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MAJOR BENEFICIARIES OF THE IRAN DEAL:

IRGC AND HEZBOLLAH

HEARING

BEFORE THE

SUBCOMMITTEE ON 

THE MIDDLE EAST AND NORTH AFRICA

OF THE

COMMITTEE ON FOREIGN AFFAIRS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED FOURTEENTH CONGRESS

FIRST SESSION

SEPTEMBER 17, 2015

Serial No. 114–92

Printed for the use of the Committee on Foreign Affairs

(

Available via the World Wide Web: http://www.foreignaffairs.house.gov/ or

http://www.gpo.gov/fdsys/

(II)

COMMITTEE ON FOREIGN AFFAIRS 

EDWARD R. ROYCE, California, Chairman 

CHRISTOPHER H. SMITH, New Jersey 

ILEANA ROS-LEHTINEN, Florida 

DANA ROHRABACHER, California 

STEVE CHABOT, Ohio 

JOE WILSON, South Carolina 

MICHAEL T. MCCAUL, Texas 

TED POE, Texas 

MATT SALMON, Arizona 

DARRELL E. ISSA, California 

TOM MARINO, Pennsylvania 

JEFF DUNCAN, South Carolina 

MO BROOKS, Alabama 

PAUL COOK, California 

RANDY K. WEBER SR., Texas 

SCOTT PERRY, Pennsylvania 

RON DESANTIS, Florida 

MARK MEADOWS, North Carolina 

TED S. YOHO, Florida 

CURT CLAWSON, Florida 

SCOTT DESJARLAIS, Tennessee 

REID J. RIBBLE, Wisconsin 

DAVID A. TROTT, Michigan 

LEE M. ZELDIN, New York 

DANIEL DONOVAN, New York 

ELIOT L. ENGEL, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

ALBIO SIRES, New Jersey 

GERALD E. CONNOLLY, Virginia 

THEODORE E. DEUTCH, Florida 

BRIAN HIGGINS, New York 

KAREN BASS, California 

WILLIAM KEATING, Massachusetts 

DAVID CICILLINE, Rhode Island 

ALAN GRAYSON, Florida 

AMI BERA, California 

ALAN S. LOWENTHAL, California 

GRACE MENG, New York 

LOIS FRANKEL, Florida 

TULSI GABBARD, Hawaii 

JOAQUIN CASTRO, Texas 

ROBIN L. KELLY, Illinois 

BRENDAN F. BOYLE, Pennsylvania

AMY PORTER, Chief of Staff THOMAS SHEEHY, Staff Director

JASON STEINBAUM, Democratic Staff Director 

SUBCOMMITTEE ON THE MIDDLE EAST AND NORTH AFRICA

ILEANA ROS-LEHTINEN, Florida, Chairman 

STEVE CHABOT, Ohio 

JOE WILSON, South Carolina 

DARRELL E. ISSA, California 

RANDY K. WEBER SR., Texas 

RON DESANTIS, Florida 

MARK MEADOWS, North Carolina 

TED S. YOHO, Florida 

CURT CLAWSON, Florida 

DAVID A. TROTT, Michigan 

LEE M. ZELDIN, New York 

THEODORE E. DEUTCH, Florida 

GERALD E. CONNOLLY, Virginia 

BRIAN HIGGINS, New York 

DAVID CICILLINE, Rhode Island 

ALAN GRAYSON, Florida 

GRACE MENG, New York 

LOIS FRANKEL, Florida 

BRENDAN F. BOYLE, Pennsylvania 

(III)

C O N T E N T S 

Page

WITNESSES 

Emanuele Ottolenghi, Ph.D., senior fellow, Foundation for Defense of Democracies ..................................................................................................................... 6

Matthew Levitt, Ph.D., Fromer-Wexler Fellow, director, Stein Program on 

Counterterrorism and Intelligence, Washington Institute for Near East Policy .......................................................................................................................... 37

Suzanne Maloney, Ph.D., interim deputy director, Center for Middle East 

Policy, The Brookings Institution ....................................................................... 48

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Emanuele Ottolenghi, Ph.D.: Prepared statement ............................................... 8

Matthew Levitt, Ph.D.: Prepared statement ......................................................... 40

Suzanne Maloney, Ph.D.: Prepared statement ...................................................... 50

APPENDIX 

Hearing notice .......................................................................................................... 62

Hearing minutes ...................................................................................................... 63

The Honorable Gerald E. Connolly, a Representative in Congress from the 

Commonwealth of Virginia: Prepared statement .............................................. 64

(1)

MAJOR BENEFICIARIES OF THE IRAN DEAL: 

IRGC AND HEZBOLLAH 

THURSDAY, SEPTEMBER 17, 2015

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON THE MIDDLE EAST AND NORTH AFRICA,

COMMITTEE ON FOREIGN AFFAIRS,

Washington, DC. 

The subcommittee met, pursuant to notice, at 2:07 p.m., in room 

2172, Rayburn House Office Building, Hon. Ileana Ros-Lehtinen 

(chairman of the subcommittee) presiding. 

Ms. ROS-LEHTINEN. The subcommittee will come to order. 

After recognizing myself and Ranking Member Deutch for 5 minutes each for our opening statements, I will then recognize any 

other member seeking recognition for a minute. We will then hear 

from our witnesses. 

And, without objection, your prepared statements, madam and 

gentlemen, your prepared statements will be made part of the 

record. 

Members may have 5 days to insert statements and questions for 

the record, subject to the length limitation of the rules. 

The Chair now recognizes herself for her remarks. 

As we confront the fallout from the Iran nuclear deal, it is important that we examine two critical networks, as they are two critical 

criminal networks—that stand to gain the most from sanctions relief: The Islamic Revolutionary Guard Corps and Iran’s proxy, 

Hezbollah. 

Made up of at least 150,000 personnel, the Revolutionary Guard 

Corps is responsible for Iran’s external and internal security, including the protection of the key strategic oil waterway, the Strait 

of Hormuz; the development of Iran’s ballistic missile program; and 

maintaining order and control of the Iranian people. 

It oversees the Quds Force, the asymmetric war and terror operators of the IRGC, who are behind the deaths of hundreds of American service men and women and coalition forces in Iraq and who 

continue to plan operations on the ground in Iraq and Syria while 

undermining our national security interests. 

The IRGC is Iran’s single largest economic actor. It owns the 

country’s largest construction company, its main telecommunications company, and controls at least 25 percent of the Tehran 

Stock Exchange. The IRGC owns and controls banks, its officials sit 

on and control the boards of private companies, and it is the primary player in the construction and infrastructure sectors as well 

as, increasingly, the energy sector. 

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Because the IRGC controls so much of the Iranian economy, it 

is poised to gain billions from the deal and Iran’s economic growth. 

When the administration argues that the Iranian regime will invest its sanctions relief into infrastructure, what they are not telling you is that the IRGC, a terror organization in its own right, 

will be the one cashing in on all the infrastructure, all the construction, all the energy projects. Companies are already lining up 

to do business with Iran, and, as the sanctions come off, more 

money will be funneled to IRGC companies, who will then turn 

right around and use that money for their nefarious activities. 

As such a big player in Iran, the IRGC has a vested interest in 

maintaining its alliance with the regime and ensuring the regime’s 

survival, both inside Iran by maintaining its authority over the 

people of Iran but also by continuing to expand regionally and fulfilling its hegemonic ambitions. 

Fulfilling those ambitions requires the continued work of the 

Quds Force—training Shia militias in Iraq, funneling funds and 

arms to Syria’s Bashar al-Assad, and supporting Houthi fighters in 

Yemen. Incredibly, the Iran deal delists and lifts certain sanctions 

from some of the same people leading these very actions, including 

the current Quds Force commander, Soleimani, and the former 

Quds Force commander and Defense Minister Vahidi. And, as we 

know, he is wanted by Interpol for his role in the AMIA Jewish 

community center bombings in Buenos Aires. 

As a matter of fact, almost half of the entire nuclear agreement 

is pages and pages of delisting of individuals, of companies, and 

vessels from the U.S. or EU sanctions list. 

The second organization that will benefit enormously from sanctions relief is one of the world’s most dangerous and capable terror 

organizations, Hezbollah. Trained, equipped, and funded by the 

Quds Force, Hezbollah is said to be responsible for some of the 

world’s most infamous terror attacks, including the 1983 U.S. Marine barracks bombing in Beirut, the AMIA Jewish community center which I just referenced, and the 1996 Khobar Towers bombing, 

just to name a few. 

A stronger Hezbollah undermines our interests in Lebanon, 

where that fragile country continues to grapple with internal strife. 

And its forces are deeply involved and critically important to Iranian efforts in Syria, helping Iran to prop up Assad and prolonging 

the chaos, the destruction, the tragedy that is spreading further 

and further outside the borders of Syria. 

Hezbollah’s leader recently reaffirmed the terror organization’s 

ideological partnership with Iran, saying that the nuclear deal 

would not stop Iran from providing it material and financial support. And now that we have lifted Iran’s arms embargo and ballistic missile sanctions, Hezbollah will soon be able to obtain even 

more sophisticated weaponry in order to carry out operations like 

the one we recently saw with a terror cell in Kuwait. 

Sanctions relief from the Iranian deal will not only free up resources for Iran to spend more on Assad, it will allow Hezbollah 

to extricate itself from Syria, where its forces have been bogged 

down, and return to its focus of its top priority and target: The 

democratic Jewish State of Israel. The possibility that Hezbollah 

will launch attacks against Israel is increasingly likely thanks to 

3

the Iran deal and Iran’s increasing capability to provide assistance 

and advanced weaponry. 

We must consider the impact of both direct and indirect sanctions relief from the Iran deal and what these additional resources 

will do for the Iranian regime’s next steps in the region, including 

what it will do for the capabilities of Iran’s proxies, like Hezbollah, 

and the consequences for our own interests and the interests of our 

allies. 

I look forward to hearing from our witnesses on exactly who and 

which entities stand to gain the most from this disastrous agreement, what we can expect next from the IRGC and Hezbollah, and 

what we here in Congress can do to prevent this from happening. 

So pleased to yield to the ranking member, Mr. Deutch of Florida. 

Mr. DEUTCH. Thank you, Madam Chairman. 

And while this is not the first hearing we have had to look at 

Iran’s sponsorship of terrorism, it takes on new significance in the 

wake of the nuclear agreement, as Iran stands to gain access to billions of dollars. 

After the Iran deal debate, it is important that the administration and my colleagues continue to be clear about the nature of this 

regime. Iran was designated a state sponsor of terror in January 

1984, after it orchestrated the deadly U.S. Embassy bombing in 

Beirut which killed 63, the horrific attack on the Marine barracks 

that killed 241 U.S. servicemembers, and the bombings of the U.S. 

and French Embassies in Kuwait. Both 1983 attacks were carried 

out by what would become Hezbollah. 

Despite the U.S. designation in 1984, in September of that year 

Hezbollah carried out another attack on the U.S. Embassy annex 

in Beirut, killing 23. It was Hezbollah that hijacked TWA Flight 

847, resulting in the death of a U.S. Navy diver. It was Hezbollah 

that bombed the Israeli Embassy in Argentina and the AMIA Jewish center in the early 1990s. 

It was a Hezbollah-linked group that bombed the Khobar Towers 

in Saudi Arabia, killing 19 U.S. Air Force personnel in 1996. It was 

Hezbollah that blew up a tourist bus of Israelis in Bulgaria in 

2012. And it was Hezbollah that attempted to carry out dozens of 

foiled terrorist attacks around the world—all of this done, of 

course, with financial and material support from, and at the direction of, the Iranian regime. 

Iran has continued to supply Hezbollah with weaponry to fight 

alongside Assad’s forces in Syria. Weapons transfers from Iran to 

Hezbollah have allowed the terrorist organization to amass an arsenal of nearly 100,000 rockets in Lebanon, with the ability to 

reach every corner of Israel. Iran’s terror proxies are directed by 

the Iranian Revolutionary Guard Corps’ elite Quds Force, led by 

the infamous general Qasem Soleimani, who has been spotted on 

the battlefields of Iraq and, according to reports, may have just recently again visited Russia, his partner in Syria. The IRGC is aiding the Houthis in Yemen and stirring unrest via their allies in 

countries throughout the Gulf. 

The IRGC is the most powerful economic actor in Iran. In fact, 

no one has benefited under sanctions more than the potentially 

hundreds of IRGC-owned companies that no longer had to deal 

4

with international competition for construction or energy projects, 

and no one will likely benefit more when these IRGC-owned companies are delisted and sector-based sanctions removed. 

Now, there are certainly disagreements over exactly what Iran 

will do with its sanctions relief. No doubt this regime, which is obsessed with its own survival, will use money to revitalize Iran’s 

economy. President Hassan Rouhani was elected on his pledges to 

bring real economic relief to the people of Iran, and, by all accounts, he wants to deliver. But it is logical that some portion of 

Iran’s newfound wealth will flow to its terror proxies. And regardless of how you feel about the nuclear deal, no one can dispute that 

Iran remains the world’s largest state sponsor of terrorism. 

Despite crushing U.S. international sanctions, Iran has sustained 

its destabilizing activity with relatively limited resources, but that 

will soon change. In fact, not only did Iran receive sanctions relief, 

but it received repeal of the arms embargo and ban on the transfer 

of ballistic missile technologies in 5 and 8 years respectively. Now 

we are faced with the reality of advanced weaponry sales to Iran 

that will undoubtedly fall into the hands of Hezbollah, Hamas, Shiite militias, and other bad actors like Al Shabaab in East Africa. 

The IRGC already possesses ballistic missile capabilities that 

threaten its neighbors. Now, in 8 years, it will be free to purchase 

technologies to advance its program. This committee held a hearing 

on Iran’s quest for intercontinental ballistic missiles earlier this 

summer, where experts testified that the only logical use for an 

ICBM is the delivery of a nuclear warhead. 

My colleagues on this committee are split on support for the 

JCPOA, but we cannot allow our already-expressed positions to 

hinder our efforts to work together to do whatever we can to block 

Iran’s ability to exploit its anticipated windfall for dangerous and 

destructive activities. 

We must now come together for a practical discussion on what 

more the United States can do to counter Iran’s destabilizing activities in the region and around the world. This means increasing 

intelligence cooperation with Gulf partners, strengthening the capabilities of our friends in the region, enhancing Israel’s qualitative 

military edge, redoubling our efforts to interdict weapons shipments, and continuing to enforce existing and to impose new sanctions against those who support terrorism or engage in human 

rights abuses. If they received nuclear proliferation sanctions relief 

under the deal but they support terror or abuse human rights, then 

the individuals or entities must continue to be sanctioned. 

I look forward to hearing from our experts today as to what steps 

the U.S. and the international community can take to blunt the impact of Iran’s newfound financial resources and the strengthening 

of the dangerous regime. 

And I yield back. 

Ms. ROS-LEHTINEN. Thank you very much, Mr. Deutch. 

Mr. Cicilline. 

Mr. CICILLINE. Thank you, Madam Chairman and Ranking Member Deutch, for calling this hearing today. 

It is absolutely critical that, as the Joint Comprehensive Plan of 

Action is implemented, Congress and the administration are relentless and vigilant in monitoring its implementation and that we 

5

work together with Israel and with our allies in Europe and the 

Middle East to combat the destabilizing activity of Iran throughout 

the region. 

In order to strengthen its implementation, Congress should introduce legislation as necessary, and I look forward to working with 

my colleagues on this committee in doing so to ensure that the necessary steps are taken. 

In particular, I have expressed to the President my strong support for an expedited renewal of the Israeli defense agreement for 

a new 10-year period. And, of course, robust funding must be provided by Congress. Additionally, Congress must provide additional 

financial resources to support the implementation and monitoring 

process through the IAEA and increase funding for U.S. intelligence and diplomatic activities. 

The administration must also develop a specific plan with the 

P5+1 and Israel to respond to any violations of the Joint Comprehensive Plan of Action by Iran and to work together to confront 

Iran’s destabilizing activities in the region. In addition, we must 

continue to aggressively pursue appropriate non-nuclear sanctions 

against individuals and organizations responsible for terrorism activity and violations of human rights. 

There is no question that the IRGC and Hezbollah will continue 

to take actions to support terrorism throughout the region, and it 

is incumbent upon the United States to ensure that we have a robust action plan to combat these activities in close cooperation with 

our allies. I look forward to hearing the witnesses’ suggestions for 

actions we can take to mitigate the dangers posed by Hezbollah 

and the IRGC. 

And I thank the witnesses for being here. 

And, with that, I yield back. 

Ms. ROS-LEHTINEN. Thank you very much, Mr. Cicilline. 

Ms. Meng of New York. 

Ms. MENG. Thank you, Chairwoman Ros-Lehtinen and Ranking 

Member Deutch, for your longstanding stellar leadership here. I 

know that you have worked closely and very hard on issues of terrorism, Iran’s funding of it, and this recent deal very closely. 

While I appreciate that many of my colleagues have voiced disapproval of the Joint Comprehensive Plan of Action during last 

week’s vote, I am troubled with the prospect of it moving forward. 

In addition to the direct outcome of the Iran deal with regards to 

nuclear capabilities, there are serious concerns about Iran’s access 

to funds, especially given their track record of funding universally 

recognized terrorist groups. 

I am interested in hearing the consequences of this deal as it relates to these beneficiaries and ways that we can mitigate any potentially disastrous outcomes. 

Thank you. I yield back. 

Ms. ROS-LEHTINEN. Thank you so much. 

And hearing no other requests for time, I am pleased to present 

our panel. 

First, we are pleased to welcome Dr. Emanuele Ottolenghi, who 

is a senior fellow at the Foundation for Defense of Democracies. 

Previously, Dr. Emanuele headed the Transatlantic Institute in 

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Brussels, and he has advised several foreign ministries in Europe 

on the subject of Iran. 

We welcome you, sir. 

Second, we welcome back a good friend of our subcommittee, Dr. 

Matthew Levitt, director of the Stein Program on Counterterrorism 

and Intelligence for the Washington Institute for Near East Policy. 

Previously, Dr. Levitt served as the Deputy Assistant Secretary of 

Intelligence and Analysis at the U.S. Department of the Treasury, 

a branch chief under the Director of National Intelligence, and a 

counterterrorism advisor to the State Department’s Special Envoy 

to the Middle East. 

Welcome back. 

And last but certainly not least, we welcome back Dr. Suzanne 

Maloney, who is the interim deputy director of the foreign policy 

program for the Brookings Institution. Dr. Maloney has served as 

an external advisor to the State Department on issues related to 

Iran. She has also served as a policy planner for the Middle East 

for the Secretary of State and the director of the Council on Foreign Relations’ task force on U.S. policy toward Iran. 

Welcome to all three. Your written remarks will be made a part 

of the record. Please feel free to summarize. 

And we will begin with you, Dr. Emanuele. 

STATEMENT OF EMANUELE OTTOLENGHI, PH.D., SENIOR 

FELLOW, FOUNDATION FOR DEFENSE OF DEMOCRACIES 

Mr. OTTOLENGHI. Thank you, Chairman Ros-Lehtinen, Ranking 

Member Deutch, and members of the committee. On behalf of FDD 

and its Center on Sanctions and Illicit Finance, I am very grateful 

for the opportunity to testify. 

Iran’s Islamic Revolutionary Guard is the regime’s top exporter 

of terrorism and a deadly instrument of domestic repression. My 

testimony describes how, regrettably, the Guards will benefit greatly from the Joint Comprehensive Plan of Action. 

The JCPOA dismantles most of the international nuclear sanctions against Iran, thereby creating a major stimulus package for 

its economy. The IRGC and the Supreme Leader’s business empire 

will be its main beneficiaries. Their economic ascendance will fortify their domestic influence. 

Although the U.S. retains the legal edifice of sanctions against 

the IRGC, it is insufficient to exclude the IRGC from this windfall 

for four reasons: First, on implementation day, just months from 

now, the JCPOA lifts or suspends sanctions against entire sectors 

of the Iranian economy. The IRGC is active in each sector. IRGC 

companies will get the lion’s share of business opportunities. 

Second, the lifting of sectoral bans will provide the IRGC easier 

access to dual-use technology in the aerospace, defense, and nuclear sectors. 

Third, on implementation day, the JCPOA will delist companies 

that assisted the IRGC’s nuclear and missile procurement efforts, 

as well as its support for Hamas and Hezbollah and for the Assad 

regime in Syria. A change of behavior was not a condition for their 

delisting. 

Fourth, most IRGC companies were never identified as such by 

EU or U.S. authorities. Treasury has listed only 19 IRGC individVerDate 0ct 09 2002 12:13 Oct 07, 2015 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 F:\WORK\_MENA\091715\96147 SHIRL
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uals, 23 companies, 4r military entities, and 2 academic institutions. The EU has listed just 25 companies. My written testimony 

names hundreds of companies owned or controlled by the IRGC 

that should have been designated. 

Absent the change in approach by Congress or the administration, the post-sanctions economic climate will likely benefit the 

IRGC because, in practice, the global business community looks to 

the U.S. Treasury for a way to assess risk. Companies seeking to 

reenter Iran will assume that what is not explicitly forbidden is allowed. 

Let me offer you the example of Iran Aluminum Company, or 

IRALCO, Iran’s largest aluminum producer. The EU sanctioned it 

in 2012 because it had assisted Iran’s nuclear procurement, including a contract to supply aluminum to Iran’s Centrifuge Technology 

Company. The U.S. never designated IRALCO, even though it is 

partially owned by an IRGC investment company that is under 

U.S. sanctions. And because IRALCO was only sanctioned for nuclear-related activities, the EU will delist it on implementation day. 

Madam Chairman, I therefore strongly recommend that, first, 

there be an increase in U.S. designations against the IRGC because 

of the IRGC’s unequivocal role in terrorism and other nefarious activities. If Congress and Treasury were to designate hundreds of 

IRGC companies before implementation day, this would send a 

very strong message to the business community contemplating Iranian contracts. 

Second, to help this process along, Congress should require 

Treasury to lower the threshold for designations. As I explain in 

greater detail in my written testimony, the IRGC has engaged in 

a pattern of obfuscation to hide its control of many corporations. 

Even with a minority share, the IRGC often controls these companies through the board of directors. Congress can also mandate 

that Treasury maintain and publish an IRGC watchlist to identify 

and report on companies that do not yet reach the designation 

threshold. 

Third, Congress should also require the State Department to designate the IRGC as a foreign terrorist organization. Designating 

the IRGC as an FTO will provide another warning to foreign companies considering business in Iran. Listing the IRGC as an FTO 

will also emphasize that the IRGC cannot be decoupled from the 

Quds Force; they are one and the same. 

Fourth, Congress can leverage future trade agreements with Europe to limit the IRGC’s operations there. Congress should require 

the Transatlantic Trade and Investment Partnership between the 

U.S. and the EU to stipulate that any European company contracting with Iran must certify that none of the business partners 

are associated in part or in whole with the IRGC, requiring also 

that the EU report annually on European companies investing in 

Iran, placing local merchant transactions under public scrutiny. At 

a minimum, Congress should encourage international corporations 

to demand an exclusion clause to halt commercial activities with all 

suspected or designated IRGC entities. 

These are just a few highlights from my written testimony. I 

thank you for the opportunity to testify, and I very much look forward to your questions. 

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[The prepared statement of Mr. Ottolenghi follows:]


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NOTE: Appendices to the above prepared statement may be found on the Internet 

at http://docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=103958


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Ms. ROS-LEHTINEN. Thank you very much for those recommendations, Doctor. 

Dr. Levitt? 

STATEMENT OF MATTHEW LEVITT, PH.D., FROMER-WEXLER 

FELLOW, DIRECTOR, STEIN PROGRAM ON COUNTERTERRORISM AND INTELLIGENCE, WASHINGTON INSTITUTE FOR 

NEAR EAST POLICY 

Mr. LEVITT. Chairman Ros-Lehtinen, Ranking Member Deutch, 

members of the committee, thank you for the opportunity to appear 

before you today to discuss the recent activities of two of the major 

beneficiaries of the Iran deal: The IRGC and Lebanese Hezbollah. 

Allow me to focus on Hezbollah. 

Iran is Hezbollah’s primary benefactor, giving the Lebanese 

party and militant group some $200 million a year, in addition to 

weapons training, intelligence, and logistical assistance. But over 

the past 18-plus months, Iran had cut back its financial support to 

Hezbollah, a collateral benefit of the unprecedented international 

sanctions regime targeting Iran’s nuclear program as well as the 

fall in oil prices. 

The cutback mostly curtailed Hezbollah’s political, social, and 

military activities inside Lebanon. Its social service institutions cut 

costs. Employees received paychecks late or were laid off. Funding 

for organizations like its satellite television station Al Manar were 

reduced. 

By contrast, Hezbollah’s Syrian operations, which have been a 

priority for Tehran given its commitment to defending the regime 

of Bashar al-Assad, have shown no sign of financial hardship. In 

fact, Hezbollah is busier than ever, especially in Syria, where it is 

engaged in expensive militant operations and support activities. 

Meanwhile, the group has expanded its regional activities further 

afield, straining its coffers, even as it had to cut back on its activities in Lebanon. With renewed funding from Iran, even a little bit 

of funding, Hezbollah would be more aggressive at home and 

abroad, challenging less militant parties across the Lebanese political spectrum and boosting its destabilizing activities outside of 

Lebanon. 

The war in Syria has dramatically changed Hezbollah. The group 

is now a regional player engaged in conflicts far beyond its historic 

area of operations. The strongest indicators of Hezbollah’s transformation are structural. Since 2013, it has added two new commands, one along the Lebanese-Syrian border and one in Syria 

itself, to its existing bases in Southern and Eastern Lebanon. 

This points to a serious commitment to conflicts well beyond Lebanon’s border. Today, there are between 6,000 and 8,000 Hezbollah 

operatives in Syria. Meanwhile, Hezbollah has transferred key personnel from its traditionally paramount southern command to 

Syria and even to Iraq and to Yemen. 

Hezbollah’s transformation into a regional actor is acutely felt by 

the group’s operatives themselves. ‘‘We should not be called Party 

of God,’’ one Hezbollah commander told the Financial Times. ‘‘We 

are not a party now. We are international. We are in Syria, we are 

in Palestine, we are in Iraq, and we are in Yemen. We are wherVerDate 0ct 09 2002 12:13 Oct 07, 2015 Jkt 000000 PO 00000 Frm 00041 Fmt 6633 Sfmt 6601 F:\WORK\_MENA\091715\96147 SHIRL
38

ever the oppressed need us. Hezbollah is the school where every 

freedom-seeking man wants to learn.’’

Meanwhile, Hezbollah remains committed to conducting terrorist 

activities around the world. And just about a year ago last September, the National Counterterrorism Center warned they remain 

concerned the group’s activities could either endanger or target 

U.S. and other Western interests, not just Israel. 

In April 2014, there was a Hezbollah operative arrested in Thailand; in November 2014, another in Peru, and this man had married an American citizen. Most recently, there was a new plot 

thwarted in Cyprus, where an individual who was a dual LebaneseCanadian citizen had stockpiled 8.2 tons of ammonium nitrate. 

And, according to Israeli investigators, Hezbollah was using Cyprus 

as a point of export from which to funnel explosives for a series of 

attacks not just in Cyprus but elsewhere in Europe. 

It is against this backdrop that sanctions relief will take place. 

And whatever amount of money Iran receives, it will presumably 

spend the bulk of these moneys on pressing domestic needs, but it 

will undoubtedly also direct substantial funding to foreign adventures. And that is something that none of us can tolerate. Even a 

small percentage of the lower-end estimates of Iran’s sanctions relief would provide a windfall to its proxies. 

In all likelihood, Iranian support for such behaviors will only increase in the wake of a deal. Iranian leaders who backed the deal 

will likely feel the need to prove their anti-American and pro-revolutionary bona fides, especially since the deal is widely seen in Iran 

as a victory for Rouhani and his allies over the IRGC and 

hardliners. 

It is important to note, also, that we are losing at least one critical tool to combat Hezbollah’s financing. In March 2014, thenTreasury Under Secretary David Cohen touted the collateral counterterrorism benefit of counterproliferation sanctions targeting 

Iran’s banking and oil sections. He said, and I quote:

‘‘In fact, the success of our unprecedented Iran sanctions regime, including sanctions on Iranian financial institutions and 

Iran’s ability to sell its oil, has had the collateral benefit of 

squeezing Tehran’s ability to fund terrorist groups such as 

Hezbollah.’’

That will no longer be the case even as Iran remains, in the words 

of the Financial Action Task Force, an ongoing and substantial 

money-laundering and terror-financing risk. 

A few weeks ago, a Saudi Hezbollah operative, Ahmed alMughassil, was detained in Lebanon. He was the mastermind of 

the 1996 Khobar Towers bombing. Hopefully, this is going to lead 

to a whole lot more intelligence-sharing between us and our Gulf 

allies. It should reveal a tremendous amount of information about 

Hezbollah, Lebanese Hezbollah, Saudi Hezbollah’s connections to 

the IRGC. 

One area of inquiry and action that could yield particularly positive results would be to target in fairly quick suggestion a variety 

of Hezbollah front companies and logistics nodes around the world. 

The theme of my written testimony is that Hezbollah relies heavily 

39

on such fronts to carry out its operations from Europe to Iraq, from 

China to Dubai. 

But that can’t be all we do. As Emanuele said, we need to also 

designate IRGC and Quds Force elements, as well, or the Iranians 

will feel that all we are doing is targeting their other proxies. 

There are many areas of the Iran deal that warrant close attention as the deal moves toward implementation. Contending with 

what Secretary of the Treasury Jack Lew referred to as ‘‘Iran’s 

menacing behavior,’’ in particular through the Quds Force and 

Hezbollah, must be at the top of the list. Failure to do so would 

not only undermine the logic of the Iran deal as articulated by the 

administration, it would add to the very real trust deficit currently 

affecting our relationships with allies both in the region and 

around the globe. 

Thank you very much. 

[The prepared statement of Mr. Levitt follows:]

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Ms. ROS-LEHTINEN. Thank you, Dr. Levitt. 

Dr. Maloney? 

STATEMENT OF SUZANNE MALONEY, PH.D., INTERIM DEPUTY 

DIRECTOR, CENTER FOR MIDDLE EAST POLICY, THE 

BROOKINGS INSTITUTION 

Ms. MALONEY. Chair Ros-Lehtinen, Ranking Member Deutch, 

members of the committee, thank you so much for the opportunity 

to appear before the committee today on this very important issue. 

The wide-ranging sanctions relief incorporated in the Iran nuclear deal has elicited what I believe to be a widely shared sense 

of affront at the appearance of rewarding Tehran after decades of 

bad behavior. And this is magnified by the irony that Washington 

is being forced to effectively cede the most effective instrument in 

its policy toolbox, the sanctions regime, at the very moment when 

its efficacy has finally been confirmed, even as some of the most 

strategically relevant aspects of the Iranian challenge remain 

unabated. That unescapable reality underscores the importance of 

identifying and implementing new mechanisms for addressing 

Iran’s problematic regional policies. 

Let me emphasize just two aspects of my written testimony. The 

first is the question of what Tehran will do with the money that 

it receives from the sanctions relief and the new trade and investment that is facilitated by the post-deal context. 

The public discussion of the deal and its provisions have tended 

to emphasize the availability of new resources for Tehran’s support 

of terrorist groups and other violent proxies, as well as its assiduous efforts to extend its influence across the region. However, it 

should be acknowledged that the most pressing needs facing 

Tehran today are not those related to its regional posture but to 

its domestic economy. 

The sanctions regime that was so effective in succeeding in shifting Iran’s approach and changing its longstanding nuclear recalcitrance did not come as a result of restrictions that impeded its 

ability to sustain its regional policies but, rather, because of the 

more immediate and potentially unsettling implications for the stability and the survival of the regime at home. The sanctions were 

felt far more immediately and more profoundly by the average Iranian than by the average beneficiary of Tehran’s terror subsidies. 

And it was these concerns about the erosion of Iran’s economic 

base and the legitimacy of the system that generated the decision 

to negotiate in full seriousness and the elevation of Hassan 

Rouhani. For this reason, it is important to appreciate that the domestic requirements and priorities will loom large in the allocation 

of deal-related windfalls that will accrue to Tehran over the course 

of the next year. Rouhani is keenly concerned with Iran’s dire economic predicament. Rehabilitation is ranked at the top of his agenda, in parallel with the nuclear file. 

This isn’t simply a matter of policy preferences for Rouhani and 

his team. Iran has real politics, and its population is impatient to 

reap the peace dividend that it was promised more than 2 years 

ago when they elected Rouhani to the Presidency with the expectation of an end to the nuclear impasse. 

49

Let me also speak to the question of how sanctions relief will impact Iran’s regional policies. Unfortunately, the long-term track 

record is clear: 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 at times of epic sanctions and economic constraints. 

These policies were initiated during the early post-revolutionary 

period, just at the moment that Iran’s economy reached its lowest 

point as a result of revolutionary chaos and upheaval and the eventual Iraqi invasion of Iran and throughout the long, brutal, and 

costly war that followed. In fact, many of Iran’s worst regional 

abuses took place during this first decade, mentioned during the 

chair and the ranking member’s statements: The cultivation of 

Hezbollah, the 1983 and 1984 bombings, and the direct and deadly 

assistance to subversive groups around the region. 

The same trends have held course over the past decade as externally imposed economic pressures as well as the fall in oil prices 

have reached or even surpassed the heights of the hardships during the war. Sanctions have provided no remedy to Iran’s efforts to 

extend its influence through nefarious activities and allies and its 

substantial investment in fueling and fighting conflicts in Iraq and 

Syria. 

Even since 2010, as the world has targeted Iran’s regional power 

projection and its support for terrorist proxies, there is little evidence that sanctions have impeded Iran’s most destabilizing policies. 

So the question that concerns the committee today is, what can 

we do? My colleagues have, I think, provided a number of important and constructive recommendations. Sanctions relief will undoubtedly exacerbate the challenges that we face, but the nuclear 

deal takes one of the most pressing aspects of the problem off the 

table at least for the next decade. 

This provides us an opportunity to construct a bipartisan approach here at home and to, for the first time in the history of the 

Islamic Republic, really create a multilateral, durable alliance that 

addresses the regional challenge that Iran poses. 

Thank you. 

[The prepared statement of Ms. Maloney follows:]

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Ms. ROS-LEHTINEN. Thank you very much. 

And we have just been called to the House floor for a series of 

votes, but we will not be able to come back. I will turn in my questions to you. If I can give you a homework assignment, to answer 

these for me, I would appreciate it. 

And let me turn to Mr. Cicilline in the remaining time for the 

questions. He is recognized. 

Mr. CICILLINE. Thank you, Madam Chair. 

And thank you again to our witnesses. 

I am interested, Dr. Maloney, you said that Iran’s support for 

terrorism has never been determined by availability of resources, 

which suggests that the advent of additional resources—I guess, 

explain, sort of, what you mean by that before I——

Ms. MALONEY. I think simply if you look at the long-term track 

record of the Iranian regime has done around the region, it has not 

been dictated by either the availability of or the lack of availability 

of funds. And, in fact, we have seen the intensification of its worst 

policies, whether it is in Lebanon, Iraq, or in Syria, at times of 

greatest economic pressure. The regime always finds ways to fund 

the guns; it is the butter at home that suffers. 

Mr. CICILLINE. And certainly the argument has been made that 

there will be some pressure on Rouhani and the regime to respond 

to some of the very pressing domestic issues that face the Iranian 

people. But I would ask each of the witnesses, what are the 

things—you know, presuming some portion of the sanctions relief 

will be directed to activities that Iran is currently engaged in in the 

region, destabilizing activities, and presumably some increase in 

that, what are the best things that we can do, that Congress can 

do, to help mitigate the impact of those activities, reduce the likelihood that they will happen, or impose significant costs on Iran for 

engaging in that activity? What would you recommend as the one 

or two things, actions we can take as a Congress to respond to 

that? 

I guess start from left to right. 

Mr. OTTOLENGHI. Thank you, sir. 

I would suggest three things. 

The first is that you retain, both Congress retains and the administration retains, legal instruments to go after entities involved 

in aiding and supporting terrorism. And these instruments also 

allow you to prod and press allies who in this current climate may 

be less inclined to take action. 

One clear example is the case of the Iranian private airline 

Mahan Air. Mahan Air has been an accessory to Assad’s war 

crimes by transporting weapons and personnel, including foreign 

militias, back and forth from Iran to Syria. It continues to do so, 

as far as my record tells me. The latest flight happened 2 days ago. 

So they are not deterred. 

Now, the problem with Mahan Air is that is only under U.S. 

sanctions. Europeans have never sanctioned Mahan Air, and, in 

the current climate, Mahan Air is actually expanding its destinations in Europe. So——

Mr. CICILLINE. I want to give the other witnesses—but you said 

you had three things. If you could just tick them off. 

Mr. OTTOLENGHI. Yes. 

59

The second thing is that a lot of the funds that will go to economic projects in Iran will actually be allocated through public contracts and vendors to IRGC companies. So this will be an indirect 

way to help IRGC companies get funds. 

And the third thing is that a lot of the IRGC personnel has never 

been sanctioned, will not be affected by travel bans, so will be a 

lot more free to travel around the world in procurement efforts. 

Again, going after these individuals more vigorously will help contain their activities. 

Mr. CICILLINE. Thank you. 

Dr. Levitt? 

Mr. LEVITT. Thank you. 

In brief, I would just say I completely agree with Dr. Maloney 

that Iran has funneled money, whether it had it or not, to these 

types of activities. But it is true that when they have had more 

money they have funneled more. As I noted, they have cut back on 

Hezbollah’s budget, and we expect that to pop up again. 

The general theme here is that there has to be a cost. We have 

never incurred serious costs, political costs, for actual acts of terrorism—not after the Marine barracks, not after the Embassy, not 

after Khobar. It would be very interesting to see what happens 

after we get more information out of Mughassil to see what happens then. 

There is a tremendous amount of work to be done, as Emanuel 

suggested, with the Europeans—formally, in terms of helping them 

understand the structure, how serious we are about this, and then 

informally. 

And Treasury Department swears up and down, and I believe 

them, that they intend to go on new dog-and-pony shows of the 

kind that I went out on when I was the DAS for intel to educate 

people about the risks of doing business with Iran. We can no 

longer tell people, ‘‘Don’t do business with Iran,’’ but we sure can 

highlight the risks. And the risks are massive, because the IRGC 

is more embedded in the Iranian economy now than it ever was before. And this would be very effective. 

Mr. CICILLINE. Dr. Maloney, I think I have a few seconds left. 

Ms. MALONEY. Very quickly, the focus, as Matt has just said, on 

building a real coalition with Europe, I think, is the kind of 

kryptonite that we need to go after Iran on these issues. We have 

spent 36 years trying to find a way to impede Iran’s support for 

terrorism. What worked on the nuclear issue was that kind of 

international multilateral coalition. 

Mr. CICILLINE. Thank you. 

I thank the chairman. 

Ms. ROS-LEHTINEN. Thank you so much. 

And I will just make a last statement before we go vote. The administration has attempted to assuage concerns that Iran will not 

use its sanctions relief to support terror, that the money is already 

tied up in other ventures. But, as we have heard, the IRGC is one 

of the major actors of the Iranian economy, with a presence in 

nearly every sector. 

Administration officials also tell us that U.S. sanctions against 

IRGC and its officials will not be lifted. However, it is clear that 

we have only scratched the surface when it comes to sanctioning 

60

IRGC companies. As you pointed out, all of the subsidiaries—and 

their subsidiaries are not under sanctions like their parent companies. And so how effective can our remaining sanctions be if these 

subsidiaries remain free from sanctions? 

So we will leave that intriguing topic for the next hearing. Thank 

you so much, ladies and gentlemen. 

And, with that, our subcommittee is adjourned. 

[Whereupon, at 2:45 p.m., the subcommittee was adjourned.] 

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