Transcripts For CSPAN Key Capitol Hill Hearings 20240622

I like what president obama had to say, because in my book, whatever he does, ever since he became president , to go against him, one time they said a time they agree with them, and then they change their mind and go again tim. Against him. If president obama could find a cure for cancer, they still would disagree with him, so i fully agree with my president. Next on the line. We have done nothing for far too long, and sanctions have only succeeded in crippling this economically, and with all of the difficulties. This is a step in the right direction. How effective it will be is yet to be seen, but something is better than nothing at this point. Thank you, and from raleigh north carolina, your opinion on the deal . Yes it is a bad move. They cannot be trusted. Anybody coming before or after meddling in this country and the whole region, trying to start a new world order and changing the way we live and using this as an excuse as to say, hey, this is for the security of our nation. They are always using that as an excuse, and i do not believe that. It is nothing but trouble. The president speaking at American University today making the case for the Iran Nuclear Deal, and your calls tonight, getting your opinion on what you think of the agreement between the major powers, the United States and other world powers and iran. Hank joins us from new york, the line for independents. We have absolutely no reason to give faith to anything the iranians say. What we tend to get from this, i think they will benefit greatly and we will not have any benefit to us. Except for perhaps political gain for the president and his party. Staying in new york, john joins us come staying with the independents. Yes, i would like to say i am very happy that the president has decided to work on a deal with iran. I am happy to see we are working on a different strategy in our Foreign Policy, and i am being positive. I have a positive outlook on the future. I think the way it works, we should give other countries a chance. We are powerful enough to take this risk. And i am happy that the president has made this at this time. Thanks for the call. A couple of tweets about the agreement, and from the national journal, a statement applauding obamas speech while criticizing his threatening language to iran. And from brookings, they say this is referring to members of congress. Now going through their 60day review. Of the iran agreement. Alex, from jackson heights, new york, on the line for republicans, you are up. Hi, i heard the president s speech, very eloquent. Unfortunately, he did not go into details, because the devil is in the details, and the details are that we feel at the tables with the russians and chinese as a community that is supposed to approve the complaints. I dont think that the speech of the president did cover it. Ok, a democratic caller from lakewood, washington, your thoughts on the agreement. Yes sir. I agree with the speech totally. Iran is a young country. They do not want war, and our people do not want war. We have been at it for so long and i do not understand what is wrong with the word piece peace and to give this time. I wonder what other people are going to say to their people about it. Do you think the administration is making the case for this deal, particularly with congress . I think so. I think schumer and the others will be backing it. Once they see the alternative is just not you know, where i am from, i have they used to show on the map where russia is, and this is coming off the map. They have nuclear capabilities, so i do not want to see anything go any further in the middle east, to spread any farther. X x for calling. Rj joins us from cumberland, maryland. This is absolutely necessary, regardless of what irresponsible people have to say. I have never seen the president have such well conceived arguments, laying everything out. People who do not see the wisdom in what president obama said at American University are just death deaf deaf to logic deaf to reason. My children served in iraq. I have a daughter who served as a noncommissioned marine. She is married to an active duty marine. These are the people who go to fight these wars. When everyone in congress has a kid in uniform, i will listen to what they have to say about tough talk and the military. Thanks for calling, South Carolina on the line for democrats. What is your opinion of the Iran Nuclear Deal . I think it is a sweet deal. I think president obama is a statesman, and he is also an international statesman. He explained in their he explained in very, very fine detail everything about this, everything about the future. We are like a giant compared to iran. It sounds let me may have lost rose up. A couple more tweets have come in. Actually, one earlier today from former arkansas governor mike huckabee, writing about the president each, comparing the nuclear deal with the islamic radicals running islam. It is beyond insulting. It is idiotic. Again, my cut cubby, who is running for president. We also have we lost that treat. Let me get this. One more from one of our viewers, tweeting and during the speech this evening. Andrew writes time for a few more callers on this Nuclear Agreement, and terry on the line for republicans. What do you think . I think it is a bad deal. I think you do not give the holy on the schoolyard the rocks to throw at you do not give the bully on the schoolyard the rocks to throw for you. Thank you. The line for independents. I do not know why we should trust a president who retreated in afghanistan and china is on the march in the south china sea. We are putting our trust in a regime who does not trust their own and has killed them by the thousands. We are selling piece peace in the middle east, and others will have Nuclear Weapons, and that is the most volatile and most unstable place in the United States, and obama and the democrats have blood on their hands for that. Pamela is with us. Tamala, you need to turn down your tv. You will get that echo. Sorry. It is ok. Go ahead. What do you think of the Nuclear Agreement . I am a republican from florida. Pamela, we have to move on. A reminder you have to mute the tv otherwise youre going to get a little bit of an go we get you on the air. Get a little bit of an echo when we get you on the air. I have suffered from a lot of turmoil, and i am glad to see that our president has taken a diplomatic turn on our international events. I think that he was absolutely taking the right road. From evanston, you are up. This basically guarantees iran a Nuclear Weapon in 10 to 15 years. What about the four americans being held hostage by iran . Why sit at a table with a country that has hostages, and not even ask for them . Do you think that should have been a part of the agreement . We should not have sat down at the table with them unless it was part of the agreement, and our allies do not like the deal. Israel does not like the deal. Those that are jewish you are democrats are against the deal and that should tell you something. In texas an independent caller. Go ahead with your thoughts. My question is when did israel become the 51st state. Do you want to answer that yourself . What do you think . What is the influence of israel in all of this . Way, way too much in this country. Thank you. Good evening. I fully support president obama. I think he has done a wonderful job leading. We are not the only country that had come to this conclusion that this is the best possible deal. Very good. Tom in ohio, go ahead. Republican call. High. I think our president has lied to us on many occasions about health care and many other issues. I think it is critical that we are not recognizing the fact of the damage that could happen to israel, a protected nation by god, and i think our president has sent us down the river on this deal, and he wants to give them 20 billion of our money, and i that is wrong. Thanks for calling. Another one of our viewers tweeting in saying, do not buy it. Iran will conversely covertly work on a bond. We need to take out Nuclear Sites asap. A few more calls, from jacksonville florida, an independent call. Go ahead. I absolutely agree with the president. We have to try peace first. If we do not try this first, what is the point . You have to give peace a chance, and then we go in with the military. That is what the military is for. Next call from smithfield virginia, a democrat. What are your thoughts . God bless you. The first thing i want you to do is to pray for peace. A few weeks of prayer for peace. We know that we are going to be sustained through god. We always protect israel, but we do not need another war on this earth. Thanks for calling. Jeff in winstonsalem, north carolina, you will get the last word in this go around. Yes, i think this is a bad deal. Asking us to trust iran, if you look back at the record, the people of iran are laughing at us. It is a bad deal. It is that all of the way around. If you missed any of the president s speech, we will be airing it again at 11 00 p. M. And you can watch it any time on our website at cspan. Org, and now a hearing on the sanctions part of the deal. It would remove International Sanctions on the iranian government and state Department Officials testified at a Senate Hearing about the lifting of the iran tensions and its effect on Foreign Policy. The chairman of the Banking Committee is senator richard shelby. This hearing runs 3. 5 hours. The hearing will come to order. Do you want to go ahead and ask it now . Do you want to wait . If that satisfies you, that satisfies me. Much has changed since the Committee Held its hearing on iran and marked up an economic sanctions bill. Since then, there has been a Nuclear Agreement with iran after numerous delays. Many serious concerns have been brought including first and foremost, whether it would actually prevent iran from continuing on its dangerous path to a Nuclear Weapon, and although a new deal has been reached, then a mental problems remain with iran, the country upon whose assurances the deal rests. Iran remains the state sponsor of terrorism and remains a serious risk to the National Security interests of the United States. It remains a constant threat to the survival of israel. And despite these grave concerns it will remain a country with , the capability to enrich uranium. Under these circumstances, i believe it is critical that congress conduct a thorough review of the agreement as required by the iran Nuclear Agreement review act. As part of this review, the Banking Committee will focus specifically on analyzing the sentience relief provided in the Nuclear Agreement and the implications of taking such actions. There is general agreement that the pressure of sentience brought iran to the negotiating table. Congress must consider carefully now the repercussions of lifting those sanctions on our National Security and our economic interests. In recent weeks, many of my colleagues on both sides of the aisle have expressed skepticism over several aspects of the agreement. For example, the relief provided to you ron this deal would allow iran the financial means to increase its support of terrorism and regional destabilization. In addition the mechanism for , reopposing the harshest sanctions should iran not comply with parts of the deal may prove ineffective except in the most extreme cases of violation. Many view it as irans license to cheat, as long as such cheating falls just short of a zynga the begin violation of the falls just short of violating the sanctions part of the agreement. Financial sanctions have become a critical tool of u. S. Foreignpolicy and a very important part of this committees jurisdiction. In fact, over and they shall administration objections, this committee was instrumental in and posing the sanctions that brought iran to negotiations in the first place. I believe it is essential for u. S. Sanctions and policy to continue to meet any new security challenges presented by iran. Today, the committee will hear from two panels. On the first panel, we will hear from the administrations lead negotiator of the agreement and the lead sentience expert. Then they committee will receive testimony from a panel of experts who have studied the agreement extensively, including officials from the previous administration. Senator brown. Senator brown thank you, mr. Chairman. Mr. Chairman, mr. Shuman, thank you for being here and for your very important public service. A witness we will hear from the second panel, four who work in the Bush Administration, terrorist finance and middle east policy. This whole process began in the Bush Administration with a republican president who was in the wake of the iraq war willing to engage iran diplomatically. As secretary kerry observed the Bush Administration laid the foundation for the iran agreement, sanctions relief and strict limits on the Nuclear Program. In june 2008, president bushs National Security advisor signed a memorandum with the p5 plus one, which is said that in return for iran doing key things to limit its maker program, the United States was ready to do a number of things. One, to recognize irans right to Nuclear Energy for peaceful purposes. Two, treat iran for the Nuclear Program like any other nonNuclear Weapons state to the npt with International Confidence that the peaceful nature of the program to be restored. Three, provide technical and Financial Aid for diesel energy. Fourth, work with iran for confidence Building Measures allowing for Civil Aviation cooperation. That was condoleezza rices agreement at the time. This should sound familiar because it was the early outline of the iran agreement just completed. That is part of why i have been so disappointed in the politicized nature of the debate on this agreement so far including from colleagues coming out in opposition to the agreement within hours of its release, even though it is over 100 pages long and very dance and complicated to read a very dense and come located to read. This will be the second or first most important vote i have ever cast in Foreign Policy. Second perhaps only, or even more important, then my vote against the iraq war a decade plus ago. This should not be subject to partisan attacks and political ad wars, even though it has been. Congress should give this serious debate. We know iran is a sponsor of terrorism. We know it destabilizes the region. We know in violates the human rights of its people. That is why western policymakers agreed to separate out and try to secure an agreement on this one specific arrangement. They knew an iran with a Nuclear Weapon would be especially dangerous to us, israel, and to the region. That was the singular goal of p5 plus one negotiations, to keep iran from getting a Nuclear Weapon. Since iran has deceived the west verification is key. , we must understand how verification will work. There is a number of questions why iaea has sufficient resources to conduct inspections, suspicious covert sites. Will our intelligence capabilities be able to detect cheating . Willie iran breakout time be extended from two to three months to a year, will it become to respond politically economically, and necessarily military if necessary militarily . What actually happens of Congress Rejects the deal . How would we maintain effective enforcement of our sanctions without the support of our p5 plus one allies . It was made clear to a large group of us yesterday that we would be isolated. What happens of the country like china walks away and dodges our sanctions by establishing banks with no correspondent relationships in the u. S. And starts buying iranian oil again . What would a rejection and congress due to the credibility of the United States in the eyes of the western world . We need answers to these questions and others. Some we will hear today, summing classified sections. Over the years, i have joined many colleagues in supporting ground after round of unilateral and International Sanctions which brought iran to the table and helped secure this agreement. Some predicted the jpoa would unravel the sanctions regime. It has not. Others worried iran would not comply. Or it would benefit unduly from sanctions relief. That has not happened. We have an unusually grave and historic responsibility to assess the consequences without partisan rancor, without partisan attacks, to assess the consequences of this agreement and to weigh the risks and benefits of allowing the president and allies into test irans ability to comply with it. Some of us might differ on tactics, but we share the same goals, to ensure that iran does not achieve a Nuclear Weapon, to do that diplomatically, if possible, and to recognize that other alternatives remain on the table and are not precluded by this. Thank you, mr. Chairman. Senator shelby thank you. The first panel, we will hear from honorable Wendi Sherman secretary under secretary for Political Affairs here next, we will hear from mr. Adam szubin acting undersecretary of the treasury for terrorism and financial crimes. Written testimonies will be made part of the hearing record. Ambassador sherman, proceed as you wish. Ms. Sherman good morning, chairman shelby, Ranking Member brown, and members of the committee. Thank you for this opportunity to discuss the joint comprehensive plan of action that the United States and International Partners recently concluded with iran. To reserve as much time as possible for questions, i will only highlight a few key points. By locking each of irans potential pathways to get material required for a bomb the deal approved injures that insures that Irans Nuclear program will be peaceful over the longterm. Under the deals provisions iran , must remove twothirds of centrifuges for 10 years, reduce the stockpile of enriched uranium by 98 for 15 years, and cap uranium enrichment at 3. 67 , far below the danger point for 15 years. The core of irans heavywater reactor at iraq will be removed and rendered unusable, and the facility rebuilt so it cannot produce weapons grade plutonium. Spent fuel from the reactor will be shipped out of the country. I emphasize, as both the chairman and the Ranking Member did, this deal is days of verification, not trust. Before obtaining any relief for economic sections, iran must meet its nuclearrelated commitments. International inspectors will have a president access to irans declare Nuclear Facilities and its entire Nuclear Supply chain from , uranium production to centrifuge manufacturing and operation. And if there are suspicious undeclared sites, no sites will be offlimits. If iran fails to meet its responsibilities, we can ensure that sanctions snap back into place. No country can stop that from happening. If iran tries to break out of the deal all together, the world will have more time, a year, compared to the two months prior to the negotiation, to respond before iran could possibly have enough materials for a bomb. At that point, all the potential options that we have today would remain on the table, but we would also have the moral authority and International Support that comes from having exhausted all peaceful alternatives. This is also a longterm deal. Some provisions will be in effect for 10 years, some for 15, some for 25, and some indefinitely. Under the Nuclear Nonproliferation treaty, iran is permanently prohibited from pursuing a Nuclear Weapon, and the access of verification provisions associated will remain in place forever, enhanced by the Additional Protocols as a result of the joint conference of plan of action. The bottom line is that this deal does exactly what it was intended to do when we began formal negotiations nearly two years ago. At that point, we faced an iran in reaching uranium up to 20 at a facility built in secret and buried in the mountains, and it was rapidly stockpiling enriched uranium, had installed test Center Buildings and building weapons grade bonds. The plan will shrink those number dramatically, ensured the facilities can only be used for feasible purposes, and to the entire program under a microscope ensure facilities can only be used for peaceful purposes. Some have expressed concerns but without this agreement, as secretary kerry said, the 15 would begin today. If the United States walks away from this, which is been negotiated every step of the way with International Partners, we will be left alone. That would be the worst of all worlds. Iran could push ahead with its Nuclear Program in whatever direction it chooses. Everything we have tried to prevent could occur. We would not have enhanced transparency required under the jcpoa to scrutinize the program and the multilateral sanctions regime, which the president and Congress Worked so hard to put in place, led by this committee, and it would begin to rapidly unravel. As for irans behavior, the United States is under no illusions. This agreement was never based on the expectation that it would chance one the Iranian Regime. We have a clear that we will continue our unprecedented levels of Security Cooperation with israel, as secretary kerry confirmed earlier this week in the tar, we will work closely with the gulf states for them to defend themselves and push back. We will continue to take actions to prevent terrorist groups, including hamas and hezbollah, from acquiring weapons. We will keep in place all of our own sanctions related to human rights, terrorism, Ballistic Missiles be a we will continue to insist on the relief of u. S. Citizens unjustly detailed in iran and for information about the whereabouts of robert levinson, so everyone comes home. Im almost done, mr. Chairman. We know that the middle east today is undergoing severe stress because of extremism and sectarian and political rivalries. But every of those problems one would be even worse if iran were allowed to have a Nuclear Weapon. That is why the agreement reached in vienna is so important. None of us can accept a nucleararmed iran. Some have said, if we double down on sections, we can force iran to dismantle its Nuclear Program. But quite frankly, ladies and , gentlemen, members, that is a fantasy. The whole purpose of sanctions was to get iran to the bargaining table and to create incentives for precisely the kind of good agreement that we were able to achieve in vienna. Over 90 countries have issue public statements in support of the deal. That includes all of the countries that were involved in these negotiations. Every one of these countries has made tough choices to give the International Sanctions regime in place. We need their support for implementation. It is important to remember that we tried for many years to get here, as was pointed out. We worked on this on a bipartisan basis. President obama and his committee pushed for a stronger multilateral sections and unilateral sanctions to keep the door open to negotiations. Those sanctions forced iran to pay a high price but were not enough to make them change course. That required this diplomatic initiative. Congress played a Critical Role in getting us to this point. Sanctions achieved their goal by bringing about serious productive negotiations. Now congress has agents to has a chance to affirm a deal that will make our country and our allies safer, a deal that will keep iran for the Nuclear Program under intense scrutiny. A deal that war sure that would assure this. It is a good deal for america, a good deal for israel, good deal for the world, and i say to you all respectively, it deserves your support. Thank you. Thank you, chairman shelby, Ranking Member ground. Thank you for inviting me this morning to discuss the nuclear deal with iran and to appear beside ambassador sherman. The global coalition, build and led by the United States of ross went across gave us the leverage to secure unprecedented Nuclear Concessions from iran. From the start, our purpose was to build the leverage that could be used to obtain concessions. Our secondary sanctions were met to be the qid for the nuclear quo. This would be to close off their path to a Nuclear Weapon, assure that we could no that they were cheating, and to punish them if there was a breach. The jcpoa gets these. I would like to touch briefly on four points that have been much debated. The scope of relief, the snapback provisions, the campaign that is ongoing to combat irans support of terrorism, and finally, the remaining leverage if the United States walks away from this deal. First, we should be clear on what the sanctions will and will not mean to iran. If iran accepts the deal, which will take at least 69 months, the United States will lift our secondary sanctions. Our primary sanctions, the embargo, will still be in place with respect to a ran and was still be enforced aggressively. Iran will be denied access to the worlds most important markets and unable to deal in worlds most important currency. The worlds most important currency. Our sanctions list with respect to iran will remain very extensive. We are not relieving sanctions against irans revolutionary guard corps or any of their subs subsidiary or senior officials. 200 companies linked to iran will remain designated including in financial engineering, and transportation sectors. There has been much discussion of the Iranian Foreign reserves. If iran fulfills its nuclear commitments, iran will receive about 50 billion, not two or three times that much. The rest of what has been inaccessible will remain inaccessible. With that 50 billion, iran will need to address an economic hole that is about half 1 trillion a deep. This was the president of irans promise when he ran for office and he needs to meet that promise. Second, on snapback. If iran does not uphold its side of the bargain once we have suspended sanctions, we can quickly snap sanctions back, in a matter of days. Our eu colleagues are positioned to do the same. We have the discretion to impose everything from smaller penalties to the powerful oil and financial restrictions. A binary on or off at back would snapback would not serve us as well, and we have maintained leverage here. There is no grandfather clause. No provision in the deal gives signed contracts special status. Once snap back occurs, any new areas are sanctionable. Third, as we neutralize the most acute threat posed by iran, its Nuclear Program we need to be , aggressive in countering the array of irans other malign activities. This deal in no way limits our ability to do so. We have made that clear to iran and to our partners. We will sustain and intensify our use of sanctions, using our authority to counter irans intervention in yemen and syria, irans efforts to oppress those standing up for human rights in iran, and we will be using our sanctions to block their attempts to develop a Nuclear Missile program. Under the interim deal, while negotiations were ongoing, we took action against 100 targets, and we will be accelerating that work in the days ahead alongside israel, to combat funds moving through irans illicit network. I will be personally focused on these efforts. Fourth and finally, let me provide my perspective as a sanctions official on the implications of walking away from this deal. The sanctions regime generated much of its force because the Worlds Largest powers agreed on ending the threat of nuclear iran through diplomacy. It would be a mistake to back away from this on the notion that we could unilaterally escalate pressure on iran. And obtain a broader capitulation. U. S. Sanctions are extremely powerful. I have seen firsthand in my 10 years at the treasury. But they are not all powerful. If the u. S. Were to walk away and ask our partners to continue locking up irans reserves limiting their Oil Purchases the coalition we have assembled would fray, with unpredictable and risky results. It is difficult to see how a broken consensus and less leverage would help us to obtain a much better deal. Instead, enforcing this deal will capitalize on our carefully build economic pressure and deny iran access to a terrifying weapons capability for the foreseeable future. And as we move forward, you have my commitment that the dedicated team at treasury will continue to pursue smart and aggressive sanctions to stop irans malign activities. Thank you very much, and i look forward to your questions. I yield to senator corker. Mr. Corker thank you. we have four briefings or hearings today, so thank you very much. I want to start by addressing the Ranking Members comments. I could not agree more that this should not be a partisan effort. Could not agree more. I met with senator reid on monday just to talk a little bit about how this debate will take place in september, and i can say to everyone in my colleagues on both sides of the aisle, regardless of how people vote on this, youre not going to hear me making comments either way. I think this is a very important vote. What we try to do in the Foreign Relations committee is make sure people fully understand the ramifications, so i could not agree more. One of the details you left out in your letter regarding the bush agreement was they were not going to agree to enrichment and that is a detail that has kind of been left out. That is the rubicon that has been passed here. In essence, we have three state sponsors of terror that we left, sudan, syria, and iran. What this agreement in essence does is it codifies with our approval the industrialization of their Nuclear Program. That is a fact. That has not been debated. I think senator donnelly senator warner, senator tester senator schumer, senator menendez all know that i have been very open to supporting an agreement. I had one of the few conversations i have ever had with secretary kerry. I think we all know him well where i felt like he was listening to what i was saying. It was in my driveway on a saturday. Talking about these last pieces, and i am talking about the inspections. Im talking about the previous military dimensions. I know it is possible military dimensions. We all know they are involved militarily. And how important that was not just from the standpoint of what it said, at the indication to us that we were really going to apply this thing, dtf and make this stand. When i got the documents, and i went through them extensively there is the missile ban in eight years, and on the front end, and on top of what these agreements said, i was very troubled. Now, i want to get the sanctions first of all in perspective. I know you were saying 50, and most people would say 56, but overall it is 100, and some of that is tied up in money for things that would be taking place, deposits. But to be fair, it is about 100 billion dollars. Just to put that in perspective, their economy is about 400 billion. So 100 billion to them would be like as getting 4 trillion. Just relative to the economy. That would be like us getting 17. 5 trillion over the next 10 years on a relative basis. Here is the question i have. I was very discouraged with the final round, and i think maybe i showed a little temperature when i went through it and i understood it, and i apologize for that. I worked with my friend, senator cardin and i began with senator menendez and worked over an excruciating time to make sure that the way this agreement worked, we got the documents and we got them in a way that was acceptable. He spent all weekend with you, the white house, and others, on the iran review act. And we got the agreements, including the Side Agreements. Now, the very entity we are counting on to do the inspection, we cannot even get a copy of the Side Agreement that lays out how we are going to deal with parts. I would say to everyone here, if you have not been down to the intel area, you ought to see what iran is doing today while we are sitting here. We cannot even see the agreement related to how we are going to deal with pmd. By the way, all sanction relief occurs regardless of what they do with pmd. All the iaea has to do is write a report. But if they do not tell us much or if they tell us everything sanctions relief till occurs, so i would just as ms. Sherman after this painstaking effort we went through to make sure you did not we did not ask you to give us ocalans you could not and you knew what the iaea protocol was, why now would you not give us the document that exists that is so important to all of us . Why not . Thank you very much, and thank you, mr. Chairman, for all of your hard work alongside senator menendez and senator carton on this deal, and all of your attention to it. Let me answer your question but then i want to come back to another point you made. You are about to have the director general, and meet informally with the Senate Relations committee. He made this decision on his own because the iaea is an independent agency. He agreed to come, and i found out about it at the same time you found out about it. We dont have the documents to give to you. And the reasons we dont have them is because they are safeguards confidential. The director general explained this to you, and what that means. The iaea does safeguard confidential protocols with the United States, and they dont share them with anyone else, so they dont want to share irans with anyone else. You, i am sure, will say to me but ambassador sherman, they did , tell you about them, and indeed they did. And the reason they did is because it was in the middle of the negotiation, and they wanted to go over, with some of their experts, the technical details. So, i did see the provisional documents. I did not see the final documents, as did my experts. As you know, there will be a classified, all Senate Briefing this afternoon, and i will go over in detail, in a classified setting, everything i know about these arrangements. Senator i want to say again, we spent four days going over every detail with the administration to make sure the documents we were four were once we could be delivered. Ambassador sherman and you got every document we have. Every single one. Senator the entity that we are depending on for the integrity of this deal we dont have the , agreement. Let me ask you this. Do you have any understanding of whether there are limitations, whether the iaea is actually going to have physical access inside to take samples themselves . Ambassador sherman i would be glad to discuss all of this in a classified session this afternoon. I would say this also, on two other points you made. What iran must do is give to the iaea all of the actions and all of the access that they believe is required for them to write their final report on the possible military dimensions of irans program. The United States has already made its own judgment about that. We made it in a National Intelligence estimate that was made public some years ago, and that estimate said publicly that we believed they did have military dimensions to their program up until 2003. So, the United States has already made its judgment, and we stand by that judgment. What this deal is most focused on is where the program is and where its headed. And i quite agree, getting access is important because it says something about access in the future. And establishing the credibility of the iaea is also important to this. So i am very glad the director general is coming to see you. I would add one other point, mr. Chairman, and that is that sanctions, as the acting under under secretary said are , absolutely crucial for getting iran to the table, but sanctions never stopped irans program. When the Obama Administration program began, there were about 5000 centrifuges. The sanctions were the most extensive ever during the Obama Administration, and yet iran went to 19,200 centrifuges. So sanctions will not stop their program ever. It is negotiations or other options that will do that. Senator i will just say in closing, to every senator here this is a big decision, but wendy and secretary kerry, every other country, including iran, knew that because we drafted this iran review act, regardless of what was being said, we were going to have this opportunity to weigh in. We were going to have the opportunity to weigh in. So, when people say it is this verse is that, especially on these issues that we have been so concerned about, and when we saw that they were just punted on, negotiated away, issues that we, with great sincerity, talked with the administration about, and yet, they were just punted on. I think each of us has to make our own decision based on whether we think this is going to keep iran from getting a Nuclear Weapon, regardless of how we feel about the international community. I just hope that at some point on this grandfathering issue and i will stop. We sent out a document to help everybody. It was nine pages long. We asked the administration for red lines. I got staff and resources to go through this agreement, and it is a huge privilege to do that so i sent out cliff notes to everybody. And there was one question about whether the gold rush we are all concerned about is going to occur. And that is people going into iran immediately to sign contracts. And we used the word grandfathered contracts. You used some interesting words. I guess the question i have, and it is still unanswered and by the way, our friends in britain, and germany, france, and the eu, have told us the contracts are grandfathered. Now, they have backed off a little bit. There is some confusion around that. And by the way, i want to say there is confusion. I think iran views at the way we had it in this document. But if someone spent a billion dollars on these sanctions lets say bp on an oil facility and sanctions snapback by the way, you realize that in nine months, iran has the nuclear snap back. Meaning it shifts to them. If we put any sanctions on the , agreement clearly states they can walk away. They have a nuclear snap back. We have a sanctions snap act. Back. I guess the question is, if somebody enters into a contract over the next year when the sanctions are relieved everybody expects them to be relieved in nine months again regardless of what the report says. Can that contract continue on . In other words, it was put in place during the free time, can it continue on its sanctions are put in place afterwards . That is a gray area. I think that is a detail, and i realize this is not the biggest issue, but it does create concerns about people rushing in now to establish contracts which we see happening right now in europe. Senator, i dont think that is an unimportant issue. I wouldnt describe it as a detail at all. I think it is essential. Companies could enter into contracts and then somehow be protected against snap backs then we would have a very weak snap back indeed. We were in tent not to let that we were intent to not let that happen. Iran may want to put grayness into the issue, but they understand the issue as well. When sanctions are lifted, the business allowed by that lifting when sanctions are lifted, the business allowed by that lifting can occur. If sanctions are snapped back, any protections on an existing contract or a new contract are sanctionable. Our friends in the u. K. , france, and germany understand that. If there is any doubt, i want to remove it today. Senator if we could have a letter from the other parties that agree to that, that would be helpful. If you could get the other parties, including china and russia, to agree that is the case because we are getting very mixed i think it would just help us, to some degree, at least with people who are on the bubble about the issue. Ambassador sherman i spoke with the u. K. Ambassador to the United States this morning. I know he has talked to many of you. He shared with me and email an email that i believe he sent to your office about this. He said that in fact he is committed, and you are committed to snap back and to the ability to apply sanctions for other forms of an acceptable activity. He also said to me on the phone this morning that he absolutely understands, all europeans understand. He said to me on the phone this morning that he absolutely understands, all europeans understand, and the deputy of the European Union of the Representative Office had a meeting with all of those from the European Union to affirm this very fact that you questions, which was that you indeed that companies have no grandfather clause whatsoever. Senator thank you, senator corcoran. Senator graham. Senator graham isp or she ate i appreciate senator corcorans concerns about this issue. We have snapback, and they have snapback. The military option, obviously is always on the table. Its a political agreement that any party can obviously pull out of, just to make that clear. Again, i appreciate senator corkers comments. I do not know if the analogy of 50 versus 100 and it went to get to that in a moment. 50 versus 100. I want to get to that in a moment. I dont know if analogizing that to the size of our economy really gets us anywhere. But that aside, lets talk about sanctions release and this is the jurisdiction of this committee and the primary area of jurisdiction. I know you opposed, secretary sherman, a pay for Performance Model in the iran agreement, and i would like you to discuss, generally, the steps iran will have to go through before receiving any new sanctions relief under the agreement on implementation take, if you would walk through that with us. Ambassador sherman sure. Iran has to uninstall two thirds of its centrifuges. It has to get its stock pile down 98 from 12,000 tons to 12,000 kilograms to 300. It must take the core of the iraq reactor out and fill it with concrete so that is unusual rendered unusable. It must set up with the iaea all of the verification processes. The iaea will have access to the declared vicinity is on a 20 47 basis 20 24 7 basis. There will be Realtime Data transmission. There will be electronic monitoring so that the iaea will know if something is tampered with in real time. The iaea will have eyes on production for 20 years. For 25 years, the iaea will have eyes on uranium from the time it comes out of the ground until it is milled, from its mining until its milling, conversion set into gas so that they will not be able to divert one ounce of uranium, one portion of uranium. Goes. So iran in essence, would have , to create an entire new supply chain covertly to get a Nuclear Weapon. In addition to all of these new measures which have to be put in place, iran has to take all of the steps the iaea requires on pmd. That is supposed to happen around october 15, adoption day as opposed to implementation day, so even sooner. All of these things have to take place and all of these are detailed in annex five of the agreement, before there is any sanctions relief whatsoever. At that all sanctions relief is point, a lifting, not a termination. Termination comes 20 years later many years later or when the iaea reaches broader conclusions, meaning they have no undeclared facilities, and they can certify that their program is completely peaceful. Senator if you could certify describe what sanctions remain in place that will help us manage, combat, eliminate as much as possible, various nefarious activities and terrorism in the region. Within that answer, if you could talk about the 50 billion figure, why it is 50 billion and not 100 billion in terms of obligations. Second, if you could speak to the 500 billion i think you used the term hole in the iranian economy, what that pressure is on their government to supply domestic needs as some of this money is available. Absolutely. The sanctions regime that remains in place to combat terrorist activities, their support of hezbollah and to shia militants in iraq, a regime in syria, and that fully remains in place, and it is a very extensive one so it is not just the companies and the actors and the generals that we have listed so far, but it is an Ongoing Party that we have, and that many of our allies aint tame to go after these actors. Senator if i could interrupt, you are confident our allies stay with us on those sanctions, unlike suggestions we hear from others that particularly china and russia will not be there with the broader sanctions that take place overall. You and your our concerns are not shared worldwide. I dont think we will see china and russia stepping up in the way we have seen our allies in europe. Many opponents have talked about the dollars that will be available from the lifting of sanctions and the discord and terror that iran can engage in in the region. Can you tell us about what the administration is doing to combat that. We share the concerns this committee has about irans activities in the region. Not only do we have all the tools, but president obama has provided more Security Assistance to israel than any other president or it every president has built on the efforts of the previous president , so each president has increased that assistance, but this president has commissioned technology that allows us to take actions if we need to in iran and a way that no president has before ended in ensure that we have the options we need. In addition, as you know, the president had all of the goal Cooperation Council to the meeting at camp david to talk about how to develop security for the region and the regional strategy. That has been fold up with a meeting that secretary kerry just had in delhi deoha. It will bring more security to the region. I think that would help to better improve those capabilities, whether in training, intelligence sharing having the right armaments to deal with these efforts, and really working coalition. I think we are all in common cause. This is quite critical and we will be following up on a daily basis is. Secretary of defense carter was in israel. We are ready when ever the Prime Minister of israel is ready to discuss further enhancements. I neglected to answer. On the 50 billion we have a high degree of confidence that it is 50 billion. I know we have a classified session with you and the senate later this afternoon. Thank you. I would be pleased to. The reason the 100 billion figure has been out there is that there are 100 billion in foreign reserves that have been inaccessible to it. Some of that has been due to the sanctions, some of it because it is obligated, and some of it has been spent. One can list it on the books but it is not there. Obviously, those latter baskets the funds that have been spent and are now in place as collateral cant be recovered , even when sanctions are lifted. What remains is about 50 billion to come back to iran. With that, one needs to keep the perspective of the 500 billion dollars or more that iran needs to meet fundamental needs in terms of unpaid military pensions and salaries, needed infrastructure their oil sector, which is crippled. The final point i want to add how much of that 500 billion hole would be required to get the oil sector up and producing so they could bring the wealth into the country that they aspire to . Their oil minister has stated they require 160 billion to 200 billion just for the oil sector repairs alone. That is not to take their sector into the future. That is to take it back to the baseline and undo the damage. Across the economy, we see a seven year lag due to the sanctions. Upon sanctions relief in the middle of next year, the Major Economic sanctions abroad are relieved it will be seven years , before iran comes back to where they ought to be today. Even if they invested the money, it would take them that long . That wasnt a comment on the oil repairs. The oil repairs might happen in a shorter amount of time, 23 years. I need to get back to you on that. If you look at their gdp curve and where it ought to have been, it had this radical break due to the International Sanctions, and it only gets back in seven years to where it ought to have been today. The hole that they are in cannot be overstated. 50 billion coming back to them does not begin to meet the needs. Whats more that 50 billion is , not spending money. That is all of their freed up foreign reserves. No country is going to exhaust its foreign reserves down to zero, risking huge and stability instability to do so. We estimate that they will use it for their domestic economy and will need to leave some in reserve in the way any country would with its foreign reserves. Last question. Secretary sherman, many of us have raised concerns about the prospects of the u. N. Embargoes in iran and conventional arms being listed in five years lifted in five years, and Ballistic Missiles in eight years. I know all of us would have preferred to retain these embargoes longer. Russia and china felt differently. Outline briefly what specific specific legal authorities remain in place to combat irans conventional arms and missile efforts. Sure. We will be able to rely on other Un Security Council resolutions that levy embargoes. So all of those remain in place. , we will continue to work with over 100 countries around the world that have signed the Proliferation Security Initiative to limit imports or exports. The Missile Technology control regime also remains in place and will play a Critical Role in that regard. We have bilateral cooperative tools. We have ongoing sanctions in place as adam has pointed out, executive orders which authorize u. S. Sanctions on a foreign persons that contribute to the proliferation of missiles. We will make use of those executive orders. The iran, north korea, syria proliferation act connected to iranian ballistic and Cruise Missile activities and the sanctions of the 2006 provision of the foreign assistance act of the fine assistant act, iran amended in the a ron proliferation arms act, all and impose sanctions on entities. The Un Security Council resolution that was just recently passed has not let the program off the hook. The current prohibitions on the supply of Ballistic Missile related items in place and are still required to prevent transfers of missile related items. They are still required to prevent provision to iran technology, technical assistance, and other services. They are still required to prevent transfers of Ballistic Missile of items that happen to pass through their territory. I can go on. There are about 10 things that it still continues to require states around the world to do. Frankly, yes. Would we have liked them to go on forever . Of course. We have kept them on far longer than iran, china, or russia wanted them to stay on. We have kept them on under article 41, chapter seven, which means they are enforceable. We have other Un Security Council resolutions and other tools unilaterally to make sure that where arms and missiles are concerned we can keep moving , forward in every way we need to. Thank you, mr. Chairman. Thank you, mr. Chairman. I thank the witnesses for appearing today. I want to go back to the issue raised by senator corker. Ambassador sherman the iran , Nuclear Review act of 2015 is abundantly clear that congress is supposed to receive all the documentation, all of the agreement, annexes, related materials. It says right in the beginning referring to the transmission of agreements, the President Shall transmit to the impersonal appropriate congressional committees and leadership the agreement as defined in subsection hone, including all related materials. Subsection hone specifies that this agreement includes and i quote the last part of this any additional materials related thereto, including annexes appendixes, compasses, site agreements, implemented materials, guidance, or other understandings, and any related agreements. I think that is clear that that is meant to be all encompassing. Yet we discovered that there is a secret Side Agreement, which presumably compliments that contemplates the previous dimension of activities, which strikes many of us as a very Important Information to have and evaluating whether or not future activities are in violation of this agreement or not. Now senator corker asks why you have not given us the documents. You said it was because we dont have the documents. Knowing this statute, the intent of the statute, and that the letter of this law, why did you not insist that this essential to enforcement document be disclosed . Senator thank you very much , for your question. As you point out we dont have , the document. The United States senate has every single document that the United States government has. Secondly the reason we did not , insist is because we want to protect u. S. Confidentiality. This is a safeguard protocol on the iaea protection of confidential understandings and arrangements between the United States and the iaea. I know you will say this is a different situation. I grant you that this is an International Understanding to try to stop iran from having a Nuclear Weapon, and that is a different circumstance. In the development of where the iaea was going, they did come to us for Technical Expertise as they came to every other member, and in a classified briefing this afternoon, i will share everything i know about this. I am also grateful that the director general on his own cognizance is meeting with the senate Foreign Relations committee in an informal setting. It is extreme he on usual, because every other country wonders why he is. You did not see the final document . I was shown documents, but whether there were other discussions you know, what this is about is about the technical modalities that the iaea uses, and i will share with you this afternoon in a classified setting every single thing i know about that, and i think it will give you great confidence that the iaea is doing what it needs to. I look forward to that. It is still disappointing to me. We are being asked to vote on an agreement in which the enforcement of tens on a very important document that we are not allowed to see. It is not clear to me that you have read the final document, or anyone else in our government. You do not have it your possession. I have seen the document, as i said. As we were going to the technical discussions with the iaea, but what is important here senator, ultimately what we are talking about is the credibility of the iaea, whether in fact we believe they are credible, independent, verifiable organization, which it is. They have done a superb job on the joint plan of action. All of those reports have come up here. They have done a very fine job. I have trust and confidence in their ability to do a fine job on the joint conference plan. Im glad you do. I think that is a document we ought to have before us. Let me ask a separate question. Paragraph 36 grants to either party the opportunity to walk away from this agreement. Anybody can raise an objection about what the other side is doing. After an adjudication process if this objection is not resolved to the satisfaction of the claiming complaining participant, then the complaining participant can then so we walk away, either side. So iran for any reason that iran deems sufficient can walk away from the agreement, after they have their 50 billion or 100 billion, or whatever the figure is. Here is my concern. I am concerned that this dynamic creates a very this fact creates a very dangerous dynamic, one in which the administration will have a hard time enforcing anything other than a massive violation. Former secretary of state shultz and kissinger wrote a widely read piece that suggested that most likely if a violation occurs, it would not be a clearcut event, but the gradual accumulation of ambiguous evasions. So lets say we start to discover the gradual accumulation of ambiguous violations, which strikes me as possible. If we were to take any measures at all, any enforcement mechanism of any kind, iran could invoke paragraph 36 and say this is unacceptable. Since this administration has told me that the alternative to this is war, and so we have to have this agreement, and we have to make all these concessions after concessions after concessions to get this agreement, why should we believe that in the face of the accumulation of these small but accumulating evasions that the administration is going to risk iran walking away from the table, because i suspect that that would be there threat. Senator i appreciate that you , believe that iran will have gotten enormous sanctions relief and will be sitting in the driver seat, but you forget the other half of the equation. Iran will have reduced their centrifuges by two thirds, eliminated 98 of their stockpile, made the iraq reactor in operable allowed inspectors , in their country to have 24 7 access to the facilities. 24 day access. No, for declared facilities the iaea has 24 7 access every day of the week. And the military sites . If the iaea believes there is justification for them going to a site, the Additional Protocol allows them to give 24 hours notice to get into that site. If the country says we think you should go to this site or we think you should have this document, under the additionald to , suggest alternatives. However, that debate about what the iaea can do can go on for quite some time. What this agreement did, different than any other arms control agreement ever negotiated, we put a clock on that debate. We said that if the iaea under the Additional Protocol wants to go to a site, it has to have access to that site. So we said that you can debate with iran for two weeks, at the end of those two weeks, the joint commission made up of all of us looks at that. If we believe that on day one of the saving days we have to consider the situation that they ought to give access and we believe we will always have europe and the European Union representatives with us, iran has three days to provide access. It could be as short as 18 days. As the secretary has testified again and again, Nuclear Material cannot be cleansed away. It will be found if it is there. So quite frankly, senator, what we have negotiated in this agreement is absolutely unprecedented access when ever the iaea believes that it has a suspicious site that needs access to. Senator would it be permissible to address the snap back aspect . At the discretion of the chairman. Your next. You want to read . I will take my time and as ask quickly to respond to the question. Thank you. I just wanted to speak to one of the premises behind your questions on the snap back. I absolutely agree that the more likely scenario we see is small breach, testing, sticking a toe across a line. What we need to do is show them that those breaches have consequences, otherwise we are just asking for larger breaches. We have to be very serious about that. We have been very clear with our partners that we are going to be serious about that. But there is a premise that i have heard circulating that after the initial sanctions relief, iran can immunize itself to further pressure. Therefore it will care about snap back. That is just simply not the case. Irans foreign reserves cannot be put in a vault in the form of gold or bills. If they are not liquid, they are not usable. What iran needs with its foreign reserves is to have them in major financial centers, imports, boost currency, a whole host of things that countries do with their foreign reserves. That means they will have to keep them in foreign jurisdictions where they are subject to snap back. If anything, the more iran begins to benefit from the deal, the more vulnerable they are to this pressure. So we need to be very serious and i agree with your question in that respect, but the consequences to iran will remain very serious, very severe, throughout this agreement. Senator reed. Thank you very much. Within my allotted time, you have testified that you dont expect iran to stop funding has hezbollah and other proxies so what do you expect . I do expect them to continue funding hezbollah and other violent proxies. Its one of the goals of my career. I have been working 13 years on the terrorist financing portfolio. We have a lot of tools at our disposal here. One of the most powerful is the one that congress has given us which is when we sanction iranian terror supporters, our designation is amplified internationally. What i mean by that is when we name a hezbollah finance financier a money launder, any , bank worldwide, that facilitates transactions for that designated entity, it faces very severe sanctions from the United States, sanctions that no no bank wants to face. What we have seen as a practical matter thanks to those congressional sanctions is that our sanctions against their proxies carries international weight, and those designated entities become pariahs worldwide. But we have to do more. I think it is incumbent upon us to do more. Additional intelligent intelligence targeting to identify the money , launderers, facilitators, and funders, and muster a coalition of countries to cut it off to and shut it down. Thank you. Let me go to a very critical point here. The sanctions regime is in place today. If we reject this deal, some have argued that it will not make a difference the sanctions , will stay in place. You have been working on this for 10 years. How would our partners react if we said we walk away from the deal . From my perspective, and i would certainly defer to ambassador sherman on the diplomatic perspective but we have tremendous clout and influence as the worlds most powerful economy. I do not underestimate that. I have been a privilege of exercising that clout for the last 10 years and i have seen how effective it can be. As i mentioned in my opening statement, it is not all powerful. We do not get to dictate to other countries, especially major economies, what they are there Foreign Policy will be. We need to harness shared concerns. When it comes to iran, we have a shared concern, for you and resolutions have called out their program as being a threat, so when we went to china, india, japan, saying we need you to work with us. You agree with us that Irans Nuclear program is a threat. They said yes, we do agree. We said here is the way to , address it. We have a diplomatic path forward. Join us and lets test it. Lets try to use our sanctions leverage to obtain the concessions we need from iran. They worked with us and it succeeded. It succeeded to a remarkable extent. In the event that we walk away it is a very different and much bleaker scenario. The International Consensus is behind this deal, 90 countries have endorsed this deal. We would be alone in walking away from it. Going and asking them to take costly economic sacrifices in the hope of a future better, tougher deal, i think we would have very weak prospects for that. Thank you. Mr. Chairman, i think i will stop. Thank you, mr. Chairman. Good morning to the witnesses. Thank you for being here. Like so many of us i am , concerned about this deal, not supportive of it whatsoever. The more i read of the deal, the less i like it, and that does not include the iaea site agreements. Ambassador, you have said a couple of conflicting things this morning from my perspective. Sitting here i can see your , notebooks. I cant read what is in it. In the final deal from the iaea, have you seen it and read it . Let me be very clear. I have seen the documents that the iaea and iran have discussed to create the final arrangements for the modalities that underpin the roadmap document, the Public Document that congress has a copy of. I was not allowed to keep any of the documents about the arrangements on the modalities that underpin the public roadmap that you have a copy of. However, i told the iaea that given our constitution that if Congress Asked me to brief on the details that i understood, i would do so in a classified session, and i will do so this afternoon in the all senate classified session. I will give you all the details of which i am aware. Have you read the final agreement . It is not an agreement. It is a set of arrangements. Have you read it . I have. Question for you. You stated earlier that the Iranian Regime continues to Fund Terrorism and bad behavior. At the same time, we are concerned that the more money the Iranian Regime has, the more they will fund terrorist activity. In spite of the fact that they have a crumbling Economy Infrastructure needs, needs to repair, ability to sell more oil, yet they are still funding terrorism. It seems like to me that you would agree with susan rice when she says that we should expect that some portion of the money from sanctions relief will go to the Iranian Military and could potentially be used to fund more bad behavior and terrorist behavior in the region in spite of the state of their economy. Thank you, senator. I do agree with the premise of your question. I do agree with the statement that you quote from secretary rice. We saw them fund these groups during the iraniraq war. I expect we will continue to see that. The question is, what do we do about it . It is my offices responsibility along with our colleagues in the Intelligence Community to ramp up our efforts and go after those funding streams. The alternative that is put out there does not make sense to me strategically, which is we dont enter into a Nuclear Agreement, give them back their money, then what . So we will continue to combat their support for terrorism, but we will have the prospect of iran tothree23 months away from breakout. When you talk about a state sponsor of terrorism, that is a terrifying prospect. Strategically speaking according to the agreement, five years from the start of the agreement, more access to weapons, eight years, Ballistic Missiles, and they will be able to move ford with advanced research on Nuclear Technology and then we know for certain at the end of the 10th year that we are looking out a breakout phase. The reality of the agreement is that we will be able to mark on a calendar when the iranians will have an opportunity for Nuclear Weapons . No, as ambassador sherman has said, at no future date does iran have the ability to pursue a Nuclear Weapon. In fact, the agreement locks in the contrary. It has varying durations with respect to enrichment limits and those are strictest in the first 1015 years and then reduced, but at no point do they have the right to pursue or obtain a Nuclear Weapon. Senator we will have to respectfully disagree. I have one final question. Paragraph 25 seems to suggest that there would be an effort to preempt state laws and other states to pass laws that prohibit companies from investing in iran. How is this not a violation of states rights and have you read , that paragraph . How do you read that her graph . Mr. Szubin there is nothing to my knowledge about preemption in the joint plan of action. All it says is that we will make sure that state authorities who have enacted legislation with respect to iran are informed of the developments, which i think are pretty key to be aware of, when it comes to the iraq nuclear deal, and that will encourage them to take this into account as they consider it. Senator how would you enforce encourage them . Mr. Szubin in some cases those laws were predicated on the nuclear case. Any authority looking at divestment laws based on their Nuclear Program, you would have to take into account the historic developments that we are talking about today. Senator thank you. Chairman senator schumer. senator schumer i want to thank you. I want to thank undersecretary sherman. I have appreciated to this process your thoughtfulness, intelligence, candor, and availability for past meetings. I thank you for many years of laudable service to our country. And acting undersecretary szubin, thank you for your service as well. I look forward to removing acting from your title so that we can have you officially at the helm for the daunting challenges that face us not only in iran but around the world. I read and reread the agreement. Ive had many meetings with both people on sides of the issue. More meetings to come this week. Im carefully analyzing the proposed deal, because it implications are profound and farreaching. Ive had many questions answered. I have not get reached a conclusion. This is one of the most important votes ive had to take any of us will have to take in our legislative career. As senator brown mentioned. I owe it to my constituents to make an informed decision. I wont let Party Pressure politics in form what i think is interfere with what i think is right. I want to judge the deal on its merits and merits alone. In that spirit, i want to ask you a question today. One of the questions i had is this, to both of you. Where will iran be 10 years from now . I am interested in where iran will be. Some will say, look at the people of iran, they tend to be secular. They will push iran in a direction that is more moderate, more welcoming to the world, etc. Some say, weve had that population for a long time and this dictatorship, a very totalitarian, evil dictatorship of mullahs has barely shuddered even with one transition of power. So let me ask you how you see these two elements competing. I want your judgment, because this is only a judgment question, but i think in very important one as to where iran will be 10 years from now. I would ask you each to answer that question. Undersec. Sherman thank you senator schumer. And i thank all numbers for the enormous diligence of looking at this deal and trying to ask and answer incredibly ethical difficult questions. The u. S. Senate has been united behind democratic and republican president s for war, and i appreciate that we can perhaps come united together behind peace. Where iran will be in the future, i dont know, senator. I really dont. I dont think anyone does. Our Intelligence Community can give and i think probably has given you an assessment of what they believe, but quite frankly, it is a very common complicated situation. The people who turn out on the streets tended to be the young people who are desperate, not only for a better life and a job, but they want to end their isolation. We live in a technologically connected world. No matter what the Iranian Regime does, indeed, they get on the internet. They read twitter. They use all of the devices all of our kids use. And they know what is going on in the world and they want to be part of it. I thank the u. S. Senate for their support of programs which have helped break through the internet so that they can get on. At the same time we have a regime led by clerics who have been around for a very long time, had a very conservative views, more than conservative radical. Our are part of the revolution of 1979, and have not let go of that history of the depth of mistrust between us which is profound. I dont think there will be some magic transformation as a result of this deal. For me this deal is about one , thing and one thing only making sure that this regime which does do a lot of terrible things in the region and to its own people, will not have a Nuclear Weapon that could further terrorize the world and terabytes of the region. Terrorize the region. I am hopeful because i am a hopeful person that a transformation will take place in 10 years, but it may not. So we have to use every tool we have on all of the activities of concern that we have and work with israel, work with the region to stop those activities to make sure that those young people have a future atoll. Future at all. Senator schumer do you have anything to add, mr. Szubin . Sec. Szubin i dont. Senator schumer she is a very hard act to follow. Secretary susanzubin thats right. Senator schumer i would like to talk about the grant monitoring of contracts. I want to give you a hypothetical. A country, a Major Oil Company government owned, signed a 10 Year Contract with iran immediately after sanctions are lifted because iran has complied with the long list of agreements. And then snapback, we find it major violation. We go forward on that. It is now year 4 of that contract. I understand that grandfathering will not affect 1, 2, and 3. The profit they made in the first three years, they keep. Is the contract terminated in year 4 for the next six years, or does the contract continue . This is a important question as senator corker said, not the most important question, but we need an answer. There was a New York Times article about a different views. They asked the u. S. Government spokesman, and he refused to give an answer. That made me worry. That is why i am glad you are here to clarify. What happens in year 4, 5, 6, 7, is that contract terminated . Sec. Szubin i want to make sure i am exactly answering the question. Sanctions dont terminate a contract. They dont have the authority to annul a contract between parties. What u. S. Sanctions a do in that circumstance you are describing is they say any furniture transactions, whether it is future investment by wheel the foreign oil Company Future derivation of profits future expansion is sanctionable. That is what the sanctions and do right now. Senator schumer you will have to explain what that means to me in laymans terms. I am to tell total. Its my 4th year, and im due to send iran 1 billion for oil which i want. Can i still send that oil . Thats allowed . Mr. Szubin no. Sen. Schumer what does it mean its sanctionable . Is it in your view that the sections are severe enough that total will terminate the contract and risk being sued by iran . What does sanctionable mean in that situation. Sec. Szubin its exactly what the circumstances are right now and what the circumstances have been. There were a lot of preexisting contracts that were 10 year, 20 Year Contracts when we put them into place. What companies saw is that they faced the threat of these powerful u. S. Sanctions senator schumer so another words, total will not be able to do business in the u. S. If they continued in year 4, for instance. Answer me that question. Would they be able to do business in the u. S. In year 4 if they continued the contract . Sec. Szubin total could face a menu of choices. A menu of penalties under the iranian sanctions act, which could include being cut off from the u. S. Market. Senator schumer what could include mean . I just want to know this. Sec. Szubin the iran sanctions act has a menu senator schumer and who has the ability to determine what on the menu is chosen . Is that the u. S. Government unilaterally . Undersec. Sherman if i may, i was in the private sector for a decade. At the time when these sanctions came into place and total had to make a decision at that point whether to leave, the risks were too high for them. Same for another client at the time. They had to leave. They had to unwind those investments. They had to see if there was a force majeure that would allow them to come out. The risks were too high. Senator schumer what were those risks . Sec. Szubin they didnt have access to u. S. Secondary markets and corresponding banking relationships. Senator shubin senator schumer mr. Szubin, you said could, you didnt say will. Who determines that . Sec. Szubin in respect to your hypothetical, it is done at the state department. The penalties are imposed on the banks unilaterally by the u. S. Government. The only reason i was putting in the caveat at the top about the contract is that if a contract is signed between a European Company and iran the contract , isnt invalidated by our sanctions. What our sanctions do is to tour senator so that company would have to make a decision, doesnt risk the does it risk the suit for violating the iranian contract, given the heaviness of our sanctions . I appreciate the answer and i think you answered it. Next question. That is our interpretation what you just gave, of what grandfathering means. I think ambassador sherman, what is your title . You are good by me, whatever your name is. A British Ambassador said it agreed with the that after vacation. That interpretation. Do we have that in writing somewhere that can, france britain france, germany, and the eu agree with that interpretation . Undersec. Sherman we do not have a letter to that. I will talk with them about it that possibility. I want to tell this committee, though, ive had extensive discussions during the 27 days i was in vienna with everyone of our partners. Quite extensive. They all have these concerns and we were extremely explicit. The explicitness is the following, which adam said and i will repeat. We said there is no validity towards snapback provisions if there is any form of grandfathering. Then it renders snapback meaningless. And we will not agree to a deal, the u. S. Will not agree to a deal where there is not a real snapback provision. That is what we insisted upon and that is what we got. Senator schumer there are other aspects to it that i understand. Do russia and china, is there any indication they agree with this interpretation of it grandfathering . Undersec. Sherman yes we had explicit discussions with them. There is light which in the language in the documents that talks about prior contracts. If you read about language carefully, you will see there is no grandfathering whatsoever. Senator schumer okay. I suppose if it is a Major Contract to them, they could add ask that snapback not be put into effect, or pull out of the deal. That is speculation. Undersec. Sherman snapbacks cannot be brought by anyone country. Stopped by anyone country. Senator schumer no, but lets say there is a contract that is important to russia. They could. Who knows if they would . But they could. Thank you mr. Chairman. Chairman senator crapo. Senator i would like to address my first questions to you, mr. Szubin with regard to sanctions. At this point the jcpoa has been approved and submitted to the Security Council of the united nations, correct . What effect does that approval have on the sanctions regimes, both u. S. And u. N. . Sec. Szubin it has no impact on the sanctions of the u. S. Whatsoever. With respect to the u. N. Sanctions regime, as i understand it, the endorsement by the Un Security Council sets out a timetable in line with what ambassador sherman was describing, where iranian performance, when a verified will lead to a listing of sanctions. Senator crapo that would lead to all of the sanctions on iran . Sec. Szubin when enron has when iran has taken those initial steps. The sanctions on their arms trade and acquisitions of Ballistic Missile knology remain technology remain in place for many years to come under the u. N. Senator crapo in your opening statement, you made a point that it would be very hard for the u. S. To back out of the agreement that it has reached and then reimpose sanctions regime, correct . Sec. Szubin when i was referring to is that if congress were to strike down the deal would we of the u. S. Be able to unilaterally cut worse cut worseoerce International Pressure to secure a much better agreement . I wasnt talking about snapback. The key distinction between the two is that iran is in breach of the contract. Iran is defying the international community. I think we have good leverage in that case. Senator crapo thats the question we wanted to ask. If its not possible for us to go back and reimplement and affection an effective sanctions regime now, what about snapback . I understand that is based on an iranian violation of the agreement. But what about that makes you think, now that the sanctions have been essentially put into the process of being removed what makes you think that the snapback will work . Sec. Szubin thats a question i spent the better part of two years working on. I appreciate it very much. One of the things you hear about us talking about listing is for that exact reason, to make sure these authorities remain in place. That the structures of the uns sanctions resolution is still on the books. That the eu and u. S. Sanctions are still on the books so that they are hovering in suspense. We make very clear, not just symbolically, but legally that we are quickly in a position to restore that pressure. Senator crapo so you believe that the fact that we have five other nations agreeing that the violation of the agreement would require a snapback of sanctions means that they would immediately join us if we said there was a violation of the agreement . Sec. Szubin obviously if are talking about a scenario of the violation in the future, the key question would be, what is the violation . How material is it . But in the event that the u. S. Views it as a significant breach, we retain the authority to do so unilaterally, including at the united nations, even if members of the Security Council are not with us. Senator crapo you believe in that case, we could effectively cause the other nations to read reimplement sanctions . Sec. Szubin in the event of a serious breach, i do. What youre talking about then is the scenario we faced in 2012, where iran seems to be on the path towards a Nuclear Weapons capability. We Won International agreement to impose tough sanctions to cut off contracts, to pull out of investments, all of those costly steps were taken because the world frankly does not want iran to have that ability. That is not a u. S. Only priority. Senator crapo youre talking about a serious violation that would cause other nations of the world to believe that iran was building a Nuclear Weapon . Sec. Szubin yes sir. Senator crapo it would have to get to that level of proof of a violation before we could see a effective reimplementation of sanctions . Sec. Szubin no, we wants to what i am saying is we would obviously want to respond in a proportional way. It is not in our strategic interest to respond to a small breach with scrapping the agreement and trying to put all of the sanctions back into place. I dont think that would have this affect that we had over the last few years. I dont think it would be in our interest to see this agreement scrapped. If we see a small breach, its in our interest to see iran come back into full compliance in a way that we can verify. Senator crapo thank you mr. Chairman. I see my time is up. Chairman thank you. Senator mendez. Senator mendez let me thank you both for your service. Regardless of my questions, i thank you both for your service. Madam secretary, this agreement, or war, is as it a simple yes or no . If you cant give me a simple yes or no that if it is this agreement or war. And since i dont have unlimited time, if you had not struck agreement with iran, we would be at war with iran . Undersec. Sherman i believe the chances that we would be at war down the road would go up exponentially. Senator mendez you are saying compared to other witnesses who have served this administration in the past, who support the agreement and have been asked the same question, they have unequivocally said no, its not this or war. Undersec. Sherman , i just said to you it is not binary, senator. Senator mendez two years now three years from now . Undersec. Sherman i dont think any of us can predict the future in that way. Senator mendez the secretary of state has come before various members of the senate and said its either this or war. That is a binary statement. Undersec. Sherman and the reason, senator, is because sanctions have never gotten rid of their Nuclear Program. Its only brought them to the table. Senator mendez it hasnt created war, either. Undersec. Sherman if we abandon this deal, iran will continue this program further. And the president of the United States has said he will not allow them to obtain a Nuclear Weapon. That leaves us with one option. Senator mendez i think there is real doubt, including if you got an intelligence briefing. I think there is real doubt that iran believes a credible military threats on the table. On page 26 of the agreement, it says the u. S. Will make its best efforts in good faith to sustain the agreement and to prevent interference with the realization of the full benefit by iran on the sanctions lifting specified in annex 2, which is basically the u. S. Section. The u. S. 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 under the joint apprehensive plan of action. I tried to get this from the treasury secretary, and he didnt give me an answer. To the iran sanctions act that i was one of the authors of expires next year, do we have the right to reauthorize those sanctions now or at any given time . Yes or no . Undersec. Sherman i believe that it doesnt expire until the end of next year and its premature to have that discussion. Senator mendez so here we go again. We either have the right or we do not have the right. Having a question of prematurely discussing something doesnt answer the question. Do you understand that we have the right or dont have the right . Undersec. Sherman we said in this document that it recognizes the constitution of the u. S. The u. S. Congress has the right to do whatever it wants to do in its authority. So it not case you do have the right. What we are saying, we urge that it is premature to make that decision. Senator mendez well, if you are going to snapback, you have to snapback to something. The iran pensions act, which sanctions act which this administration on various occasions has credited as one of the significant elements of getting iran to the negotiating table. If they dont exist after next year, there is nothing to snap back to in that context. Undersec. Sherman we believe there is a way forward in that regard. Senator mendez let me just read to you what your partner in this deal said in a letter to the Security Council, dated july 20, 2015. The iranians said it was clearly spelled out in the joint comprehensive plan of action that both the eu and the u. S. Will refrain from reintroducing or reimposing the sanctions and restrictive measures listed under the joint company has a comprehensive plan of action. It is understood that reintroduction or reimposition including through extension of the sanctions and restrictive measures will constitute significant nonperformance which would believe iran from relief iran from its commitments in part or in whole. Your partner in this regard believes that if we were, if congress were to go ahead and reauthorize which i think most members believe is still going to exist. I think most numbers believes members believe that the iran sanctions act is going to exist. With all the waivers the president has, as something will be reverted back to if the iranians violate . That is a form of deterrence. Either sanctions work or they dont. Either they are a deterrent, or they are not. And if they are not, then the agreement is really based on the hope over the course of 10 years, or 13 of the president said in his npr interview, that there will be performance by the iranians, that they wont violate, and then with no sanctions in place, the only choice you have is a very limited window in which you will have to act possibly militarily. Mr. Szubin, let me ask you this. Is it true that when we have imposed sentience, we have given sanctions, we have given companies and individuals sufficient notice for them to divest themselves of the sanctionable activity . Sec. Szubin no, what i would say senator is that when we impose major sections that sanctions sanctions that affect sectoral behavior or major investments, there is a wind down. In some cases, 6 months or longer. Senator mendez if it is six months, and you have a oneyear break out time. David albright, in testimony before the senate Foreign Relations committee, said that they believe their calculation of the potential breakout time under one scenario is 67 months. That is a heck of a lot less then one year. The time for potential reenactment of sanctions. The iran says dont get the Administration Says sanctions dont get iran to do what they wanted to do, but at the same time, we have snapback. It is either one or the other. I dont see how we have the wherewithal under this agreement. Your partner says there is no way that they will respect that. We will be back to point zero. You are reluctant to acknowledge that there should be a reauthorization of the iran sanctions act because then they may very well walk away. If they are going to walk away simply by the existence of sanctions that dont go into effect unless there is a violation in the future, you have to worry that what they are doing is buying for time. The last point i want to make. Sometimes what is past is prologue. I want to read some excerpts from a hearing when i was pursuing the iran sanctions act when did the thenchairman, now the secretary of state was arguing against the sanctions. I guess in that respect things have not changed. He said that rather than motivating these countries to join us and increasing pressure on iran, they are more likely to resent present our actions and resent our actions and resist following our lead. A consequent that would serve the iranians more than it harms them. He could have the opposite effect and increase the Iranian Regimes revenue. Secretary sherman, you were recorded as also buying into that point of view. If you look at the transcript of the hearing, basically what it talks about is everything that we have heard here. That we will break the coalition. That we will be isolated. That we will be alone, and therefore, we will not have the consequences against iran. The problem is, when you cry wolf too many times, it really is problematic. Based upon the history which says no, those sanctions should not be imposed because if they do we will lose the coalition, now listening to this agreement. If it is not accepted, we will lose the coalition. Unwilling to say that the iran sanctions act should be reauthorized, which i think every member believes will exist as a deterrent. Then saying there is deterrence or no deterrence. That is hard to understand. The final point i would make mr. Chairman, this Iranian Regime cares about two things. Preserving the regime of the revolution. Cash and the revolution and the revolution. They are not going to enter into any agreement that does not preserve the regime. And the revolution. They would think this is a good agreement for them to accomplish that goal. That is worrisome. I understand the hope that the agreement implies in that they will perform. But when they dont perform, i dont think we are going to be in a better position at that time. Thats my concern. Senator investor ambassador sherman, im wondering if you can help me what you think congress is actually voting on. Whether or not congress would kill the deal, does that matter in any way to the iranians, or are they guaranteed all the benefits of what is then negotiated today . Undersec. Sherman of course they are not. The u. S. Congress has the authority and the right under our constitution to in fact review and vote a resolution of