The foundation for defense democracies. Good afternoon and welcome to the foundation for defense of democracies. My name is toby and im the Senior Vice President for Government Relations and strategy. As many of you know, f. D. D. Is a nonpartisan policy institute focusing on National Security issues. We are a source for research, analysis and policy options for congress for the congress, for the administration and for the media and certainly for the wider National Security community. We take no Foreign Government or foreign Corporate Funding and never will. To learn more about f. D. D. , please visit fdd. Org. I want to welcome the online live stream audience and also those watching on cspan today. We invite everyone to join in on the conversation which will be live tweeting at fdd. Todays event is hosted by f. D. D. s center on economic and financial power. Cefp provides actionable recommendations to policymakers on how the u. S. Can leverage its economic and financial power to achieve its National Security objectives. In a moment, well hear from our featured speaker, Deputy Assistant secretary of state, for counterthreat finance and sanctions. He overseas oversees 25 sanctions programs at the department of state. He works very closely with our department of treasury to implement current and new sanctions. He also interacts with governments around the globe and with the private sector to ensure effective and strategic implementation of our sanctions. F. D. D. Really appreciates the tirlse work you and your team undertake. After his remarks, there will be a conversation about the threat environment and the administrations approach to addressing the myriad of challenges we face in this area. Eric is the senior director of f. D. D. s center on economic and financial power. He previously served as Senior Advisor to the undersecretary for terrorism and Financial Intelligence at the u. S. Department of treasury. Please join me in warmly welcoming Deputy Assistant secretary of state, david payman. [applause] david thank you very much. For the nice introduction. Good afternoon. Let me start by thanking f. D. D. For having me here this afternoon. I believe you were founded shortly after 9 11. To help protect our country from all threats. And i believe youve done a fantastic job in empowering policymakers with thoughtful analysis and investigative reporting. That really has helped keep our country safe and make our country safer. I think what distinguishes f. D. D. Is that you publish not only insightful and thoughtful analysis, but your products are operational and theyre actionable. And i can assure you that theyre read throughout our government and we look forward to reading more. I lectured upon three topics today. First, the role of my division, threat finance sanctions and sanctions policy and implemeptation. Second, id like to discuss our sanctions approach with respect to iran, and third, id like to discuss our enforcement posture more generally. And make an announcement with respect to the maritime industry. The maritime industry is the key artery for sanctions of asian globally. For multiple policy areas, including our sanctions against north korea, our sanctions against venezuela, and our sanctions against iran and syria as well. My division consists of two offices, toby mentioned one. The office of sanctions policy implementation manages programs ranging from venezuela, north orea, iran, russia, syria, nicaragua and other sanctions. My office of threat finance countermeasures deals with illicit financing through the use of conflict minerals and conflict diamonds. So we are the government representative to the kimberly process. Were also the state Department Representative to where we work very closely with our treasury colleagues to implement antimoney laundering standards within the fatf. One of our key roles is to help design the arc techture, the framework for our respective sanctions regimes and we do so by working very, very closely with our special representatives, special representative hook on iran, special representative abrams on venezuela, Deputy Beegan and department spi special representative wong on north korea, as well as obviously a close partnership, a day to Day Partnership with our treasury colleagues as well. So we were instrumental in helping draft the recent syria executive order 13894, which allows us to designate bad actors who are contributing to the worsening situation in syria. But it allows us to do more. It allows us to designate family members of bad actors. We recognize that this regime, along with other dictatorial regimes, are looting the wealth of their own people and theyre using that wealth to not only enrich themselves, but enrich their families and we intend to hold them accountable. We also play an honest broker role. We dont want to see sanctions in one policy area undermine the National Security priorities and the policies of our president and our secretary in another policy area. So, for example, when we decided to sanction Venezuelas Oil sector, we worked closely with our Energy Colleagues to ensure that Venezuela Oil sanctions will not cause instability in price or supply of oil. If it does, obviously it has economic consequences here at home and in other policies including iran. We conducted that analysis and determined it would not have a negative impact and i think time has proven that to be true. One thing weve done that sing quite historic at the state department in the last year is that we created an economic sanctions targeting team within my bureau to focus on designating those that violate sanctions and sanctions authorities granted to the secretary of state. So this team undertook to the largest ship owner in the world, a Major Chinese state owned enterprise, that was violating our sanctions against iran. And i think the very, very clear message this designation sent was that we are focused on strategic sanctions, sanctions that have an impact beyond the designated target itself, that have an Impact Across Industries and across sectors and the clear message i think were trying to send, that secretary pompeo was trying to send is that no company is too big to fail when it comes to protecting u. S. National security. No company is too safe when it comes to protecting our homeland and the american people. And so we undertook that designation, not wid standing the fact that it was a considerable increase in shipping costs globally not only with respect to china, to send that very, very clear message. One of the most important things we do at the state department is to use actionable intelligence to engage with foreign actors to determine if theres an opportunity for them to change behavior before we have to resort to enforcement actions. And if they do change behavior, thats a fantastic result often time bus comes quicker and more efficiently than undertaking undertaking a designation. We also take a multilateral approach to sanctions enforcement. So for example, we engage quite considerably with countries and private sectors around the world to ensure that they not only comply with but proactively implement u. S. Sanctions. Panama signed a president ial decree last year that allows it to withdraw its flag from any ship within 24 hours that violates sanctions or is used to facilitate terrorism and terrorist financing. Without the right of appeal to the ship owner. Before ship owners would have 30 to 60 days to appeal a decision to deflag that decision will now come immediately and it will not be appealable. We have also worked with flag registries across the world to help them share information. So one key success was the implementation of the risk. Risk is the registry information sharing compact. An agreement that was initially signed by panama, the Marshall Islands and liberia. Among the three largest flag registries in the world. To help them share information about bad actors. So panama or liberia decide to deflag a ship for violating sanctions, they will tell the other parties in the risc about that deflagging action to ensure that bad actor doesnt flag hop. I can announce today that st. Kitts, nevis, honduras and paulau have signed onto the risk and other countries are couldntly in negotiations to sign on to the risc as well. Let me move on to our approach to iran. Our objectives have been quite clearly laid out by secretary pom teo and the special representative. They are number one to deprive the regime of funding used to engage in its host of malign activities all over the world from developing Ballistic Missiles to engaging in proxy wars in syria, to supporting and sponsoring hue tee rebels in yemen, Houthi Rebels in to terrorist organizations from his boll lo on down. Our sanctions are designed to incentivize the regime to come to the negotiating table and address the 12 points laid out clearly by secretary pompeo which go toward five key objectives. You were in one, stop your sponsorship of terrorism. Number two stop your proxy wars in the region. Number three, give a full accounting of your Nuclear Program with inspection of all sites. Number four, stop your development of Ballistic Missiles. Number five, release all hostages including, of course, u. S. Hostages. What were really asking iran to do is to come to the table and act like any other normal country in the world. And how have we got ton achieving our objectives . Well, iran has said they are no longer funding certain shia militias in iraq. Hezbollah for the first time is making public pleas for donations to fund its activities. Lets look at the numbers. Oil revenues are down by 80 . Weve taken two Million Barrels a day of oil off the market from iran. That has amounted to 50 billion per year that is not going to the Iranian Regime to fund its malign activities abroad and commit human rights abuses at home they have regime is running out of options to store oil we have sanged and they are now cutting some production. We will target and designate anybody that stores iranian oil, petrochemicals or Refined Petroleum in violation of u. S. Sanctions no matter where they are and we will soon be announcing a sanctioned advisory on exactly that topic. On the risk private Sector Companies face and others face in storing iranian oil in violation of u. S. Sanctions. We have been quite successful in our campaign to take iranian oil off the market and that has led to iran resorting to petrochemicals and Refined Petroleum products as a major source of revenue. And we have now also adjusted our enforcement posture to attack those two sectors as well as the metal sector and the construction sector and other sectors that are sanctioned as well. The regime does not have any good options to fund an even modest budget. According to the i. M. F. , it is estimated that irans economy contracted by 9. 5 in 2019. However that number is based on oil exports of approximately 600,000 barrels per day. We know iranian exports are less than. Less than that. Some analysts estimate the contraction is closer to 12 to 14 . 10 is a depression. Inflation is in double digits and has been hovering around 40 . Unemployment is in double digits. 17 out of 18 iranian Pension Funds are bankrupt. Theyre in the red. That has led to iran issuing a false budget. Oil exports typically comprise 30 of irans revenues, and our sanctions are bringing this number close to zero. The regime itself says it exports about 300,000 barrels per day. So its curious why the regime put out a budget a draft budget that assumes exports are one Million Barrels per day of oil. Shortly after they released the state budget, the real tanked. Iran cannot be trusted to run its own economy. This regime cannot be trusted to run its own economy. Iran has a few options to respond. It could cut subsidies and we saw that when it was forced to raise gas prices. That led to mass protests against the Iranian Regime. For the first time we heard chants of death to the dictator, death to khomeini. Or it could sensibly tax its wealthy elite, regime cronies, or irgc affiliated companies which it is not deciding to do. Instead it is shifting the burden to the middle sector. Iran has has a dark economy. It had multibillion dollar socalled charities and foundations run by coe khomeini and his cronies that are untaxed and whose wealth doesnt reach the iranian people. 99 of 11 99 of 100 of irans purported companies have a an affiliation to the regime or the irgc. Failing state companies are continuing to be us is diesed and protected from taxes, further draining irans coffers. Iran has a choice to make. If the regime continues to divert money to Ballistic Missiles, terrorist sponsorship, proxy wars in the region, it could do so but it will have to start printing money. Which will force its economy to completely collapse. Or it could delay spending on salaries, benefits and economic development. But it cannot do both. This is why we hear today in the reets of tehran and across iran, death to khamenei. The people know that the regime must swallow the bitter medicine of sangs in order to finally change behavior. They know that corrupt officials that are mismanaging the economy are respondable for their plight. All of these results have happened since the reimposition of sanctions in november of 2018, the full reimposition. But actually i would argue its been less than a year since the secretary of state decided not to issue waivers for several countries continuing to import iranian oil. That stopped in may of in may of last year. Its been less than a year we have seen all these results. Weve also made clear that we stand with iranian people and we leave open a humanitarian channel for the export of food and medicine into iran. While cautions that in 2017 and 2018 the Treasury Department designate sodcalled humanitarian companies in iran and libya sorry, lebanon, for funneling millions to the irgc. Weve created a swift mechanism to help facile kit more humanitarian exports to iran while implementing enhanced Due Diligence to ensure the irgc is not coopting the export of aid to the iranian people. The u. S. Maintains broad exceptions to facilitate the flow of food and medicine into iran and this mechanism is one option. Special representative hook and our department have recently made public statements that were willing to help the iranian people fight the coronavirus disease and that offer has not, unfortunately, been accepted by the regime. Let me move on to the third topic. Our sanctions enforcement posture more broadly. Id like to announce today that well soon be issuing a Global Maritime sanctions advisory. The shipping sector, the aritime sector writ large from flagging registries, to insurance company, ship owners, to port operateors, to Terminal Operators to managers and other companies have more work to do to ensure their vessels are not financing and contributing to terrorism or violating sanctions writ large. U. S. Sanctions, u. N. Sanctions and e. U. Sanctions as well. In this Global Maritime advisory, we are going to foe tchoins use of a. I. S. A. I. S. Tran sponders that provide the transponders that provide the location of vessels should never be turned off. If they are that presents a risk that requires high Due Diligence. Flag registries should be asking for a. I. S. From those seeking to register their vessels with flagging countries. They should see the history of ample i. S. If the a. I. S. Has been turned off or manipulated that my may be a reason to deny services. Same for Insurance Companies and Financial Institutions. There are certain obvious highrisk jurisdictions where vessels engage in shiptoship transactions in order to evade u. S. Sanctions. These include the persian gulf, the u. A. E. , iraq, malaysia, hong kong, off the coast of china. False bills of laiding are used to disguise the original source of cargos. I encourage anybody in the private sector who is suspecting a false document to contact the u. S. Government. Contact my division, contact ofac, determine if theres some guidance we can provide on whether that bill of laiding or that documentation is indeed fraudulent. Private sector actor, port authorities, should be using longrange identification and tracking radar as appropriate to ensure theyre tracking all vessels in their area of operation. So for example if you are a port operator in the persian gulf, lirt can be used 24 hours a day, seven days a week to determine if all ships in that area have docked in an iranian port or stopped in iranian waters to conduct an s. D. S. Transfer or have stopped just outside iranian waters to conduct an s. D. S. Transfer. We are encouraging ship captains and crews to take pictures of the captains and crews of the ships that i do an s. D. S. Exchange with. If youre getting oil from another ship, it might be appropriate to take pictures of the captain and the crew of that ship and to transparently inform them if that cargo ends up being sanctioned, you will release that information and those pictures to appropriate authorities. Legal representations about sanctions compliance are always appropriate. Importantly, its appropriate to obtain the Beneficial Ownership information of vessel owners and those youre providing services to in the maritime sector. Not only the information about the Front Company that might be seeking a flag or the parent of that flag of that Front Company. Rather the ultimate Beneficial Owner and the individual principals that own and control that entity that ultimately get the benefit of that flag. Its also appropriate to determine if your counterparty has their own sanction compliance policies that are as robust as yours should be. Second, we are going to continue to aggressively enforce sanctions. Wherever a private sector actor or the government may be violating them. And were going to look forward enforcing them in a strategic , y, much like the designation the strategic sanction designed to send a message across the industry. Sanctions are the sharp tip of a Foreign Policy spear. In 2009 through 2016 we had 535 actions. In the first three years this administration, weve had close to 800 actions. We expect this pace to continue. We also understand that sanctions are not a silver bullet. They are simply a policy tool that are used in conjunction with other policy tools to achieve all Foreign Policy objectives. But this administration has not hesitated to use the full weight of the Great American economy to protect our National Security. And we will continue to do. So thank you very much. [applause] thank you for that. That was quite a bracing set of announcements and we really appreciate you doing that here at f. D. D. With us. For those with us in the audience, following us online and watching us on cspan, if you have a question, please feel ree to tweet fdd with the question, ill check my phone every now and then and incorporate those in the conversation. Two big announcements. One big announcement, the risk compact and jurisdictions. Second big announcement, the forthcoming advisory related to the maritime sector. Before we touch on a couple of things i want to focus on in the iran and venezuela context, can i ask, whats your message to the shipping industry about sanctions and sanctions evasion . David many actors in the shipping industry are good actors with good intentions. I think there needs to be a greater appreciation of the immense Economic Risks to those that do not appreciate u. S. Sanctions and do not have infrastructure to protect themselves against sanctions violations and ensure theyre being proactive in complying with u. S. Sanctions. So the first step is understanding our laws and having expert advice on how to meet those regulatory requirements. I think the second step is to take a step back and to understand that sanctions are Foreign Policy tools, intended to achieve Foreign Policy objectives. So its not necessarily enough to be compliant with the letter of the law. Its not enough, perhaps, in terms of injure risk analysis and the hell of your business for the longterm to only be concerned with the letter of the law. Its important to understand where u. S. Policy is today and where its going in the future and weve tried to engage the shipping industry writ large from ship owners to flag registries, Insurance Companies, Financial Institutions that provide financing to ships as well as ones that own ship, send that very, very clear message. And a part of our message is, we want to have an open door policy. So we want to be able to field questions if the private sector. But i really do think theres much more space for improvement in the private sector. It seems like much of the shipping sector is a generational business that has been handed down from generation to generation and business was conducted in a certain way, maybe 50 years ago or 30 years ago or even 10 years ago. The world has changed quite dramatically in the last 10 years. The use of u. S. Sanctions, i think, has escalated and i think weve shown that were ready to undertake strategic targeting. I think theres a lot of space there, the maritime advisory is intened to provide guidance, answer a lot of questions and get people started on the hard work they must do to get to where they think they need to be. Fantastic. So turning to venezuela first. This administration has launched and continued to engage in a significant sanctions campaign to pressure maduro and his cronies. Whats your sense of the administrations next step . What are you planning to continue to pressure maduro to stop looting the economy and allow for free and Fair Elections in venezuela . David i think special representative abrams has been quite clear that we intend to hold those accountable that are undermining the democratic process in veans way la and supporting an unelected dictator. And undermining the legitimate president guaido. Those include foreign actors that are interfering in venezuela which is why recently designated an entity for the continuing operations in the oil sector in venezuela. We will continue to hold foreign actors accountable for their behavior and interference while continuing to hold the maduro regime cronies accountable for their steal og of this stealing of the venezuelan peoples wealth and property and assets while at the same time seeking to block asset, hold assets for day one. Day one of the he jate legitimate government that actually is able to run the country without the interference of corrupt dictators like maduro. Eric lots of interesting things to unpack there. The first is it seems like this is something of a targeted pattern with the administration of focusing on Material Supporters of regimes that we dont like and think are threatening u. S. National interests, right . So you have the trading designation in the context of vens way. U have the other designation in the context of iran. Is this something your office is really target, the Material Support network thats able to prop up these regimes . Absolutely. Where we have authority well be sur pruing them pursuing them. The United States does not tell anybody what to do. But we have a sovereign right to decide who we do business with. Who gets to use our dollar, who gets to use our financial system. And we spent the better part of the last century making sure we have the strongest, most reliable currency in the world and the strongest economy in the world. And we have no tolerance for those that decide to do business with terrorists, corrupt dictators and those that commit human rights abuses and are stealing the wealth of their own people while undermining global peace and stability and threatening our National Security. On your comment about making sure that on day one, the legitimate government in venezuela will have access to sort of assets that are held abroad that are stolen by the maduro regime, how is the state Department Going about securing those assets or figuring out where they are and making sure theyre going to be available the day after . David obviously when the Treasury Department undertakes an enforce. Action to freeze or block an account, were able to determine where those moneys are and ensure that theyre continued to be frozen and blocked and not used by malign actors to the detriment of the venezuelan people and were closely tracking globally, i think, assets, accounts, and moneys worldwide to ensure that those are preserved for the venezuelan people. Eric we have seen over the last few months sort of the reinvig ration of the venezuela programs certainly with interim president guaidos appearance at the state of the union. Can you give us a preview, not mentioning specific targets that may be under consideration, but where you see the Venezuela Sanctions Program going over the next few months . David sure. I think we sent a really clear message over the last few years that were taking anest callaer to approach in venezuela and our sanctions are going to continue to amp up. That ramping up could be broadening the scope of our targeting to include secondary actors that contribute to the situation in venezuela who are located outside of venezuela. But that could also include the substantive broadening of our sanctions program to potentially include other sectors and other areas that are not yet sanctioned and obviously cant give details to forecast what they might be other than to say everything is on the table. Eric gotcha. So turning to iran. Based on your comments and the economic figures you include in your comments, its clear that the maximum Pressure Campaign is having a Significant Impact on the iranian economy. And its also, i think, having a Significant Impact on the iranians ability to finance terrorism in activities throughout the region. Couple of questions on. This first question is, is there more the private sector can do in your estimation to amplify that pressure . Yes. I think erik if so, what . David theres always more the private sector can do. We talked about the shipping sector. I think also the metal sector. Electrodes are a key component to irans ability to produce metal which is they export for a significant amount. The state department issued an advisory on this. I encourage producers of these to read those advisories. Many of those company mace be located in the United States and they may be located in europe and they may be selling those to Chinese Companies who are reexporting home to iran. Its good to have good export controls around highrisk products. That is a highrisk product. I think its important for Terminal Operators in ports across the globe to ensure they have sufficient compliance programs to ensure theyre not taking or allowing the port to take sanctionable cargo from iran whether thats petrochemicals, Refined Petroleums, crude oil, metals or construction ferrell. Any material that is sanctioned would potentially put them at jeopardy. And i think understanding your risk more broadly, it goes back to understanding what the rules are and what the laws are. Your exposure to them. And the direction of u. S. Foreign policy. Weve graduated now from a mechanics mum economic pressure against iran to a super maximum economic Pressure Campaign. Where we look to ramping up enforcement and continuing to designate key strategic targets. If i could use the cosco target s one example. Cosco a Major Chinese stateowned enterprise, we designated two subsidiaries. I think that was important because it sent the message i indicated in my speech, no one is too big to fail. But also the result was important. So after we designated cosco, we engaged in several rouns of discussions with cosco to ensure that they will comply with u. S. Sanctions going forward. They created a sanctions compliance program, they changed behavior. They changed behavior which is the intent and purpose of our sanctions. Our sanctions are not necessarily meant to punish. Theyre spended to change behavior of actors to become consistent with u. S. Foreign policy and i think they did that. Erik let me follow up on that eric let me follow up on that. Cosco changed their behavors, have you seen others in the shipping industry that said, wow, we dont want that to happen to us, have they changed behavior . David there are indications of that. We have seen that from other private Sector Companies, and i would note its not just the shipping sector. Cosco exports cargo. Those that rely on ships to carry whatever cargo that theyre doing business in, whether its in the construction sector or the Energy Sector or the metal sector, whatever sector that might be, those Companies Take notice and they ask themselves, are we sensitive to this risk . What is happening with respect to u. S. Policy . And were getting those questions and indications which is a great thing. Our door is open to answering those. Eric something of a twofer, companies are beefing up compliance, great in terms of increasing the integ i have to the system. But at the same time it probably more easily allows you to identify companies who arent doing that, who may be bad actors. David thats such a critical point. I think for the health of any sector, its important for bad actors not to take advantage of good actors. And we all recognize theres Economic Cost in complying with sanctions. And companies have to bear that cost. They shouldnt act at a disadvantage to those what are manipulating the system, evading our sanctions. So the more were able to create a common floor about what good compliance means, and the more Companies Buy in to that program, the more theyll be protecting themselves from bad actors and also not allowing others to take market advantage of the good work that theyre doing. Eric fantastic. Lets go back, david, quickly, to your point about the maximum Pressure Campaign and the super maximum Pressure Campaign. Great term. Sometimes you hear the criticism, or the comment, i guess, that, well, in terms of authority, were just maxed out on iran. Theres nothing else we can do from an Authority Perspective to ramp up pressure further. We heard this argument following the full snapback of sanctions in november of 2018 and there were steps taken to continue to ramp up authority. In your mind is there a super super maximum Pressure Campaign . Are there other authorities or steps that could be taken beyond what you said about enforcement which is obviously incredibly important . Just looking at it objectively, without forecasting what we may be thinking of doing, there are other opportunities to expand the scope of our sanctions. I went pr eric i wont press you on that but understood. We have had a number of questions come in from the audience before the session an during. I want to turn to some of those now. The first question we received was a question about china. In the context of iran. So going back to the cosco discussion. The question essentially is, how can we push china further to make sure that they are not providing support to iran and in particular, theyre not providing support to iran in the context of importing iranian origin crude . I want to get your thoughts on that. David sure. One more announcement i can make today, i think i may have mentioned it, we are going to be issuing guidance on bunkering, providing storage for sanctioned iranian oil and the sanctions risk and providing that service. So were hoping being transparent about where we see the risk and what we intend to do about it from enforcement perspective will induce a change in behavior before we have to resort to enforce. Actions. But we are looking at the very broad range of all evasive behavior, whether that is a ship owner or port operator or terminal operator or refinery, anybody basically in the supply chain of energy. From the very beginning owhere a ship picks it up to the very end after the shiptoship transfers may have occurred and holding everybody in that chain responsible, i think, sends a very Important Message to the industry. That the time of pointing fingers an claiming ignorance is over. Eric thank you. On that, i started off saying there were two major announcements you made but i think there may be three. Theres risk contact, theres bunkering guidance and is that separate and apart from the shipping guidance . David yes. Eric following up about china, we have gotten questions from the fdd tweet handle about the current impact of the Oil Price Plunge over the last few days and what your assessment is, what that means for tehran and what that means for their ability to cant continue to withstand the current regime in place. David first, nobody should be importing sanctioned iranian oil. Notwithstanding any price fluctuation, nobody should be in the business of dealing with sanctioned cargo. In terms of those who seek to evade our sanctions, having cheaper iranian crude may have an impact on the bottom line and their assessment on how worth it, the risk and whether its worth it. To engage in that kind of evasive sangs busted behavior for potentially decreased profit margin. Eric ok, gotcha. So do you think that price plunge would, for example, impact chinese buying if there is chinese buying of iranian oil going on . David im not going to speculate on the complexities of the energy marks, particularly in china. Other than to say that we expect no one to be engaged in sanctioned iranian cargo, operating or transacting anctioned iranian cargo. Eric. Turning to conversations youve had with our counterparts over the theres few months to a year, withdrawing from the jcpoa was not a pop already dation over the big three, but it seems there have been less sort of protests coming out of the e3 about u. S. Sanctions policy toward iran. I want to get your sense of where the e3 stands in terms of iran. Imum pressure on are they more on board . Following ill just along . David i think theres areas that we could work on together. That includes areas outside of the nuclear context. Whether its responding to Ballistic Missile proliferation and other host of bad act yoss that the iranians are commit, including asass nation attempts on european soil. So you had attempts a couple of ears ago in paris. Assassination attempt in denmark. I think the europeans have shown theyre willing and able to respond to that. Through the use of sanctions. So where theres opportunities, well continue to work with them. I also want to make one point more broadly. Not only about europe but our partners all around the world. And theres a misconception that u. S. Sanctions against iran are unilateral. But the fact of the matter is, in implementing our sanctions, we have fantastic partners all over the globe. From europe to south america to asia. Who not only who are not only complying with u. S. Sanctions but are proactively helping implement our sanctions. So at least in that respect, our sanctions are multilateral. I dont think you would have seen the success we have seen if they werent. Eric and of course theyre multilateral not just in the sense of being multilateral in other jurisdiction bus in some ways theyre multilateral with different types of actors. I know when i was at treasury and we were implementing the sanctions, we were pleased to see how many companies, European Companies in particular said were not willing to continue to do operations in iran in potential violation of u. S. Sanctions and so were going to pull out. Eric absolutely david absolutely. I think thats a perfect example of american clarity and leadership. I think we operate with a clear moral compass. When we take the lead the world soon follows. When we say either business with the United States or terroristsponsoring regime thats killing its own people, engaged in proxy wars in syria and yemen, sponsoring terrorism, thats a clear choice for many in the private sector to be making. Eric exactly. We saw companies leaving, Huge Companies that had massive operations in the country, leaving within two or three weeks of the announcement, well within the wind down and grace period. Whats your response then to the sort of of the heard argument here in d. C. And you alluded to it a little bit, that we are overusing sanctions and if we continue to use sanctions in such a unilateral way, the russians and the chinese and the europeans are going to develop workarneds. Exhibit a is insects, the european s. P. V. , an exhibit b, name your sovereign crypto currency. David its a good question. First we have to be an i think we are quite deliberate in how we use sanctions to ensure a few things. Number one, what is the policy objective . What is the goal were trying to achieve . Secretary pompeo has been extremely clear on our specific policy points on iran. Weve been extremely clear on our specific goals with respect to venezuela. Weve been extremely clear with our goals with respect to north korea. Making sure you know where the objective is, an does the new action, whether its a new executive order or new target, how does that move the ball forward . It could be in a modest, small way or in a strategic, large way. But how does that move the ball forward to achieving your ultimate Foreign Policy objective . And those are things we think about quite deliberately and people much smarter than me think about those things with the help of our intelligence community. Secondly, we do want to use sanctions in a multilateral way on venezuela, over 50 countries around the world have supported ur policies. On russia, transatlantic unity and cooperation are cornerstones of our approach with respect to russia. North korea, similarly, the u. N. Has done a fantastic job ensuring implementation and enforcement of sanctions writ large. That multilateral aspect is important. On iran we talked about how the globe in many ways silently but nevertheless are proactively helping us implement and comply with our sangs. So thats also an important component. Its important to listen to the voices of the people in the countries where we have targeted sanctions. The voices of the people in venezuela who are supportive of our sanctions regime and approach. The voices of the people in iran who are demonstrating death to the dictator, death to cha may khameneiing him and blaming him and his cronies for the malign behavior they have committed. Its also important, i think, to have conversations with our foreign partners on the use, appropriate use of a sanctions infrastructure for their own countries. Theres no reason why the United States has to be one of the few countries in the world with a sanctions infrastructure. Weve been having conversations particularly within the group on why its important for countries to have at least that ability. So when the time comes, where they see a need to use sanctioned to protect their own national securities, and to protect their hemisphere as were all trying to do with respect to venezuela and from interference in our hemisphere, to have the tools necessary to implement and the United States obviously will stand by them every step of the way. Eric one thing thats a little out of the scope of this conversation but obviously with brexit, the only other major sanctions authority thats currently in place where theres been enforcement activity is in the u. K. Under the office of sanctions implementation. Itll be interesting to see if that office ramps up its enforcement and the u. K. Adopts more autonomous sanctions moving into the future. One thing ill say in response to the question we received and in response to your response lateral sanctions activity at treasury we used to look at it and say, if we see bad activity we candice rupt here and now with a designation or with some other type of disruptive action, weir going to take that action. It doesnt necessarily mean that we dont think about what the longterm implications are. We absolutely did and sounds like thats still an ongoing conversation, as it should be, within the state department and interagency. But it was always sort of if we think this will stop them getting money or stop the irgc from receiving hundreds of billions of dollars, were not going to pull that punch because were afraid of what the longterm impact of this designation would potentially in some faroff world do to the power of u. S. Sanctions down the road. I think thats much of the mindset. I think thats largely true. Absolutely. David i think thats largely true. Absolutely. Were in the business of protecting this country and enforcing u. S. Law. If youre breaking u. S. Law, were going to look forward enforcing it and holding you accountable. Its also important to note that just because you might think youre getting away with it today, dont hold your breath because it takes some time to develop packages, as im sure you know, and we do have to go through the process. But have no doubt that process is continuing. Eric thats a great point i just want to flesh out a little bit. I think it was in maybe 2017, this is coming from the treasury perspective, everyone was reading the tea leaves about enforce. Actions because there was a dip in enforcement activity. Everyone in the private sector was saying oh, this must be part of a deregulatory approach, low enforcement, theyre not going after anybody, its a concerted effort. And those of us who had spent time in government and who are in government knew in the back of our minds that you cant just turn on or off enforcement activity at the flip of a switch. It takes years for these cases to come out. David absolutely. Youre right. And i think that raises the need for private sector actors not to speculate and make assumptions. But that could have been a legitimate change in policy. And that provides an opportunity to have conversations with folks like yourself when you were at treasury or with the state department about what our approach is and if its changed or not rather than guessing. I read a lot in the press about why we delisted cosco and the fact that it was economically unsustainable, which is factually inaccurate. Whats accurate is that we use sanctioned as they should be used to elicit a change in behavior. Thats not to say that in the future of if cosco violates they will not be redesignated. Eric its interest, the question of changing sappingses or lifting sanctions for a change in behavior is to your point exactly what youre trying to achieve with the use of sanctions in the first place. Certainly with the we wont spend time in russia but with that lift, it was that exact type of activity done by the Treasury Department where we were able to secure real strong terms and conditions to make the one that should be designated no longer had authority. David sanctions are a great tool to change the thinking of private sector actors. As long as we can bring them on the right side of the Railroad Tracks i think weve won. Eric i want to turn in our remaining minutes to a couple more questions from the audience. We had some come in over the hotline. One concerns f tambings f. The Financial Action task force. As you know, and con graduations, i think this was part of a long played out strategy, the fatf caw called for the reimplementation of measures on iran at their plenary a few weeks ago. Whats your sense of the impact that the call for reimposition will have then the iranian economy in particular. David i appreciate the compliment bucek retear billingsley deserves a lot of credit for the heavy lifting to get us where we got to with respect to reimposing countermeasures against iran that has, i think, the same impact and feeds the narrative that this is not a regime that can be trusted. This is not a Financial Sector that can be trusted. There has to be intense, heightened Due Diligence taken. Even when youre thinking about potentially engaging in a nonsanctionable act. So well see how that plays out. Well see how entities that are nked up with nonsanctioned beings may be reacting to the blacklisting. Eric interesting. There are a number of nonsanctioned iranian banks or designate bud not subject to sangs. So they will likely be impacted potentially by this. That raises another question which is one we also received from the audience. Its particularly germane in the light of everything thats happening or allegedly, supposedly happening in iran right now related to coronavirus. Whats been the administrations response to coronavirus within iran and then more broadly, how has the administration sort of answered the critique of, you know, u. S. Sanctions cost humanitarian aid from iran and therefore we are in responsible for some of the humanitarian issues that the country is facing . David we have been quite clear that the humanitarian channel has always been open and will remain open and were encouraging the export of food and medicine to the iranian people. And the swiss mechanism is intended to provide another, i think, important mechanism to ensure that export channel stays wide open. We cant help private Sector Companies tell private Sector Companies what to do but we can make clear what our approach is and our approach is to keep that humanitarian channel open. I can tell you also this is an area where i encourage private Sector Companies who have specific transanswers theyre interested in who may have some concern to reach out to the u. S. Government. My division has not received a lot of calls from people who are interested. So if theres a perception out there that theyve overcomplianced, i would say please if theres an interest on a particular, specific transaction and theres hesitancy there may be space for us to provide guidance, to ensure that kind of transaction could be accomplished. Eric thats useful advice. I work with clients on the private side. Whenever anyone suggests to them maybe they should reach out to the u. S. Government authorities about a proposed transaction or proposed business deal that maybe looks humanitarian goods provisions and services to iran, their First Response is no, no, no. Dont go to u. S. G. Look at the fines. Look at the enforce. Activity. David my response is we dont use those opportunities to play whackamole and go after good intentioned actors who are looking for sound advice on how to comply. We dont use those opportunities to say they came into the door to talk to us, how can we get them . Thats not the approach we take. Ill tell you something. The best conversations ive had and i think the ones that have been most fruitful for private Sector Companies are those operating in highrisk jurisdictions including lebanon and iraq and other jurisdictions who want to do the right thing and come into my office and have a frank conversation about how they could be doing the right thing without violating u. S. Sanctions. Those are tremendously helpful conversations for private sector actors and i encourage them. Just to to your point about coronavirus you asked about, special representative hook i think has made repeated public statements about our desire to help the iranians address this virus. I think treasury recently put out guidance on our approach. We have been quite clear that were there and ready to offer whatever assistance we can. , my understanding is the i eric my understanding is the iranian have not taken us up on that. David thats correct and they have not in the past. Eric another question from the audience, it builds off the conversation we were just having about those who want to be in compliance, how do they come to you and to your office to get the guidance that they need . So how would how would you recommend people get in touch with your team . David we do have a website. I think theres Contact Information there there are theres an opportunity when you go to the state e. B. Threat finance sanctions Division Website to sign up for sanctions alerts much like youd get from olfac. Ill make sure when i go back to ensure that the contact is up to date. But you can reach out to us, to the extent its an olfac question, reach out to us, reach out to olfac by all means, well help facilitate that dialogue as well, especially if its time sensitive. I would encourage anybody reaching out to reach out with a specific set of facts on a particular transaction. Its hard to give any advice or guidance on a hypothetical. On a situation where we dont have all the facts. And naturally thats going to elicit questions from us about more facts so we can make an honest assessment and provide transparent guidance and advice going forward. Eric that makes sense. For everyone on the line and watch, the advice is reach out, but reach out with all the information ready to go. If you dont all youll do is incur additional sets of questions that probably i arise. From a personal perspective, are you guys fairly responsive in terms of getting back to inquiry . David i think we try to be. Certainly when folks have reached out to us, i spend a significant portion of my time communicating with private sector actors. U. S. Companies and Energy Sector and other sectors, foreign companies, middle eastern companies, semiprivate companies, government run institutions, Stateowned Enterprises in asia and other part os they have world. So i spent a considerable amount of time on those topics, its important, because these are people that are responsible for a lot of Business Activity in key strategic sectors where we want them to comply. If we can get them there and create a common threshold for what good compliance means, weve just accomplished many objectives in one meeting or in a few meetings. Eric so weve got a couple more questions from the audience. Cognizant of the time, we only have a few minutes left, i want to ask one of them but then i want to ask you the final question which will be all of us are thinking about in sort of the compliance base and think tank world, whats ahead for sangs in 2020 so i want your thoughts on what you think is ahead for sanctions in 2020, not giving away specific targets. But the one from the audience i do want to touch on is, walk us through how you think of economic pressure as one tool in the Foreign Policy tool kit and in your role at state, how do you see sanctions complementing other elements of national power. David thats a great question. Where do i see us going in 2020 i think depends on which sanctions program youre talking about. It goes back to the point of being deliberative to ensuring the sanctions response to specific policy objectives an determining what kind of progress were making. With respect to how sanctions work with other policy tools, it is as i mentioned in my opening comments, not a silver bullet. Its one policy tool designed to achieve object i haves. In terms of diplomacy, i think it gives us the leverage we need to have a good engagement and achieve positive results without resorting to enforcement action. So the sanctioned tools are there, i think weve made good examples of private sector entities that have violated our sanctions. And weve shown were not hesitant to use our sanctions no matter who you are or what country youre located in. So when we have those real frank discussions with those that could be doing more to comply with sanctions that may potentially be violating our sanctions, i think knowing that we have enforcement mechanisms, authorities, to back it up is important. I think knowing in the iran context, you know, sanctions are sanctions. We work very closely with our treasury colleagues to implement sanctions. We have expanded our resource space. We have expanded it to include a sanctions targeting team in the state department to implement economic sanctions authorities, delegated to the secretary of state and worked closely hand in hand with our treasury colleagues as well in implementing and helping them implement treasury authorities as well. It doesnt matter at the end of the day its all one u. S. Action. Weve increased our enforcement power and were continuing to expand that that only leads to more fruitful discussions in being proactive with foreign counterparts on what they should be doing to comply before we need to resort to enforcement. Eric i will say that theyre expanding your resource base, ill tell you, as im sure you know, the folks at o fambings c work so hard, im sure theyve been grateful for that david they work hard, theyre talented, ive never seen a more dedicated group of people than my counterparts at ofac. Its just fantastic par for theship throughout and we work with them. I would say on daily basis but more like an hourly basis. Eric i want to give you the last word. Is there anything else yo you want to share with us given the important announcements you made today . David sure. Thank you for allowing me to be here and giving me the opportunity to speak with you. I think these discussions are critical. I think creating more transparency, more communication, with the private sector is indispensable and ultimately the best way we can protect the United States is through Publicprivate Partnership and cooperations and thats what we intend to do going forward. Eric fantastic. Please join me in thanking Deputy Assistant secretary of state david peyman. David thank you. Applause] we take you live to the Brady Press Room briefing house on the update to fight the outbreak of the coronavirus. We expect to hear from President Trump and members of the Coronavirus Task force. He briefing to get under way here on cspan
comparemela.com © 2020. All Rights Reserved.