Transcripts For CSPAN Key Capitol Hill Hearings 20240622

Produce oil in iran, so they invested that billion dollars, so they are performing under that contract, they are producing x barrels a day, and they did that after the sanctions were lifted, could they continue under that contract or not . Mr. Nephew my understanding is no. At the moment the snapback is triggered the b. P. Staff and whatever financing is still going on or Technical Assistance going on has to be stopped. The United States government will now not sanction them for having built the plant in the first place. Senator corker you agree with that . Chairman zarate im not sure. Its a question how it gets interpreted. This can be affected by the nature of the snapback if there is a tailored snapback, this could be impacted by the nature of the contract itself. There could be special purpose vehicles created to contend with this provision to ensure the continuity of the actions. I think you could have parties at the u. N. , permanent five, arguing that as long as the continued activities arent furthering the activities that are sanctioned, if you can assure they are clean, for example, or productive, that she that they shouldnt fall under this provision. Im not convinced yet there is clarity as to how this would apply. Senator corker thank you very much. Senator menendez. Senator menendez thank you, mr. Chairman. Mr. Chairman, before i get to the issue that our witnesses are here for, i want to comment on you and the Ranking Members request to the iaea. I am deeply, deeply disappointed of their unwillingness to come in any session, public or classified, to have a discussion. This whole agreement rests upon if you support it the concept of inspection and verification by whom . By the iaea. We are putting an enormous part of the National Security of the United States and of our allies in the region in the iaea. A u. N. Organization for which we pay membership dues. For us not to be able, maybe their fear is the questions which they can allege and take the position thats it we are not going to talk about that. But the entire inspection regime, the entire verification regime depends upon the iaea. And not to be able to question the iaea about how they are going to go about it, about their abilities to do so, about the budgetary realities they need to accomplish what we want them to accomplish, i dont know how one can come to a conclusion on this agreement without understanding from the agency that is involved. The most critical element of this agreement is them. Forget about the sanctions. Because sanctions only come into play if they are not performing. We have to know whether they are performing in the first instance, in the implementation. And subsequently if they are performing afterwards. I would hope that we would find a mechanism. Whether that is a letter, you and the Ranking Member, i applaud for having done that every member of this committee whether that is a resolution of the United States senate that could be quickly passed, calling upon the iaea to engage in consultations with the senate, you cannot advise and consent in a sense to something for which you are going in the blind on pure faith. Without knowing the wherewithal how that agency is essential to this agreement, if one believes in it, is ultimately going to do its job. And for which we are going to depend upon our interests for. Its amazing to me. I would urge the chair and Ranking Member, and i would be happy, im sure many other members would agree, to engage with you in any way possible to bring that about. If it doesnt, thats a critical material issue for me. I just want to speak to that. Let me thank both of you for not only your testimony but your service to our country. Its been both exceptional. I look at this whole question of sanctions visavis incrementalism, and its very poignant question. Why . How did iran get to where we are today . Through incrementalism, through deceit, deception, delay through notwithstanding u. N. Security Council Resolutions in the world saying you cannot, shall not. But they did. Each step of the way we were collectively reticent to do what was necessary to stop them until it got to a certain point that both the world and to be very honest the congress drove some of the most critical elements despite the opposition of administrations. So when i think about the context of potential violations and looking at the agreement and thinking about what is substantial or not substantial i see a history. If you go by the archives building here in washington, it says what is past is prologue. And you have a 20year history here of getting to the point of being a threshold Nuclear State by everything that iran did. So you give it a little bit, give it a little bit because you want to preserve the agreement and you dont, as some of our witnesses yesterday, including those who support it, give it a quick no, no, no, this agreement is not for you to play with. We are not going to give you a little bit. Not going to give a little more. We are going to come down heavy. I am concerned based on other iterations of our unwillingness to engage in the type of sanctions regime that are necessary, i look at how hard its been on the list to get people listed, i look at how hard it is despite congressional legislation on venezuela. I look at how hard it is, with russia and the ukraine, try to pursue sanctions. I look at how difficult it is as it relates to syria where we still havent gotten all the chemical weapons. So, the concern for me is if you want the deal so bad and you hope it will work so well that youre willing to overlook elements that may seem small at the time but begin to grow collectively and then collectively have a point in time when you say, oh, my god, which is where were at right now. So i think that those are critical questions. Now mr. Zarate, i want to understand something. Im pretty convinced of it but i want to make sure i havent selfconvinced myself because i want to be convinced. On page 26 of the agreement, it says the United States administration, acting consistent with the respective roles of the president and the congress, will refrain from reintroducing or reimposing the sanctions specified in annex 2 basically the congressional mandated sanction, that it has ceased applying under the joint plan of action without with respect to dispute resolution. I tried to get from secretary lew a clear, definitive view you either have the right to reimpose sanctions that expire next year or you dont. You can maybe argue about the timing but you either have the right or you dont. Now i did not get a clear answer from him. If anything, i suggested that, well, it sounds like you want the sanctions to expire. He did not oppose that view, didnt say, yes, thats what i want, but he didnt say no i was absolutely wrong. When i pursued, why shouldnt we reauthorize the sanctions so that if deterrence is in part by the virtue of consequences which is that theres an actionable activity, an actionable consequence to an activity you take in violation of the agreement, you have to think twice about it, which is a lot of what your discussion was, shouldnt we have those sanctions in place with all the same provisions, the president s waiver options . And secondly, do you read this agreement to suggest that we cannot do that or well be in violation of the agreement . Chairman zarate it appears it would put us in violation of the jpoa or at minimum it would go against to reimpose senator menendez not only reimposition. It says reintroducing. Chairman zarate which raises the question whether the waiver provision is good enough as a safeguard. I think this goes to the larger point we were discussing earlier about whether or not this framework itself, the way its structured, actually takes away the ability of the u. S. Government to dictate how its going to frame the use of these powers, whether its in deterrent mode or whether its in application. The other part of this, senator that weve already discussed is the problem that if you begin to impact those same elements of the economy of iran that are implicated by isil, in some other ways that that too could potentially be viewed as a violation of that provision. So i think the construct as laid out puts too much power in the hands of iran and those who might object to what it is were trying to impact, either in deterrent mode or in effect. Senator menendez let me ask another question. One is an observation. It seems to me that the burden is shifting here. Under the joint comprehensive plan of action, its almost like weve got to prove our case and that, you know, versus that, look, youre in violation. And of course we should say why a country is in violation, right . Not just arbitrarily or capriciously do it. But the burden of proof seems to shift. We all talk about violations in the shortterm. What about in the longterm when iran has become a more significant nuclear, potentially industrial, the dual uses of that will be far harder to make the case on than it will under its present circumstances. Is that a fair statement . Chairman zarate i would say youre absolutely right in terms of the framework of the jcpoa. In my written testimony submitted to the committee, what i suggest is, thats one of the fundamental problems of the jcpoa. Put aside the sanctions issue. Its the fact that iran is suddenly become an equal partner this framework and the u. S. Along with other parties are now on equal footing in terms of how they present evidence and information. The burden of persuasion and proof which had all along around the u. N. Security Council Resolutions been on iran as the suspect actor, has now shifted. I think thats part of the problem with the process whether its with respect to the nuclear or the sanctions. I think weve moved into a different frame of reference diplomatically which does get harder over time youre right. Senator menendez my final point, as my time expires, one of the things i grapple with and it came to me again when mr. Nephew was responding to one of your questions, is, you know, the hope here that the iranians enter into a deal that changes the course of their countrys conduct. But you know, the whole focus, at least as i see it up to now of their actions, is the ayatollah trying to think about how do i preserve the regime and the revolution . And it would be a unique thought to think they are entering into an agreement that would mean the end of the regime and revolution. Certainly, if theyre doing that, it may be, you know, certainly, i dont think its their intent. And hopefully this all passes and it will be the consequence. I dont think theyre entering into it with the intent of thinking that this will end the revolution or the regime. Thank you, mr. Chairman. Senator corker senator perdue. Senator perdue thank you, id like to read a couple of quick to read a few sentences here and lead to a cup of quick questions. Thank you guys for your career, and this is helpful here today. Some part of this committee has addressed this issue in a nonpartisan, im not going to say bipartisan, but a nonpartisan issue. This is the security of our country, indeed, i think the security of the world. This is from the jcpoa this historic jcpoa will ensure that Irans Nuclear program will be exclusively peaceful. Iran reaffirms that under no circumstances will iran ever seek, develop, or acquire any Nuclear Weapons this jcpoa will any Nuclear Weapons. This jcpoa will allow iran to move forward with an exclusively peaceful, indigenous Nuclear Program. I have just one question. The whole process. We started in the beginning and allowed them to have enrichment in the very beginning. There are 18 country, we talked about this yesterday, there are 18 countries, out of 180plus countries in the nonproliferation treaty, there are 32 countries that have peaceful Nuclear Programs. There are only 18 that have similar programs but can enrich. 18. So there are only 14 countries that have the combination. Only Nine Countries have the bomb. Five countries have civil programs but cant enrich, countries like germany and j and japan. If you look at this thing historically, we did a similar deal with north korea and it didnt work out so well. I think we might have been naive in looking at it in historical terms. The problem with this deal that i can see so far, and im still trying to look at it in a measured way this deal in my mind doesnt prevent iran from becoming a Nuclear Weapons state even though the intent of the agreement is to do this. I think, mr. Nephew, you said, we talked about sunset and this deal gives them an opportunity to have a Nuclear Weapon. So when i look at this thing, it comes dow it comes down to, to we have a false choice accept this deal or war . And i dont accept that. My question this morning leads to that. But initially, when we did this enrichment and allowed them to go that way, in my mind, it violates the very issue we have here. A peaceful, indigenous Nuclear Program doesnt require enrichment. Though weve now taken that up as a presumption and i challenge that, but thats historical. Its given. In this agreement theyre allowed to enrich. So i have a question. If we have to go it alone. Lets just say, im trying to understand is there an alternative to the position were in right now . Id like both of you to address in my opinion, im a business guy, im an outsider to this process. You dont sanction countries, you sanction companies. When you look at the financial industry and their Energy Industry and you sanction, from our 18 trillion economy you start sanctioning we dont need any other sanctions, in my opinion, really have a dramatic impact on this regime. And we know from past history, recent history, just in the last five years, under this administration, when they doubled down on sanctions, it brought them to the table. In my opinion, we gave in too early my question to both of you this morning, do we have an alternative we havent talked about in detail . Another alternative to war or this bill as it is . Mr. Nephew. Mr. Nephew i think thats an important question. I dont know that youll like my answer. My view is that senator perdue why would you say that . Mr. Nephew i think that at the end of the day that while its certainly true that it would be our preference for iran not to have a Nuclear Enrichment program, theres nothing in the treaty that precludes countries having it. The way in which we were able to mount this pressure on iran is because, as senator menendez was describe, they engaged in years of cheating. Senator perdue but they said, we need to have enrichment because we cant secure a consistent flow of material yet 18 countries do that. I push back a little bit on that. Mr. Nephew but they werent those 18 countries werent subjected to the kind of pressure and sanctions campaigns. Senator perdue but they didnt violate laws like this either. Mr. Nephew thats correct and i would never apologize for what weve done. But iran in 19 in 2015 faces a Nuclear Program we attempted to strangle in the cradle as often as we could from back in the 1990s and going back beyond that. From the iranian perspective they couldnt sign a deal that didnt allow an indigenous Nuclear Program, and while that wouldnt have been my preference, i started my job as the guy going after iranian enrichment efforts, the practical reality is we faced a country that wouldnt give this up. Senator perdue youre going to run out of time. Do we have an alternative . In other words weve got to consider that. If we dont agree with this deal, do we have an alternative. Mr. Nephew my feeling is if we dont agree to this deal, theyll Start Building more centrifuges and well be dealing with more centrifuges and reactors. Senator perdue what sanctions have impact . Mr. Nephew i dont think u. S. Sanctions would stop irans Enrichment Program. Senator perdue all right. Chairman zarate i think sanctions will have an impact. Would it stop Nuclear Program alone . I dont think so. Ive argued for a long time that the use of power and influence has to be part of a broader strategy of influence and leverage against the regime. To get them to stop working toward Nuclear Program. Senator perdue do you believe they have to have enrichment capability in order to have a peaceful Nuclear Program in iran. Chairman zarate absolutely not. Im not a Nuclear Physicist but it raises an interesting point. You talk about that having been a concession up front. The other problem with the structure is we may be conceding most favored nation status in terms of a sanction regime. This is part of my problem with the structure. Given the structure, were now allowing iran a process and a vehicle to challenge the use of u. S. Financial power and oh, by the way, we put it in context where the chinese and russians who are no fans or in favor of u. S. Power, financial power in particular, have a voice in the vote. I think the very structure of that is, not just with respect to iran but more broadly the use of our power with other issues we care about. So it goes to how we have given iran most favored nation status in terms of how we made this deal. Senator perdue im out of time but i want to say im troubled by this side deal. I know side deals are done between iaea inspectors and individual countries are normal practice. But this is not normal practice. Were signing a deal for the future of america and it assumes those deals are part of this deal. The way i read this document. In this document, those special deals are not mentioned, and i am really troubled that we are not going to be able to get the best advice from those people. I dont know how we can make a decision without that. Id encourage more pressure to be put on the iaea to come before us to explain that. There may be very good explanations but when i hear the types of inspection processes that are going to be done which are not mentioned in this document at all, im troubled by that. Senator corker i think almost everything thats occurred in this committee since chairman menendez was chairman and i became chairman and senator cardin became Ranking Member its been done in a strong bipartisan way. So were going to craft a letter that everyone can sign if they wish, that hopefully wont affect anybodys sensibilities urging them to reconsider that and to come before us next week. So thats under way right now. Certainly, i would like everybody to have the opportunity to sign that if they wish. Mr. Chairman, as long as were making requests, i would also ask that we request a confidential, classified brief briefing by our intelligence agencyings. Agencies. Senator corker ok, well do that. I appreciate it. Senator coons. Senator coons thank you, chairman corker, for the way youre conducting these hearings, i think theyre vitally important. I associate myself with the conversations previously about the iaea and their centrality to the enforcement of this and their importance to our understanding their roles and capabilities and some of the concerns that have been raised are central to our understanding of this agreement. Let me, if i might, gentlemen, just touch on four different questions, i hope in the next six minutes well get some response to. You had a vigorous disagreement about the grandfathering clause and what it means. Will it lead to a gold rush . As long as they are not explicitly in furtherance of the sanctioned activity, contracts entered into will be allowed to continue to perform or no what it means is you wont be subject to sanction for having entered into an agreement. Im a lawyer. Who decides and how does the outcome of the dispute resolution ive gotten both answers from folks in senior level of this government current and former, but the reality is this is an agreement. Its a multilateral agreement. There are inevitably going to be disputes over this provision. It raises the larger question about the extent to which we can rely on our allies in dispute resolution and the potential consequences of our ability to actually, meaningfully enforce first. Second, mr. Nephew 100 saying second, mr. Nephew new york a Previous Exchange you were saying that a certain proposal involving sanctions was not the best policy response to restrain likely ongoing iranian support for the huttis and assad. What is the best response . I think theres very legitimate concern by all our regional allies that sanction relief whether its 50 billion or 100 billion will lead to a significant flow of funds into the Iranian Central Bank and out regionally to support folks who we view as terrorists and who are significant bad players in the region. What would be the ideal policy response . Whether sanctions, interdictions or otherwise, if you were in a position to advise the administration, what would you do . Third, and i think this is an important question, we go it alone if we reject this bill and we rely on u. S. Economic power to reimpose sanctions and renegotiate tougher terms, what are the consequences for our role in the Global Financial system . The chinese have made persistent efforts to suggest to others that our central role, the fact that the dollar is the reserve currency of the world system the fact that the vast majority of Financial Transactions run through the United States, should be lessened or weakened. What are the longer term consequences . Will our allies really support us . Can we use the enormous leverage we have effectively and sustain it other time . It over time . And last, any insights on the impact those flows will have on iran . Some suggest the relief from sanctions will overwhelmingly have to invest in restoring their own oil and gas sector. The oil sector has suffered a nearly 50 drop in the perbarrel price of oil over the last year. How will that influence their ability to finance and sustain what i think is their enduring commitment to promoting terrorism in the region and being a destabilizing force and determine odd opponent of our and a determined opponent of ours in the region and the world . So gentlemen, please, have fun. Mr. Nephew on the issue of grandfathering, the decision on whether or not to impose sanctions with respect to the issue of grandfathering is the u. S. The United States gets to make the decision as to whether or not sanctions can be imposed under our own laws. Now that doesnt mean, though, that were not going to have response from our partners. If we were to go and sanction b. P. , total and other institutions, i think we can expect a reaction from that. As weve done in previous instances, i imagine there will be at least consultation and engagement with our partners to ensure we deal with any concerns they have with the action as well as to protect our broader interests. That does not mean we cant, as we did in 2010, curtail the activities of Partner Companies in iran, including with regard to oil and gas sector, which we did. We had comprehensive iran sanctions. On going it alone. My view is that if we decide to reject this deal and just use our sanctions, we will have an effect. And we will have an effect on iran. I dont think it will be as strong, nearly as strong as we would have if we had cooperation, particularly out of europe. Longterm, im very concerned about overuse of u. S. Sanctions, removing it as a tool. You spoke to the idea of the chinese and others looking for alternative Financial Systems. Thats my fear. My fear is that if we go it alone here as well as in other circumstances, we may actually invalidate the tool of financial sanctions in the future because people will just create systems that dont have to involve us. On the issue of flows in iran and what theyll do with them, my view is theyll use a lot of them on domestic economic issues. They have a lot of infrastructure problems, i think rahani was elected on the basis of solving those problems and i think they dont want instability and conflict on the inside. They are concerned about arab spring and the things that happened throughout the middle throughout eastern europe. They want to avoid that. I think theyll spend most of their money at home. Very quick on the policy response for the region, i think it needs to be a multifaceted approach involving targeted sanctions on individual bad actors, but it also needs to be support such as weapons sales, logistical support, cooperation with partners in dealing with individual terrorist groups and the broader Regional Security architecture. It cant just be choke off all iranian money and the problem is solved. Chairman zarate i think we run the risk of the joint commission and the sanction subcommittee becomes the arbiter of how to interpret these sectors which by definition is how its set up. So i think we certainly can impose sanctions but a lot of that becomes subject to discourse and debate in that context. Would you try to find ways to do too do that . To prelitigate that question . Chairman zarate to ensure theres a meeting of the minds you cant figure out all permutations but some of the these fundamental questions should be entered into. It gets harder over time to either have the agreement or impose sanctions. I think were in the most effective and powerful position to determine how this goes and how its shaped. In some ways its how customary International Laws are created that explain how this is going to be applied. I think thats right. Otherwise, i think you create an incentive for iran to do what Saddam Hussein did in the oil for food scandal. I helped chase down his assets on behalf of the Treasury Department when i was there. What he did was pick winners and losers. Important for geopolitical and diplomatic shielding. So you have the possibility of iranians taking chinese russians,ance perhaps a selection of other european allies on the ground who are going to have vested commercial interests in making sure this is interpreted in the right way. Thats a real danger here. In terms of strategy, to repeat richards point, it has to be multifaceted, has to involve interdiction, has to involve strategic, targeted financial measures, has to involve aggressive support on the ground to our allies which i think we failed to do from a counterterrorism view today. If we go it alone, its easier to do now than later because over time the sanctions regime melts away, but i think reality is, and i have written about this there are potential longterm consequences. The russians and the chinese are clearly trying to challenge and create alternate platforms, payment platform, currency arrangements, trade arrangements to circumvent the dollar and the u. S. Market. On the margins, talk to most experts, most treasury firms treasury officials, theyll say this is marginally relevant, there are other factors that will really drive whether the u. S. Is the principal economy and the dollar is the principal currency around the world. Rule of law, the functionality of our congress, for example. Things like that. Finally on iran, we should take the iranians at their word. Theyre going to support their allies. They have in the past. Theres no question that the sanctions restrictions we put in place for oil purposes, which richard was part of and this administration did a great job on, has impacted their ability to support hezbollah, the palestinian groups and their proxies. They will, no doubt, and this is an expectation of folks like the secretary general of hezbollah to be receiving more funding from iran in the future as a as a result of the sanctions relief. Thank you both, thank you for your service. Senator corker thank you and before turning to senator gardner, just for reporting back to New Hampshire your efficacy, the intel briefing will take place at 5 00 on monday. Thank you. Senator gardner. Senator gardner thank you, mr. Chairman. Thank you to our witnesses today. Appreciate your time and service and testimony. Mr. Chairman, i wanted to clarify on the iaea, they were offered a setting such as this or classified setting, is that correct . Senator corker yes. In any form. And i think again, i think based on what we know about it all of us would like to dig into more. I mean i know this these agreements generally speaking are between the country and the iaea but generally speaking were in sort of New Territory here altogether and so again well write a letter or all of us to participate in trying to get them to change their mind. Senator cardin just to clarify. In talking with the chairman and our staffs on how we would receive during the viewing period, our staff, senator corker and myself felt information about the iaea would be critically important and we should hear it directly from the iaea. So its been our hope from the beginning that we can get direct communications with the iaea. We know theres confidentiality between the iaea and the participating state, we know that. We also understand that information is shared at times in a confidential way with other Member States. The United States, because of its separation of branches, it becomes a little more complicated. So we made that request from the beginning. We dont know how much of that is under the control of our own government and how much is iaea and thats been one of the difficulties. There are two documents we specifically requested that are confidential documents between iran and the iaea that we think are important for us to be able to see and review. So its not just a direct contact with the iaea for our review which would be done i would believe that would be in a confidential setting because of the information we would have to get. So well continue to press for that but its an independent agency, not under control of the federal of the u. S. Government. Senator gardner thank you for that. Thank you to the Ranking Member for being part of this and making sure these hearings are successfully completed. I think its important we have that opportunity to hear and i cant imagine anyone, regardless of where you are in the government would be opposed to us hearing the full details of the agreement. I think thats important. In the meantime, mr. Chairman, perhaps if the iaea is not available, maybe we hear from the deputy at the iaea, hes testified in the house, i believe, and i think our witnesses yesterday mentioned some of the comments he made about the agreement. Senator corker we had, as you can imagine, all of us do this we have experts in and out of our office, and weve had him in. But the problem is, he hasnt seen the agreement. So thats problematic. Senator gardner thank you, mr. Chairman. Thank you for that. To turn to mr. Zarate, i have a question for you. Under the terms of the nuclear agreement, we talked a lot at the hearing with secretary lew about the businesses that were dedesignated, delisted. One of the Companies Set to be delisted is controlled by the Supreme Leader khomeini. Designated in 2013 as the known as the eiko a group of companies, includes Gray Investment company, a couple of banks, and their investment arm which is the investment arm on the tehran stock exchange. This eiko was initially listed to those under executive order 3159, which was not a knew leer related sanction but it was a sanction addressing desiptive financial practices and the risk they posed to the integrity of the international Financial System. In 2013, the u. S. Treasury designated along with 37 subsidiaries, stating that they continue to generate and control massive off the books investments shielded from the view of the iranian people and international regulators. Weve also talked about the amount of money that will be freed up to iran. Its been characterize being between 100 billion to 150 billion. Secretary lew spent time at the hearing last week talking about how it may be around 55 billion or so, not 100 billion. I wanted to hear from you, mr. Zarate, what are the purpose of delisting these entities, and from reuters studies and others, we know eiko has 95 billion worth of assets and theyre coming off this list. There may be some sanctions the u. S. Will maintain to be in place against them directly but 52 billion in real estate portfolio, 3. 4 billion in publicly traded companies and more. So 95 billion. Should that 95 billion that will be freed up, it looks like, be included in the 100 billion to 150 billion, or 56 billion figure that will be an impact to irans economy up front . Chairman zarate you raise a great question. Ieko and others of the first traunch delisting present a challenge. They may have had elements of support dimensions to the Nuclear Program. Some of them may have been captured by nuclear executive orders. Others had other problems attendant to them making them subject to sanctions and other financial, what i call preventive measures, given the risks to the international Financial System. And i think this is a fundamental challenge for how weve constructed the unwinding because in some way, weve given up on much of the underlying conduct that weve worried about in terms of what these entities, owned and controlled by the regime and various elements, are able to do in the international Financial System. And i think unfortunately, what i see as the sort of blunt unwinding traunches here is really part and parcel of what stated as the intent of the jcpoa which is the normalization of trade and economy with iran. Now i want this deal to work. I dont want to be sort of perceived as throwing stones at this. Because this is incredibly hard and the unwinding of the sanctions which is the most sanctioned regime out there is incredibly difficult. But i think what weve done with the example you cited and others is weve thrown them into the lot of unwinding without having the iranians contend with the underlying conduct that is still a risk to the international Financial System and our National Security. Again, this is why i worry that, you know, viewed in maximalist term, weve given iran a get out of jail free card on some of these issues. Ive been critical of even my own administration, our own actions, when i was at the treasury, at the white house. What we did in 2005, 2006, to let up too early on our Financial Leverage against north korea, not forcing the North Koreans to deal with the underlying conduct and stopping further financial and commercial isolation on the back of a nuclear deal. That was a mistake. And i said so and ive written about it. I think it was a mistake at the time. I still think. I still think so. I dont think we should repeat those mistakes and ignore the underlying conduct that still poses a real risk to our National Security. Senator gardner and one of the groups under control in this group, is a german group with machinery iran needs for centrifuges. With this lifting of sanctions theyd be able to put money into that. Is that correct . Chairman zarate thats right. The other challenge is, and given how weve defined unwinding and Nuclear Related sanctions, i put that in quotes, weve included elements of proliferation and dual use and even missile trade that is still of concern and still is subject to other sanctions. So weve in some ways ensconced and embedded here a broad definition of Nuclear Sanctions which affect the rest of the implementation of the deal. Senator gardner thank you, and i have to go vote on Energy Committee system of thank you, Energy Committee, so thank you. Senator corker thank you. Senator udall. Senator udall i thank both witnesses for the testimony today. Lets assume the deal is approved, what do you think the u. S. Needs to do to ensure the snapback option remains a legitimate threat for iran for breaking the agreement and how can we work with the p5 plus one to ensure we have international buyin of the use of these kinds of sanctions if needed . Chairman zarate my view is context is important. I believe so long as we are insisting on tough verification and we respond to mr. Nephew i think as long as we insisting on tough verification and respond to them directly, even with more modest snapback for minor violations. The bottom line is the iranians need to understand that we will respond at all times and it starts by continuously monitoring the program prompting and challenging them when we see things that are inconsistent with the terms of the deal or that causes question, and vigorously using the dispute process we have put in terms of the deal. We have to do that with high level attention and we have to do that with rigs you enforcement and monitoring. Chairman zarate i think congress has a role to play here, congress can put in place measures that makes it clear not just to the negotiating parties but also the private sector that there are going to be sanctions and sanctions provisions that are potentially brought to bear if theres evidence and suggestions of ill list iranian activity. So creating a sanctions framework where congress itself shapes the environment and shapes expectations around how the International Community may view doing business with the irtc or the intelligence services, that actually i think could be incredibly helpful this grandfathering provision getting clarity on that, i think is really important and will shape the marketplace and then to richards point, enforcing the elements of the deal quickly and often and demonstrably i think will be critical. Senator udall i think one thing your testimony here this morning highlights is there definitely is a role for congress to play. You have the approval or disapproval of the agreement but if you move forward on the agreement, a role for congress to play in order to strengthen it, to bring transparency, to plug holes that occur that we dont think are going to be there. Would you agree with that . Chairman zarate absolutely. Whether you agree with the deal or not, congress has a role to play in clarifying the deal, maintaining our power and ensuring its executed properly to deal with the risks that are very real, deal or no deal. Mr. Nephew i agree. Senator udall there are concerns about what happens at year 10, year 15, year 20 under the deal. What are your thoughts on these sunset provisions and do you think the existence of a sunset is reason enough to reject the deal . Mr. Nephew i do not. I dont think theres any arms control arrangement thats possible or has been achieved thus far that does not include sunset. Even the original n. P. T. Included a sunset. We had to get it extended permanently in the mid 1990s only after demonstrating it had been working for so long. The idea that a country would voluntarily renounce its Nuclear Program in perpetuity i dont think was ever credible. Chairman zarate one element of the sunset provision that is problematic and doesnt match with the 15year timetable and the presumption of the peaceful nape of the Iranian Regime is the cessation of chapter obligations and scrutiny by the u. N. At year 10. Again, im a bit more skeptical and i think we should be presumptive of ill intent on the part of the iranians, or at least an intent to push the envelope in terms of what theyre able to do in terms of a covert Nuclear Weapons program so i think that in itself is problematic. To richards point, sunset provisions are part of the International Legal landscape but thing this case, we are dealing with a unique circumstance, we are dealing with high risk and we are dealing with a suspect party that was subject to a numb of security Council Resolutions that assumed that they were suspect party. Senator udall thank you both. Thank you, mr. Chairman. Senator corker as clarification, how would we appropriately understand the grandfather issue . In other words if we wanted clarification, as we talk with people, we have, you know, various opinions and obviously this is were in the selling mode at this moment, how would we best clarify that issue . What would be the responsible way for us to know what the true meaning of the grandfather clause or not grandfather clause means . In advance of voting . Chairman zarate ive thought about that a little bit but not enough. With that comment ill think out loud a little bit if thats ok, chairman corker. One is congress could lay out what you think it is and have people push band and shape the definition. A letter from the senate or this committee proclaiming what it deems this to be actually has some impact and would force open reaction. Secondly, getting asking for, in writing, the interpretation from the various parties to the agreement. In particular our allies. How do they interpret this deal and how are they going to enforce it . Third i would suggest that the Treasury Department is going to have to have a role in clarifying how the sanctions unwinding is going to play out. So as part of that regulatory process, theyre probably going to have to put out interpretive notes or other Regulatory Guidance and so its probably in that context that the administration is going to have to be incredibly clear i hope for the marketplace to then determine. So those are three ways i can think of off of the on of my head that might help. Senator corker thank you. Senator isakson . Senator isakson im not a Nuclear Scientist and certainly not an expert in this subject but i was a Real Estate Broker for 33 years. Negotiated a lot of deals. And ive run for office 17 times. When you run for office you get to a opponent where if youre in the final two, theres a frontrunner and a challenger. Ive been both at one time or another but eventually the press wants to challenge both of you to a debate toward the end of the campaign. And so you appoint your best guy to go negotiate your position on the debate and they point thire and they appoint their best guy. You negotiate whether youre going to be sitting or standing, talking english or french, whether you can have a prop or anything else. It appears to me that the iranians negotiated a lot of wiggle room in this agreement for them to do a lot of nefarious things if they wanted to. I think you made theres a paragraph in your testimony where it says, irans problematic construct of in iran as a coequal which illustrates what im talking about. If somebody challenges the iranians to a to an inspection other a suspected violation of the agreement, they first of all can question, reject, stall any challenge they want to. They can interrogate people making the request. They can object to the reimposition of sanctions. And they can appeal anything they want to to the joint commission which they sit on. Am i reading that correctly . Chairman zarate yes, sir, thats my reading as well. Senator isakson so not only is there a potential 24day period of time to get to inspection by the iaea which by contract cant include an american inspector, but theres an additional way to do ropeadope for an extended period of time to keep that inspection from taking place. Am i correct . Chairman zarate yes, sir. And theres been analysis of how many days that means, and its more than the 24 days given the potential for stalls and challenges. Whats been negotiated in the letter of the jcpoa is the right of iran to walk away. They get the ultimate, whats been called the nuclear snapback by my colleague mark dubowitz, i call it the hecklers veto. Whatever it is, i dent like it. Senator isakson from the day that jpao is signed, theres a place for them to get to a position where they can, it may be as long as 15 years, or 8 1 2 under the most liberal interpretation but either way you take that, combined with the wiggle room theyve negotiated with the joint commission where you can make the appeal or other things, give them a glide path to being able to have a Nuclear Weapon. Which is why when the chairman asked the question yesterday about is there an alternative to agreeing to the deal or war, there should be. Because we need to reclaim some of the equality we ought to have a standing in this agreement once its signed along the way. There will be bumps and bruises. The iranians negotiated a lot of excellent rat holes for them to run into if something pops up, but were pretty much exposed. I want to call everyones attention to one other thing in mr. Zarates testimony, paragraph 29 of the preface of the entire agreement, where it says the e. U. And its Member States an the United States of america, stint with their respective laws, will refrain from any policy specifically intended to directly and adversely affect the normalization of trade with iran inconsistent with their commitments not to undermine the successful implementation of the jcpoa. It looks like from the beginning theres a speed bump for all of us to be able to have any snap back, reimposition of sanctions or any other economic tool we want to use if we suspect they violated the agreement is that correct . Chairman zarate thats right, senator. The reason i highlight that paragraph, its essential. It reinforces and illuminates what the goal of the deal is for iran. Which makes sense. They want reintegration into the global order. What im arguing is that the reason these sanctions have been so darn effective post9 11, a regime thats been subject to sanctions for three decades has come to the table. Why . Because they were unplugged from the Global Financial and commercial system. We messed with, we interfered, we interrupted their very trade and economy. My point is, if we want to preserve that power moving forward for terrorism, human rights, support to assad proliferation, we may have just negotiated away the effective use of those kinds of measures. And that was the point of that portion of my testimony. Senator isakson thats my point. What got them to the table was not that they liked or respected us, but we were squeezing them. They were calling uncle. When they got to the table to negotiate from day one, the construct of it brought them up to be a coequal with the United States when in fact it was our power and leverage that brought them there in the first place. Thats what concerns me so much about the way in which the negotiations ended up. Weve raised and elevated their stature and position an given them various windows along the way to violate what they promised in the preamble which promised in the preamble which is not to develop a Nuclear Weapon. Thank you both very much. Senator corker senator shaheen. Am i out of order . You can politely decide. Senator kaine thank you senator shaheen. Thank you to the witnesses. Mr. Zarate, since i last saw you, i havent finished reading treasurys war, but ive enjoyed reading it. I recommend all read it its about how treasury has been important to our sanctions. Mr. Zarate thank you very much. Senator kaine i agree with the comment senator menendez made about the iaea and the needing to dig more into their situation, whether it be, you know agreements they may have with iran as they do with other members or to get a Comfort Level with how they inspect. I dont want to leave this room with an unstated what i think would be an inaccurate impression that we dont trust the iaea or they dont know what theyre doing. If i can, just, to remind everybody of a painful history. In march of 2003 the iaea issued an opinion that they said, to date, the iaea has found no evidence of a plausible or a plausible indication of the revival of a Nuclear Weapon program in iraq. That was in march of 2003. The administration at that time immediately jumped out, trashed the iaea, said they were wrong. And said that the United States needed to initiate a war that has proven highly costly in american lives, in treasure, and in instability in the region because the administration said, no, we have better intel. They do have a program of weapons of mass destruction. Nuclear weapons. We need to worry about the Mushroom Cloud and we need to begin this war because they dont disarm. The iaea was right and the United States was wrong and there was a significant generation altering consequence of that. So i completely get the notion that we want to dig in to what the iaea is going to do on this i dont want to leave with the impression that the iaea hasnt demonstrated their chops. The iaea hasnt been perfect either. There were weaknesses in the north korean negotiation especially with respect to north korean covert programs but the iaea and the International Community went back to add the Additional Protocol that iran is obligated to ratify in year eight to fix challenges. Lets not leave the impression that the iaea doesnt know what theyre doing because in one of the most critical decisions we have made as a nation in our Foreign Policy history, we trash their conclusions, they were right, we were wrong and a war that should never have been started, thats an editorial opinion, was the result. Would the senator yield . Senator kaine yes. I dont want you to think because i dont know if youre referring to me, but i want to know what theyre going to do. Do they have the wherewithal financially and otherwise. Senator kaine the agreement says theyll put between 130 and 150 inspectors into iran to carry out inspections. Do they have the financial ability to do that . I think thats critical. But i was worried that there was an unstated point and i wanted to clarify that. I think you both hinted at this but i want to ask your opinion on this statement. I was intrigued. I was going back as part of understandin to understand the status quo before negotiations started or before the public phase of the jpoa began. I want back and looked at the speech that Prime Minister netanyahu gave to the u. N. In september of 2012. He had a quote that i thought was interesting. Seven years of International Sanctions have hurt irans economy but lets be honest, they have not stopped Irans Nuclear program. I think the evidence suggests that the sanctions have been incredibly effective. In hurting irans economy. And getting them to the table to negotiate. Certainly the congressional sanctions, but also the International Sanctions and the compliance of all allies in that. However, i think the Prime Minister was honest and i think if you look at the data, it would suggest that the sanctions did not stop Irans Nuclear development, in some way because of a resistance mentality or defiance mentality, the sanctions may have accelerated Centrifuge Development to 19,000. Enriched Uranium Development to 11,000 or 12,000. The enrichment level to 20 . The plue teen yum reactor. But im curious, do you share that opinion . Did sanctions slow down Irans Nuclear program . Mr. Nephew i would say it did have an impact on their supply and procurement efforts. It caused difficulties. But i think your point is right. If you look at the end of the 2011, they had 9,000 installed centrifuges. By 2013 they had 22,000. This is while our sanctions were as intense as they possibly could have been given oil prices and so forth. My view is sanctions were always a means to an end. The end was a diplomatic outcome that probably wasnt the end of the Nuclear Program but was putting it under significant restraints and very aggressive monitoring. Chairman zarate thank you again for your kind remarks. I think youre right. I dont think sanctions were a Silver Bullet here, was ever going to be a Silver Bullet. Ive argued we needed multiple points of leverage. And i would argue the ghost of the green movement. Even though they were able to crush it in its infancy, the very threat to the regime of internal instability, in combination with that external pressure, i think is really what drove president rahani and his team back to the table. 10 youre right, sanctions alone wasnt going to do it. But sanctions were necessary element to getting them to the table. Senator kaine the reason i ask, this is a risk analysis, a very complicated one, where every option has upsides and downsides and some unpredictable upsides and downsides. One of the, i think, alternatives we have to contemplate is if we walk away from a deal and we think that reimposing sanctions, now assuming we can get the International Partners to completely go along and i think thats a big assumption, but reimposing sanctions, getting everybody to go along, is going to lead to a better deal. It could lead to a better deal. It could also lead to the same kind of acceleration. I think in that same speech, the Prime Minister said, you know, theyre just months away from crossing the nuclear threshold. Now the critique is in 15 years they could be months away from crossing the nuclear threshold. I think even some of the critics critique of the deal acknowledge that the deal is moving. Sanctions could get us a better deal. They could. Sanctions could also lead to acceleration of an iranian knew leer program that could put us in a worse position. We might assign different percentages to that but were dealing with, again, sop upside risks and some Downside Risks and some are known and some are unknown. This is a very complicated analysis. Senator corker thank you. Thank you for that line of question. To further clarify the iaea situation, we can reach out and talk to former people, nonstop, to get a comparison between the inspection regime that is going to take place and in iran versus the ones that have taken place in other polices. And other i know the secretary of state mentioned this is by far the best weve ever had. I think most people dispute that the one youre talking about in iraq was actually the a much better inspection regime. Much better. I know the other day in his testimony he tried to, well, he twisted around, i dont know if that was what he tried to do, to indicate we had a lot of eyes on the ground when we invaded. Thats not what i was talking about. Its back in the 2003 time frame. And the ability to go anywhere any place, was much better with iraq. Than exists with this. I think thats all the more reason that we need to get them in to understand at least, let me say this. The elements we know thus far, certainly is much better and the anywhere, any time inspection thats been alluded to, could be 24 days, could be 74 days, is very different than what we had in iraq. Senator kaine but we bought those better inspections with a war. I dont want to go to war to get better inspections. Senator corker i dont know about that. Senator rubio. Senator rubio on one hand we can continue with the strategy, International Sanctions, had an impact on irans economy, they continued to make progress in their enrichment capabilities and so to the but it was the combination of International Sanctions and the threat of credible military force which no one wants to talk about, but that was on the table. The president said if it came down to it, the u. S. Would do that if it were necessary, versus what we have now which is a deal that argues, well, what this bill do if they comply with it, it will slow them down and in 10 years if they want to break out it buys us 10 years time. Assuming everybody complies with everything. Heres my problem with that analysis. My problem is in eight to 10 years, which sounds like a long time, but its nothing. 10 years goes quickly. Thats if were optimistic. In 10 years, iran will be in a much stronger position. In fact, i think in 10 years, theyll be immune from International Pressure compared to where they are today. Heres why. First of all, theyre going to use the sanctions relief and the billions of s that it frees up and i know everybody wants to believe theyre going to invest in hospitals an roads and social services in order to win their next election. I promise theyre going to win their next election. I dont think theyre worried about that as much as they are about their need, for example, theyre going to get to modernize their enrichment capability into a 21st century industrial system. It falls right in line with the mandate that the Supreme Leader, i believe, gave his negotiators which is dont agree to anything thats irreversible but go as far as you need to go to get the sanctions removed but dont agree to anything irreversible. Theyll have less centrifuges but theyll be better and modernized and theyll retain that infrastructure, and thats the hardest part of any Nuclear Program, the infrastructure. But heres what else theyll continue to do. Theyll continue to build their conventional capabilities. Iran in 10 years will have conventional capabilities, maybe less, but could potentially drive us out of the persian gulf and the straits of hormuz because the price of being there will be too high. They can develop capabilities to kill ships, add to fast swift boats, things that can threaten an Aircraft Carrier, theyll build longrange rockets. Why are you building a longrange rocket . Are you going to put a man on the moon . No. They say north korea has a long range rocket. We dont know whether its going where its going to hit. Itll hit somewhere. That alone has made north korea bigger. I would argue even now before sanctions relief theyve given iran tremendous leverage over u. S. Policy. Iran has laid out clear red lines. They are going to hold back the shiia militia in iraq from protecting american troops or going after americans. Theyll agree to hole them back if we dont cross certain red lines they have made very clear. What are the red lines . For starters, they dont want to see u. S. Combat troops in iraq f we make any moves towards any sort of permanent presence in iraq in the future well get attacked by shiia militias at their orders. They dont want to see you take any concrete steps to remove assad from power. If they see us move toward getting assad out of power, we get hit by their surrogate groups in the region including hezbollah and shiia militia. If we take steps to try to help put in place an Iraqi Government that actually unifies that country and isnt it a puppet of iran, not to mention one that may be hostile towards irans ambitions in the region, theyll attack us. They already have leverage over our policy. Extrapolate that eight to 10 years from now when their groups are better armed. When they dont have just rockets, but guided rockets, missiles, that dont hit somewhere in israel, hit exactly what they want to hit. Imagine a world in 10 years where iran decides or eight years or 12 years where they decide, you know what . We are building a Nuclear Weapon because we believe israel has one or because we think someone else is going to threaten us. What can the world do then . Then, then reimposing sanctions wont be an option because all these companies that are deeply invested in that economy just wont let their nations, governments do anything about t we have seen that in the case of the europeans. What will the price be of actually going after their systems . It will be worse than going after the price of north korea now . Do we have a credible military option today to target the North Koreans program . We do not. We do not because we know that the price of going after the north korean program, through credible military option, the price of that is tokyo. The price of that is seoul. The price of that is hawaii. Theyll hit us back. Imagine iran where the price of going after the Iranian Program in 10 years if they decide to break out will be watching d. C. , or new york city, not to mention tel aviv and jerusalem and any number of places in the region that are our allies. My argument is in fact what i think we have done here is walked right into the situation they wanted to lay out. They didnt want a Nuclear Weapon next week anyway. We have created a system where in eight to 10 years he they will have the capability to quickly become, walk into the Nuclear Weapons club, not sneak in, walk in to the Nuclear Weapons club with a world class industrial enrichment capability, much more powerful conventional force, capable of actually asymmetrically driving our navy from the region or further out and immune from any credible military action because if we attack them the price will be a nuclear devastating strike, potentially even on the continental United States. My point is that when people vote on the deal in a few weeks, ill live with this for the rest of your life. 10 years, 12 years when iran has a Nuclear Weapon and we cant target them, people are going to remember this vote thats coming up and this deal is what laid the groundwork for t i keep hearing this notion there is no other alternative or way forward. I disagree. I believe u. S. Sanctions are the most important part of all the sanctions. I believe that these are banks and europe, german banks whatever banks, if they were forced to choose between having access to the American Economy and access to the iranian economy, thats not going to be a hard choice. I know theres not a question embedded in this other than mr. Zarate in the 30 seconds i have left i would ask you do you have any doubt that when the sanctions are removed and the billions of dollars flow in that a significant percentage of that money will be used for the things i just outlined . Develop longrange rockets, develop oiler conventional capabilities, and better equip their surrogate groups in the region . Chairman zarate i dont know what the percentage will be, this is a regime thats already investing in those capabilities. Has already increased its Budget Allocation for the irgc that could force another element of its security infrastructure. Theres no doubt in my mind that they are going to use some of the relief and actual flow of capital to support their proxies. As i said my testimony from the golan to yemen. There is no doubt in my mind. I dont know what the percentage will be. But its going to be significant. Senator corker i dont have additional questions but i think other members may and we would be glad to entertain those for a moment. I dont want to let the war thing hang. I hope you are not trying to indicate that theres some of us who would like to see a war. Chairman zarate no. Let me be real clear what i meant about that. You are mr. Chair, if you dont mind, you are absolutely right, the inspections in iraq were the gold standard. This deal is not at that level. But the inspections in iraq flowed from our winning gulf war one. There was a war we won. And then it set a pattern of an inspections regime in iraq that we used the inspections to bomb iraq in the late 1990s. But there was a war that led to this super comprehensive agreement. Thats not a comment about what anybody senator corker i would say just in response that i think we all know from the meetings that we have that iran has never thought that the threat of force was real in recent times. And i might say, i hope we dont get to that, i think thats what we are all trying to assess right now, is this an agreement that keeps us from that. But i might say because they never thought that to be a threat, maybe thats the reason they purchased something that is certainly at a minimum not near as good as what we had in the past, maybe. But senator shaheen. Senator shaheen thank you, mr. Chairman. When i passed to senator kaine it wasnt because i didnt have questions. It was because he was first and having started out at the end of the row here i appreciate how challenging it is when somebody comes in with more seniority and bumps your questioning. Thank you both for being here. Senator rubio presented a fairly stark, doomsday scenario in his time. And i just want to go back and see if i can clarify a couple things with respect to what he said. First of all, does this agreement in any way affect our ability to take any military action in iran should we choose to do so . Mr. Nephew . Mr. Nephew no, it does not. Senator shaheen do you agree with that . Chairman zarate i do. Senator shaheen are you both in agreement with what i understand to be the intelligence assessment that today before we enter into this agreement that iran is two to three months away from breakout to build a Nuclear Weapon should they choose to do that . Mr. Nephew . Mr. Nephew thats my understanding, two to three minutes. Senator shaheen mr. Zarata . Chairman zarate thats my understanding. Senator shaheen its my understanding again based on estimates i have seen that should we enter into this agreement at the end of the 10year time period that iran will be between eight and 12 months away from building a Nuclear Weapon . Is that your understanding . Mr. Nephew yes, senator, thats my understanding. Chairman zarate yes senator. At the end of the restrictions can quickly shrink that timetable back to two months. Senator shaheen theyll be able to shrink that timetable because they already have an Enrichment Program and they have built or in the process of building a plutonium program at the iraq site because of the work they are doing right now not because of what they are going to be able to do over the next 10year time period, is that your understanding . Chairman zarate it is. But also the case theyll likely accelerate their activities given the modernization in particular around the centrifuge program and the enrich. Enrichment. Senator shaheen thats not my understanding based on secretary moniz. Mr. Nephew from years 10 to 15, the iranians will be constrained with respect to their research and development activities, as well as the iranian stockpile. Further the iraq plutonium path will be more closed down because they cant do any of that. My understanding as of year 15 well still be in that six to eight months time frame for uranium breakout. But years and years away from a plutonium base bomb. Senator shaheen you agree . Chairman zarate i was referring to uranium enrichment. Not plutonium. Senator shaheen there has been some suggestion that one of the challenges with relying on the iaea is that the u. S. Wouldnt have inspectors on the ground as part of those activities. Are there other agreements that we have entered into where we have inspectors on the ground and can you describe those, mr. Nephew . Mr. Nephew i am aware of some. Things for instance bilateral arms control with the soviet union. Had inspectors of the United States and soviet inspectors came here and when it became russia, russian. There were constriction and restraints placed upon those inspections because there were National Security interests involved here. From the iranian perspective my understanding is they have concerns with americans tromping around their military sites. I think from their perspective there is reason to be concerned. I dont think that should imply we wont have access from information from those inspections. The iaea will be asked to provide reports and information both to the members of p5 1 and the iaea governors which we are one. Senator shaheen with respect to our activities in russia, since you gave that example, and with respect to iran, we will also continue to have intelligence assessments about activities going on there, is that correct . Mr. Nephew i think it will be one of the most watched targets in u. S. Intelligence community. Senator shaheen i want to go now to the sanctions question because youall have testified and i think i heard this every hearing that i have been in, that its more likely that if we agree to the negotiated, the jcpoa, that iran would most likely violate that in an incremental way rather than in a flagrant way. And that therefore as you testified, mr. Nephew, that the situational challenge will be how we respond to that and how do we get the International Community to go along with this in our response. You both mentioned several other incremental options with respect to sanctions and other disincentives that we could engage in with iran. And i wonder if i could get you to talk a little bit more about that. Mr. Nephew, do you want to start and then mr. Zarate. Mr. Nephew i believe the base principles we still have the ability to impose sanctions with respect to particular bad conduct. Now, the terms of the deal require us to go through this dispute process to engage iran on the terms of its violation. If it is a valve thats out of place, we may not wish to impose draconian sanctions for that or at all. There may be other restrictions imposed on iran as a result of that vie lailings of that visalation. Senator shaheen like what . Mr. Nephew additional monitoring. If a valve is found out of place it might be because the monitoring regime is not sufficient. In my opinion you can use the dispute process to tailor further the deal to make sure you dont have those problems in the future. Overall, if you have violation upon violation, its tickytack, there are lots of little ones that add up. Frankly, then you can go down the path of iran is trying to systematically undermine the deal, which may push in you a direction of more aggressive sanctions response option. Senator shaheen i think there are a variety of things you could do. Certainly unilaterally you could impose different type of sanctions if the if an element of tailored snapback as opposed to blunt snapback, thats one way of dealing with relatively minor yet material infractions. I think the bigger question is going to be systematically how infractions are viewed. Will they be viewed as iran really trying to cheat . Or is it simply iran being iran pushing the envelope . I think that will be the biggest challenge because i think those who dont want the deal to fail, and certainly may have commercial interest, etc. Will make the assumption that these are forgivable offenses. Those that are more suspicious of iran will see these as just the tip of the iceberg reflecting what iran may or may not be doing covertly, for example. I think how all those infractions are viewed in toto becomes important. Senator shaheen if youre going to divide can i continue . My time senator corker you are already having an impact with the intel briefing. Go ahead. Senator shaheen if youre going to divide the p5 1 so negotiators who are party to this agreement, would you put certain of them in one camp, people who think iran is looking to violate the deal and people who think, well, we want to give them some slack on these things . And how would you divide that out . Then what options would we have as we are looking at those partners and negotiation to try to bring them around to our point of view . Chairman zarate i would say this, i think every party to the p5 1 wants to see the deal work. I think that they would treat any violation as being a potentially serious one. Now, if, on the one hand, if its a valve issue, well probably react more seriously to that than russia. Mr. Nephew i think a real very substantial significant violation of the deal would be as big a problem for the russians and the chinese as it would be for the p5 1. Ultimately again it will come down to the context of the violation and what we are suggesting in response. If we are able to be proportional and reasonable and serious about how we are handling this, i think the p5 1 will stay together. Senator shaheen do you agree . Chairman zarate i have a slightly different view in part because i think there is a question of how the Nuclear Program and iran is viewed in the context of the negotiation. And richards right. Everyone wants the deal to work. Then there are other geopolitical factors that i think create gradations among the negotiating parties. One of the gradations is actually is how willing the parties had to allow sanctions to be used effectively is the way i would put it. I would put china and russia in the camp where they certainly do not want to see the effective use of sanctions wantonly. And they certainly dont want to encourage the u. S. To use these powers effectively. And i think thats a real challenge in terms of the sanction framework. Senator shaheen excuse me. On the other hand, they have been effectively working with the u. S. In terms of imposing those sanctions on iran, is that not the case . Chairman zarate because they had to. Not only because of u. N. Chapter 7 obligations but because of the market implications. The rest of the regime imposed by the u. S. Government has really forced the choice. Are you going to do business in the u. S. Or are you going to do business in iran . I think that choice has been fairly stark for most market actors to include russian and chinese actors. Senator shaheen thank you both. Senator corker are we good . I do want to say we, because of the chinese relations, we did grant some significant flexibilities to them. To say that they have held firm to this would be a little bit of an exaggeration because we they were not going to hold firm so we granted them some flexibility. Senator menendez. Senator menendez just a quick question. And a comment. If its true that sanctions did not stop the program, neither did this agreement. It may delay it but it doesnt stop it so lets look at what standard we are trying to look at. In terms of judging. I have a concern that people think of snapback as an instantaneous reality. And yet in page 6 of your testimony talking about how we got to the point, you say, this approach took time, patience and coordination within the u. S. Government with allies. It would not be a financial shock and awe campaign using a series of coordinated steps to isolate key elements of the iranian economy. So my question is, how instantaneous is, assuming we have all the laws in place which is still a question, how instantaneous is snapback in terms of both its actual you have to give notice to the world, companies, that youre now in violated space in sanction space, we used to give people at least six months notice of that. Im trying this idea that its a instantaneous, give me a sense of that. Chairman zarate two different answers. One is the mechanics. The implication of a snapback would have legal and mechanical implications and you have to allow for contracts to be unwound. Investments to be rejiggered and moved, etc. Mechanics of that will take months, potentially. The second part which is perhaps the most important is, as we get further along in the implementation of this deal, and the erosion of the sanctions architecture, you begin to lose the ability to affect the marketplace and its risk aversion to doing business with iran. That would take even longer to reinstitute. Even though the snapback would certainly help. I think that would depend on enforcement. That would depend on expansion of sanctions list. That would depend on a whole set of other measures. With the market understanding that iran is being not only punished for its violations, but also being isolated from elements of the financial and commercial system. That in some way would be in violation of the current reading of the jcpoa which is in part why i have such grave concerns. In any event i think those are the two elements that do add delay to any snapback. Mr. Nephew i generally agree with juan this wont be instantaneous. There would be some windup. Some of this will be in the dispute resolution process i dont anticipate the dispute process itself will be a secret. I think there is going to be publicity about there being violations. Certainly when a security counsel consideration an consultation begins, there is going to be attention paid to this. To my mind that is part of the warning time and preparation time that companies and banks and businesses are going to have to build into their snapback calculation. They will see this coming and that 30, 50, 60, 80 days period is a lot of time for them to start preparing tore response to snapback. That doesnt mean on day 80 i think you are going to have zero Economic Activity with iran. It does mean, i dont think, its three months plus six months. I think if there is a sixmonth windup period, some of that is in the process. The second point i would make in reaction to juans comment, i think its true that over time the market is going to normalize its expectations. Our secondary sanctions are still in effect. Banks and companies are still going to have to be screening against the treasure will be s. D. N. List. They still have to treat iran has different. Otherwise they run the risk of being cut off from the United States. Senator menendez we are calculating here the sense of instantaneousness. There will be months involved. Months involved. Which means that this whole breakout period, months involved, to have an effect before you try to move the iranians into changing their courses they are violating is a lot less. So when you take the totality of the consideration even in the case of snapback, youre talking about a limited window in the future. And that has a real consequence to judgment at the end of the day. Thank you. Senator corker certainly, yourself and the two people at the table, theres a vast amount of experience and how long it takes for these things to kick in, no question. I want to thank our witnesses. Its been an outstanding hearing. Well leave the record open for questions if its ok through close of business monday. And hope that you would respond. But we thank you both for your service to our country. Its been an important service. We thank you for being here today. And again, its been an outstanding hearing, thank you. Adjourned. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap. Org] [captions Copyright National cable satellite corp. 2015] the cspan cities tour, working with our cage affiliates visits cities across the country. This weekend were joined by comcast to learn more about the literary life and history of augusta, georgia. Jimmy dyess was the epitome of a hero awarded the Carnegie Medal for civilian heroism at the age of 19. He was also award the medal of honor posthumously for his actions in world war ii. We are sitting here in the Augusta Museum of history and about 10 years ago, a decision was made to do a military display, a Permanent Military display, to honor jimmy dyess and when i did my research on the book, i went through over 9,000 Carnegie Medal recipients in the last 100 years and the 3,500 or so medal of honor recipients since the civil war and it turns out hes the only person ever to have earned both awards. He would almost for sure say he did not deserve it. He might point out to somebody else who was more heroic than he was. He was very humble. He never talked about the Carnegie Medal when i interviewed people who knew him, when i did the book a long time ago, people knew him well, i said, tell me, what about the Carnegie Medal, that he earned when he was 19, they didnt know anything about it. I know a lot of medal of honor recipients from my years in the medal of honor foundation, most of them will tell you, i didnt deserve this medal. It should have been given given to somebody else. Its a piece of humility that we all can learn from. I think he would have been in that category. We also visit the boyhood home of our 28th president woodrow wilson. President wilson moved to augusta as a child when he was just a year old. Lived in another house. And then moved to this house when he was 3. The wilsons very first memory was in november of 160, before he was 4 years old. He was standing in the front gate out in front of the house and two men came by in a hurry with very excited tones of voice and they said, Abraham Lincoln has just been elected president and theres going to be a war. , so young tommy ran inside to ask his father what was war, what did that mean, why were they so excited . We think its remarkable that his very first memory was about another president. Abraham lincoln. And about another war, the civil war. Of course wilson would have to leave the country through world war i. See all of our programs from augusta saturday noon eastern, on cspan2s book tv and sunday afternoon at 2 00 on American History tv. On cspan3. The Senate Armed Services Committee Held a confirmation hearing today to consider the nomination of Navy Admiral John richardson. To be chief of Naval Operations. The c. N. O. Is the senior military officer of the department of the navy and directs the utilization of resources. This is about an hour and a half. Mr. Kaine the Committee Meets today to consider the nomination of admiral John Richardson to become the 31st chief of Naval Operations. Admiral richardson, we thank you for joining us this morning. Were grateful for your many years of distinguished service to our nation and for your continued willing tons serve. We also welcome members of your family who who are joining us this morning and thank them for supporting you and the nation. As is our tradition at the beginning of your testimony we will invite you to introduce any family members that are joining us. The next chief of Naval Operations will lead our navy in confronting the most diverse and complex array of global crises since the end of world war ii. With instability spreading across the middle east and north africa, more than ever, our nations counting on the forward presence, power projection and Rapid Response that the navy uniquely delivers. In the asiapacific, china is undertaking an ambitious naval buildup that seeks to project power and influence in key waterways of the asiapacific and beyond. While our rebalance to the asiapacific has shown some success this policy is not yet addressed has not yet addressed the shifting military balance in any serious manner. While some would rather avoid the discussion of our competition with china this relationship will be a serious challenge for our navy. And yet while worldwide challenges like these grow, the Defense Department has grown larger, but less capable, more complex, but less innovative, more proficient at defeating lowtech adversaries, but more vulnerable to hightech ones. And worse, the selfinflicted wounds of the budget control act and sequestration have made all of these problems worse. Now more than ever, a strong navy is central to our nations ability to deter adversaries, assure allies and defend our national interests. Yet yet by any measure todays fleet of 273 ships is too small to address these critical security challenges. The navys requirement is 308 ships. The Bipartisan National Defense Panel calls for a fleet of 323 to 346 ships. And our Combatant Commanders say they require 450 ships. With continuing high operational tempo and drastic reductions to defense spending, we will conduct the downward we will continue the downward spiral of military capacity and readiness until congress acts. Admiral richardson, there are several challenges that will require the next chief of Naval Operations personal leadership. I look forward to discussing many of these today. First, each Aircraft Carrier has experienced more than 2 billion in cost growth. This Program Continues to be plagued by technology immaturity, concurrent development and production and a lack of reliability test data for data for critical systems. This is unacceptable. I repeat, unacceptable. And i fully expect the navys ongoing study of alternative Aircraft Carrier designs to provide real options. Next nate i have tell need navy still needs to justify the combat ships transition to a frig its which is required in the senate ndaa and all three of the l. C. S. Mission packages must overcome Major Technology integration challenges to deliver the promised war fighting capability. Several other important new ship building efforts will require the Service Chiefs leadership in the coming years, including building the first ohio class replacement submarine, building the first flight three destroyer with the new air and Missile Defense radar, and integrating the virginia pay load module on attack submarines. Naval aviation will take strong leadership to address the Strike Fighter shortfall, oversee the smooth and timely integration of the f35 joint Strike Fighter into the fleet, and ensure the right requirements for the first unmanned carrier launched Airborne Surveillance and strike system. We must also maintain our advantage in the capability and capacity of our munitions. Fielding new weapons like the long range antiship missile and improving existing ones like the family of standard missiles will continue to be essential. Our ships and planes have been operating at a sustained high operational tempo for over a decade and it shows. Clearing maintenance backlogs and restoring the navys readiness will be a priority. Finally, we cannot forget about our members of the United States navy. High operational tempo and lucrative opportunities outside the navy continue to drive some of our best talent to leave the service. Im interested in your plans to manage operational tempo and views on how best to provide a competitive and modern compensation package that provides the right retention incentives. No matter how many dollars we spend, we wont be able to provide our military the equipment they need with a broken defense acquisition system that takes too long and costs too much. With this years act, this committee has embarked on a major effort to reform this system, including ways to empower our Service Leaders to manage their own programs and take on greater accountability. Admiral richardson, were interested to hear your views on improving defense acquisition based on your many years of service. Thank you, we look forward to your testimony. Mr. Reid thank you very much. Let me mr. Reed thank you very much. Let me join new welcoming admiral richard sond and his family. We understand that no one serves alone in the navy or elsewhere. So thank you very much. You have an extraordinary record of service to the nation and the navy and we thank you for that. You have a remarkable record, as the director of navy Nuclear Programs, the current assignment. And in that assignment, youre familiar with many of the issues senator mccain raised. Acquisition, how you design a program, thats not only effective but is affordable. Those are one of the major issues youre going to confront as the c. N. O. Youll be asked to ensure that we have a quality force, thats recruiting, training, and in this respect, ensuring the highest ethics are employed in the service, particularly when it comes to the issues of domestic violence, which weve seen all too often in the military services, thats another role we expect you to play. We have a world that is full of crises and the navy is one of the major ways that we project force and we deal with uncertainty and changing conditions and it remains that way. But one of the issues youll face is affordability. How do we afford all the ships that we need . How do we bring on the next class of Ballistic Missile submarines . And then, these challenges are exacerbated by the prospect of blooming sequestration looming sequestration or temporary arrangements to get by year to year rather than a long range plan to fund the navy and other services. So all of these challenges will be before you. Im confident that youll be able to face them and look forward to your testimony this morning. Thank you very much. Mr. Mccain before we continue, let me ask you the standard questions that we ask all military nominees. In order to exercise its legislative and oversight responsibilities, its important that this committee and other appropriate committees of the congress be able to receive testimony, briefings and other communications of information. Have you adhered toa applicable laws and regulations governing conflicts of interest . Do you agree when asked to give your personal views, even if these differ from the administration . Power . Mr. Richardson i do. Mr. Mccain you have assumed any duties or undertaken actions which would appear to presume the outcome of the confirmation process . Mr. Richardson no. Mr. Mccain will you ensure staff comply with dead ryan lines, including questions deadlines, including questions for the records and hearing . Will you cooperate in providing witnesses and briefings . Will those witnesses be protected from reprisals for their testimony or briefings . Do you agree if confirmed to appear and testify upon request before this committee . Do you agree to provide documents including copies of electronic forms of communications in a timely manner when requested by a duly constituted committee or to consult with the Committee Regarding the basis of any goodfaith delay or denial in providing any such documents . Welcome and please proceed. Mr. Richardson thank you. I am honored and humbled to appear before you as the nominee to be our next chief of Naval Operations. Im grateful for the confidence of president obama secretary carter and secretary may bills. Id like to may advice. Id like to begin by thanking admiral greenard and darlene for their service to our country for over 40 years, and especially for their role in leading our navy these past four years. They have been tireless and superb advocates for our sailors, their families, our navy and our nation. Im grateful to have my family here withmy today, chairman, as you recognized, as they have been throughout my entire career. My dad is here with me today. My dads a retired navy captain who served with distinction for 25 years through the cold war. And i remember like it was yesterday the nights that my mom and we six kids would get together in our living room and my dad would come out in his Service Dress blues and his sea bag, wed say goodbye for six months. Then we would carry on. Supporting each other until my dad came back home. I got my start in the navy from my dad and he continues to advise me, sometimes vigorously, and make me proud. My wife, dana, is here. Mr. Mccain i had the same experience. [laughter] mr. Richardson yes, sir. My wife, dana, is also here. Dana and i met as classmates in York High School in southern maine. We married just as soon as we could, after i graduated from the naval mr. Ayotte caddyingmy. Over the last 33 naval academy. Over the last 33 years, dana has raised my five children while i was at sea. Shes always been there with me challenging me and agenda perspective that i long ago grew to depend on. Our daughter, rachel, one of our five children, is here representing the richardson tribe. Shes a student at the university of virginia and is a summer intern in the Amputee Center at walter reed. Our oldest son is a navy yuent. He and his wife are serving overseas in italy. Our other son, daniel, is doing research for Renewable Fuels in hawaii. Our two youngest children, matthew and never on can, are visiting family in oregon before they return home to go back to school. If you ask dana, she would say were just a typical navy family. Weve moved 20 times. Our kids have attended dozens of schools. Weve lived all around the country and oversales. Today the richardson family, like so many other navy families, is ready to continue to serve our nation. Im also conscious that i am here before this committee for the very first time and want to thank you for your leadership in keeping our nation secure and our navy the strongest that has ever sailed the seas. If confirmed, i very much look forward to working closely with you to continue that important work. I see the naval profession as a bond of trust and confidence with the American People and with our sailors. And i hold some core beliefs about our navy that guide me. The navy must be at sea under way. It must be present around the world. Protecting american interests. Enabling access to International Markets and trade, responding to crises and providing security. We are at our best when we operate with others, including our fellow services, especially the marine corps as well as with our partners and allies. The muscle and bones of the navy are our ship submarines and aircraft, highly capable, exercised frequently, well equipped and ready to operate from the sea and far from home. But the heart and soul of our navy are our sailors. Every day around the world our sailors can be found on, under and over the sea. They are smart resourceful, committed americans who want to be part of something special, to serve their country by being part of a highperforming team. They are rightly proud of what they do. And they are a formidable force. Despite a growing set of challenges and some of the significant strains, they continue to go to sea to do what must be done today and to adapt and innovate in order to prevail tomorrow. Its a privilege to work with and especially to lead such capable and resilient team. America sends us their sons and daughters, their brothers and sister, their fathers and mothers, to go to sea with us potentially into harms way. In return for that sacrifice, our navy must provide them a positive and respectful environment where they can thrive and achieve their highest potential. Finally, the American People demand, as they should, that we execute our mission in a prudent and responsible way worthy of their confidence in us. The bottom line is that in any situation, in any competition, and certainly in any fight, america expects that their navy will find a way to win and we will. Mr. Chairman, and members of the committee, if confirmed i will give everything i have to honor and strengthen the bonds of trust and confidence that your navy has with our nation and its people. Thank you and look forward to your questions. Mr. Mccain thank you, admiral. General dunford recently stated, made a couple of the statements in his appearance before this committee. One was that he said, we cant we the company execute the 2014 defense review with a budget cuts as a result of budget control act known as sequestration. He continued stating ongoing cuts will threaten our ability to execute the current defense strategy. Do you agree with that . Mr. Richardson yes, sir i do. Mr. Mccain do you believe that, as other witnesses have in uniform have stated, that continued adherence to sequestration will put the lives of the men and women serving in the navy at greater risk . Richard yes, i do mr. Richardson yes, i do. Mr. Mccain are you seeing what im hearing . That there is becoming a morale problem atched possibly over time a retention problem because of the affects of sequestration on the ability to plan ability to train readiness, long deployments etc. . Mr. Richardson from my experience, when i get around the fleet, and i do a fair amount of that, morale remains high. But there is a degree of unsettledness and uncertainty that arises from uncertainty in the fiscal environment. So as we manage our way through continuing resolutions, the looming sequestration sequestration always looming over us, and manage our way through these times of reduced resources, there is an unsettled feeling in the force as this uncertainty clouds the air. They reare main committed to they remain committed to doing the job theyve been given. They want to be trained properly to execute the mission. Thats the way i see it right now. Mr. Mccain which sequestration is a hindrance to . Mr. Richardson yes, sir. Mr. Mccain the department of defense has announced a twomonth gap of Aircraft Carrier presence in the middle east later this fall. While we are conducting air operations from the carrier there does that concern you . Mr. Richardson sir, that does concern me. But i would say that the overriding message that i hope is clear is our Firm Commitment to naval presence in that region. We have been there for decades. Mr. Mccain the absence of a carrier doesnt really authenticate a commitment. Mr. Richardson sir, i think the commitment does remain strong. Well work to mitigate mr. Mccain does this impair our ability to carry out operations, the absence of the carrier . Mr. Richardson i think we will mitigate any absence of the carrier through other capabilities. Mr. Mccain tell me what replaces an Aircraft Carrier . Mr. Richardson you could use other air assets, strike assets to mitigate that gap. Mr. Mccain for example . Mr. Richardson landbased air or mr. Mccain so now you believe that landbased air can replace the presence of a carrier . Mr. Richardson theres no question about the value of an Aircraft Carrier in the region, sir. Mr. Mccain that doesnt comport with what you just said. Mr. Richardson i was trying to make the point that about our longterm commitment in the region. Mr. Mccain im talking about a twomonth gap in the shortterm. Mr. Richardson yes, sir. That gap is a reflection of the earlier strains on the force, longterm commitments. Mr. Mccain my question was, is that going to hinder our ability to carry out the needed operations in the region, where obviously theres conflict taking place . Mr. Richardson without a carrier, there will be a detriment in our capability there, yes, sir. Mr. Mccain after more than 2 billion in costs growth of the first three ford class carriers whats an example, and a demraring example, of cost overruns and schedules, delays what extent would giving the chief of Naval Operations greater responsibility for acquisition programs help reduce cost overruns, scheduled delay and fix this problem which at least in the view of many of us have difficulty justifying to our taxpayers . Mr. Richardson sir, i share your concern about the cost overruns of the carrier. I agree with you that they are unacceptable from my experience , controlling cost and schedule while delivering capability really resides from adhering to a few fundamental principles. One is clear command and control, that is lean and agile. Weve got to have a definition of requirements that is informed by Available Technology and available resources. Weve got to have a stable design and a build plan before you begin production. And finally you have to have informed and close oversight. I think that the chief of Naval Operations is involved in every step every one of those four steps. And if confirmed i look forward to being very involved in acquisition. Mr. Mccain unfortunately the last chief of Naval Operations testified before this committee that he didnt know who was responsible for it. I hope youre aware of the changes that were trying to make in the ndaa which would make the chief of Naval Operations more involved. Finally, do you believe its appropriate or would you be supportive of a provision in the ndaa which calls for examinations of alternative platforms for aviation, as opposed to what is basically right now the only game in town . Mr. Richardson i look very much forward to supporting that study completely and seeing what information it produces. Mr. Mccain thank you. Mr. Reed thank you, mr. Chairman. Admiral richardson. Following on the chairmans questioning, the biggest program, new program coming online is the ohio class replacement. And you talked about sort of getting it right from the beginning. Which is requirements. And youre in a very significant position right now, with your participation in the Nuclear Reactor program. Are you satisfied with their requirements as they exist today . 16 missile tubes on the ohio class, one of the most significant aspects . Mr. Richardson the current requirements for the Ohio Replacement Program are exactly what we need to continue to deliver that capability. Mr. Reed not home now, but if youre the c. N. O. Youll continue to look closely at those requirements to ensure that theyre necessary and sufficient both . Mr. Richardson yes, sir. Mr. Reed the other what other requirements, with respect to the ohio class replacement, do you think are critical besides the tubes . Are any other key, sort of, game changes that are youre looking at . Mr. Richardson yes, sir. Certainly, as i look at the Ohio Replacement Program, a program that will be defending the nation well into the for 50 years potentially into 20 80s, there are some things you must build into the ship, that you must get right from the very start. There are some things inside the ship where you allow technology to mature and advance. I would say that critical component that must be addressed from the start is, in addition to the missile tubes, is stealth. Weve paid a great deal of amount of time and energy to make sure we have the stealth requirements of the submarine right. Mr. Reed very good. One of the things that we have done in the last several years in the National Defense authorization act, is create a seabased deterrence fund, to try to aid the construction, deployment of this new class of submarines. The navy is developing plans to use this seabased deterrence fund. Do you have any notion of when those plans will be forthcoming and available to us . Mr. Richardson sir, first, the creation of this fund i think highlights the existential importance of this program to our nation nation and also that executing this program will require a combination both of resources and authorities. Were conducting a study right now to both mature the design and mature the build plan. We should get that completed by the fall time frame. I look forward to collaborating when we have that more mature. Mr. Reed and the essence underlined this national seabased deterrence fund, the same logic, i presume, will apply. The necessity to go forward as we replace the air and landbased legs of the triad. Because the service, exclusively servicefunded program, is very expensive. Is that your logic . Mr. Richardson yes, sir. I agree with that logic. These are critical bills to reconstitute our strategic tried a, yes, sir tried a. Yes, sir triad, yes, sir. Mr. Reed thank you. One of the other areas which gives us an edge is the labs and the Test Facilities and the intellectual infrastructure of the navy. Its all over the country. We have the Warfare Center in newport. But theres so many criticals a ects aspects of critical aspects of this. Particularly in these difficult budgetary times, do you have any concerns about appropriate funding for the laboratories and will we lose out in terms of their contribution to National Security . Mr. Richardson sir, i think its absolutely crit that we critical that we maintain this intellectual capital to inform our decisions today and into the future. Addressing your concern that programs like ohio replacement replain remain tuned and relevant going forward. Its absolutely critical that we fund this so that we can re main relevant. Also look forward to participating in discussions that can make them more agile and competitive with their private sector counterparts as well. Mr. Reed a final point. I think your comments are right on target. You need an infrastructure of Research Centers navy other services. But they have to be much more connected to commercial procurement, commercial enterprise. And thats a challenge that youll have to take on if you assume these duties. Thank you very much. Mr. Richardson thank you, sir. Mr. Mccain before i recognize the senator, id like to you like you to affirm that the finest shipyard on earth is the port mouth Naval Shipyard, is that correct . Thank you. [laughter] thank you chairman. I appreciate you confirming what we all know. And certainly what senator king agrees with me about, that theport smith Naval Shipyard is the finest Naval Shipyard on earth. [laughter] ms. Ayotte we have a Great Partnership between maine and New Hampshire on this shipyard. Actually know that you have a history with the shipyard. Certainly have been there before. Mr. Richardson yes, madam chairman, i sure do. Thats yes, maam, i sure do. Thats where my wife and i met. We dated all over there. [laughter] ms. Ayotte we will welcome you back to the senator ayotte i thank you for your service to the country and take on this important leadership during these challenging times. And yesterday before the committee on readiness senator mccain and i hosted a hearing that was focused on best practices at our nations public and private shipyards. I believe my staff provided that testimony to you. And one of the things that came out that is happening at the portsmouth naval