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IMPLEMENTING TOUGHER SANCTIONS ON IRAN:

A PROGRESS REPORT

HEARING

BEFORE THE

COMMITTEE ON FOREIGN AFFAIRS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED ELEVENTH CONGRESS

SECOND SESSION

DECEMBER 1, 2010

Serial No. 111–136

Printed for the use of the Committee on Foreign Affairs

(

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

(II)

COMMITTEE ON FOREIGN AFFAIRS 

HOWARD L. BERMAN, California, Chairman 

GARY L. ACKERMAN, New York 

ENI F.H. FALEOMAVAEGA, American 

Samoa 

DONALD M. PAYNE, New Jersey 

BRAD SHERMAN, California 

ELIOT L. ENGEL, New York 

BILL DELAHUNT, Massachusetts 

GREGORY W. MEEKS, New York 

DIANE E. WATSON, California 

RUSS CARNAHAN, Missouri 

ALBIO SIRES, New Jersey 

GERALD E. CONNOLLY, Virginia 

MICHAEL E. MCMAHON, New York 

THEODORE E. DEUTCH, Florida 

JOHN S. TANNER, Tennessee 

GENE GREEN, Texas 

LYNN WOOLSEY, California 

SHEILA JACKSON LEE, Texas 

BARBARA LEE, California 

SHELLEY BERKLEY, Nevada 

JOSEPH CROWLEY, New York 

MIKE ROSS, Arkansas 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

JIM COSTA, California 

KEITH ELLISON, Minnesota 

GABRIELLE GIFFORDS, Arizona 

RON KLEIN, Florida 

ILEANA ROS-LEHTINEN, Florida 

CHRISTOPHER H. SMITH, New Jersey 

DAN BURTON, Indiana 

ELTON GALLEGLY, California 

DANA ROHRABACHER, California 

DONALD A. MANZULLO, Illinois 

EDWARD R. ROYCE, California 

RON PAUL, Texas 

JEFF FLAKE, Arizona 

MIKE PENCE, Indiana 

JOE WILSON, South Carolina 

JOHN BOOZMAN, Arkansas 

J. GRESHAM BARRETT, South Carolina 

CONNIE MACK, Florida 

JEFF FORTENBERRY, Nebraska 

MICHAEL T. MCCAUL, Texas 

TED POE, Texas 

BOB INGLIS, South Carolina 

GUS BILIRAKIS, Florida 

RICHARD J. KESSLER, Staff Director 

YLEEM POBLETE, Republican Staff Director 

(III)

C O N T E N T S 

Page

WITNESSES 

The Honorable William J. Burns, Under Secretary for Political Affairs, U.S. 

Department of State ............................................................................................ 12

The Honorable Stuart A. Levey, Under Secretary for Terrorism and Financial 

Intelligence, U.S. Department of Treasury ........................................................ 22

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

The Honorable Howard L. Berman, a Representative in Congress from the 

State of California, and Chairman, Committee on Foreign Affairs: Prepared 

statement .............................................................................................................. 5

The Honorable William J. Burns: Prepared statement ........................................ 16

The Honorable Stuart A. Levey: Prepared statement .......................................... 25

APPENDIX 

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

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

The Honorable Dan Burton, a Representative in Congress from the State 

of Indiana: Prepared statement .......................................................................... 68

The Honorable Russ Carnahan, a Representative in Congress from the State 

of Missouri: Prepared statement ......................................................................... 70

The Honorable Joe Wilson, a Representative in Congress from the State 

of South Carolina: Prepared statement .............................................................. 72

The Honorable Theodore E. Deutch, a Representative in Congress from the 

State of Florida: Prepared statement ................................................................. 73

The Honorable Gene Green, a Representative in Congress from the State 

of Texas: Prepared statement ............................................................................. 74

Questions for the record submitted by the Honorable Russ Carnahan to 

the Honorable William J. Burns (responses not received prior to printing) ... 75

(1)

IMPLEMENTING TOUGHER SANCTIONS ON 

IRAN: A PROGRESS REPORT 

WEDNESDAY, DECEMBER 1, 2010

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

The committee met, pursuant to notice, at 9:33 a.m. in room 

2172, Rayburn House Office Building, Hon. Howard L. Berman 

(chairman of the committee) presiding. 

Chairman BERMAN. The committee will come to order. 

And in a moment I will recognize myself and the ranking member for up to 7 minutes each for purposes of making an opening 

statement. I will then recognize the chairmen and ranking members of the Middle East and South Asia Subcommittee and the Terrorism, Nonproliferation and Trade Subcommittee for 3 minutes 

each to make their opening statements. 

We have to end today’s hearing by noon. So, without objection, 

all the members may submit opening statements for the record. 

Before I begin my statement, I want to say a few words about 

Steve Solarz, one of our most distinguished former colleagues, who 

passed away on Monday after a long battle with cancer. 

Steve had struggled for several years with this terrible illness, 

but with his typical discipline and good humor he maintained an 

active and productive schedule. He served in Congress from 1975 

to 1992. On this committee he was chairman of the Africa Subcommittee and later chairman of the Asia Subcommittee, where his 

hearings and activism played a key role in ending the dictatorship 

of Philippine President Ferdinand Marcos. 

Steve was one of the most creative legislators I have ever worked 

with. Time after time, the committee would be debating an amendment to a bill that was resisted by the committee leadership; arguments would be made on both sides; and then Solarz would seek 

recognition, offer the perfect synthesis between the two positions, 

and get the unanimous backing of the committee for his compromise. He was a unique talent. 

After leaving Congress, Steve continued his activism as a leader 

of the International Crisis Group. Those of us who had the privilege of calling Steve both a friend and colleague will remember him 

for his sharp insights, good humor, and willingness to push American foreign policy beyond the boundaries of conventional thinking. 

We express to his wife Nina and his family our deepest regrets 

and condolences at this loss to them and to our Nation. And I ask 

for us just to sit to take a moment of silence while we remember 

Steve. 

2

Now to my opening statement. 

Iran’s nuclear program is a fundamental threat to the United 

States, our friends and allies, and to the global consensus on halting and reversing the spread of nuclear weapons. 

As we meet this morning, Iran’s centrifuges continue to spin, 

making more and more enriched uranium that could ultimately be 

turned into fuel for nuclear weapons. This threat continues to grow 

with each passing day. 

This summer, in response to that threat, Congress passed the 

most rigorous sanctions ever imposed on Iran, the Comprehensive 

Iran Sanction, Accountability, and Divestment Act, or CISADA, as 

it is widely known. 

The overwhelming vote for CISADA—408 to 8 in the House, 98 

to nothing in the Senate—was a powerful demonstration of the bipartisan commitment to a tough approach to halting Iran’s nuclear 

program. 

This act broadly expanded the applicability of the original Iran 

Sanctions Act, including sanctioning third-country companies and 

banks involved in activities such as sales of refined petroleum to 

Iran, assistance to Iran’s domestic refining capacity, and financial 

dealings with the Iranian Islamic Revolutionary Guard Corps, or 

IRGC. 

The fundamental premise of our approach is that companies 

should choose the U.S. market over the Iranian market. It is a 

sound approach but by no means a silver bullet for addressing 

Iran’s desire to acquire a nuclear weapons capability. 

Our legislation, even before the President signed it into law on 

July 1, helped to galvanize international opinion regarding the Iranian nuclear issue. The European Union, previously a key source 

of Iranian commerce and investment, passed its own set of tough 

sanctions in late July. Other states—Canada, Australia, South 

Korea, Japan, and Norway—followed with their own national sanctions. 

As a result of our sanctions and additional financial measures 

pursued by the administration, most major Western, Japanese, and 

South Korean energy companies have ceased selling Iran refined 

petroleum and investing in Iran’s energy sector, and the doors of 

much of the financial, insurance, and shipping worlds have been 

closed to Iran. 

Major oil companies, such as Royal Dutch Shell, Total of France, 

Italy’s ENI, Vitol, Norway’s Statoil, Spain’s Repsol, and Japan’s 

INPEX, have all ended or are in the process of ending their energy 

projects in Iran. And there are numerous reports that these sanctions have seriously hurt the Iranian economy and deepened political fissures in the Iranian leadership. But is that, in fact, the case? 

And, if so, how much closer does it bring us to our real objective, 

which is to persuade Iran to suspend its nuclear enrichment program and end its nuclear weapons program? 

[Audio difficulties.] 

Chairman BERMAN. Roll the clock back. I get 10 more seconds for 

the last play. 

The purpose of this hearing is to attempt to answer these very 

questions. I would like to hear the witnesses’ candid assessment of 

the current sanctions regime. Is it helping us to achieve our goal 

3

of an Iran without nuclear arms? Are sanctions having the desired 

impact on Iran’s economy, and are we getting closer to persuading 

Iran to suspend its uranium enrichment program, as repeatedly demanded by the international community? In particular, is international support for sanctions holding firm? How much back-filling 

is there by companies whose governments have not imposed national sanctions? 

On that last point, there seems to be no doubt that Chinese companies are pursuing energy investments in selling Iran refined petroleum. The Chinese acknowledge it. I would like know why we 

haven’t sanctioned any of the Chinese companies engaged in clearly 

sanctionable actions. I am concerned that we will not be able to 

sustain a robust sanctions regime if we don’t impose sanctions in 

an evenhanded manner. 

Many leading Western, Japanese, and South Korean companies 

have pulled out of Iran because they feared we would otherwise impose sanctions. Will they stay out if they see that others are getting off scot-free? Is the problem that we lack leverage over the 

Chinese companies? What kind of message do we send if we fail to 

sanction companies that are transparently engaged in sanctionable 

activities? 

I know the administration did impose sanctions on one company, 

NICO, which is based in Switzerland. But since NICO is an Iranian state-owned company that, by definition, would be barred 

from dealing with the U.S. market, that action doesn’t seem to me 

to have much of a deterrent effect. I hope Undersecretary Burns, 

in particular, will address these issues. 

And, in addition, I would welcome Under Secretary Burns’s views 

on other key aspects of Iranian nuclear issue, such as the recent 

interruption in Iran’s enrichment activities and the general diminishing of its enrichment efficiency, as reported by the IAEA. How 

meaningful is that slowdown? Should it alter our previous calculations regarding Iran’s nuclear program? Have the recent revelations regarding North Korea’s apparently enhanced nuclear facilities affected those calculations? What can you tell us regarding upcoming negotiations in Iran, now scheduled to commence in a few 

days in Geneva? 

Lastly, this month marks the 1-year anniversary of the last 

major demonstrations by Iran’s reformist Green Movement, which 

mushroomed in the wake of the June 2009 hijacking of the Presidential elections by Ahmadinejad. Where does the Green Movement 

stand today? What can we do to affirm our clear support for the 

pro-democracy forces in Iran? 

And I would like to close by reaffirming my own strong support 

for our sanctions effort. It is our last best hope for resolving the 

Iran nuclear issue in a peaceful manner. As I have said on many 

occasions, the alternatives are military action and, even worse, acquiescence to a nuclear-armed Iran. Both of these alternatives are 

unpalatable. 

And I also want to really commend the administration for placing 

such a high priority on the Iranian nuclear issue and for the effectiveness of its policies thus far. Thanks to this administration’s artful diplomacy, we have far more international support on this issue 

4

than most of us thought even remotely possible as little as 6 

months ago. 

From the outset, this administration has made Iran a top priority item in virtually every meeting with foreign leaders, and the 

results show. The administration’s successful jawboning of many 

banks and energy companies have also made a significant contribution to the effort to isolate Iran economically. 

So, 5 months to the day since CISADA became law, I look forward to your candid assessment of the effectiveness of our sanctions effort, and how it can be improved, as well as your assessment of the prospect that we will succeed in our larger goal of preventing Iran from achieving nuclear-weapons status. 

I also want to give the witnesses every opportunity, should they 

choose, to comment on the significant number of documents concerning Iran which were unfortunately released by Wikileaks. 

However much one might deplore the unauthorized release of internal U.S. diplomatic communications, they do disclose the very high 

priority that this President, from the outset, has put on ending the 

Iranian nuclear weapons program. 

I am very pleased to recognize the ranking member, the 

gentlelady from Florida, Ileana Ros-Lehtinen, for her opening remarks. 

[The prepared statement of Mr. Berman follows:]

5


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7

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

I would like to start by recognizing some of my constituents who 

are in the audience. They are Iranian Americans who are staunchly 

opposed to the Iranian regime, who have shed light on Iran’s nuclear program through the unveiling of information on different 

Iranian nuclear facilities. Many have relatives in Camp Ashraf. I 

raised with Assistant Secretary of State Feltman a few weeks ago 

the need for the administration to ensure that the Iraqi Government lives up to its human-rights commitment and protects the 

residents of Camp Ashraf. 

Welcome. 

With respect to Iran, Mr. Chairman, as we all know, the United 

States must have one vital objective, and that is to stop the regime’s pursuit of nuclear and other unconventional weapons and 

the missiles to deliver them, its sponsorship of terrorism, and other 

activities that threaten Americans, our interests, and our allies. 

However, since the 1990s, the U.S. and international efforts to 

stop the growing Iranian threat have been half-hearted at best, 

with results to match. The problem is not that a tough approach 

has failed but that it has yet to be fully tried. The sanctions were 

not fully implemented or enforced. The focus was not on measures 

the U.S. could easily take but, instead, on persuading the so-called 

international community to act ‘‘collectively,’’ meaning agreeing to 

the lowest common denominator while continuing to cultivate ties 

with the regime in Tehran. 

Russia, of course, has a long record of cooperation with Iran on 

missiles and on nuclear matters, particularly its construction of the 

Bushehr reactor, which is scheduled to come on-line in January. To 

secure Russian cooperation, the current and previous administrations resorted to a series of concessions to Moscow. What did we 

buy at so great a price? Tacit support for U.N. sanctions and ‘‘assurances’’ that Russia will wrap up investments in Iran’s energy 

sector and that Russia will not, at this time, proceed with its sale 

of advance missiles to Iran. Of course, despite all of our concessions, Russia has indeed offered a nuclear cooperation agreement 

and advance missile sales to the Syrian regime. 

China is another key ally and protector of Iran and has made it 

clear that it will prevent significant pressure being placed on 

Tehran. Chinese companies are eagerly expanding their trade with 

and investments in Iran, many taking advantage of opportunities 

created by Western and other companies which are curtailing or finally severing their ties. Recent reports indicate that China has actively facilitated North Korea’s providing Iran with advanced missiles and ingredients for chemical weapons in violation of U.N. Security Council sanctions. 

But support for Iran comes from other places as well. Determined to demonstrate its growing distance from the U.S., Turkey 

has publicly embraced Tehran, increased its economic cooperation, 

signed a major gas pipeline deal, and tried to undermine U.S. efforts to stop the Iranian threat, including voting against U.N. Security Council Resolution 1929. Turkey recently prevented NATO 

from designating Iran as a missile threat to be countered with a 

proposed anti-missile shield, despite Tehran’s expanding missile caVerDate 0ct 09 2002 15:11 Dec 29, 2010 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 F:\WORK\FULL\120110\62665 HFA PsN: SHIRL
8

pabilities. Armenia is expanding financial trade, transport, and energy cooperation with Iran. 

Unfortunately, securing effective action by one administration 

after another has been an uphill battle. For over 14 years, since the 

passage of the Iran Sanctions Act, only one determination of 

sanctionable activity has ever been made, and the resulting penalties were immediately waived. Efforts to strengthen existing laws 

were opposed by each administration, citing a reluctance to tie the 

President’s hands or upset other countries who want to keep doing 

business with Tehran. 

This past June, after a long, hard-fought struggle, the Comprehensive Iran Sanction, Accountability, and Divestment Act, 

CISADA, was enacted. Although weaker than some of us had 

hoped, this law could represent a major step forward, especially 

through its energy, refined petroleum, and financial sanctions. This 

congressionally driven effort has led some countries, including the 

EU, Japan, Australia, and South Korea, to finally impose their 

own, albeit more limited sanctions on Tehran. 

On the financial front, the actions taken by foreign governments 

to sever their ties with the Iranian financial institutions and other 

Iranian entities designated as involved in Iranian proliferation and 

sponsorship of terrorism is encouraging. 

Under Secretary Levey, let me again thank you and your team 

at Treasury for your pivotal role in these developments and your 

years of dedication in acting against the Iranian regime and its 

enablers. Thank you, sir. 

I am, however, concerned that history may be repeating itself regarding the State Department’s implementation efforts. For example, the law requires the administration to investigate upon receiving credible evidence of suspected sanctionable foreign investment 

in Iran’s energy sector. The U.S. has known for years about Chinese energy investment in Iran, but only this past September did 

the administration initiate investigations of sanctionable activity. 

Yet State still refuses to publicly disclose whether Chinese companies are among the targets. 

The State Department has issued one determination under 

CISADA, just one, imposing the minimum number of sanctions on 

NICO, an Iranian subsidiary, for its role in Iran’s petroleum sector. 

Likewise, the administration has listed and sanctioned just eight 

Iranian regime officials responsible for human-rights abuses. 

We have wasted enough time, 14 years. No more waivers, exceptions, or excuses. We cannot live with a nuclear Iran. We must ensure that the tools we have are used to their maximum effectiveness and look for new means of compelling Iran to cease activities 

that threaten our security, our interests, and our allies. 

I am not just referring to this nuclear pursuit but also to its 

state sponsorship of terrorism. Of particular concern is Iran’s support for Hezbollah in Lebanon, Mr. Chairman, which has threatened violence if, as expected, its operatives are indicted for the assassination of former Lebanese Prime Minister Hariri, has amassed 

an arsenal of about 50,000 rockets, and participates in and has 

veto power over the current Lebanese Government. I would ask 

Under Secretary Burns what the U.S. is doing to address this situVerDate 0ct 09 2002 15:11 Dec 29, 2010 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 F:\WORK\FULL\120110\62665 HFA PsN: SHIRL
9

ation before it becomes a full-blown crisis and Hezbollah takes over 

completely. 

Thank you, Mr. Chairman. And I will ask the administration 

also about the continued military assistance to the Lebanese armed 

forces. 

Thank you very much, Mr. Chairman. And I thank the witnesses. 

Chairman BERMAN. Well, thank you. 

And now I am pleased to recognize for 3 minutes the chairman 

of the Middle East and South Asia Subcommittee, the gentleman 

from New York, Mr. Ackerman. 

Mr. ACKERMAN. Thank you, Mr. Chairman. 

In the 112th Congress, the challenge before our witnesses and 

before those of us returning in January will be the same: How do 

we prevent Iran from acquiring nuclear weapons? It is, I believe, 

the most critical national security question facing our Nation today, 

and the success or failure of our efforts will determine what kind 

of world our children will inherit. 

Iran’s drive to acquire nuclear weapons is near to success, but it 

has not yet succeeded, and it must not. The consequences of a successful effort by Iran to acquire nuclear weapons, in open defiance 

of numerous U.N. Security Council resolutions, solemnly undertaken treaty obligations, and amid an endless stream of genocidal 

rhetoric against the state of Israel, would change the world. And 

this must not happen. 

The implementation of new sanctions so far has been surprisingly successful, with the combined effect of U.N. sanctions and the 

new CISADA sanctions imposing real economic pain on the ayatollahs’ regime. But for pressure to succeed, it must be comprehensive. 

And here there are two points to make. First, the economic pain 

must be as severe as we can make it. Sanctions must be applied 

without exception or distinction. The Congress will accept nothing 

less. 

Second, economic pain is not enough. By luck or providence, the 

mullahs’ regime is facing an internal political crisis more severe 

than any since the creation of the Islamic Republic. While it is true 

the Green Movement has been effectively suppressed by the tools 

of repression, the legitimacy of the Iranian regime has been permanently undercut in the eyes of the Iranian people. Elections whose 

results have to be forced down an unwilling population’s throat by 

means of mass murder, rape and torture are a sign of weakness, 

and that weakness needs to be aggressively exploited. 

I again call upon the Obama administration to emulate President 

Reagan’s approach to the Soviet Union, which applied comprehensive, across-the-board pressure, combining economic, political, diplomatic, cultural, and military pressure, with arms control negotiations—what we might call today ‘‘engagement’’—that advanced 

American interests. 

The Iranian regime is likewise ripe for comprehensive pressure. 

Multilateral forums and multinational institutions need to be 

pushed to focus on Iran’s deplorable human-rights record. Our 

broadcasting into Iran must be ramped up to let the Iranian people 

know that they are not alone. The President and the Secretary of 

10

State need to consistently remind the world of the oppression of the 

Iranian people by the illegitimate Iranian regime. 

The Armed Forces of the United States need to be deployed and 

exercised with key partners to demonstrate our ability to respond 

overwhelmingly to aggression and provocation. Those willing to 

take up arms against Iranian influence should have our material 

support. Iranian agents attempting subversion or the acquisition of 

illicit materials or arms must feel the shadow of the United States 

pursuing them with vengeance. 

It is not too late to stop Iran, to roll back their nuclear program, 

to aid the Iranian people in taking back their country. But we must 

engage in this great and necessary challenge with even greater effort and vigor than we have managed so far. Time is running out. 

Thank you, Mr. Chairman. 

Chairman BERMAN. Time has run out. And the ranking member 

of the Subcommittee on Middle East and South Asia is not here, 

so I am going to recognize the chairman of the Terrorism, Nonproliferation and Trade Subcommittee of this committee, the gentleman from California, Mr. Sherman, for 3 minutes. 

Mr. SHERMAN. Thank you for holding these hearings, Mr. Chairman. I believe that CISADA and its implementation is the most 

important work for us to do this month. I think that we need to 

see even more enforcement of existing law and the adoption of new 

statutes. I hope that later this month or early next year we consider the Stop Iran’s Nuclear Program Act, which would strengthen 

the sanctions still further. 

In addition, I should note that our colleague, Congressman Filner 

of California, has a bill with over 106 co-sponsors to take the PMOI 

off the terrorism list. And I hope that respect for our 106-plus colleagues that have co-sponsored that bill would lead to a serious 

consideration of the bill and hearings on it. So we have much legislating to do, just as is our friends from the administration have 

much to do, as well. 

Major oil companies from the West for the most part won’t invest 

in Iran’s oil sector or sell refined petroleum. This is a success. It 

is a success that comes, perhaps, a dozen years too late. 

At this point, we have to not only prevent investment in the energy sector of Iran, we have to prevent Iran from getting refined 

petroleum products. Had the executive branch of government decided to follow the law when it was passed over a dozen years ago, 

we would be in a much better position now. Now the only way to 

stop Iran’s nuclear program is not only what is already being done, 

but the much, much more difficult job of preventing Iran from getting refined petroleum. 

And I would point out that we are where we are not because 

there has been a radical change in State Department policy. The 

policy has been, since the Iran Sanctions Act was adopted, to follow 

the law only to the extent that its implementation did not offend 

any foreign government except that of Iran. This is described by 

our ranking member as the ‘‘lowest common denominator’’ of policy. 

The good news is the lowest common denominator is now a higher 

number than it used to be, especially for Japan and western Europe. And we have obtained a lot of cooperation, and it is now difficult for Iran to find partners to invest in its oil fields. 

11

We also ought to give credit, however, to the wisdom of our allies, but especially to the corruption and ineptitude of those who 

are running Iran, who make doing business with that country so 

difficult. 

As to the Stop Iran’s Nuclear Program Act, it would, for example, prevent—or sanction the $5 billion euro sovereign bond issuance 

that Iran is now engaged. They have realized that they may not 

be able to get Western investment in their oil fields, so they feel 

they will borrow the money and do the investment themselves. The 

way to stop that is new legislation, which I look forward to taking 

up expeditiously. 

I yield back. 

Chairman BERMAN. Time of the gentleman has expired. 

The ranking member of the Terrorism, Nonproliferation and 

Trade Subcommittee, the gentleman from California, Mr. Royce. 

Mr. ROYCE. Thank you. 

Chairman BERMAN. You are recognized for 3 minutes. 

Mr. ROYCE. There is no mike? 

Chairman BERMAN. I got one. 

Mr. ROHRABACHER. Does this one work? There. You can take this 

one, Ed. 

Mr. ROYCE. Mr. Chairman, I want to thank you for holding this 

hearing because we face a crisis. And this has to sink in. Here is 

the headline from The Washington Post recently: ‘‘The Obama administration has concluded that Chinese firms are helping Iran to 

improve its missile technology and develop nuclear weapons.’’ That 

represents a crisis. 

When we learned yesterday that China declined to act on multiple—multiple—U.S. requests that it stop shipments of ballistic 

missile components from North Korea that were going through Beijing on Korean airlines, North Korean airlines, on Iranian carriers 

as well; when we learn that our Secretary of State has asked China 

to act on the fact that Iran was trying to buy gyroscopes and carbon fiber for its ballistic missiles from Chinese companies; when we 

find that Chinese companies were supplying Iran with precursors 

for chemical weapons; when we find that Iran gets both its parts 

and its technology from China, we face a crisis. 

And I am appreciative of the fact that Mr. Levey is here, because, as he puts it in his testimony, foreign financial institutions 

have a choice. If you conduct certain business with Iran, you risk 

losing access to the U.S. financial system. 

The message we need to convey, Republicans and Democrats 

alike, is this conduct on the part of China, in terms of violating 

these sanctions and helping give Iran the wherewithal to develop 

the missile technology and the nuclear weaponry, has to stop immediately. And if it does not stop, there certainly is going to be legislation from this Congress to bring it to a halt. The way to do it 

is to simply have an understanding that this is now the law on the 

books of the United States. It needs to be followed by China, and 

it needs to be followed now. 

Thank you, Mr. Chairman. I yield back. 

Chairman BERMAN. The time of the gentleman has expired. 

And now I am quite pleased and honored to introduce our two 

witnesses, two people who I think are among the most exceptional 

12

public servants we have working for the United States Government. The first is Ambassador William Burns, the Under Secretary 

of State for Political Affairs. 

Previously, Ambassador Burns served as Ambassador to Russia, 

Assistant Secretary of State for Near-Eastern Affairs, and Ambassador to Jordan. A career Foreign Service officer, he has also 

served as Executive Secretary of the State Department and as a 

special assistant to Secretaries of State Christopher and Albright. 

Ambassador Burns is a central player in the Obama administration’s Iran policy team. In October 2009, he led the U.S. negotiating team in the P5-plus-1 talks with Iran in Geneva, where he 

struck an agreement with the Iranian negotiators that would have 

removed significant amounts of low enriched uranium from Iran 

stocks. The agreement was widely praised internationally at the 

time but was subsequently rejected by the leaders in Tehran. As 

I understand, he will once again be leading the U.S. negotiating 

team at upcoming P5-plus-1 talks with Iran scheduled to begin in 

a few days in Geneva. 

Stuart Levey is the Under Secretary of Treasury for Terrorism 

and Financial Intelligence, a position he has held since 2004. In 

this position, he has played a central role in the efforts of both the 

Bush administration and the Obama administrations to combat 

Iran’s illicit conduct in the international financial system. In fact, 

he is widely considered a key architect of those efforts. That, no 

doubt, is why the Obama administration asked him to remain in 

his position. 

Previously, Mr. Levey served as the principal associate deputy 

attorney general in the United States Department of Justice and, 

before that, as an attorney in a private law firm. 

Gentlemen, thank you for coming this morning. We look forward 

to hearing your testimony. If you decide to, you can summarize. 

Your entire statements will be part of the record. 

And, under Secretary Burns, why don’t you lead off? 

STATEMENT OF THE HONORABLE WILLIAM J. BURNS, UNDER 

SECRETARY FOR POLITICAL AFFAIRS, U.S. DEPARTMENT OF 

STATE 

Mr. BURNS. Thank you very much. And good morning, Chairman 

Berman, Congresswoman Ros-Lehtinen, members of the committee. 

Thank you for the opportunity to appear before you again with my 

friend and colleague, Under Secretary Levey. 

We meet today at a moment of great consequence in the long and 

complicated history of international concerns about Iran and its nuclear ambitious. In recent months, working closely together, the administration, Congress, and our international partners have put in 

place the strongest and most comprehensive set of sanctions that 

the Islamic Republic of Iran has ever faced. It is a set of measures 

that we are determined to implement fully and aggressively. It is 

a set of measures that is already producing tangible results. And 

it is a set of measures that we reinforces or collective resolve to 

hold Iran to its international obligations. 

A great deal is at stake for all of us. A nuclear-armed Iran would 

severely threaten the security and stability of a part of the world 

crucial to our interests and to the health of the global economy. It 

13

would seriously undermine the credibility of the United Nations 

and other international institutions and seriously weaken the nuclear nonproliferation regime at precisely the moment when we are 

seeking to strengthen it. 

These risks are only reinforced by the wider actions of the Iranian leadership, particularly its longstanding support for violent 

terrorist groups like Hezbollah and Hamas, its opposition to Middle 

East peace, its repugnant rhetoric about Israel, the Holocaust, 9/11, 

and so much else, and its brutal repression of its own citizens. 

In the face of those challenges, American policy is straightforward: We must prevent Iran from developing nuclear weapons. 

We must counter its destabilizing actions in the region and beyond. 

And we must continue to do all we can to advance our broader interests in democracy, human rights, peace, and economic development across the Middle East. 

President Obama has made clear repeatedly that we will stand 

up for those rights that should be universal to all human beings 

and stand with those brave Iranians who seek only to express 

themselves freely and peacefully. The simple truth is that a government that does not respect the rights of its own people will find 

it increasingly difficult to win the respect that it professes to seek 

in the international community. 

We have emphasized from the start that what is at issue between Iran and the rest of the world is not its right to a peaceful 

nuclear program but, rather, its decades-long failure to live up to 

the responsibilities that come with that right. If Iran is sincere, it 

should not be hard to show the rest of the international community 

that its nuclear program is aimed at exclusively peaceful purposes. 

Facts are stubborn things, however. And it is a telling fact that 

Iran, alone among signatories of the NPT, continues to fail year 

after year to convince the IAEA and the United Nations of its 

peaceful nuclear intentions. 

Nearly 2 years ago, President Obama began an unprecedented effort at engagement with Iran. We did so without illusions about 

whom we were dealing with, with the scope of our differences over 

the past 30 years. We sought to create early opportunities for Iran 

to pursue a different path and to build confidence in its intentions. 

This was both a serious demonstration of our good faith and also 

an investment in partnership with a growing collation of countries 

profoundly concerned about Iran’s nuclear ambitions. 

When, regrettably, those early efforts made little headway, we 

and our partners were left with no choice but to respond to Iran’s 

intransigence by employing another tool of diplomacy: Political and 

economic pressure. 

The cornerstone of this campaign was U.N. Security Council Resolution 1929, passed early last June. By far the toughest of the four 

Chapter 7 resolutions enacted in recent years, 1929 broke important new ground in curbing arms transfers to Iran; targeting the 

central role of the IRGC in Iran’s proliferation efforts; banning for 

the first time all Iranian activities related to ballistic missiles that 

could deliver a nuclear weapon; sharply limiting Iran’s ability to 

use the international financial system to fund and facilitate nuclear 

and missile proliferation; and, for the first time, highlighting forVerDate 0ct 09 2002 15:11 Dec 29, 2010 Jkt 000000 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 F:\WORK\FULL\120110\62665 HFA PsN: SHIRL
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mally potential links between Iran’s energy sector and its nuclear 

ambitions. 

Russia’s partnership was particularly crucial to passage of such 

an effective resolution, which led directly to its enormously important cancellation of the S–300 surface-to-air missile sale to Iran. 

The significance of 1929 is only partly about its content. It is also 

about the message of international solidarity that it sent and the 

platform that its carefully crafted language has provided for subsequent steps. 

Barely a week after the passage of 1929, the European Union announced by far its most sweeping collection of measures against 

Iran, including a full prohibition of new investment in Iran’s energy sector, bans on the transfer of key technology, and the strictest steps to date against Iranian banks and correspondent banking 

relationships. 

Canada, Australia, Norway, Japan, and South Korea have followed the EU’s example. New provisions in 1929 regarding cargo 

inspections are already being applied, resulting, for example, in the 

recent seizure by Nigeria of an illicit Iranian arms shipment. 

None of this is accidental. We have worked intensively with our 

partners, in conversation after conversation and trip after trip, 

around the world to produce an unprecedented package of measures and to ensure robust enforcement. 

Central to our strategy have been the efforts made by the Congress, by all of you, to sharpen American sanctions. When the 

President signed into law CISADA in early July, the administration and the Congress sent an unmistakable signal of American resolve and purpose, expanding significantly the scope of our domestic sanctions and maximizing the impact of new multilateral measures. 

We are enforcing the law rigorously and energetically. Already, 

more foreign investment in Iran has been curbed than at any time 

since Congress enacted the original Iran Sanctions Act nearly 15 

years ago. In late September, Secretary Clinton imposed sanctions 

for the first time in the history of the ISA on a Swiss-based Iranian-owned firm involved in hundreds of millions of dollars’ worth 

of deals in Iran. Deputy Secretary Steinberg announced that we 

have opened formal investigations into other firms. 

Just as importantly, we have used the powerful instrument provided by CISADA’s ‘‘special rule’’ to persuade major European and 

Asian firms, including Shell, Statoil, ENI, Total, and INPEX, to 

terminate existing sanctionable activities in Iran and provide clear 

assurances that they would not undertake any such activities in 

the future. According to reliable estimates, Iran may be losing as 

much as $50 billion to $60 billion overall in potential energy investments, along with the critical technology and know-how that comes 

with them. 

Faced with new international concerns and the choice between 

doing business with Iran and doing business with America, more 

and more foreign companies are pulling out of the Iranian market. 

Major energy traders like Lukoil, Reliance, Vitol, Glencore, IPG, 

Tupras, and Trafigura have stopped sales of refined petroleum 

products to Iran. 

15

Until last July, according to open sources, Iran imported roughly 

130 barrels per day of refined petroleum products. In October, that 

figure had dropped by 85 percent to 19,000 barrels per day. Large 

shipping companies like Hong Kong-based NYK are withdrawing 

completely from the Iranian market. Major firms like Lloyd’s have 

stop insuring Iranian shipping. Daimler, Toyota, and Kia have 

stopped exporting cars to Iran. Major banks like HSBC and Deutsche Bank have pulled out. 

Stuart will address the impact of these developments in more detail. And his own personal efforts with firms and governments 

around the world remain hugely important. But the short answer 

is that the net result of all of the measures that we have applied 

in recent months is substantial—far more substantial than any 

previous set of steps. 

I would also like to emphasize that we take very seriously 

CISADA’s provisions regarding human-rights concerns in Iran. 

Earlier this fall, we designated eight senior Iranian officials for 

human-rights abuses, and we are working with Treasury on other 

potential designations. One of the best ways in which we and others can support the cause of universal human rights in Iran and 

the brave people who defend them is to hold accountable people 

who deny them. 

I cannot honestly predict for you with any certainty how all these 

collective and individual measures will affect the choices that Iran’s 

leadership makes. We will continue to sharpen those choices. We 

will show what is possible if Iran meets its international obligations and adheres to the same responsibilities that apply to other 

nations. We will intensify the cost of continued noncompliance and 

show Iran that pursuit of a nuclear-weapons program will make it 

less secure, not more secure. 

And, in the meantime, we will continue to reassure our friends 

and partners in the Gulf of our long-term commitment to their security, a commitment clearly reflected in the visits to the region 

that both Secretary Clinton and Secretary Gates will be making in 

the next 2 weeks. 

Let me conclude by emphasizing two simple but important realities. First, Iran is not 10 feet tall. Its economy is badly mismanaged. Iran’s leaders have tried very hard to deflect or divert 

the international pressures building all around them, itself an acknowledgement of their potential effect. 

Second, and just as significant, sanctions and pressure are not an 

end in themselves. They are a compliment, not a substitute, for the 

diplomatic solution to which we and our partners are still firmly 

committed. 

There is still time for diplomacy if Iran is prepared to engage in 

serious discussions. There is still room for a renewed effort to 

break down mistrust and begin a careful, phased process of building confidence between Iran and the international community. 

There is still an opportunity for an outcome which ensures both 

Iran’s rights and the fulfillment of its responsibilities. 

The P5-plus-1, led by EU High Representative Ashton, will approach next week’s meeting with Iran with seriousness of purpose 

and a genuine readiness to engage constructively on international 

16

concerns about Iran’s nuclear program. The door is open to serious 

negotiation if Iran is prepared to walk through it. 

Thank you. 

[The prepared statement of Mr. Burns follows:]


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Chairman BERMAN. Thank you very much, Secretary Burns. 

And Secretary Levey. 

STATEMENT OF THE HONORABLE STUART A. LEVEY, UNDER 

SECRETARY FOR TERRORISM AND FINANCIAL INTELLIGENCE, U.S. DEPARTMENT OF TREASURY 

Mr. LEVEY. Thank you, Mr. Chairman, Ranking Member RosLehtinen, members of the committee. Thank you for inviting me 

here today to discuss the current status of the global effort to impose sanctions on Iran. I appreciate the true partnership we have 

had with this committee over many years. 

And I am happy to be here with Under Secretary Burns, who has 

been an excellent leader on this issue and on many others. And he 

has given an excellent overview of our overall Iran policy. I can assure you that we share the sense of urgency that you all expressed 

and we have the same priority placed on this challenge. 

I can report to you today that we have made significant progress 

in implementing our strategy to impose sanctions on Iran, and the 

strategy is beginning to have the effect it was designed to have. By 

sharpening the choice for Iran’s leaders between integration with 

the international community, premised on their living up to their 

international obligations, and ever-increasing isolation, we are beginning to create the leverage we need for effective diplomacy. 

The strategy we designed and are now implementing has several 

critical elements. 


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First, we recognized from the outset that no one measure would 

put enough pressure on Iran, and so we are imposing a variety of 

measures simultaneously. 

Second, as Bill pointed out, we took steps in advance to generate 

the support necessary for a broad coalition of governments and the 

private sector to support us on sanctions. 

Third, we focused our measures on Iran’s illicit conduct, such as 

WMD proliferation and its support for terrorism, since that has 

proven to be an effective way to build the broad coalition. 

And, finally, we designed a strategy that uses Iran’s expected attempts to evade sanctions to our advantage, by aggressively exposing Iran’s deceptive conduct and, thus, underscoring Iran’s riskiness as a commercial partner. 

It is difficult to overstate the importance of Security Council Resolution 1929 in building our international coalition and in implementing this strategy. In addition to the provisions that Bill mentioned, the resolution’s financial provisions are particularly powerful, as they call upon member-states to prevent the provision of financial services if there are reasonable grounds to believe that 

such services could contribute to Iran’s nuclear and missile programs. 

And given the vast body of public information demonstrating the 

scope of Iran’s illicit conduct and deceptive practices, it is virtually 

impossible for banks and governments to assure themselves that 

transactions with Iran could not contribute to proliferation-sensitive activities. 

Indeed, in the aftermath of the resolution’s adoption, many of our 

partners, as was mentioned by several of you and Under Secretary 

Burns, have enacted robust sanctions programs. These sanctions 

regimes impose asset freezes and financial restrictions on a wide 

range of illicit Iranian actors, including the IRGC and IRISL, the 

Iranian shipping line, and they have enacted broad measures to 

protect their financial systems from Iranian abuse, such as reporting or pre-approval requirements for transactions involving Iran. 

Also critical to our strategy is the passage and implementation 

of CISADA. As you know, the financial provisions of CISADA are 

quite powerful, as they indeed force the stark choice that Mr. Royce 

pointed out: If you conduct certain business with Iran, you risk losing access to the U.S. financial system. It is a very draconian potential sanction. 

We have moved quickly to implement CISADA. We published required regulations promptly. And we have traveled to 24 countries 

since June, both to educate governments and the private sector 

about CISADA and also to share information about Iran’s illicit 

conduct. We have reached out to governments and financial institutions in more than a dozen countries to investigate conduct that 

could be sanctionable under the act. What we have seen thus far 

is very dramatic. Even banks that had previously been willing to 

do business with designated Iranian banks are now reversing 

course and cutting ties with Iran altogether. 

Beyond this outreach, Treasury has used its authorities to designate a wide range of Iranian actors involved in illicit conduct. As 

I mentioned earlier, we expected Iran to try to evade any sanctions 

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ical to counteract this evasion and to maintain the effects of our 

sanctions. Just since June, we have designated 53 IRISL-related 

entities, 9 IRISL-linked individuals, 10 individuals or entities 

linked to the IRGC, and 2 Iranian-owned banks, Post Bank and the 

Hamburg-based EIH. We have also identified 43 entities as being 

that of the Iranian Government. 

The cumulative effect of sanctions has been to increasingly isolate Iran from the international financial system. Iran is effectively 

unable to access financial services from reputable banks and is 

finding it increasingly difficult to conduct major transactions in dollars or euros. Iran’s reduced access to the international financial 

system has also made it very difficult for Iran to make payments 

on loans and maintain insurance coverage on IRISL’s ships and is 

having an impact on IRISL’s ability to continue operations. It has 

even led to the seizure of some IRISL ships by its creditors. 

As the chairman indicated in his opening statement, with great 

regularity, major companies across a range of industries—finance, 

engineering, energy, manufacturing, automobile, insurance, accounting firms—they are all announcing that they are curtailing 

their business dealings with Iran. 

There are clear signs that the speed, scope, and impact of sanctions have caught the Iranian regime by surprise. In the face of 

pressure, the Iranian Government has increasingly turned to the 

IRGC for key economic projects. That trend meshes perfectly with 

our conduct-based strategy, since it is hard to imagine a better 

sanctions target than the IRGC. Relying on the IRGC is likely to 

exacerbate Iran’s isolation, as companies around the world have 

begun to shun all business with the IRGC, given its support for terrorism and involvement in Iran’s proliferation activities and 

human-rights abuses. 

Our efforts to consistently expose Iranian sanctions evasions are 

also paying off. In September, a high-ranking Iranian Government 

official underscored exactly the effect we have tried to create when 

he said, ‘‘We have never had such intense sanctions, and they are 

getting more intense every day. Whenever we find a loophole, they 

block it.’’

In order to maintain and even increase the impact we have created, we need to remain vigilant and intensify our efforts. By doing 

so, we can continue to create the leverage needed for our diplomacy 

to be effective. I look forward to continuing our work with this committee to achieve that goal. 

Thank you. 

[The prepared statement of Mr. Levey follows:]

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Chairman BERMAN. Well, thank you very much, Secretary Levey, 

for the testimony and the overview. 

I will now yield myself 5 minutes to begin the questioning. 

Neither of you mentioned China in your testimony. Are Chinese 

companies involved in Iran’s energy sector? And, if so, why are we 

not sanctioning them? 

I understand the dilemma. What are the implications for our relations with China if we were to sanction a state-owned energy 

company? But I would also throw out the alternative proposition: 

What are the implications for our entire sanctions regime if we 

don’t? 

How important are Chinese companies to Iran’s energy sector 

and refined petroleum products? And are there other countries or 

companies that are currently supporting Iran’s energy sector? 

Mr. BURNS. Well, Mr. Chairman, first, we take very seriously, 

just as you and Congressman Royce emphasized, concerns about 

Chinese involvement in the Iranian energy sector. We have, at the 

very highest levels, including in President Obama’s most recent 

meeting with President Hu a few weeks ago, emphasized the importance that we attach to restraint on the part of China in its 

dealings in the Iranian energy sector. 

We have seen reports—and also the importance we attach to not 

only slowing down existing investments, not engaging in new ones, 

but not backfilling behind companies, the large number of companies that are pulling out of the Iranian energy sector. 

We have seen reports since then in the trade press and other 

open sources of slowdowns in Chinese activities in the Iranian energy sector. It may be that the Chinese are concluding that the Iranians, as so many other companies around the world have found, 

are not reliable energy partners. The Chinese are clearly trying to 

diversify their energy partnerships around the world. 

It is also clear, with regard to your question about refined petroleum products, that rising domestic demand in China is occupying 

a much greater proportion of the attention of Chinese refined-petroleum producers. 

So, for all those reasons, we will continue to push very hard on 

this issue, which remains quite significant, I think, to our hopes to 

apply the sort of pressure that is going to be needed. 

Chairman BERMAN. Thank you. 

I don’t like raising points based on revelations from WikiLeaks, 

but I am going to make an exception here because it concerns a 

matter of potentially great significance. And I think both the ranking member and Mr. Royce made references to this. 

Do you wish to comment on the New York Times claim, based, 

it says, on WikiLeaks documents, that Iran has acquired 19 medium-range nuclear-capable missiles from North Korea? According 

to the article, these missiles can reach Berlin or Moscow. The article also says that possession of these missiles can facilitate Iran’s 

development of intercontinental ballistic missiles. And I should 

point out that that claim was treated skeptically today in today’s 

Washington Post, based on the Post’s interpretation of the same 

WikiLeaks documents. 

Rather than take one or the other slant, what are your thoughts 

about this issue? 

35

Mr. BURNS. Well, I mean, just several quick comments, first on 

WikiLeaks in general. 

I think, you know, the reality is that the despicable breach of 

trust that we have seen through the WikiLeaks disclosures has 

done substantial damage to our ability to carry out diplomatic efforts like the one we have just described to you. Confidentiality of 

conversations is at the core of what we do as diplomats, just as it 

is for journalists or doctors or lawyers or others. 

And it has done damage. Secretary Clinton is literally working 

night and day, in conversations with countless leaders around the 

world, to try as best we can not only to express regret but to work 

through these issues. And we have also taken some quite stringent 

measures to ensure that information in the State Department that 

doesn’t need to go to other agencies of the U.S. Government isn’t 

going to people who don’t need to know it. So that is the first general point on WikiLeaks. 

I can’t comment on the contents of, you know, particular alleged 

cables that WikiLeaks has referred to. What I will, however, 

stress—and this is in response to Mr. Royce’s, I think, you know, 

very serious reinforcement of concerns about any evidence that we 

come across of support for Iran’s illicit missile or nuclear activities—we take seriously every piece of information that we see. We 

have, on a number of occasions, raised that information with the 

Chinese Government as well as with other governments. In some 

cases, we have seen them act on it, but the record is a mixed one, 

to be honest. 

And we are continuing to press those specific concerns that we 

have. Because I agree with you that it is extremely important to 

fully implement the provisions, particularly in Resolution 1929, 

which add significantly to the flat prohibition of any support, technical or otherwise, for ballistic missile activity in Iran that is capable of delivering a nuclear weapon. So we will continue to take this 

very seriously and follow up on it vigorously. 

Chairman BERMAN. My time has expired. And I yield now 5 minutes to the ranking member. 

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

Thank you, gentlemen, for your testimony. 

As you pointed out, Secretary Burns, the next round of the P5-

plus-1 negotiations with Iran is tentatively scheduled to take place 

in just a few days in Geneva. However, in the lead-up to these 

talks, Iranian leaders have reiterated their commitment to continuing their uranium-enrichment program. 

Given these statements and the position of the Iranian leadership, what does the administration expect to accomplish with these 

upcoming negotiations? 

And related to that, previous negotiations were aimed at reaching an agreement that would require Iran to suspend its uraniumenrichment activity, as mandated by the United Nations Security 

Council. So is a complete halt to enrichment a prerequisite, or is 

the administration willing to consider a partial halt? 

Also, there are rumors of a new P5-plus-1 offer to the Iranians. 

Does such an offer exist? And what type of incentives and disincentives are included in the proposals? 

36

Also, what is the administration’s plan regarding the uranium 

that Tehran has enriched to the 20 percent level? Will we insist 

that Iran surrender the entire amount, or is a deal in the works 

allowing Iran to keep some portion of what it has already amassed? 

And how do you plan to deal with Iran’s using the negotiations as 

a stalling procedure by the U.S. and other countries? 

And then lastly, I know the chairman has talked about the energy and refined petroleum activities with Iran, and China being 

a repeat offender, but we also have the Iran, North Korea, Syria 

Non-Proliferation Act, INKSNA, and that is also a sanctionable 

procedure that we can use. And I wanted to ask about the administration possibly taking action against Russia and their entities implicated in the proliferation assistance to Iran. 

I don’t know if we will have time for all of that, but thank you, 

sir. 

Mr. BURNS. Sure, no, thank you. And I will try as best I can, 

very briefly, to go through four or five points. 

First, in terms of our general approach, as I emphasized in my 

opening statement, the P5-plus-1 will go into what we hope will be 

a serious round of discussions with the Iranians, prepared to engage seriously about our very profound concerns about Iran’s nuclear program. We will continue to emphasize the importance of 

taking tangible steps to address those concerns, tangible steps 

which are necessary as a result of Iranian noncompliance over 

many years and the mistrust that that has created. 

We will be guided—and this is in response—this is my second 

point—in that approach, the P5-plus-1 will be guided by a whole 

series of Security Council resolutions and IAEA decisions—Security 

Council resolutions which include the mandate in the provision 

that you mentioned. 

Third, we will certainly look for ways in which we could build 

confidence and steps the Iranians could take, that could be taken 

together to build confidence. Last year, as you know, we made an 

attempt through the original Tehran research reactor proposal to 

do that. We are still prepared to consider the P5-plus-1 or the possibility of making use of that concept. But last June, we made clear 

to Mr. Amano, the director general of the IAEA, that we, the Russians, and the French, our partners in the so-called Vienna Group 

on the TRR issue, had several concerns that would have to be addressed if the TRR is to be a real confidence-building measure, because circumstances have changed since this was originally proposed last October. 

Ms. ROS-LEHTINEN. You talked about the steps. Are they tangible 

steps? And is there a deadline? Are we really providing these deadlines for them to make good on what they supposedly offer, or just 

keep stalling and stalling and run out the clock? 

Mr. BURNS. No. Well, first, in terms of the tangible steps, you 

mentioned the issue of enrichment, almost 20 percent. That is one 

of the concerns that we made clear. I mean, that is something that 

would have to be addressed. 

In terms of——

Ms. ROS-LEHTINEN. Thank you. We will discuss that later. And 

I wanted to ask about the Russian entities. Any movement in sanctioning those? 

37

Mr. BURNS. Well, on INKSNA, which was the question I think 

you had asked——

Ms. ROS-LEHTINEN. Right. 

Mr. BURNS [continuing]. The State Department has finished its 

draft of the report for 2008. We are trying quickly to catch up. We 

have provided the 2007 report, I think, a few months ago, and that 

is in circulation interagency right now. 

So we take very seriously the importance of following through on 

INKSNA and hope to have that report to you early next year. 

Ms. ROS-LEHTINEN. Thank you very much. 

Sorry I ran over time. Thank you, Mr. Chairman. 

Chairman BERMAN. The time of the gentlelady has expired. 

The chairman of the Middle East and South Asia Subcommittee, 

the gentleman from New York, Mr. Ackerman, is recognized for 5 

minutes. 

Mr. ACKERMAN. Thank you, Mr. Chairman. 

Thank you for your testimony. 

Several thoughts first. It seems that the evil twins of Iran and 

North Korea had been separated at birth and have now reunited 

and found each other and have certain things in common and certain things that are different, with Iran insisting that its nuclear 

program is for energy only, and the North Koreans protesting very, 

very loudly that theirs is absolutely for nuclear weaponry, and 

demonstrating that at every moment that they can. The combination of the two of them joining in their mutual interests is very lethal. 

It seems to me that, among terrorists and terrorizing nations, it 

almost seems that possessing a nuclear program is a rite of passage to becoming a respected member of the international community. And they are pursuing that at all costs. 

Trying to evaluate the effectiveness of placing sanctions on Iran 

to drive it to the point where they become an economic basket case 

such as North Korea—where we really don’t have to have too many 

economic sanctions because they are there already at the bottom of 

wherever they have to be, but still not giving up their program—

I think we should reflect a bit on what happens when the Iranians 

are driven to that economic low point, should the program of imposing strangling sanctions, as the successes seem to indicate that 

we will have, whether or not that produces the goal that we are 

looking for. 

Some of the things we have seen in these leaks that have appeared in the media a lot of us have found to be true. Those of us 

who have spoken personally to world leaders, especially in the Middle East, who tell you you have to impose tough sanctions and 

when you ask them the question, ‘‘Will they work?’’ they say, ‘‘Hell 

no, there is no way that they are going to work.’’

At what point do we make the determination that the sanctions, 

no matter how successful in measurable aspects, are not going to 

prevent the Iranians, whose game is intent to just run the clock on 

us till they have the weapon, that we have to find and exercise an 

alternative means? Where is that point? 

Mr. BURNS. Well, Mr. Ackerman, I can’t give you a precise point. 

I mean, all I can say is that I think there is still time to continue 

the approach that we have used, to tighten pressure, to try to make 

38

clear that there is an alternative pathway through which Iran 

could have a peaceful nuclear program and enjoy the benefits of 

contacts with the international community, but it is going to have 

to take some very concrete steps to address international concerns 

about its nuclear program. I think there is still time for a serious 

diplomatic effort to try to produce that outcome. 

Mr. ACKERMAN. And I will ask the same question, as well, to Secretary Levey. 

Mr. LEVEY. I was just going to comment, Mr. Ackerman, I think 

the distinction that you have drawn between North Korea and 

Iran, and also—that there are differences, I think, also in the potential effectiveness of sanctions. And the basic point, I think, is 

that Iran doesn’t want to be isolated, and perhaps that is not so 

much the case with North Korea. 

Iran doesn’t want to be isolated. They are facing situations—as 

they look out from where they are now, they see a lack of investment coming in. They see the inability to do business with major 

financial firms. They see the inability to do business with first-tier 

energy firms. They see that that has potential impact on their oil 

and gas production in the medium term, the inability to create 

jobs, et cetera. They don’t want to be this kind of pariah. 

And while, as Bill pointed out, there is no guarantee here, that 

at least gives us some reason for confidence that they will want to 

change that dynamic. 

Mr. ACKERMAN. Let’s assume that you are wildly successful and 

in a period of, I will give it 90 days, you have cut their GNP, their 

economy, and everything else by 99 percent, and they have an 

atomic weapon, they have a nuclear weapon, where are we? 

Mr. LEVEY. I think the point is——

Mr. ACKERMAN. I think your clock runs faster than theirs, is the 

point I am making. And I think that we have to have a plan B. 

Because plan A, by anybody’s estimation, even if successful beyond 

our wildest dreams in a real quick time frame, is not going to 

change the dynamic. 

Chairman BERMAN. The time of the gentleman has expired. 

The gentleman from Florida, Mr. Mack, is recognized, the ranking member of the Western Hemisphere Subcommittee, recognized 

for 5 minutes. 

Mr. MACK. Thank you, Mr. Chairman. And thank you to the 

ranking member, as well, and for the witnesses today for being 

here. 

Someone earlier said that they didn’t hear you talk about China 

in your opening statements. I also didn’t hear you talk about Venezuela in your opening statements. And let me suggest that Venezuela is in violation of the Iran Sanctions Act. 

That being said, if both of you could answer, why have we not 

sanctioned Hugo Chavez? That is question one. And I will let you 

answer that real quick, and then I have a couple follow-ups. 

Mr. BURNS. Well, sir, I will just start by saying we did sanction 

one Venezuelan bank because of its connection to an Iranian bank, 

the Export Development Bank of Iran, which we had already sanctioned. 

We will continue to monitor very carefully the Venezuelan-Iranian relationship and, particularly, Venezuelan compliance with 

39

U.N. Security Council resolutions and hold them to their international obligations. 

Mr. MACK. Secretary Levey? 

Mr. LEVEY. As Bill pointed out, we have taken action when we 

identify conduct that is in violation of the sanctions and will continue to do so. 

Mr. MACK. What information do you have on the allegations that 

gasoline in excess of 1 million U.S. dollars has been sent from Venezuela to Iran, utilizing China’s National Petroleum Corporation 

and the Emirates National Oil Company? 

Mr. BURNS. I will have to try to get you an answer on that, sir. 

I don’t know. 

Mr. LEVEY. I have no further information at my fingertips. 

Mr. MACK. Okay. Well, let me suggest that Venezuela has violated the Sanctions Act by its shipment of gasoline to Iran. 

Next question. What is the status of the joint Venezuela-Iranian 

international development bank and its U.S.-alleged connections to 

Iranian military entities and nuclear ambitions? 

Mr. LEVEY. I will get back to you with a more complete answer, 

but, in general, let me say that we have been looking very carefully 

at banking ties between Iran and Venezuela. When we have identified sanctionable activity, we have taken action. There was a subsidiary of the Export Development Bank of Iran in Venezuela 

which we have sanctioned. 

But there is also a fair amount of bluster that we have also seen 

from Venezuela, where they are playing up some of these ties and 

sometimes there is not as much substance behind the bluster as 

they would like us to believe. And we have to make sure that we 

cut through all of that and act based on the evidence. 

But we will have to get back to you with a more detailed answer 

on the——

Mr. MACK. Well, let me suggest this. That is their problem. If 

they choose to bluster about it, then we need to hold them accountable. I mean, I think that, you know, as you have listened to some 

of the other members, the clock is running—they are trying to run 

the clock out. And so, let’s take their word for it. If Hugo Chavez 

says that he is sending gasoline, let’s take his word for it. If his 

banks are in violation with this Iran Sanctions Act, let’s take his 

word for it. 

Now, if you don’t want to take his word for it, I think there is 

plenty of evidence, also, to suggest that in both those cases he is 

in violation. And the problem that I have is, when you have an act 

like the Iran Sanctions Act and you apply it to some and you don’t 

apply it to others and you are slow on the draw, others figure out 

a way to game it. 

So if we are going to be serious about the Iran Sanctions Act, it 

starts with countries like Venezuela. We need to hold Hugo Chavez 

accountable. I think that, as you look through, you will find even 

more connections that are in direct violation of the Iran Sanctions 

Act. 

Let me ask you this, Secretary Levey. Will you set up a task 

force on PDVSA involving the developing of Iran’s nuclear capacity 

and other corrupt activities? 

40

Mr. LEVEY. I guess the question of PDVSA would be more of a 

State Department lead, but we are happy to take a look at it in 

detail and take whatever action is appropriate. 

I want to assure you, there will be no hesitation to take action 

against Venezuela, or any other country for that matter, but no 

hesitation to take action against Venezuela if we identify 

sanctionable activity. This is not—no question about that. 

Mr. MACK. Well, I will suggest again that he is in violation, and 

so actions need to be taken. 

Secretary Burns? 

Mr. BURNS. Just to reinforce what Stuart said, we will devote all 

the resources we need to get to the bottom of all the concerns that 

you rightly raised. And where we come across evidence, we will certainly hold the Venezuelan Government accountable. 

Mr. MACK. Thank you. 

Chairman BERMAN. The time of the gentleman has expired. 

The gentleman from California, chairman of the Terrorism, Nonproliferation and Trade Subcommittee, Mr. Sherman, for 5 minutes. 

Mr. SHERMAN. The chair and several members have focused on 

China. China attacks us in a hundred ways: Attacks the economic 

security of Americans, attacks the national security of our country, 

cooperates with and subsidizes rogue regimes. And this is best exemplified in the example from the ranking member of our subcommittee, where China facilitates the transfer of missile technology from North Korea, which it subsidizes, to Iran, which it uses 

the threat of its U.N. veto to protect. 

And I don’t blame so much Beijing as I blame Washington. We, 

in Congress, have a choice between two approaches. One is to continue to denounce China, in this room and others, in the hopes that 

our words will sting so badly that Beijing will change its policies. 

And occasionally we grant to the administration the authority to 

actually hit China a little bit, just as CISADA would allow you to 

sanction Chinese companies. But we know you are not going to do 

it to any significant degree. 

So one approach is to continue our current policy. The other is 

to take a radical approach, such as the bill I have proposed, which 

within 6 months would end most-favored-nation status for China. 

Given the power of Wall Street, I think it is clear that at least at 

the present we are going to continue our present policy. 

As to plan B, the King of Saudi Arabia told us what our plan B 

was. I am hoping plan A works. 

Secretary Burns, I was struck by your opening comment in which 

you said that sanctions were a mere complement to negotiations. 

Now, one view is that Iran really wants a Kumbaya moment with 

the United States. Another view is that Iran wants nuclear weapons so badly that nothing but the prospect of the brutal murder of 

all regime leaders by their own people would cause them to abandon their nuclear program. 

Assume—and I realize I may be less optimistic than you—assume the second Iran. Are our sanctions policies enough not to just 

encourage a Kumbaya Iran to join us in negotiations; are you 

building toward sanctions strong enough to force a determined, belVerDate 0ct 09 2002 15:11 Dec 29, 2010 Jkt 000000 PO 00000 Frm 00044 Fmt 6633 Sfmt 6633 F:\WORK\FULL\120110\62665 HFA PsN: SHIRL
41

ligerent Iran to choose between regime survival and abandonment 

of their nuclear program? 

Mr. BURNS. Well, Mr. Chairman, Kumbaya moments are not 

something I have ever associated with doing business with this Iranian leadership. It is a pretty unsentimental leadership, and I 

think our approach is also pretty unsentimental. What we are——

Chairman BERMAN. A little closer to the mike, Bill. 

Mr. BURNS. Sorry. What I said is that Kumbaya moments are 

not something that I normally associate with dealings with the Iranian leadership. 

What we are determined to do is to sharpen the choices that that 

leadership faces to try to ensure that it sees both the possibilities 

of addressing international concerns about its nuclear program but 

also the costs. And the costs are rising. 

Mr. SHERMAN. Secretary, the question is, do you have a plan A 

that will force this regime to choose between regime survival and 

a nuclear program? Or do you only have a plan of sanctions that 

would encourage a rational regime to try to reduce the sanctions? 

Mr. BURNS. Yeah, as we have described to you, Mr. Sherman, 

what we have is an approach which is very unsentimental which 

seeks to sharpen the choices for that leadership and imposes a 

stiffening set of costs. And I think what we have seen——

Mr. SHERMAN. Let me move on. The idea of stiffening implies 

that we have a lot of time. Had the executive branch complied with 

the law back in the mid-1990s, we might have that time, but we 

don’t. We have to take action that immediately bites the Iranian 

economy. 

Toward that, the recently enacted law provides for sanctions for 

those who provide gasoline to Iran. The standards are a million, 

five million in the law. 

Is the failure to launch formal investigations and actually sanction firms due to a lack of will or just a belief that we don’t know 

who it is that is providing this gasoline? Do we not know which 

tankers are arriving at Iranian ports? Do we not know who owns 

those tankers? Even if we don’t know who owns the oil on them, 

do we not know from which refineries they arrive? What do we 

have in intelligence? Why have you not sanctioned or even begun 

formal investigations against any entity taking gasoline to Iran? 

Mr. BURNS. With regard to gasoline, refined petroleum products, 

I think it is pretty striking that, just in the few months since 

CISADA was passed, you have seen an 85 percent drop, according 

to open sources, in the amount of refined petroleum product that 

Iran is importing. We all have mentioned a number of companies 

which have pulled out of that business. So I think what we have 

seen is a quite significant move in the direction that we have all 

intended——

Mr. SHERMAN. Secretary, thank you for your answer, but it 

wasn’t to my question. 

Chairman BERMAN. The time of the gentleman has expired. 

The gentleman from Texas, Mr. Poe, 5 minutes. 

Mr. POE. Thank you, Mr. Chairman. 

And I want to thank all of the Iranian Americans that are here 

in the audience today, concerned about a mutual concern that we 

42

all have, and that is Camp Ashraf and a delisting of the MEK as 

a foreign terrorist organization. 

I know the State Department and Foreign Affairs Committee are 

supposed to work very close together. My question, Secretary 

Burns, is, why has the State Department refused to brief the subcommittee chaired by Mr. Sherman on the delisting of the MEK? 

Mr. BURNS. Well, sir, we are in the midst of a review that was 

ordered by the court last summer, as I understand it, in which——

Mr. POE. I guess my question is this: Will the State Department 

brief this committee and the subcommittee on information it has on 

the MEK and why the State Department relentlessly believes it 

should still be on the FTO list? 

Mr. BURNS. The first thing is——

Mr. POE. No. Just answer my question. 

Mr. BURNS. Sure. Yesterday afternoon, we provided an intelligence briefing, as I understand it. Second, I would be glad to take 

back your question and see if, in addition to the briefing we provided yesterday afternoon, there is more that we can provide at 

this stage. The only——

Mr. SHERMAN. Will the gentleman yield? I would point out the 

State Department has refused to do a classified briefing at the request of our subcommittee for over a month, but did arrange for 

the classified briefing from the CIA, which couldn’t address many 

of the questions but did address some. 

Mr. POE. Reclaiming my time, that is exactly my point. That 

briefing yesterday, which I attended, was not by the State Department; it was by the CIA. And those two agencies aren’t the same. 

I am just curious why the State Department, it appears to me, 

is so obstinate, even after going to court and the court ruling 

against the State Department, ordering them to provide information about the MEK in this lawsuit, information that is required 

to be delivered in January, which is next month, the way I figure 

it, and why Secretary Clinton in 2009 said that she would review 

the whole designation of the MEK in the next 2 years. That has 

not been done. The 2 years is up in January. 

I want to know what information the State Department has that 

is so relentless on your part that they should remain on this list. 

Do you know that information? 

Mr. BURNS. We are reviewing in response to what the court said 

and what Secretary Clinton said. One step in that review is to 

allow the MEK to have an opportunity to review the unclassified 

material which led to former Secretary Rice’s decision in January 

2009. We have provided that to the MEK. We await their input, 

and then we will complete the review as we promised. 

And if there are other questions beyond the briefing that was 

conducted yesterday afternoon, as I said, sir, I would be glad to 

take that back and see if we can provide further answers in the 

meantime. 

Mr. POE. The situation in Camp Ashraf appears to me to just be 

getting worse, not better. People are very concerned about their relatives that live there. What are some hardline new procedures that 

we are taking, as the United States, to ensure the safety of those 

people at Camp Ashraf? 

43

Mr. BURNS. As Assistant Secretary Feltman said when he testified before you, we take very seriously the concerns that have been 

raised about inadequate availability of medical treatment and 

other kinds of activities at Camp Ashraf. There were two individuals in particular who had been raised in that hearing, and we 

made sure afterwards that they did have access to the cancer treatment that they needed. 

We, along with the U.N. mission in Iraq, meet regularly with the 

Iraqi Government to hold them to their obligation to ensure that 

the basic human and individual rights of the residents of Ashraf 

are protected. And we will continue to do that. 

Mr. POE. In other words, our position is we are just encouraging 

the Iraqis to do the right thing. I mean, is there hardline evidence 

that we are really encouraging in a way, I guess a diplomatic way, 

that they protect the safety of the people at Camp Ashraf, other 

than talking about it? 

Mr. BURNS. We and the U.N. mission will continue to insist that 

the Iraqi Government meet its obligation to ensure the human 

rights of the residents of Ashraf. And that is to say that they are 

not subject to forcible repatriation to a place that might persecute 

them; that is to say that they have access to the medical treatment 

that they need. And we will continue to push that hard. 

Mr. POE. Lastly, my own opinion is that the greatest hope for 

Iran and the world is a change, peaceful change, in regime in Iran. 

It is not to go to some type of military conflict. And, hopefully, the 

good folks in Iran will change their own rogue, unauthorized, illegitimate government, in my opinion. 

What are we doing to encourage that, if anything? 

Mr. BURNS. Well, sir, as I said in my opening statement, the 

President and the Secretary take very seriously the importance of 

supporting universal human rights of Iranians. We do that in several ways: First, by applying CISADA, designating individual senior Iranian Government officials who are guilty of human-rights 

abuses, to hold them accountable; second——

Mr. POE. Reclaiming my time, Mr.——

Chairman BERMAN. No, the time has——

Mr. POE. Mr. Chairman, may I have that answer in writing? My 

question was, what are we doing to promote the opposition in Iran, 

not human rights. And I would like to have an answer to that, Mr. 

Chairman. 

Chairman BERMAN. Okay. Would the administration be willing to 

lay out a number of the different things that you are involved in 

doing in communication to the committee or to Mr. Poe. Thank you. 

And the time of the gentleman has expired. The gentleman from 

Florida, Mr. Deutch, is recognized for 5 minutes. 

Mr. DEUTCH. Thank you, Mr. Chairman. 

Mr. Chairman, I would like to commend you and Congresswoman 

Ros-Lehtinen for your leadership on these issues. And thank you, 

Secretary Burns and Secretary Levey, for your testimony. 

On September 30th, Deputy Secretary Steinberg announced that 

Total, Statoil, ENI, and Royal Dutch Shell have pledged to end 

their investments in Iran’s energy sector. And, as a result, pursuant to the special rule provided for in CISADA, there would be no 

investigation into their activity. The special rule provides that, and 

44

as the notice sent to our committee stated, that they are either no 

longer engaging or have taken significant verifiable steps toward 

stopping activity. 

My question, first question is: To what extent do those four companies continue to operate in Iran’s energy sector? 

Mr. BURNS. Well, just to add, sir, there is a fifth company since 

then to which the special rule has applied, INPEX, a Japanese 

company. So I think, broadly speaking, it is a demonstration that 

that instrument, which is a very important one, is working to 

produce the outcome that we want. 

With regard to the companies that you mention, I can try to get 

you a more detailed answer, but we have had quite detailed conversation with those companies. They are winding down their operations quite rapidly. And they have given us very clear assurances 

that, not only are they winding them down, the current operations, 

but they are not going to engage in any sanctionable activity in the 

future. 

Mr. DEUTCH. All right. Do we know how quickly they will wind 

down? When will they stop doing business in Iran? 

Mr. BURNS. I can’t give you that precise answer, but it is in the 

very near term and, in some cases, I think, already wrapped up. 

But I will try to get you a clearer answer. 

Mr. DEUTCH. If you could, for each of those. And, I mean, do you 

know, though, is it weeks, is it months? Are they finishing existing 

contracts? 

Mr. BURNS. No, it is—you know, I can’t give you a precise answer. I promise I will get you one. But it is in the very near future. 

I mean, these are companies that are pulling out of the Iranian energy sector and have also, as I said, committed not to engaging in 

future activity. 

Mr. DEUTCH. Okay. I would——

Mr. BURNS. So I think in most cases we are talking about weeks. 

I, you know, can’t tell you if it stretches much beyond that, but I 

will certainly try and get you as clear an answer as I can. 

Mr. DEUTCH. If you could, I would appreciate that, Mr. Secretary. 

If you could confirm that those companies that, at the end of September, had certified that they would be leaving will no longer be 

doing business in Iran within the next several weeks, I would appreciate that very much. 

That, then, leads to the next question, again, with respect to 

what companies have said they are going to do and when they are 

going to do it and what constitutes credible evidence. The Boston 

Globe reported on November 12th that Schlumberger has promised 

the United States Government that it will end operations in Iran 

upon completion of existing contracts. But then it cites internal 

Schlumberger documents that existing contracts worth hundreds of 

millions of dollars will keep them in Iran until 2013. And, in fact, 

according to that report, they had entered into 12 new contracts, 

valued at more than $400 million, even after telling U.S. officials 

in February 2009 that they would cease activities. 

First of all, do you have anything further on their efforts and 

when Schlumberger will be leaving Iran? 

Mr. BURNS. No. We remain concerned about Schlumberger for all 

the reasons that you just described and will continue to press those 

45

concerns. I don’t have anything further to add on that, at this 

point, unless you do, Stuart. 

Mr. DEUTCH. Mr. Secretary, then, does this report—and this is, 

I think, the main question I have today. Does a report that cites 

internal documents of the company, like this report that was published in the Boston Globe, does this constitute credible evidence 

that either has or will cause an investigation to be launched 

against Schlumberger? 

Mr. BURNS. Well, you know, in trying to determine what the 

threshold is for credible evidence, I mean, we go through all of 

those reports. We also talk to companies, themselves. We talk to 

governments, you know, of which those, you know, companies are 

hosted. We also, obviously, go through all the information in our 

intelligence community. So I can’t give you a simple answer on 

that, except to say that we try to exhaust all the information we 

have at our disposal to make a judgment——

Mr. DEUTCH. Right, I understand. If you determine that these internal documents are valid and actually come from the company 

itself, and the broader question then is, if any one company identifies, self-identifies, as a company that is doing business in Iran, 

does that constitute credible evidence? And if it is not clear, 

shouldn’t that constitute credible evidence? 

Mr. BURNS. Well, it is certainly a very important factor in coming 

to that judgment, just as you said. I mean, I think, just to take a 

step back for a second, you know, last summer when we were 

asked the question about, you know, how many instances are there 

where there may be sanctionable activity, I mentioned in a hearing 

that there were 7 to 10 that we were looking at carefully. 

That was in July. Since July, we have actually formally sanctioned one company; five, through the use of the special rule, have 

pulled out or are pulling out of the Iranian energy sector; and we 

have launched formal investigations into several others. So we are 

trying to follow through quite energetically and thoroughly on 

these issues. 

Chairman BERMAN. The time of the gentleman has expired. 

I am just going to interject here. It is probably not the way you 

should do it, but I will, sort of, take it as the privilege of the last 

hearing of my chairmanship, at least for a while, and just point 

out: The law provides for this credible-evidence threshold, and then 

it provides for a 180-day investigation. 

I don’t know if that was what Mr. Deutch was getting at, but, 

to my mind, there is a difference between the finding that comes 

at the end of a 180-day investigation, or within that 180 days, and 

the threshold of credible evidence. And we shouldn’t fall into the 

trap of needing enough evidence to make the final determination 

about a sanction in order to decide whether or not to launch an investigation. 

And, with that, I think I have exhausted whatever privilege I 

gave myself, and I better go on to the next member. The gentleman 

from California, Mr. Royce, is recognized for 5 minutes. 

Mr. ROYCE. Thank you, Mr. Chairman. 

The story that I pointed out from the Post actually predated 

WikiLeaks, the story on the Obama administration, concluding that 

Iran was being helped by China, in terms of the development of its 

46

nuclear weapons and its missile technology. And it comes from a 

story last month. Our State Department special advisor for nonproliferation presented Chinese officials with what was called a significant list of companies and banks that were assisting Iran with 

its missile and nuclear technology. 

I think what concerns us is, as the Wall Street Journal said yesterday, China’s role in Iran’s procurement activities is growing; it 

is on the upswing. And we know that China looks the other way 

as weapons trade between North Korea and the Islamic Republic 

of Iran, ends up entrenching both regimes. And that reality pours 

cold water on the latest U.N. Sanctions resolution that the administration lodged this morning, a resolution that put congressional 

sanctions on the back burner. And I can’t help but feel a sense of 

lost time. 

But, as Stuart Levey has pointed out, the new legislation does 

include potent new financial sanctions. And these are patterned 

after section 311 of the PATRIOT Act, which was once used to 

great effect on North Korea. 

Which brings me, Stuart, to my question. I remember when that 

was imposed on the Bank of Delta Asia, and it had a certain effect 

on the hard currency that ended up being constricted from the 

hands of the regime. 

And I thought you might want to lay out for us what the effect 

was on North Korea at the time. And it worked, probably, because 

there was some concern about reputational risk on the part of the 

banks that participated in that effort. But I would also ask you, is 

it possible that Chinese banks today would be concerned about 

reputational risk and, therefore, this could be just as effective? 

But let’s go through the effect of it, if you would. 

Mr. LEVEY. Well, thank you, Mr. Royce. 

You are referring to an action that we took under the PATRIOT 

Act back in 2005, I believe, to designate a bank in Macau as being 

a primary money-laundering concern under the PATRIOT Act, 

under section 311. And to summarize quickly, the overall effect was 

it led banks around the world to stop doing business with North 

Korea because we had put into the public domain a catalog of the 

kind of illicit activity that North Korea engages in. And the fear 

that banks had that they might be inadvertently swept up into that 

led the responsible financial institutions to say it wasn’t worth the 

risks to continue doing business with North Korea. 

I think, as I said to Mr. Ackerman, I think North Korea was a 

more contained target, if you will. And so we have applied some of 

the same principles in going after the Iranian strategy, in that 

there is a much broader integration into the financial system that 

we are already dealing with, and I think just one action like that 

wouldn’t have had the same dramatic effect. But we have drawn 

upon the same principle, which is that reputable financial institutions will not want to do business if they fear that they might get 

caught up in illicit activity like Iran’s nuclear procurement, its missile procurement, its support for terrorism, and so forth. 

And that is the reason why we have had the ability to have the 

effect we have had thus far on the banks. And we had already had 

a significant effect, and then CISADA dramatically increased it, because it created a situation where any bank that continued to do 

47

business with the banks that we had already pointed out is now 

at risk of losing access to the U.S. financial system. It made, if you 

will, a multiplier effect on our designations, and it has had a dramatic effect thus far. 

And to come down to your final point, which is I think that that 

effect even applies with respect to Chinese banks. As many people 

have expressed and as Bill has said, we are quite concerned about 

the role of China in this whole strategy, and we are continuing to 

press it. 

But we do have one thing going in our favor, which is that Chinese financial institutions seek to have a global business model and 

a global footprint, and, therefore, they do take these sort of 

reputational concerns seriously. And that gives us the ability to be 

somewhat persuasive with them. 

Mr. ROYCE. My only regret, Mr. Chairman, was that those sanctions were ultimately lifted. And I think, you know, it is sanctions 

enforcement, it is sanctions enforcement. The stakes are too high 

for subtlety. It is the enforcement that is going to get the demonstrative effect. 

Thank you, Mr. Chairman. 

Chairman BERMAN. The gentleman from California, Mr. Costa, is 

recognized for 5 minutes. 

Mr. COSTA. Thank you very much, Mr. Chairman and the ranking member, for this timely hearing. Unfortunately, I don’t think 

that time is necessarily on our side. 

Clearly, as has been noted by many of the members here on the 

dais, China continues to be a key and a challenge as we try to impose these sanctions. And sanctions, I agree with Mr. Royce, must 

be enforced. I would like to move this a little westward on another 

country that I think is an important participant, a NATO ally, Turkey. 

Secretary Levey, how have the Turkish banks reacted to the new 

sanctions? And are Turkish banks continuing to conduct business 

with entities that the U.S. has sanctioned? 

Mr. LEVEY. With respect to Turkey, I think there are a couple 

of points worth making. 

One is that, while Turkey did vote against the resolution, as we 

all know, they have stated that they will implement the resolution. 

And they have also stated that they will leave to their private sector decisions about what business the private sector will do. 

And I have been to Turkey since CISADA was passed, and other 

Treasury officials have also been to Turkey since CISADA was 

passed. And we have engaged with the private sector there. We 

have engaged with their banks, their banking association. We have 

engaged with their government officials. And what we are finding 

is that the private sector, the banks in Turkey are reacting similarly because they are concerned about the potential of losing access to the U.S. financial system and they are concerned about 

their reputation. 

I can’t give you more detail in an open setting about that, but 

that is the general trend. 

Mr. COSTA. Will it be our policy to enforce sanctions if, in fact, 

we find that their banks continue to do business, and would we impose the CISADA sanctions? 

48

Mr. LEVEY. Yes. 

Mr. COSTA. Secretary Burns, I would like to bring this back 

around—we discussed earlier Russia’s role in making these sanctions work. 

Do you believe that there is a correlation or a connection with 

regards to our efforts to secure the START treaty that is pending 

over in the Senate as to how Russia’s behavior will be as we go forward on enforcing these sanctions? Do you think there is, in your 

view, a direct correlation here? 

Mr. BURNS. Well, just two points, sir. First, I think Russia’s partnership in the diplomacy which led to Resolution 1929 and to its 

own decision to cancel the S–300 sale was crucial. Without Russia’s 

partnership, I don’t think we would have had Resolution 1929. 

Without Resolution 1929, I think it is most unlikely that we would 

have seen as significant a set of measures from the EU and from 

many others. 

So that painstaking effort to work together with regard to a 

shared concern about Iran’s nuclear ambitions has been right at 

the core of our relationship with Russia over the last couple of 

years. 

Certainly, the START agreement is in the interests of both of our 

countries. It is very much in the American national interest. And 

as the President and the Secretary have made clear, we hope very 

much that it can be ratified this month, because I think it is an 

important demonstration of a partnership with Russia, which has 

also produced important dividends with regard to our shared concerns about Iran. 

Mr. COSTA. I would like to ask a final question, and I noted it 

earlier. The Revolutionary Guard in Iran, how effective are these 

sanctions in trying to impact their ability to continue to operate? 

Have we made any determination? 

I mean, clearly they are, in essence, a part of the government. 

But, obviously—and I don’t know whether, Secretary Levey, you 

feel best prepared to respond to this. But it seems to me that the 

Revolutionary Guard in Iran is at the head of many of the problems we deal with here. 

Mr. LEVEY. The short answer is that you are right that they are 

involved in many of the problems, but the only good news I have 

is that that is now something that is not just recognized by the 

United States but recognized by the international community. 

So one of the most significant pieces of 1929, which I think was 

widely underestimated when it was first passed, one of the significant pieces of 1929 is its designation of a number of IRGC companies for sanctions in the resolution. That led to other countries, including the EU, designating the IRGC as an organization. Similar 

action was taken by Japan and South Korea. The overall effect of 

this has been to create a dynamic that has companies around the 

world saying they won’t do business with the IRGC. 

And if you add to that the way Iran engages in deceptive conduct 

so you don’t know who you are really dealing with in Iran and the 

increasing likelihood that if you are doing business with Iran you 

are doing business with the IRGC, this adds to the overall effect 

of sanctions. 

I will give you a good example of this. 

49

Chairman BERMAN. I think——

Mr. LEVEY. But I don’t have to. 

Chairman BERMAN. Well done. 

The gentleman from California, Mr. Rohrabacher. 

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

let us note the good job that you have done in conducting, being 

chairman of these hearings over the last 2 years. And it has been 

an honor to work with you, knowing and also considering the fact 

that we are demonstrating for the world that, here in the United 

States of America, people can disagree but we have respect for one 

another and we treat each other fairly in trying to decide policies. 

So thank you, Mr. Chairman, for your leadership over these years. 

I would like to associate myself with the concerns of Congressman Poe in terms of the citizens of Camp Ashraf. And I think that 

it is disconcerting to understand that we have to play games with 

the Government of Iraq after we have invested such a massive 

amount of treasure and blood. 

We need to hear from Iraq, from the Government of Iraq, a solid 

commitment that they will not betray the people of Camp Ashraf 

to the Mullah dictatorship. That would be a terrible sign for anyone opposing the Mullah dictatorship in Iran. We would lose leverage, et cetera. So if you could pass that on, I would appreciate that. 

What we hear today—and thank you, Secretary Burns, for your 

analysis there of the relationship we have with Russia in dealing 

with the Iran. It is easy to put this in one-dimensional to understand, the Russians built that nuclear power plant. We also understand that, when they signed the contracts, they were in a horrible 

economic situation and felt that they were being pushed to make 

such deals. 

So you have testified today that we have cooperation from Russia 

now in dealing with Iran, but I think also this hearing has demonstrated that our China policy has been a dismal—dismal—failure. Not only are the Chinese not cooperating, but we can see that 

not just Iraq and Iran and that area but the Chinese, of course, 

provided the nuclear weapons for Pakistan through Korea, and the 

Chinese seem to be using Korea as a puppet. And the Chinese, of 

course, have just been playing a very negative role in the world. 

And my compliment to the chairman also should suggest that in 

his opening statement he outlined the problem with China. If we 

are going to have a peaceful world, we are going to have to start 

dealing with China in a more forceful way. 

One last note, and then I would like you to answer this. But I 

understand that oil now is being transferred—some of the sanctions you are talking about have been working, but oil is now being 

transferred, and a large amount of oil, from Iraq, from the Kurdish 

areas of Iraq. Is that true? 

And let me just note, if it is, that we passed a resolution that 

I authored that would establish a consulate in Arbil, for a Kurdish 

consulate. We passed that, and that would not have passed had we 

known that the Kurds were shipping large amounts of oil to Iran. 

So what is going on with that oil shipment? 

Mr. BURNS. Well, sir, we share the concerns about reports of oil 

smuggling across the border in northwest Iraq. We have had a 

State Department-Treasury team in Baghdad, as well as in Arbil 

50

recently, to talk specifically about those concerns and emphasize 

the need for this practice to stop. 

I don’t know if Stuart wants to add to it. But we take it very seriously. We have followed up, and we will continue to. 

Mr. ROHRABACHER. Well, is this oil smuggling, or is this a-winkand-a-nod-with-the-government oil smuggling? 

Mr. BURNS. Well, there have been reports of smuggling that are 

worrisome, you know, whatever their origins or content. And it 

needs to stop because it runs counter to obligations. 

Mr. ROHRABACHER. Okay. 

One last note here about this WikiLeaks. I find it disconcerting 

that I have to find out information about wrongdoing of other governments and other countries through these type of leaks of classified documents. 

Mr. Chairman, one of the things we are going to have to work 

on is the fact that we, as Members of Congress, deserve to know—

if hostile countries know what is going on and our Government is 

protesting something that is going on with the hostile government, 

meaning our Government knows about it, the American people and 

certainly Congress should know about these things. 

And, for example, there is a—we know that at least one weapons 

system from China has been shipped over where we protested it. 

The American people don’t know anything about it. 

Thank you very much. 

Chairman BERMAN. The time of the gentleman has expired. 

The gentlelady from Nevada, Ms. Berkley, 5 minutes. 

Ms. BERKLEY. Thank you, Mr. Chairman. I appreciate your holding this hearing. 

And thank you, gentlemen, very much for being here. It is a very 

important issue, and I appreciate all of your efforts on behalf of our 

country. 

I was an early supporter of tough sanctions at the U.N. and an 

original cosponsor of our Iranian sanctions bill here. I think they 

are working. Obviously, not as fast as any of us, including yourselves, would like. But you just can’t——

Chairman BERMAN. Shelley, why don’t you come up here? Your 

mike is not working. 

Ms. BERKLEY. I hope you heard all the accolades. 

Chairman BERMAN. Take 30 seconds off for the accolades. 

Ms. BERKLEY. Sorry I mentioned it. 

I had an interesting exchange of ideas with a high-ranking Turkish official yesterday. And in the discussion, he assured us, the 

members of the Foreign Affairs Committee, that Turkey was, in 

fact, doing everything they can to help implement the sanctions 

against Iran and have a successful result from the implementation. 

That seemed to me a bit out of sorts with the fact that they voted 

against the sanctions, and it is my understanding that they have 

done just about everything they can not to be helpful. 

My question to you is, do you think that they have done anything 

to hamper U.N./U.S. efforts to make these economic sanctions successful? 

Mr. BURNS. Well, let me start, ma’am, and then Stuart may want 

to add to this. 

51

The Turkish Government has made clear, as it did to you, that 

they are determined to implement Resolution 1929 and all the 

other sanctions. Whatever their vote in the Security Council, they 

are obligated to do that, and we will work closely with them to ensure that. 

We have already seen evidence of some Turkish companies—I 

mentioned earlier Tupras, which has pulled out of the supply of refined petroleum products to Iran. You know, the truth is that the 

total volume of Turkish trade with Iran is not that great. I think 

something like 2 percent of Turkish exports go to Iran and 2 percent of Turkish imports come from Iran. So, beneath a lot of the 

public statements, I think, as Stuart said, you know, Turkish firms, 

banks, and businesses have a lot more at stake, in a sense, in their 

business with the rest of the international community and with the 

United States than they do with Iran right now. 

I think Turkey has made clear that they share our profound concern about a nuclear-armed Iran. We have had technical differences sometimes over this, but I think they have a lot at stake 

in this, too. I think they have played a constructive role in Iraq, 

for example, in working with us to help Iraqis produce a broadly 

inclusive government. I think they are very mindful of the danger 

sometimes of Iranian behavior in Iraq. 

So I think there is a partnership with Turkey that is not perfect 

but that we need continue to work at, because it is significant for 

us in a lot of different ways. 

Ms. BERKLEY. Let me ask you a question. Is there anything more 

that Congress can provide you so that you can make the sanctions 

more effective? Are there any loopholes in the law that need tightening? Is there anything we can do as a Congress that can help the 

State Department implement these sanctions? 

Mr. BURNS. No, ma’am. We are just trying to make the best possible use of the instruments that have been provided, especially in 

CISADA. And as we have both described today, that is what we are 

working very hard to do. 

Ms. BERKLEY. If there is a glaring—as you work through this and 

do what you are doing, if there is something glaringly missing or 

a tool that you find could be helpful, would you share that with 

Congress so we can remedy that situation? 

I think it is very important, and the ramifications of this not 

working are catastrophic, in my mind. And while I think nothing 

should be taken off the table—and I have been very vocal about 

that the reality of not taking everything off the table is challenging. 

So these sanctions have to work, because the alternatives are far 

more dire. So, anything we can do to help you to make this work 

and bring the Iranian economy to its knees, I think you need to 

share with us. 

Thank you very much, again, for your service. 

Chairman BERMAN. The time of the gentlelady has expired. 

The gentleman from Nebraska, Mr. Fortenberry, is recognized for 

5 minutes. 

Mr. FORTENBERRY. Thank you, Mr. Chairman. And let me add 

my voice to those who have thanked you for your leadership over 

52

these few years. We are grateful for your service; look forward to 

continuing to work with you. 

And thank you, gentlemen, for coming today. I appreciate your 

hard work, and I do think the administration’s dual-track policy is 

very important. 

With that said, the Iranian people have a deeply historic and 

deep cultural sensitivity to the fundamental notions of justice. And 

yet, they are ruled by a religious autocracy that is bent on repressing its people and preventing Iran from taking its place among the 

members of the responsible international community. 

We will all soon awaken to the headline that Iran has the bomb, 

and this will be a geopolitical game-changer. And if we look back 

at this, we see a pattern here where Russia, in its previous engagement, has empowered this development; China is clearly committing a sin of commission; North Korea has an exchange program 

with the country; and the European business interests are still involved there. 

Having Iran obtain nuclear weapons in the most volatile region 

of the world is going to leave very, very difficult defense questions 

for countries like Saudi Arabia and the Egyptians and the Turks 

and may spark a nuclear arms race, again, in this most difficult 

part of the world. 

And no one in the international community is going to be served 

if Iran uses a bomb or gives it to a proxy and it goes off in Berlin 

or Chechnya or Tel Aviv or New York. I just don’t think that we 

can get our minds around the horror that would ensue. 

So, with that said, again, I appreciate your hard work on this, 

but here we are, as a committee in the United States Congress, 

holding hearing after hearing on this. And we are talking about the 

minutiae of Iran sanctions, which is important; it is an important 

part of the dual-track strategy. Is this going on in the EU? Is the 

Russia Duma doing the same thing? Expound upon your discussions with the Chinese. You had earlier said, we have emphasized 

restraint with China. Okay, thank you, but ‘‘restraint.’’

The nature of this dilemma and the probability of what is coming 

has to compel us all to act swiftly. And the burden of this shouldn’t 

just fall to this committee and on you. This has to be an international effort of the highest urgency. 

So, again, the question primarily being, give me the disposition 

of your counterparts in Russia and the European Union and talk 

further about China’s engagement here. 

Mr. BURNS. Sure. Let me start. 

First, I absolutely agree with you, there is an enormous amount 

at stake here. I think what is striking about the last year is the 

growing realization on the part of many other partners around the 

world, in the EU, in Russia, parts of Asia, about what is at stake 

and about the dangers of a nuclear-armed Iran. 

And what that has led to is an unprecedented set of measures, 

not only Resolution 1929—that provided the foundation for it—but 

a truly unprecedented set of steps that the EU took, steps that 

they had been reluctant to take before; that, as Stuart said, Australia, Japan, South Korea, Canada, Norway, and other countries 

have taken; steps that Russia has taken that it hadn’t been prepared to contemplate in the past, like significant curbs on arms 

53

transfers to Iran in a U.N. Resolution and canceling of a major 

arms sale. All that reflects, I think, a widening realization of what 

is at stake. 

And we will continue as energetically as we can to work with our 

partners to drive home to Iran the choice that it faces and the importance of it choosing a path that is going to allow its people that 

connection to the rest of the world, as you rightly said, that I think 

they thirst for and that we saw very vividly in the rioting and the 

other concerns that played out on Iran’s streets the summer before 

last. 

Mr. FORTENBERRY. Do we have the time? 

Mr. BURNS. We feel a real sense of urgency. And we need to see 

action as quickly as we possibly can. And that is why we are going 

to drive this as energetically as we possibly can. 

Mr. FORTENBERRY. Who else is driving it outside of the United 

States? 

Mr. BURNS. Well, I think, as I said, in the European Union you 

see a much greater recognition of what is at stake and a willingness to act. You see that on the part of Russia. You see that on 

the part of our major allies in Asia. You certainly see that on the 

part of many of our partners in the Gulf. 

So, you know, I think there is a growing recognition of what is 

at stake here, and we are going to do everything we can to build 

on that. 

Mr. FORTENBERRY. All right. Thank you. 

Chairman BERMAN. The time of the gentleman has expired. 

The gentleman from Georgia, Mr. Scott, is recognized for 5 minutes. 

Mr. SCOTT. Thank you very much, Mr. Chairman. 

Again, welcome to the committee. 

So, it is without any question in both of your minds that Iran is 

after a nuclear weapon? 

Mr. BURNS. I think we see increasing concerns which lead people 

toward that conclusion. I mean, if Iran wanted to demonstrate the 

exclusively peaceful purpose of its program, it wouldn’t be hard to 

do it. It can answer questions the IAEA has posed over the years 

and the U.N. Security Council has posed. 

Mr. SCOTT. So, without question, you will go on record saying 

they are after a nuclear weapon? That is your conclusion and your 

conclusion; is that correct? 

Mr. LEVEY. I think we have to, as policymakers, we have to make 

that assumption, because we have to pursue a policy that assumes 

that that is what they are doing. 

Mr. SCOTT. Okay. We have talked about China, we have talked 

about Russia, we have talked about North Korea, and all of this 

presents a very dangerous geographical, geopolitical scenario of an 

impending, sort of, axis. Within that context, we have not touched 

upon another country which I think could hold the balance here, 

and that is India. 

And I would like to ask you—India fascinates me, in terms of 

their approach to this. I think it is very important for us to examine India, particularly in view of the fact that they now are, from 

some information, rejecting the sanctions. And that is particularly 

peculiar in view of the fact that, just a few years ago, 2005, 2006, 

54

they supported the sanctions that were put forward under the 

Bush administration. 

Tell me what is going on in India. 

Mr. BURNS. Well, sir, I mean, the Indian Government has made 

very clear its commitment to uphold the new U.N. Security Council 

sanctions resolution, 1929. And everything we see of its behavior 

suggests that it is serious about that commitment. 

For example, one Indian company, Reliance, which had supplied 

a considerable amount refined petroleum product to Iran, has 

pulled out of that business already. India vote has voted three 

times in the IAEA Board of Governors to condemn Iranian behavior. In its last vote last November, it voted to condemn the Iranians 

at a moment when a number of other countries were on the other 

side of the vote, including Brazil, Turkey, Egypt, and South Africa. 

So the Indians, I think, have made very clear their determination 

to do everything possible to ensure that Iran does not develop a nuclear weapon. 

Mr. SCOTT. That is what bothers me. I have information here 

that says, for example, India’s foreign secretary, Nirupama Rao, 

made India’s position explicit early this month, when she said restrictions on investments in Iran’s energy sector could have a direct 

and adverse impact on Indian companies. And, in fact, that they 

look forward to more investment by Indian companies directly into 

that energy sector. And, sort of, goes on to say that the United 

States is thousands of miles away; they are next-door and have a 

long, centuries-old relationship. 

That seems to run counter to what your assessment just said. 

Mr. BURNS. Well, sir, I would just say two things briefly. 

First, the Indians at the very highest level have made clear their 

concern about a nuclear-armed Iran. 

Second, I think you have to judge by the practice on the ground. 

Reliance, one of the major Indian firms, has essentially pulled out 

of business in Iran. Secondly, in the South Pars gas field, an Indian 

company that was involved in the past in development there has 

also begun to pull out. 

So I think the facts suggest a real concern on the part of India. 

Mr. SCOTT. Do you think that the sanctions are going to work? 

There is some worry about that. And, particularly, as I mentioned 

earlier, with North Korea, China, even with Russia, we wouldn’t be 

in this position with Iran if it weren’t for Russia investing first of 

all in the Bushehr plant, which seems to me might have been a 

convenient cover for them to pursue. 

So I guess my point is that I would like to—is a military option 

on the table, in your opinion? And how realistic is that? 

Mr. BURNS. Well, let me just make a quick comment first on 

Bushehr. 

I mean, I think it is significant—the last administration recognized this, as well—that Russia has significantly adjusted the 

terms of the Bushehr project so that it would not only supply the 

fuel for the reactor but it also would take back the spent fuel, all 

under IAEA safeguards, which just simply helps to reinforce the 

point that Iran doesn’t need a domestic enrichment capability in 

order to have a peaceful nuclear program. 

That is the first point. Then the second——

55

Chairman BERMAN. Finish the answer to the last question, but 

the time has expired. 

Mr. BURNS. All I can say is on the second point you made, sir, 

is the President has made clear we haven’t taken any options off 

the table, but what we are focused on now is making diplomacy in 

all of its dimensions—engagement and negotiation, but also political and economic pressure—work. 

Chairman BERMAN. The time of the gentleman has expired. 

The gentleman from Illinois, Mr. Manzullo, is recognized for 5 

minutes. 

Mr. MANZULLO. Thank you. 

If you take a look at the Iranian Sanctions Act, passed in 1996 

I believe, and then the latest act that we passed this spring—all, 

of course, dealing with sanctions—can you give an opinion or at 

least some thoughts on the best way to, as it were, toughen up 

these laws, to give them real teeth, to come up with the real results 

that we are looking for? 

Mr. BURNS. I would just start simply by saying that I think what 

we have before us now in the laws passed by Congress, signed by 

the President, but also in Security Council resolutions, steps that 

other countries have taken, is a very broad array of instruments. 

What we need to do now and what we, as we have described, 

have been doing very energetically in recent months is to apply 

those and enforce those as vigorously as possible. I think we can 

continue to have a significant impact if we do that. 

Mr. LEVEY. I would agree with that. The sanctions that we have 

on Iran are the toughest in the world. And we have made it a very, 

very high priority to implement them. 

One thing that—when we say that CISADA has had a very positive impact, I think, to put that in context, the effect that CISADA 

is having is on behavior of companies outside of the United States. 

It does have that impact. And so, if we go ahead and continue to 

implement that, I think it can have a great effect, because now 

there is a broader recognition of how important this is. Going beyond the United States, we have a much broader set of governments that agree with us in the fundamental principle that this is 

a very high priority. 

Mr. MANZULLO. If these sanctions don’t work, then the next step 

would be a blockade, and the next step would be some type of—

you hate to use the word, but military action. Do other countries 

around the world realize to the extent that the United States does 

the importance of complying with these sanctions? 

Mr. BURNS. I think so. As I mentioned before, there is an increasing recognition of that. You see that in the behavior of many 

other countries—I won’t say all of them, but many other countries, 

in recent months in particular. I think there is a growing awareness of what is at stake here and of the importance of trying to 

make this approach work. 

Mr. MANZULLO. I agree 100 percent with what you are saying, 

but how do you increase the awareness? How do we get the message across to other countries in the world that this is probably the 

last best shot that we have diplomatically to do something? 

Mr. BURNS. Well, as I said, I mean, I think many other leaderships around the world have already come to that conclusion. They 

56

have concluded that because of Iranian behavior itself. They have 

concluded that because they also see the concerns of many others 

in that part of the world, whether it is in the Gulf or in other parts 

of the Middle East. And they understand the risk that a nucleararmed Iran would pose to a part of the world that is central to the 

health of the global economy. So I think many other leaderships 

are coming to those same conclusions. 

Mr. MANZULLO. Mr. Levey, did you want to comment on that? 

Mr. LEVEY. I entirely agree with what Under Secretary Burns 

said. 

Mr. MANZULLO. Okay. Well, I appreciate your time on it. It is obviously an issue of utmost concern to our country and, actually, to 

the stability of the whole area. Thank you. 

I yield back. 

Chairman BERMAN. I thank the gentleman and recognize the 

representative from American Samoa, Eni Faleomavaega. 

Mr. FALEOMAVAEGA. Thank you, Mr. Chairman and our ranking 

member, for calling this important hearing. 

I certainly want to commend both Secretary Burns and Secretary 

Levey for not only testifying before the committee, but too often I 

think we don’t say enough on this side of town about how much 

we appreciate the services that you gentlemen provide not only to 

our President but to our Nation. 

On the important question of whether implementation of stronger economic sanctions against Iran have been proven effective or 

not—and I think this seems to be the question that we are trying 

to determine here—I would like to share with you a statement 

from research that was conducted by the Congressional Research 

Service. And I want to share this with you, and I certainly would 

like to add your comment on it. 

It says, and I quote:

‘‘Because so many major economic powers have imposed sanctions on Iran, the sanctions are, by all accounts, having an effect on Iran’s economy. However, data on Iran’s economy is 

often sparse or incomplete, and it is difficult to form a precise 

picture on the impact of sanctions on it.’’

Now, officials have spoken and said that it has this effect, and 

yet it says again,

‘‘However, there is not a consensus that sanctions are causing 

a demonstrable shift in Iran’s commitment to its nuclear program, the key strategic objective of the whole idea of sanctions.’’

Would you care to comment on that? 

Mr. BURNS. I would be glad to start. I think in terms of——

[Audio difficulties.] 

Mr. BURNS. Can you hear me? Now ours are going out. 

I will be very brief, and I will turn to Stuart since it is his microphone. 

Chairman BERMAN. That is not working. 

Mr. LEVEY. We promise we are pressing the buttons. 

Chairman BERMAN. How come mine works? 

57

Mr. FALEOMAVAEGA. I think these mikes are bugged, Mr. Chairman, or something. 

Well, I am losing time, Mr. Chairman, and I know the gentlemen——

Chairman BERMAN. We are told there is a rebooting process 

going on, which take a minute or so. 

Try yours. 

Mr. BURNS. I think we are back in. 

Mr. FALEOMAVAEGA. So much for modern technology. Please proceed. 

Mr. BURNS. Sir, let me just start to answer your question about 

the impact of sanctions in Iran. 

I mean, I think in terms of objective impact on the Iranian economy, I think sanctions clearly have amplified what is already considerable mismanagement of the economy. And you can look at a 

number of indicators: The fact that oil revenues for the Iranian 

Government have declined steadily over the last 3 or 4 years——

Mr. FALEOMAVAEGA. Let me ask—I don’t mean to interrupt you, 

Mr. Secretary, but how much is the estimate of the value of the oil 

reserves that Iran currently has? And I also would like to know 

how much oil reserves Iraq has worldwide, in terms of its capacity 

for whatever it has. 

Because it seems to me that this is one of the fundamental reasons why we are in the Middle East, the concern about whoever is 

going to take possession of this oil supply. And, ironically, if I am 

correct that when 30 companies offered bids on the oil in Iraq, it 

was a Chinese company that won the bidding. They didn’t even lift 

a finger. After all the billions and billions of dollars that we expended, the Chinese got the oil. 

And I wanted to ask you, Mr. Secretary, how much oil reserve 

does Iran have? 

Mr. BURNS. Iran has considerable reserves of both oil and gas. 

I will have to get you the specific figures. And, of course, Iraq does, 

too, particularly in terms of oil reserves. 

So I don’t know whether Stuart wanted to add to the answer on 

the economic impact on Iran. 

Mr. FALEOMAVAEGA. Well, I know from the administration’s point 

of view, you feel that sanctions have proven successful. But here 

is the problem that I have and that has been raised by my friend 

from Florida, as well as Mr. Ackerman. 

China is in this mix in the most important way, to the fact that 

it is in China’s national interest to get as much energy resources 

it can get. And I don’t think Iran is any other exception in all the 

efforts that have been made worldwide—Africa. Wherever they can 

get energy supplies, they will do this. And so is India. 

So is it in China’s national interest that they get this oil from 

Iran one way or another? 

Mr. BURNS. Sir, I think it is clearly in China’s national interest 

to have stable access to energy reserves in the Gulf. And if you 

have a nuclear-armed Iran or greater instability caused by Iranian 

behavior in the Gulf, then you can easily put at jeopardy access to 

energy resources in a part of the world that is critical not only to 

the global economy but to Chinese economic growth. So I think that 

strategic concern has very much focused attention in Beijing. 

58

Mr. FALEOMAVAEGA. Here is one question I would like—and I 

know I have 6 more seconds, Mr. Chairman. 

It is very, very difficult for us——

Chairman BERMAN. It will get answered, though. 

Mr. FALEOMAVAEGA [continuing]. Very, very difficult for us to tell 

the Chinese what to do. And I think this is the biggest problem we 

are faced with. 

Thank you, Mr. Chairman. 

Chairman BERMAN. That is an observation. 

The gentleman from Florida, Mr. Klein, is recognized for 5 minutes. 

Mr. KLEIN. Thank you, Mr. Chairman. 

And, again, I want to thank the chairman and the ranking member for the opportunity to serve on this committee, and the staff for 

being great support, making us all look good. And, of course, Mira 

Resnick, Mira Kogen Resnick, who has worked with me for the last 

4 years, has been an invaluable tool. 

And I would like to thank our guests today, who have really provided a tremendous amount of resources, going back to the last administration to the current administration. So thank you for your 

work. 

A few thoughts. Number one, there has been a lot of talk about 

China, which—I certainly support a consistent and aggressive enforcement across the board. I think we saw that even before the 

sanctions were actually passed word was already getting out and 

we already started seeing some anticipated reaction by businesses 

around the world. But more particularly since the sanctions have 

passed, the United Nations, United States, European Union, and 

other countries—we are starting to see more. And I would heartily 

and aggressively encourage you as fast and as quickly as possible 

to continue that process. 

As it relates specifically to China, though, we have lists of China 

National Petroleum, China Petroleum and Chemical, and other 

companies that specifically and very openly are doing things that 

would be considered sanctionable, as I understand it. So it is not 

so much of a question, but it is a very strong statement that I 

would make and I think would be joined by most of the members 

of this committee: We need to go after them. 

I know there are a lot of delicate issues between China and the 

United States relating to a whole variety of things. But if China 

supported this at the United Nations level and understands, for all 

the reasons you just explained, the importance of why a stable 

Middle East and a non-nuclear Iran is essential to its future and 

everyone else’s future, they have to get on board, and they have to 

be held accountable just like every other country in the world. That 

is my first point. 

Number two, the Central Bank of Iran has been a facilitator, if 

you will, in stepping in the void when other banks are being sanctioned. What is it that we can do, and why are we not sanctioning 

the Central Bank of Iran? 

Mr. LEVEY. With respect to the Central Bank of Iran, for the first 

time the U.N. Security Council resolution actually expressed concern about the activities of the Central Bank of Iran, which had 

previously been something that we had been expressing some conVerDate 0ct 09 2002 15:11 Dec 29, 2010 Jkt 000000 PO 00000 Frm 00062 Fmt 6633 Sfmt 6633 F:\WORK\FULL\120110\62665 HFA PsN: SHIRL
59

cerns about, in that we had seen it engaging in the sorts of deceptive conduct that other Iranian banks were engaging in. 

With respect to the Central Bank, though, it is already, in the 

United States, a violation of sanctions to do business with the Central Bank of Iran. In fact, it is a crime for a U.S. person to engage 

knowingly in a transaction with the Central Bank of Iran. 

Mr. KLEIN. And to take it to next level. Other countries, our allies, or——

Mr. LEVEY. Well, I think that having this in the Security Council 

resolution helps to bolster us when we do what we do all the time, 

which is to go and share information and express concerns and try 

to raise awareness. 

Now it is not only a U.S.-expressed concern, but it is one where 

we can point to the Security Council resolution. And that does help 

the conversation considerably. And we will continue to do that and 

continue to raise those concerns. 

Mr. KLEIN. How big a problem is that, though, in terms of them 

stepping in and, you know, facilitating transactions when other 

banks are being sanctioned? How big a problem is it in terms of 

the overall scheme of clamping down and isolating Iran? 

Mr. LEVEY. I would speak more generally, that Iran is going to 

do whatever it can—that is our presumption, that they will do 

whatever they can to evade the sanctions. And that is a presumption that we had going in. 

And so, what we have tried to do is continue to expose that, so 

that not only do we make that more difficult for them, but we also, 

in the process, make the private sector around the world even more 

wary of doing business with Iran. 

So the Central Bank of Iran is one concern that we have in that 

regard, but it is not the only one. And so our engagement on this 

issue, you know, has a number of concerns that we would raise. 

Mr. KLEIN. Okay, again, I would encourage that. 

Also, there are a number of examples that have been brought forward, the UAE as being one country, where companies are getting 

around restrictions in terms of——

[Audio difficulties.] 

Mr. KLEIN [continuing]. By shipping through, facilitating through 

UAE and other countries. That is something—obviously, we are 

trying to close every door that is opening. 

How big a problem is that? 

Mr. LEVEY. I would say that we have—is my mike working it? 

Chairman BERMAN. Yes. 

Mr. LEVEY. We have engaged very intensively with the UAE. 

They take the implementation of 1929 very seriously. They take 

very seriously their desire not to be abused by Iranian illicit conduct. And so, that seriousness of purpose has been reflected, I 

think, in recent months in their actions, as well. 

Chairman BERMAN. The time——

Mr. KLEIN. Can I just make one last comment—it is not a question, but just—as it relates to this? It is my closing comment. 

It relates to—the anticipation of what happened with the sanctions coming online I think were very indicative of a process. We 

are now in the enforcements stage, and, again, we all feel very 

strongly about that. But you heard from some of the members 

60

about the notion of layers of additional things that can come down 

the road. 

Now, we all know time is of the essence, and we want to continue 

that process. But to the extent that ideas can continue to come forward from the experts about additional things that we can and 

should be doing, even in the form of ‘‘these are the next steps we 

will continue to take,’’ I think they will continue to build layers of 

enforcement and message that are very, very substantively important at getting the possibility of change of behavior. 

Thank you. 

Chairman BERMAN. The time of the gentleman has expired. 

The gentlelady from California, Ambassador Watson, is recognized. 

Ms. WATSON. Thank you so much. And I am very conscious——

[Audio difficulties.] 

Chairman BERMAN. I just want to say—oh, boy. 

Ms. WATSON. I think my mike has just—is it on? 

Chairman BERMAN. Yes. We know you have to leave soon, 

and——

Ms. WATSON. As time grows short in many ways, I want to get 

to a bottom line. We have talked about sanctions. We have worked 

with the EU and the surrounding countries of Iran. This is really 

going to Ambassador Burns. 

You see Ahmadinejad—and I have been told by a panel of British 

parliamentarians, who were able to go into the back door of Iran, 

that the people in the streets don’t necessarily go along with the 

ideology of Ahmadinejad. 

Do you think that we can converge on the current leadership of 

Iran to sit down and negotiate with us about the sanctions, about 

nuclear power and so on? Are we at that point? 

And is there a separation of the top leaders, the ones that are 

speaking, and the common people in the street? I remember Iran 

in other decades, and we have a very—the czar came here, if you 

remember. And we had a very good working relationship with the 

Carter administration. 

What do you project in the very near future in terms of the ideology that comes from Ahmadinejad? 

[Audio difficulties.] 

Mr. BURNS. Ambassador Watson, can you hear me? No, sorry. 

Chairman BERMAN. Just speak as loud us you can. 

Mr. BURNS. Can you hear me? 

Ms. WATSON. I can hear you. 

Mr. BURNS. Two comments. First, what was made clear in the 

summer of 2009 and all the discontent you saw unfolding on the 

streets of Iran was a real disconnect between the first of many, 

many Iranians for connections to the outside world and for the individual rights that are so important to us and to any society in 

the world. 

I think what the leadership has done since then is quite ruthlessly suppressed the Green Movement, but I don’t think it has 

eliminated those concerns, that discontent, that thirst for connections to the rest of the world. 

Second, with regard to the prospects for negotiations, I mean, all 

I can tell you is that we will approach—we and our P5-plus-1 partVerDate 0ct 09 2002 15:11 Dec 29, 2010 Jkt 000000 PO 00000 Frm 00064 Fmt 6633 Sfmt 6633 F:\WORK\FULL\120110\62665 HFA PsN: SHIRL
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ners will approach the next set of discussions with the Iranians 

with real seriousness of purpose. And what we will emphasize is 

that there is a choice available here. 

We are not taking issue with the right of Iran or any other country to a peaceful nuclear program. What is at issue here is its responsibility, like any other country in the world, to demonstrate 

that it is going to conduct a purely peaceful program. And because 

of all the mistrust that has been built up because of Iranian behavior in recent years, it is going to take time and hard work to build 

some confidence. 

But we are going to approach this with real seriousness and with 

a clear focus on that choice. Because there is a path whereby Iran 

and its people can have access to peaceful nuclear power, just like 

any other country in the world. They just have to convince the 

international community of the seriousness of their willingness to 

live up to their responsibilities. And that is really what is at issue 

here. 

Ms. WATSON. Just yesterday, several members of this committee, 

under the leadership of our great chair, met with Turkey—the minister from Turkey, the ambassador, et cetera. And the gist of it, to 

me, is that they are acting as a go-between between Iran and the 

countries of the West. 

And I felt a little differently after hearing them, Mr. Chairman, 

than what we felt before we went into that meeting. I think it was 

explained quite clearly that they wanted to continue trade with 

Iran, they wanted to continue to address them in terms of being, 

shall I say, more cooperative in terms of the sanctions and looking 

at their nuclear development of uranium as something that cautions the rest of the world because we feel the irresponsibility of 

the leadership. 

I somewhat applaud the Turks for playing that role for us. We 

are going to continue our discussions with them, hoping that they 

will have an impact. 

And can you comment? 

Mr. BURNS. Simply to say that, you know, whatever our technical 

differences with Turkey in the past, Turkey is an important partner for the United States in many, many areas. Certainly, Turkey 

has made very clear that its interest argues very strongly against 

a nuclear-armed Iran. Turkey has a border with Iran. You know, 

Turkey has as much at stake as anyone in that region in avoiding 

the instability and the risk that would come from a nuclear-armed 

Iran. 

So we are going to continue to work with the Turks on these 

issues, not just on that issue but on Iraq, on Lebanon, many other 

areas where I think the Turks can continue to play a constructive 

role. 

Ms. WATSON. Thank you very much. 

Chairman BERMAN. The time of the gentlelady has expired. 

And our last questioner is the gentlelady from Texas, Ms. Sheila 

Jackson Lee. 

Ms. JACKSON LEE. Mr. Chairman, let me thank you very much. 

And, Mr. Chairman, do we believe this will be our last hearing for 

the month, or will there be greater opportunities? 

62

Chairman BERMAN. Let’s put it this way: It is my hope this is 

the last hearing. 

Ms. JACKSON LEE. Well, allow me the personal privilege to thank 

you for your leadership——

Chairman BERMAN. Thank you. 

Ms. JACKSON LEE [continuing]. And to add my appreciation for 

my dear friend, Ron Klein, who has been such a value to this committee. 

I will follow—and thank you again—the line of questioning that 

some of my colleagues mentioned regarding China and the value of 

sanctions. One lieutenant general in the Israeli defense forces 

asked a question, do sanctions really work? And I would like to 

pose that question to you, particularly as it relates to human 

rights. 

And we note, in particular, that we have had a series of stoning 

deaths that have occurred, particularly Sakineh Mohammadi 

Ashtiani, the verdict of death by stoning. We know that there is 

discrimination, religious discrimination. 

So my question is, what do we in the United States expect to get 

out of sanctions, strong or not-so-strong? 

Mr. BURNS. Well, I think, ma’am, we are aiming for the strongest 

possible set of measures that produces changes in behavior, certainly with regard to the nuclear issue, so that Iran chooses a path 

of demonstrating to the rest of the world that it wants to pursue 

a responsible, peaceful nuclear program, but also on issues like 

human rights. 

And I think on human rights we will try to take full advantage 

of the provisions you have provided in CISADA. I think identifying 

individual officials who are responsible for abuses is a way to hold 

them accountable and demonstrate our commitment. 

I think the truth is that the Iranian leadership would like nothing better than to paint opposition movements as foreign agents, 

and we need to be careful of that, because the Green Movement, 

for example, has made clear that it is a homegrown movement, and 

it can’t afford to be seen as an instrument of anybody outside the 

country. So we are very mindful of that. We don’t support particular opposition groups or political factions. But what we do—

what we are determined to do is stand up for universal human 

rights. 

And finally I would say, it is important for us to work to mobilize 

others in the international community to make those same points. 

Ms. JACKSON LEE. Do you see any direct movement as a result 

of sanctions, any direct changes in behavior as a result of sanctions? 

And let me just—as my time runs out, let me conclude with the 

fact that I would like to receive the same answers that Congressman Ted Poe asked for. And you might want to comment on whether or not any——

[Audio difficulties.] 

Ms. JACKSON LEE. Let me just finish so you can take up the rest 

of my time. And thank you. Do we have any movement—a lot of 

my colleagues have asked about China, India, and others. Do we 

have any ability to impact their behavior as they seek a very necVerDate 0ct 09 2002 15:11 Dec 29, 2010 Jkt 000000 PO 00000 Frm 00066 Fmt 6633 Sfmt 6633 F:\WORK\FULL\120110\62665 HFA PsN: SHIRL
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essary resource, and that is the energy that they are using for 

their——

[Audio difficulties.] 

Mr. BURNS. I think we have seen some movement, for example, 

on the part of India, as I mentioned to you before, as a result, as 

they look at not only Resolution 1929 but what other countries in 

the world are doing. I think you have seen an interest in diversifying their sources of energy in the world. 

I think, with regard to human rights, we have from time to time 

seen some movement and changes in behavior when you have had 

a strong international chorus of concern, in particular cases. In the 

Third Committee in the United Nations a few weeks ago, there was 

by far the largest vote yet of countries condemning Iran for humanrights abuses. So the more that other countries speak out, I think 

the more impact it may have on concrete behavior. 

Ms. JACKSON LEE. If we speak directly to the Iranian people, for 

example, they will listen. The world is frustrated by the inertia of 

the Iranian Government. Certainly we are not in support of the efforts to dismantle it in a nondemocratic manner, but there has to 

be some movement for this country to come into the world forum 

of the 21st century, meaning democracy, trade, and interaction 

with the other world countries. I hope the Iranian people are listening and will not accept human-rights abuses and begin to demand that Iran work with the world community. 

I yield back. 

Chairman BERMAN. The time of the gentlelady has expired. 

And I am going to just—you won’t get off quite that easy—ask 

one last question. In September, the Treasury Department sanctioned Iranian-owned bank EIH, incorporated in Germany, for providing financial services to Iranian WMD proliferators and facilitating transactions on behalf of other sanctioned banks. 

Why has the German Government refused to take action against 

the bank? What are we doing to convince the German Government 

to close them down? And are we considering any sanctions against 

any entities doing businesses with EIH? 

Mr. LEVEY. Mr. Chairman, you are right, we did take that action 

against EIH in September. We consulted in detail with our German 

colleagues on that action. They are looking at the evidence that we 

were able to share and looking into it themselves. 

We do, as you know, have authorities that go beyond what most 

other countries have, in our ability to take action on administrative 

record and to rely on information that we don’t have to make public. But the Germans have been good partners on this, and they are 

looking at this seriously. 

The answer to your final question, though, is answered by the effect of CISADA, which is, now that we have designated EIH—

which, for those who are not familiar with it, was a very big financial facilitator for Iran in Europe and was one of the main ways 

in which they were accessing euro transactions—but now that we 

have designated EIH for its involvement in Iran’s proliferation program, any bank that does substantial business or engages in substantial transactions with EIH puts at risk their access to the 

United States financial system. And we will take that provision 

very seriously and enforce it as appropriate. 

64

Chairman BERMAN. Well, thank you. 

And thank you both very much for coming here. I know how busy 

you are. I know how much is coming up even on this subject in the 

near future. We appreciate you very much taking the time to come 

to us. And also, for what is really—I mean, so much of it is quiet. 

Some of it is government-to-government. And the time you are 

spending on this—I think the other aspect of WikiLeaks, as terrible 

and deplorable as that was, is it demonstrates that this administration’s commitment to this issue is intense, sincere, enduring, 

and hopefully, at the end of the day, successful. 

Thank you. 

[Whereupon, at 12:13 p.m., the committee was adjourned.] 

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