[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
EXAMINING U.S. SANCTIONS POLICY,
IMPLEMENTATION, AND ENFORCEMENT
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON OVERSIGHT AND ACCOUNTABILITY
OF THE
COMMITTEE ON FOREIGN AFFAIRS
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
FIRST SESSION
__________
March 29, 2023
__________
Serial No. 118-15
__________
Printed for the use of the Committee on Foreign Affairs
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available: http://www.foreignaffairs.house.gov/, http://docs.house.gov,
or http://www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
51-645PDF WASHINGTON : 2023
-----------------------------------------------------------------------------------
COMMITTEE ON FOREIGN AFFAIRS
MICHAEL T. McCAUL, Texas, Chairman
CHRISTOPHER H. SMITH, New Jersey GREGORY MEEKS, New Yok, Ranking
JOE WILSON, South Carolina Member
SCOTT PERRY, Pennsylvania BRAD SHERMAN, California
DARRELL ISSA, California GERALD E. CONNOLLY, Virginia
ANN WAGNER, Missouri WILLIAM KEATING, Massachusetts
BRIAN MAST, Florida DAVID CICILLINE, Rhode Island
KEN BUCK, Colorado AMI BERA, California
TIM BURCHETT, Tennessee JOAQUIN CASTRO, Texas
MARK E. GREEN, Tennessee DINA TITUS, Nevada
ANDY BARR, Kentucky TED LIEU, California
RONNY JACKSON, Texas SUSAN WILD, Pennsylvania
YOUNG KIM, California DEAN PHILLIPS, Minnesota
MARIA ELVIRA SALAZAR, Florida COLIN ALLRED, Texas
BILL HUIZENGA, Michigan ANDY KIM, New Jersey
AUMUA AMATA COLEMAN-RADEWAGEN, SARA JACOBS, California
American Samoa KATHY MANNING, North Carolina
FRENCH HILL, Arkansas SHEILA CHERFILUS-MCCORMICK,
WARREN DAVIDSON, Ohio Florida
JIM BAIRD, Indiana GREG STANTON, Arizona
MICHAEL WALTZ, Florida MADELEINE DEAN, Pennsylvania
TOM KEAN, JR., New Jersey JARED MOSKOWITZ, Florida
MICHAEL LAWLER, New York JONATHAN JACOBS, Illinois
CORY MILLS, Florida SYDNEY KAMLAGER-DOVE, California
RICH MCCORMICK, Georgia JIM COSTA, California
NATHANIEL MORAN, Texas JASON CROW, Colorado
JOHN JAMES, Michigan BRAD SCHNEIDER. Illinois
KEITH SELF, Texas
Brenden Shields, Staff Director
Sophia Lafargue, Staff Director
------
Subcommittee on Oversight and Accountability
BRIAN MAST, Florida, Chair
SCOTT PERRY, Pennsylvania JASON CROW, Colorado, Ranking
DARRELL ISSA, California Member
TIM BURCHETT, Tennessee DINA TITUS, Nevada
FRENCH HILL, Arkansas COLIN ALLRED, Texas
MICHAEL WALTZ, Florida ANDY KIM, New Jersey
CORY MILLS, Florida SHEILA CHERFILUS-McCORMICK,
NATHANIEL MORAN, Texas Florida
MADELEINE DEAN, Pennsylvania
Ari Wisch, Staff Director
C O N T E N T S
----------
Page
INFORMATION SUBMITTED FOR THE RECORD
Information submitted for the record............................. 7
WITNESSES
Asher, David, Senior Fellow, Hudson Institute.................... 14
Alpert, Rachel, Partner, Jenner & Block, LLP..................... 19
Ruggiero, Anthony, Senior Director and Fellow, Foundation for
Defense of Democracies......................................... 29
APPENDIX
Hearing Notice................................................... 71
Hearing Minutes.................................................. 73
Hearing Attendance............................................... 74
ADDITIONAL INFORMATION SUBMITTED FOR THE RECORD
Additional information submitted for the record.................. 75
EXAMINING U.S. SANCTIONS POLICY, IMPLEMENTATION, AND ENFORCEMENT
Wednesday, March 29, 2023
House of Representatives,
Subcommittee on Oversight and
Accountability,
Committee on Foreign Affairs,
Washington, DC.
The committee met, pursuant to notice, at 2:57 p.m., in
room 210, House Visitor Center, Hon. Brian Mast (chairman of
the subcommittee) presiding.
Mr. Mast. The Subcommittee on Oversight and Accountability
will come to order.
The purpose of this hearing is to examine the Biden
Administration's sanctions policy, its use, its implementation,
and its enforcement of sanctions on a range of malign actors.
I now recognize myself for an opening statement.
So, as we begin oversight and accountability in this work
of the 118th Congress by examining a crucial tool in advancing
U.S. national security--and that is sanctions, economic
sanctions, specifically--in the past 2 years, the Biden
Administration, in my opinion, has failed at implementing and
enforcing sanctions on many of our adversaries. Unenforced
sanctions, in my opinion, are worse than no sanctions at all
because of what it telegraphs to our enemies. Plain and simple,
sanctions have to be enforced because they show that our
``yes'' is yes and our ``no'' is no. And if we are not showing
that, we are telegraphing the wrong thing to any foreign
intelligence asset.
I will begin this hearing by posing three questions. How do
we know that the Biden Administration has failed to enforce
sanctions? Why does that matter? And what is the correct course
of action?
Let's take Iran, No. 1, as an example. Under the Trump
Administration's maximum pressure campaign, the Islamic
Republic of Iran's official cash reserves fell to $4 billion
from, roughly, $122.5 billion. And that was in the year 2020
that they fell to that.
Under the Biden Administration, it has risen to $41.4
billion. That is a 900 percent increase. On top of that,
failure to enforce sanctions on Iran's oil sector has allowed
oil exports to surge to 1.3 million barrels per day.
In South America, Venezuela President Nicolas Maduro has
been able to milk the cash cow. For the first time in many
years, Chevron is exporting 100,000 barrels of crude oil a day
to the United States every day, lining the pockets of a regime
that had been cutoff until it agreed to hold free and fair
elections.
Let's move to North Korea. North Korea has been allowed to
launch a record number of missiles with few consequences on Kim
Jong-un. In 2022, 90 missiles were launched, breaking the
previous record of just 25 in 2017. The Administration has
failed to crack down on Kim's sources of revenue or Chinese
banks and companies that have been enabling him.
Why does all of this matter? Because the United States is
facing very real threats from China and Russia. We cannot be
fighting with one hand tied behind our back.
Since Vladimir Putin launched his illegal invasion and
occupation of the sovereign Ukraine, the United States has sent
billions in aid to Ukraine. But by allowing Russia to continue
to export energy, hundreds of billions have been pumped into
Putin's economy. Sanctioning a farmer without sanctioning that
farmer's crops is not an effective strategy, and it telegraphs
to our enemies that President Biden does not have the correct
red lines.
It is widely recognized that China is the greatest
strategic threat to our country, but, again, there have been
little to no efforts to use sanctions to hold the CCP
accountable. Today, we will hear recommendations on how our
government can do just that--hold them accountable, including
targeting China's support for Russia; the Wuhan Institute of
Virology, and China, the cartels, and the role that they play
in the deadly fentanyl epidemic.
Instead of focusing on innovative, new ways to implement
sanctions, this Administration has been developing creative
ways to undermine them--by offering massive carveouts through
overbroad general licenses. In December 2022, Treasury issued
amended general licenses offering massive new exceptions for
humanitarian aid, making it easier for assistance to fall into
the hands of sanctioned regimes, terrorists, and human rights
violators, as we have seen in places like Syria.
In the wake of the recent earthquake in Syria and Turkey,
General License No. 23 went even further--authorizing direct
sanctions with Syria's Assad regime, despite numerous existing
avenues for providing humanitarian aid to the Syrian people,
opening that door for the Butcher of Damascus to line his
pockets.
So, what is the correct course of action? Today's
discussion will help determine that, but I believe the Trump
Administration had laid out a very helpful blueprint. Economic
warfare is a method to preventing kinetic warfare.
Prior to the invasion of Ukraine, President Biden did agree
with that statement--referring to direct sanctions--but later
he started to say things like this in February 2022: ``I did
not say that sanctions could stop him.'' And then, later, he
went on to say, in a half-assed measure, talking about Putin,
that ``Sanctions never deter.''
I would disagree with that. Mr. President, I would say this
to you: sanctions never deter if they are empty threats. For 4
years, the Trump Administration showed a clear path to success:
make sanctions match your words and lead from a position of
strength.
We have seen the impact of rigorous congressional oversight
of sanctions policy, implementation, and enforcement in recent
years. Congress has a duty to conduct oversight and push this
Administration to take responsibility and act in the best
interests of the security of our United States of America and
our people.
And in that, I will now recognize the ranking member. The
chair now recognizes the ranking member, the gentleman from
Colorado, Mr. Crow, for any statement that you might have.
Mr. Crow. Thank you, Chairman Mast, and thank you for
calling this important hearing.
In this subcommittee, we have a responsibility to examine
critical issues of U.S. foreign policy and national security,
and the impact of those policies and decisions on our national
interests. Our system of checks and balances places on us the
responsibility to conduct intentional oversight of the
executive branch, to improve policies, and ensure compliance
with the intent of Congress.
So, I believe in robust oversight, and I hope that we can
work together in a bipartisan way to strengthen and improve the
lives of Americans. With that, I'm pleased to get to work on
this first hearing.
The sanctions are a critical tool of U.S. policy that help
us counter an increasingly complex range of threats. From the
weaponization of energy to human trafficking, to terrorists,
our sanctions are holding dictators like Putin, Xi, and Assad
accountable--cutting off the illicit finances of transnational
terrorists and criminal organizations and imposing severe
penalties on human rights abusers around the world.
So, in that sense, sanctions are a versatile tool. But this
is not the 1990's. We have to recognize that the world is
rapidly changing, and the challenges of effective sanctions are
greater than ever before. The simple reality is that the global
economy is complex. Our trading partners have many options
which require that sanctions be used as a scalpel, not as a
sledgehammer. If we misapply them, they will be ineffective.
So, with this new reality in mind, the Biden Administration
has used sanctions to significant effect--making U.S. sanctions
policies stronger, more coordinated, and more effective.
Under President Biden's leadership on Russia sanctions,
they have produced an unprecedented coalition of more than 30
countries imposing devastating costs on the Kremlin. Never
before has the world seen such expansive and deep sanctions
programs, and through effective coordination and diplomacy, has
been able to leverage this tool in a way that we have never
seen. They have also imposed expansive export controls against
Russia and China to cutoff their access to American products,
software, and technologies.
So, recognizing the need for smarter sanctions, the
Administration has undertaken important reforms by implementing
new guidance on licenses that allow humanitarian workers the
ability to operate in the most volatile and challenging
environments. Our sanctions policies are becoming more targeted
and more humane.
These license reforms are not only critical to ensuring
that our policies are in line with our values--preventing our
sanctions from exacerbating humanitarian crises in Syria,
Afghanistan, and Yemen, and others--but they are also working
to make them more effective. These reforms ensure that the
oppressors, not the oppressed, are the ones paying the price,
which is in our national security interest.
But, as with any policy, implementation is difficult. It is
an art, not a science, as we all know. Bad actors are
constantly finding ways to evade our sanctions, which is why it
is so critical that our policies serve broader strategic
objectives and work in concert with other tools at our
disposal, including diplomacy, development, and strong national
defense.
I look forward to hearing from our distinguished witnesses
on these important issues and thank them in advance for their
insights and candor on how we can meet this complex and ever-
evolving new world challenge.
And with that, I yield back.
Mr. Mast. Thank you, Ranking Member.
Other members of the committee are reminded that opening
statements may be submitted for the record.
We are pleased to have a distinguished panel of witnesses
before us today on this important topic of sanctions.
Mr. David Asher is a senior fellow at the Hudson Institute.
Ms. Rachel Alpert is a partner at Jenner & Block, LLP.
And Mr. Anthony Ruggiero is a senior director and fellow at
the Foundation for Defense of Democracies.
I thank you for being here today. Thank you for your time.
Your full statements will be made a part of the record. I
will ask each of you to keep your spoken remarks to 5 minutes
in order to allow time for members to ask their questions.
And I now recognize Dr. Asher for his opening statement.
STATEMENT OF DAVID ASHER, SENIOR FELLOW, HUDSON INSTITUTE
Dr. Asher. Good afternoon, Chairman Mast, Ranking Member
Crow, and the other members of this esteemed subcommittee.
It is a real honor, frankly, for me to be able to testify
in front of the two of you especially, but also the other
members. You have served your Nation valorously on the fields
of combat in different theaters of war.
I had the pleasure of serving as a senior advisor to
Special Operations Command while you were deployed in different
capacities, and I also worked for Central Command with General
Petraeus and General Allen. And you were the tip of the spear
and we know you paid some prices for it. And I want to say I
commend you, and we are going to do our best to use finance and
economics in the future to replace some of the military effects
that cost you and cost so many of your colleagues dearly. But I
still feel it was worth the price.
Today, in a personal capacity, I speak as an experienced
practitioner of economic and financial warfare who has worked
over the last 34 years in the U.S. Government to advise on
Congress' finance campaigns against our main adversaries,
terrorist groups, and drug trafficking cartels.
I want to speak poignantly, pointedly, about our failure to
have a sanctions regime at any extent against the People's
Republic of China, which has a nuclear weapons program that is
out to destroy us. That nuclear weapons program is operating
here in the United States. There was a report recently issued
by a group--I think it is called Strider Technologies--that
outlined something called the Los Alamos Club, which is the
Chinese Academy of Engineering Physics; i.e., the nuclear
weapons program, and China's penetration of Los Alamos National
Laboratory, and many other National Laboratories, as well as, I
think, 12 universities we have identified at Hudson in our
research.
This has to be stopped. They are pointing a huge, and
growing, stockpile of nuclear weapons at us to destroy us, and
they have made that clear. I think that we need to at least use
sanctions to try to stop them from taking advantage of their
ability to buy stuff in the United States and transact through
our banks.
But let's face it, we haven't even imposed sanctions
against China over its likely willful creation and certain
undercover export of COVID-19. I led the investigation into the
origins of COVID-19 for Secretary Michael Pompeo at the State
Department. We, two and a half years ago, concluded it was a
massive lab accident combined with an even more massive cover-
up. At this stage, can we at least sanction the infamous Wuhan
Institute of Virology, its parent organization, its partners in
the Chinese military, corporate subsidiaries, and key
personnel?
I will drop a little bombshell for you here today. My
colleague, who came in as our external science advisor on
weapons of mass destruction related to biology, Steven Quay at
the State Department, Dr. Quay has recently concluded, based on
metagenomic analysis of the sequences posted by the Chinese on
NIH's own servers, that there is clear evidence that the Wuhan
Institute, in an unsafe lab condition at BSL2-3, so-called
dentist office-level condition, was not just working on COVID-
19 before COVID-19, it was working on NIPAH and MERs.
MERs is 35 percent, roughly, lethal. They were adding an
ability for it to bind to human receptors, so it could spread
very fast between people. It can spread, but it cannot spread
fast naturally. So, that is total gain-of-function research,
absolutely outlawed. NIPAH, 60 percent deadly. If you want to
end the world, this is a pretty clear way to do it.
They were doing this in the fall of 2020 in the wake of the
pandemic. As far as I know, they are doing it right now today,
and none other than the infamous EcoHealth Alliance up in New
York is still funding the research on behalf of the National
Institute of Allergy and Infectious Diseases. I think this
needs to end.
But let's face it, we also have a massive problem with the
Chinese over fentanyl trafficking. I led the task force at the
State Department with the DEA to counter the Sino-Mexican
fentanyl trafficking partnership, and with the Sinaloa and New
Jalisco Cartels. We haven't even sanctioned the Mexican banks
that we know harbor the leadership finances of Ismael Zambada
Garcia, the leader of the Sinaloa Cartel, and other members.
But we have many more things to sanction, including the
Chinese banks that are receiving billions and billions of
dollars of the drug money and the Chinese network of communist
Chinese resident in the United States who are laundering the
money.
Frankly, I also would like to underline, in line with,
Chairman Mast, your point, there is much more to be done on
Russia. I have worked on that. I can illuminate just how much
the sanction skirting continues.
I have five slides that I would like to submit for the
record that sort of outline this. If you have time to take a
look at them, I would appreciate it.
Mr. Mast. Without objection, so ordered.
[The information referred to follows:]
[GRAPHIC] [TIFF OMITTED] T1645.036
[GRAPHIC] [TIFF OMITTED] T1645.037
[GRAPHIC] [TIFF OMITTED] T1645.038
[GRAPHIC] [TIFF OMITTED] T1645.039
[GRAPHIC] [TIFF OMITTED] T1645.040
[GRAPHIC] [TIFF OMITTED] T1645.041
Dr. Asher. And I guess the core lesson--I just want to
change--I just want to say at the end here is we need good
financial intelligence. We need verification of compliance with
sanctions, and we need an interagency action plan and an
absolute top-down approach to breaking the bank of these
adversaries.
Thank you.
[The prepared statement of Mr. Asher follows:]
[GRAPHIC] [TIFF OMITTED] T1645.010
[GRAPHIC] [TIFF OMITTED] T1645.011
[GRAPHIC] [TIFF OMITTED] T1645.012
Mr. Mast. Thank you, Dr. Asher.
I now recognize Ms. Alpert for her opening statement.
STATEMENT OF RACHEL ALPERT, PARTNER, JENNER & BLOCK, LLP
Ms. Alpert. Chairman Mast, Ranking Member Crow,
distinguished members of the House Foreign Affairs Oversight
and Accountability Subcommittee, thank you for this opportunity
to testify before you today.
I'm here to share my personal views on the use,
implementation, and enforcement of sanctions. My views are
informed by my prior work as an attorney at the State
Department under both Republican and Democratic Administrations
and my current work advising multinational companies and
international NGO's on sanctions compliance.
As my written statement reflects, I believe that sanctions
are a critical tool in our foreign policy arsenal, but they are
not a silver bullet. Sanctions alone do not end wars, topple
dictators, or stop terrorists. But, when used appropriately,
they can make a meaningful impact toward promoting our foreign
policy and national security.
Today, I want to focus on three key areas that are
important to effective sanctions implementation.
First, the role of sanctions in the broader foreign policy
toolkit.
Second, the importance of tailoring sanctions to the
challenges they aim to address.
And third, the value of multilateral sanctions
implementation and enforcement.
When assessing sanctions as a tool of foreign policy, we
look at the overarching goals and range of levers used to
achieve them. In addition to sanctions, these tools include
diplomatic engagement, foreign assistance, import and export
controls, even threat of force. Determining the right mix of
these tools in each particular case, and how sanctions fit, as
the Administration has done in response to the coup in Burma
and Russia's illegal war on Ukraine, is key to an effective
sanctions policy.
It also means explaining sanctions clearly and publicly, so
that the foreign policy objectives are understood, serving as a
foil to disinformation about sanctions reach and impacts. To
this end, it is important to calibrate sanctions to align with
foreign policy priorities. This is done through considered
targeting of sanctions actions and through intentional
authorizations. When authorizations aren't clear to those
operating in heavily sanctions environments, there is a
chilling effect on desired activities, both by those carrying
them out and by third-party service providers needed to
implement them.
The Biden Administration's implementation of humanitarian
and associated general licenses provides an important example.
It has long been U.S. Government policy, regardless of the
Administration, to authorize activities in furtherance of U.S.
Government programs and specified NGO activities in sanctioned
environments. Such licenses allow for disaster relief, for
democracy building, education, development projects, and
environmental programs.
In December 2022, under U.S. leadership, the U.N. issued
Security Council Resolution 2664, which provides an exception
from U.N. sanctions programs to allow for the timely delivery
of humanitarian assistance or for other activities that support
basic human needs.
OFAC, subsequently, implemented this resolution
domestically via authorizations across sanctions programs.
These authorizations allow for a more orderly assistance
response and they counter anti-sanctions narratives by showing
that U.S. economic sanctions should not prevent the provision
of critical assistance. Such clear communication turns the
focus in times of crisis, instead, to actors who are preventing
the flow of aid to their own populations because of barriers
they create and their corrupt practices.
Finally, as espoused in Treasury's sanctions policy review
and evidence through U.N. humanitarian licenses and the Russia
response, the Administration has prioritized multilateral
action in both the implementation and enforcement of sanctions,
where possible.
Given the range of global challenges at our doorstep,
Congress and the executive branch have the opportunity now to
increase the efficacy of sanctions toward U.S. foreign policy
goals. Congress can ensure that all sanctions authorities
provide for Presidential waivers, so that the United States has
flexibility to respond quickly to changing circumstances.
We also need increased U.S. Government sanctions
implementation resources commensurate with the increase in
sanctions. In addition, the United States should continue
expansion of sanctions diplomacy and sanctions-related
technical assistance. Multilateral sanctions are the future and
will allow us to more effectively tackle global challenges.
Finally, the development of a clear foreign policy and
national security strategy, including when and how the
Administration will seek to apply sanctions, would promote
these goals by fostering greater cohesion and consistency in
the use of sanctions among the many levers of foreign policy.
Thank you.
[The prepared statement of Ms. Alpert follows:]
[GRAPHIC] [TIFF OMITTED] T1645.013
[GRAPHIC] [TIFF OMITTED] T1645.014
[GRAPHIC] [TIFF OMITTED] T1645.015
[GRAPHIC] [TIFF OMITTED] T1645.016
[GRAPHIC] [TIFF OMITTED] T1645.017
[GRAPHIC] [TIFF OMITTED] T1645.018
[GRAPHIC] [TIFF OMITTED] T1645.019
[GRAPHIC] [TIFF OMITTED] T1645.020
Mr. Mast. Thank you, Ms. Alpert.
I now recognize Mr. Ruggiero for his opening statement.
STATEMENT OF ANTHONY RUGGIERO, SENIOR DIRECTOR AND FELLOW,
FOUNDATION FOR DEFENSE OF DEMOCRACIES
Mr. Ruggiero. Thank you, Chairman Mast, Ranking Member
Crow, and distinguished members of the subcommittee. Thank you
for the opportunity to address you today on this important
issue.
My testimony is informed by my previous work at the State
Department, the Treasury Department, Senator Rubio's staff, and
the White House National Security Council, working on sanctions
and nonproliferation issues.
My written statement reviews what I call the axis of
sanctions evasion, where North Korea, Russia, China, Iran, and
Syria work together to undermine U.S. sanctions policies. And
in many ways, China and Russia lead this new axis, the former
serving as a shopping market for illicit items and financing,
and the latter in service of its war in Ukraine. In each
instance, the overall goal is to disrupt the preeminence of the
U.S. dollar and America's foreign policy and national security.
I provided 16 recommendations in my written testimony for
improving sanctions policy implementation and countering this
coalition of sanctions evaders.
The good news is that the United States has a range of
available tools to address these challenges. Senior officials
from the Treasury, State, and Commerce Departments engage with
other government officials and the private sector on the
dangers of aiding this coalition.
The Biden Administration benefits from the bipartisan
nature of sanctions and export controls enforcement and
implementation, and Congress can provide additional resources
and authorities to expose and target sanction evaders.
On North Korea, limited nuclear deals have not stopped or
rolled back Pyongyang's nuclear program, and U.S. sanctions on
the Kim Jong-un regime have atrophied since former President
Trump pursued summit-level diplomacy in 2018--even though
Congress passed three North Korea sanctions laws in 2016, 2017,
and 2018 by overwhelming bipartisan majorities.
The Biden Administration deserves credit for building a
diplomatic and financial sanctions coalition to increase the
costs on Moscow and its allies for the Ukraine war, but Putin
can fund his war machine based largely on oil exports, and the
United States should lead efforts to end U.S. and global
reliance on the Rosatom State Nuclear Energy Corporation.
The Administration's inconsistent messaging on Chinese
companies' exports to Russia suggests it is unsure of how to
address China's role in the Ukraine war. While it is unclear if
Chinese leadership is aware of, or perhaps even tacitly
supports, Chinese companies providing lethal assistance to
Russia, there is scant evidence to suggest the Chinese
government intends to take any action to hold those firms
accountable for potentially violating Western sanctions, let
alone to prevent future lethal shipments from occurring.
Iran has continued its nuclear advances, as we saw last
week, also, with attacks on Americans. Yet, this Administration
does not have a plan for addressing Tehran's provocations and
has not developed a sanctions strategy to increase pressure on
the Islamic Republic.
The Administration has significantly reduced implementation
of the Caesar law. Even as Assad's atrocities and attacks on
Syrian citizens continues, the Administration is allowing
regional energy deals to move forward, where Damascus could
pocket $40 to $50 million.
The Administration also issued a broad general license that
allows a wide array of transactions involving Syria that were
previously restricted or prohibited. General License 23 goes
further than previous exceptions for humanitarian aid and could
allow the transfer of money or goods to the Syrian government
if it is listed as being for earthquake relief. I noted that it
should revoke or modify that license and consider establishing
a ``white channel'' for humanitarian-related relief efforts.
The United States has expanded the use of sanctions as a
crucial tool in its foreign policy. Congress should compel the
Biden Administration to sharpen its focus on the axis of
sanctions evaders to ensure that they do not undermine key
foreign policy priorities.
Thank you for inviting me to testify, and I look forward to
addressing your questions.
[The prepared statement of Mr. Ruggiero follows:]
[GRAPHIC] [TIFF OMITTED] T1645.021
[GRAPHIC] [TIFF OMITTED] T1645.022
[GRAPHIC] [TIFF OMITTED] T1645.023
[GRAPHIC] [TIFF OMITTED] T1645.024
[GRAPHIC] [TIFF OMITTED] T1645.025
[GRAPHIC] [TIFF OMITTED] T1645.026
[GRAPHIC] [TIFF OMITTED] T1645.027
[GRAPHIC] [TIFF OMITTED] T1645.028
[GRAPHIC] [TIFF OMITTED] T1645.029
[GRAPHIC] [TIFF OMITTED] T1645.030
[GRAPHIC] [TIFF OMITTED] T1645.031
[GRAPHIC] [TIFF OMITTED] T1645.032
[GRAPHIC] [TIFF OMITTED] T1645.033
[GRAPHIC] [TIFF OMITTED] T1645.034
[GRAPHIC] [TIFF OMITTED] T1645.035
Mr. Mast. Thank you, Mr. Ruggiero.
And just before we even begin, I'm not butchering your
name, am I? I'm saying it well? All right. Good. I think that
helps everybody out, so we do not mess it up.
I now recognize myself for 5 minutes of questioning.
And I want to make this simple and straightforward in my
questioning. I will alert you right now I'm going to start on
my right and work my way left, so you all can prepare. I'm
going to start on the right because you prepared a
comprehensive list in your analysis of sanctions that you
believe to be important. But I want to ask you all to each go
beyond that just a little bit.
Identify to me, starting with China--and then, if we still
have time, we will go to Russia for myself, and if we still
have time after that, we will go to Iran--give me, for
yourself, your most important national security objective and
what sanction you would tie to that, beginning with China,
please. And then, we will work our way toward the left for me.
Mr. Ruggiero?
Mr. Ruggiero. Well, the two things with regard to China are
deterring them assisting Russia in its war with Ukraine and
preparing the United States interagency for the eventuality or
the potential invasion of Taiwan, and what role sanctions will
play in that--I think looking at the lessons learned from the
Ukraine sanctions.
Mr. Mast. Meeting the national security objective of what?
Mr. Ruggiero. Well, initially, trying to prevent that
invasion, and then, if an invasion happens, trying to reduce
their ability to continue that invasion with Taiwan.
I think, right now, we should be starting, the Biden
Administration should be starting taking a clear-eyed look at
what worked before the Ukraine war; what has worked during the
Ukraine war, and then, as we move, at some point, hopefully,
past the Ukraine war, what works after that.
Mr. Mast. But, as you mentioned in your remarks, you talked
about the nuclear pipeline, the unconventional warfare pipeline
that we certainly need to be looking at.
Ms. Alpert, I will give you that opportunity as well.
Identify to me a national security threat and a sanction that
you think that we should be implementing right now.
Ms. Alpert. Yes. So, with respect to China--and building on
what my co-panelists said--there is the threat of China's
support to Russia and, also, China's just general acquisition
of technology in support of its efforts countering U.S. foreign
policy interests. And so, taking strong action to prevent China
from acquiring more advanced technologies, even stronger
boundaries to prevent its acquisition is really critical to
preventing them from getting them to the next stage.
Mr. Mast. No doubt, but we are sitting up at 30,000 feet
right now. I want you guys to come a little bit lower in the
altitude. Give me some specifics, if you have them, if you can
offer one.
Ms. Alpert. Well, I think one issue has to do, also, with
global supply chains and the significant reliance that we have
on China in those supply chains, and the fact that not all of
our allies are in alignment on how to address those issues.
In the United States, we have the Uyghur Forced Labor
Prevention Act, which prevents items manufactured----
Mr. Mast. I will pause you for a moment. I know we are not
all in alignment, but we are the United States of America. And
I like to think that we swing the biggest stick. And so, we can
get them in line--with the right leadership. So, what, if we
could wave our magic wand as the leader of the free world, what
would you put in place?
Ms. Alpert. So, I think building strong international
coalitions to address these concrete issues--so, the issues of
China acquiring technologies that will advance these priorities
of theirs that are counter to ours is one critical issue. And
another is making sure that we are all in alignment with
respect to human rights policies and best practices in global
supply chains.
Mr. Mast. Mr. Asher? Dr. Asher?
Dr. Asher. Yes, I would just say, reiterating what I said
in my prepared statement, we need to hold the Chinese
accountable for killing 20 million people around the world.
That is roughly what the number in excess mortalities who have
died as a result of COVID-19. They absolutely bear
responsibility for the spread of this. I'm fully convinced they
have created it. I do not think they deliberately leaked it.
But, as I said, they are continuing to pursue weapons of
mass destruction research in their biology programs, which are
dual-use, which will potentially destroy us, in unsafe lab
conditions. So, a leak will happen again with a much larger
chance of a biological World War III happening than any other
type of World War III, even nuclear. And so, we have to aim to
stop that through deterrence and imposing costs.
Mr. Mast. Can you give me a pipeline example that you would
look at beyond New York that you mentioned earlier?
Dr. Asher. The pipeline would be, well, in terms of
targets, we need to go after the Institute of Virology in Wuhan
that created this and is continuing to work on these hyper-
dangerous pathogens, funded including by the United States. If
you sanction them, then no one in the NIH, even Dr. Fauci, if
he is still around, can do business with them in the United
States. And frankly, almost no foreign bank will touch them.
That is the best way to stop this from occurring.
Mr. Mast. I will give you one last question. Why do you
think that hasn't happened to date?
Dr. Asher. I think people are still in shock over the fact
that we lost over a million Americans and nearly 60 percent of
GDP was expended countering this thing. I do not think any of
us has reconciled ourselves to the actual origin, let alone the
cost that this has imposed on humanity.
Mr. Mast. I thank you all for your testimony, your candor,
your answer to my questions.
And I now recognize the ranking member, Mr. Crow, for 5
minutes.
Mr. Crow. Thank you, Chairman.
Ms. Alpert, is there really any instance today, sitting
here in 2023, in which a unilateral sanction would be as
effective as a multilateral one?
Ms. Alpert. It is hard to think of a situation where a
unilateral sanction alone will be as effective. And, you know,
I think we can look to export controls as an example. Export
controls, historically, are based on broad multilateral
agreements, and that is so that you can prevent diversion,
other routes of items--and in this case, financial resources--
getting to the location or the destination or the target in
question. And so, we are always stronger when sanctions are
multilateral.
Mr. Crow. And what does it take to create a multilateral
sanctions regime? Can we just tell other countries to do
something? Can we cram that down?
Ms. Alpert. So, this is where really nuanced foreign policy
is critical. That is diplomatic engagement bilaterally with our
allies. That is working through international institutions. And
we have seen that really working through the United Nations,
even the U.N. Security Council, there have been really
effective collaborations that have led to policy changes via
the U.S., which then has a broad global impact.
Mr. Crow. So, you have to lay some groundwork and you have
to do that with nuance and sophistication. Is that safe to say?
Ms. Alpert. That is right.
Mr. Crow. So, we are the United States of America and we do
carry a big stick, so to speak, but we have to work with our
partners and we have to build that. And only then would they be
more effective? Is that safe to say?
Ms. Alpert. That's right. And, you know, the way that we do
that most effectively, from what I have observed, is by
leading--by leading in international organizations, regional
bodies, and bilaterally with our allies.
Mr. Crow. Thank you.
Mr. Ruggiero, you had mentioned, you had made a comment
about sanctions implementation and more resources. And I
actually couldn't agree with you more, right? It is one thing
to pass a sanctions regime, but it is another to actually
implement it. So, would you say that implementation is as
important as passing and imposing sanctions?
Mr. Ruggiero. Yes, I agree. I think implementation of
sanctions, when it comes from enforcement, usually from some of
our law enforcement partners in the government, but just as
important is, you know, I know a lot of people, when we talk
about sanctions, do not like the term ``whack-a-mole,'' but
that is sometimes exactly it is. The United States takes an
action. The countries I mentioned, they are all expert in
avoiding those sanctions. So, we have to continually care and
feed those sanctions lists to ensure that we are having the
same level of effectiveness.
Mr. Crow. And do you think the Treasury Department, more
specifically, OFAC, and let's say the State Department--you
know, DDTC is another example--do you think they have the
resources, the personnel, the money to effectively implement
all of the sanctions regimes we currently have?
Mr. Ruggiero. Well, and there's so many others that we
could have mentioned, right? The Commerce Department, Defense
Department, there's a whole long list. The one main criticism I
have of Treasury's sanctions review is that it was a Treasury
sanctions review and it was not led by the National Security
Council. It should have been a whole-of-government approach.
That would be something I would recommend that the Biden
Administration do. It has been tried by the Trump
Administration, and the Obama Administration before them, to
have a sanctions person at the National Security Council.
Generally, that person has not been of a sufficient high enough
rank and has not led, really, a review of sanctions policy. I
would recommend that as something that, then, the
Administration could come back to Congress and say, ``This is
the type of resourcing we need to accomplish our goal.''
Mr. Crow. So, if Congress were to allocate more resource,
more funding for personnel, that would be helpful, in your
view?
Mr. Ruggiero. Personnel, sometimes it is computers. I mean,
all the way down the line, but I would suggest that it would
start with the Administration--what are their goals, and then,
what are they missing to achieve those goals? And it has to be
a whole-of-government approach.
Mr. Crow. Dr. Asher, in your time in government and working
in sanctions, you are familiar with the low, medium, and high
confidence when the intelligence community creates as an
assessment, right?
Dr. Asher. Yes, I am.
Mr. Crow. So, if something is low confidence, it is less
reliable than a medium or high confidence?
Dr. Asher. Actually, not necessarily. I know it sounds
strange. It is just a question of the volume of information
usually. Low confidence in the wake of the war in Iraq and the
mistakes the intelligence played there----
Mr. Crow. But would you, let me ask, would you rely on a
low confidence assessment in the same way you would a high
confidence assessment?
Dr. Asher. No, but I wouldn't--I would----
Mr. Crow. OK. That is all. I yield back. Thank you.
Dr. Asher. Thanks.
Mr. Mast. Thank you, Ranking Member Crow.
I now recognize Mr. Mills for 5 minutes.
Mr. Mills. Thank you, Mr. Chairman.
Thank you all for being here today.
I wanted to ask a couple of questions, if I may, which is:
first, can the Administration enforce secondary sanctions
against Chinese banks facilitating evasions without causing
systemic harm to the American financial sector and the global
economy? Anyone is fine.
Mr. Ruggiero. Well, I would just say, based on our
experience in the North Korea context, that was certainly a
myth that was out there, that we would cause systemic harm. And
it turned out that that was not the case. Because it was part--
again, this was a bipartisan approach. It was the last year of
the Obama Administration, the first 2 years of the Trump
Administration. And they each had a plan to go after the
entities and individuals and the banks that were financing
Jong-un's sanctions evasion.
I think we have a tendency in the United States
Government--I assume this is still the case--to shy away from
doing that because we think that will happen, but I think, if
we are smart about it, and we are prepared to understand how
far we are not willing to go before we even make the first
step, that is important, too.
Ms. Alpert. I would just add to that, building on that
point, I think the targeting of any sanctions actions just
needs to be very carefully considered. Because which entities
get targeted, what banks might get sanctioned, that impacts the
degree and what sort of impacts in the global economy it would
have.
Mr. Mills. Thank you so much.
And if I may--this is directed to you, Mr. Asher--given the
understanding about OFAC's has got this 50 Percent Rule,
whereby entities are considered blocked if they are owned 50
percent or more, directly or indirectly, in the aggregate by
one or more blocked persons, do you believe OFAC's 50 Percent
Rule is inadequate to address our national security challenges?
Dr. Asher. Absolutely. It is totally outdated. Today, there
is commercial data available from a number of providers,
including one I actually helped start. I'm not going to
advertise it, but it is the largest data provider to the
Federal Government, actually, for financial intelligence,
commercial data.
So, you can follow the sanctions pretty much 24/7 in terms
of their implementation because companies will change names, as
Anthony mentioned, like we change clothes, but we can follow
them through the commercial registries of hundreds of countries
that are online today. And therefore, there should be no 50
Percent Rule. It should be totally eliminated. It is not
needed.
Mr. Mills. And if I may, just staying with you, I wanted to
followup. Do you feel that there is a lack of sanction
enforcement, based mainly on resource issues?
Dr. Asher. I think it is resources and will. I mean, you
asked about China. We have absolute grounds related to the
killing of 100,000 American kids due to fentanyl to go after
the Chinese banks in Hong Kong, primarily, that are laundering
billions and billions of dollars. I would say I have no issue
sanctioning a major Chinese bank. You could always lift it
after a period of a month, if they came back into compliance.
We also can use a non-sanction-based remedy, which I have
used before, called Section 311 of the PATRIOT Act, which will
just cut them off from the U.S. dollar in its maximum
application.
We need to draw the line somewhere. I worked on HSBC Bank,
given the cartel financing that they were doing for Sinaloa.
The fact we gave them a pass because of the world financial
crisis lives on in the hearts of bankers as a sign that we
won't pursue them.
Mr. Mills. And given the fact that, in my opinion, the
Chinese and CCP are hands-down one of the greatest existential
threats to America and to the world, would you say that the PRC
has been responsive to aggressive sanction enforcement?
Dr. Asher. Absolutely. In the wake of the Section 311,
which wasn't a sanction, but it was treated like one, the
Chinese stepped up their cooperation radically, I mean,
including the night of the Section 311--this is a way that the
U.S. dollar is no longer allowed to be accessed by a Chinese
bank or a foreign bank. The Chinese Central Bank Governor
called me on my home phone line in Chevy Chase and said, ``We
want to make a deal. What can we do to get out from under this
cloud?'' That was a pretty clear indication that the Chinese
government was willing to do something--only under the threat
of force, though.
Mr. Mills. And just quickly, Mr. Asher, do you think that
the PRC would go to the mat for Russia or North Korea? Or could
you foresee enforcing secondary sanctions against the Chinese
escalating to any type of an armed conflict?
Dr. Asher. No, I really do not. I think that the almighty
power of the dollar remains intact, and the Chinese know that.
I think that we need to be basing it on evidence, though. I
think law enforcement combined with sanctions is the best way.
So, not just in our intelligence, it should be based on
evidence, and that gets at the previous question.
Mr. Mills. And just quickly with my last remaining seconds,
Mr. Ruggiero, the same question for you, sir.
Mr. Ruggiero. Well, again, we only have small sample sizes.
But, in the case of North Korea, when we did go after China's
help with North Korea, the Chinese responded in a positive way.
Mr. Mills. Thank you so much.
With that, Mr. Chairman, I yield back.
Mr. Mast. The gentleman yields back.
I now recognize Mr. Allred for 5 minutes.
Mr. Allred. Well, thank you, Mr. Chairman.
And thank you all for being here. I appreciate your
testimony.
I think that sanctions are an important tool in our
toolbox. They can help us influence some behavior. But, Ms.
Alpert, as you noted in your testimony, it is not a silver
bullet and they are best done multilaterally.
I'm wondering, though, whether--there's a lot of recent
scholarship arguing that sanctions are less effective than they
maybe previously have been, maybe because we are no longer in
the unipolar world. There are now other options, I guess you
could say.
What do you think, in terms of modifications to our use of
sanctions, is the best way for us going forward to actually
influence behavior without impacting the populations of some of
these places that maybe are not deserving of some of the pain
that we want the decisionmakers, for example, to feel?
Ms. Alpert. Yes. So, I thank you very much, Congressman,
for the question.
I think one of the key elements of effective sanctions
actions is clear communication. We need to make sure that it is
evident from the outset what purpose a given sanctions action
is meant to achieve and, also, what changes in behavior would
cause that action to be lifted.
That, in conjunction with careful targeting of sanctions,
so that they are intended to avoid unintended consequences, and
also, so that there are authorizations in place to clearly
allow the activities we want to continue to do so, are all key
features of a more effective sanctions implementation.
Of course, multilateralism is necessary, too, not just in
the sanctions themselves, but in the exceptions. Because if
organizations are operating on the ground in challenging
environments that are heavily sanctioned, then they need to
know that an exception that applies in the United States also
applies to their donors from Europe and the United Kingdom, and
other countries.
Thank you.
Mr. Allred. What about permanent sanctions? That sounds to
me like what you are describing is something that, if we are
communicating clearly, we have set goals--if sanctions last
beyond a certain duration, does their effectiveness decrease,
in your opinion?
Ms. Alpert. Yes, well, I think sanctions that are stagnant
are not particularly effective. That said, it is hard to put a
set duration on what an effective sanction is because, you
know, sanctions are a lever, right? And if you, 20 years later,
get to the negotiating table with a foreign adversary, and
removal of sanctions is a real possibility, then, sure, it
might be effective there. You need to weigh that, though,
against the real consequences to those who are living under
sanctions, especially comprehensive sanctions regimes, and
assess whether, in the broad scheme of things, is the sanctions
regime really the most effective way, still, at getting at the
foreign policy goals that were the underpinnings of the
sanctions at the get-go.
Mr. Allred. Yes. One of my concerns in the Global South is
kind of our, I guess you could say, competition, and strategic
competition, for hearts and minds; that we both want to
discourage, you know, for example, coups and activities that we
know violate our values, but that we want, ultimately, the
people in the Global South to look to us for our way of
governance, for values, to not maybe be forced into the arms of
the Russians or the Chinese.
Looking at the Global South and some of the ways that we
are trying to both have in place, I think, sometimes targeted
sanctions for certain activities, but also maybe invite U.S.
foreign investment into some of these areas, how can we work
with, and communicate with, U.S. businesses and corporations
that are trying to navigate these sanctions and navigate the
risk for them being involved, and making some important
investments that could potentially help us advance our brand, I
guess you could say?
Ms. Alpert. Yes, well, I think it is all quite situation-
specific. You know, each different environment is going to have
a different mix of what might be effective. But a few features
kind of are consistent in things that do work.
And one is stability, knowing that your operating
environment is going to remain relatively the same, and that
the authorizations that are in place will continue. And also,
providing reassurance to, for example, the financial
institutions that are necessary to fund rebuilding and
assistance, and all of those activities, that they are not
going to run afoul of sanctions or other prohibitions in
supporting those works.
Mr. Allred. Thank you.
Now, I yield back.
Mr. Mast. Thank you, Mr. Allred.
I now recognize Mr. Waltz for 5 minutes.
Mr. Waltz. Thank you, Mr. Chairman.
Thank you, all of you, for coming today, and thank you for
your very good work that I try to follow and read, particularly
from FDD, as much as I can.
Look, we know that Iran continues to evade sanctions. We
know that the exploitation of Iraq's government and financial
system is one of the ways that Iran has evaded these
international sanctions. And despite sanction waivers issued
for the Trade Bank of Iraq, Iraq remains heavily dependent on
Iranian energy.
So, I think the first question to Dr. Asher and Mr.
Ruggiero, from your perspective, how is the Biden
Administration's lack of sanction enforcement on Iran impacted
the stability of Iraq, one? And then, the followup is, do you
think there is an appropriate balance of the waivers, the
secondary sanctions, and the collaboration with the Iraqi
government, or lack thereof, that the Administration can strike
to further enforcement of the sanctions against Iran and combat
Iran's desire and progress toward making Iraq, essentially, a
vassal State?
Dr. Asher. I will just say, having worked extensively
against the IRGC Quds Force in a number of fashions in the
government, certainly, the covert action and overt military
action of the Iraqis and the Syrians, our U.S. presence in Iraq
and Syria, have experienced recently in terms of the sheer
number of attacks coming from Iran and its partners--I wouldn't
even call them ``proxies''; they direct these groups--is off
the charts, and we do need to expand our sanctions directly
against the Iranian regime just in response to that.
There are so many waivers, even in the context of Iran,
that actually occur. The biggest one is via Iraq. Iraq is the
main sanctions, the Asian point for the Iranian regime. And I
do think we need to tighten up----
Mr. Waltz. Do you have a comprehensive listing of those
waivers and the time associated with them?
Dr. Asher. Yes, I do not have a list at the top of my head,
but, certainly, what goes on in Iraq is a major reservoir where
the Iranians are able to exploit the financial system very
readily.
And we can and have periodically tightened that up. We
should be doing that immediately. I do not want to sanction the
Iraqis themselves, but there are Iraqi banks--we have
sanctioned one called Albilad. It was an Iranian front. There
are several others I could think of. I would rather tell you
privately who to go after that could be sanctioned, and it
would get the Iranians' attention very quickly.
Mr. Waltz. Just very quickly, Mr. Ruggiero, I just have
another question I want to get to. Yes?
Mr. Ruggiero. Yes, I would just say, very quickly, that
this Administration, it is not clear what their sanctions
policy is with regard to Iran. I think that that is a key part
of this, the questions that you are asking, is they need to
step back and think about what they are trying to accomplish
with Iran.
Mr. Waltz. Thank you.
So, the lack of strategy, right, much less than the
enforcement within it, is a key issue? Fair?
Mr. Ruggiero. Correct.
Mr. Waltz. OK. Switching to Afghanistan, since 2021, OFAC
has administered seven Afghan-related general licenses. They
explicitly authorized financial transfer to the Taliban and the
Haqqani Network, despite clear and well-known ties to Al Qaeda,
to allow for continued humanitarian assistance. Under these
licenses, for example, the NGO's are authorized to pay taxes
and fees imposed by the Taliban. I know from many Afghans that
I'm in touch with the Taliban and, essentially, Haqqani have
registered themselves as NGO's. So, we are, essentially,
laundering--they are, essentially, laundering that money and we
are funding their terror network.
In June of last year, U.N. official Martin Griffiths
acknowledged that aid diversion by the Taliban is a grave
concern. And this year, SIGAR noted that neither the State
Department, nor SIGAR, have visibility on how much revenue the
Taliban-controlled ministries may be generating. And many of us
who have worked there know that they use that as leverage to
pick winners and losers and who is going to suffer.
So, can you just comment on the aid diversion that is going
on and what you know about it; what visibility you have? And I
will open that up to anyone who wants to jump in.
Ms. Alpert. Well, I can speak specifically to my experience
working with international NGO's on the ground in Afghanistan
and the importance of the general licenses to their operations.
Now, these are international NGO's that are implementing U.S.
Government foreign assistance in Afghanistan. So, consistent
with U.S. Government priorities, to educate women, to provide
food for those in great need. And in order to operate----
Mr. Waltz. NGO's that are no longer allowed to employ women
by the Taliban.
Ms. Alpert. Not all of it. Some have managed to employ
them, nonetheless. But, in order to operate in the country,
they need authorizations just to pay their leases and utility
bills. And so, at least from that perspective, these
authorizations have been critical to just allowing them to
provide that much-needed humanitarian assistance.
Mr. Waltz. I would just thank you for your indulgence, Mr.
Chairman.
I would love to have a followup with you on how we weigh
that humanitarian assistance versus, essentially, funding, in
my view, a terrorist government that has clear ties with Al
Qaeda, and that the military is explicit--it is allowing Al
Qaeda to reconstitute. Meanwhile, ISIS is reconstituting as
well.
But thank you, Mr. Chairman. I yield.
Mr. Mast. And, Mr. Waltz, there was interest by Ranking
Member Crow for a second round. So, if that was something that
you wanted to stay for, we can get you another round of
questioning.
The chair now recognizes Ms. Titus for 5 minutes.
Ms. Titus. Well, thank you, Mr. Chairman. And I apologize
for being late.
I hope that you haven't already covered this, but I wanted
to ask you a little bit about some different kind of sanctions.
My district in southern Nevada and Las Vegas has been hit by
cybercrime a lot lately, and it has cost millions of dollars in
losses. Even a hospital was hit.
And I wonder how you are using sanctions to address the
problems of cybercrime, because some of these are originating
in foreign countries.
Dr. Asher. I will just speak very quickly, as Mr. Ruggiero
can elaborate on North Korea, because we both worked on this.
North Korea is, of course, at the forefront of cybercrime,
including extortion of banks and of hospitals and the
utilities.
It is very difficult to pin down who to sanction,
especially, but there certainly is a fair amount of nearshore/
offshore assets in foreign banks that we could threaten to
sanction, if they do not freeze and allow us to forfeit,
though. So, that is one aspect of how you can use a threat of a
sanction to get someone to do something that they otherwise
wouldn't. There is money sitting all over the world for North
Korea that we know about, and that might stop the North Koreans
from being able to do business.
Mr. Ruggiero. Well, on North Korea, of course, they have a
long history of this, unfortunately. You know, they targeted
Sony and threatened a 9/11-style attack over a movie, putting
aside what your view of that movie is.
On the question of cyber activities, going after the
entities involved is one way to use sanctions, but this is
really going to be an area where sanctions and the financial
institutions--you are going to have to work together with
financial institutions. In a lot of ways, these are going to be
cryptocurrencies that at some point are going to come back into
the banking system. So, making sure that financial institutions
are not allowing that money to come back into the system, then
going to the perpetrators of the cyber activities, that is the
real key part there that we need to work better on and do more
with financial institutions.
Ms. Alpert. And I would just add that it is also important
for the Treasury Department to modernize, for OFAC to have the
understanding and the tools, so that they can intelligently
target these actors.
Ms. Titus. Is there anything we can do in Congress to help
facilitate that?
Ms. Alpert. It is, oftentimes, as everything else, a
resources issue.
Ms. Titus. Yes. Thank you.
Along the same lines, we have made ending fentanyl a
priority. Is there any way you can use sanctions to go after
the illicit drug trade? Or is it all about financial
institutions, too?
Dr. Asher. One hundred percent. I mean, sanctions are
probably our most effective tool. Let's face it, we have never
sanctioned a bank pretty much in our entire history that is a
drug trafficking bank. BCCI, the ninth largest bank in 1988,
was brought down by a U.S. Customs investigation with law
enforcement.
We have never taken a full-bore sanctions approach, whether
it is against a Mexican bank that is holding the accounts of
the Sinaloa Cartel leadership, a Chinese bank that is
laundering the money for the 14K triad, which is selling the
chlorofentanyl to the Mexicans to make fentanyl. I mean, it
would be a nice area to start, and I think it would have a lot
of effect. The drug business is a business about making money.
Ms. Titus. Uh-hum.
Mr. Ruggiero. Well, this also gets back to what we talked
about earlier in terms of China. If we are unwilling to move up
the chain inside of China, to include entities and individuals
and potentially banks, then the effectiveness may not be there.
So, before we move down this pathway, we need to make sure, the
United States needs to make sure that they are prepared to
understand how far they are willing to go.
Ms. Alpert. And then, also, in conjunction with sanctions,
we need effective law enforcement capabilities. We need to work
with our allies internationally because this is a global
problem. We have got conventions that counter various forms of
drugs. These are tools at our disposal in our foreign policy
arsenal to also help address this issue.
Ms. Titus. Well, thank you. Maybe we can work on some of
that.
I yield back.
Mr. Mast. Thank you, Ms. Titus.
The chair now recognizes Mr. Perry for 5 minutes.
Mr. Perry. Thank you, Mr. Chairman.
Thank you, ladies and gentlemen, for your testimony.
Dr. Asher, we talked to Secretary Blinken recently, at
least I did, regarding the known illicit bioweapons program
conducted by the Chinese Communist Party and the military in
conjunction with the Wuhan Institute of Virology. Do you think
that there is a reluctance to sanction because of the fact that
we have known about it, and even though we have known about it,
there has been U.S. taxpayer dollars provided to the Wuhan
Institute of Virology that worked in conjunction with the
Chinese Communist Party's military in this illicit bioweapons
program?
Dr. Asher. I mean, when I first started the investigation
at the State Department into what happened at Wuhan with COVID-
19, and became aware of the extent of military funding, I can
say that I have actually visited the Wuhan Institute of
Virology back in the late nineties, when I was at the U.S.
Embassy in Beijing. And we were toured around by military
people. So, you know, I do not think things have changed as
much as our intelligence community. They seem to have forgotten
more than they ever really knew, especially about dual-use
research of concern. OK?
The Chinese were engaged in very dangerous virological
experiments involving coronaviruses, and now, as I explained
earlier, NIPAH, you know, massively deadly; MERs. The idea was
to try to stop these, if they ever would have evolved in
nature, but, instead, the military was covertly funding that.
We declassified that information. And the goal was to make
biological pathogens which would be useful as weapons in the
future, provided there is a vaccine. And there was a vaccine
program for COVID-19 going on across the street from the Wuhan
Institute at the Wuhan Institute of Biological Production,
which is its partner institution, which gave me high confidence
that the military had a dual-use intention that was benevolent
related to that facility.
Mr. Perry. But do you think that the United States is
reluctant to sanction, based on that history that you just
described?
Dr. Asher. Yes. Our own analyst at the State Department,
it----
Mr. Perry. OK.
Mr. Asher [continuing]. Has come out, they were scared of
us opening the can of worms that might bite us somehow, or a
Pandora's box. And I said that's not the Secretary's concern
and I went to him directly, and he said, ``Go ahead and
investigate it. If we're the problem, we need to unsmoke what
we're doing.''
Mr. Perry. So, since there is every bit of at least
circumstantial evidence that the pandemic originated at the
Wuhan Institute of Virology, or certainly, with the CCP, or if
nothing less, that they hid the origins of it and made it more
difficult to determine the origins of it. It did not come from
a pangolin. It did not come from a bat. It did not come from a
raccoon dog. It came from them.
Do you see any reason whatsoever to not sanction the Wuhan
Institute of Virology or the Chinese Communist Party in that--
--
Dr. Asher. No, we should be sanctioning them and their
parent organizations, their partners, and their proxies, and
personnel. They should be cutoff from their ability to transact
with the United States, receive U.S. funding forever. What they
have done is imposed what could have been the end of the world.
But I guarantee you, with the work they are doing right now, it
is 10 times more dangerous or a thousand times more dangerous
than they were doing before.
Mr. Perry. So, actually, would you contend, then, that
there is actually a greater threat at this time because we
have, essentially, allowed them license to continue? We do not
even call it the ``Wuhan flu'' or the ``Wuhan virus.'' It is
not something like Ebola or the Spanish flu. We call it COVID-
19, and part of the reason we do that is because of the
propaganda of the Chinese Communist Party that called people
that wanted it identified correctly at the time, they called us
racist and xenophobic, and so on and so forth. Do you think it
is actually counterproductive at this point, to our great
peril, to not be sanctioning them?
Dr. Asher. It is absolutely counterproductive. There's no
cost. Literally, 60 percent of GDP in fiscal and monetary
stimulus to offset the biggest decline in GDP that exceeded any
year in the Great Depression in 2020. Let's not forget what
happened to our economy--negative 12 percent GDP disaster. I
mean, 60 percent of stimulus. Why do you think we have
inflation today? I'm sure your constituents are interested in
that. Thank you, China. That is the problem.
Mr. Perry. Well, I would agree with you. And I would also
ask this: you know, there is a lot of concern in the room about
what might be the effects of the sanction, you know, on a
greater level, whether it is to the United States economy, the
global economy, diplomatic relations, et cetera. Is there
anything more concerning than a more virulent string or strain
of pandemic, pandemia, than one that will come out of a
unfettered Wuhan Institute of Virology run by the Chinese
Communist Party, in partnership with the Chinese communist
military?
Dr. Asher. No. It is the future of warfare, is in biology,
in my mind.
Mr. Perry. Thank you, Mr. Chairman. I yield.
Mr. Mast. Thank you, Mr. Perry.
The chair now recognizes Mr. Hill for 5 minutes.
Mr. Hill. Thank you, Mr. Chairman. I appreciate this
hearing.
This is something that we should always put at the
forefront, which is evaluating how our sanctions regimes are
working. Since the Obama Administration, we have just been a
sanction-oriented government. Every troubling situation seems
to demand a new sanction.
So, my view is that that is good, but if we do not enforce
them, what value are they? If we do not have our multilateral
partners also imposing sanctions in a similar way, what success
is that?
And I think North Korea is certainly a terrific example of
that over the recent years with not a lot of help on
enforcement in that particular part of the world.
The two most consequential sanctions-related bills that
have passed during my past 8 years in Congress are the
Countering America's Adversaries Through Sanctions Act, and
then, the Caesar Syrian sanctions.
And I worked very closely on the Caesar bill. And I have
been very engaged in the tragedy of the last decade in Syria.
Assad is, clearly, one of the most dangerous people in the
world.
And when Secretary Blinken was here last week, I asked him
why we were tolerating Arab League member countries,
potentially, reestablishing diplomatic relations with Syria. I
think that is a terrible mistake.
But the good news is that the NDAA included by CAPTAGON Act
bill in it, which just yesterday--and I'm pleased to have a
small victory in the last few days--the Treasury Department and
the United Kingdom jointly began sanctioning Syrian nationals
connected to the captagon trade using the Caesar sanctions. And
I like the fact that we are partnered, as I say, with another
one of our major partner countries, because that gives a lot of
credibility and potential for success that way.
What is your--let me start with Dr. Asher--what is your
assessment of how the executive branch has used sanction
authorities in this Administration?
Dr. Asher. With great scale and scope, but with inadequate
effectiveness and enforcement, to get to your question and your
point you made.
Mr. Hill. Yes.
Dr. Asher. I mean, again, people, as all the experts here
on this panel can attest, they have changed their name; they
have changed their something, and they dropped their ownership
below 50 percent. That was a very important question that was
asked earlier. If you do not change the rules of conduct for
implementing these sanctions and establish a clear verification
and compliance mechanism for sanctions like we have for arms
control, you know, where we are flying satellites over weapons,
missile silos, and stuff, all the time, we are never going to
be effective in achieving our aims.
And by the way, thank you for your work on CAPTAGON. I
worked as the co-lead on DEA's Project Cassandra into Iran,
Hezbollah, Syria, drug trafficking, and it is a most definite
key source of support for the Syrian regime.
Mr. Hill. Yes, I mean, hundreds of millions of dollars
fueling Assad's war machine against his own people, threatening
the region, being a partner to Russia and Iran. I mean, it is
an appalling situation. And now, he is a drug kingpin.
But the State Department last year did not name Syria as a
transnational drug nation. Should they have, Ms. Alpert?
Ms. Alpert. I haven't specifically studied Syria's role in
the transnational drug trade.
Mr. Hill. Yes. Dr. Asher, should we have named Syria?
Dr. Asher. Absolutely. We had them nailed. Absolutely. We
had Assad nailed in 2011----
Mr. Hill. So, I asked Secretary Blinken about that last
week.
Mr. Asher [continuing]. In the transshipment of multi-ton
loads of cocaine through Damascus. It was tied to Hezbollah's
terrorist wing that was killing American soldiers in Iraq. And
we absolutely had grounds to actually indict them.
Mr. Hill. Yes.
Dr. Asher. And we failed to do that because the DOJ does
not want to go after State leaders who are criminals like
Assad.
Mr. Hill. Well, I hope we link it in the United Nations
mechanism on the war crimes. Because this is money directly
tied to the Assad regime and the Assad military producing
captagon, poisoning the very countries that want diplomatic
relations. Go figure that one out. Because if those dollars are
connected--and they clearly are--then I think we can use the
mechanism process in taking him to court, you know, as a
transnational drug criminal, in addition to being a murderer.
Secondary sanctions--I have got a few seconds left--who
wants to talk about China's secondary sanctions? It is, you
know, ``China for $600. OK, you are up.''
Mr. Ruggiero. So, I mentioned it before, but, you know, we
have one example when it comes to North Korea. In 2016 through
2018, it worked going after Chinese companies, Chinese
individuals, Chinese banks, because there was a plan there. It
cut across the Obama and the Trump Administrations. It can work
if we have a plan, if the United States knows how far they are
willing to go, and they execute that plan.
Mr. Hill. Good. I thank you and I thank the panel.
Thank you, Mr. Chairman. I yield back.
Mr. Mast. Thank you, Mr. Hill.
The chair now recognizes Mr. Burchett.
Mr. Burchett. Thank you, Mr. Chairman.
I'm sure you all got up this morning and thought this is
just going to be like on television; all the cameras were going
to be around you, and people would be asking you really
informative questions, and the press will be very honest about
your opinions. But, then, you got up here and you realized it
is just not that.
So, anyway, let's see, I want to make sure I have got my
names right. ``Ruggiero,'' how do you say, ``Mr. Ruggiero''? Is
that it, Ruggiero? All right. Well, Burchett gets slaughtered
pretty regular, too. So, do not worry about it.
It feels like the Administration is kind of reluctant to
enforce some mandatory sanctions against the Chinese entities
enabling sanctions evasions by Russia and North Korea. I want
to address some of the narratives underpinning that the
reluctance.
Can the Administration enforce secondary sanctions against
Chinese banks facilitating evasions without causing systematic
harm to the American financial sector and the global economy?
Mr. Ruggiero. Absolutely, but I think, as a starting point,
it would be great if the Administration targeted the networks
inside of China. They have designated North Korean individuals
inside of China operating, but not the networks inside of
China. So, they are, clearly, just going after one small node
of a larger network. So, they have some work to do there.
Mr. Burchett. Is the PRC responsive to aggressive sanction
enforcement?
Mr. Ruggiero. We only have one example, a small sample
size, but they have been in the past. And part of that is
making sure you have a full plan of how to do it, and then,
executing that.
Mr. Burchett. I'm not sure who to address this to, but
maybe Mr. Asher. You look kind of lonely over there.
Would the PRC go to the mat for Russia or North Korea? And
could you foresee enforcing secondary sanctions against the
Chinese escalating the armed conflict?
Dr. Asher. I mean, I do not think on Russia they are going
to go to the mat. On North Korea, they are at the mat. They
have been using North Korea assiduously for years.
I have worked extensively in the intelligence community,
among my many other jobs, seven times in and out of the
government, on North Korea operations and North-Korea-related
intelligence activities. And we saw that.
Anthony, Mr. Ruggiero can also amplify that North Korea's
Namchongang nuclear proliferation network that built the
reactor in Syria that was for the Iranians to build nuclear
weapons back in 2007, which was taken out by the Israelis, was
moved--that whole program existed right through Beijing. OK?
So, the Chinese knew what was going on. We informed the Chinese
of what was going on, and they said, ``Oh, no, no, no,
nothing's happening.'' But we knew they knew.
It continues. China uses North Korea as a partner and a
proxy to destabilize our alliance system and our allies in
Northeast Asia, as well as, I believe, to proliferate weapons.
I think what happened in Syria when our team showed up there
and we found Chinese blueprints for nuclear weapons in
Gaddafi's compound, I think that was a clear indication that it
wasn't just the North Koreans supplying weapons, components for
a nuclear weapon to the Libyan government, but it was Chinese
fingerprints on it as well.
Mr. Burchett. You mentioned, Mr. Asher, that you could
illustrate, that you can illustrate the holes in the sanctions
against the CCP. Could you elaborate on that quickly?
Dr. Asher. Yes. Well, the holes are everywhere. We have no
sanctions on their weapons of mass destruction program. I mean,
I have no idea why. Their program is overtly designed to
undermine and destroy us. That is what they say publicly. Xi
Jinping just gave a speech on it the other day. I mean, you
have got to take the guy seriously.
I also think we need to use sanctions to deter against a
conflict with Taiwan, but, frankly, the CCP is buying nuclear
weapons components in the United States, sucking talent out of
Los Alamos and Oak Ridge, and other National Laboratories. This
is all public. What is not public is even worse.
Mr. Burchett. Who is sucking out of Oak Ridge?
Dr. Asher. The Chinese Academy of Engineering Physics----
Mr. Burchett. OK.
Mr. Asher [continuing]. Is the center of the nuclear
weapons work in China. It recruited over 120 people,
apparently, at Los Alamos National Laboratory in the last 25
years.
Mr. Burchett. Wow.
Quickly, what impact would the sanctions against the Wuhan
Institute of Virology have, Mr. Asher?
Dr. Asher. I think it would absolutely set back the
biological dual-use research areas of concern that, whether
deliberately or indeliberately, led to the promulgation of
COVID-19 and, most likely, its creation.
Mr. Burchett. Do you think there is a good reason for us to
do that?
Dr. Asher. Absolutely. And I think it would have a--it
would certainly send a message to the world, and it would also
stop U.S. taxpayer money from going there. It is almost the
only way to stop NIH from continuing to fund stuff that just is
blatantly dangerous.
Mr. Burchett. What can we do, this Administration do, to
use sanctions to counter the Chinese military threats? Just
jump on it, either one of you all.
Dr. Asher. Yes, I think we just need to say these are the
nuclear/biological chemical programs, and all the hundreds, if
not thousands, associated companies, and we need to hit them
with one large blast of sanctions. And I think it would need
congressional legislation to do that. It should be much like
the work that was mentioned earlier against terrorism in Iran
and Iran itself as a regime.
Mr. Burchett. Thank you.
Mr. Chairman, I'm over my time, but, out of my 19 meetings
today, I believe this has been the most informative.
Mr. Mast. It is No. 1 in our hearts, Mr. Burchett.
Mr. Burchett. And 435 on the chart.
Mr. Mast. That's right.
The chair now recognizes Mr. Moran for 5 minutes.
Mr. Moran. Thank you, Mr. Chairman.
Anthony, would you actually pronounce your last name for
me? I want to get it right.
Mr. Ruggiero. Sure. It is Ruggiero----
Mr. Moran. Ruggiero.
Mr. Ruggiero [continuing]. But I'm good either way.
Mr. Moran. I know and I appreciate that, but I want to get
it right. It is very important. I want to ask you a couple of
questions, and then, I will, Dr. Asher, come to you.
Mr. Ruggiero, you mentioned earlier in testimony, I think
you said something to the effect of, before we start
sanctioning banks as it relates to the cartels, the United
States needs to decide how far it is willing to go. I think it
was a quote you said.
What I want to ask you, to begin with, is, in your opinion,
how far should the United States be willing to go to stop the
fentanyl epidemic?
Mr. Ruggiero. Right. I do not want to give the impression
that we shouldn't go to the banks, but I know when we have
these conversations, that is usually where the conversation
starts in terms of secondary sanctions. But there is a lot that
comes before that in terms of targeting the networks, sometimes
targeting key individuals and companies. There can be a
deterrent effect, where you do not even have to actually get to
the banks eventually.
Because, you know, as was mentioned earlier in some of the
testimony, it is that you do the entities and individuals, and
then, you are sending public, probably very stern private,
messages to the Chinese about potentially, not in specifics,
but potentially what is coming next. And the hope, of course,
is that they are going to react to that, and that they are
going to decide that helping, in this case the cartels, and in
other cases North Korea, is not worth losing their access to
the U.S. financial system.
Mr. Moran. So, are there efforts short of the sanctioning
banks, like targeting the networks and key individuals, things
and entities that you just discussed, that we need to be taking
and undertaking at this point?
Mr. Ruggiero. Yes. I think, as long as you have a strategy
of where you are willing to go. I mean, the other thing I
failed to mention is that sometimes in these processes the U.S.
Government might threaten that they are going to do something,
but they, actually, know they are not potentially willing to do
it. So, let's make sure we do not actually threaten that. For
example, if this Administration is willing to go after Chinese
banks in this instance or in other instances, after they go
after entities and individuals, they can send a very stern
private message to China that that potentially could be coming
next.
Mr. Moran. Other than just our willingness to impose those
sanctions, are there any conditions precedent that you would
say need to be satisfied before we start going after these
networks, these key individuals, and these entities?
Mr. Ruggiero. Well, I would imagine we have already had
these public and private conversations with China on this
issue, many of the other issues we are talking about today. At
some point, if the Chinese are not reacting to those public and
private stern messages, then using this tool, and beginning to
move up that escalation ladder, is warranted.
Mr. Moran. As the provider of the global reserve currency,
do unilateral U.S. sanctions have an outside impact relative to
the rest of the world? What do you think, Mr. Ruggiero?
Mr. Ruggiero. I know this question was asked earlier about
unilateral sanctions. And, you know, I think financial
sanctions is the one area where the United States has an
advantage because of the U.S. dollar. Of course, we want
sanctions to be multilateral when they can be effective, but in
a lot of ways the United States is the leader. Especially with
a Security Council that, essentially, is ineffective in this
space because of China and Russia, the United States really has
to fill that gap and be willing to push our allies to do more
on the sanctions front than they would otherwise be comfortable
with.
Mr. Moran. Switching gears just for a moment--I hope I can
get to you, Dr. Asher--unmitigated ship-to-ship transfers of
oil and other goods are enabling Iranian and other Russian oil
sanctions evasion. What more could the Administration be doing,
either unilaterally or with partners, to detect, prevent, or
deter those transfers?
Mr. Ruggiero. Right. It is a huge problem also in the North
Korea context. I would just say that, again, we have to think
about what is our strategy here. Monitoring is important, but
only if at some point we are willing to take action against
that sanctions evasion.
Mr. Moran. Dr. Asher, how adequately is the Department of
Justice's National Security Division responding to the threat
of the drug cartels?
Dr. Asher. Totally inadequately in my mind. I'm shocked by
how--and we faced it ourselves. We had identified at the State
Department, through unclassified information, not classified, a
network of 4,000 Chinese communist students here on student
visas who are picking up drug money every week for the Sinaloa
and New Jalisco Drug Cartels, coordinated by a network of money
brokers who are Chinese, ethnic Chinese, who dominate today the
global underground banking trade. The Department of Justice
refused to allow us to move forward with DEA on an indictment
of those individuals, let alone opposed us revoking their
visas.
Mr. Moran. And I know I'm out of time, but why did they
tell you not to move forward with that?
Dr. Asher. On the visa part, they did not really have much
to say beyond the fact they did not like it. But I think one of
the issues that came up was saying it might be racist. These
students are getting a piece of the money on every buck they
pick up on the streets of Flatbush and Queens. I can tell you,
I have been up there recently and seen it. And they are used
because they are sort of above getting the law being enforced
against them.
Mr. Moran. Thank you, Mr. Chairman. I yield.
Mr. Mast. Thank you, Mr. Moran.
You all are interesting. People have requested a second
round of questions with you all.
I'm going to defer because I have to be here until the end,
no matter what. And I'm going to start with my friend, Mr.
Waltz----
Mr. Waltz. Thank you.
Mr. Mast [continuing]. Who is recognized for 5 minutes.
Mr. Waltz. Thank you, Mr. Chairman.
I just want to followup on Mr. Moran and give you a little
more time, Dr. Asher, because I think it is an incredibly
important point, how the money is moving in cooperation with
the cartels, with Chinese nationals; what is going on right
here in the United States. And can you just elaborate a little
bit more on at least your opinion of DOJ's apathy? I mean, can
you just unpack that a little bit more? I want to give you a
little more time.
Dr. Asher. Yes, we have the best tool in the world, and it
was used so successfully against the mob. I mean, it is called
RICO, right?
Mr. Waltz. Right.
Dr. Asher. The influence of corrupt organizations statute.
You could do that. It is a hub-and-spokes approach. You hit the
top person--let's say John Gotti--and everybody under him gets
indicted if we can identify that they are actually members of
the organization.
Mr. Waltz. Sure.
Dr. Asher. And we tried to propose to the DOJ, even under
Trump, doing the same sort of approach against the Sinaloa
Cartel's partnership with the 14K triad in China that was
sourcing most of the precursor chemicals going into Mexico for
the Sinaloa Cartel. And there was just no appetite for
processing it.
Some of it was just COVID, though. COVID got in the way of
all sorts of meetings.
Mr. Waltz. COVID lockdowns?
Dr. Asher. The COVID lockdowns.
Mr. Waltz. Right.
Dr. Asher. The government, more or less, shut down.
Mr. Waltz. Our reaction to COVID got in the way of a lot of
things.
Dr. Asher. We couldn't get into court. I mean, I had a
strange job where I had done--I did law enforcement part time,
and then, I was doing work on proliferation, including us
getting COVID, its origin.
But, on the law enforcement side, which I'm very proud of,
having spent nearly a decade of my life working in law
enforcement, we have the tools. We know who--we know where the
money is, actually. You would be shocked at how much the DEA
knows about where the cartel money is located. We even know
which Chinese banks are at the heart of this. And even though
it is an underground banking, Hawala-like thing, ultimately,
the cash gets dropped into banks. There is a massive amount of
cash going south from the United States toward Mexico in
railcars, in trucks, and they are dumping it in the Mexican
banks, which is legal under Mexican law, but the Mexican----
Mr. Waltz. And then, what is the relationship between the
Mexican banks and back to mainland China?
Dr. Asher. And Mexican banks, including Mexican banks that
are Chinese in Mexico, are receiving billions and billions of
dollars a month in drug money. It would be very easy to enforce
the law against these people. Someone just needs to decide to
do it. The evidence is there.
Mr. Waltz. Thank you, Dr. Asher.
I want to go back to Ms. Alpert to finish our conversation
on Afghanistan. And again, it is a dilemma. It is a dilemma
largely of our making with the withdrawal decision and the
collapse of the government.
And so, I just want to be clear. I support the delivery of
aid, but I think there's different ways that we can do it. And
I do think it is extremely alarming that we do not know the
exactly amount of U.S. taxpayer dollars that are going to the
Taliban and the Haqqani Network, as a result of these
exemptions.
So, to your knowledge--or to anyone's knowledge--has the
Biden Administration reviewed/adjusted these sanctions policies
to assure its aid is being delivered in line with humanitarian
principles and those in need, rather than falling in the hands
of terrorist networks, either through out-of-country third
parties, through a U.N. intermediary? I mean, we could go down
the list of other options besides, literally, lining the bank
accounts of Taliban and Haqqani officials, and then, going to
their registered NGO's, in addition to the legitimate
international NGO's.
Ms. Alpert. Yes, so I cannot speak for the Biden
Administration or what they are doing. But what I can tell you
is that the international NGOS, with which I work, many, on the
ground in Afghanistan, take compliance and carrying out their
humanitarian mission quite seriously. And so, that is ensuring
that aid goes to the people in need on the ground; that they
carry out their programs without diversion, without benefiting
the Taliban or other sanctioned actors to the maximum extent
possible.
There are reasons, when you are operating in a heavily
sanctioned environment like this, that, you know, there might
be payments that need to be made to keep the lights on, to have
a location where you can carry out your work. But the real
mission and real efforts and activities of these organizations
that I have worked with on the ground are really focused on the
implementation of assistance.
Mr. Waltz. I just want to give----
Ms. Alpert. Yes.
Mr. Waltz. I got it and there is assistance needed, but I
know--and we are going to get delivered to this committee, Mr.
Chairman, information of Haqqani and Taliban bank accounts that
are lined before it ever gets to the Afghan people.
Any comment, Dr. Asher?
Dr. Asher. Well, I mean, again, I have done a lot of things
in my career. One of them was work on Afghanistan. I led the
Haqqani Network targeting effort kind of through a financial
standpoint.
You are absolutely right. I mean, but they have been doing
this NGO thing for 30-40 years. And we need to--we have the
knowledge; we have the information, and we just do not have the
intent. And it is something we should not be providing material
support to a terrorist organization that is affiliated with Al
Qaeda and has killed, literally, dozens, if not hundreds, of
Americans in the context of the war in Afghanistan.
Mr. Waltz. Thank you, Mr. Chairman, and thank you for the
additional time.
Mr. Mast. Thank you, Mr. Waltz.
The chair now recognizes Mr. Crow for 5 minutes.
Mr. Crow. Thank you, Mr. Chairman.
And, Dr. Asher, I'm not going to ask you what you were
doing in Flatbush and Queens when you witnessed these Chinese
drug dealers. We can save that for a different hearing.
I do want to pick up on the Afghanistan line of
questioning. Ms. Alpert, is it, basically, the challenge with
every sanctions regime trying to figure out how we effectively
allow aid to flow to the most vulnerable, those who are in
humanitarian distress, those who, oftentimes, are essential to
opposition movements, to pushing back, to countering the malign
activities of regimes and preventing it from falling into the
hands of a regime?
Ms. Alpert. It is, and there are organizations that have
great expertise working in these incredibly challenging
environments, and have done so for decades, and have built
really strong and effective compliance systems and programming
operations to the maximum extent possible to minimize diversion
in that way.
Mr. Crow. So, it is your opinion that this is possible to
do in Afghanistan?
Ms. Alpert. It is--not to say it is not an incredibly
challenging environment. And ultimately, when you are living,
working under a sanctioned government, there will be
challenges. But, you know, those challenges need to be weighed
against the very real need and the U.S. Government's national
interest in ensuring that humanitarian disasters do not
propagate around the world.
Mr. Crow. And are those challenges static, meaning are they
the same year to year, or do they evolve because the world
changes, because regimes change, because conditions change?
Ms. Alpert. They evolve all the time. I mean, there are
disasters all the time. And, you know, I think one way I look
at this is we have got sanctions in place as a barrier. We also
have foreign assistance restrictions and, also, notwithstanding
authorities. And so, many of the authorities that Congress,
historically, has allowed assistance to be provided, even when
there are foreign assistance restrictions in place, are
consistent with the carveouts to sanctions that OFAC has also
authorized.
Mr. Crow. And is that reality that conditions change and
things have to evolve, is that built into the process? Is the
review of these sanctions, are we receiving information and
tweaking enforcement of them as we go?
Ms. Alpert. Yes, it is important to do so. And we saw this
along the way in Afghanistan, as international NGO's and those
working on the ground there really communicated with the
Administration about the challenges they were facing and the
lack of ability, essentially, to function in the country
because the authorizations weren't clear enough. And so, in
response, we saw the Biden Administration issue various general
licenses, so that these organizations could continue their
important work in Afghanistan.
Mr. Crow. I would like to talk for a moment, also, about
the risk of sanctions. There has been a lot of discussion today
about the benefit of them, which is very clear. They can be a
very useful tool, but they can backfire.
And I will just use the example of the Global South. Some
of my colleagues were talking about the challenges of engaging
in the campaign for the hearts and minds in places like South
America and Africa and South Asia, and other places.
If we do not do this right and intentionally, is it
possible that we impose sanctions and we actually drive some of
those emerging economies and developing societies away from us
into the arms of our adversaries?
Ms. Alpert. Certainly. And this is why it is so important
to carefully target sanctions and make sure that they are not
overly broad.
And we have seen this to a degree--you know, one example
under this Administration, there were sanctions applied in
Ethiopia. And they explicitly did not include the 50 Percent
Rule, so that they wouldn't have inadvertent, unintended
consequences, at least to the maximum extent possible.
Mr. Crow. So, in your experience, we are taking that into
account? We are trying to make sure they are narrowly tailored,
yet effective? So, we are engaging. We are moving people toward
us, but also penalizing the malign actors?
Ms. Alpert. That is the goal, and I have seen effective
communication about the goals behind individual sanctions
actions.
Mr. Crow. The last question for you, Ms. Alpert, is Russia.
You know, the fact that in the last year we now have a
coalition of 30 countries that have imposed sanctions on Russia
across a variety of industries, but we had to declassify
information, engage in diplomacy, and then, create a coalition,
and sometimes allow Europe to lead; sometimes lead ourselves.
Is that a model, do you think, for future sanctions regimes?
Ms. Alpert. I think it is, and I think it really
strengthens the U.S. ability to implement and enforce sanctions
in the future--the fact that we have this model of being able
to effectively impose really strong and broad multilateral
sanctions outside of the U.N. Security Council, when the U.N.
Security Council is, effectively, not functioning.
Mr. Crow. Thank you. I yield back.
Mr. Mast. And I yield myself 5 minutes.
And, Ms. Alpert, you are getting a fair amount of attention
right now, your comments. All of your comments are interesting
everybody.
But I want to touch on something else that you brought up.
And you mentioned the importance of preventing China from
acquiring certain tech. I think this is something that we can
all agree with, I would say every bit of tech. I wouldn't even
specify certain. I do not want them to outdo us in anything,
and I mean that very literally.
So, what do you make of the fact that BIS has approved, I
want to say, over 23 billion of tech licenses to black-listed
companies, specifically? And the Foreign Affairs Committee has
uncovered that they have denied less than 1 percent of license
requests to Huawei and SMIC, despite being on the Entity List.
Ms. Alpert. Without knowing the specific nuances of each
license denial, I cannot comment on the specific actions. But
what I can say is that the ability to license is also
important. So, if we want to--and we should at times--take
really broad, sweeping sanctions or export control actions,
licenses add nuance and they create the ability to be much more
flexible with our foreign policy. I cannot comment on the
specific licensing decisions.
Mr. Mast. But do you find that today, right, looking at
today, 2023, do you find that acceptable, to give Huawei
licenses, to not deny, to approve 99 percent of them, instead
of denying 99 percent of them?
Ms. Alpert. Without more information on the substance of
the license applications, I cannot comment on whether or not it
is a policy that makes sense.
Mr. Mast. I would pass this over to Dr. Asher and Mr.
Ruggiero to expound upon this, approving 99 percent of their
licenses in today's world.
Dr. Asher. I think it's a poisonous precedent and the whole
Huawei affair has been really mishandled. You know, we made
this dramatic arrest of the Canadians, the daughter of the
founder who was, basically, their chief operating officer. And,
of course, she has made her way back. The whole China task
force that the FBI had has sort of collapsed. It was
decommissioned under Biden. I have no idea really why.
These are the issues which do resound in the mind. I know
of President Biden strongly giving us actions on
semiconductors.
I think that we really need to look hard, and I'm really
glad you are the ones to do it because you are in charge of
oversight, not those of us at think tanks, to look at these
license exemptions. I think we should have a much higher
threshold, and frankly, they should be reviewed maybe by a
third party before they are just granted the thumbs-up by the
bureaucracy.
I do not think the bureaucracy, though, also has enough
resources to process the effective implementation of export
controls. So, that is another problem where you could address
that legislatively.
Mr. Mast. Mr. Ruggiero?
Mr. Ruggiero. Well, I think this goes back to what Ranking
Member Crow asked about in terms of implementation. You know,
what is the goal of the Huawei restrictions in terms of their
listing on the Entity List?
Something we haven't talked about in terms of sanctions and
export controls implementation, we have to think about the
interplay between those lists in terms of blocking sanctions
and export controls. Should Huawei, potentially, really be on
the blocking list at some point, where they do not get any of
the transactions you are talking about, or should they remain
on an Entity List, where they get some of the things that they
are requesting? That is a part of, if there was a whole-of-
government approach to sanctions and export controls, I would
put that on the list to think about how Commerce and Treasury
and State and DoD think about these issues.
Mr. Mast. Thank you for that.
I want to go for just a moment, Dr. Asher, in the minute I
have remaining, going back to cartel banks. And if you can,
just walk us through the secondary and the tertiary effects
that you see of going after these cartel banks, which I'm
interested in and see great value in. But I would love to have
you comment.
Dr. Asher. I mean, I'm very confident that, having gone
after several banks in my career, including Hezbollah's main
bank, Lebanese Canadian Bank, which had nothing to do with
Canada, but a lot to do with Iran and Hezbollah.
If we were to use a criminal approach combined with
sanctions against one or two of the main banks in Mexico that
we know hold the money for the Sinaloa Cartel leadership, it
would have a dramatic effect on all the banks in Mexico and
their willingness to do business with the Sinaloa Cartel
leadership.
It would also cause the Sinaloa Cartel leadership to
probably go into a crisis. They are in the business of making
money. So, you have got to think about it like, you know, the
last episode of The Sopranos, when the financial walls started
falling in on Tony and, look, somebody then puts a bullet in
his head, right? That is what we think.
Someone would do that to probably Ismael Garcia himself,
the head of the Sinaloa Cartel, if he couldn't pay his capos.
And most certainly, if you went after his main banks, he would
lose that ability. He would lose his ability to traffic
fentanyl, too.
Mr. Mast. I thank you all for, again, your testimony.
And I now recognize Ms. Titus for 5 minutes.
Ms. Titus. Thank you, Mr. Chairman.
And going back to the licensing, I would ask you, Ms.
Alpert, do you believe that the Biden Administration or
President Biden has imposed the more aggressive controls on
China's semiconductor industry than any other Administration?
Ms. Alpert. Yes. We saw a very, as us export practitioners
can attest, a very, very long Federal Register Notice last
October announcing a very complicated rule on semiconductors,
supercomputers, and really advanced technologies that the
United States absolutely wants to keep out of China's hands.
Now, the issue, and one of the key issues I think that will
be a feature as we continue our policies with respect to China,
is multilateral enforcement of these rules. Because that rule
included a foreign direct product rule that expanded the scope
of U.S. export controls beyond U.S. borders to items made
overseas, we need partners in implementing these export
controls.
Ms. Titus. Thank you.
If Congress prohibits TikTok here in the United States,
would that be kind of a form of sanction indirectly?
Ms. Alpert. Any prohibition--it depends how you define
``sanction''--could be a broad one.
Ms. Titus. Well, let me ask you this: I think you mentioned
in your opening statement some of the ways that sanctioned
countries get around those sanctions. If we are going to have
stronger enforcement, and have some kind of plan overall, we
need to understand those kind of go-arounds. Could you
elaborate more on some of those ways, things we need to look
for?
Ms. Alpert. Yes. There are a number of international
evasion networks. And one of the ways that it is most important
for sanctions to work is to find them, and then, to take steps
to address them. And so, that is a challenge we got with
respect to Russia's sanctions--the UAE, India, as countries of
significant diversion, where Russia can still gain access to a
financial system internationally and other tools. And so, it is
a challenge and one that the United States can address, but it
is strongest addressed with others as well.
Ms. Titus. Can you give me an example, besides the loading
of the ships alone?
Ms. Alpert. Of multilateral situations?
Ms. Titus. Yes.
Ms. Alpert. Yes. So, one, I mean the Russia war is kind of
the biggest example of multilateral action to address a shared
challenge. There are also a slew of U.N. sanctions programs.
And so, these are programs that the United Nations imposes, and
all U.N. member States are obligated to follow them.
And so, these are instances where sanctions are most
effective if at least everybody, conceivably, in the world is
supposed to be following them and applying them. Now, the key
is actually ensuring that they are enforced.
Ms. Titus. OK. I will yield back. Thank you.
Mr. Mast. Thank you, Ms. Titus.
I now recognize Mr. Moran for 5 minutes.
Mr. Moran. Thank you, Mr. Chairman.
Dr. Asher, let's talk a little bit about Venezuela real
quick. I come from east Texas. Oil and gas is really important
to us in east Texas. I want to know, in your opinion, has the
Biden Administration's hostility toward domestic oil production
made it more difficult for us to apply sanctions pressure on
the Maduro regime?
Dr. Asher. It is hard to know. I cannot understand what
they are doing with their oil policy, frankly. I think that it
is certainly--I mean, the idea that now we have impaired our
oil and gas industry so severely, as you know because your
constituents can tell you, regulation has gone through the
roof. My family has been in the oil and gas industry just
totally separately for 70 years, roughly, in Amarillo, Texas. I
know I do not sound like I'm from there, but we have friends
there. And I can tell you, the regulations have gone crazy.
So, it is very difficult to do fracking. It is very
difficult to do exploration. But now, we are going to go and
buy oil from Maduro? I mean, I find that just beyond fatuous.
That seems like where the policy is heading. And lift sanctions
against this criminal who is--by the way, I mean, the main
flow-through point for cocaine into the world, including right
here in the United States, is Venezuela. It comes out of the
Andes in Columbia, but it goes through Venezuela.
Mr. Moran. I agree, and a lot of my constituents agree with
that analysis as well.
Mr. Ruggiero, has the Administration's use of overbroad
general licenses, such as GLH regarding the JCPOA and GL 23
with Syria, undermined congressional intent in your opinion?
Mr. Ruggiero. Yes. You know, we talked--there has been a
lot of discussion about humanitarian operations and the use of
general license. You know, that is certainly one approach, but
it has been part of the question is it can be subject to abuse.
Another approach is a so-called ``white channel'' where the
organizations and financial institutions are named or
identified. It is a little more labor-intensive, but at least
it is not as prone to abuse.
Mr. Moran. And with the remaining time that I have, I want
to pose to you, Mr. Ruggiero, and you, Dr. Asher, a question
about differing countries and ask you to rate and grade the
Biden Administration's sanction record for the following
countries--and I will list them for you--on a scale of 1 to 10,
1 being the absolute worst, horrible, and 10 being the best. If
you say the Biden Administration is doing really good in
sanctions in this country, then it is a 10. If they are doing
really horrible, that it is a 1.
Mr. Ruggiero, let's start with you. Iran?
Mr. Ruggiero. I would say probably a 3.
Mr. Moran. What about Russia?
Mr. Ruggiero. A 6 or a 7.
Mr. Moran. Syria?
Mr. Ruggiero. Probably a 4.
Mr. Moran. And North Korea?
Mr. Ruggiero. Zero.
Mr. Moran. Dr. Asher, what about China? From 1 to 10--1
being the worst and 10 being the best?
Dr. Asher. Zero. There's no sanctions regime against China.
Mr. Moran. How about Venezuela?
Dr. Asher. It is probably about a 4, but the enforcement
stinks.
Mr. Moran. And then, finally, ending where I started my
conversation earlier, and that is with the drug cartels. Dr.
Asher, as it relates to the drug cartels, would you rate the
Biden Administration sanction record either a 1 or a 10, or
somewhere in between, as it relates to how good they are
doing--1 being the worst and 10 being the best?
Dr. Asher. Well, I will just go into negative math.
Negative, less than zero would be my view, and I'm not hostile
to President Biden, but I do not understand his lack of use of
financial force against these cartels.
Mr. Moran. What I hear from you is that there is a lot of
work that can be done, and should be done, with respect to
sanctions against those entities and those countries that are
working adversely to the interest of the United States. We need
to be steady; we need to be strong, and we need to be strategic
in the way we impose our sanctions. That is simply not
happening.
Thank you, gentleman and ma'am, for your testimony today.
I yield back.
Mr. Mast. The gentleman yields back.
This will conclude. I thank the witnesses for their
valuable testimony. The fact that we went a couple of rounds is
evidence of the fact that what you were saying was interesting
and valuable to everybody.
The members of the subcommittee may have some additional
questions for you all, Witnesses, and we ask that you do
respond to them in writing.
I now recognize Mr. Crow for any closing remarks that he
may have.
Mr. Crow. Thank you, Mr. Chairman.
And thank you to all of you for the candid discussion
today. I mean, this is what this committee is all about. We are
not always going to agree. We are going to find points of
disagreement. But we are trying to flesh out the facts. We are
trying to have a discussion on how to make things better.
But the bottom line here is: this is not our grandparents'
world anymore. The world has changed. It is complex. It is
evolving. Our trading partners have options, right? The
developing world has options.
And as much as we like to talk about, you know, the power
of the United States, which I believe in, and I do still
believe that the United States is a great power and great
influence in the world, and the world is far better off when we
wield that power for good.
But we have to do it differently. We just cannot tell
people what to do and expect them to do it. It is a far more
complicated environment. And we have had that discussion. That
is one of the themes I have tried to flesh out here today.
But the Biden Administration recognizes this reality. And
we see example after example of them effectively wielding and
evolving sanctions, learning as we go, because nobody is
perfect. We have to learn and evolve, as Ms. Alpert pointed
out, because the world is not static.
But the example of the Russian sanctions, I do not think
there is anyone in this room here today that, 13 or 14 months
ago, would have thought that we would have a regime as
comprehensive and as deep and as hard-hitting as that that the
Biden Administration has assembled, the 30 nations, kind of in
a comprehensive way--from energy to technology, to export
controls, to the economic system--to hit on Russia.
And we did so by declassifying information, by creating a
diplomatic coalition, by leading at times, but also deferring
and allowing our allies to lead at times. And therein lies the
great strength.
By getting aggressive on China with the semiconductor
industry and looking very hard at other ways in which we will
continue to get aggressive on their malign behavior.
By understanding the reality of Afghanistan; that we are
tied in so many ways to the Afghan people. Me and the chairman
are tied to the Afghan people. And we cannot allow them to
suffer, but we also have to allow sanctions to hit the Taliban
and Al Qaeda and other malign behaviors, and that is hard.
And as we heard today, that is the challenge of sanctions:
how do you actually implement them to achieve the effect? And
it is not easy. If it is easy, everybody would do it. Yet, this
Administration is attempting to do something that is very hard,
and learning and evolving, and doing a phenomenal job.
So, with that, I look forward to working with all of you,
working with the chairman, and my bipartisan colleagues, to
figure out how can we improve; how can we conduct effective
oversight, but how can we recognize that we live in a different
world, in a different environment, than we did 10, 15, 20 years
ago? And this will require a greater degree of sophistication
than we have ever been able to wield before.
And with that, I yield back.
Mr. Mast. Pursuant to committee rules, all members may have
5 days to submit statements, questions, and extraneous
materials for the record, subject to the length limitations.
Without objection, the committee stands adjourned.
[Whereupon, at 4:44 p.m., the subcommittee was adjourned.]
APPENDIX
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
ADDITIONAL INFORMATION SUBMITTED FOR THE RECORD
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
[all]