way that Iran, which is a weak economy, does not. The 

question is, is it fair to think about a strengthened, more effective 

sanctions regime that includes additional measures to deny Iran 

access to the payment network as utilizing a primary U.S. advantage? Is that a primary U.S. advantage? 

Mr. TALEBLU. Thank you very much. That absolutely is a primary U.S. advantage, and it is absolutely fair to seek those measures, but it is also absolutely fair to seek diplomacy with our partners’ help to interdict the sales and transfers of these weapons too. 

Mr. BUDD. So that is a soft power way that we could leverage 

Iran—I guess you could elaborate on that a little more how we 

could go about that? 

Mr. TALEBLU. Sure. That it is soft power, I think, hits the nail 

on the head. We could target the entities that actually engage in 

the production or transfer of these weapons. There is another Executive Order we have been talking about, Executive Order 13224, all 

of today. There is another one, 13611, I believe, which came into 

force May 2012, and that blocks the property and assets of those 

threatening the peace and stability of Yemen. Iranian arms transfers to Yemen have been intercepted at least 4 times. There are 

Iranian antitank missiles, copies of Iranian antitank missiles being 

used in Yemen. So we could investigate, does the IRGC or any Iranian private entity which facilitates the transfer of weapons to the 

Yemeni theater deserve to be targeted pursuant to sanctions as defined in this new executive order? 

Mr. BUDD. Sure. So are the benefits the Iranians get as a result 

of this Iran deal strong enough to keep them in the agreement if 

the U.S. dials up pressure in other areas? 

Mr. TALEBLU. While it is important to look at both the costs and 

the incentives of Iran for it to keep the nuclear deal, I think it is 

also important to be aware of the domestic debates in Iran. Here 

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31 

paper, Kayhan, and the headline is a quote from Iran’s Deputy Foreign Minister. And I am just translating it as I am reading it now, 

and it says, ‘‘The JCPOA wasn’t supposed to make Iran’s economy 

blossom.’’ So he is basically taking the exact opposite of the argument that he is going to international banks and to the Western 

world. Basically, he is—the argument he is making to the West is, 

no, you have an investment in the Iranian economy, but as Adam 

Szubin said, ‘‘The JCPOA is an agreement, not a cashier’s check.’’ 

Just because we have agreed to waive sanctions doesn’t mean we 

need to go actively advocate on behalf of the Iranian economy. That 

is something that they need to do by fixing their AML laws, by 

making their companies more transparent, and by getting the 

IRGC out of the legitimate private sector. 

Mr. BUDD. So if they still have maneuvering room, bottom line, 

because the Iran agreement is so good for the Iranians, we could 

get tough on them and they would still—they wouldn’t leave? 

Mr. TALEBLU. To the best of my assessment, I believe that Iran 

has constantly cited in their domestic press that they feel that we 

need the deal, the United States needed the deal more than they 

do. I believe Mohammad-Javad Larijani, who is the brother of 

Iran’s Parliamentary Speaker, made this point in the fall of 2016. 

Mr. BUDD. The Iran deal hasn’t worked. Iran remains the world’s 

foremost state sponsorship of terrorism. And they capture and humiliate our soldiers. They are first-rate money launderers, as we 

have heard. They test ballistic missiles regularly. The IRG is now 

solidifying its place as one of the largest quasi-criminal syndicates, 

and the list just keeps going on. But the theory that Iran was a 

geopolitical equivalent of a lost sheep waiting for the international 

community to stop being mean to it, the theory that the Iran deal 

is based on, has been proven totally false. So are the options for 

additional sanctions you have laid out in your testimony, is that an 

option for the United States to recover some ground in light of the 

total failure of the Iran deal? 

Mr. TALEBLU. It is definitely one of the many ways that the U.S. 

should deal with this. In fact, what is required is really a wholeof-government approach. I think there has been a significant informational leg in the campaign against Iran that has been missing, 

such as we have all been looking at Iran for decades now with this 

combined experience of this distinguished panel, but one thing that 

hasn’t been said today is that one of the saddest things to see 

about Iran is the constant prioritization of the regime’s interest 

over their national interest, over their own narrow ideological interest over the interests of their own people. You see it with the 

Boeing deal. You see it with military use of civilian airliners. This 

is something that should be highlighted in that informational campaign to supplement U.S. economic sanctions. 

Mr. BUDD. Thank you, Mr. Taleblu. 

Mr. McInnis, in the remaining time we have, how would you— 

or how do we deter Russian and Chinese arms sales to Iran 

through a sanctions regime? 

Mr. MCINNIS. Yes. As I had alluded to before, I think, targeting 

increased designations of the IRGC, lowering the thresholds, as we 

discussed before, perhaps down to 25 percent and increasingly detoxify IRGC-related defense industries so that we have an inVerDate Nov 24 2008 18:38 Mar 16, 2018 Jkt 028175 PO 00000 Frm 00037 Fmt 6633 Sfmt 6633 K:\DOCS\28175.TXT TERI
32 

creased secondary sanctions regime so that defense companies that 

want to work with the IRGC or sell to the IRGC particular types 

of weapons that we designate, we can continue to make it—financing and make those types of sales more and more difficult for the 

Russians, Chinese, and others to do. 

Mr. BUDD. Thank you very much. 

I yield back. 

Chairman BARR. The gentleman’s time has expired. And the gentleman from North Carolina will be advised that the shot clock on 

the floor was almost exactly in line with his, and so the time on 

the floor has run out like it ran out against Gonzaga last night. 

The Chair now recognizes the gentleman from Tennessee, Mr. 

Kustoff, for 5 minutes. And be advised we are expecting votes at 

any moment on the Floor. We will try to get in the questions, but 

if not, we will adjourn the hearing. So, the gentleman from Tennessee. 

Mr. KUSTOFF. Thank you, Mr. Chairman. 

Mr. McInnis, we know that last year, there was a payment from 

the Obama Administration of around $400 million on the same day 

or about the same time that Iran released five American prisoners. 

We also know that the Obama Administration stated a number of 

times that it would neither negotiate nor pay a ransom. This payment appears to be a contradiction of the remarks made by the 

Obama Administration, and people can judge that as they like. 

Specifically, though, is there any evidence that you see that Iran 

used this and any other cash payments following implementation 

of the JCPOA to further or worsen the conflicts in the region, such 

as the civil war in Syria or the conflicts in Yemen? 

Mr. MCINNIS. I believe that the moneys—especially in 2016— 

that Iran accrued from the JCPOA, insofar as following their budget in particular, you saw a number of these types of allocations 

that particular—what ended up being $1.7 billion in total from that 

settlement. Many of those moneys were directed to be used by the 

IRGC for its overall military activities. 

How to discern exactly if that money went to specific activities 

in Syria or Iraq or to support terrorism elsewhere is hard to discern, but I think that it is pretty clear from analysis of their budget 

that the moneys that that came out of the JCPOA, a good portion 

of them was very clearly sent to the military and to the IRGC for 

their activities around the region. 

Mr. KUSTOFF. Thank you, Mr. McInnis. 

Mr. Taleblu, yesterday, there was a story that posted on The 

Wall Street Journal website, and it is entitled, ‘‘Syria’s Civil War 

Produces a Clear Winner: Hezbollah.’’ And I don’t want to read 

from the entire article, but if I could: ‘‘Hezbollah today is stronger, 

more independent, and in command of a new Syrian militia that 

its officials say is ready to be deployed to other conflicts in the region. Hezbollah now fights alongside Russian troops, its first alliance with a global power. It was Hezbollah that devised the battle 

plan for Aleppo used by Syrian and Russian forces last year, according to Arab and U.S. officials who monitor the group.’’ 

One line that struck me: ‘‘Thanks to money and arms from 

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33 

tector of President Bashar al-Assad’s government and as a sponsor 

of Shiite forces in Syria.’’ 

So, if we could, how specifically does Iran sponsor terrorism and 

other illicit activity with groups such as Hamas and Hezbollah, and 

is there any additional evidence that suggests Iran has taken additional steps to further destabilize the region? 

Mr. TALEBLU. Thank you very much for that excellent question. 

I think that observation is key, because having been tracking the 

issue in Iran’s war in Syria for a couple of years now, I have seen 

many testimonies where analysts have alleged that actually having 

Hezbollah fight deeper in the Syrian civil war could have a longterm positive effect because it would discredit them as a Lebanese 

political institution or a Lebanese political force. 

Unfortunately, the exact opposite thing has happened, as you 

had mentioned. In 2007, for instance, there were reports that 

Hezbollah was helping Iran train Shia militias on Iranian territory 

and then deploying them to Iraq. In 2013 through 2016, as you 

mentioned, Hezbollah was active helping Assad take back territory. 

In 2015 through 2017, they were reporting that Hezbollah allegedly 

is helping Iran in Yemen. So, in fact, this force is growing its 

strength. It is not weak—it is not being diminished at all. 

And while the issue of exact number of payments to Hezbollah 

remains to be seen, Iran has furnished that group with everything 

from C-802 anti-ship missiles to a whole variety of different rockets, 107-millimeter rockets, 106-millimeter anti-tank shells. There 

is a whole slew of such munitions that continue to be sent to 

groups like Hezbollah. 

Mr. KUSTOFF. In this Wall Street Journal article from yesterday 

entitled, ‘‘Syria’s Civil War Produces a Clear Winner: Hezbollah,’’ 

the statement that I just read to you, ‘‘Thanks to money and arms 

from Tehran, Hezbollah now stands almost on a par with Iran as 

a protector of President Bashar al-Assad’s government and as a 

sponsor of Shiite fighting forces in Syria,’’ would you agree with 

that statement? Are they equal or almost equal? 

Mr. TALEBLU. I continue to see Hezbollah as more of an Iranian 

proxy than anything else. While Hezbollah may have— 

Chairman PEARCE. If the Chair could interrupt, we will ask for 

that in writing. Votes have been called. We are down to 10 minutes. We are going to try to squeeze at least one more questioner 

in. 

Mr. Davidson is recognized for 3 minutes. 

Mr. DAVIDSON. Thank you, Mr. Chairman. 

And thank you all for being here. I appreciate your testimony. 

I had a question about Hezbollah’s activities, and Hezbollah’s activities with the drug trade in particular. There has been a fair bit 

of their involvement, and so far that ties to Lebanon, but not directly to Iran. And, of course, there is correlation. Has there been 

any successful effort to tie the cash flows from the drug trade, particularly with the U.S. drug trade, not just in Central and Latin 

America more broadly, but at U.S. border trade? Dr. Ottolenghi? 

Mr. OTTOLENGHI. Yes. Thank you. It is a very important question, and I am very grateful you brought it up. The network that 

deals with drugs is truly global. The cocaine, of course, comes entirely from Latin America. It travels to its multiple designations, 

34 

Western markets mainly, but also increasingly to the Middle East. 

And while I can’t go into too much detail, there is plenty of opensource evidence indicating multiple connections between the 

Hezbollah people in Latin America involved in the drug trade on 

the one hand, operatives and cartels trading in criminal organizations in Europe and other places in Latin America and potentially 

all the way to the United States moving the drugs, connections 

with the Iranian network in Latin America. And most troubling, 

the financial links lead all the way to the United States. In other 

words, while the drugs may not be moved directly by Hezbollah 

into the United States, into the U.S. market, Hezbollah is using 

U.S. jurisdictions in order to launder the revenues from its illicit 

trade. So there is a threat to the financial integrity of the U.S. financial system from Hezbollah’s illicit activities in Latin America 

that are linked to the drug trade. 

Mr. DAVIDSON. Thank you. 

And, briefly, could you mention any tools that would be helpful 

that aren’t already in place? 

Mr. OTTOLENGHI. Thank you. I think that one important tool is 

to empower the law enforcement agencies that are chasing these 

cases, especially down in Latin America, where the willingness by 

local government to cooperate is somewhat diminished by the level 

of collusion and complicity that some officials in these governments 

have with illicit activities to which Hezbollah is accessory. 

Of course, once again, I bring to your attention the ongoing activities of Hezbollah in the tri-border area. In the tri-border area, 

there is an enormous degree of complicity, collusion, or just benign 

neglect from local officials, from law enforcement authorities that 

overlook these activities. 

Chairman PEARCE. The gentleman’s time has expired. 

Mr. OTTOLENGHI. Pressure from the United States and its Government would be extremely helpful. 

Mr. DAVIDSON. Thank you. My time has expired. 

Chairman PEARCE. The gentleman’s time has expired. 

The Chair now recognizes the gentleman from Indiana, Mr. Hollingsworth, for 3 minutes. 

Mr. HOLLINGSWORTH. Thank you, Mr. Chairman. And thanks to 

all of the witnesses for being here today. We have heard a lot of 

testimony and certainly a lot of great information about what may 

need to be done next, but could you walk a step further and tell 

me what success looks like? If you had all the tools at your disposal, you were able to put these sanctions on, you were able to do 

these things, what would success look like, and how would we 

measure whether we have been successful? And then I will go one 

step further. And that really goes to everybody if each of you wants 

to answer. 

Mr. TALEBLU. I think that is an absolutely important question. 

One measure of success is no Iranian ballistic missile testing for 

the duration of the deal should the deal decide to hold. Another 

measure of success should be marshaling sufficient economic pressure to erode the ability for Iran to domestically produce some of 

these systems. Another measure could be forcing Iran or coercing 

Iran to stop sending men, money, and munitions to Syria. So while 

35 

coercion is the primary goal, deterrence and punishment could be 

secondary and tertiary goals. 

Mr. MCINNIS. Yes. I would add to that that certainly you can 

measure that by a shrinking ability for groups like Hezbollah and 

others to be able to project any type of terrorist activity worldwide, 

but also I think that Iran’s ability to be able to build and increase 

the reach of its proxies and their ability to project any type of 

weapons against us, I think, the increasing arming and ability to 

move their proxies around the region. For me, I want to be able 

to shrink that capacity to move this new integrated militia army 

that Iran has. If it can be broken and shrunk and slowly over time 

be able to be rolled back, that, for me, is what I am looking for 

most importantly. 

Ms. MALONEY. The definition of success would be a more responsible government in Iran, one that is not interfering and sowing violence throughout the region, but a broader definition of success 

would include an end to the conflicts in Syria and Yemen, and U.S. 

support for broader political, social, and economic reform across the 

region. 

Mr. OTTOLENGHI. I fully subscribe to what Dr. Maloney has just 

said. 

Mr. HOLLINGSWORTH. You have the problem I do. As a freshman, 

I go last and so I get to say, ‘‘I agree,’’ frequently. But is it too 

much—are we asking too much of these sanctions? Many of the answers that you put forth are very big, very broad, admirable goals 

nonetheless, but maybe too far a reach for sanctions or any political 

pressure that the United States can provide? Any thoughts on 

that? 

Mr. TALEBLU. You know, I have the pleasure of working for Mark 

Dubowitz at the Foundation for Defense of Democracies, and he 

has coined this phrase, ‘‘Sanctions aren’t a silver bullet, but they 

are silver shrapnel.’’ And I definitely think there is a lot of shrapnel that the Iranian body armor can afford to take right now. 

Again, it should be coupled with a whole-of-government approach. 

Chairman PEARCE. The gentleman’s time has expired. 

I would like to thank our witnesses for your testimony today and 

for answering our questions. 

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. 

This hearing is adjourned. 

[Whereupon, at 4:32 p.m., the hearing was adjourned.] 

(37) 

A P P E N D I X 

April 4, 2017 

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