Transcripts For CSPAN Key Capitol Hill Hearings 20240622

Cuba a position that the president also supports. I want to read from you a piece from the miami herald, and get your reaction from it. They write that they have yet to see any significant action from the castro regime that would enhance the Civil Liberties of the cuban people. Do you disagree with that statement . Mr. Earnest what we have seen, john, are some steps like human government has taken, both in terms of releasing some clinical prisoners, and giving the cuban population greater access to information. They are steps that the government previously resisted. I think that is an occasion of some forward progress. I think the other thing i would acknowledge is that our expectations is that the kind of policy changes that the president initiated just seven or eight months ago is strongly in the best interest of the United States and cuban people in the longterm. What we saw is the previous policy that was in place for more than 50 years did not yield any progress that anyone could point to, in terms of changing the government posture in the direction of respecting, it even protecting, the basic human rights of the cuban people. That is what prompted the president s policy decision to begin to normalize relations with cuba, and even established diplomatic relations with cuba. We did not see progress for more than 50 years, and when you are trying something for 50 years and it doesnt work, it is time to try Something Different. What we have tried to do differently has resulted in at least what can be described as some preliminary change and positive indications about the future. One other data point that i would point to is that available data about the preferences of the cuban people indicate that more than 90 of them support the policy changes that the president initiated. Even if they are skeptics here in the United States the president who has the National Security interest of the United States at heart believes this is the best decision for our country, and it is relevant that an overwhelming majority, and near unanimity of the qa people agree this is in the best interest of themselves too. John they also write said daily repudiation of anyone who questions the official line is still in place. Do you disagree with that . Mr. Earnest there is no doubt that there is significant progress that remains to be done. There are a number of additional steps we like to see the cuban government take to do a better job of protecting and respecting the basic human rights of the cuban people, including those in cuba who may have political differences with the government. There is no design that there is additional progress that is needed. We believe that progress is more likely, it we can be more effective in pressing for that progress by more deeply engaging with the country, and reestablishing diplomatic ties. Kevin . Kevin i want to follow up on the question about the planned parenthood video. You mentioned grossly misleading partisan, even saying that have been impartial observers who have raise questions. Who are these impartial observers to whom you refer. Can you understand why there are so Many Americans who believe their voices should also be heard here at the white house . Whether they be democrats republicans who believe that what is revealed in the video will have consequences . Mr. Earnest the New York Times has referred to this as a campaign of deception. Kevin seriously, you cant say the times is an partial visavis all things planned parenthood. Ive never seen them criticize planned parenthood, and you are saying they are impartial. Mr. Earnest i will refrain from talking about personality about any news agency in this room. Particularly about this question. Kevin do you believe the law is being applied equitably, especially when you consider the David Petraeus case. In the case of the clinton circumstance, the server still has not been picked up by anyone a lawenforcement. You think that is in a google equitable use of the law . Mr. Earnest i would not judge the use of a lot by the department of justice. You should direct questions to them. Kevin if i could direct my question to the emails themselves, is the white house confident that the secretary of state, the then secretary of state clinton, was right to predetermined that which was classified what does the white house believe that she should have done Something Different and allow someone else to determine what was classified on her server . Mr. Earnest the requirement for every official serving in the Obama Administration is to ensure that they turn over those official emails to Agency Officials so that they can be properly maintained, archives, and use in responding to requests for information from the general public or congress. That is what secretary clinton has done, and those are request that thi the state department fulfilling. I want to ask about sandra bland. I would not say the case has gone cold, but there has been less news. Mr. Earnest i understand that there was a commission created at the state level to look of the conduct of the state level Law Enforcement agency there. I know there are some state legislators that are actively involved in the discussions. I believe there was a hearing yesterday on this matter. The Department Justice continues to monitor the situation, both the review at the local level, but also the efforts that are underway at the state level. Carol . Carol are there any deal wednesday speech . Will there be anything new in the speech . Meeting, you have talked about this a lot, he has talked about this a lot. People are typically on vacation. Mr. Earnest we will have some more details on a number of those questions next week. I can tell you the president is what forward to the opportunity to make a strong case about our broader National Security interest and how preventing iran from obtaining a Nuclear Weapon through diplomacy advances the interest of our allies. I think the other thing i alluded to in the Opening Statement is that this is also the venue in which president kennedy himself delivered a speech, i believe about 52 years ago, at American University where he talked to his effort to use diplomacy to make a nuclear war left likely. In this case it was a war between United States and the soviet union. Trying to advance our interests through diplomacy, even when the threat of Nuclear Weapons is involved, is something that has served our country well in the past. The president believes it will serve our country well in the future, particularly when it comes to confronting iran. Fred . Fred can you follow up on the New York Times Editorial Board piece . Mr. Earnest is there a question . Fred are you putting that in the context of an impartial observation because it is an editorial . Mr. Earnest i am. Im not saying they dont have an opinion, but that they are individuals who can look at the facts and can render an opinion. If you want to raise questions about the credibility of factche ck. Org, ironically, you can as well. The point i am making is that i have not seen the video. For those who have, they have raised concerns about the content. Ultimately, what the president believes is that or, our position on this is that if the department of justice inquiry is required, that is a decision they will make. For questions about that, i would refer to the department of justice. Fred couldnt one argue that the funding of planned parenthood is ideological . In terms of receiving federal tax dollars. Mr. Earnest fred, i think it is relevant to point out a couple of things. Planned parenthood does provide important Preventative Care and services to men, women, and children across the country. The other thing that is true, and is also flies to planned parenthood, and sometimes i think it gets lost in the debate is that no federal funds are permitted to cover abortions or administer plans that administer abortions unless in cases of rape incensed, or when the mother is in danger. That is the case since the 1980s. Fred is there any reason to believe the president will watch the video . Mr. Earnest not that i am aware of. Chris . Chris [indiscernible] do you condemn the action . Mr. Earnest absolutely. This is a terrible act of violence. One that the United States strongly condemns. Scott . Scott what is the White House Position mr. Earnest if she wants an opinion on this policy matter, she can do so in private. Scott we want an opinion. Mr. Earnest this is a policy decision that ultimately will be determined by the secretary of commerce at the department of commerce. I dont want to leave you with the impression that the white house would be left out of the loop, but if any communication is necessary, that would take place in private. Scott gasoline prices tend to impact prices internationally without being a relevant thing to consider in making that policy choice . Mr. Earnest ultimately, that is up to the department of commerce to figure out. Sarah . Sarah it was reported that both the times and several other news organizations were told that it was criminal, that later emerged to not be the case. Is the president concerned whether Accurate Information or not, the Justice Department is leaking information about a potential successor . Mr. Earnest i think i have gotten in trouble when i have opined on relying on information from on unreliable news sources. I want to refrain from relying on that again. I would let you all decide on that. The department of justice, i think, has gone to some lengths to try and help you understand what is going on in this situation. That is made more difficult because the report not only relied on Anonymous Sources in the Department Justice, but elsewhere who one could logically conclude, maybe even and partially conclude, might have an ax to grind in this particular matter. Ultimately, it is news organizations themselves to have to account for their own reporting. It will have to account also for relying on what turned out to be a questionable, if not misleading Anonymous Sources for a really important story. Ultimately, that will be something for news editors and media reporters to turn through. I will let them to do that on their own. Sarah is the awkward though has the president said anything to attorney general lynch, or at the Justice Department about dealing with things concerning secretary clinton . Mr. Earnest no. Im not aware of those conversations. The Department Justice, like the Obama Administration, goes to Great Lengths to help you understand what is going on inside the administration, and why it is happening. In this case, the Department Justice worked hard to let the news media and American Public know what was happening, and thats obligated by the fact that the original report was wrong. That did not prevent the Department Justice from trying to work to help you understand exactly what the facts were. Jared . Jared in a Conference Call last night, the president cautioned supporters to not make the same mistake as with iraq. How does the administration of point this paradox that the more that is known as objectively the less is trusted about the veracity of those reports. That is a paradox that investigators fell into with iraq. Mr. Earnest i think i see a little bit differently. As it relates to this deal, i think the more people understand the agreement and the commitments, and the nature of the most Intrusive Inspections the more likely they are to support the agreement. They will understand that this will shut down every pathway that iran has to a Nuclear Weapon, and it would give us significant confidence that we had good insight into Irans Nuclear program, and whether or not they are following the terms of the agreement that they committed to. Andrew . Andrew or a little annoyed with you. Im not sure if you heard something about this . [indiscernible] mr. Earnest it was. Andrew im wondering if you want to back those remarks. Mr. Earnest i certainly still stand by those remarks. I stand by those remarks. Andrew just for clarification on the confidential protocol between iran and the iaea, who is aware . Mr. Earnest our negotiators. It is the basis of that briefing that we have made a commitment to sharing, in the classified setting, that information with members of the congress. My understanding is that Wendy Sherman is the individual who briefed house members in a classified setting earlier this week, and she has made an offer to brief members of the u. S. Senate in a classified setting. At least me to believe that she is the one who was briefed by the iaea on the contents of the agreement, but you should ask the state department directly. Andrew obviously you cant speak about confidential protocol, but can you envision a situation where the iaea approaches [indiscernible] mr. Earnest my understanding is that the iaea has indicated they will have access to all the information they need to write the report. I mentioned yesterday some irony of some republicans in the United States senate who say they are not scientists and therefore cannot form an opinion about the reality of climate change, yet, all of a sudden they have the expertise of a Nuclear Physicist and can effectively determine what Server Access and information the iaea needs to write the report. I think it is that is why we dont put a lot of that is why we dont find those are takes from republicans in congress to be particularly credible. The last one, and then the week ahead. Do you think members of congress will go on a fiveweek vacation . What will the white house be doing to reach out or make themselves available to talk about Unfinished Business . Will you Call Congress members back in the district or do any lobbying . Mr. Earnest i may have been settled with the previous question, so i will be a more direct. The white house has put forward a budget. I believe is february 1 it was february 1. If it was sitting here, it would be as big as a phone book. There is detailed information and an apple proposal that the white house has put forward on how we think the budget should be funded. If congress decides they dont want to do work and want to pass our budget, we would certainly welcome that. My position is that they would want to wait in. The good news is the Founding Fathers have given that the responsibility of maintaining the powers of the purse, so ultimately it will be congresss responsibility to pass the budget. That is why you have heard me say repeating the repeatedly that it is republicans responsibility and congress to sit down with democrats in congress and find some Common Ground and keep the government open, and find it at appropriate levels in the best interest of our economy and National Security. The white house will certainly be available to facilitate those conversations, offer advice, and weigh in with our opinion if it is requested. The responsibility of the present is put forth his own budget proposal, something we did almost exactly six month ago. It is the responsibility of the congressional leadership to pass a budget and put it on the president s desk before the end of the fiscal year. I will remind you one last time, john boehner and Mitch Mcconnell in the aftermath of the election, the day after the midterm election, when it was confirmed that republicans would be in charge of congress they penned an oped saying that they would get Congress Moving again. What we know about the progress is it will require the support of at least some democrats in the senate for the budget to pass. That is why we have been urging for months for republicans in the house and senate to sit down with democrats in the house and senate to find this bipartisan agreement. That has been something that republicans have resisted. It certainly runs contrary to the promise that they made to get Congress Moving again. It will come back from their recess in september and will be worried about making all of this work done in three weeks. We are worried about it too, and that is why they should start now. The work they need to do now is there across the table from congressional democrats, and find some Common Ground. The Silver Lining of all of this is this is exactly how they work through problems in the past. In 2013, democrats and republicans set down across from each other and hammered out a solution. It was a solution that funded at appropriate levels, above the sequester, both for National Security and the economy. There is a template that we should follow, that has been successful in the past. Republicans, thus far, have resisted. That has been the source of the frustration that i express and the president expressed in the oval office. Efforts to reject the iran deal i imagine that will be to begin the recess, as we approach the deadline. What will the white house be doing to counter that huge influx of money . Mr. Earnest i think the president convened the call yesterday with americans across the country. Because of his believe in the power of grassroots organizing. Are people all across the country who have been following this issue, and are concerned about making sure that we dont engage in a rush to war, that we have so much more focused on using other elements of american authority, including diplomacy to resolve questions that are relevant to our National Security. In this case, the president has done exactly that. He has used his influence around the globe to build an international coalition. It put in place sanctions that we coordinated with the rest of the global community, including the the largest economies around the world, put intense pressure on iran, compel them to come to the negotiating table, and they voluntarily agreed to shut down every pathway they have to t a Nuclear Weapon. To essentially render harmless a heavy water reactor at iraq, and agreed to the most intrusive set of inspections that has ever existed on a countrys Nuclear Program. By following through on this diplomatic agreement implementing, and a force that, it is not only the best way to prevent iran from obtaining Nuclear Weapons, failing to do so only makes one in the middle east more likely. That is why the president has advocated so strongly for this agreement. That is why he will continue to do that in the days and weeks ahead, and that is what we will encourage americans all across the country to do. To talk to their friends and neighbors, their coworkers the people at church, to explain to them exactly what is included in this agreement, and why we believe it is something that should be supported not only by people around the country, but by every member of congress. With that, why dont we look at the week ahead, and you can begin your weekend. On monday, the president will address the second class of 500 mandela fo fellows at the African Leaders president ial summit. The initiative, luncheon 2010, the United States to leaders in Subsaharan Africa and provides them with opportunities they need to make a meaningful impact in their communities. The threeday summit will bring together 500 of subsaharan leaders to meet with leaders. The event will be a capstone to the president s trip to africa where he confirmed his commitment to youth across the continent. On tuesday, the president will host ban kimoon in the oval office. In the afternoon, the president will offer marks at the white house demo day. We will have more details on that over the week. What is that . Mr. Earnest demo day. I think it is short for demonstration. White house demolition day is a different event, but an event that i am similarly looking forward to. On wednesday, the president will deliver a speech on the Nuclear Deal Reached with iran at American University here in washington. On thursday and friday, the president will be here at the white house, but we will have more details on his schedule earlier next week. Daytime . Nighttime . Mr. Earnest we are working on details, but i anticipate the daytime. Have a great weekend. President obama today signed a shortterm threemonth highway extension highway funding extension, but said Congress Needs to pass a longterm funding bill for our nations urges and mass transit. President obama ive about to sign a three month extension of a highway funding. That is a good thing because if this was in front of me and ready for signature, we would have rogers all across the country close. On the other hand, we have now made a habit where instead of fiveyear funding plans for transportation, instead of longterm approaches where we can actually strategize on the most important project, how they are getting paid for providing information to mayors and leaders in localities about how they will approach roads bridges, airports, ports instead, we operate hand to mouth, three months at a time which freezes a lot of construction, makes people uncertain, leads to businesses not willing to hire because they dont have any longterm certainty. It is a bad way for the u. S. Government to do business. I want to make sure that before i sign this, Congress Gets a clear message. That is we should not be leaving all the business of the u. S. Government to the last minute. Think about the things that are still undone as congress is about to go on vacation. They not reauthorize the Export Import Bank which creates tens of thousands of jobs all across the country. Good paying jobs, because it increases our exports. When i was in ethiopia on our trip we sold a score of airplanes to Ethiopian Airlines from boeing. Small businesses benefit from us being able to facilitate the cell of u. S. Products to other countries. I had a group of Small Business people here with employees ranging from 12 employees to 500 employees saying that their Business Sales were starting to be affected by congressional in action on what has traditionally , 481 years, been by partisan has been bipartisan support for the Export Import Bank. Congress has had all year to do a budget, and yet, congress is leaving on vacation without the budget done. When they get back, they will have about two weeks in order to do the peoples business. This is going to be critical. Richard shelby is our guest on newsmakers this weekend. The alabama republican answers questions about the Export Import Bank, Monetary Policy under janet yellen, and legislation in congress to deny funding to socalled sanctuary cities where local police do not report Illegal Immigrants to authorities. The republican president ial candidates are in New Hampshire monday at 7 00 eastern. Cspans road to the white house is providing live coverage of the twohour forum. The New Hampshire union leader along with media organizations are sponsoring this form. Following the life form, you can provide your light input by calling in or adding your comments on facebook or twitter. Road to the white house 2016 on cspan, cspan radio and cspan. Org. The Center Forward the Senate Foreign Relations Committee heard from a former member of the Security Council and a former state Department Official who negotiated with iran from 20132 dozen 14. Tennessee senator bob corker chair of the Senate Foreign Relations Committee. Senator corker the Senate Foreign Relations Committee will return to order. Todays here is the third in a series of hearings held to on the agreement with iran. Todays hearing gives us an opportunity to look closely at one of the key aspects of the agreement, sanctions relief. Next week we will have an opportunity to hear from exports on Nuclear Aspects of the deal. Today we had to wellrespected experts on sanctions. We thank you for being here. It is worth noting that real questions about sanctions relief remain. I ran that of iran will and leaders say they would treat use of the snapback as grounds to walk of the agreement. Again, i think you know that i ran sent a letter refuting the ability to use snapback. That same letter outlines that the extension of current sanctions would be in violation of recently, they have been backing off a little bit. I dont know exactly where that stands. Those statements the agreement itself, and the lack of clarity from our administration have left senators with unresolved questions. Those include questions about the efficacy of u. S. Secondary sanctions, if congress refuses the deal, and are also concerns about the u. S. Being able to reinstate sanctions. Im very honestly surprised to say, but there are remaining questions about whether or not extending the sanctions would constitute a violation of agreement, as i mentioned earlier. I see no reason why not simply existing simply extending existing authority would be an violation. I hope our witnesses will address these questions, as well as expand on the current climate of doing business in iran. Both of you have worked for companies that have been affected by these companies. It is important to note that these sanctions that this congress put in place are responsible for bringing iran to the negotiating table. In exchange for its suspension of virtually all of our economic leverage, iran will, over time get to develop a legitimate Nuclear Program. While this agreement is not intended to address terrorism many of us believe it will impede our ability to i would appreciate your perspective on how this agreement could affect our ability to use ancient in response to terrorism. Secretary kerry said last week we are free to eye. Additional sanctions, as they are not a phony excuse for taking the whole pot and putt them back. I worried that iran will not agree with our definition of phony and administration could inadvertently hamper iranian terrorism. In september, we will have the opportunity to approve or disapprove of the agreement. At its core, that choice is whether or not this mans congress to lift those sanctions. Thank you very much. I turned to our distinguished Ranking Member for his comments and look forward to a very good hearing. Senator cardin thank you for a radio this hearing. I think both of our witnesses to experts in this area, for sharing their thoughts and engaging in this discussion so we can better understand the impact of the jp co as it relates to sanctions. Yesterday i thought we had a very helpful hearing that that was the overall effects of the agreement. I think we spent a good deal of time looking at the alternatives. If congress effectively rejects what would be the consequences . In that discussion, we talked about sanctions. Im sure we will get back to the same and today. Today, i think we want to focus on the sanction impact of the agreement. Ultimately the members of this committee, the members of the United States senate, and congress will make a decision whether the benefits of the agreement outweigh the risk, or whether the risk out way the benefits. That is our test. The section the sanctions have a major impact on our valuation of those issues. The first deal with an issue that i have raised since day one, that the chairman raised again in his opening comments, and i hope we will get your views on this. That is it has been stated very clearly by this administration that we are not taking all sanctions as it relates to terrorism, human rights, and the missile program. It has also been stated, and i asked the direct question last thursday if we have credible information that iran has violated our policy on terrorism, can we reimpose sanctions on the specific organizations that received relief under the jc p o a, or the economic sectors that were affected, such as the crude oil sales by iran . Could we reimpose those sanctions . Secretary lu said very the said fairly directly yes it we could demonstrate the fact that it is related to terrorism. I ask the same question two representatives this week because we know ultimately it will require five of eight votes of the commission that oversights this. The response was similar to what secretary lu said. Im just relate what they said to me. I am tempered by the language of the jcp or a. Im more interested in what is in that than what the iranians say about that, or for that matter, our own administrations words. We are bound by the language in the jc po a if we go forward with it. It says, in section 29, the eu and its members will refrain from any policy specifically intended to directly and i firs adversely affect trade relations with iran. In paragraph 30 it says it will not restrict measures or entities for engaging in activities covered by the lifting of sanctions. Then, there are some qualifications. What i would hope we will get into discussion today would we be out of compliance if we reimpose sanctions for nonnuclear activities of entities, or Economic Activities that were relieved from sanctions under the jcp oa. Secondly what type of pressure with their be on the United States if we wanted to go forward, would there be International Pressure for us to not be as aggressive as perhaps the congress or the administration wants to be . We were told yesterday by both of our witnesses that we should be very aggressive and hold the iran to high standards if this agreement goes forward. What type of pressure would there be on us effectively being able to impose sanctions to prevent iran from nonnuclear nefarious activities . That is one set of questions i hope we can get into today. The second is how effective would snap back sanctions be . If this was lifted and if any of the negotiate partners felt there was a material breach and takes it to the point of snapping back all, or part, of the sanctions that were relieved under the u. N. , the eu, and or the United States, how effective, and how quickly can we reimpose sanctions that will require iran to rethink its behavior . I would be interested in your views in that regard. Then, the last point i would like to have you respond to. That is if we do not approve the agreement, if we reject it, and the United States sanctions remain in place, how effective were those will those engines be it we do not have the support of the International Community to cooperate with us and a sanction regime . I think these are important questions for the members of congress to understand, and i look forward to our discussion today. Senator corker i want to say when i met with our western partners, they were very explicit in agreeing with iran. They did get back with us since that time, since there may have been some reach out from the administration. They moderated their views much and line with what you may be saying. I will also say, the Ranking Member and i asked for a testimony next week so we can get an understanding of the iaea issue that we have been concerned about, and whether we do that in a classified setting or somewhere else, and we have been turned down. I do want to make you more aware of that. Obviously, there are concerns about the agreement that we have not seen. What we do know about it, we all know is, at best very questionable. Im sorry to say that we will not have the benefit of their testimony to help clear up some of the concerns that we have. With that, we have two outstanding Witnesses Today that will be very helpful. Our first witness is audible honorable juan zarate. He previously served as Deputy Assistant to the president and deputy National Security at advisor for combating terrorism. He was the first ever assistant treasurer of i assistant secretary of the treasury. Our second witness is richard nephew from the center of Global Energy policy. Previously he served as Principal Deputy coordinator for the asian policy at the department of state and the lead sanctions expert for the u. S. Team negotiating with iran. He has also served as director for iran on the National Security staff. Thank you both for being here. We are excited about you being here. If you would, sort of abbreviate your comments. You will have lots of questions. Thank you, both. You can start in whatever order you wish. Mr. Zarate thank you for the kind introduction. Ranking members of this distinguished committee, thank you for this privilege opportunity to speak with you about the implications. Ive audit and privilege. Thank you very much. Im also grateful to be here next to mr. Richard nephew. I will pass all the difficult questions to him. I do want to thank him for his service to the government and on the issue of sanctions. I take this responsibility before you today very seriously given the gravity of the implications of this agreement. I appreciate the question that you have already closed which are nuanced and important. I come to this issue with views or in from relative experience dealing with iran, both from the Treasury Department and the National Security council. I know that all involved have been working incredibly hard towards a peaceful solution towards through strategies of coercion and a policy. Indeed, the campaign will methodically over the course of a decade helped bring iran to the table. In the words of president rouhani, sanctions threatened to drive iran back into the stone age. These have also been designed to isolate rogue behavior, human rights abuses, and other dangers activity, as well as protect the integrity of the u. S. And International Financial stems. Financial systems. I will focus my testimony on the stations relief framework. Mr. Chairman, i will tell you that the framework is flawed. The relief is to frontloaded. It does not account for the increased risks stemming from commercial and financial activity. And, in broadly constrains the u. S. Government ability to use affected power against nonnuclear security risks. There are structural problems that undermined the u. S. s ability. The snapback behavior proves problematic. It will only be applied if the most egregious violations can be proved openly and convincingly to all parties. If new contracts are signed, as suggested in some text, the snapback loses its realworld affect to ensure compliance. Instead, it creates a gold rush incentive for actors to get into the market quickly. The iranians maintain a veto on nuclear sanctions, and can simply walk away from the agreement. With the policies, u. S. Sanctions, or related actions to which iran rejects, would be subject to review by the other parties, including iran, china russia, creating a whole new paradigm for how the u. S. Reviews and issues its sanctions. The jcpoa does not address the underlying conduct. This creates real risks, and damages the ability to use the very same tools against iranian individuals and entities in the future. This proves highly problematic with a listing of iranian banks, for example, the central think of iran, and transport companies , which have been used not just the facilitate the Nuclear Program but for proliferation and the sanctions. Though nonnuclear sanctions were supposedly off the table, the spirit and letter of the agreement made new to may neuter the ability for the u. S. To use one of its most powerful tools. Mr. Chairman, from the start of negotiations, as you know, what the iranians wanted most was the ability to do business again unfettered and plug back into the Global Financial system. With commitment to reintegration of the economy on the back of a deal, the administration effectively put all sanctions on the table. To understand this, one needs to appreciate why these financial and commercial measures were so effective in the first instance. These were not the sanctions of all. The financial construction campaign, which began against iran in 2005, has proven effective over the last decade not because iran was medically sealed with blockades or embargoes, but because it was unplugged from the elements of the Global Financial and political order. The regime has needed access to banking, shipping, insurance new technologies. That is what they lost over the past decade. That appears to be what they have gained and guaranteed in the steel this deal. An addition, the will have to amplify its use of financial members aggressively against key elements of the iranian economy to deal with increased risks based not just on this deal but Iranian Foreign policy. It is not at all clear to me that this is understood by all parties or part of our strategy. The risks from iran are real and will increase. Iran will get a massive infusion of capital with sanctions relief. No doubt, some of this will go to support terrorist groups. With an allowance for the Nuclear Program, the deal will likely increase, not decrease, the risk of proliferation. The regime will use its control of the economy to not only further enbridge itself, but suppressed opposition. Concerns over Human Rights Violations will grow. The risk of sanctions invasion and Money Laundering will increase over time. The United States will need to use the same types of Financial Strategies and campaigns to isolate rogue activity which will necessarily affect the trade, commerce, and economy of iran. I think there are three principles for congress to demand related to sanctions. Congress, i think, should ensure that there is clarity in the jcpoa. It should ensure that the United States maintain as much financial and economic power and leverage of possible. Congress should as well mitigate the risk and tended to the regime in tehran. These principles could help form the basis of a new strategy to address the real and dangerous risks stemming from iran. U. S. Should adopt a financial Conscription Campaign that engage in terrorist financing and support to militias. This could include the use of secondary sanctions. There should be a recommitment to the elements of a nonproliferation regime, and a dedicated strategy focused on the proliferation risk dealing with any deal of iran. This would deal with tighter control and financial restrictions tied to actors, including iranian banks. This could be amplified with the program, perhaps led by the European Union to create a Monitoring System through a swift, akin to what we build in the terrorist Financing Program to track suspect banking transactions. The Global Human Rights accountability at could be used extensively to target holdings of the Iranian Regime and those involved in gross Human Rights Violations on his behalf. I know this is of deep concern and is an issue for you. These are just some of the measures that could be taken to confront the risk from iran. Of course, undertaken these types of steps will likely be seen from diplomats, for what ever country, as interfering with the jcpoa or any deal. Instead, they should be seen as necessary states to temporary market enthusiasm for doing business with a dangerous regime, and preserve a key element of American Power and beverage against iran and other rogues. When the iranians came to the table after president rouhanis election, one diplomat in iran told me in confidence, you have one before using economic sanctions and financial pressure, but he added, can you win these. I still hope we can win peace but it will require us leveraging the same powers and authorities that helped ring the regime to the table. We must ensure that the jcpoa has not inadvertently and powered the regime and tehran while taking one of americas most potent powers off the table. Mr. Nephew thank you. It is a privilege and an honor to speak to you about a subject to which i have dedicated my professional life, the iranian Nuclear Program and sanctions. And with jan, who pioneers a lot of the work that we will be discussing today. I would like to begin by extending my gratitude to the negotiating team. Regardless of how one sees the deal in my opinion, the deal that they negotiated is a very good one, especially when compared to the realistic consequences. It satisfies the two most important objectives. First, lengthening the time the iran would need to produce enough material for one Nuclear Weapon. Second, ensuring that any such attempt be quickly detected. Some may argue that some key provisions renders the deal unacceptable. I disagree that these are worth killing the deal. One argument presupposes that there is no point in time in which iran can be trusted with the Nuclear Program, requiring regime chains change. Having been in that room, i believe the link is the longest of achievable. In any event after key restrictions lapse, the United States is free to declare that these program is of concern. Getting International Support will require diplomacy, but it is an option for future president. Some have argued that it provides iran was far too much relief and the practical effect of trading with iran will renders that back and effective. It is a blunt reality that iran would not accept sanctions and monitoring. The regime did the right thing for maximum early nuclear steps. Iran is now under every incentive to take all the steps as soon as the iaea will verify. Of course it does not equate to unilateral sanctions. United states retained a number of sections authorities that will continue to extract consequences for iranian violations of human rights and damage irans ability to engage in terrorism financing. I believe that fears are overblown, and according to the l. A. Times so does the cia. The United States will still be able to pressure banks and companies to not do business with the Iranian Military forces. Even if the eu and u. N. Remove some of these from their list, the bad actors and iran generally will find there is need find this is both do to the direct sanctions, and a bipartisan effort that begun under george bush and continued under barack obama. The United States will retain its ability to impose sanctions on those trading in conventional arms it as well as ballistic missiles. The nine can also trigger snack backs snap tax existing sanctions, even just one jcpoa participant can trigger a review and a vote on a resolution to continue with relief. The u. S. Veto power in the u. N. Security Council Gives us the ultimate free hand to reimpose these sanctions. Snapback can be less draconian to deal with. As secretary lew testified. This could come with political costs. Many skeptics point to these costs as likely meaning that no such snapback would be triggered. But International Reaction to u. S. Actions will always depend on the context. If the rationale for doing so is credible, chances for success will always be higher. Iran had much to lose if snapback were to be triggered. Irans leader would carefully evaluate the cost and benefits of any course of action that threatens the integrity of the nuclear deal. These cost also grow as irans economy grows. Some may see this as resilience; i see it as iran having more to lose. A critic once referred to this deal as a marshal plan for iran. While the analogy is far from perfect, it is interesting. The marshal plan was intended in part to prevent the spread of radicalism in europe after the Second World War in recognition of the fact that harsh sanctions had on german politics in the 1920s and 1930s, and the liberalizing benefits of trade and growth. The soviets refused to participate, fearing the effect economic openness would have on their population. As the president outlined one potential benefit of the deal is the possible transformation of Iranian Society over time, government policy. This may not happen. But at a minimum, irans leaders will have to wrestle with the benefits of economic openness and risk of losing control as a result of this deal. As well as the threat of returning sanctions that may break its terms. This will be a challenge for them and possibly an existential one. To conclude, though it is not a perfect deal, i believe the Nuclear Deal Reached by the United States the p5 1 partners and identify rain meets our needs, preserves our option, and possibly lays a path to a better future. I urge the congress to make the choice and support it. Thank you. Senator corker thank you both. We can see from these two witnesses why this is a difficult decision for people to make. We thank you so much. So that i can reserve my time for various interjects along the way and not nominate in any way, ill turn to our Ranking Member for questions and move on down the line. Thank you. Senator cardin let me also join the chairman in thanking you both for your testimony here today. Let me give you a hypothetical. Its a year from now. And iran complies with all of the preliminaries required and they have received the relief a few months earlier than that. From both the United States, the waivers being exercised by the administration on sanctions, as well as the u. N. And europe. We get clear evidence that iran has used crude oil sales to directly finance terrorist activities in lebanon and yemen. They have done it through the central bank of iran. We have clear evidence of that. The United States Congress Passes the statute that says that well impose sanctions against iran for their support of terrorism against the central bank of iran and crude oil sales. A, are we in compliance with the jcpoa . And secondly, what pressure would there be on the administration to implement such a statute if congress were to pass it . Any thoughts . Chairman zarate its an astute hypothetical because it points out the difficulty of disentangling the regime. With respect to a country and regime that controls key elements of the economy. And when they are still engaged in some of the underlying activity that is subject to at a minimum u. S. Sanctions. So it certainly is within the congress right and i would argue certainly should be a focus of this administration to go after the financial conduits that the Iranian Regime or any other state sponsor uses to support destabilizing activity or support terrorist groups around the world. So it would be wholly justified. To Richards Point i think in the context of any action taken in the could he number bra of the jcpoa context, it would depend on what information and evidence we have. The problem i have with the jcpoa framework as i laid out in both my submitted testimony and orally this morning, is that we have now established ourselves and placed ourselves into a framework where we ourselves will have to submit or potentially have to answer to other parties why we are justifying the use of u. S. National power with respect to these other types of challenges and risks. So under the agreement the iranians, for example, could object, could threaten to walk away. And perhaps even the view of some legitimately say you are simply trying to reimpose sanctions that were just lifted under another name. Of course, the administration is saying and we would argue, all of us, that these are different sanctions and they should be imposed and they can be imposed, but there would be a question in the context of the jcpoa and probably a process trigger if it were significant enough action that would call into question whether or not we could take the action. Ultimately it may prevail. But it would put us into a completely new venue and into a new process to have to explain ourselves, demonstrate evidence to parties like the chinese and russians, and ultimately justify our action in the contours of the jcpoa. I just dont think thats an acceptable outcome. Mr. Nephew i would add two important caveats or conditions to it. First is we always had to justify and explain our secondary saxes. You have to bear in mind the sanctions you are referring to govern the trade activity of foreigners with foreigners. To get them to do things we have to explain why and explain in what context its appropriate. I think that going after the hypothetical that you brought up would be complicated because the chinese, for instance, or other importers of iranian oil, we have known for a long time that iran supports these groups thats a given. It was a given when we were what change made you have to do this . I think this points to the second problem. The hypothetical you brought up will happen because oil is a primary revenue stream for iran and its a primary way which they support groups we believe are terrorists and engage as terrorists. I think the bigger question to my mind is, is that the most effective way of curtailing iranian terrorism . In my view, no. We have had very crushing Oil Sanctions on iran for the last three years and they still supported assad, and hezbollah. Thats because the scope and scale of that support doesnt have to be oil revenue worthy. It can be much smaller and something the iranians believe in strongly. I would argue that rather than go for an oil embargotype sanction we have to think of a better policy response to deal with the terrorist issue that we have identified. Senator cardin do we have the flexibility to do that . Do we have you may very well be right. We may choose other ways. The reason i use that two examples because they were lifted by the sanctions. Absolutely. Here i guess is the question. Yesterday we heard from both witness that is u. S. Should be pretty aggressive in making sure iran complies with the letter of everything it said in this agreement and be prepared to start taking action. Irans past activities show they test us. They try to push the envelope as far as they can. So will interpret some of the jcpoa differently than we do and do things we think are wrong. How aggressive should we be . Can we get our partners to agree with us on less than major violations . Will we be able to do that . Mr. Nephew it depends on the context. If we go with a good case and able to justify why we are doing it, then we can be very effective as we were from 2011 to 2013 with respect to the oil embargo. On the other hand, if we are seen as acting capriciously and if the response is to say we are walking away from the nuclear deal, that will be a challenge. Ultimately we need to be aggressive, but we also need to be mindful that the nuclear deal, again, in my view, is something thats worth preserving. I dont think that precludes our use as sanction tools in an aggressive way. Just like we have already done we are going to have to be careful about the unintended consequences of those acts. Senator cardin if we have to snap back, if there is a substantial violation that we have to take the International Community and maybe exercise our veto, how quickly can they bite Strong Enough to effect iranian behavior . Mr. Nephew i would say that if we are able to get snap back and in the context that is conducive to people imposing swift sanctions, we can start biting the iranian economy quickly. The oil embargo we were talking about started having dramatic economic effects on iran within two or three months of being imposed starting in january of 2012. So again i think with the right context, with cooperation, we can start to really have an impact on the iranian economy. Senator cardin you were inconsistent on oil. You said one time that would not be effective from financial terrorism if we impose the sanction. Now youre saying that could bite quickly. Mr. Nephew i thinkim not saying it wouldnt bite the economy. My point on terrorism, biting the economy does not necessarily preclude iranian support for terrorism. So you can have damaging impact on the iranian economy, but will that translate into stopping iranian terrorism . If my view the history suggests not. Chairman zarate if i could address strategy and the use of these tools. Our tool kit is not expansive. We have limited tools to address whether its terrorism, human rights abuses, etc. The use of financial power and the power to exclude from the global system is one of our principal if not most effective tools. And so i take Richards Point which is an important one. We have to have a comprehensive strategy. We have to use all tools of national power. No doubt. But the reality is at the end of the day these tools are the ones that prove to be most effective. And as i said in my testimony, i actually think the risks to the International Financial system go up with this deal or any other deal with respect to iranian activity. So we are going to have to, if we are honest about whats happening in the International Financial commercial order, we are going to have to crack down on front companies, irgc funding flows, contracts run by the ministry of intelligence. Thats the nature of the iranian economy and the way they do business and the way they have reached precisely what we have cut off. You have asked some astute sets of questions. At the heart of this is have we given up too much of our power to deal with all these other risks that iran presents that will actually go up over time . Senator cardin thank you. Senator corker before i move to senator flake, just because you have different view, wonder if we could get consensus. It would be fair to say, on the other hand, in nine months when the sanctions most people believe all the sanctions will be gone, and then iran has, in essence, the nuclear snapback, that people will be somewhat reticent to put sanctions in place if iran cheats by inches because of the things that youre saying. Iran does have the ability to say at that moment, well, we are out of the program. Would you agree, i think both of you are shaking your head up and down, that does create a dilemma . Ill take that as a yes. Senator flake. Thank you. Senator flake thank you. I want to thank the chairman and ranking minority member for putting these hearings together. Hearing your testimony today each on one side of this in terms of favor the agreement or not, i think demonstrates that the only thing thats certain is this is no easy call. For those who stand and say that it is, i think they havent examined the agreement or the broader Foreign Policy context in which this is going to be implemented. So i appreciate the testimony and the way you have gone about it. And i appreciate the question from the ranking minority member and i think all of us will have some variance of the same kind of questions because we have asked administration witnesses. We have been assured we havent diminished our tool kit. That we can distinguish between nuclear and nonnuclear sanctions. But when you read the plain text of the agreement, that seems to conflict with the assurances that we have received. And let me just turn to the financial sanctions. I couldnt agree more that thats i have always felt that thats what really finally bit. Because its more difficult with these financial, these secondary sanctions for the russians chinese, or others to help iran evade. Which is easier to do with just crude Oil Sanctions or other petroleum sanctions. But if we find that iran is linked directly to terrorism and we want to punish and go in, when i look at the agreement it seems difficult to do that. On the financial sanctions, if we decide to do so, how effective will that be if our european allies are not with us . I hear conflicting testimony and discussion from others about whether or not we can lead on that and that the our European Partners will eventually have to follow, or if they can go their merry way and we are left with unilateral sanctions which rarely work. Whats your thought on financial sanctions . Can we lead our partners back, do they have to be with us . Whether People Choose to do business with a 17 trillion economy or 1 trillion economy what do you make of that, mr. Zarate . Chairman zarate again another very astute question. I think the financial sanctions have been led by the u. S. Because the u. S. Is the dominant economic and Financial Center ofom the world. The u. S. Dollar is the reserve currency. And we have the moral and strategy situation to be able to effect what others do. Both governments and the private sector. I want to emphasize the last point. I do think we shouldnt undervalue or undercut the power of our u. S. Financial sanctions. In many ways, u. S. Unilateral sanction that is affect the Financial Community in the first instance here, iranian banks are global by definition. There is no unilateral u. S. Financial sanction. What the u. S. Says in terms of how to interact with u. S. Financial institutions and u. S. Markets is a global standard. And in fact is applied as such by the private sector. One of the interesting things here, this goes to a time dimension of this issue. One of the interesting things here is i think there is still opportunity to shape the environment and the risk calculus of the private sector. In many instances the major global banks, nonamerican banks around the world are derisking enormously. They are making decisions not to do business in iran, cuba. Regardless of where sanctions policy is going. Almost in opposite direction. And so what congress says, what the u. S. Does, what the u. S. Treasury may put out in advisories or designations, has an enormous power and capability to shape the market. I dont want to anything i say here to undercut that reality. In the context of this deal, that diminishes over time because the International Sanctions architecture in the u. N. , in the e. U. Directives really does enable countries that may not be quite as enthusiastic about this risk calculus to participate. I would say if we wanted to effect the Global Financial system, if we wanted to isolate iranian banks, based on legitimate concerns that are demonstrable, we can put out in registry, we can put out and show to our allies, that has enormous power and capability to isolate the iranians. Would that be accepted by the iranians . Probably not. Thats why im so concerned about the constraint on our power based on the agreement. Senator flake mr. Nephew . Mr. Nephew i would agree with what juan had to say. The only thing i would add is, again, this concept of the context matters. If we are going after an iranian bank of because of very clear evidence, support payment for terrorism, to go to European Countries to say you need to impose sanctions on this bank is strong. If its capricious, i dont think thats going to have the same kind of impact. That doesnt mean we wont have Financial Companies and Financial Institutions cooperate. This is important point i want to note. It may be we are able to influence banks and Company Behavior even if their governments are not supportive. This is what we did from 2005 until 2010 in europe. But the danger of that is that you start to have european governments or japanese governments or anybody else have laws that say you are not allowed to comply with u. S. Sanctions as what happened in 1996 with the iran sanctions act originally. I think there is still u. S. Unilateral power we can use in the financial sector, but with that power comes the responsibility to wield it effectively and carefully lest we challenge ourselves, the w. T. O. And so on. Senator flake the concern that we have is that we the leverage point actually goes to iran. If we find that they are engaged in nefarious activities, we want to impose sanctions on, and given the multilateral nature of this agreement, and the fact that we would have to submit to the body that we believe that iran has violated Good Behavior and we want to impose sanctions. Given the interlocking nature of these it sanctions, how it affects banks, private companies, and governments, it might be even more difficult to get them to agree to allow us to impose those sanction it is thats what we have to do. If we go it alone, thats a whole different can of worms. My time is done. I appreciate the answers and im sure this will be touched on later. Thank you. Senator corker before going to senator menendez, there was another question senator flake asked in a previous setting i want to use part of my time to follow up on. We sent out a ninepage summary of about 13 documents to help everybody understand quickly what the deal was. Contracts that were entered into, in other words, if you lift sanctions, contracts that you are entered into, the way we read it, those contracts are grand fathered. You can continue to do business under those contracts even if sanctions are put in place after. We had some pushback and obviously we dont want to be accused of sending something out that has fault, so we asked the white house for redlines we never got back. And we started send out something to qualify, i think we did, but candidly as we sat down and talked with the experts that we typically rely upon for these things, they are telling us that, in fact, we were right in the first place. That contracts that are entered into when sanctions are lifted are grand fathered. Could you could you give us some clarification as to whether that is or is not the case, mr. Zarate . Chairman zarate its a great question. I read paragraph 14 of the new u. N. Security Council Resolution to create some sort of a grandfather provision. Now, this is not typical paragraph in these kinds of sanctions regimes. Now, of course, this is related to snapback provision which is not usual in these types of regimes anyway. I read that to open the door for some sort of grand fathering provision. So you could read in a maximum way to say, look, there is no application of the snapback to contracts that are signed between the lifting of the sanctions and the snapback. That creates the potential gold rush effect that i talked about. If you read this to say, look, it has to be contracts that dont have anything to do with prior sanctions, then you say, look, if there is a contract with the irgc or some other element that is now relisted that has to be nullified. Perhaps. But i would say in the interpretation of any of these sanctions whether they are related to iran or north korea there has always been slippage of interpretation, especially when talking to the chinese or russians, about what some of these provisions mean. I would imagine at a minimum there would be a fight diplomatically, over what this provision means and what contracts with chinese banks chinese companies, russian banks, Russian Companies would ultimately mean. I would say, mr. Chairman, it is interesting that the russians are a part of this commission in part because they are under and chafing under sanctions regime led by the u. S. And European Union. So they are going to have every interest to undermine any capability of thwarting commercial relations that affect their economy as well. Senator corker can i get you to reach at least a degree of agreement, would you say at a minimum that its highly unusual that a clause like that would be in an agreement like this when typically its very clear that theres no ambiguity. Its an unusual clause to have in an agreement like this. Go ahead, mr. Nephew. Mr. Nephew i think this is an unusual agreement in a lot of respects. I wouldnt call that particular provision the most unusual. I would disagree with the idea that this immunizes longterm contracts. I think the intent here is basically to assure people if they invest in iran and snapback is triggered, that we would not impose sanctions for the plant that was built or for the the business that was conducted. The intent is to say that business will not be sanctioned, but that doesnt stop us from saying you now have to stop performing the business under the contract. Whats at issue does it nullify or protect contracts, its more the performance of the contract from snapback forward can occur. Senator corker if b. P. Built a billion dollar facility to 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. Special vehicles created to contend with this provision to make sure there could be 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 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 our unwillingness to engage in the necessary sanctions. I look at how hard it has been to get people listed, i look how hard it is, despite congressional legislation on venezuela. I look at how hard it is in russia and the ukraine to pursue additional sanctions to try to get them to deter their actions. I look at how difficult it is as it relates to syria where we still havent gotten all the chemical weapons. So, you know, 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 . Mr. 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. Mr. 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. 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 wenches 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 iranian venture 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 questions. Thank you for your careers. 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 allow it to move 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 ebb enrich. 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 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 system of when i look at this thing, it comes down, do 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 outside of this process. You dont sanction country 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 while we dont want iran to have a nuclear policeman enrichment program, theres nothing that precludes them 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 subjected to these rules. Senator perdue but they didnt violate laws like this either. Mr. Nephew but they face a history in which we attempted to strangle the Nuclear Program 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 . Mr. Nephew my feeling is if we dont agree to this bill theyll start build manager centrifuges. 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 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. And i senator perdue do you believe they have to have enrichment capability in order to have a peaceful Nuclear Program in iran. Mr. Nephew absolutely not. Chariman zarate 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 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 big our intelligence 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 comments about the iaea and their centrality to understanding this, and their roles and capabilities, are very central to our understanding of this agreement. Let me, if i might, gentlemen, just touch on four different questions, i hope in the next sex 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 that a certain proposal involving sanctions was not the best policy response to restrain likely ongoing support for the assad. Whats 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 . 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 objectives 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 circumstance well, may actually invalidate the too many of financial sanctions in the future because people 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 east. 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. Mr. 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 . Mr. Zarate i think so. 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 hard every over time to 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 hoped 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, chinese, russians, other allies on the ground who are going to have vested commercial interests in ensuring this is interpreted the right way. I think 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 go do now than later. 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 theyll say this is marginally relevant and other factors that 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, thins 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 receive manager funding from iran in the future as a result of the sanctions relief. Senator corker thank you, and just for reporting back to New Hampshire, the intel brief willing take place at act 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 this i know that 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 for all of us to participate in trying to get them to change their mind. 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 senator cardin so from the beginning its been our hope to 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 system of 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 system of well continue to press for that but its an independent agency, not under control of the federal of the u. S. Government. 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. 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