Transcripts For CSPAN Key Capitol Hill Hearings 20240622

Three days. So it could be 24 days or as short as 13 days. Would it be permissible to address the snap back aspect . At the discretion of the chairman. Youre next. I will take my time and ask quickly to respond to the question. Thank you. I just wanted to speak to one of the premises behind your question. First, i absolutely agree that the more likely scenario we see is small breach is a testing, sticking a toe across the line. And what we need to do then is hit iran in a proportionate way show them that has consequences. Otherwise were asking for larger breaches. And we have to be very serious about that. We have been very clear with our partners we will be serious about that. But there is a premise that ive heard circulating that after the initial sanctions relief iran can somehow immunize itself to further pressure. Therefore it wont care about snap back. That is simply not the case. Irans foreign reserves cant be put in a vault or a mattress in iran in the form of gold or bills. Theyre not liquid, theyre not useable. What iran needs is to have them in Major Financial Centers useable for imports, to boost their currency, the whole host of things countries do. That means theyre going to have to keep them in foreign jurisdictions where theyre subject to snap back. If anything, the more iran begins to benefit the more vulnerable they are to this pressure. So we need to be serious. I agree in that respect. But the consequences will remain very serious, very severe. Reed. Ator thank you. Youve testified that you dont expect iran to stop funding hezbollah and other proxies. So what will you do to imbat those activities . Unfortunately, i do expect to see iran funding hezbollah and their other violent proxies. It is extremely troubling. It is frankly what i have devoted the bulk of my career combating. We have a lot of tools at our dispostal here. Is of the most powerful what Congress Gives us. Our designation is amplified internationally. What i mean by that is when we name a hezbollah financor, money laundrer, any bank entity e that facilitates faces very severe sanctions from the u. S. Sanctions that no bank wants to pay. So what weve seen as a practical matter thanks to those congressional sanctions is that our sanctions against irans proxies carry this International Weight and those become pariahs worldwide. But we need to do more. I think it is incumbent upon us to do more in terms of additional intelligence targeting to identify them and then to muster the coalition of countries who care about this to cut it off to shut it down. Let me just go to a very critical point here. The sanction regime is in place today. This deal some have argued it wont make a difference, the sanctionless stay in place. Youve been working on these for ten years. How would our partners react if we said we walked away . From my perspective and i would certainly defer to ambassador sherman. But from a shanking perspective, we have tremendous clout, tremendous influence as the United States, as the worlds most powerful economy. When it comes to our moral way and sanctions and economic way. I do not underestimate that. Ive had the privilege to be a part of the exercising that clout and ive seen firsthand how effective it can be. But as i mentioned it is not all powerful. We dont simply get to dictate to other countries what their Foreign Policy will be. We need to harness shared concerns when it comes to iran we have a shared concern. Four u. N. Security Council Resolutions have called out the program as being a threat so when we went to china, india, south korea, japan, to say you need to work with us, we have these powerful sanctions, you agree with us its a threat they said yes we do agree. We said heres the way to address it. Weve got a diplomatic path forward. Join us and lets test it. Lets see if we can use our sanctions leverage to obtain the concessions we need. They worked with us and it succeeded to a remarkable extent. In the event we walk away its a very different and much bleaker scenario. The International Consensus as ambassador sherman described is behind this deal. We would be alone walking away from it. In that event going and asking them to take very costly economic sacrifices in the hope of future much better much tougher deal that i think they would doubt the feasibility of, i think we would have very weak prospects for that. Thank you. Mr. Chairman i think i will stop. Senator scott. Thank you mr. Chairman and good morning to the witnesses. Thank you for being here. I, like so many of us, am very concerned about this deal, not supportive of it whatsoever. And the more i read of the deal the less i like it. That doesnt include the one part i do not know about, the iaea Side Agreements. Ambassador youve said a couple of conflicting things this morning from my perspective. Sitting here, i can seat your notebooks. I cant read whats in it. In the final deal, from the iaea, have you seen it and read it . Let many be very clear. I have seen the documents that discussed to an create the final arrangement force the modalities that underpin the road map, the roadmap being a 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 will so this afternoon in the allsenate classified session. I will give you all of the details of which i am aware. Have you read the final agreement . Its not an agreement. It is a set of arrangements have you read them . I have. Question for you. You stated earlier that the regime, Iranian Regime continues to Fund Terrorism and bad behavior. At the same time were concerned that at least those of us who have commented on the fact that were concerned that the more money the Iranian Regime has, the more they will fund terrorist activity in spite of the fact they have a crumbling economy, they have infrastructure needs, they have needs to repair their ability to sell more oil, yet in spite of all of that theyre still funding terrorism. So it seems like to me that you would agree with National Security adviser susan rice when she said that we should expect that some portion of the money from sanctions relief will go to the Iranian Military and could potentially be used as you said, will 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 premises of your question. I agree with the statement that you quote from normer National Security rice. Weve seen iran Fund Terrorism before the sanctions, through the period, the toughest period of the sanctions. We saw them fund these groups during the war when their economy was a shambles and i expect well continue to see it. The question is what do we do about it . And its my officers responsibility along with our colleagues, to ramp up our efforts to be able to go after those funding streams. The alternative, though, that i think is put out there doesnt make sense to me strategically, which is that we dont enter into a Nuclear Agreement, we dont give them back their money. In other words, we dont do this exchange of securing a nuclear commitment in exchange for sanctions relief. And then, what . So well continue to combat irans support for terrorism as weve been doing but we will have the prospect of iran two to three months away from breakout. To me, when youre talking about a state sponsor of terrorism, that is a terrifying prospect. So weve decided we need to address the Nuclear Threat and then turn to the terrorism. I think thats the strategic way to do this. So strategically speaking, according to the agreement, five years from the start of the agreement theyll have more access to weapons, eight years theyll have access to ballistic milssles. And be able to move forward on nuclear technology. Then we know for serp at the end of the tenth year were looking at a breakout phase. So the reality of the agreement, the reality is that we will with certainty be able to mark on a calendar when the iranians will have an opportunity for Nuclear Weapons. No. As ambassador sherman has said repeatedly, at no point, at no future date not 25 years, not 50 years, does iran have the ability to pursue a Nuclear Weapon. The agreement locks in the crare. Conterrory. At no point does iran have the right to pursue or obtain a Nuclear Weapon. Well, well just have to respectfully disagree. Paragraph 25 of the agroment seems to suggest that there will be an effort made to preempt state laws and states who otherwise pass laws that prohibit companies from investing in iran. How is this not a violation of states rights . And how do you read paragraph 25 of the agreement . Thank you, senator. There is nothing to my knowledge about preemption. All that the jcpoa says is that we will make sure that state authorities who have enacted legislation, divestment 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 Iran Nuclear Deal. That will encourage them to take into account as they consider their divestment. How will you enrrge them . Simply by putting forth what this deal is, what it is not. In some cases those divestment laws were predicated on the case. And for any state authority looking at divestment laws, you would have to take into account the historic developments that were talking about today. Thank you. Senator schumer. I want to thank you and i want to thank undersecretary sherman, acting undersecretary zuben. I have appreciated through this process your thoughtfulness, intelligence, canned dor, availability can dor, in our past meetings i thank you for your laudable service to our country. Sec. Szubin, thank you for your service as well. I hope to have you for the daunting challenges we face not only with 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. Im 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. I owe it to my constituents to make an informed decision. I will let Party Pressure politics in form what i think is right. Want to judge the deal on its merits and demerits 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 tenures from now . 10 years from now . I am interested in where i run will be. 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. I think all numbers for the enormous diligence of looking at this deal and trying to ask and answer incredibly ethical 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 ehind peace. Here iran will be in the future, i dont know, senator. I really dont. I dont think anyone does. Our Intelligence Community probably has given you an assessment of what they believe, but quite frankly, it is a very common gated 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 think 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. Or 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. 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. Do you have anything to add, mr. Szubin . Sec. Szubin i dont. She is a very hard act to ollow. 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. Hat they made in the first three years, they keep. If 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. When it new york spokesman refused to give an answer. 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 know 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 committees, future derivation of profits, future expansion is sanctionable. That is what the sanctions and do right now. You will have to explain what that means to me in laymans terms. Its my 4th year, and im due to send iran 1 billion for oil hich i want. Can i still send that oil . Thats allowed . 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 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. What could include mean . I just want to know this. Sec. Szubin the iran sanctions act has a menu 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. The risks were too high. What were those risks . Sec. Szubin they didnt have access undersec. Sherman they did not have corresponding banking relationships. 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 copy edit at the top about the contract is that if a contract is signed between a European Company and a broad, the contract isnt invalidated by our sanctions. 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. I think undersecretary german, ambassador sherman, what is your title . Whatever your name s. A British Ambassador said it agreed with the that after vacation. That interpretation. Do we have that in writing somewhere that can, 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. Theyll 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. 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 documents that talks about prior contracts. If you read about language carefully, you will see there is no grandfathering whatsoever. Okay. I suppose if it is a Major Contract to them, they could add 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. By any one country. Lets say there is a contract that is important to brush up. Important to russia. Thank you mr. Chairman. 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 erformance, when a verified, will lead to a listing of sanctions. That would lead to all of sections on iran . Sec. Szubin when enron has taken its initial steps in all of those key steps when iran has taken those initial steps. The sanctions on their arms trade and acquisitions of Ballistic Missile knology remain in place for many years o come under the u. N. 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 Course International pressure to secure a much better agreement . I wasnt talking about snapback. He key distinction between the two is that i run is in breach of the section. Iran is defying the International Community. I think we have good leverage in that case. 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 appreciated 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 sections 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. 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 un, even if members of the Security Council are not with us. You believe in that case, we could effectively cause the other nations to read implement 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. 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. It would have to get to that level of proof of a violation before we could see a effective rehabilitation of the sanctions . Sec. Szubin no, we wants 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. Thank you mr. Chairman. I see my time is up. Let me thank you both for your service. Regardless of my questions, i thank you both for your service. Madam secretary, this agreement, is as it a simple yes or no . If you cant give me a simple yes or no that if it is this greement or war. If you had not struck agreement with a run, we would be at work with iran, we would be at war with iran . Undersec. Sherman i believe the chances that we would be at war would go up exponentially. You are saying compared to other witnesses who observed indian ministration in the past, who support the agreement and have been asked the same question, they have unequivocally, easley said no, its not this or war. Undersec. Sherman , i just said to you it is not binary, senator. Two years now, three years from now . Undersec. Sherman i dont think any of us can predict the future in that way. 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. It is an created war it hasnt created war, either. Undersec. Sherman if we abandon the steel, they will continue this program further. 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 forces 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. Do the iran sentience 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. So here we go again. We either have the right or we do not have the right. Having a question of maturely 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. Given a snapback, you have to snapback to something. The iran pensions 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. 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 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 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 that the iran sanctions act is going to exist. Is that 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, where 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 section in place, 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 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 affect sexual behavior or Major Investments sectoral behavior or Major Investments, there is a wind down. In some cases, 6 months or longer. If it is six months, and you have a oneyear break out ime. David albright, in testimony before the Senate Foreign relations committee, said that they believe their calculation of the potential breakout time under one scenario, 677 months 67 months. The time for potential reenactment of sentience reenactment of sanctions. 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 to not respect things have not changed. Rather than motivating these countries to join us and increasing pressure on iran, they are more likely to present 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. 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. Unwilling to say that the iran sanctions act should be reauthorized, which i think every member believes will exist as a deterrent. 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. They are not going to enter into any agreement that does not resume preserve the regime. 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. Invested her 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 initiated 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 disapproval. The president of the u. S. Then has the right and the authority to exercise his veto, if you wants, and i would expect that he would. Then the u. S. Congress has the right to override that veto. Thats how our system works. I would hope the u. S. Congress cannot override that veto, because i believe that this plan is the most profound, the most farreaching arms agreement ever negotiated and that will keep his country, israel, and our allies safer. If the congress did override that veto, why would it matter to the iranians . What would they lose . Undersec. Sherman they would lose an opportunity to have sanctions relief. They would have the opportunity to lose their isolation from the rest of the world. They would lose their opportunity to come into the community of nations. They may not care about that. And what i would expect is that the u. S. Congress overwrites a president ial veto, which i would not expect that to happen, because i believe this congress has united behind democratic and republican residents for war, and i believe they would unite behind them for peace. That is what this deal is about, not having to go to war, but ensuring that iran does not get a Nuclear Weapon. I agree this should not be a partisan issue. Is the administration are going that we already lost the International Community . So that if we do not go forward with the deal, the iranians will get this relief anyway . If no, isnt that an answer to senator menendezs question . What secretary kerry was saying 34 weeks before, it isnt a choice between this deal and war, but there are other scenarios where sentience could have an effect . Undersec. Sherman yes, i understand that. It is what kind of effect, and whether that will stop their nuclear program. Is it true that our unilateral sentience could be put back in place and continue on . Is it possible that the rest of the world, maybe not europe, europe may follow through because they are allies, but other parts of the world that have taken huge economic costs by stopping their importation of iranian oil or taken huge costs by ending trade with iran would not Pay Attention to our sanctions . Es, that is indeed the case. Our sentience regime would not e as effective as it would e. The International Community has come together behind the steel. This deal. The u. S. Will be in a weaker position, not only on this, senator, but on many other things we are trying to do internationally. Just to be clear, it is your position that if the congress would kill this deal, the u. S. Sanctions regime could still have some significant effect . Undersec. Sherman it would have some effect, i would suspect so. But not to the effect that it does today. Everyone has to remember that iran will then move forward with its program. That sanctions, at stated as devastating as they have been, and i would say to senator menendez, that indeed this administration has enforced both unilateral and multilateral sanctions than every previous administration. Each of which has tried to do a very good and credible job. The we have intensified that. That is what president obama set out to do, intensify sentient rusher. Intensified that sanctions pressure, so that iran would come to the table. Thank you. I do appreciate your advocacy for the agreement. I think this was a yes or no question that you just gave. You dont believe that it is war or this deal. You just outlined a third scenario. You wouldnt answer yes or no for him. Undersec. Sherman even though our sections would have some bite, iran would move forward with its nuclear program. Because why wouldnt they . They wouldnt get all the relief they wanted. They would keep marching forward with their program. It would force us into a choice. Where we allow them to have a Nuclear Weapon . President obama is resolute he will not allow that to happen. That leads us down a road heading to war. Secretary szubin, id like to ask you a question. I know that we have mutual affection for one of your predecessors. He said that the irgc receives no sentience receives no sanctions under this deal. Most of those and most of those entities receive sentience relief under this deal. Sec. Szubin on this point, i respectfully beg to differ. The business and for empire f the irgc will remain under sanctions. Thanks to congress, that will have international effect. The largest Construction Engineering firm in iran we have designated for being controlled by the irgc. It is not coming off. Not at five years, 8 years, 15 years under this deal. They will be cut off from the u. S. Financial system. Those all remain in place. There are companies who have done what i would call arms transactions with the irgc which we have designated conducting business with the irgc. They are due to receive relief under various phases. But the Business Empire as you described it remains intact. Undersec. Sherman and the irgc does not support this deal. That should tell you something. My understanding is that the irgc controls smuggling benefits very handsomely. That is one of the reasons they are opposed to that. Is that a correct impression . Sec. Szubin the irgc is engaged in a lot of nefarious activity within irans activity. Within irans economy. We have heard and credible allegations of profiteering and black markets, including goods going to the help of the ranian people. I submitted a series of questions to this administration. Iran has committed indefinitely to not engage in specific activities that could intervene to the design and develop a Nuclear Weapon. N this context, does indefinitely meaning that the time period has not been established, or does it mean indefinitely . Undersec. Sherman it means i run is prohibited iran is prohibited from acquiring or obtaining a Nuclear Weapon, ever. Soybeans perpetually. So it means perpetually. Undersec. Sherman yes. Does iran have the right to enrich weapons grade uranium after the enrichment cap . Undersec. Sherman no, because if they indeed move to enriching, what we would consider weapons grade, it would raise a red flag to the iaea. There are very few circumstances where iran needs to enrich above 5 for peaceful purposes. One could argue for submarine fuel perhaps. But if they went to weapons grade, it would raise red flags immediately and we would see it as a major noncompliance. So enrichment over 5 starts to essentially raise this red flag with the exception of submarine fuel . Undersec. Sherman there may be one or other two things. There may be other instances, but they are very few. What would submarine fuel be near . Undersec. Sherman it could be 20 . That is a big distention between 5 and 20 . Are you basically saying that if the amount of fuel enriched didnt specifically meet the quantity profile of the nuclear submarines, that that would be a red flag . So most purposes it is 5 . Undersec. Sherman yes, 5 or less. The one other distinction i should make is for the Tehran Research reactor, which helps to make medical isotopes for Cancer Treatment in iran. It uses 20 , but this agreement says that we will provide fabricated fuel for that Tehran Research reactor overtime. We put controls on that so that it cannot be used for other urposes. How much enriched uranium above 5 could iran store without creating a red flag . Undersec. Sherman two point acting under secretary sbuzin, hopefully reminds me. For 15 years, iran is not allowed to enrich beyond 3. 67 . The concern you raised only begins to raise those red flags after those 15 years. They are allowed for those 15 years to only have a stockpile of hundred kilograms. That 300 kilograms is not enough to provide enough physical material or a Nuclear Weapon. After those 15 years, they can have more than 300 kilograms . There is no limit . Undersec. Sherman there is no limit, but again, we would look at it ever increasing stockpile. We have centrifuged reduction for 20 years. They have to make a declaration to the iaea of their additional per call and additional protocol. There will be many metrics for measuring what they are doing with their program for a very long time. My last question is, when you look at snapback, it is kind of a sledgehammer approach. Given the scale of the violations, is there a scalable response . Sec. Szubin yes, senator. We reserve the right to snapback in full or in part. That is a quote from the agreement. We can do that with you when sections or unilateral sections. The eu has reserved a similar right. Whether it is on a category transactions all the way to full snapbacks. Thank you. Senator cotton. I too noted with some astonishment there was an eight Minute Exchange between the meeting of the grandfather clause. I think we got some kind of answer out of it. Administration officials have said repeatedly that iran will exploit every ambiguity in the text of this agreement to their advantage. I can only imagine what they will say about that clause should it come to pass. Moving on, secretary sherman. Theres a lot of commentary about access. Access to Irans Nuclear sites, heir military sites. Secretary kerry and moniz talked about access. Can you assure us that this access will be physical access, iaea inspectors will be physically walking into these sites and taking samples for installing equipment . Undersec. Sherman i think every situation is different. The iaea has the capability, the expert knowledge to make sure that whatever they do can be technically authenticated. I cant through every hypothetical situation. I know the director general working ask these questions i your colleagues in this informal meeting. I would rely on his answers more than my answers. What i am assured of is that whatever they do in every circumstance where they believe the need to have access, it will be technically authenticated and will meet the standards that they must have and they require for ensuring verification. Sen. Cotton it sounds like the answer is no we cannot verify that iaea inspectors will be physically present on every site. Undersec. Sherman you dont have to be present on every site in his technological world to get done what is necessary. Sen. Cotton who will decide what is and what is not a military site . Undersec. Sherman the better way to respond to your question, if the iaea has justification to have access to a site, we have a process to make sure they get access, whether that is military or nonmilitary. If they have justification to enter any site, regardless of what it is, and the axis agreement, they will get access. The u. S. Would not have agreed to an agreement where access was not assured if the iaea believed it had to happen. Sen. Cotton are you aware of any actions iran has taken it to sanitize any sites . Undersec. Sherman there is an all Senate Briefing this afternoon. That is classified information. We will be prepared to answer these questions. Sen. Cotton was moved to the side deals for iaea and iran. You acknowledged to senator scott that you read the Side Agreement between the iaea and iran. Did anyone else read these Side Agreements . Undersec. Sherman some of her experts at it as well. As it all of the p5 1. Sen. Cotton can you give me an estimate . Undersec. Sherman a handful. Sen. Cotton you said earlier to senator corker that we have to technologies agreement between iaea and iran. Undersec. Sherman it is the iaea in every country with safeguards protocol. Sen. Cotton the fact that you read them, doesnt that undermined the supposed evidence reality . Supposed confidentiality . Undersec. Sherman we were shown it in a private setting. I will share my confidential understanding and keep it in a classified setting. Sen. Cotton how long are these doctorates . These documents . Undersec. Sherman very short. Sen. Cotton why are these documents classified . Its not a u. S. Covert document. Its not sensitive to the methods of our Intelligence Community. You know whats in it. Why are these classified . Undersec. Sherman the reason is that they are called safeguard confidential. Under the company has of safeguards agreement, to which we are also a party, we have confidential documents and protocol with the iaea, as do all of the countries that are under the csa. The iaea has committed to keeping them confidential. And so therefore, they are committed to keeping these protocols under csa confidential as well. Sen. Cotton im aware that is the statement you also gave to senator corker. I assume youre not implying any kind of moral equivalence. Undersec. Sherman i indeed senator, that it understood that this was a very different circumstance in the sense that we are trying to keep iran from obtaining a Nuclear Weapon and that this was a International Understanding negotiated amongst 6 parties and iran. So yes, i understand this is a different circumstance. Which is why i believe the iaea at an expert level shared the protocol arrangements, understanding they would be classified. And i made clear to the iaea under our system, i would be required to share, in a classified cover initial setting, with members of the u. S. Congress what i had seen. And i will do so this afternoon. Sen. Cotton did you make clear to iran that these laws required commerce to receive it required congress to receive all of the texts . Undersec. Sherman our understanding of the legislation passed by the house and senate is that we must give you every document that we have. And we have given you every document that we have. Sen. Cotton it says it doesnt matter whether the u. S. Government has it in its possession. Undersec. Sherman its very difficult to give you something that we dont have. Iran and the iaea are well aware of our legislation. I can assure you they follow what you do every cycle day. Sen. Cotton fascinating new interview from secretary kerry today. Secretary kerry says that if Congress Rejects video, it would show iran america is not going to negotiate in good faith. That would be the yatollahs point. You made it clear to iran that covers would have to confirm on this deal before he could move forward. Undersec. Sherman of course they knew that congress was going to vote on this. Everything was very public. Everything that happens here in our country is transparent, democratic, and public. Sen. Cotton are you concerned about congress screwing the ayatollah . Undersec. Sherman i will not comment on that. I can say that secretary kerry, secretary moniz, myself, the negotiating team that has been working diligently on this for over two years, having briefed the u. S. Senate and congress countless times, hundreds of times quite frankly, did everything they could to ensure the safety and security of the u. S. That is our solemn obligation. That is what we did. Sen. Cotton thank you. One, i appreciate what you have been doing. Many of us have concerns about components of the deal. I find it remarkable that some members seem to impugn that we are doing the best deal for the u. S. And prospects into the egion. May agree or not a great with or not agree with what you have negotiated, but i would never a question the approach or dedication that you have taken in this process. Clearly mr. Szubin, your actions towards the ministration brings a lot of history and commitment. I absolutely believe that you want to make sure that we followup, particularly on iranian actions in the region. There are some who put forward theory that if the u. S. Congress turns this agreement down, that iran would still have an interest to go through with implication with mplementation. They would do this so that they could still obtained the 50 million plus dollars and isolate themselves from the rest of the world. That has been speculated on a lot. Could you comment on that . Sec. Szubin its always dangerous to speculate about highly complex International Scenarios like the one you are describing. But the point ambassadors for minute maid is important in this respect. The point ambassador sherman made is important in this aspect. We would implement the sanctions as it is in our obligation to do. We would still see some international enforcement, whether it is on the oil side or reserve outside. That enforcement would begin to erode, especially in the scenario you were describing, where i ran actually goes through where iran goes through to isolate us. To show that they through with their convention and the u. S. Is the one that walks away. That would be terrible for us in terms of our credibility. When we exercise our authority, we need to be able to do so in a way that is meaningful. I very much hope it doesnt come to that. It certainly would be a situation of weakened leverage. It is not going to be zero or 100 , but it will be weakened leverage. The question is, could be turned weakened leverage into a much stronger deal . My assessment is no. Undersec. Sherman i could not agree more. My assessment would be no, if we walk away, even if we retain some sentience capability. Some sanctions capability, the rest of the world will go in another direction. More importantly, iran will go in another direction. And the president of the u. S. , whether it is president obama or the next one, will receive this challenge. Would they walk away or go through with the implementation . Undersec. Sherman i doubt very seriously if the u. S. Sanctions remain in place, iran will perceive that we have walked away from the deal and they no longer have to stick with it. Two more questions. One concern we have had is that the administration mentioned swift system, there was great reluctance in taking that step. In retrospect, that was important in helping taken down the sanctions. I do wonder, if we dont move forward, will we be prepared to move forward with those same sections, particularly as we look at the banks of indian, orea, japan. Comments on that . Ec. Szubin it is a very stark scenario you are depicting. The institutions youre talking about are some of the most significant and fundamental institutions in the International Financial sector, whether it is swift, the leading secure messaging company for banks worldwide. Whether its the largest commercial banks in korea, india, the central bank of japan. The prospects of us having to use our sentience authority is against those our sanctions authority against those entities are frightening. It would be threatening those institutions unless they come along with the u. S. Pproach. Let me just get my last question in. One of the statements you made earlier, i would like further expiration on how you got to the 24 days. Still i have some concerns, but at least i have a little more clarification. I think it is an artful process you accreted you have created. What kind of assurance can we really have that our current eu partners and friends in the. K. , if they have engaged with iran on a business basis, that they will stick with us, had we get more comfortable rock that . Comfort around that . Undersec. Sherman , in the we were in the same circumstance. In 2012, we were in the same circumstance. Europe had a lot of business with iran. They were very concerned about iran having a Nuclear Weapon and moving down that pathway. So they joined us in enforcement of unilateral sentience and their own sanctions. They enforce them. I would like to hear more from our european allies on that matter. Undersec. Sherman i would urge you to speak with them directly. I will think you will think youll get the right answer you are looking for. Senator warren . Sen. Warren i like to yield to senator donnelly and come back when it is my turn. Sen. Donnelly thank you both or your hard work. In regards to the iaea agreement and moving forward and this has been asked by others, but i want to clarify. Moving ahead in every other facility, is it your understanding that the iaea can get into every facility, that if they choose to, they can go in there physically themselves as opposed to having iran urnover materials . That they have physical access . Undersec. Sherman i be happy to get into this in greater detail in a classified session. What i can tell you is that whatever the iaea believes that it needs to do to have a technically authenticated result for whatever access they believe they need to have, they will get it. So if they believe they need to have physical access to a place, that will not be denied . Undersec. Sherman as i said, whatever they believe they need for a technically authenticated process, they will get under the agreements that we have negotiated here. And i will be glad to discuss this in greater and more exquisite detail in a classified seven. That would be fine. We can talk this afternoon, but it sounds like yes to me. Is there any reason to believe there are any other documents out there . Undersec. Sherman no. Or i do not know about them. Have you asked the iaea if there are any other doctorates out there . Other documents out there . Undersec. Sherman i talked with the director yesterday, i asked him questions about where we were with various things. I had no reason to believe there were any other documents. Have you asked the iranians, who you have had these discussions with, do you have any other agreements with anybody else at this time that we dont know about . Undersec. Sherman i have not asked that question explicitly, but given the hours and hours we have spent together, i do not believe there are any other documents. I think that is question well worth asking. Mr. Szubin, the alternative theory, or one of the alternative scenarios is that the u. S. Walks away and then we, in effect go country by country, saying make a choice economically. Dont deal with iran or else we will section we will not deal with your economy. What is the likeliness of that kind of scenario . Sec. Szubin in the event of us walking away from this deal, i think we would be very much swimming against the tide. The cooperation we have obtained to date in going around the world, just as you have described, saying we need to pressure iran, was predicated on a diplomatic path. China, india, south korea could see heres a way to test a run to see if they are ready to make a deal. Test iran. So in this context, we are walking away from that . So if we walk away, what is left in terms of strength of the sanctions . Some folks have said we have some a Significant Impact still on iran. What other global effects will take place . What other global effects will take place . Undersec. Szubin the u. S. , as you know, senator, would maintain sanctions. That is true that she either way, our embargo is going to remain in place. The eu has sanctions with respect to irans bad activity outside the nuclear file. But the most severe economic sanctions that we have spent time talking about today and this Congress Helped to put in place affects things like sales of crude oil, tetra chemicals, and access of the central bank of iran, the Banking System internationally. Those are all built on the threat of u. S. Sanctions with international acquiescence. It is that acquiescence sen. Crapo the alternative suggestion is for countries who arent willing to also continued their sanctions come if we walk away, we go to them and say make a choice. How realistic is that . Undersec. Szubin i think it would be a very tough conversation and when you go to a country like china or india and told them we will dictate where you filed by your oil from, which is what we have been doing the past few years, they will say with an eye on what . If they think that our bar, having moved the goalposts, the bar is unrealistically high, we will have a hard time securing that cooperation and that means that the sanctions leverage will the road considerably. Sen. Crapo thank you, mr. Chairman. Sen. Warren thank you, mr. Chairman, thank you, undersecretary szubin, and ambassador for your work. I think everyone understands that a nucleararmed iran threatens the United States, threatens israel, threatens the entire world. The only question before congress is whether the Nuclear Agreement negotiated alongside other countries represents our best available option for preventing iran from acquiring Nuclear Weapon. Im wondering if you can pull these pieces together and evaluate the option. What happens if we go forward with a deal versus if we back out . Lets start with the tough sanctions imposed by the United States with the cooperation of other countries around the world, such as the u. K. , france, china, germany, the u. If we reject this deal, we need our International Partners to continue the tough sanctions, block irans access in order to be effective. Ambassador sherman, if we walk away, do you believe that all the other nations that have endorsed this deal are likely to continue working with us to impose strong sanctions against iran . Undersec. Sherman no, because as acting undersecretary szubin said, the reason they cooperated is because they believe we were pursuing a diplomat excision and they thought that was worth trying to accomplish. That has been accomplished. They believe it was worth taking the economic hit they did it to do that, but if we walk away from what they consider to be a good deal 90 countries have spoken out in support of that deal they will believe we have changed the equation, we have not operated in good faith, and we are on our own. Sen. Warren lets look at what happens if we are on our own. If the United States continues sanctions on our own while other nations resume trade with iran, how effective will our sanctions likely be . Undersec. Szubin they will be less effective than they are today and were when we negotiated this agreement. Sen. Warren thank you. Now lets consider the roughly 50 billion of iran money that is frozen and could be granted as part of sanctions relief if iran complies with the deal. Undersecretary szubin, is most or even a very significant part of this 50 billion held in the United States . Undersec. Szubin no. Sen. Warren if we walk away, do you believe the other countries who hold this money will continue to keep it out of irans hands . Undersec. Szubin i think we will begin to see those funds be released if iran starts meeting its commitments under the deal. Sen. Warren but the question i ask is if we walk away from the deal, are you convinced that other countries that hold these funds are going to continue to withhold those funds from iran . Undersec. Szubin i cant guarantee that they will. En. Warren all right, lets talk about irans Nuclear Weapons ambitions. If we reject this deal and iran decides to build Nuclear Weapons, what would be irans breakout time . How long do you estimate it would take iran to produce enough material for a Nuclear Weapon . Sen. Warne the assessment undersec. Sherman the assessment today is 23 months. Sen. Warren what would be irans breakout . Undersec. Sherman at least 10 years. Sen. Warren lets talk about cheating. Ran may try to build a nuclear bomb anyway. Ms or sherman, will it be easier or harder for us to detect secret iranian Nuclear Weapons program if we accept the deal or reject the deal . Undersec. Sherman clearly if we accept the deal we will have many more eyes and the iaea will have access to declared sites in iraq and also have surveillance over uranium, the entire supply chain through the procurement channel, they will have eyes on centrifuge production, they will laugh access to undeclared sites that is, suspicious sites, if they police there is a justification. Most of that, nearly all of that, will disappear if there is no deal. Sen. Warren i have one more question on this. Lets talk about war. I dont think americans want to be dragged to another war with the middle east, but lets face hard facts. If we reject this deal, the breakout time will go down and that will increase pressure to take military action very soon. What i want to compare here is the effectiveness of these 2 options, negotiated option versus a military option. In the longterm, which action is likely to be more effective at preventing iran from developing a nuclear bomb . Accepted the agreement and closely monitor Irans Nuclear program, or rejected the agreement and if there is escalation, bomb iran . Which one is more likely to be effective . Undersec. Sherman clearly a longterm negotiated solution, which is what we have in the plan of action, is more effective. If we take military action, which the president of the United States will do if he has absolutely no choice, indeed, we will only set back their program as estimated by the Intelligence Community tothree years, because iran has the knowhow to master the fuel cycle to create fissile material for a Nuclear Weapon. Although we could bomb away their facilities, they can reconstruct of them. You cannot bomb away knowledge, you cannot sanction away knowledge. The only way to control it is a solution that is highly monitored and verify. That is what we have negotiated. Sen. Warren thank you. Some have said they want a better deal, but that is not the choice that congress faces. The deal is the deal. Congress has two choices, accepted or rejected. No one can say for certain that this deal will prevent a nucleararmed iran, and i wont say it. But no one has put a better or more realistic alternative on the table, and until i hear a better option, i intend to support this deal. Thank you. Thank you, mr. Chairman. Senator shelby senator heitkamp. Senator heitkamp thank you, mr. Chairman, thank you for your patience today. I have watched you let members get to the heart of what they need to examine, and i wanted personally thank you for that. We have a lot of attempt here to unbake the cake, right . Ive been somebody engaged in multiparty negotiations, including some of the largest civil settlements that this country has seen, and i know how difficult it is to unbake a cake and say that this could be better. I think elizabeth, senator warren, just took us through the paces in terms of what the real options are. I will tell you that one thing i dont believe has been talk a lot about is the fact of lifting the sanctions regime will in fact build a bigger, better, more economically stable iran into the future. As long as iran is on the terrorism list, creates incredible opportunity. As i think mr. Secretary, you have so appropriately talked about the challenges that they have economically today, it is if in fact the sanctions regime is lifted and we look 10 years in the future, iran will be much more stable economic power. Dont think theres any doubt about it. This might seem offtopic for some people, but it is certainly ontopic for me, which is the one thing we could do that would provide competition against an iran that has the ability to market their oil into the market and ave the resulting Economic Growth as a result of marketing that oil, is actually exporting american oil to compete with the iranian oil. It is very difficult in my estate to explain why we should lift sanctions on iran when we are sanctioned in the United States of america in terms of our oil exports. I would like to hear from both the state department and the department of treasury your response to that statement, especially looking into the future in a 10 years when we know that that competition could in fact curtail the economic might of an enemy that s pretty powerful. Undersec. Szubin senator, thank you for the question. Unfortunately, i am not the right treasury official the two jurisdictions on sales of american oil sen. Heitkamp what you do manage the sanctions, and that is a big part of it. As part of your job of managing the sanctions, is to look at how the sanctions have an impact on the viability economically of iran. You kind of are, for me, the right back to ask. Undersec. Szubin well sen. Heitkamp no dodging. Undersec. Szubin what i can say with respect to the sanctions is you are right. What is important is to relieve the secondary pressure internationally on irans economy, and if iran adheres to all of its commitments, iran can expect some economic recovery. I think it will be many, many years in the making before iran gets to where it ought to otherwise have been today sen. Heitkamp but you do understand that there is a lot of concern about an economically empowered iran and what it means for stability in the region. Undersec. Szubin i understand it to my very core. Sen. Heitkamp i dont have a lot of time and i think the chairman has been externally generous, so i would turn to you, ambassador sherman. Undersec. Sherman senator, either adam nor myself can comment on u. S. To mr. Policy, although we u. S. Domestic policy, although we understand how it has a profound impact on International Relations and the international market. I am sure that particular interest that you have, that we all have come in american conomic security and independence when it comes to oil and gas, is something that has to be resolved here. Sen. Heitkamp but there has been a lot written about the ability to provide some kind of Energy Security into europe that could be one of those soft power measures. Undersec. Sherman absolutely. Sen. Heitkamp i understand that it might be above your a great or whatever it is, but i want and a knowledge than oil of moving into International Markets has the effect of curtailing the economic power of iran, and economic power of russia, and a whole on able for a lot of people or nation states that really are not friends of this country, and this is an opportunity to give our allies step forward and the Energy Security that may in fact strengthen the sanctions regime if we ever snapped back. Undersec. Sherman i think no one would disagree that Energy Security for our country, for the world, and, for that matter, dealing with issues of climate and how we manage that, will have a profound impact on the development of countries and americas continuing to be the preeminent economy in the world. No question. Sen. Heitkamp thank you, mr. Chairman. Sen. Shelby senator vitter. Sen. Vitter thank you, mr. Chairman. Thanks to both of you for being here and for your service. I want to followup on a fairly important issues that a very important issue that my colleague senator scott got into, and that is these two significant iaea agreements. They are certainly significant in terms of enforcing this agreement, are they not . Undersec. Sherman i would say they are important arrangements on the modalities that the iaea will use, but the public roadmap, which you all have access to, lays out with the aea requiring of iran in broad terms as one of the steps it must take in order to get sanctions relief along with all the other nuclear steps. Although i agree that possible military dimensions are important, they are, the United States has already made its judgment about it, but we are much more focused on where the program is today and where it is headed in the future, which is what people of the joint what the bulk of the plan is about. Sen. Vitter you said what is available to members of the senate and the public is laying in broad terms. On the real specific arent the real specifics of verification very important with this agreement . Ndersec. Sherman of course, nd that is white in a briefing why in a briefing is something i will share in a classified session the arrangements of the confidential protocols between iran and the iaea. Sen. Vitter and you have read those secret agreements . Undersec. Sherman ive read the safeguard confidential arrangements, yes. Sen. Vitter ok, when do i get to read them . Ndersec. Sherman you know more than any other country will get to read the confidential protocols between United States and iaea. En. Vitter do you have a vote on this agreement . Undersec. Sherman i do not. Sen. Vitter i do. You have read these agreements, and i think that is appropriate, im not arguing with that. I have to vote on this agreement. You dont think it is appropriate that i would get to read it . Undersec. Sherman as i said to the iaea and all of my colleagues, i would have to share the arrangements in a classified session with United States sen. Vitter that is not my question. Do you think it is appropriate i dont get to read it when i have to vote on the matter . Undersec. Sherman senator, you will have to make your own judgment about it not sen. Vitter im asking your opinion, do you think that is appropriate . Undersec. Sherman my opinion is that it is in the United States National Security interest for there to be a comprehensive safeguard protocol and that those remain confidential good that is in our National Security interest. Sen. Vitter do you think it is appropriate that i as a sitting u. S. Senator representing a significant number of americans who has to vote on this do not get to read those agreements . Im not talking about putting them on the internet, im not talking about handing out undersec. Sherman i dont have those agreements to give to you, sir. Sen. Vitter . My question. Please answer my question. Do you think it is appropriate i dont get to read them . Undersec. Sherman i think the system that has been put in place that maintains these as confidential documents between the iaea and the countries which operate under the coverings secret agreement is appropriate. Sen. Vitter under the appropriate system, you get to read it, although you dont have a phone. I dont get to read it, although i do have a vote. Ok, let me move on. President obama earlier said that a year 14, 15, they, meaning iran, have centrifuges that have grown rapidly and the breaker time has shrunk close o zero. S that accurate . Undersec. Sherman what is accurate sen. Vitter is that quote accurate . Undersec. Sherman in those years it will not come down to zero, no. Sen. Vitter what will it come down to . Undersec. Sherman we can discuss those in a classified session. Sen. Vitter his quotation was down to zero. Undersec. Sherman it is not close to zero. Sen. Vitter so he was wrong. Undersec. Sherman it is technically impossible for enrichment to go down to literally zero. It is just not possible. That is why today it is 23 months. Sen. Vitter 23 months. Ok, maybe it is something comparable to that. In that context, do you think other middle Eastern Countries will strongly consider developing Nuclear Weapons . Undersec. Sherman i do not, and it is the Intelligence Communitys assessment that they will not. Sen. Vitter and to a layperson, that makes no sense. To a layperson, when you have a radical, dangerous regime, just the capability of within months having Nuclear Weapons, it is not credible that everybodys just going to sit on their hands. Explain to me why that judgment would be credible. Undersec. Sherman first of all, to build a Nuclear Weapon, you not only need it for some material, which today the breakout time is 23 months, under this agreement it would be a year to 10 years, which would give us plenty of time to take action could you also have to weaponize that material and you have to have a Delivery System. It is the assessment of our community that even if iran were able to enrich the highly enriched uranium to have for some material for a bomb, which he does not have today, and would take some time for them to get, they would indeed still maybe as much as a year or two away from getting a Nuclear Weapon, if in fact they had a program to weaponize and the Delivery System to carry it. Sen. Vitter well, again, im not talking about today. Im talking about assuming they live under the agreement in the later years, those timeframes considerably shorten. Undersec. Sherman well, the fissile material time frames shorten. We would have to ask intelligence i am not aware of the current weaponization program be im not aware of a Current Program that marries a bomb with a Delivery System in iran. I expect that they could do that should they make the decision to do that. But your question was about other countries, and i didnt get to that, and i apologize. I believe other countries will not go there because it is expensive, very expensive. Secondly, we would know about it. They would find themselves under the intense sanctions that iran has been under, because some of the countries that you are talking about our partners or allies of hours and are trying to deal with aspects of state sponsorship of terrorism of iran, and they want to work with us to do that and we are working with them to do that. I believe that any number of incentives or disincentives for those countries to choose not to move in the direction that iran has moved in. Sen. Vitter ok, thank you, mr. Chairman. Sen. Shelby this is been a long hearing, an interesting hearing. I have a few observations and will forgo the question. What is and what is not in the agreement is very important, is not, mr. Szubin . But if you dont have all the information, it is hard to discern what is in the agreement. My question to both of you, we know the history of iran. We know what is at stake here. Ambassador sherman, do you trust iran . Undersec. Sherman of course not. Sen. Shelby ok. Mr. Szubin . Undersec. Szubin no, senator. Sen. Shelby so we are entered into an agreement of great importance with a country we dont trust that we have reason to believe is going to cheat or do whatever they have to because they are determined, they are in pursuit of Nuclear Weapons, and as you have said, they are close to it right now, is that correct undersec. Sherman actually, they are not close to it right now. They are a year or two away from a Nuclear Weapon, should they decide to pursue one, and it is not clear that the Supreme Leader has made the decision to pursue a Nuclear Weapon. Two to three months for fissile material. Sen. Shelby fissile material. Undersec. Sherman under this agreement that would change to a year. Sen. Shelby which is a huge step. Mr. Szubin, do you trust iran to forgo their terrorist activity not and if we say 50 billion on promoting terrorism and unrest all over the world . Undersec. Szubin mr. Chairman, i do not trust iran, and we can be fairly certain that iran will continue to sponsor terrorism and groups like the quds force. It is incumbent on us to intensify the campaign against that. Sen. Shelby strange agreement. Thank you for your appearance efore the committee. We have another panel. I know it is a long day. Very important issues. I will call them up. Our witnesses for the second panel today include the zarate, Senior Adviser for the transnational threats project for the center of strategic and international studies. Mr. Mark dubuwitz. And dr. Matthew levity director of the stine program on Counter Terrorism and intelligence at the Washington Institute for near east policy. Nd ambassador burns. We welcome all of you here. To the banking committee. And all of your written testimony will be made part of the hearing record in its entirety. When you get seated we will proceed. Yes, sir. We will start with you, sir. When you are ready. Thank you, mr. Chairman. Ranking member brown, distinguished members of the can he, i am honored to testify before you to discuss the sanctions irmications of the iran Nuclear Agreement. I am privileged to be testifying with my fellow panelists whose work i have admired for years. I take this responsibility seriously given the gravity and implications of this agreement. I come to this issue with views born from relevant experience dealing with iran, from the Treasury Department and the National Security council. I know that all involved, including my good friend and former colleague who just testified, have been working incredibly hard to a peaceful solution to the iranion nuclear problem. The campaign which you know well has been a part of, built methodically over the course of a decade thanks to the innovative work thanks to patriots like ambassador burns. Have helped bring iran to the table. These efforts it is important to remember have also been designed to constrain and isolate rogue iranian behavior that supports terrorism, the assad regime, as well as to protect the integrity of the u. S. And International Financial systems. Unfortunately, the sanctions relief framework is flawed. The relief is too front loaded it does not account for the increased risks stemming from iranian commercial and financial activity and ultimately constrains the u. S. Governments ability to use effective power against nonnuclear National Security risks. There are structural problems in the agreement. The snackback is a blunt instrument. E iranians retain a hecklers statement. It may put them in the position of rehabilitating their economy. It creates a International Process that now subjects u. S. Sanctions to review. Based on the appellate process, any u. S. Sanction or related action would be subject to review by the other parties, including iran, china, and russia. We have potentially converted the Iranian Sanctions Program into one in which the target has an immediate right to challenge and an International Venue in which to do it. This will be done with the support of parties that do not like or want to see the use of financial power and influence. It may even drive a wedge between the u. S. And europe moving forward. At a minimum, all this will temper our aggressive use of financial tools against iran. The spirited letter of the agreement may neuter u. S. Ability to leverage our financial power in the future. From the start of negotiations what the iranians wanted most was the ability to do business again, unfettered and unplugged back into the global system. The regime has needed access to banking, shipping, insurance, new technologies and connectivity to global markets. That is what they lost over the past decade. That appears to be what they have gained and guaranteed in this deal. The u. S. Will need to amplify its use of Financial Measures aggressively against key elements of the iranian economy to deal with increased risks. It is not at all clear that this is well understood by all parties or even part of our strategy. And we have the ability to do so unilaterally, if needed. The United States has been shaping and leading the efforts to isolate iran and enforce sanctions since 2005. The sanctions regime has not been faltering. On the contrary, irans ice lation by virtue of their own actions and Market Reaction has increased over time and there has been increased risk aversion to doing business with iran because of the underlying conduct it engages in as well as the deep role of the revolutionary guard, the mullas and regime of controlling Strategic Elements of the economy. The private actors will not rush in immediately waiting to understand how the sanctions will unwind, whether iran will adhere to the deal, and their own risk. And the risks from iran are real and will increase from terrorist financing and proliferation, to corruption and illicit fin psing. These risks will help keep legitimate actors away from the economy for some time. The private sector as well, mr. Chairman, will be watching and listening to you and to congress, which can affect the Global Environment and the reach of our financial powers in the future. I think there are three critical principles for congress to demand related to this deal and to sanctions. Congress should ensure that there is clarity and implementation of the deal, and in particular the execution of any sanctions unwinding plan. It should ensure the u. S. Maintains as much financial and economic power as possible. Congress should mitigate the risks attendant to an enriched and emboldened regime in tehran. These principles then could help inform a new strategy to address the dangerous risks stemming from iran. The u. S. Could and should address a financial constricks campaign focusing on the revolutionary guard and the core elements of the regime that engage in terrorist financing, that could include the use of secondary sanctions. Recommitment of a nonproliferation regime focused on iran. Reinforce our measures against the bank using section 311 of the patriot act. The act could be used expansively to target the fin bses and holdings of the Iranian Regime and those involved in gross human rights violations. These are just some of the measures that could be taken to confront the risks and shape a new sanctions framework. Just very quickly. When president row hanie came back to the negotiating table a western diplomat based in tehran shared that he thought we had won the war using economic sanctions and financial pressure. But then he asked can you win the peace . I think, and certainly hope, we can still win the peace. But it will require using and leveraging the very same powers and authorities that help bring the regime to the table. We must ensure that the agreement has not empowered the regime and taken one of americas most potent powers off the table. Thank you. Chairman, Ranking Member, members of the committee, thank you for inviting me to testify particularly with these three great experts. The Iran Nuclear Deal is deeply flawed. I will address two of its most serious design defects. The sunset clause and the nuclear snap gak. The sun set allows them to disappear over a 5 to 15 year period. Tehran has to simply abide by the agreement to emerge with a Nuclear Power with industrial sized program, near zero breakout time, and easier sneakout pathway, and increasingly immunized against future pressure. And as we learned today it sounds like the iaea weapons inspectors will not get physical access to all military sites. Now, as iran grows more powerful americas ability to use peaceful economic leverage diminishes. This results in an additional fatal flaw that provides a nuclear snapback. The agreement notes that if sanctions are reimposed in whole or in part, iran will view that as grounds to void the deal. It also contains an explicit requirement to the u. S. And eu to do nothing to interfere with the normalization of trade and economic relations with iran. I call this a nuclear snapback because iran will use these to threaten to walk away and engage in Nuclear Escalation. Iran will likely target the europeans to intimidate them not to support the reimposition of any sanctions on any grounds or risk provoking Nuclear Escalation and potentially war. This is likely to provoke disagreements on the credibility of the evidence the seriousness of infractions, the appropriate level of response and likely retaliation. It will also stymie a the dispute resolution process governed a joint commission. The administration assumed that even if russia and china were to take irans side, washington could always count on the votes of germany, france, and britain as well as the eu representative. This 53 vote majority assumes that one european vote will not change in the face of intimidation. While the u. S. Can move to impose u. N. Security Council Sanctions over the objection of china and russia, would it do so without european support . Europe will also have a strong economic incentive not to join the u. S. In snapping back sanctions as Companies Invest billions into the Iranian Market pressure will grow. The same dynamics apply to nonnuclear sanctions including terrorism. On july 20, iran released a statement to the u. N. Security council that i mate reconsider its commitments under the agreement if new sanctions are imposed irrespective of whether such new sanctions are introduced on Nuclear Related and other grounds. Iran may be able to use this threat to prevent washington from combating irans support for terrorism or human rights abuses. In the face of threats, for example, would europe agree to a plan to reimpose terrorist sanctions on the bank of iran if it was found to be financing terrorism . Im doubtful. If the u. S. Cannot use economic pressure to stop iran, military force may become the only option. As a result, i fear that this agreement may make war with iran more likely, not less likely. And when that war comes iran will be stronger and the consequences will be much more severe. But there is an alternative and it isnt war and it is not about killing the deal. It is about a better deal. Congress should require the administration to amend the agreements fatal faulted laws especially the sunset clause. One key amendment. Restrictions on Irans Nuclear program, access to heavy weaponry and ballistic milssles should remain until the u. N. Security council where america retains its veto determines that its program is not a threat. One key amendment. The u. S. And europe should keep in place some key parts of the sanctions architecture so we dont need to snap back anything. That will still be in place. Precedent. Le congress has required amendment to multilateral agreements including cold war agreement wts soviets. At a time when moscow had thousands of Nuclear Tipped Missiles aimed at our cities. If congress rejected this deal china and russia might return to some iranian business but likely to stay at the table to keep iran from getting Nuclear Weapons. Europe however is their big prize. Their key is to use persuasion to keep the europeans out of iran. Few banks are going to risk penalties. Companies will find their financial pathways into iran sometimied. We will never again have the kind of powerful u. S. Secondary sanctions leverage as we do today. We should use it to get key amendments to this deal. Those amendments will lower the risk of a future war against a much more powerful and dangerous iran. Thank you, mr. Chairman. Chairman shelby, Ranking Member brown, members of the committee, thank you for this opportunity to appear before you today to discuss Nuclear Agreement with iran and the challenges it poses to the future viability of u. S. Sanctions architecture. The administration is telling people privately that it interprets deals sanctions provisions in a very aggressive way but is not making that clear to the public to congress our allies business and finance communities in particular or iran. Unfortunately, if we dont articulate the position that doing business with iran still comes with real business and reputational risks, others will not per seef there being much risk at all and will rush head first into the luke rative Iranian Market. Officials say the interpretation allows it to do several things including denying access to the Financial System and the u. S. Dollar, denying access to the u. Turn transaction mechanism to which iran dollarized transactions in the past and aggressively enforcing sanctions on foreign entities doing business with an entity that remain listed for human rights issues. The problem is that these have not been made public in any meaningful way and they are only effective if they are aggressively publicized in an equally aggressively enforced. The fact is as u. S. Officials will concede in private conversations that the administration suffers from a trust deficit whether one believes this is deserved or not it is there. And the fact is that not only are none of the positions listed i just listed clear within the deal. The deal could easily be read as prohibitting each and every one of them. Failing to make these positions public not only undermines the utility, it makes people question whether the administrations intention is to act on these moving forward. These are critical issue that should not be open to interpretation. Just a few weeks ago they issued a statement with strategic deficiencies which poses risks to the International Financial system. Found that iran presents such ongoing and substantial Money Laundering and terrorist risks that must apply active Counter Measures to protect themselves on the system from irans illicit conduct. But now under the iran deal much will be looking to expand business relationships with iran. A journal already contacted me asking me to write an article on what more europe can do to more proactively reintegrate iran into the Financial System. And one could think this should be our collective policy since it talks about parties refraining from actions that could undermine normalization of trade and economic relations with iran. For years now u. S. Officials have pointed to the conduct based nature of iran sanctions. The conduct brought upon the sanctions aimed at countering said conduct. Today irans conduct continues. And if the conduct based consequences do not kick in this could be the death nail of this tool kit. Designating a person here or there or a company here or there is not enough. What worked was making iran as a jurisdiction an unattractive market due to the massive business and reputational risks inherent to doing business in or with iran. But at the very time we most need to be able to highlight the fact that iran is a tremendously risky jurisdiction where they control much of the economy, human rights abuses are on the rise, and support for militantsy and terrorism continue unabated we are denied under the deal the ability to discourage business with iran. The best we can do is to delineate irans ongoing onduct remind their still some secondary sanctions and maybe some reputational risk. The former sanctions depend on u. S. Follow through. While the latter depends on the perceived risk. It actually encourages business with iran. How effective will it be to highlight the roll once it has been removed from the sanctions list . Major banks will be slow to move in but major nonu. S. Companies are likely to trip one another in a rush to reenter the potential market which is already being described as a el dorado and potential bonanza. Finally under the deal we lose the balance of multilalral sanctions. Under the deal, u. N. And eu sanctions largely disappear and remains u. S. Sanctions. To be sure, secondary sanctions remain in place and would impact behavior of european and other foreign banks and businesses, but this puts the onus solely on the u. S. The deal is not a bilateral u. S. Iran deal. And our partners should be expected to do their part Holding Iran Accountable for its conduct. Thank you very much. Mr. Chairman thank you. Ranking member brown, senator kirk, thank you for the opportunity to testify. You have my testimony. I will just make four quick points. I served in the Bush Administration as undersecretary of state and had the pleasure to appear before your committee before. I had lead responsibility on iran. And i come to you as a supporter of this agreement. I think it has many benefits for our country. And this is my first point. It will effectively arrest the Forward Movement in Irans Nuclear program that began with addin jads election ten years ago this summer. And it is going to make sure that iran does not have the potential to produce fiscal material for their Nuclear Weapons program for the next 10 to 15 years it is going to narrow that breakout time, as the last panel discussed, from two to three months now to about a year. There will be significantly strengthened inspections of Irans Nuclear supply chain for 25 years. And sanctions wont be lifted and this is important. This could take months until iran scomplies with the letter of the agreement. The administration is rightly going to mapet sanctions on iran for terrorism and human rights violations. And final advantage and it hasnt been discussed is that we have an opportunity to stop iran from becoming a Nuclear Weapons power through diplomacy and negotiation without having to resort to war. I certainly believe any american president should use force should they get close to a Nuclear Weapon. That is not the case now. And i think both president obama and president combush before him thought that diplomacy should be tried first. I congratulate the administration on this accomplishment. Second point. But there are risks here. I have outlined some of the benefits. But there are substantial risks. And i am mindful of them. The most important is that the super structure of irans program both uranium and plutonium is going to remain in both balls. It will be intact. It can be rebuilt and revived 1015 combreers from now when restrictions begin to laps. I fully expect the iranians two decades from now will want a reconstituted civil program. The problem for us then is that they could perhaps build a Covert Program on that facility or behind that facility. And that is going to be a problem for the United States at that time. We will have to reconstitute a sanctions regime that will not be impossible but i dont minimize the difficulty of doing that. Worked with czar at ea in trying to establish that regime ten years ago. Finally, i would just like to say that the global embargos on irans arms and Ballistic Missile programs that will end in five and eight years respectively, i wish they had not been agreed to the end of the embargos. I wish the administration has held the line. I wish we wouldnt be in a position of five to eight years from now having to reconstitution the program. I think that was a compromise that should not have been made. The third point. If you weigh the benefits and the risks, i think that the benefits outweigh the risks. Because we are going to freeze this program for 10 to 15 years. And without the agreement, and if we get into a scenario of a no deal where Congress Disapproves and defeats the president , i think three things will happen. The Global Coalition that we built for ten years across two administrations, i think inevitably is going to weaken. The sanctions regime wont end immediately. Certainly the United States would not end its sanctions but it is going to atrophy. And most importantly the iranians will not feel constrained to abide by the restrictions that undersecretary smermen and secretary kerry negotiated. They will be unfettered and unshackled. They will be able to move forward to become a Nuclear State again and i think that would be a weakening of american strategy ying interest. I do think that sometimes we are too caught up in the conventional wisdoms in this debate. And two examples i think are relevant. I dont believe the congressional defeat of this nuclear deal will lead inevitably to war. I dont think that is right. I think iran would be careful perhaps become a threshhold state but not to cross the line. But neither do i believe that implementing the deal deal leads inevitably to an iranian Nuclear Weapon. A lot will depend on what we do, not so much president obama but the next president after that. That is what congress should be thinking about. How do we strengthen Strategic Policy in the middle east to deter the iranians as we implement a deal. The president is giving a speech at american university. I hope what he is saying is we are going to close the big gap attain United States and israel ensure israels military as a secretary kerry did successfully this week. We should say the american president should say, he would use force against iran should it gets close to a Nuclear Weapon and violate this deal. I think that is something both democrats and republicans here on capitol hill would agree to