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74–238PDF 2012

IRAN SANCTIONS: STRATEGY, IMPLEMENTATION,

AND ENFORCEMENT

HEARING

BEFORE THE

COMMITTEE ON FOREIGN AFFAIRS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

SECOND SESSION

MAY 17, 2012

Serial No. 112–161

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 

ILEANA ROS-LEHTINEN, Florida, Chairman 

CHRISTOPHER H. SMITH, New Jersey 

DAN BURTON, Indiana 

ELTON GALLEGLY, California 

DANA ROHRABACHER, California 

DONALD A. MANZULLO, Illinois 

EDWARD R. ROYCE, California 

STEVE CHABOT, Ohio 

RON PAUL, Texas 

MIKE PENCE, Indiana 

JOE WILSON, South Carolina 

CONNIE MACK, Florida 

JEFF FORTENBERRY, Nebraska 

MICHAEL T. MCCAUL, Texas 

TED POE, Texas 

GUS M. BILIRAKIS, Florida 

JEAN SCHMIDT, Ohio 

BILL JOHNSON, Ohio 

DAVID RIVERA, Florida 

MIKE KELLY, Pennsylvania 

TIM GRIFFIN, Arkansas 

TOM MARINO, Pennsylvania 

JEFF DUNCAN, South Carolina 

ANN MARIE BUERKLE, New York 

RENEE ELLMERS, North Carolina 

ROBERT TURNER, New York 

HOWARD L. BERMAN, California 

GARY L. ACKERMAN, New York 

ENI F.H. FALEOMAVAEGA, American 

Samoa 

BRAD SHERMAN, California 

ELIOT L. ENGEL, New York 

GREGORY W. MEEKS, New York 

RUSS CARNAHAN, Missouri 

ALBIO SIRES, New Jersey 

GERALD E. CONNOLLY, Virginia 

THEODORE E. DEUTCH, Florida 

DENNIS CARDOZA, California 

BEN CHANDLER, Kentucky 

BRIAN HIGGINS, New York 

ALLYSON SCHWARTZ, Pennsylvania 

CHRISTOPHER S. MURPHY, Connecticut 

FREDERICA WILSON, Florida 

KAREN BASS, California 

WILLIAM KEATING, Massachusetts 

DAVID CICILLINE, Rhode Island 

YLEEM D.S. POBLETE, Staff Director 

RICHARD J. KESSLER, Democratic Staff Director 

(III)

C O N T E N T S 

Page

WITNESSES 

The Honorable Mark D. Wallace, president and chief executive officer, United 

Against Nuclear Iran (former United States Representative to the United 

Nations for Management and Reform) ............................................................... 11

Mr. Mark Dubowitz, executive director, Foundation for Defense of Democracies ..................................................................................................................... 20

Ray Takeyh, Ph.D., senior fellow for Middle Eastern Studies, Council on 

Foreign Relations ................................................................................................. 34

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

The Honorable Mark D. Wallace: Prepared statement ........................................ 13

Mr. Mark Dubowitz: Prepared statement .............................................................. 22

Ray Takeyh, Ph.D.: Prepared statement ............................................................... 36

APPENDIX 

Hearing notice .......................................................................................................... 66

Hearing minutes ...................................................................................................... 67

The Honorable Ileana Ros-Lehtinen, a Representative in Congress from the 

State of Florida, and chairman, Committee on Foreign Affairs: Material 

submitted for the record ...................................................................................... 69

The Honorable Allyson Schwartz, a Representative in Congress from the 

Commonwealth of Pennsylvania: Prepared statement ..................................... 72

The Honorable Christopher H. Smith, a Representative in Congress from 

the State of New Jersey: Prepared statement ................................................... 73

Written responses from Mr. Mark Dubowitz to questions submitted for the 

record by the Honorable Connie Mack, a Representative in Congress from 

the State of Florida .............................................................................................. 74

(1)

IRAN SANCTIONS: STRATEGY, 

IMPLEMENTATION, AND ENFORCEMENT 

THURSDAY, MAY 17, 2012

HOUSE OF REPRESENTATIVES, COMMITTEE ON FOREIGN AFFAIRS, Washington, DC. 

The committee met, pursuant to notice, at 10 o’clock a.m., in 

room 2172 Rayburn House Office Building, Hon. Ileana RosLehtinen (chairman of the committee) presiding. 

Chairman ROS-LEHTINEN. The committee will come to order. 

After recognizing myself and the ranking member, Mr. Berman, for 

7 minutes each for our opening statements on today’s hearing topic, 

I will recognize the chairman and ranking member of our Middle 

East and South Asia Subcommittee for 3 minutes each for their 

opening statements. I will then recognize any member for 1-minute 

opening statements. We will then hear from our witnesses. Thank 

you, gentlemen. 

And I would ask that you summarize your prepared statements 

into 5 minutes each before we move to the question and answers 

with members under our 5-minute rule. 

Without objection, the prepared statements of the witnesses will 

be made part of the record, and members may have 5 days to insert statements and questions for the record subject to the length 

limitation in the rules. 

I would like to point out that we are privileged and honored to 

have a distinguished group of Americans with us in the audience. 

They are the loved ones, the survivors from the terrible bombing 

of the Marine barracks in Beirut, Lebanon that occurred in October 

1983 that resulted in 241 dead and we are working for justice for 

them. If you could stand up and let us applaud you. Thank you. 

Thank you, ladies and gentlemen, for joining us today. 

The Chair now recognizes herself for 7 minutes for an opening 

statement. 

Today’s hearing is part of a broader oversight effort by the committee to examine U.S. policy options to address the Iranian threat. 

And this particular hearing will focus on U.S. policy and sanctions 

implementation and enforcement. Economic sanctions are inflicting 

damage on Iran’s long-term oil production potential. 

Continuous reinvestment in upstream production is required to 

offset a natural decline. Sanctions on Iran’s oil industry and its 

banking system are curtailing foreign partnerships that the Iranian oil industry has relied upon. 

With these trends in place, it is not unreasonable to contemplate 

the end of net oil export from Iran within a few years and its reVerDate 0ct 09 2002 13:47 Aug 29, 2012 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 F:\WORK\FULL\051712\74238 HFA PsN: SHIRL
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sulting effect on government finances, on foreign exchange earnings, and presumably the larger economy. But much more remains 

to be done. 

I am deeply concerned that the administration’s foolish embrace 

of yet another round of negotiations will only embolden the regime. 

The administration has made already concession after concession 

in its negotiations with Iran only to come up empty handed. 

The Iranian approach seems to be what is mine is mine, and 

what is yours is negotiable. Unfortunately, the administration 

seems to be playing along. 

Last month the Los Angeles Times reported that U.S. officials 

are now willing to let Iran continue enriching uranium in the face 

of multiple U.N. Security Council resolutions demanding that Iran 

immediately halt uranium enrichment. Rather than embarking on 

this dangerous and foolhardy course, we must accelerate and expand our sanctions to compel the Iranians to verifiably and permanently abandon their dangerous policies. 

We know what must be done, and today we are here to explore 

what additional measures we must take in order to achieve our 

vital national security objectives. 

Ambassador Wallace, thank you for joining us today. I would 

greatly appreciate your views on what additional measures we can 

take to prevent insurance and reinsurance companies that operate 

in the U.S. from providing services to entities that facilitate Iran’s 

ability to trade or develop its energy and infrastructure projects. 

Also, what specific disclosure requirements are currently required? 

Have they been implemented, and what additional measures can 

and should we pursue? What additional measures beyond sanctioning the National Iranian Tanker Corporation do you recommend taking to effectively sanction the Iranian energy sector, 

both crude oil and downstream petrochemical products? 

Additionally, we have previously discussed the idea of mandating 

that automakers receiving Federal Government contracts must certify with the U.S. Department of Transportation that they are not 

engaged with business in Iran, or engaged in the implementation 

of any agreement with Iranian entities. So, if you could elaborate 

on your estimates of the impact that this action would have on the 

coffers of the regime. 

And, Mr. Dubowitz, thank you also for joining us with your 

smashed shoulder and all. And I would greatly appreciate your 

thoughts on two specific issues. With respect to sanctions against 

Iranian shipping, you state in your testimony, ‘‘Sources reveal that 

China, in the past few weeks, has engaged in covert purchases of 

Iranian oil estimated to be about 1 million barrels in excess of their 

committed purchased volumes under agreement between Chinese 

traders and the national Iranian Oil Company.’’ You said, ‘‘This 

may be one reason for the Iranian decision to turn off ship locating 

systems so that Western authorities cannot track those shipments.’’ 

And lastly, you state, ‘‘Iran may also be reluctant to expose the extent of their floating storage, which is a sign of the difficulty they 

may be facing in selling their oil.’’

Now, Iranian tankers have been turning off their onboard vessel 

tracking systems even though the International Maritime Organization requires that those systems stay on. Can multilateral acVerDate 0ct 09 2002 13:47 Aug 29, 2012 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 F:\WORK\FULL\051712\74238 HFA PsN: SHIRL
3

tions be taken against the National Iranian Tanker Company to 

penalize Iran for its activities? And what specific role does the National Iranian Tanker Company play within the IRGC supply 

chain? 

And, additionally, you recommend that the United States pass 

measures to establish the U.S. as an Iranian oil-free zone to provide U.S. leverage in enforcing the EU oil embargo. What is the 

projected impact of this course of action on the regime’s finances? 

And could you also comment on the possible impact of integrating 

prohibitions on the purchases of Iranian oil futures contracts into 

the Iranian Sanctions Act structure? 

And, Mr. Takeyh, you make the cogent observation in your written testimony that a multi-staged diplomatic process plays into the 

Ayatollah’s inclination to simply muddle through, or to quote you, 

‘‘as he can trade some modest compromises for a measure of sanctions relief.’’ You add that this helps the regime protect the essential aspects of its nuclear program while gaining some breathing 

room. If you could expand upon your statement, and what modest 

compromises do you believe the Iranians will attempt to trade for 

this actions relief? What are the essential aspects of the nuclear 

program, and what measures do you recommend that congress take 

to counter these efforts? 

Unfortunately, time is of the essence, and this year may mark 

our last chance to prevent Iran from crossing the nuclear threshold. History has taught us that failing to act, and relying on hope, 

when threatened by a deadly foe like Iran, usually ends in an 

avoidable tragedy. 

Iran’s nuclear weapons program, its unconventional and ballistic 

missile development programs, and its political and military involvement across the Middle East and South Asia, and indeed in 

our own hemisphere, is a force to be reckoned with. We must take 

the necessary measures through sanctions development, implementation and enforcement that will finally address the threat posed 

by the Iranian regime. 

Again, I thank you gentlemen for appearing before the committee 

today. I look forward to your testimony. 

I now turn to my good friend, the ranking member, Mr. Berman 

of California. 

Mr. BERMAN. Well, thank you very much, Madam Chairman, for 

calling this timely hearing on Iran sanctions. In less than 1 week, 

representatives of the five permanent members of the U.N. Security Council and Germany, the so called P5+1, will meet with Iranian negotiators in Baghdad in pursuit of a resolution to the ongoing nuclear problem. 

The administration has appropriately pursued a two-track approach, diplomacy and pressure. Those tracks are supposed to be 

mutually reinforcing, but most people agree that it is the pressure 

track that has brought Iran back to the table. 

The point of sanctions has always been an effort to change Iran’s 

calculus in pursuing a nuclear weapons program. Without rigorous 

enforcement, sanctions have no value. Let us be clear, the Obama 

administration has done far more than any previous administration 

to implement U.S. sanctions and to build support for multilateral 

sanctions. 

4

For more than a decade we urged successive administrations to 

follow the law and implement sanctions against energy companies 

that invest in Iran, but to no avail. Now, with the implementation 

of CISADA, all of the major oil companies have ceased developing 

energy fields in Iran. The EU is about to implement a boycott on 

the purchase of Iranian crude, and Tehran is finally financially isolated, reduced in some cases to signing barter agreements in order 

to sell its oil. 

The administration has rallied the international community, and 

especially the European Union, to tighten its sanctions against 

Iran’s nuclear weapons program in an unprecedented fashion. 

As we all know, congressional focus on sanctions has been crucial 

in this regard with this committee leading the way. That said, the 

administration has yet to use all the tools at its disposal. The sanctions have had an impact on Iran’s economy, but they are still far 

from crippling. With oil prices so high, Iran is still expected to earn 

significant oil revenue this year. 

In addition, some nations have not been as helpful as they 

should be in terms of enforcing sanctions. Take China, for example. 

Chinese oil companies continue to buy Iranian oil. Chinese Oil 

Services Company is still helping Iran develop its oil fields. Chinese banks continue to finance sanctionable transactions with Iran, 

and Chinese shipyards are building oil tankers for Iran. It is time, 

in fact, it is long past time to impose sanctions on the entities involved in these activities. 

Last year this committee marked up and the House passed the 

Iran Threat Reduction Act which strengthens our sanctions regime 

in several ways. For example, it would ban foreign subsidiaries of 

American firms from engaging in commerce with Iran, just like 

their American parent companies. But if we are to persuade Iran 

to suspend uranium enrichment and end its quest for nuclear 

weapons, we must do more than pass legislation. That legislation 

must also be implemented and enforced. 

With regard to negotiations, the most immediate goal of the talks 

must be to turn back the nuclear clock to set back Iran’s timetable 

for achieving nuclear weapons capability. Some have suggested the 

possibility of an interim agreement where Iran would agree to ship 

out its most highly enriched uranium and agree to close its underground bunker facility near Qom, Fordo, which is set up for production of high-grade enriched uranium and may be virtually impervious to conventional military attack. 

That would be a useful start, but I think it is important to make 

clear that such an agreement would not warrant the easing of 

sanctions. And most importantly, I believe we should not compromise on the fundamental goal demanded by the Security Council six separate times since 2006, that Iran fully suspend its uranium enrichment. 

In a New York Times article earlier this week, an Iranian advisor to Supreme Leader Khamenei gloats that the Iranian regime 

through sheer passage of time has won Western acquiescence to its 

uranium enrichment program. The headline of the article which accurately characterized the official’s view was, ‘‘Iran See Success in 

Stalling on Nuclear Issue.’’

5

The official posted that Iran has ‘‘managed to bypass the redlines 

the West has created for us.’’ Well, we need to make clear that Iran 

is not going to wear us down. We are going to insist on full and 

sustained suspension of enrichment. We are going to demand that 

Iran answer all of the outstanding questions about the history of 

its nuclear weapons program; questions asked repeatedly by the 

International Atomic Energy Agency, questions that Iran has been 

stonewalling for years. We are going to insist on far more intrusive 

inspections; otherwise, we will keep moving forward with stronger 

and tougher sanctions. 

I am eager to hear the witnesses’ assessments as to how effective 

the current sanctions regime is, how effectively the sanctions have 

been implemented, and what other sanctions we in Congress 

should pursue. But most of all, I would like to hear their thoughts 

on whether and how the sanctions are achieving our primary goal, 

ending Iran’s nuclear weapons program once and for all. 

I yield back, Madam Chair. 

Chairman ROS-LEHTINEN. Thank you very much, Mr. Berman. 

Please yield 3 minutes to the chairman of the Subcommittee on the 

Middle East and South Asia, Mr. Chabot of Ohio. 

Mr. CHABOT. Thank you, Madam Chairman, for calling this timely and important hearing. I look forward to hearing the testimony 

of the witnesses here today. 

I remain very skeptical about the administration’s current policy 

which continues to be a combination of engagement and pressure. 

The theory, as I understand it, is that if we are able to put enough 

pressure on the Iranian regime, not the people but the regime, we 

may be able to alter its calculation, and either entice it or coerce 

it into negotiating away the nuclear program that it continues to 

pour resources into. 

We are, however, now over 3 years into this policy, and as far 

as I can tell, the regime is no closer to complying with its international obligations. Nevertheless, the administration continues to 

pursue this questionable policy, the next chapter of which will play 

out in 6 days at the next round of negotiations. 

I don’t think I am alone when I say that I will not be holding 

my breath for a breakthrough, at least not a real one, but I am concerned that the administration is so desirous of progress that it 

may end up manufacturing through unwise concessions something 

it can parade around as success. 

Along these lines, I was deeply disturbed to read recently that 

according to one report the administration ‘‘might agree to let Iran 

continue enriching uranium up to 5 percent purity.’’ The Non-Proliferation Treaty may give its signatories the right to peaceful nuclear energy, but it does not give them the right to the full nuclear 

fuel cycle, including domestic enrichment. 

Allowing Iran to enrich on its own soil even with the appropriate 

safeguards would allow the regime to continue to stockpile low-enriched uranium and would bring it ever closer to a breakout capability. Just this morning I read a report which suggests that Iran 

is installing additional centrifuges at an underground facility. 

As one analyst recently noted, getting within weeks of acquiring 

a bomb by making nuclear fuel, especially when doing so is unecoVerDate 0ct 09 2002 13:47 Aug 29, 2012 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 F:\WORK\FULL\051712\74238 HFA PsN: SHIRL
6

nomical and is now tactically required in order to produce nuclear 

power ought not to qualify as peaceful nuclear energy. 

As I have said before, it is my belief that Iran’s nuclear program 

is a symptom of the disease rather than the disease itself. I want 

to be clear, Iran’s illicit nuclear program is a paramount challenge 

to U.S. core national security interests and it must be addressed. 

But to speak of a nuclear program independently of the regime 

which pursues it is to put the cart before the horse. A nuclear program is not in and of itself what makes the regime nefarious, it is 

the perverse nature of the regime that makes the nuclear program 

so dangerous. And it is my belief that any regime that threatens 

to wipe Israel off the map or so wantonly shirks its international 

obligations cannot be allowed to enrich on its own soil. 

As we sit here today, Iran’s centrifuges continue to spin and the 

regime inches closer to a nuclear weapons capability. That we 

would permit this is anathema to me, and I yield back. 

Chairman ROS-LEHTINEN. Thank you very much, Mr. Chabot. 

Honored to yield 3 minutes to the ranking member of the same 

subcommittee, Mr. Ackerman of New York. 

Mr. ACKERMAN. I think it important that we consider the context 

in which both the upcoming P5+1 negotiations and the sanctions 

are taking place. 

There has been bipartisan concern about this issue since the 

1990s. Some of us here voted on a bipartisan basis for the first 

sanctions investment in Iran’s petroleum sector, and we have been 

working together on this committee to strengthen those sanctions 

ever since. 

Bipartisan frustration regarding the implementation of those 

sanctions by the Clinton and Bush administrations culminated almost 2 years ago with the passage of the Comprehensive Iran 

Sanctions Accountability Divestment Act which significantly boosted pressure on Iran. 

But more than just supporting CISADA, the Obama administration broke with its predecessors which, unfortunately, viewed further U.S. sanctions an unwelcome impediment. In contrast, the 

Obama administration, wisely in my view, embraced sanctions as 

a critical element of a comprehensive strategy, and skillfully unified the international community as never before behind our policy 

of seeking to engage Iran while also cranking up serious pressure 

on the Ayatollah’s regime to back down. 

The Obama administration has worked to make sanctions more 

effective by improving U.S. enforcement, enhancing international 

participation and successfully moving a Sanctions Resolution, one 

with further unilateral sanction supporting language through the 

United Nations Security Council. 

Previously, we had painless sanctions, feckless negotiations, and 

no real leverage. Iran was seen as a rising power in the Middle 

East and the United States was seen as failing in a morass of endless war in Iraq and Afghanistan. 

Today, the picture is nearly 180 degrees reversed and that is no 

accident. While our economy continues to add jobs, Iran’s economy 

has been choked by sanctions that are only getting stronger, and 

the bottom has fallen out of their currency. 

7

Rather than being mired in Iraq, we have successfully disengaged militarily. We are reducing our liabilities in Afghanistan, 

far from being viewed as the vanguard of a new Middle East built 

upon the so called axis of resistance, Iran has made itself the 

enemy of the Arabs by aiding the Assad regime’s slaughter and terror. 

Admittedly, I have low expectations for the upcoming negotiations, but only because I have such low expectations of Iran’s leaders. Unfortunately, I think they would rather see their own country 

fail than accept any deal, no matter how reasonable. But even 

though I doubt Iran will negotiate in good faith, I believe we must 

continue as we have by strengthening, sharpening, and broadening 

sanctions, by improving international cooperation on their enforcement, and by insuring that we have a truly viable military option 

so that no matter what Iran absolutely does, not acquire a nuclear 

weapons capability. The bottom line is that, and the mullahs need 

to know it. 

Chairman ROS-LEHTINEN. Thank you so much, Mr. Ackerman. 

We will now move to the 1-minute statements by our members. 

Pleased to yield to Mr. Smith, the chairman of the Subcommittee 

on Africa, Global Health, and Human Rights. 

Mr. SMITH. I thank my good friend, the distinguished chair. 

Madam Chair, a nuclear weapons capable Iran poses an unprecedented and absolutely unacceptable threat to Israel, its neighbors, 

the United States, Europe, the world. Some have naively suggested 

that the Mutually assured destruction Theory or MAD theory that 

mitigated the threat of nuclear annihilation with the Soviet Union 

is somehow applicable to a nuclear Iran. It isn’t. Unlike Moscow’s 

penchant for survival, the Iranian dictatorship savors, even welcomes individual and mass suicide as somehow noble and worthy 

of eternal paradise. 

I congratulate Chairman Ros-Lehtinen and the ranking member 

Howard Berman for working tirelessly to strengthen sanctions, especially the potentially most effective sanction of all, shutting down 

Iran’s banking capabilities. 

In his testimony, Ambassador Mark Wallace says, ‘‘First we must 

fully end Iran’s access to international banking system.’’ I couldn’t 

agree more. 

Chairman ROS-LEHTINEN. Thank you. Mr. Sherman, the ranking 

member on the Subcommittee on Terrorism, Nonproliferation, and 

Trade. 

Mr. SHERMAN. I agree with Mr. Chabot that non-nuclear states 

do not have the right to the full fuel cycle under the NPT, but with 

Iran, there is another reason; they are already a violator of the 

NPT and should not be allowed to enrich. 

It is said that this administration has done more than prior administrations. That is way too low a standard. It is like we used 

to have the record spinning at 33 revolutions for an LP, and now 

we have adjusted it up to that old 78. The centrifuges spin at 

90,000 revolutions per minute, and we have to have sanctions that 

move just as fast. 

We need, and I hope to have co-sponsors in this committee of my 

bill to punish those banks in swift, that do not vote for the complete shutoff of all Iranian banks from the inter-bank communicaVerDate 0ct 09 2002 13:47 Aug 29, 2012 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 F:\WORK\FULL\051712\74238 HFA PsN: SHIRL
8

tion system, and it is time for the administration to sanction all 

Iranian banks, not just the Central Bank. There is so much more 

we could do and so little time to do it. I yield back. 

Chairman ROS-LEHTINEN. Thank you, sir. Mr. Rohrabacher is 

recognized, chairman of the Subcommittee on Oversight and Investigations. 

Mr. ROHRABACHER. Thank you very much, Madam Chairman. 

Thank you for holding this hearing. 

It is time for us to admit that our strategy about Iran, a nuclear 

armed Iran, is not working. I mean, here we are. It just keeps getting worse and worse, closer and closer to the time when Iran, 

these mullah, the crazy mullah regime will have a nuclear weapon. 

We have focused actively on China, on our allies, on U.S. corporations, we have focused on economic sanctions, diplomatic pressures, negotiations with the mullahs themselves, but we left out 

the significant player who could make the difference, how about 

the Iranian people? This administration has been noticeably quiet 

when the first Arab Spring demonstrations happened where, in 

Tehran. We didn’t even give them any support. We haven’t supported any of those elements in Iran. We are willing to fight 

against the mullah regime. That would be the most successful 

strategy, but yet we have been talking about China trying to enlist 

our allies, doing everything but going to the people and forming an 

alliance with those people who could make a difference. Thank you 

very much, Madam Chairman. 

Chairman ROS-LEHTINEN. Thank you. Mr. Sires of New Jersey is 

recognized. 

Mr. SIRES. Madam Chair, I don’t have a statement at this time. 

Chairman ROS-LEHTINEN. Thank you very much. Mr. Murphy of 

Connecticut. 

Mr. MURPHY. Thank you, Madam Chair. During the 5 to 10 years 

before President Obama took office, we didn’t stand still, we went 

backwards. During that period of time year by year the balance of 

power tipped every year in favor of Iran. Why? Because we decided 

to empower Iran by fighting an unjustified war in Iraq that essentially elevated their presence in the region. By being distracted 

both in the war in Iraq, and by mismanaged war in Afghanistan 

we essentially pursued absolutely no policy of sanctions, no policy 

of multi-lateralism. In fact, the Bush administration didn’t enforce 

one single sanction against Iran during their time in office. 

So, the historical context for this hearing is important because 

over the past 3 years, the Obama administration has done something different. They have engaged the international community. 

They have put in place sanctions that have never been tougher, 

and they have pursued a policy backing it up to talk to the Iranians about something different, a way forward that is different. 

That is the historical context that this hearing takes place in today. 

Chairman ROS-LEHTINEN. Thank you so much. Mr. Joe Wilson of 

South Carolina. 

Mr. WILSON. Thank you, Madam Chair. I am particularly appreciative of the survivors of the Beirut barracks bombing. I want to 

thank you for being here. What a tribute to your loved ones, persons on October 23rd, 1983, 241 U.S. Marines, sailors and soldiers 

were killed clearly by an Iranian attack. The American people need 

9

to remember this. Sadly, so many people have forgotten. But thank 

you for being here. The American people need to know that the resulting explosion was the largest non-nuclear explosion ever detonated on the face of the earth. It was a force of 15 to 21,000 pounds 

of TNT. 

The court ruling of 2009 made it clear that because of the Iranian connection with Hezbollah, that there was no question that 

the material and technical support was from the Iranian Government. 

Thank you for being here. Thank you for reminding the American people. We must not repeat this. I agree with Congressman 

Rohrabacher, we need to be encouraging the people of Iran to encourage change, and there has been a failure by this administration. Thank you, Madam Chair. 

Chairman ROS-LEHTINEN. Thank you, sir. Mr. Deutch of Florida. 

Mr. DEUTCH. Madam Chairman, I would like to thank you and 

Ranking Member Berman for your leadership and your commitment to preventing a nuclear Iran. And thanks for our witnesses 

whom I have had the pleasure of working with on this issue. 

In the last 3 years, the U.S. has gone from having essentially no 

impactful sanctions policy to the most robust targeted Iran sanctions program in the world, and we have amassed a broad international coalition of partners. We are finally seeing sanctions severely strangle the Iranian economy, but we can and we must do 

more. 

I encourage the administration to stay the course and proceed 

with the implementation of crude export sanctions at the end of 

next month. I, along with several of my colleagues on this committee have proposed additional legislation to strengthen sanctions 

even further, and I hope the Senate moves forward with its new 

package today. 

Madam Chairman, we cannot allow the Iranian regime to use negotiations simply to buy time while thousands of centrifuges continue to spin. 

I look forward to the testimony of our witnesses, and I yield 

back. 

Chairman ROS-LEHTINEN. Thank you very much. Mr. Turner of 

New York. 

Mr. TURNER. Thank you, Madam Chair. If the purpose of the 

sanctions is to stop the Iranian nuclear weapons program, I would 

be anxious to hear what our witnesses have to say about the efficacy of this program, particularly in view of the timeline. By year 

end, we expect a weaponization program. Which do you think will 

work, sanctions or will the Iranians win on the time? I yield back, 

thank you. 

Chairman ROS-LEHTINEN. Thank you. Mr. Meeks, the ranking 

member on the Subcommittee on Europe and Eurasia. 

Mr. MEEKS. Thank you, Madam Chair, for convening this timely 

hearing on Iran sanctions. 

Let me just say that I strongly support and supportive of President Obama’s efforts to establish what is unprecedented international sanctions against the regime of Iran. In order for sanctions to be successful, first you have to have a coalition of individuals. You know, you do certain things on a bilateral or unilateral 

10

basis, generally that means you can pass all the sanctions you 

want. It will not have the intended effect. The way to be successful 

is to make sure you do it on a multilateral effort. 

What the Obama administration has been doing that has been 

successful is now they have brought in a number of our European 

allies who I also want to congratulate, who have implemented 

wide-ranging sanctions despite even difficult economic situations 

that they are in. This is a real achievement, I think, for the Obama 

administration and for the rest of the world, as now everyone can 

be focused and united to make sure that Iran does not a nuclear 

weapon. This is not about containment, it is about making sure 

they do not obtain a nuclear weapon. 

Chairman ROS-LEHTINEN. Thank you, sir. Mr. Marino of Pennsylvania. 

Mr. MARINO. I have no statement. 

Chairman ROS-LEHTINEN. Thank you. Mr. Bilirakis of Florida. 

Thank you. Mr. Connolly of Virginia. 

Mr. CONNOLLY. Thank you, Madam Chairman. I think we need 

to be careful as Members of Congress that we don’t talk ourselves 

out of a very strenuous and robust sanctions regime to bring Iran 

to the table and to resolve the issue of its nuclear capability. 

The fact of the matter is, and I respectfully disagree with my 

friend, Mr. Berman from California, and Mr. Rohrabacher from 

California. I don’t think we have ever seen a sanctions regime as 

strict and as tightly controlled as we are seeing under the Obama 

administration with respect to Iran. 

There is mounting evidence it is working. It is working in cutting 

off its ability to supply oil to its customers. It is working in terms 

of the banking system and its access to credit. It is working in 

terms of mounting domestic pressure within Iran among consumers 

and among the people of Iran who are seeing the negative consequences of this folly. And I think the Obama administration deserves credit and a little more time to make it all come home. I 

thank the chair. 

Chairman ROS-LEHTINEN. Thank you very much. And now the 

Chair is pleased to welcome our witnesses. We will start with Ambassador Mark Wallace, who is the chief executive officer, co-founder and former president of United Against Nuclear Iran. He is also 

the CEO of Tigris Financial Group. 

Ambassador Wallace previously served as our Ambassador to the 

U.N. in the field of management and reform. How did that work 

out? He also served as principal legal advisor to the Bureau of Immigration and Customs Enforcement, and the Bureau of Immigration and Citizenship Services in the Department of Homeland Security. Welcome, sir. 

Mr. Mark Dubowitz is the executive director of the Foundation 

for Defense of Democracies where he is the head of FDD’s Iran Energy Project, and directs its Iran Human Rights Project. He is also 

a principal at the Iran Advisory Group. Mr. Dubowitz previously 

served in software management as director of International Business Development in Double Click. Thank you, sir. 

And lastly, we will hear from Ray Takeyh. He is a former—he 

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eign Relations. Dr. Takeyh is also an adjunct professor at the Center for Peace and Security Studies at Georgetown. 

Before that, he was a professor at the National War College, and 

at the National Defense University, as well as a fellow at Yale, and 

the Washington Institute for Near East Policy. He recently contributed to the work of the special advisor for the Gulf and Southwest 

Asia at the Department of State. Welcome. 

I would like to kindly remind our witnesses to keep your testimony to no more than 5 minutes. And without objection, the witnesses’ entire written statements will be inserted into the hearing 

record. And we will begin with you, Ambassador Wallace. 

STATEMENT OF THE HONORABLE MARK D. WALLACE, PRESIDENT AND CHIEF EXECUTIVE OFFICER, UNITED AGAINST 

NUCLEAR IRAN (FORMER UNITED STATES REPRESENTATIVE TO THE UNITED NATIONS FOR MANAGEMENT AND REFORM) 

Ambassador WALLACE. Thank you, Madam Chairman. Madam 

Chair, Congressman Berman, distinguished members of the committee, it is an honor to have the opportunity to appear before you 

again today to discuss what is unquestionably the most serious national security challenge confronting the United States. Thank you 

for having me, and I would like to acknowledge the important work 

of my colleagues on the panel, Mark and Ray. 

I am proud that my colleagues from UANI are here today, David 

Ibsen and Lara Pham. They and their other UANI colleagues do 

the hard important work so well. I must acknowledge the UANI 

Advisory Board and the intimate role they play in our work, including prominent foreign policy experts such as Graham Allison, Les 

Felb and Fouad Ajami, and former government officials like former 

CIA Director, Jim Woolsey, former Homeland Security Advisory, 

Fran Townsend, former head of the Mossad Meir Dagan, former 

head of the German Intelligence Service, Dr. August Hanning, and 

the former head of the United Kingdom’s MI6, Sir Richard 

Dearlove, among many others. I am lucky to have colleagues like 

UANI’s president, Kristen Silverberg, and European partners in 

the London-based Institute for Strategic Dialogue. 

The international and transatlantic character of our organization 

is a testament to the consensus belief that a nuclear armed Iran 

is the preeminent global security challenge. The threat of a nuclear 

armed Iran is difficult to overstate. If Iran acquires nuclear weapons, the threat environment that the United States faces will be 

changed in dramatic, fundamental, and irrevocable ways. 

With bold action, we still have an opportunity to thwart Iran’s 

nuclear ambitions. We must seek the most robust sanctions in history. And we must consider much more than tweaks to current 

sanctions. We have made real progress. The U.S. and EU passed 

financial sanctions against Iran’s central bank and pressured 

SWIFT to bar Iranian bank access to the international banking 

system. And, of course, the very important decision by countries to 

either ban or significantly curtail oil imports from Iran has been 

a very key development. 

12

The consequences to Iran have been significant. Iran’s rial, its 

currency, has been in free fall, a reliable indicator of the economic 

impact of sanctions. 

This committee has been at the forefront in championing sanctions, and I would like to discuss some concepts for consideration 

to achieve an economic blockade of Iran. 

Our proposed strategy focuses on four areas; namely, banking, 

insurance and reinsurance, disclosure and debarment, and shipping. We give it an acronym called BIDS, B–I–D–S. 

First, we must fully end Iran’s access to the international banking system. All Iranian financial institutions and banks should be 

sanctioned, and there should be no exceptions to the areas of prohibited banking activity. Moreover, any institution that engages in 

sanction work-arounds, including participating in elaborate bartertype arrangements should be penalized and sanctioned. 

Second, we must increase pressure on Iran through the insurance sector. Insurance and reinsurance companies that operate in 

Iran should be identified and prohibited from doing business in the 

United States, and precluded from entering into insurance or reinsurance agreements with any entities in the United States. 

Third, companies that avail themselves of U.S. capital markets 

should be required to disclose the business that they conduct in 

Iran and with Iranian entities, not limited just to the energy sector 

or after some threshold amount. And if a company conducts business in Iran, any type of business, it should not be eligible to receive U.S. Government contracts. 

Finally, international cargo and crude shippers that service Iranian ports should be barred from docking in U.S. ports for 10 

years. Vessels arriving in U.S. ports should certify that they have 

not docked at an Iranian port, or carried Iranian crude oil, or 

downstream petrochemical products in the previous 36 months. 

Some vessels have also worked to conceal their movements including by disabling their GPS tracking devices, and thus are actively 

facilitating the illegal practices of the Iranian regime. Such violations should result in permanent bans from U.S. ports. 

Some may say that the above measures are too hard, particularly 

on the Iranian people, while others will say that it is too late for 

economic pressure, and that the only option is a military one. But 

Iran’s economy is controlled by the regime and the IRGC which 

profit at the expense of the Iranian people. This regime will never 

change course due to half-measures. As for the other argument, I 

cannot under oath with certainty, state with certainty that sanctions and pressure will finally compel the Iranian regime to change 

course. But before we would take military action against Iran, we 

should be willing to test the most robust sanctions in history. 

Doing so will show the regime that we are serious, committed, and 

willing to do what is necessary to stop Iran’s pursuit of a nuclear 

weapon, but we must act, and act now. 

Thank you for allowing my longer statement to be submitted for 

the record. It includes our detailed BIDS proposal that we hope 

may achieve an economic blockage of Iran, and it is an honor to 

be here today, particularly before the survivors of the 1983 attacks 

in Beirut, something that we all so frequently talked about as one 

of the reasons why we should oppose a nuclear armed Iran. But to 

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have these people in this room, it is an honor for me to be here. 

Thank you, Madam Chairman. 

[The prepared statement of Ambassador Wallace follows:]


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Chairman ROS-LEHTINEN. Thank you, Mr. Ambassador. 

Mr. Dubowitz. 

STATEMENT OF MR. MARK DUBOWITZ, EXECUTIVE DIRECTOR, 

FOUNDATION FOR DEFENSE OF DEMOCRACIES 

Mr. DUBOWITZ. Thank you very much. Chairman Ros-Lehtinen, 

Ranking Member Berman, distinguished members of the committee, on behalf of FDD it is an honor to be here today, and an 

honor to be testifying with Mark and Ray. 

The topic of my testimony is sanctions relief as the Obama administration prepares for the P5+1 talks in Baghdad. Now, administration officials publicly and privately are making a tough case 

for relieving sanctions on Iran, but these officials have, nevertheless, made it clear that these talks are part of a process that will 

require confidence-building measures and reciprocal concessions. 

To be meaningful to Tehran, concessions will have to come in the 

form of sanctions relief which are threatening the regime’s oil 

wealth, and perhaps even its survival in ways not seen since the 

Iran-Iraq War. 

Supreme Leader Ali Khamenei badly needs to relieve this economic pressure. He is seeking to buy his country enough hard currency from oil sales to withstand soaring inflation and a crumbling 

currency. He also seeks to use the P5+1 negotiations to buy more 

time to reach breakout capacity, which would enable him to build 

a nuclear weapon within a few months. 

Now, Iran sees the negotiations as an opportunity to force the 

international community to accept its enrichment activities. In the 

face of five UNSC resolutions and a U.S. commitment to stop Iran 

from crossing previously established red lines, Iran has simply 

moved the goal posts. Bushehr, Arak, Natanze and Fordo are a testament to the success of this Iranian strategy. 

Khamenei likely will continue the strategy of playing for time by 

dangling incremental nuclear concessions before the negotiators, 

such as the cessation of 20 percent uranium enrichment. This concession will be portrayed as an important confidence-building 

measure putting pressure on the administration and its partners 

for a similar gesture of goodwill in return. 

As eager, however, as President Obama is for a deal he cannot 

take the risk of offering too much relief for too few concessions. 

Once these sanctions start to unravel, the fear of U.S. penalties 

that held them together will become difficult to re-establish. The 

multi-lateral sanctions regime, the centerpiece of the President’s 

Iran strategy, will be gone. In order to make concessions to Iran, 

the President or our allies may be tempted to offer sanctions relief 

in the shadows. 

In my written testimony, I detail some of the ways in which Iran 

could be offered sanctions relief without inviting public scrutiny. 

These are just a few examples of what should not be allowed. They 

include reducing by even a few percentage points what constitutes 

a significant reduction to the volume of petroleum purchased from 

Iran, as provided in 1245 of the NDAA. Doing so would provide 

Iran with additional hard currency. Allowing the 14 or so Iranian 

financial institutions to continue using SWIFT. Supporting Europe 

in relaxing the Maritime insurance sanctions that are so effective 

21

in slowing down Iranian oil shipments. Looking the other way as 

Europe allows sanctions busting of its oil embargo. Keeping open 

financial channels that allow the Iranians to access the global financial systems and repatriate its oil profits. Permitting 

sanctionable transactions to take place through barter trade to help 

Iran reverse the decline in its energy production. Delaying sanctions against critical elements of the oil supply chain like NIOC or 

NITC. Providing less rigorous enforcement of shipping sanctions 

that allow Iran to covertly sell more of its oil. 

Now, these are just a few of the ways that the U.S. or our allies 

could provide sanctions relief in the shadows. President Obama 

must not allow this. Instead, the recommended course is for the 

President to engage openly with the American people, with Congress, with this committee, and with key allies like Israel during 

the negotiating process with Iran. 

He needs to green light the passage of the Senate’s sanctions bill 

before the Baghdad talks begin. He needs to support additional 

sanctions proposed by members of this committee, and by members 

of the Senate Banking Committee on an expanded energy and commercial embargo, broader insurance sanctions, and Iranian oil-free 

zone, expanded financial sanctions, and the lifting of CBI immunity 

to allow victims of Iranian terrorism to finally receive justice. 

He should provide detailed reports to this committee and to Congress on the type of sanctions relief being offered, and on the nature of the Iranian concessions that they are offering. And he has 

considerable flexibility under the National Interest Waiver in Section 1245 of the NDAA to provide sanctions relief in the open. But 

the President needs to be careful. Sanctions relief needs to be coordinated with the EU, and an EU suspension of sanctions is not 

likely to be easily and quickly reversed. Real sanctions relief should 

only be offered in response to meaningful Iranian concessions. 

Congress, and this committee, in particular, has played a critical 

role in the development and implementation of sanctions. Your 

next task is to ensure that sanctions relief, if it is to be provided 

at all is only provided in the open, not in the shadows, and only 

in exchange for meaningful, verifiable and irreversible Iranian nuclear concessions. 

Thank you very much for inviting me here today. 

[The prepared statement of Mr. Dubowitz follows:]

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Chairman ROS-LEHTINEN. Thank you so much. 

Dr. Takeyh. 

STATEMENT OF RAY TAKEYH, PH.D., SENIOR FELLOW FOR 

MIDDLE EASTERN STUDIES, COUNCIL ON FOREIGN RELATIONS 

Mr. TAKEYH. Thank you very much for inviting me, Madam 

Chairman, Congressman Berman. I am also very privileged to be 

here with Ambassador Wallace and Mr. Dubowitz, who have done 

much to draw attention to this particular issue. 

As has been discussed, diplomacy has resumed its place in the 

Iranian drama. I would like to draw attention to some of the Iranian calculations as I understand them, because I think little is 

being paid to contradictions that are likely to complicate Tehran’s 

path to a prospective settlement. 

The objectives of the United States and the Western powers are 

as seamless as they are obvious. We hope for confidence-building 

measures yielding a durable arms control agreement. Al 

Khamenei’s path, however, the Supreme Leader’s path is beset by 

contradictions. 

For long, Iran’s Supreme Leader perceived that he could advance 

his program at a tolerable cost to his economy. Today he stands at 

crossroads of conflicting ambitions. On the one hand, the Supreme 

Leader needs America as an enemy and a robust nuclear infrastructure to legitimize his rule. Yet, such convenient enmities further erode his economy and potentially threaten his hold on power. 

Whether he can untangle these contradictions will determine the 

success or failure of the latest diplomatic efforts. 

As a revolutionary, Al Khamenei has long pursued a 

confrontational foreign policy as a means of reinforcing the regime’s 

ideological identity. What many observers often miss about the Islamic Republic is that its leaders may rationally opt for self-defeating policies abroad in order to buttress a certain ideological character at home. The theocratic state needs an American enemy, and 

it needs some degree of estrangement from the international community as a means of sanctioning its hegemony of power. In contemplating his moves, Supreme Leader has to calibrate how 

transacting an agreement with nefarious Westerners impact his 

need for such useful enemies. 

Nuclear empowerment has emerged as a core element of Islamic 

Republic’s strategic conception. Iran’s quest for nuclear capability 

is not really predicated on ideological assumptions. An enhanced 

nuclear capacity gives Iran ability to assume a more dominating 

role in the region that is beset by political transitions. 

Moreover, unfortunately, the history of proliferation suggests 

that nuclear weapon states ordinarily receive better treatment 

from the international community in terms of resumed contracts 

and diplomatic recognition, whether it is Pakistan, China, so on 

and so forth. 

The argument that a nuclear armed nation is too dangerous to 

remain isolated and must be reintegrated in the global system has 

proven compelling over time. 

Despite these frequent professions of autonomy and self-sufficiency, Iran is profoundly dependent on global economic structures. 

35

After all, Iran subsists on revenues derived from an export commodity whose price and the means of transport are determined by 

actors beyond its control. 

For Iran to successfully sell its oil it requires access to global financial institutions, tankers that are insured by European firms 

largely, and customers that have alternative suppliers. Can a stage 

really reject global norms yet benefit from the prevailing mechanisms of international trade? And here lies Khamenei’s dilemma as 

his revolutionary foreign policy and his quest for nuclear capability 

are increasingly clashing with the vulnerabilities of his state. 

Al Khamenei today faces a choice he would rather not make. He 

Supreme Leader would much prefer to persist with brandishing his 

anti-Western slogans, incrementally expanding his nuclear apparatus, and somehow managing Iran’s economy. Protracted diplomacy may actually serve his cause and his inclination to muddle 

through where he can attempt to offer some compromises for a 

measure of sanctions relief. In such a format, he can protect essential aspects of the nuclear program. 

Despite the limitations of the diplomatic process, there is still 

much the West can do. My colleagues have highlighted some of 

these issues. I think after decades of sanctions and pressure, the 

international community is finally placing the Supreme Leader in 

a position where he can no longer afford both his enmities and his 

economy. 

The Western powers would be wise to stress that sanctions will 

not be lifted until there is a fundamental different Iranian approach to the issue of proliferation. As such, the European boycott 

of the Iranian oil scheduled to take place in July should be implemented irrespective of offers that Iran is likely to dangle between 

now and then, and the same can be said about the central bank 

sanctions that are designed to take effect. 

It must be said that it is entirely possible that the Supreme 

Leader will opt to preside over a country that has greater nuclear 

capability and a permanently degraded economy. He may opt for 

that choice. Still, the objective of the Ally Diplomacy should be to 

compel him to make a choice and deprive him of his uncanny ability to continuously square his many circles. Thank you very much. 

[The prepared statement of Mr. Takeyh follows:]

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Chairman ROS-LEHTINEN. Thank you for excellent testimony the 

three of you. Thank you. 

When you talk about the Supreme Leader, as we know, in July 

2011 Treasury sanctioned and designated six al-Qaeda terrorists 

and reported that they are working for a network that would be 

headquarters in Iran operating under an agreement between alQaeda and the Iranian regime. Do you think that the administration should sanction senior Iranian political leadership folks, including Ahmadinejad and the Supreme Leader? He has the authority under Executive Order 13224 because they are providing material support to al-Qaeda? 

And let me ask you the additional question. Now, a lot of individuals in the international community are under the impression that 

the United States has done everything we can to fully sanction the 

Iranian regime. And, as we know, and we discussed right here, 

nothing could be further than the truth. And you have pointed out 

in your testimony we must fully end Iran’s access to international 

banking system, increase pressure on Iran through the insurance 

sector, require companies that avail themselves of U.S. capital market to disclose the business that they conduct in Iran, and with the 

Iranian regime, bar international cargo and crude shippers that 

serve Iranian ports from docking in U.S. ports for 10 years. There 

is so much more that needs to be done, in addition to sanctioning 

the Supreme Leaders, tell me what you think will come out of this 

upcoming negotiations on May 23rd in Baghdad. What has been accomplished with previous negotiations? What could be accomplished with this, and why is there that sense incorrect that we 

have done all the sanctions that could possibly be had, and that is 

why there is nothing else to do but to negotiate for some settlement. If you could comment on any of those. We will start with 

Ambassador Wallace. 

Ambassador WALLACE. Thank you, Madam Chairman. It is a 

very important question, and a good question. 

This committee has really led in the area of sanctions and 

dragged, frankly, much of the rest of the sanctions community 

along with it over the years. And it is a problem we have been 

dealing with since 1978–79, and we have seen really bad behavior 

from Iranian regime. And we haven’t dealt with Iran effectively 

through successive administrations. 

We called for something very clear, United Against Nuclear Iran, 

and I am hoping to convince you all that it is possible. We have 

to have an economic blockade of that government. 

As Ray testified very accurately, this is an economy that is very 

dependent upon outside forces. We can do that, and our focus has 

been on banking, insurance, disclosure and debarment, and shipping, and importantly, oil. And if we say no more banking, no more 

insurance, deny any shipping opportunity, and force all Iranian 

businesses to disclose and continue to pursue the oil embargo, you 

will see that economy continue to be stressed. 

When this committee did such important work on SWIFT, my 

colleagues at the table, as well, we tracked the rial, the Iranian 

currency. And when you looked at the precipitous drop of the rial 

at the time of the sanctioning of SWIFT, and the discussion even 

of sanctioning of SWIFT it was an incredible and precipitous drop. 

43

If we were able to cut them off fully and completely from the 

banking industry, deny their oil exports in a fundamental way, continue to do so, and their ability to ship, have an impact on their 

automotive industry. We have a plan to sanction their automotive 

industry. It is a dirty little secret, but it is the 13th largest automotive producer in the world. It is the fastest growing in the Middle East. It is the largest part of their economy other than oil. We 

have to do more to sanction these areas of the economy. 

Chairman ROS-LEHTINEN. Thank you, Ambassador Wallace. And 

I will let the other gentleman go. 

Mr. DUBOWITZ. I think the most effective sanction that is available that is out there is the sanction that decreases the global price 

of oil, because the Iranian budget today is set at a price per barrel 

at $85. So, while I absolutely agree with my colleague here that we 

should seek the most robust sanctions, we have to also be cognizant 

of the fact that anything we do that spooks oil markets and drives 

up the price of oil will only enrich Al Khamenei, only buy him more 

time, will only embolden him. So, we should be very careful about 

threading the needle when it comes to oil market sanctions, and financial sanctions. 

I would argue that with spare capacity still very tight in the 

market, the best thing we can do is turn Iranian oil into a toxic 

asset, into a distressed asset, and in doing so force the Iranians to 

offer price discounts on every barrel. 

Chairman ROS-LEHTINEN. Thank you. And I apologize, maybe 

somebody will get to you, Dr. Takeyh. I am out of time. Thank you, 

sir. Mr. Berman is recognized. Thank you. 

Mr. BERMAN. Dr. Takeyh, you spoke of an ideological regime in 

your written testimony. But ideological regimes, I mean, I think of 

the Soviet Union in 1939 cut deals to insure survival. Do you think 

that there is a real chance that the economic pressures, the damage to the economy, the growing unrest, the factionalization within 

the regime offers some prospect of, if we stay the course and pursue this, getting them to shift their calculus? 

Mr. TAKEYH. As you mentioned, Congressman Berman, this is intensely an ideological regime. It is kind of animated by certain ideological spirit. 

I think that what could compel the Supreme Leader and a narrow circle of advisors to change their calculus would be if they fear 

they are going to lose power, if they feel all the walls are closing 

in and they have no option but to engage in some sort of diplomacy 

in order to relieve that particular status. So, it would have to be 

strenuous enough to threaten the regime’s hold on power. 

We think of economic sanctions as one of the tools in the toolbox. 

There are other things I think we can do. For instance, Iran—we 

have to work harder to make sure they remain regionally isolated 

and largely isolated from the international community. I think as 

has been mentioned by members of this committee, there are some 

we can do to support forces of domestic dissent. And there is a relationship between domestic dissent and economic debilitation. So, it 

has to be a multi-pronged process to compel this particular regime 

to agree to some sort of an agreement. It would have to be quite 

a strenuous policy. 

44

Mr. BERMAN. All right. Mr. Dubowitz, you made an interesting 

point as we talk about an additional litany of sanctions. There are 

also sanctions in place that have not yet been—there is legal authority in place to impose sanctions that have not yet been imposed, even if there were to be no additional sanctions beyond what 

existed CISADA and the central bank sanctions. What would you 

suggest the administration do here? And put into that that they 

haven’t yet done with the existing authority they have now. 

Mr. DUBOWITZ. Well, Congressman Berman, I think that that is 

really the key. You know, we talk a lot about new sanctions, and 

we all like to develop or help develop new legislation, but the key 

for sanctions is enforcement. 

Mr. BERMAN. We are not paid on a commission basis. 

Mr. DUBOWITZ. Exactly. 

Mr. BERMAN. But I get your point. 

Mr. DUBOWITZ. There already is existing authority under U.S. 

law. The President has the power to really crack down on the Iranian economy, on the Iranian oil sector. We should be designating 

the National Iranian Oil Company and all its subsidiaries. We 

should be designating the National Iranian Tanker Company and 

make it very difficult for the Iranians to ship. We should be imposing a much broader insurance embargo on Iran, and we should be 

kicking off banks from SWIFT, on the one hand. But on the other 

hand, what we need to do is be very careful about threading the 

needle because there are sanctions that make us feel good, and 

there are sanctions that do good. And any sanction that actually 

creates the perception that there is going to be a physical supply 

disruption of Iranian oil too quickly is going to spook oil markets 

and drive up the price, and in doing so, neuter all the sanctions 

that we are actually trying to impose. 

Mr. BERMAN. Your organization put out a paper which affected 

my thinking, which was you don’t have to achieve the absolute boycott of Iranian petroleum worldwide to have massive impacts on 

the Iranian economy. And if other countries, oil-producing countries 

help make up the difference, less impact on price, greater impact 

on Iran. 

Mr. DUBOWITZ. Well, that is exactly right. I mean, I think the 

goal here is to get the Iranians to sell their oil at a discount. The 

goal is to cut Iranian supply up to the point at which the Saudis 

and others can replace it, and effectively turn Iranian oil into, as 

I said, a toxic asset. 

I think one of the most effective sanctions that we have actually 

put in place is a sanction that didn’t get much attention. It was actually implemented by the administration in convincing Norr Islamic Bank out of Dubai to stop repatriating oil profits back to 

Iran. You know, you can sell all the oil you want, but if you are 

getting Rupees and Yuan in a barter trade, and if you are getting 

all of these dollars in Euros that you can’t repatriate, all of that 

is useless. So, I think that the goal should not be on an oil embargo; the goal should be in focusing on cutting hard currency oil revenues from Iran, which can be done in a variety of precise ways that 

don’t ultimately and inadvertently enrich the regime. 

Chairman ROS-LEHTINEN. Thank you very much. Thank you, Mr. 

Berman. Mr. Smith is recognized. 

45

Mr. SMITH. Thank you very much, Madam Chair. 

Let me first, note and thank for their service those who are survivors from the terrible bombing in Beirut. I would note that Paul 

Innocenzi who was from my district, I remember being at his funeral. He was one of the victims who died in that terrible, terrible 

act of terrorism, and we all remember him. And thank you again 

for your service. 

Let me ask a couple of questions. First, I notice again, Ambassador Wallace, you make the point that this regime will never 

change course due to half-measures. And I would note, Mark 

Dubowitz, you point out something I think many of us are concerned about, and that is the idea of sanctions relief in the shadows. And I really thank you for bringing that, and giving some very 

specific possibilities that would evade press, and maybe even congressional scrutiny the way it shouldn’t. 

I do believe the President should have some flexibility but I am 

very worried, and I think we all are, that in the time frame there 

may be an effort to postpone sanctions, maybe wittingly or unwittingly, thinking it is going to do the issue better, but you have got 

to wonder. 

And I think your first point, the standard—relaxing the standard 

of what constitutes a significant reduction to the volume of petroleum purchased from Iran as provided under Section 1245 of the 

NDAA, and you did point out again in your statement—I think this 

is very important, that the administration has refused to specify 

how much of a cut qualifies as significant. And I think you might 

want to expand on that, and perhaps our other witnesses, I would 

appreciate it. 

Secondly, Youcef Nadarkhani has, as you know, posted a very 

important statement. He apparently is getting 9 years for simply 

believing in Christianity and being a pastor. I think, and I would 

hope the Iranians would sit up and take notice, maybe they don’t 

care. But some of us have raised this issue directly to Iranian leaders. We believe in religious freedom, and that includes Muslims’ 

freedom to establish mosques, to practice their faith in an unfettered way, and the mistreatment of this pastor is emblematic, I 

would suggest, and I think you would agree, of an intolerance that 

brings dishonor to Iran. So, our belief would be that 9-year sentence is absolutely unwarranted. Obviously, the death sentence was 

an absolute outrage, but this is not good, as well. Perhaps, if you 

could speak to that issue of the sanctions relief in the shadows especially as it relates to the upcoming conversation with the Iranians. 

Mr. DUBOWITZ. Thank you, Congressman Smith. I mean, I guess 

my concern with sanctions is so much of it happens in the shadows 

with respect to implementation. So, we can pass all the new sanctions we want and issue press releases, and be proud of what we 

have done, but in the shadows at a level of detail and granularity 

that is often not visible, the Iranians could be circumventing sanctions and getting the sanctions relief that they most desperately 

need, which is hard currency from oil earnings. 

Now, on the significant reduction threshold, one way to give the 

Iranians hard currency is to lower the standard. Now, as you pointed out, the administration has refused to adhere to a specific numVerDate 0ct 09 2002 13:47 Aug 29, 2012 Jkt 000000 PO 00000 Frm 00049 Fmt 6633 Sfmt 6633 F:\WORK\FULL\051712\74238 HFA PsN: SHIRL
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ber, despite requests from Congress that that number be at least 

18 percent. And it is entirely possible that come June 28th, that 

the standard would be lowered by 3–5 percentage points, really 

would mean $3–5 billion of extra hard currency in Iranian coffers. 

And I think it is critical that Congress play its oversight role in 

holding the administration accountable for what really constitutes 

a significant reduction, and that we don’t give concessions to the 

Iranians, as I said, in the shadows in ways that I think will help 

them survive all of the other sanctions that we put in place. 

Ambassador WALLACE. Just as to one point. Unfortunately, the 

global economic slowdown is giving us a bit of a gift. You see China 

cooling problems still in Europe and oil prices being somewhat deflated. We agree on so many things. I think we have a slight disagreement. I am less concerned about the rising price of oil to benefit the Iranians. The market is already adjusting for it, and I 

think the market would explode if Iran got a nuclear weapon, or 

God forbid there was a military strike. 

I do see a heightened sense of supply in the market. We have 

seen commitments from oil producers to make up the difference in 

Iran. I think what we have to do is make as airtight as possible 

boycott on Iranian oil. And to the extent that Iran is selling oil to, 

in fact, third countries, they have to discount is so dramatically, if 

we impose these other restrictions that they won’t be getting the 

benefit of a rising oil price. 

Mr. TAKEYH. I will just say briefly on your question of human 

rights, which has significantly deteriorated in Iran since the disputed election of 2009 with show trials, imprisonment of dissidents 

and summary executions. I think most of our sanctions effort has 

been focused on proliferation. I think we should highlight also how 

Iran treats its own citizens, is a factor in its reintegration into the 

global economy. 

The United Nations does have a Human Rights representative, 

and we have to ask him to support that particular effort. But the 

entire human rights issue and repression of the Iranian citizenry 

has dramatically escalated and intensified, not just the case that 

you mentioned, but an entire spectrum of issues. 

Chairman ROS-LEHTINEN. Thank you very much. Mr. Ackerman, 

the ranking member on the Subcommittee Middle East. 

Mr. ACKERMAN. Thank you. I have just been making little marks 

as to the word ‘‘goal,’’ and so far the goal has been nine different 

things from affecting the price of oil to talking directly over the 

heads of the mullahs to the Iranian people, to everything that you 

could think of. If you have been listening to our opening statements, our goal is to affect a fictitious race between President 

Obama and President Bush, and who gets credit for what. And I 

think that what we are forgetting is regardless of what we are all 

doing here, is that the real goal that we think we are discussing 

is stopping Iran from getting a nuclear bomb. And all of these 

other things are ways to get them to do that, and ways to affect 

their thinking and, ultimately, their behavior. 

The discussion that I have been trying to figure out or the two 

options, and I don’t know that it is an either/or, and that is what 

I want to ask you, is whether we exclusively continue to apply the 

choke hold that all on this committee, or almost—I think all on this 

47

committee have agreed to over several administrations, and to 

apply the type of economic pressure continuously, unilaterally if we 

have to, internationally as we must, to get them into a position 

where they have no option, but to weigh the merits of whether it 

is advantageous to have a bomb or to have a country. And that is 

the way to do it, and only that way, and ascribe that to the goal 

of one President or another, or to employ just having discussions 

that one side would like to portray, the other side is saying that 

you just want to talk to these people who you can’t talk to, and get 

them to agree, which they never will. Or should we have both? 

It seems to me one side would portray it that if you are having 

one of these extreme fighting or boxing matches, or whatever, and 

you are sitting on your opponent’s chest and pummeling him about 

the head, if you say to him you give up? The other side accuses you 

of having a dialogue. Can you get them to a place without having 

a dialogue, and just having the economic sanctions, or do you need 

some intelligent application of both? 

Mr. TAKEYH. I would say the two-track policy that offers dialogue 

as well as pressure track. I do think that has benefitted us in the 

international community in the sense that the impasse in U.S.-Iran 

relations is no longer blamed on the United States. 

Mr. ACKERMAN. And the international community is important 

because we want to seem to be popular, or because they are needed 

in order to accomplish——

Mr. TAKEYH. Well, I think a successful sanctions regime need to 

be multilateralized, because all the things that have been talked 

about, the insurance issue that has been talked about. These are 

largely European companies, so the United States has largely estranged itself from the Iranian economy for the past 20 years, so 

if we are going to have measurable sanctions really we have to 

have allied coalitions. 

Now, I do worry about our ability to maintain this international 

coalition with the reassertion of President Putin, with the changes 

that are taking place in France where President Sarkozy was really 

the steel behind this issue. So, as we go forward I think it may be 

more challenging for us to hold this coalition together. 

Mr. DUBOWITZ. Congressman Ackerman, I would say two things. 

First, on the sanctions front, it is not really an either/or. We need 

a robust multilateral sanctions regime. We need unilateral U.S. 

sanctions. It is only unilateral U.S. sanctions and the penalties 

that have actually helped create a multilateral sanctions regime. 

So, I think like many bipolar debates in Washington, it is both 

rather than either/or. 

On the question of what the goal is, I think the goal is regime 

change in Iran. I don’t think this regime can be trusted to adhere 

to any agreement, no matter how tight, no matter how much accountability we impose on them. This regime is dedicated to having 

a nuclear weapon, and they will find workarounds in any way they 

can. The goal has to be to change the regime to support the Iranian 

people, and I think one of the ways we can do that——

Mr. ACKERMAN. How do you do that? I saw a lot of nodding of 

heads on your side of the table when people on my side of the table 

said we have to talk to the Iranian people. I mean, if we are having 

a difference of opinion with Iran and they want to get around our 

48

administration, how do they talk to the American people? Can they 

convince Joe Six-Pack in America to go along with it? How do you 

talk to the Iranian people? 

Mr. DUBOWITZ. Well, I think some of the practical things we can 

do——

Mr. ACKERMAN. Sign an agreement with who? 

Mr. DUBOWITZ. Well, I think number one, we should designate Al 

Khamenei and the top Iranian leadership for Human Rights 

abuses. I think that sends a message to the Iranian people. 

Mr. ACKERMAN. I will talk to Time Magazine. 

Mr. DUBOWITZ. I’m sorry? 

Mr. ACKERMAN. I will talk to Time Magazine end of the year. 

Mr. DUBOWITZ. I think we should also declare, for example, the 

entire Iranian technology and telecom sector is a zone of electronic 

repression. I mean, one of the things we see now——

Chairman ROS-LEHTINEN. Thank you. 

Mr. DUBOWITZ [continuing]. Is tremendous Human Rights 

abuses. Let us put an end to that. 

Chairman ROS-LEHTINEN. Thank you very much. Mr. Rohrabacher, the chairman of the Subcommittee on Oversight and Investigations. 

Mr. ROHRABACHER. Thank you very much, Madam Chairman. 

And let me just say that this has been a valuable hearing for me. 

If nothing else, one point that has opened my eyes to a fundamental truth in how we are trying to drum in policy. And as Dr. 

Takeyh’s observation that in the long run if the Iranians hold out 

they know they can expect better treatment because they are now 

a nuclear armed country. And we have a history of playing up to 

and trying to then placate countries that have nuclear weapons. So, 

it would seem to me that the strategy of basically trying to make 

it hurt right now isn’t going to work if they know there is going 

to be benefit for holding out in the long run; not just the ending 

of the sanctions, but actually better treatment in the long run. 

Let me just for our friends who have come here who are the survivors of the Marine families, let me note, I worked in the White 

House during that time period. I take that whole issue very, very 

seriously. 

The Iranians and the Iranian support for Hezbollah did not 

cause the death of your loved ones. What caused the death of your 

loved ones was a State Department that insisted on a mission that 

should have never been taken. And we handed to the Marines a 

mission that they couldn’t fulfill, and then they were ordered not 

to have bullets in their guns. I don’t know if you—how many people 

here are aware that the Marines did not have bullets in their guns 

by order of the Commanding Officer as demanded by the State Department. 

I worked for Ronald Reagan. I was his Special Assistant, and he 

frequently admitted that sending the Marines into Lebanon was 

his worst decision of his presidency, and how much he regretted it. 

And afterwards he was told by his advisors, again the foreign policy gurus, that we should send in 20,000 more Marines in order to 

show these guys they can’t kill Marines and get away with it. And 

he made the best decision of his presidency when he said no, we 

are not going to send in more Marines. We are going to get our 

49

butts out of there, and we did; otherwise, we would have been in 

quagmire for the rest of the administration. And what happened 

after that debacle? Ronald Reagan turned to a policy and a strategy that worked. It was called the Reagan Doctrine. And the 

Reagan Doctrine had us supporting the enemies of our enemy and 

letting the enemies of our enemy do the fighting. It was a strategy 

that worked then, and it ended up destroying the Soviet Union 

without a military confrontation between American troops and the 

loss of so many lives that that would have taken. Instead, we 

helped the people in Poland, Lech Walesa, in Afghanistan, in Nicaragua. That is how we ended the Cold War. 

Now, we should try to take a look and maybe there is a message 

for us in this, a message for what works, a strategy based on sanctions is not going to bring about the end we want, but let us take 

a look at Iran. There are Kurds, there are Turkmen, that are 

Azaris, there are Baluchs, there are Arab speaking Azaris, as well 

as young Persians, all of whom can be mobilized against the 

mullah regime, and we have done nothing to mobilize them against 

the mullah regime. Instead, we sit here talking about strategies, 

economic strategies which, again, the testimony today suggests will 

be ineffective because in the long run they will benefit by holding 

out. 

Let us go to our roots. Let us go to where America is the supporter of people who are struggling for freedom, and liberty, and 

justice, and the people of the world will unite with us and overthrow these people who threaten the stability, and peace, and freedom of humankind as the fanatical mullah regime in Iran does. 

That is just a thought. And, by the way, this administration, 

again, who is quiet, quiet about the demonstrations by those people 

in Iran, they are the same ones who are now insisting that we keep 

a terrorist designation for the MEK so that we can then eventually, 

the Iranians mullahs know we are labeling their opponents as bad 

guys, as terrorists. This is not a strategy that will work, and I 

would hope that—I have had my say, and I have got 15 seconds. 

I am sorry I have used up my time, but that is my time. Thank 

you. 

Chairman ROS-LEHTINEN. Thank you, sir. Mr. Deutch of Florida 

is recognized. 

Mr. DEUTCH. I thank the chairman. Before asking my questions, 

I don’t know if my friend was simply trying to use the reference 

as some sort of rhetorical flourish or not, but I take—I think it is 

wrong and does a disservice to, and is on a whole host of levels offensive to suggest that the State Department is responsible for the 

bombing of the Marine barracks and not Hezbollah, and Iran, and 

Syria. And I hope the gentleman will please clarify that that wasn’t 

actually the intent. 

Mr. ROHRABACHER. When we send our troops into battle, those 

people who send troops into battle for a no-win battle are responsible——

Mr. DEUTCH. Reclaiming my time. 

Mr. ROHRABACHER [continuing]. For those lives. 

Mr. DEUTCH. Reclaiming my time, Madam Chairman. Reclaiming 

my time. Thank you. 

50

Now, if I could focus first on the issue of proliferation and what 

is going to happen between now and July 1st, July 2nd. And if I 

could just ask you to address, number one, if—as these negotiations are getting ready to start again, what will come next, June 

28th, July 1st, what will happen under this, if the Senate were to 

take up the sanctions bill and pass it today, we were to have something to the President’s desk to be signed quickly. What is the most 

biting piece of sanctions that will come from those three first? Let 

me ask that question of whoever would like to comment. 

Mr. DUBOWITZ. Well, I think the dates are very important. On 

June 28th, the President, under 1245 of the NDAA, has to make 

a determination about whether countries should be granted exceptions to the sanctions law based on whether they have satisfied the 

significant reduction threshold. Are they significantly reducing 

their purchases of Iranian oil? And I think it is critical that on that 

date that we hold these countries to account. We have granted exceptions to Japan and Europe right now, but what is key is India, 

China, Turkey, and other countries. So, it is important that we see 

what that determination looks like, and that significant reduction 

really means significant. 

July 1st is the date that the European Oil Embargo is supposed 

to kick in. I think what we want to look at is, as Ray said, we want 

to make sure July 1st is when it actually happens, and that we 

don’t actually concede that as sanctions relief in Baghdad and 

delay the imposition of that oil embargo. But an oil embargo is only 

as good as enforcement, and we have to be careful that 100 percent 

embargo doesn’t turn into a 50 percent embargo by allowing Iranian oil to be disguised as non-Iranian oil and sold to Europe. 

And finally, the Senate bill—I think the most important provision in that Senate bill is actually send a powerful message that 

the Iranian energy sector is a no-go zone because of the link between energy revenues and proliferation. So, I would hope that at 

the Conference Committee that bill would be strengthened with 

that in mind. 

Mr. DEUTCH. Can the—Ambassador Wallace, when you spoke of 

extending sanctions to the entire Iranian economy, and if you could 

focus on natural gas and the sale of natural gas, and why—actually, this is for any of the three of you, why it is important to focus 

on the sale of natural gas, and while there is legislation that has 

been introduced that I am working on that is trying to expand this, 

is that something that can be done by Executive Order? Can 

CISADA, for example, be expanded to cover natural gas sales by 

Executive Order? 

Ambassador WALLACE. Thank you. Sitting here, I haven’t chimed 

in. I do note, we underestimate the impact that our economy has 

on the world. The lesson—maybe we didn’t learn any lessons in the 

2008 financial crisis, but one of the lessons is that what happens 

in America affects the entire world. And if we impose a true economic blockage with bright lines it will have a dramatic impact. 

And Mark very accurately talks about these shadowy things that 

you can do on the margins of these very complicated sanctions proposals. 

51

I think bright lines of having bans on these certain sectors are 

the way to go. If you have a very bright line, transparent blockade 

in certain sectors, it is very much harder to break that blockade. 

In terms of natural gas, I think the focus is obviously on petrochemicals, which the downstream petrochemical companies have 

really dramatically expanded their sales in Iran. We designated the 

National Petrochemical Company in Iran, but all the quasi-state 

and other state-related authorities have not been designated. We 

need to do that, and stop the growing petrochemical sector in Iran, 

which has been a huge source of revenue. 

Chairman ROS-LEHTINEN. Thank you very much. Thank you, Mr. 

Deutch. Mr. Chabot is recognized, the chairman of the Subcommittee on Middle East. 

Mr. CHABOT. Thank you, Madam Chair. Before I ask my question, the gentlemen from California has asked that I yield to him, 

and I yield 15 seconds to the gentleman. 

Mr. ROHRABACHER. To clarify my position, President Reagan was 

responsible for the death of the Marines in Lebanon. He was the 

one who gave the order. He accepted that responsibility. We in political life owe a great deal to our defenders, and we owe them our 

very best judgment, but we are responsible for those judgments of 

where we send our troops. Thank you very much. 

Mr. CHABOT. Reclaiming my time. A question I would like to 

focus on, Iranian enrichment. As I mentioned in my opening statement, I am deeply disturbed to hear that the administration is 

even considering offering the regime in Tehran the ability to enrich 

domestically, even with so called safeguards and supervisions. 

Doing so would allow Iran to stockpile low-level enriched uranium 

making it significantly easier for the regime to break out if it were 

to decide to do so. And offering this, it seems to me, could have 

ramifications not just for the Iranian nuclear program, but for the 

entire non-proliferation regime. 

I would be interested if any of you gentlemen would like to share 

your thoughts specifically what it would mean for Iran’s ability to 

actually advance toward a nuclear weapons capability this idea 

that the administration may be considering. Anyone in particular 

would like to answer that? 

Mr. DUBOWITZ. Well, I just want to point out, I think it has been 

misrepresented in the media, that no country is actually entitled 

to domestic enrichment under the NPT. You are entitled to nuclear 

fuel, so the notion that we have to give the Iranians domestic enrichment because it is the fair thing to do is actually inaccurate. 

I think the Iranians if they have domestic enrichment, and if they 

even have the capacity, they don’t need nuclear weapons to create 

enormous difficulties, and enormous risks for the international 

community. If Khamenei is at capacity, he can do anything he 

wants. He can threaten the region. He can threaten the United 

States and Israel. I think it is key to insure that he doesn’t get to 

capacity, which is why I would again reiterate, I think the only 

deal that is worth having is a deal with a new government. 

Mr. CHABOT. Doctor? 

Mr. TAKEYH. Sure, I will just say a few things. The Iranian nuclear program as we understand and see it today is an illicit program in the sense that it, to use a Catholic phrase, it was born in 

52

sin, in a sense that Iran has always been in violation of its arms 

control obligations in violation of the NPT. And there are a series 

of international agreements that it has to abide by. 

Most of the discussion recently has been about the NPT, but 

there are about six U.N. Security Council Resolutions, as well, that 

impose demands on Iran beyond the NPT. They call for suspension 

of all its activities, a real suspension. They call for Iran to come 

to terms with its previous weaponization, and acknowledge those. 

And all these things have to happen before Iran comes back to conformity with the NPT. And once it comes back to the NPT, as Mark 

was suggesting, there are varying interpretations of it. 

There is no explicit right to enrich in the nuclear non-proliferation treaty. There is right to have access to nuclear fuel, and most 

countries that actually use nuclear fuel don’t actually enrich indigenously. You know, that purchase it from abroad and so on. So, 

once Iran comes back to the NPT, that is a conversation we can 

have, but it is not there yet. It doesn’t conform with the NPT; it 

doesn’t conform with the U.N. Security Council Resolution. And 

today there are contentious negotiations between Iran and the 

IAEA about access to military facilities, such as Porchine and so 

forth. 

Mr. CHABOT. Thank you. I have only got a little over 1 minute 

left. Let me ask something if I could in a different direction real 

quickly. We oftentimes discuss this dynamics of sanctions, and with 

Iran in particular, the sanctions we want to affect the regime, and 

not necessarily the people of Iran. But in this particular case, the 

argument is that the regime really doesn’t care too much how the 

effect is on the people because they make out fine. It is kind of the 

same thing with North Korea on food. They give it to the military, 

and the people suffer. Would one of you gentlemen talk about that 

dynamic and what actually happens in Iran, Mr. Ambassador? 

Ambassador WALLACE. I think the leadership of Iran, as I think 

everyone has testified here today, is very fractured and is diffuse, 

but the regime has done a better job of almost any very dictatoriallike regime of permeating its economy with thugs of the regime 

that control its key businesses. So, when we are actually taking 

steps to pressure that economy, you are not seeing any of the major 

businesses that are operating in Iran that don’t have—that aren’t 

either owned by IRGC or controlled tacitly or explicitly by the 

IRGC. And to the extent that you can undermine confidence of 

their thugs, you will make a real impact, potentially, on the regime. So, I think it is very important to hit these key businesses 

and their economy. 

Mr. CHABOT. Thank you. My time has expired, Madam Chair. 

Chairman ROS-LEHTINEN. Thank you very much. Mr. Sherman, 

the ranking member on the Subcommittee on Terrorism. 

Mr. SHERMAN. Thank you. Mr. Dubowitz, thank you for the work 

of FDD. We are going after their energy sector to some degree, 

their banking sector, but they do have cash reserves. China is willing to buy their oil. China can sell them many products, but what 

China cannot sell is the spare parts for everything in Iran, whether 

it be the airplanes that the Shah bought from the U.S. producers, 

where GE is seeking a license to repair them, or inspect them, 

53

whether it be any elevator in any building in Iran where the equipment was imported from Europe. 

Now, our closest allies say that they want to maintain what they 

call legitimate trade. Under American law the only legitimate trade 

is food and medicine. If Iran can’t buy machines, and more importantly, spare parts, that would have a more immediate effect than 

taking away their export markets because they have a cash reserve, so even if we cut off all their exports they would have the 

cash. 

What measures and secondary sanctions can we adopt here in 

Congress to convince our European and Asian friends to withhold 

these non-lethal exports, particularly spare parts? 

Mr. DUBOWITZ. Well, thank you, Congressman Sherman. This is 

where I do agree that we should have an embargo. We should have 

an import embargo on Iran. And, as you mentioned, there are an 

array of goods that we should deny the Iranians, with the exception 

of humanitarian goods and services. 

Mr. SHERMAN. You are saying—you mean an export embargo 

where we don’t export to Iran? 

Mr. DUBOWITZ. Right. 

Mr. SHERMAN. I think we already have that, don’t we? 

Mr. DUBOWITZ. Well, I am talking about a multilateral embargo. 

Mr. SHERMAN. We, the big we. 

Mr. DUBOWITZ. We, the big. 

Mr. SHERMAN. All the good countries. 

Mr. DUBOWITZ. And I think what would be very useful, and it is 

in the House bill right now, and it is in the Senate package is to 

accelerate the designation of IRGC entities that are active in Iran’s 

broader commercial sector. As Mark mentioned, the IRGC controls 

much of the Iranian economy. 

We have gone after the financial sector, increasingly gone after 

the energy sector. But, there is a broader commercial sector. And 

the ability to actually designate and accelerate the designation of 

the IRGC companies that control Iran’s broader commercial sector, 

and then impose secondary sanctions on any company, any international company doing business with those IRGC companies 

would go a long way to establishing from an Iranian perspective an 

import embargo. 

Mr. SHERMAN. What if we were to go further and say no company 

in the world could get a Federal or state contract if they sold anything to Iran other than food or medicine? 

Mr. DUBOWITZ. Exactly right. We should be putting these companies to a fundamental choice between doing business in Iran and 

doing business in the United States. If you are doing business in 

Iran, you are doing business with the Revolutionary Guards, and 

that is bad for your reputation. There will be serious financial penalties. And in doing so, you are supporting terrorism, proliferation, 

and human rights abuses. 

Mr. SHERMAN. Ambassador Wallace, have we actually imposed 

sanctions on any company that had any political clout in either the 

United States or any of our friendly governments? As I understand 

it, we have sanctioned some very small Chinese traders who don’t 

do business in the United States, are now prohibited from doing 

what they never thought of doing. And we have sanctioned one 

54

Swiss corporation that was full owned by the Iranians. Have we actually had the guts to impose the Iran Sanctions Act? 

Ambassador WALLACE. It is a very good question, Congressman. 

And you, of course, are aware that success of administrations have 

not adequately enforced probably what was good law from the state 

of the Iranian revolution in terms of sanctions. But don’t underestimate something, Congressman. When you speak and ask me a 

question like that, and call on all businesses around the world to 

stop selling goods into Iran for fear of not being able to do business 

in the United States, that is a sanction. You just sanctioned that 

government, because when I go out and I challenge businesses 

around the world and I say we are going to make public the business that you do in Iran, and you are not going to be able to do 

business in the United States, you know what they do? They pull 

out of Iran, because they want to do business with the biggest 

economy in the world, so don’t underestimate the power I think of 

these statements. But you are very right, sir, successive administrations have failed. 

Mr. SHERMAN. We will keep repeating them but we need to do 

more than just talk. We need legislation. What would be the reaction—I mean, I think our administration has gone as far as it can 

in persuading foreign governments that are our friends to do what 

they are willing to do. What would be the reaction if we sanction, 

say Siemens, in a way that the German Government didn’t like? 

Chairman ROS-LEHTINEN. And I will persuade you to not answer 

that right now. 

Mr. SHERMAN. Then please answer that for the record. 

Chairman ROS-LEHTINEN. Thank you. Mr. Kelly is recognized, 

our vice chair on the Subcommittee on Asia and the Pacific. 

Mr. KELLY. Thank you, ma’am. And thank you for being here 

today. I have actually had the opportunity to travel with our chairwoman to the Mideast right after the first of the year, and in all 

the countries we visited they talked about being in the same neighborhood with Iran, and the dangers of Iran actually developing nuclear weapons. And when we asked them so, what can we do to 

help? They kept coming back with the United States needs to be 

in a stronger position. It is nice to have coalitions but only if somebody is going to be the lead in the coalition. 

And I was reading the Op Ed in the Wall Street Journal today. 

We are kind of on some kind of a crash course eventually with 

Iran. And I know we have been working on sanctions for many decades now, and trying to come up with something that is going to 

keep Iran at bay. 

Ambassador Wallace, I mean, how strong is this coalition? And 

how—I know we keep talking about strong sanctions, and I know 

you answered Congressman Berman saying when we tell people 

you are not going to be able to do business with us, so we can walk 

softly and carry a big stick, but the other idea is the only way a 

big stick works is every once in a while if you swing it and hit 

somebody. So, tell me how would we approach this? 

And all three, I need you to weigh in because I think the disconnection here is we think the longer we stay at the table and the 

longer we talk that somehow we are going to arrive at an answer. 

I don’t think that works. I think that in this part of the world kindVerDate 0ct 09 2002 13:47 Aug 29, 2012 Jkt 000000 PO 00000 Frm 00058 Fmt 6633 Sfmt 6633 F:\WORK\FULL\051712\74238 HFA PsN: SHIRL
55

ness is interpreted as weakness, and the longer we talk the more 

it gives them opportunities to get ready to do something more drastic. So, if you could all just kind of weigh in on that for me. 

Ambassador WALLACE. I think we all have it wrong. I think that 

we have to—multilateral sanctions are very, very important, and 

that is where we should give our diplomats and the President discretion to come up with some sort of U.N. framework or the like. 

There should be no discretion. This is the dominant economy in the 

world right now. Do not underestimate the power of our ability to 

do things on a unilateral basis that will have an incredible effect. 

This committee has always dragged administrations and governments to tougher sanctions. If you impose an economic blockade 

here in the United States and deny the ability of other countries 

and businesses to do business here in the United States if they do 

business in Iran, you will be sending a huge and powerful message. 

Don’t underestimate it. If you require companies that come to the 

U.S. capital markets, that is nearly everyone. Certainly, there are 

some small companies out there that don’t avail themselves of the 

U.S. capital markets. To disclose their business, if they do it in 

Iran, they will stop doing that business. The reputational risk is 

too great, but we can’t underestimate the benefit of having a bright 

line economic blockage and using the power of our economy to impose that blockade. 

Mr. DUBOWITZ. Congressman, let me give you a specific example 

of what Mark is talking about. With respect to financial sanctions, 

the U.S. administration has not sanctioned any international financial institution for violations under CISADA. And despite the fact 

that there are numerous banks in places like Russia, Azerbaijan, 

South Korea, Dubai that act as Iran’s extraterritorial bankers, 

under current House bills and the Senate legislation it would require international financial institutions that have corresponding 

banking relationships in the United States that are doing business 

with Iran to disclose the nature and extent of their Iranian business. 

If that was passed and enforced, we would know what those 

banks are doing with Iran. And, in doing so, we should take the 

step of sanctioning those banks under CISADA and cutting them 

off from the U.S. financial market. I think that would send 

shockwaves through the financial community and send a signal 

that the United States is serious about sanctions enforcement. 

Mr. TAKEYH. I would agree with you, Congressman, that the diplomatic process that yields no tangible benefits cannot persist and 

it cannot persist forever. There is going to be some discussions in 

the next meeting maybe in Baghdad or the one following it about 

doing something about Iran’s 20 percent enriched stockpile, and 

perhaps a session of further 20 percent enrichment and closure of 

Fordo as an interim step. 

I wouldn’t necessarily suggest that interim measures are a bad 

thing. I don’t think they are a substitute for a deal. I don’t think 

they are a substitute for arms control agreement that is real, but 

in some way they do arrest Iran’s nuclear trajectory which has 

been going unabated for a long time. 

So, if this process can yield that, and then we can continue to 

build upon it, I am not quite sure if it is effortless. Now, we may 

56

not be able to get that through this particular process, and that 

will clarify itself that the diplomatic process that we have embarked upon is deficient, and we think about other measures of approaching it. 

One of the problems with this particular issue has been that the 

way it is framed is that diplomacy versus war. And if you frame 

it that way, then the inclination by international community and 

many international actors to persist with diplomacy is quite great. 

And we have to kind of offer some of the things that have been 

said, that there is an alternative. If this diplomacy is stalled or 

breaks down we go back, have additional course of steps, and 

maybe we can put Iran in a position where it once again makes 

compromises. 

I don’t think the situation is the question that we often is what 

would Iran accept? The relevant question is, will Iran accept what 

its predicament suggests? The question is how do we put Iran in 

a position where it accepts an arms control agreement that would 

be U.S. satisfactory? 

Mr. KELLY. Okay. So, just real quickly, how close to midnight are 

we? 

Mr. TAKEYH. The physics of this largely eludes me, having failed 

physics twice, well, same class twice, so I don’t know if that counts 

as twice. 

I think we probably have more time than we think. I think the 

nuclear program of Iran is still embryonic. It is still having some 

technical problems. We are not at the point when they are ready 

to detonate, but we are—they are incrementally getting closer to 

that. But I think we can build more time into this effort as it goes 

on. 

Mr. KELLY. Thank you. 

Chairman ROS-LEHTINEN. Thank you so much. 

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

Chairman ROS-LEHTINEN. Thank you, sir. Mr. Meeks, ranking 

member on the Subcommittee on Europe. 

Mr. MEEKS. Thank you, Madam Chair. 

I am having all kinds of questions in my head. First, from my 

viewpoint, I agree that our economic power is tremendous. I agree 

that the whole idea is to have regime change. I equate it to, and 

my hopes are that we can do this without bombing. When I look 

at the Soviet Union and how it no longer exists as we knew it, says 

that there can be pressure that can be applied to force economies 

to disintegrate, and thereby compel the regime change. 

I don’t see how we do that just unilaterally. I think that we have 

to do it multilaterally, and that is why it is important to have our 

partners, and I think that particularly right now our European 

partners playing a major role as opposed to them leaving windows 

of opportunities for the Iranian Government to skirt around. They 

need to be intricately a part of what we are doing. 

So, I know that our European allies have implemented not only 

the United Nations sanctions toward Iran, but they have gone toward the whole EU sanctions. My question then is, first, let me try 

to figure out, how do you evaluate the EU’s efforts? I know we have 

been focused on ours. I want to know how you evaluate the EU’s 

efforts in bringing sanctions, applying sanctions to Iran so that we 

57

know that we do—we have a real teammate in working collectively 

together to accomplish the end of what we want to accomplish. 

How would you evaluate the EU? 

Ambassador WALLACE. I think the EU has been very, very important, and it has taken some very, very important steps. Just three 

quickly. Obviously, the oil—ban on oil purchases has been of monumental importance. Its role in SWIFT has been very, very important, so I think that the EU’s actions in some ways have led. 

I think what my testimony previously, Congressman, was I think 

that the United States can take even a more robust stance in also 

leading and cutting off, and establishing this blockade that I talked 

about. But I think it is very important between now and the negotiations and the implementation of the EU ban that we encourage 

our European allies to not walk back those very important steps 

that they have taken. 

Mr. DUBOWITZ. I completely agree with Mark. I think that the 

key when it comes to Europe has really been France. And I think 

that the real X factor in the negotiations in Baghdad and beyond 

will be what happens under a Hollande government. I mean, under 

Sarkozy, for those of us who have dealt with Europeans, have been 

to Europe, we have always been amazed at how tough the French 

have been on sanctions. I think they have dragged many of their 

European partners with them. The question will be, will Hollande 

continue France’s tough non-proliferation stance and enforce these 

sanctions, or will the Hollande government become like too many 

of its European counterparts willing to go along, but not willing to 

lead? 

Mr. TAKEYH. I do agree that the European sanctions have been 

quite instrumental and significant. And much of the Iranian diplomatic effort right now will be focused on trying to address the Europeans. Perhaps not the entire EU oil embargo, but the insurancereinsurance provision that is actually supposed to go into effect on 

July 1st. And that may actually happen. 

Right now, there are negotiations taking place between the Europeans and the Asian markets, the Japanese, the South Koreans, 

and others who have been complaining——

Mr. MEEKS. What about the non-EU nations like Georgia, Armenia, Azerbaijan, Turkey? 

Mr. TAKEYH. The main Iranian trading partner used to be EU. 

I mean, that is gone now in terms of level of economic arrangement 

it has. Otherwise, it is with countries like India, China, Japan, 

South Korea, and so forth, those are its other main trading partners now as it is focused toward the Asian markets. But I do think 

one of the reasons why the insurance-reinsurance of cargo shipping 

may actually lapse is not so much because of Iranian-European negotiations, but because of the Asian markets that are now appealing, the Japanese and others. 

And even beyond that, I think you can see—Mark can talk about 

this notion of sovereign guarantees, where there is a bill in Japanese Parliament, and so forth. So, I think even without insurance, 

the Iranian oil cargo may move as countries move to sovereign 

guarantees. 

Chairman ROS-LEHTINEN. Thank you very much. Mr. Bilirakis, 

my Florida colleague. 

58

Mr. BILIRAKIS. Thank you, Madam Chairman. I appreciate it 

very much. And thank you for your testimony. 

Well, human rights have been systematically violated by the Iranian regime, and there seems to be no sign that the situation is 

improving. I know we touched on this, but I want you to elaborate 

if you can for the entire panel. Women, ethics, religious minorities 

such as Kurds, Bahai, Christians and Jews, political protestors, 

journalists, human rights, lawyers and others have been repressed 

and persecuted. 

In 2010, the Comprehensive Iran Sanctions Accountability and 

Divestment Act included a provision that for the first time imposed 

sanctions against Iranian officials responsible for the country’s 

human rights abusers. This provision has been used in at least 15 

cases to my knowledge, targeting many of those who perpetrate 

human rights violations against the Green Movement. 

Additionally, in July 2011, the U.S. and Britain imposed visa restrictions on more than 50 Iranian officials for their roles in political repression in Iran. Can you speak to the effectiveness of these 

targeted sanctions? I know you touched upon it, but if you can 

elaborate, I would appreciate it very much. Have we seen a change 

in Iran’s approach to human rights due to this? And I probably 

know the answer, but I want to hear from you. Can we tailor this 

newest round of sanctions to more effectively pressure Iran to comply with the human rights obligations? For the entire panel, please. 

Ambassador WALLACE. Obviously, I am sure it is probably the 

consensus of this group, I don’t want to testify for my colleagues, 

but Iran’s human rights situation is deplorable, and it has not improved. And if anything, Iran—when the Persian Spring, if you 

will, was the first of what you saw in the Middle East, started in 

2009, and then what has happened around the Arab world, Iran 

has shown that it is willing to be more brutal and more repressive 

against its own people in order to retain its power than really almost any other government, perhaps Syria. But you have a very 

restive minority population, 42 percent minority there, so it is a 

tenuous hold, particularly as this economic pressure has been put 

in place. 

We ran a campaign, United Against Nuclear Iran, we ran a campaign on human rights abuses where we highlighted international 

crane manufacturers. One of the great methods of horrible repression is Iran would stage gruesome public executions of hanging dissidents, homosexuals from cranes in public squares. And these 

were international crane manufacturers. And we succeeded in 

using those human rights violation abuses to highlight what we 

think are some economic measures that we can take in order to 

continue to isolate that regime for those very same human rights 

abuses. 

Mr. DUBOWITZ. I would just say quickly that I do think human 

rights sanctions work. I don’t think the Iranian regime is like the 

North Korean regime. I think many top level Iranian officials like 

to travel to Europe. They like to ski in Gstaad. They like to shop 

at Harrods in London. 

I think the difficulty has been that we haven’t—we have slapped 

on travel bans and asset freezes, and then we’ve relaxed them 

when these same Iranian officials become the Foreign Minister or 

59

the Defense Minister and travel to an IAEA meeting in Vienna, or 

an OPEC meeting, or a U.N. meeting. So, those travel bans are 

great in theory, but in practice they are not being enforced. 

I think the human rights sanctions are important, but I would 

argue that we need to go that next step. We need to sanction Al 

Khamenei. He is the greatest human rights abuser in Iran. It 

doesn’t mean we still can’t negotiate with this regime. But, let us 

send a message to the Iranian people that we agree with 75 percent of them, that Al Khamenei is a torturer, and a murderer, and 

should be called to account by the United States of America. 

Mr. TAKEYH. This is a point that requires no reinforcement, but 

I think it should be reinforced anyway. The human rights situation 

in Iran is abysmal. You mentioned ethnic minorities, women, I 

think it is Iranian citizens of whatever their gender and ethnicity 

are being subject to harassment, repression, arbitrary judicial tribunals, show trials, just an entire spectrum of issues where Iran 

has emerged as one of the most repressive states in the Middle 

East, and that is saying something given the lofty standards of 

that particular region. 

I think one of the limitations of our dialogue with Iran, and it 

is a limitation of the 5+1 process is that it focuses on proliferation, 

and proliferation transgressions. So, the issue of human rights 

never gets aired at those particular meetings. I am not quite sure 

if we can successfully—if you should exclude it. I think we should 

bring it up to the Iranian officials any time we have encounters 

with them, that the international community is concerned not just 

because of their violations of their international obligations under 

the NPT, but also their international obligations in a variety of 

human rights standards. 

Iran is a signatory to various U.N. human rights documents, 

international human rights documents. It is a violation of Iran’s 

international obligation to behave domestically in the way it has, 

and that is something that should be highlighted. 

Mr. BILIRAKIS. Thank you, Madam Chair. I yield back. 

Chairman ROS-LEHTINEN. Thank you very much. Mr. Griffin is 

recognized. He is the Subcommittee on Europe and Eurasia vice 

chair. 

Mr. GRIFFIN. Thank you, Madam Chairman. 

Ambassador Wallace, I would like to—it is good to see you here. 

Thanks for testifying today. I would like to dig a little deeper on 

the issue of auto manufacturing in Iran. And I apologize for any 

duplication there may have been when I was—that I might have 

missed. But I would like for you to name names in terms of the 

success that you as a group, and we collectively have had in getting 

some of the auto manufacturers to suspend. And I would like for 

you to talk about the actors that are still engaged in production or 

commerce with Iran, and what we can do to turn up the heat. Obviously, we can name names, and we should. But could you elaborate a little more on that, because it seems to me a lot of the commerce with Iran is in the auto production area. 

Ambassador WALLACE. Thank you. It is good to see you, as well. 

It is not well known, but the Persian automobile sectors are the 

13th largest in the world. And as Mark testified previously, we 

have to do better at preventing inflows of products and goods, 

60

spare parts, Congressman Sherman asked questions about this previously. And there are major auto manufacturing facilities and employment in Iran. This is a huge sector of their economy. Fifty percent of the country’s GDP is in the industrial sector, and 20 percent 

of it is their automobile manufacturing. This is a sizeable part of 

their economy. 

We have had some successes in having automobile manufacturers leave the Iranian market, the likes of Karsan, Hyundai, and 

Porsche, but there are some real gaping holes. Peugot right now is 

a major actor in Iran, major manufacturer inside Iran in direct 

partnership with the IRGC. You cannot manufacture an automobile 

in Iran without it being manufactured by an IRGC company. 

We all own parts of Peugot because own GM, and this committee 

has the ability to contact the United States Treasury Department, 

which is its major shareholder, and say to GM why are you—if you 

are partnering with Peugot, impress upon Peugot that it cannot be 

the partner of the United States of America and also manufacture 

automobiles in Iran, and sell parts into Iran. They have supposedly 

slowed down their imports of the Peugot build kits, but we have 

to make that a permanent ban. 

Another example is Nissan, a major manufacturer. Actually, I 

have a picture of the Ahmadinejad I guess Pope mobile or Dictator 

mobile which is a Nissan vehicle where he is riding in a Nissan vehicle. Well, obviously, Nissan sells cars in the United States, and 

I don’t have anything personally against Nissan, but Nissan is a 

major provider of vehicles to state governments, governments 

around the country. 

I would suggest, and I would respectfully request this committee 

to write a letter to our friend, Mayor Bloomberg, in New York. New 

York City just awarded a multi-billion dollar contract to Nissan to 

build the most iconic American vehicle, one of the most iconic 

American vehicles, the New York City taxicab to Nissan. If they 

are going to build our New York City taxicabs, they shouldn’t be 

manufacturing cars with the IRGC in Iran. And we should be able 

to use the power of New York’s pocketbook to impress upon Nissan 

to stop manufacturing automobiles in Iran. 

This is an important part of their sector, and follows on what Mr. 

Sherman said, my colleagues on the panel have said, and we can 

put a real dent in this part of the economy. 

Mr. GRIFFIN. I would be really interested in sitting down and 

talking with you. I would be happy to help with a letter, talk about 

legislation. I have some notes here that Mercedes is also continuing 

to do business in Iran. I drive a Ford pickup, so I hope there is no 

issue there. I am sure there is not. We love Ford. By the way, they 

didn’t take any bailout funds. 

So, I also have some notes that some of the companies have suspended auto trade production. Does that mean they still have resources there? What exactly does—suspended doesn’t mean—it 

doesn’t sound like they pulled completely out, Audi, General Motors, Toyota. Do you have any information on that? 

Ambassador WALLACE. Yes, absolutely. We are concerned by the 

suspension language because there is such a large presence in Iran 

of this automobile manufacturing. Peugot we think is the best example. It is the biggest manufacturer in Iran, and they have ‘‘susVerDate 0ct 09 2002 13:47 Aug 29, 2012 Jkt 000000 PO 00000 Frm 00064 Fmt 6633 Sfmt 6633 F:\WORK\FULL\051712\74238 HFA PsN: SHIRL
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pended’’ sending in Peugot build kits into Iran for 5 months because of the GM partnership. That should be a permanent ban. 

Mr. GRIFFIN. It looks like I am out of time but, Madam Chair, 

I would just say that if the Federal Government owns part of General Motors, and General Motors is doing business with Peugot, 

and Peugot is in Iran, that is an outrage, and we need to do something about it. Thank you. 

Chairman ROS-LEHTINEN. Thank you so much. Thank you. Mr. 

Burton is recognized, the chairman on the Subcommittee on Europe and Eurasia. 

Mr. BURTON. I love to listen to these discussions. We are going 

to put pressure on Iran, and they are going to change. And I start 

thinking about things that people don’t talk about in the history 

books any more. Lord Chamberlain, he was going to negotiate with 

Adolf Hitler. Hitler violated the Treaty of Versailles. Instead of 

having 100,000 troops, they had millions. And while the allies were 

sinking their ships and destroying their jeeps and their airplanes, 

because if we didn’t have weapons there wouldn’t be any more war. 

Hitler was building up. And Chamberlain goes to Munich and 

shakes hands with Hitler. Comes back, peace in our time, and 50–

60 million people died. 

There comes a point when you have to talk to these guys in 

terms that they understand. You have got to say to them look, if 

you keep this crap up, you are going to die. Now, everybody wants 

to stay out of war. I hate war. I was shaving the other day and 

I heard the commentator talking about this young man. I came out 

and looked at the TV set and there was a good looking young man 

with his wife and his child, and they announced that he had both 

arms and legs blown off in Afghanistan with an IED. And I 

thought why in the hell did that happen? 

With the technology we have, you can fly over without a pilot, 

have a hellfire missile on and put it right down somebody’s chimney. We don’t have to send a whole bunch of troops in. Through 

the technology we have, we can get anybody, anybody, but like we 

did in World War I, we are sitting around talking for hours, and 

days, and months, and years, saying oh, my gosh, you guys better 

stop making this nuclear weapons or we are going to sanction you. 

Mr. Wallace, you talked about sanctions. We passed a sanctions 

bill, but it had in it a waiver for the President. So, we pass a waiver so he can do whatever he wants. And you know, you have mentioned there were a bunch of waivers, so we keep negotiating, and 

negotiating, and negotiating. 

In Korea in 1994, we negotiated with the North Koreans. We 

don’t want them, we will not allow them to have nuclear weapons, 

so we gave them the ability to get cold water nuclear reactors. 

They got nuclear weapons. Didn’t work, didn’t work. At that time, 

if we would said, listen, you keep this crap up and you are in big 

trouble, buddy, it would have worked, but we messed around and 

messed around. Now they have nuclear weapons. And we are doing 

the same thing with Iran. 

These guys aren’t going to stop. There is always going to be a 

way to get money and the things that they need. It ain’t going to 

stop, and we are heading toward a war over there. At some point 

Israel, and I know Bibi Netanyahu, he is not going to risk another 

62

holocaust. If they keep this stuff up, they are going to attack, and 

it doesn’t need to happen. 

It seems like to me we could send a message to Ahmadinejad and 

the mullahs and say look, we know where you are. We know where 

you live, and we have got the technology to put one right down 

your chimney. And if they knew we meant it, I think you would 

probably have a change in attitude. But, no, we keep on saying if 

we put this pressure on, and put that pressure on and negotiate, 

it isn’t going to work. It will not work. 

I have been here 30 years, and I have heard it all. And I am really disappointed that we continue down this path. One thing that 

we say we ought to do to our kids is teach them history. Well, we 

don’t teach them history any more. If everybody would study history they would know that you reach a point when you can’t negotiate with tyrants. When you have to stand up and say look, you 

stop this stuff because you are endangering humanity. We are talking about nuclear weapons now, can kill—right here. We could kill 

50 million people with just a couple of bombs, so it is a lot worse 

than it was in World War II. So, we have to learn from history. 

And the history is you tell tyrants enough, while you still have 

time. 

We had the time in Korea, but now we don’t. They have got nuclear weapons, and they are working on delivery systems, so we 

have to do something now because they have the ability to kill a 

bunch of people. 

Iran is not yet in that position, so what we need to do is we need 

to say very strongly look, we have put sanctions on you. We have 

done all this stuff, now we are tired of it. And the President or 

whoever the next President is, if we still have time, needs to say 

very clearly we are not going to mess with you. You keep this up, 

and you are going to go to Valhalla, or wherever it is. We are going 

to put one down your chimney. We have the ability to do it. You 

could be 2,000 miles away with a computer and you can fire a 

hellfire missile down somebody’s—in somebody’s car as they move 

along a road, or down their chimney. 

It is time that we do something to stop this nonsense instead of 

talking about it, and killing everybody with paper. I yield back. 

Chairman ROS-LEHTINEN. Thank you very much, Mr. Burton. Always good to hear your strong voice, clarity. Thank you very much, 

sir. Don’t get frustrated. Mr. Duncan of South Carolina. You are 

the guy that’s going to clean it up here. 

Mr. DUNCAN. Thank you, Madam Chairman. 

Chairman ROS-LEHTINEN. You are the last batter up. You have 

got to hit a home run. 

Mr. DUNCAN. I am going to bat clean up here, so I appreciate the 

committee, appreciate the witnesses staying here as long as you 

have. 

I can’t say it any more eloquently or strongly as Mr. Burton did. 

And I want to echo his words. I think we should heed the words 

of Winston Churchill when he discussed the feeding of a crocodile 

hoping that he will eat you last. That is exactly what it seems like 

we are doing with these policies of sanctions, and they seem to be 

policies of appeasement. 

63

And it is clear with the rhetoric, the posturing, and the actions 

of Iran exactly what they are doing. They are just buying time. 

They are buying time so they can do exactly what they want to do, 

and that is acquire a nuclear weapon and be a threat to the world, 

and the region, and the United States, the great Satan, the little 

Satan, and all of the things because that is in their rhetoric. I am 

not making this up personally, this what they have said. 

The free world doesn’t want to see Iran get a nuclear weapon. 

And it has been clear on that, the free world has been clear on that 

with its rhetoric, but not necessarily with actions that match the 

rhetoric. So, I guess the question for Mr. Dubowitz, you state in 

your testimony that Khamenei is seeking to buy his country 

enough hard currency from oil sales to withstand the soaring inflation, now estimated to be as high as 40 percent per year, a crumbling currency. At one point this year it was down about 50 percent, I think. 

So, with all these sanctions, what is the breaking point? What 

do you see as the breaking point that is going to make Iran allow 

inspectors to come in, will remove their nuclear capability, will stop 

pursuing these paths of destruction? 

Mr. DUBOWITZ. Well, thank you, Congressman. I would say this, 

that there is no evidence to date that any sanction or sanctions in 

their entirety have changed the risk-reward calculus of Khamenei 

with respect to building a nuclear weapon. I think to change that 

risk-reward calculus, as Ray has written so eloquently, we have to 

put him to a fundamental choice between a bomb and the survival 

of his regime. And we haven’t put him to that fundamental choice. 

And I think part of the reason we haven’t put him to that choice, 

as echoed by Congressman Burton, is that the Iranians don’t believe there is a credible military threat. I mean, we haven’t actually 

laid out a serious military option. You know, there are choke holds 

within the Iranian proliferation supply chain, particularly where 

you fabricate centrifuges, that if we were to put a missile down 

that chimney, we could do serious damage to the Iranian nuclear 

program and set them back by years. 

And I think we have failed to communicate that sufficiently to 

Khamenei. I think he needs to be put to that fundamental choice. 

He hasn’t yet. And, as you said, he has played rope-a-dope, and has 

successfully moved the goal post, not to mix sports metaphors, 

but——

Mr. DUNCAN. I agree with you. And, you know, there are two 

Presidents on these issues that I tend to subscribe to, one is Teddy 

Roosevelt. I didn’t agree with everything with Teddy Roosevelt, but 

he did say he is going to speak softly and carry a big stick. He 

truly meant that the big stick works, and that you are very clear, 

when you speak softly to someone about your intentions and it is 

not idle threats at that point. It is taken very seriously. You look 

a person in the eye and you speak softly, but you tell them what 

you are going to do if they don’t straighten up. That is how my dad 

talked to me, and he meant it. 

Ronald Reagan, the reason the Iranians let the hostages go when 

Ronald Reagan was sworn into office is because they knew he 

meant what he said on the campaign trail, as it was approaching 

January 20th and being sworn in, they knew he meant it. And I 

64

don’t believe that Khamenei or Ahmadinejad, or the Iranians as a 

whole truly believe what the free world is saying, that we don’t 

want them to acquire a nuclear weapon. So, I agree with you, and 

I appreciate your testimony. 

Madam Chairman, I don’t have anything else. I think it has all 

been said, so with that I will yield back. 

Chairman ROS-LEHTINEN. Thank you so much, and I thank the 

witnesses, excellent testimony. I hope that we can move on stronger sanctions. I hope that the Senate wakes up. I fear these negotiations May 23rd in Baghdad just a lot of hot air, and a lot of concessions. We have got to get tougher. 

Thank you, gentlemen, and the hearing is adjourned. Thank you, 

Mr. Berman. 

[Whereupon, at 12:11:36 p.m., the committee was adjourned.] 

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