Transcripts For CSPAN2 Key Capitol Hill Hearings 20240622

The Senate Senate Foreign Relations committee is chaired by senator bob corker. Todays hearing is the third in a series of hearing we are holding to evaluate the Nuclear Agreement reached between iran and six world powers. We erd about evaluating the agreement as a whole and todays hearing gives us an opportunity to look at one of the key aspects of the agreement. Sanction relief. Next week we will hear from experts on Nuclear Aspects of the deal. We thank both the guest for being here. It is worth noting real questions about sanction relief remain. On the same day the un passed the deal, iran wrote a letter to the un saying they would treat use of the snap back as grounds to walk out of the agreement. Again, i think you all know this in about 90 seconds at the un last monday and at that moment iran sent a letter refuting the ability to use snap back and that same letter outlines extension of current sanctions is in violation of the agreement. I know we had an exchange where it was asked about the sanctions rolling back in 2016 if there would be something to snap back to and senator menendez made a point of that an exception. Prior to the implementation date we have a number of powerful sanctions that are being allevated and most of us felt if for some other reason iran was out of order we could apply them against terrorism and human rights and other activities. There is a debate on where that could happen. I will also say our partners in the west very strongly told me the same thing recently they have been backing off of that a little bit. I dont know exactly where that stands. Those statements, the agreement itself and the lack of clarity from the administration left senators with unresolved questions. Those include questions about the efficacy of secondary sanction if the Congress Disapproves the deal a very important factor to be considered. There are remains questions about whether or not the United States can reimpose sanctions lifted in the agreement should we need them for terrorism purposes. I am surprised to say but there are remaining questions about whether or not extending the iran sanctions act constitutes a violation of the agreement as mentioned earlier. I see no reason why extending existing authority, which could be waved but secretary lew and iranians think otherwise. I hope the witnesses will address the question and expand on the current climate in iran. Both of you spent time with companies affected by the sanction and i appreciate hearing valuable take aways. The sanction put in place were responsible for bringing iran to the negotiating table. In exchange of all of our economic leverage iran will get to conduct a legitimate Nuclear Program. This agreement is not intended to address terrorism many worry it will prevent the United States from preventing tools to counter aggression. Our witnesses have experience in economic economics and combatting terrorism. I appreciate you being here. Secretary john kerry said we are free to adopt sanctions as long as they are not a phony excuse were taking a whole pot and putting them back. I worry iran will not agree with our definition of phony and that through this agreement the administration could be hampering their about to combat terrorism. We will vote to approver or disapprove the agreement. Thank you very much for appearing before our committee. I turn to our Ranking Member for his comments and look forward to a good hearing. Mr. Chairman thank you for arranging this hearing. The deal with the sanction aspect of the joined jcpoa and thank both witnesses, who experts in this area for sharing thoughts and engaging the committee in the discussion so we can better understand the impact of the jcpoa as it relates to sanctions. We had a helpful hearing yesterday that dealt with the overall effects of the agreement. I think we spent a good deal of time looking at the alternatives if congress effectively rejects the program what is the consequences. In that discussion we did talk about sanctions. I am sure well get back to that today but i think today we want to focus on the sanction aspects of the agreement. The members of this committee will take a decision on the benefits of the agreements outweigh the risks or whether the risks of the agreement outweigh the benefits to prevent iran from becoming a nuclear state. That is our test and the sanctions have a major impact on our evaluation of the issues. Let me first deal with an issue i have raised since day one that the chairman raised again in his opening comments and i hope we can get your views on this. That is it has been stated very clearly by this administration that we are not taking off sanctions as it relates to terrorism and human rights and their missile program. It is also been stated and i asked the direct question at the hearing last thursday if we have credible information that iran has violated our policy on terrorism, can we reimpose sanctions on specific organizations that received relief under the jcpoa or the economic sectors that were affected such as crude oil sales by iran . Could we reimpose those types of sanctions and secretary lew said the answer is yes depending on the circumstances if we can demonstrate it is related to terrorism. Mr. Chairman, i asked similar questions to the representatives of europe that were here this week because we know it is going to require ultimately five of the eight votes in the commission that oversights this. And their response was similar to what secretary lew said in all fairness. But i am tempered by the language of the jcpoa. That is what we agreed to. The eu and members and units insistent with the respected laws will refrain from policy that will adversely affect trade and economic relations with iran. And on paragraph 30 the eu plus three will not apply sanctions or measures to entities engaging in activities covered by the lifting in this jcpoa. I hope the discussion today will talk about if we are out of compliance with the jpcoa and what type of pressure is on the United States and we were told we should be aggressive to holding iran to high standards. What type of pressure is on us to impose the sanction to prevent iran from their nonnuclear nefarious activities. The second thing is how effective would snapback sanctions be during the time they are lifted and repealed . If any of the negotiating partners felt there was a material breach and takes it to the point of snapping back all or part of the sanctions that were relieved how effective and how quickly can we reimpose sanctions that will require iran to rethink its behavior . I would be interested in your views in that regard. And then the last point i would like to have you respond to and that is if we do not approve the agreement, if we reject it and the United States sanctions remain in place, how effective will those sanctions be if we do not have the support of the International Community to cooperate with us in a sanction regime . I think these are important questions for the members of the congress to understand and i look forward to our discussion today. Before i introduce, i want to say i know when i met with our western partners they were explicit in agreeing with iran. They did get back to us and i sense there may have been reach out from the administration but they moderated views with what you are saying. Ranking member and i asked mr. Mano to testify before us next week just so we can get an understanding of the iaea issues we have been concerned about and whether that is classified or somewhere else and we were turned down. I want to make people aware of that. There are a lot of concerns about the agreement that we havent seen. What we do know about it is at best it is very questionable. So i am sorry to say we will not have the benefit of their testimony to help clear up some of the concerns we have. With that we have two outstanding witnesses that will be helpful. The first is honorable juan zarate chairman of the financial integrity work. Mr. Zarate served on the combating terrorism and was First Assistant secretary of treasure for terrorism crime. Our second witness today is mr. Richard nephew Program Director for the economic state craft sanctions and Energy Market at the center for Global Energy policy. Mr. Nephew served as director of sanction policy and a lead sanctions expert for the u. S. Team negotiating with iran. He served as the director for iran on the National Security staff. Thank you both for being here. We are excited about you being here. If you would abbreviate your comments. We will have lots of time to comment. Thank you both and you can start in whatever order you wish. Thankessess. Chairman, Ranking Member and members of the committee thank you for the privilege and opportunity to it speak about the sanctions implications. I am grateful to be next to mr. Richard nephew and i will pass the difficult questions to him. But i want to thank him for his service to the government the state department and the issue related to sanctions. I take this issue before you seriously given the brevity of the agreement. I appreciate the questions you posed and i am happy to answers other you pose. I come to the issue with views born from experience dealing iran from the Treasury Department and National Security council. I know all involved have been working incredibly hard for the Iran Nuclear Program through painstaking strategy. The campaign built over a decade of sanctions helped bring iran to the table. In the words of the president the sanction threatened to drive iran back in the stone age. It helps isolate rogue behavior that promotes terrorism and Human Rights Violations and other dangerous activity and protect the integrity of the United States and national economics. I am focus my tom on the framework of the jcpoa. I will tell you the grandmaframework is fraud. It is too front loading and doesnt account for the activity. The cupolajcpoa has structural problems that undermine the ability of the u. S. To use these powers to affect iranian behavior. The snapback framework proves problematic and is a blunt instrument only applied if the most severe violations are proven. If you grandfathered, as suggested in the discussions around the jcpoa, the snapback loses affect to insure compliance and has the potential to make a gold rush into the market quickly. The iranians maintain a heckler veto on old sanctions and can walk away. Any u. S. Sanction or related action to which iran objects is subject to review by the other parties creating a new pair dime for how the United States reviews and issues its sanctions. The jcpoa unwinds sanctions bluntly dealing with issues of weaponization without addressing the underlying conduct. This creates real risk and does damage to the ability to use the very same tools against iranian individuals and entities in the future. This proves highly problematic with the delisting of the iranian banks. The central bank of iran. And transport companies that have been used not just to facilitate the Nuclear Program but proliferation and sanctions as well. Nonnuclear sanctions were supposedly off the table, but the spirit and letter of the agreement may actually neuter the u. S. ability to leverage one of their most powerful tools. It is embedded in paragraph 29 in preference of the jcpoa. It does grave damage to those abilities and powers. Mr. Chairman from the start of negotiations what the iranians wanted most was the ability to do business unfettered and plugged back into the commercial system. The administration affectively put all sanctions on the table. To understand this one needs to appreciate why these financial and commercial measures were so effective in the first instance. These were not the sanctions of old. The campaign that began against iran in 2005 has proven affective over the last decade not because iran was sealed with naval blockaides or embargos but it was unplugged. They need access to new technology and cuonnection to the oil and Global Economic markets. That is what they lost over the last decade and that appears what they have gained and guaranteed in the deal. The United States will need to amplify use against the economy to deal with increased risk based not just on this deal but Iranian Foreign policy. It is not clear this is well understood by all parties or part of our strategy. The risk from iran are real and will increase. Iran will get a massive infusion of capital from initial sanction relief with estimated up to 150 billion. No doubt some will go to support terrorist groups. With allowing for a Nuclear Program the deal will likely increase not decrease the risk of proliferation. The regime will use its control of the economy to further enrich itself and suppress internal operation. The concern over human recognizes and regime will grow. The reality of Money Laundering and other crimes will increase not decrease over time. The United States will need to use the same types of Financial Strategy and campaign to isolate rogue iranian activity which will necessarily affect the trade, commerce and economy of iran. Mr. Chairman, i think there are three critical principles for congress to demand related to sanctions in the jcpoa. Congress should insure there is clarity in the jcpoa and execution of the plans or framework. It should insure the United States maintains as much economic and Financial Leverage as possible. Congress should as well mitigate the risk intended to an enriched and embolded regime. This will address the real and dangerous risks stemming from iran. They should focus on the core elements of regime that engage in terrorism financing, proliferation of weapons and supports militias. This could include secondary sanctions. There should be a dedicated strategy focusing on the proliferation risk including tighter export enforcement financial restrictions tied to suspect iranian actors and activities including iranian banks. The elements of the patriot act against iran and the central bank of iran should be reinforced for the primary money laundry concern with actions involving any iranian bank. This could be amplified to create a system through swift, the bank messaging system from the tracking program to track and analyze suspects from the iranian banking transactions. The accountability act could be enforced and be helpful. Senator, i think this is of deep concern and issue for you. Mr. Chairman these are just some of measures that could be taken to confront the risks from iran. Undertaking these types of steps in whatever form will likely be seen from diplomats from whatever country as interfereing for the jcpoa or any deal for that matter. Instead they should be seen as necessary steps to enable any Nuclear Agreement and preserve importantly a key element of americas power and leverage against iran and other rogues. Mr. Chairman, when the iran yarnians came back it the table one western diplomat pulled be in confidence, you have won the war using economic sanctions and financial pressure and then asked can you win the peace . I think and hope we can still win the peace, but it will require using and leveraging the very same powers and authority that helped bring the regime to the table. We must insure the jcpoa has not invadverently empowered to regime in iran while taking one of the most potent powers off the table. Mr. Nephew . Thank you, chairman and Ranking Member and other members of the committee for inviting me to speech. It is a privilege and honor to speak to you about a subject i dedicated my professional life and with juan who pioneered a lot of the work. Regardless of how one evaluates this deal we are lucky this country produces diplomats, Civil Servants and experts who worked on the deal. In my opinion the deal they negotiated is a very good one especially compared to the consequences. It satisfies the two most important security objectives for irans Nuclear Program. First lengthing the time they would need to produce a weapon and two insuring any attempt is halted. Some way argue the key provisions render the deal unacceptable. I disagree these concerns are worth killing the deal. The argument against sunset presusupposes there is no point in time in which iran could be trusted with a Nuclear Program requiring regime change or negotiations could not have delivered sunset. Having been in the room i believe the length was achievable. The United States is also free to declare irans Nuclear Program remains a concern. Getting International Support will require effective diplomacy but it is an option for fuchl fe fe future president. Some argue it provides iran with far too much relief and the practical affect of increasing trade with iran will render snapback ineffective. It was a blunt reality iran was going to take it the other way. We did the right thing for maximum early steps. Iran is under every incentive to take the steps required, which the iaea will verify. The United States retains a number of sanctions authorities that will continue to extract consequences for iranian violations of human rights and engaging in terrorism. I believe the fears about the new iranian money are overblown and according to the New York Times so does the cia. The United States will still be able to pressure banks and companies into not doing with business with the rigc and forces that facilitate their business. Even if the eu and un remove some of them from the list the bad actors will find business stopped until they correct their own behavior in the eyes of the United States. This is due to the direct risk of u. S. Sanctions and improvement in International Banking practices since 9 11. A bipartisan effort began under george bush and continued under president obama. And the United States will keep the sanctions on those trading with iran for ballistic weapons. The United States can trigger snapback of existing sanctions. Just one jcpoa can trigger view and a vote to coin with relief. The veto power gives us the free hand to reimpose. This could come with political cost. Many skeptics point to the cost saying they would never be triggered. International reaction to u. S. Actions always depends on the context context. If the rational is creditable they will not have much to lose. Irans leaders will have to evaluate the cost of any action preventing the deal. I see this as iran having more to lose. The critics calls this a marsh plan for iran. The Marshall Plan was intended to prevent the spread of radism in europe an the second world war. The liberalizing benefits of trade and growth were factors. Syrians refused to participate fearing the affect it would have on the population. One potential benefit of the deal is the possible transformation of Iranian Society and over time government policy. This may not happen. But at a minimum, irans leaders have to wrestle with the benefits of openness and the risk of loosing control and the threat of returning sanctions if they break the program. To conclude it is not a perfect deal but i degree the deal reached by the United States and p5f1 partners is the good for the country. Thank you both. We can see why this is a difficult decision to make. So i can reserve my time for interjections i will turn to the Ranking Member for questions and then move on down the line. Thank you. Well let me also join the chairman in thanking you both for your presence here today and for your testimony. So let me give you a hypethetical hypothetical. It is a year from now and iran complied with everything required and received the relief a few months earlier than that from both the United States waivers being exercised on sanction as well as the un and europe. We get clear evidence that iran has used crude oil sales to directly finance terrorist activities in lebanon and yemen. And they have done it through the central bank of iran with clear evidence of that. The United States Congress Passes a statute that says we will impose sanctions against iran for their support of terrorism against the central bank of iran and crude oil sales. A; are we in compliance with the jcpoa . And secondly what pressure is on the administration to implement such a statute if congress were to pass it . Any thoughts . Senator, it is a hypothetical because it points out the difficulty of this tangling of the sanctions regime with respect to a country that controls key elements of the economy; the banking system. When they are still engaged in the underlying activity that is subject to at a minimum u. S. Sanctions. It would be within the congress right and i would argue should be a focus of the administration to go after the financial that is used to support terrorist groups anywhere around the world. It would be totally justified. In the context of any action taken in a number of the jcpoa context it would depend on what information and evidence we have. The problem i have with the jcpoa framework as laid out in my submitted testimony and orally this morning is that we have now established and placed ourselves into a framework where we are ourselves are going to have to subcommit or answer to other parties why we are justifying the use of u. S. National power with respect to other challenges and risks. Under the agreement, the iranians for example, could object or threaten to walk away and perhaps the view of some say you are simply trying to reimpose sanctions that were just lifted under another name. Of course the administration is saying and we would argue they are different sanctions and can be and would be imposed but there is a context in the jcpoa and probably a process triggered if it were significant action that would call into question whether we could take the action. Ultimately it may prevail but it would put us into a new venue and process to have to explain ourselves, demonstrate evidence to parties like the chinese and russians and ultimately justify our action in the contours of the jcpoa. I dont think that is an acceptable outcome. Thank you senator. I would agree with what juan said but i would add to conditions to it. We have always had to justify and explain our secondary sanctions. The sanctions you are referring to governor the trade activities of foreigns with foreigns and getting them to do things we have to explain why foreigners i think going after the hypothetical you brought up would be complicated because the chinese, for instance or other imports of iranian oil would say we have known they support these groups and that was a given when we signed this deal. The hypothetical you brought up will happen because oil is a primary revenue stream and a primary way they support who we believe is terrorist and engages in terrorism. I think the question is is this the most effective way to curb this behavior . No. We have had sanctions on them and they have supported the groups still because the scope and scale doesnt have to be oilrevenue worthy. It can be smaller and something the iranians believe in strongly. I would argue rather than an oil sanction we have to have a better response. My concern is do we have the flexibility to do that. I used those examples because they were lifted by the sanctions. Here i guess is the question. Yesterday we heard from both witnesses that the u. S. Should be aggressive in making sure iran complies with the letter of everything in the agreement and irans past activity shows they test us and try to push the envelope so they will interpret it differently and do things we think are wrong. How aggressive should we be and can we get our partners to agree with us on less than major violations . Will we be able to do that . I would argue it depends on the context. If we go with a good case and can justify why we are doing it we can be very effective. On the other hand if we are seen as acting cupreciously that will be a challenge. We need to be aggressive and mindful the nuclear deal is something worth preserving. I dont think that precludes the use of sanction tools but we are going to have to be careful about the unintended consequences of the acts. If we have the snapback and we have a violation and have to take the International Community and exercise our veto how quickly can they bite Strong Enough to affect iranian behavior . Senator, i would say if we were able to get snapback in the context of that is conducive to people imposing the sanctions, we can start biting the iranian economy quickly. The oil embargo started having affects within two or three months starting in january of 2012. With the right context and cooperation we can have an impact on the economy. I would point out. You were not consistent on oil. You said that would not be enough to stop them but you are saying it could pay quickly. I am not saying it would not hurt the economy. My points on terrorism is fighting the economy doesnt preclude iranian support for terrorism. You can have damaging impact on the economy but will that translate into stopping iranian terrorism . In my view the history suggest not. If i could address the use of strategy and the use of the tools. Our tool kit is not expansive. We have limited tools to address whether it is terrorism, human rights abuse, etc. I take richards point, which is important, we have to have a comprehensive strategy. No doubt. The reality is at the end of the day these tools prove to be the most effective. I think the risk to the International Financial system go up. We are going to have to if we are honest about what is happening in the financial order, crack down on the forcing companies and contracts run by the ministry of intelligence. That is the nature of the iranian economy and how they do business. Precisely what we cut off that harmed them. You asked an astute set of questions because at the heart of this is have we given up too much power to deal with the other risks iran presents that will go up over time. Before moving on to senator flake, since you have different views. It would be fair to say in nine months when the sanction, most people believe all of them will be done and iran has the nuclear snapback that people are going to be redsent to put sanctions in place if iran cheats by inches because of the things you are saying. Iran does have the ability it say we are out of program. Would you agree that does create a delima . Yes, sir. Senator flake. Thank you. I want to thank the chairman and Ranking Member for putting the hearings together and hearing your testimony today each on one side of this in terms of whether you favor the agreement or not and i think that demonstrates the only thing that is certain is this is no easy call. For those standing saying it is i think they havent examined the agreement or the context it will be implemented. I appreciate the testimony and the way you go about it. I appreciate the question from the ranking minority member and we will have variances of the same kind of question because we ask of witnesses and administered we have not diminished our tool kit that we can distinguish between nuclear and nonnuclear sanctions but when you read the plain text of the agreement that seems to conflict with when assurances we have received. Let me just turn to the financial sanctions. I could not agree more and i always felt that is what really finally bit because it is more difficult with the secondary sanctions to russians, chinese and others to help evade which is easier with crude oil sanction or other petroleum sanctions. But if we find iran is directly linked to terrorism and we want to punish and go in when i look at the agreement it seems difficult to do that. If we decide to do so how affective will that be if our european allies are not with us . I would like your assessment of that. I hear conflicting testimony and discussion from others about whether or not we can lead on that and our European Partners will have to follow or if they can go their merry way and we are left with unilateral sanctions which rarely work. Is this something we can lead our partners back to be with us. Do they have to be with us given the nature of the sanctions . Whether people chose to do business with a seven million or trillion dollar any. What do you make of that . Another astute question. The United States is the dominant economic and Financial Center of the world and the u. S. Dollar is the reserve currency and we have the moral suasion to affect what others do; both government and the private sector. I want to emphasize the last point. In many ways the unilateral sanctions affect the community and are global. There is no unilateral u. S. Sanctions. What the u. S. Says in terms of interacting with other markets is a global standard and in fact is applied as such by the private sector. One of the interesting things here and this goes to a time dimension of the issue. One interesting thing here is i think there is a major opportunity to shape the environment and the risk calculus of the private sector. The major banks, nonamerican banks are derisking enormously and making decisions not to do business in iran or cuba regardless of the policy. What congress says, what the u. S. Treasury may put out in advisory or designation has enormous power to shift the market. I dont want anything i say to undercut that reality. But that diminishes and the directive does enable countries that may not be as excited about the risk calculus to participate. I would say if we wanted to affect the global Financial System, if we want to isolate iranian banks, based on legitimate concerns that are demonstruable and we can put out and show to allies that has enormous power to isolate the iranians. Would that be accepted by the iranians . Probably not. That is why i am concerned about the constraint on our power. Mr. Nephew . I would agree with a lot was said but the only thing i would add is the context matters. If we are going after an iranian bank because of a direct fuacil facilitation of payment for terrorism then going to our European Partners saying we need to restrict the banks it would be strong. If the information is cuprecious i dont think it will have the same affect. We may be able to influence banks even if the government is not supported. This is what we did from 20052010 in europe. But the danger is you have european or japanese governments or anybody else have laws saying you are not allowed to comply with sanctions. This is what happened with the irans sanction act. I think there is power we can use in the sector but with that comes the responsibility to wheel that effectively. I think the concern we have is the leverage point goes to iran actually. If we find they are engaged in nefarious activities we want to impose sanctions on and given the nature of this agreement and the fact we would have to submit to the body that we believe iran has violated Good Behavior and we want to impose sanctions and given the interlooking nature interlocking it might be more difficult to agree to allow us to impose the sanctions if we have to do that. If we go alone that is a whole different can of worms. My time is done. I appreciate the answers and i am sure this will be touched on. Thank you and before going to senator menendez. There was another question senator flake asked in a previous setting and i will use part of my time to followup on. We sent out a nine page summary of 13 documents to help everybody understand quickly what the deal was. In that we talked about contracts entered into. In other words, if you lift sanctions contracts you are entered into and the way we read it the contracts are grandfathered and you can continue to do business under the contracts even if sanction are put in place after. We had push back and we dont want to be accused of sending something out that is false so we passed the white house for red lines and never got that and started sending out something to qualify, i think we did, but as we sat down and talked with the experts we typically rely upon they are telling us we were right in the first place. Contracts entered into which sanctions are lifted are grandfathered. Can you give us clarification if that is or is not the case mr. Zarate. I read paragraph 14 to create some kind of grandfather provision. This is not a typical paragraph in these kinds of sanction regimes. This is related to the snapback provisions which are not usual in this type of regime but i long beach that to open the door for some kind of grandfather provision. You can read it to say there is no application of the snapback signed between the lifting of the sanction and the snapback. That creates the gold rush affect i talked about. If you read this to say contracts that dont have anything to do with prior sanctions and you say if there is a contract or element that is reexisted that has to be nulli nullinulli nullified. There has been slipping of the meaning about what the provisions mean. I would imagine at a minimum there would be a fight over what the provision means and what contracts with Chinese Companies and chinese banks and russian banks and companies mean. Russia is a part of this because they are chafing under the sanction regime led by the u. S. And European Union so they will have every interest to undermine every capability of thwarting anything that affects their economy. Can i get you to reach a degree of agreement. Would you say at a minimum it is highlyly highly unlikely a clause like this would be in an agreement like this. Go ahead, mr. Nephew. Senator, i think this is an unusual agreement in a lot of respects. I would disagree with the idea this immunizes longterm contracts. We will not impose sanctions for the plant that was built or the business that was conducted. But the intent is to say that business will not be sanctioned but that doesnt stop us from saying you have to stop performing the business under the contract. It is an issue of nullifying or protecting contracts but it is more the performance of the contract from snapback forward can occur. Very similar to the special rule we did before. So if bp built a billion dollar facility to produce oil in iran they invested that billion dollars, and so they are performing under that contract and producing xbarrels a day and did that after the sanctions were lifted could they continue under that contract or not . My understanding is no. At the moment the snapback is triggered the bp staff and whatever financial or Technical Assistance is going on has to be stopped. And the United States government will not sanctions them for having built that in the first place. Do you agree with that mr. Zarate i think it is based on who is interpreting this. If there is a tailored snapback it could be impacted, it could be impacted by the nature of the contract itself there could be special vehicles to make sure there is action there and i think you could have parties at the un the permanent five arguing that as long as the continued activities are not further the activities that are sanctioned, if you can assure they are clean for example, or productive they should not fall under this provision. I am not convinced there is clarity as to how this applies. Thank you very much. Senator menendez. Thank you. Before i get to the issue the witnesses are here i want to comment on the Ranking Members request of the iaea and i am deeply disappointed of their unwillingness to come in any session, public or classified, to have a discussion. This whole agreement rest upon, if you support it the concept of inspection and verification by whom . The iaea. We are putting an enormous part of the security of the United States and the allies region in the Un Organization for which we pay membership dues. For us not to be able and maybe they are fearing the questions and they can take a private stance on that but the entire verification regime depends on the iaea and not to be question them about how they are going to go about it their abilities to do so about the budgetary realities they may need in order to accomplish what we want them to accomplish, i dont know how one can come to a conclusion on this agreement without understanding from the agency that is involved. The most critical element of this agreement is them. Forget about the sanction. Because sanction only come into play if they are not performing. We have to know whether they are performing in the first instance in the implementation and if they are performing afterwards. I would hope we would find a mechanisms and whether that is a letter i know you and the rank member and i applaud you for having done that whether that is a resolution of the United States senate that could be quickly passed calling upon the iaea to engage in consultation with the senate. You cannot advise and consent for something which you are going in the blind on pure faith without knowing the where with all as to how that agency essential to this agreement, if one believes in it is going to do its job and for which we are going to depend upon our interest for. It is amazing to me. I would urge the chair and Ranking Member and i would be happy and i am sure other members would agree to engage in you with any way possible to bring that about. If it doesnt that is a critical material issue for me. So i just want to speak to that. Let me thank both of you for not only your testimony but your service to our country. It has been both exceptional. You know i look at this whole question of via increments. And it is an important question. How did iran get to where we are today . Through incrementalism deceit deception, delay through not withstanding u. N. Security councils in the world saying you cannot, you shall not but they did. And each step of the way we were collectively redicent to do what was necessary to stop them until it got to a certain point that both the world, and to be very honest with you, congress droves were the most critical elements despite the opposition of the administrations. And so when i think about the context of potential violations and looking at the agreement and thinking about what is substantial or not i see a history. Not for you to play with. Were not going to give you a little bit and then a little bit more. I am concerned based upon other items about our willingness to engage in the type of sanction regimes that are necessary. I look at how hard it is to get get people lifted despite legislation and law in venezuela. I look at how hard it is in russia and the ukraine to push sanctions to get them to deter their actions. I look look at how difficult it is as to how it relates to syria. The concern to me is if you want the deal so bad and you hope that it will work so well that you are willing to overlook elements that may seem small at the time but begin to grow collectively and then collectively you say at a point in time, oh my god. That is where we are right now. I think those are critical questions. Now juan zarate, i want to understand something im pretty convinced of it but i want to make sure im not just convincing myself because i want to be convinced, on page 26 of the agreement, it says the United States Administration Acting consistent with the respective roles of the president and congress will refrain from reintroducing or re imposing the sanctions specified in annex two which is the congressionally mandated sanctions. It is applying under this joint plan of action without prejudice to dispute resolution. I tried to get some definitive views from the secretary, you either have the right to reimpose isis sanctions that expire next year or you dont. You can maybe mark argue about the timing but you either have the agreement or you dont. I did not get a clear answer from him. If anything, i suggested that it sounds like you want the sanctions to expire. He did not oppose that view. He did not say yes thats what i want but he didnt say no thats absolutely wrong. When i pursue why shouldnt we reauthorize those sanctions so if deterrence is in part by the virtue of consequences which is an actionable activity, theres an actionable consequence that you take when its in in violation of the agreement. You have to think twice about it. Once we have those sanctions in place, with all the same provisions secondly do you read this agreement to suggest that we cannot do that or we will be in violation of the agreement . Senator i think i am in full agreement with you that it appears reimpose this and would put us in violation. At a minimum it would subject any action by congress in that regard to reimpose non sanctions act dash. Not only real position, it is reintroducing. I think thats exactly right. That raises the question about whether the waiver provision is good enough as a safeguard. I think this goes to the larger point that we were discussing earlier that whether or not this framework, the way it structured actually takes away the ability the u. S. Government has to frame the use of these powers. Whether its in a deterrent mode or application. The other part of this, sen. , that we already discussed is the problem that we begin to impact those same elements of the economy of iran that are indicated by isis in some other way. That too could potentially be viewed as a violation of that provision. I think the construct, as laid out, puts laid out, puts too much power in the hands of iran and those who might object to what it is we are trying to impact, either in deterrent mode or in effect. One observation as it seems to me that the burden is shifting here. Under the joint comprehensive plan of action, its almost like we have to prove our case and verses, you are in violation. Of course we should say why a country is in violation right. The burden of proof seems to shift and doesnt that burden we all talk about violations in the shortterm but what about in the long term when iran has become a more significant nuclear, potentially industrial size . The dual use potentials of that would be far harder to make the case on then it will under its present circumstances. Is that that a fair statement . I would say you are absolutely right in terms of the framework. What has been submitted to the committee, what i suggest is one of the fundamental problems of the basic plan. Iran has suddenly become an equal partner in this framework. Its. Its the u. S. Along with other parties that are now inputting things and how they present evidence. The the burden of persuasion and proof, which had all along been on iran has now shifted. I think that that is part of the problem with the process. I think we have moved into a different frame of reference diplomatically what each does get harder over time, you are absolutely right. My final point mr. Chairman is that one of the things i grapple with is, and it came to me again when mr. Nephew was responding to one of your questions, the hope here that the iranians enter into a deal that changes the course of their countries conduct. The whole focus, as i believe the way i see it up until now with their actions is the ayatollah trying to think how to i preserve the regime and the revolution . It would be a unique thought to think they are entering into an agreement that would mean the end of the regime and revolution. Certainly they are doing that. Certainly i dont think it is their intent and hopefully if this all passes and happens it will be the consequent. I dont think they are entering into it with the intent that this will end the revolution or regime. Thank you. Thank you mr. Chairman, i would like like to read just a few sentences here and lead to a quick question. Thank you for your careers and this is very helpful today. Im encouraged because so far this committee has really addressed this issue in nonpartisan. This is the security of our country and the security of the world. This is from the jc poa. This will ensure that irans Nuclear Program will be exclusively peaceful. Iran affirms they will not acquire any Nuclear Weapons. This jc poa asked them to move forward with a peaceful and indigenous Nuclear Program. I just have have one question. We start in the beginning and allow them to have enrichment from the very beginning. There are 18 countries and we talked about this yesterday, out of 108 countries there are 32 countries that have enrichment, im sorry sorry that have peaceful Nuclear Program. There are only 18 that have similar programs but can enrich. There are only about 14 countries that have accommodation. Five countries have civil programs but cannot enrich countries like germany and japan. My question is if you look at this historically, we did a similar did a similar deal in north korea. It didnt work out so well. I think we mightve been naive and looking at it in historical terms. The problem that i have, and im still trying to look at it in a measured way is this deal in my mind does not preclude them from being a Nuclear Weapon state even though we just saw the intent of the agreement was to do that. I think mr. Nephew, even this morning you said we talk about the sunset and over some. Of some. Of time certainly gives them some opportunity to have a Nuclear Weapon. When i look at this thing, down, do we have a choice to accept this deal or question that i dont accept that. Accept that. My question leads to that. Initially when we did this in or richmond and allow them to go that way, in my mind, violates the very issue that we have here. A peaceful a peaceful indigenous Nuclear Program does not require enrichment. Although we have now taken that up as a presumption, and i challenge i challenge that, but thats historical and given. In this agreement they are allowed to enrich. I have a question. If we if we have to go it alone im trying to understand if theres an alternative to the position we are in right now. I would would like both of you to address, im a business guy. You dont sanction countries, you sanction companies. When when you look at the financial industry and you sanction them and you start sanctioning businesses, you can have all lot of affect. We dont need any other sanctions to have a dramatic impact impact on this regime. We know from the past history recent history in the last five years, under this administration it brought them to the table. In my opinion opinion we gave in too early. Do we have an alternative that we havent talked about in detail question thats another alternative to war and this deal as it is. I think its a very important question. I dont know that you will like my answer. My view. Why would you say that speemac i think at the end of the day, while it certainly true that it would be our preference that iran not have an enrichment program, there is nothing in the non proliferation treaty that goes back to the 60s that crudes countries from having them. The way we we were able to mount all this pressure on them is they engaged in years of cheating on that program. They went back and said, we need to have enrichment because we cant secure consistent flow of material. Yet 18 countries do that so i push back a little bit on that position. Sir, those 18 countries were not subjected to the kinds of pressure and sanctions campaign. They were a violator of they were not a valid violator. The reality is that iran in 2015 faces a history a history in which we attempt to strangle the Nuclear Program throughout the 1990s and before that. From the iran perspective we have not allowed them to move forward. I started the guy going after iranian enrichment program. They are not relinquishing this capability. You are going to run out of time. Address the idea the idea if there is an alternative to what we are doing now. We have to to consider that if we dont agree with this deal, do we have an alternative question it. If if we dont agree, they are going to start with more centrifuges and we get back to the table we are going to be dealing with 30,000 centrifuges. Will sanctions unilaterally have impact . I do believe it would stop their program permanently. Senator i think u. S. Financial power and influences is enormous and would have an influence. Would it stop the program alone . I dont think so. I have argued a long time power and influence have to be part of a broader strategy of influence in strategy against the regime to get them to stop Movement Toward a Nuclear Program. You are experts in this, both of of you. Do you believe they have to have enrichment capability in able to have a peaceful Nuclear Program in iran . Apps really not. Im not a nuclear physicist. I understand that. You talk about that having been a concession up front. The other problem with the structure is we may be seeing this is my problem with the structure. Given the the structure we are now allowing them a process and a vehicle to challenge the use of financial power and by the way, we put it in the context where the chinese and the russian are no fans of u. S. Power and have a vote. I think the very structure of that is debilitating. Not just to iran but to the use of our power for these other issues that we care about. He goes to this question of have we given them the status in terms of how we negotiated this deal . Im out of time but i want to echo senator menendez i am very troubled by these side deals. I know side deals are done directly by the eye aea inspectors and countries as normal practice. This is not normal practice. We are signing a deal for the future of america and it assumes that those deals are part of this deal. The way i read way i read this document. In this document, those special deals are not mentioned and i am really troubled that we are not going to be able to get the best advice from those people. I dont know how we can make a decision without that. I encourage more pressure to be put on that iaea to come before us and explain it. There may be good explanations. When. When i hear the type of inspections that will be done in certain places that are not mentioned in this document at all, im very troubled by that. I think almost everything that has occurred in this Committee Sends chairman menendez was chairman and i became chairman it has been done in a strong bipartisan way. I think we should urge them to reconsider and come before us next week. Thats underway right now. Certainly i would like everybody to have the opportunity to sign that if they wish. As long as we are making requests i would also request a confidential briefing by our intelligence agencies. Okay. We we will do that and i appreciate it. Thank you chairman corker and thank you for the spirit in which you are conducting these hearings. I would associate myself with the conversations previously about the importance of this and our understanding, their role in capability and some of the concerns that have been raised are very central to our understanding of this agreement. Let me if i might, just touch on four different questions in the next six minutes. We we will get some response to this. You had a disagreement about the grandfathering clause and what it means. Will it lead to a gold rush as long as they are not further pushed into sanctioned activity . Will they be allowed to continue to perform or know what it means you wont be subject to sanctions or having entered into agreement. Im a lawyer. Who decides . How does the outcome of that ive gotten answers from senior levels of this government and former, that this is an agreement and its a multilevel agreement. There will be disputes over this exact provision. It raises the larger question about the extent to which we can rely on our ally in dispute resolution and the potential consequences to meaningfully enforce those. You were saying a certain proposal involving sanctions is not the best policy response to restrain iranian support for terrorist groups. What is the best policy to respond . I think theyre legitimate concerned by all of our regional allies that sanction relief, whether its 50 billion or 100 billion will lead hundred billion dollars will lead to a significant flow of funds into the Iranian National bank. That will lead to people that we view as terrorists and bad players. What would be the ideal policy . If you were in a position to advise the administration, what would you do . Third, and i think this is important, if we go it alone and reject this deal and rely on u. S. Economic power to reimpose sanctions and negotiate tougher terms, what are the consequences for our role in the global Financial System question at the chinese have made persistent efforts to suggest to others that our central role, the fact that the dollar is the reserve currency of the world system and the vast majority of Financial Systems run through the United States, should be lessened or weekend. Weekend. What is the impact those flows will have on iran . Some suggest the relief will mean they will have to invest in restoring their own oil and gas sector. The gas sector has a suffered a 50 drop in the price per barrel over the last year. How will that influence their ability to sustain their enduring commitment to promoting terrorism in the region and be a destabilizing force . Gentlemen, please, have fun. Ill be quick. On the issue of grandfathering the decision decision on whether or not to impose sanctions with respect to grandfathering is the us. The u. S. Gets to make the decision as to whether or not they can be imposed under our own law. That doesnt mean were going to have response from our partners. If we were going to sanction other institutions i think we can expect a reaction from that. As we have done in previous instances, i think there will be consultation and engagement with our partners to ensure that we deal with any particular concerns they have with the action and the broader interest. That does not mean that we cant, as we did in 2010 curtailed the activities of companies in iran. We did that with the use of iran sanctions act. Going to the loan, my view is that if we decide to reject this deal and just use our sanction, we will have an effect and we will have an effect on iran but i dont think it will be nearly as strong as we would have if we had cooperation, especially out of europe. Longterm im very concerned about overuse of u. S. Sanctions, removing it as a tool. You spoke to the idea of chinese looking for alternatives to the Financial System. Thats my fear. If we go it alone here and other circumstances we may invalidate the Financial System tool because theyll just use other systems that dont involve us. As he pointed out they have a lot of infrastructure problems there and they were elected on the basis of solving those problems. He wants to be reelected and more important the iranian system doesnt want to have instability and conflict on the inside. They are very concerned about things like arab spring and the Color Revolution that happened in eastern europe. They dont want to have the happening in iran. Happening in iran. The way you deal with that is with Domestic Development at home. I think they they will spend most the money at home. Very quickly on the best policy response for the region, i think it needs to be a multifaceted approach with sanctions on bad actors as well as support with corporations and security architecture. It cant just be choke off all the money and the problem is solved. I think we run into a rescue that this joint commission and subcommittee becomes the arbiter of how to interpret these sanctions. Thats by definition how it set up. We can impose sanctions but then that becomes subject to discourse and debate in that context. Could you find ways to prelitigate that question . I think so and this is important for the congress and thats gaining clarity on what this all means. To ensure there is a meeting of the minds among all parties on how this is actually going to work. You cant figure out all permutations, of course. Some of these questions should be answered before we move into the agreement. I think it gets harder over time to either buck the agreement or impose unilateral sanctions. We are in the most effective and powerful position to actually determine how this goes and how it shaped. In some ways its how International Law is created. You create the doctrine and interpretive notes that explain how this will be applied. Otherwise, i think you create an incentive for iran to do what Saddam Hussein did. I hope chase down his assets on behalf of the Treasury Department when i was there. What he did in the context of that sanction regime was to pick winners and losers for political and diplomatic shielding. You have the potential of a rainy and picking chinese, russian and a selection of other european allies on the ground who will have vested commercial interest in ensuring this is interpreted the right way. I think that is a real danger here. From the strategy just to repeat it needs to be multifaceted and target financial measures. It has to involve aggressive support to our allies on the ground which we have failed to do from a counterterrorisms perspective today. Three if we go it alone, i think its its easier to do now than later. Over time the sanctions regime melts away. I think the reality that ive written about is there are potential longterm consequences. The russians and the chinese are clearly trying to challenge and create alternate payment platforms, payment platforms, currency arrangements, trade arrangements to circumvent the dollar and the u. S. Markets. On the margins you talk to most experts in treasury officials, you will say this is marginally relevant and there will be other factors that drive whether or not the u. S. Is the principal economy and the dollar is the principal reserve currency around the law. The functionality of our congress, for example all those things matter perhaps more. Finally on the flow i think we should take the iranians at their word. They are going to support their proxies and allies. They have in the past. There is no question that the sanctions we put in place for oil purposes which this administration did a great job on, had impacted their ability to support hezbollah and their proxies. They will no doubt and this is an expectation of folks like the secretarygeneral of hezbollah to be receiving more funding from iran in the future as a result of the sanctions release. Thank you for your service. Thank you, before turning to senator gardner and there may have been some groundwork in advance, reporting back to new amateur, the intel breaker will take place at 5 00 oclock on monday. Thank you. Senator gardner. Thank you mr. Chairman and thank you to our witnesses today. I appreciate your time, testimony and service. I just want to clarify on the iaea, they were offered both a setting as this or classified setting . Yes. In any form and i think, based on what we know all of us would like to dig into more. I know these agreements generally speaking are between a country and the iaea but we are in New Territory altogether and so we will write a letter for all of us to participate and get them to change their mind. Mr. Chairman, if i could clarify, in setting up with the chairman and our staff how we would proceed during the review period, we all felt information about the iaea would be critically important and we should hear it directly from. From the begin direct communication with the iaea. We know their confidentiality between the iaea and the participating state. We know that and understand that. We also understand that information is shared at times in a confidential way with other Member States. The United States, because of the separation of branches becomes a little more, located. We made that request from the beginning. We dont know how much of that is under control of our own government and how much is iaea. That has been one of the difficulties. There are two documents we specifically requested that our confidential documents in iran and the iaea that we think is important for us to be able to see and review. Its not just the direct contact with the iaea that would be done in a confidential setting because of the information we would have to get. We will continue to press for that but its an independent agency. Its not its not under control of the u. S. Government. Banks Ranking Member for being a part of these and making sure these hearings are successfully completed. I think its important that we have that opportunity to hear. I cant imagine anybody, regardless of where you are in the government would be opposed to us hearing the full details of the agreement and i think thats important. In the meantime. In the meantime, mr. Chairman, perhaps if the iaea is unavailable perhaps we could hear from the deputy at the iaea if i could, as you can imagine all of us do this we have experts in and out of our office nonstop. We had him in but the problem is he hasnt seen the agreement. Thats kind of problematic. I understand. Thank you. Question for you under the terms of the Nuclear Agreement. We talked a lot about the businesses that were deed designated said or delisted. One of the companies is controlled by the Supreme Leader committee. It was designated in 2013 and known as the ei ko. It involves various banks and their investment arm on the stock exchange. This ei ko was originally listed under executive order 1399 which was not a Nuclear Related sanction but it was a sanction addressing deceptive financial practices and the threat they imposed to the International Financial system. In 2013 it was designated that they continue to generate and control massive off the books funds from international regulators. We also talked about the amount of money that will be freed up to iran. Its been characterized between 50 billion. Weve heard the number may be around 55 or 56 billion not 100 billion. Id like to hear from you, what is the purpose from you, what is the purpose of delisting these entities and from writer studies and others we know that ei ko has 95 billion worth of assets and theyre coming off of this list. Obviously list. Obviously there may bes and sanctions the u. S. Will maintain but 52 billion in real estate portfolio and 4 billion in in publicly traded companies, should that 95 million be included in the total figure that will be an impact to iran up front . You raise a great question because ei ko and other elements of the first delisting after implementation day do present this risk and challenge which is they may have had elements in support dimensions to the Nuclear Program. Some of them may have been captured by the nuclear executive orders but others had problems making them subject to the sanctions and other financial preventative measures given the risk to the International Financial system. I think this is a fundamental challenge for how weve instructed the unwinding. In some ways weve given up on much of the underlying conduct that weve worried about in terms of what these entities owned and controlled by the regimes are able to do in the International Financial system. I think, unfortunately what i see is sort of the blunt unwinding is really part and parcel of what stated as the intent of the normalization of trade in the economy with iran. I want this deal to work. I dont want to be perceived as throwing stones at this. This is incredibly hard in the unwinding of the sanctions is incredibly difficult. What weve done is weve thrown them into a lot of unwinding without having the iranians contend with the underlying conduct that is still a risk to the International Financial system and our National Security. Again this is why i worry that viewed in maximus cards terms weve given them a get out of jail free card. Ive been critical of my own administration and our own action at the treasury at the white house. What we did in 2005 to let up too early our Financial Leverage against north korea. Not forcing forcing them to deal with the underlying conduct and dropping further isolation on the back of a nuclear deal. That was a mistake. I said so and ive written about it and i think it was a mistake at the time and i still think so. I dont think we should repeat those mistakes and ignore the underlying conflict that presents a real risk to our National Security. I think ei ko is one of the businesses the Supreme Leader has control through this group assets in europe that included driven factor of dual use machinery around production of center fuse. With this lifting of sanctions they would be able to put money into that. Is that right . Thats right. Not only how weve defined the unwinding but Nuclear Related sanctions, weve included elements of proliferation and dual use and even missile trade that is still a concern and still a subject to other sanctions. In some ways weve ensconced it or embedded it a very broad definition of what were calling nuclear sanctions. That then affects the rest of the deal. Thank thank you mr. Chairman. Senator udall. Thank you mr. Chairman. Thank you to the witnesses for your testimony today. Lets assume the deal is approved. We go forward under the deal. What you think the u. S. Needs to do to ensure that the snapback option remains legitimate for ran for breaking the agreement and how can we ensure that we have international buyin of the use of these kinds of sanctions if needed . My view again remains that the context is important so i believe as long as we are staying on tough interrogation and instances of even modest violation of the deal, we respond respond to them directly through the process and through snapback for minor violations that we can address the broader view. Iranians need to understand that we will respond at all times and that starts by monitoring the program prompting and challenging them when we see things that are inconsistent with the terms of the deal and vigorously using the process we put in place. We we need to do that with rigorous enforcement. Senator i think congress has a role to play here. They they can put in place measures that makes it very clear not just to the negotiating privacies but also the private sector that they are going to be sanctions that are potentially brought to bear if there is evidence and suggestion of illicit iranian activity. Creating a sanctions framework where the congress itself shapes the environment and shapes expectation around how the International Community may be doing business that actually could be incredibly helpful. This grandfathering provision in getting clarity on that is really important and will shape the marketplace. To richards point, and forcing the elements of the deal quickly and often will be critical. One of the things i think your testimony highlights is that theres definitely a role for congress to play. You have the approval or disapproval and you move forward under the agreement. The role for congress to play in order to strengthening it and bring transparency and plug holes that occur that we dont think are going to be there, would you agree with that . Absolutely. Whether or not you agree with the deal, i think congress has a role to has a role to play in clarifying the deal, maintaining our power ensuring that its executed properly dealing with the risks that are very real, deal or no deal. Senator i would agree. There have been concerns about what happens at year ten year 15, your 20 under the deal. What are your thoughts on these provisions and you think the existence of a sunset is reason enough to reject the deal question marks. Senator i do not. I do not believe there is any armscontrol arrangement that is possible or that does not already include sunset. Even the original included a sunset and we had to get it extended permanently in the mid 90s only after demonstrating that its been working for so long. The ideal that a country would voluntarily renounce its program was never brought up. One element of the sunset provision thats problematic and doesnt match the 15 year timetable and the perv assumption of the peaceful is the obligations and scrutiny by the un at year 10. Im a bit more more skeptical and i think we should be presumptive of ill intent on the part of iranians or at least be able to push the envelope in terms of what theyre able to do over a Nuclear Weapons program. I think that in and of itself is problematic. Sunset revisions are a part of the International Legal landscape. We are dealing with the unique circumstance in high risk. We are dealing with a suspect party that was subject to a number of Security Council resolutions that assumed they were a suspect party. Thank you. Thank you very much. Just as a clarification, how would we appropriately understand the grandfather issue . In other words, if we want clarification, as we talk with people we have various opinions and obviously we are in the selling mode at this moment. How would we best clarify that issue . What would be the responsible way for us to know what the true meaning of the grandfather clause or non grandfather clause means . In advance of voting question and. At the great question. I thought about it a little bit but not enough. With that comment all think out loud a little bit, if thats okay. One is congress can lay out what you think it is and have people push back and reese shaped definition. So a letter from the senate or this committee proclaiming what it deems this to be actually has some impact and would force open reaction. Secondly getting and asking for and writing the interpretation from the various parties to the agreement particularly our allies. How do they interpret the deal and how will they enforce that . Third, i would suggest that the Treasury Department is going to have have a role in clarifying how the sanctions unwinding is going to play out. As as part of that regulatory process, they probably have to put out interpretive notes or other regulatory guidance. So it is probably a matt contacts that the administration will have to be incredibly clear, i hope, for the marketplace and then determine. Those are three ways that i can think of off the top of my head that might help. Thank you. Thank you very much. Thank you mr. Chairman. I appreciate the the issues you in the Ranking Member have raised on the iaea. Senator mendez does i agree with you. I agree with you and i was a Real Estate Broker for 33 years and negotiated a lot of deals. Ive run for office 17 times. When you run for office and you get to the point where youre in the final two, theres a front runner and a challenger. Ive been both at some point. Eventually the press wants to challenge you to a debate. You appoint your best and they appoint their best to go negotiate. Whether youre sitting or standing or negotiating it appears to me the iranians negotiated a lot of wiggle room in this agreement for them to do a lot of various things they wanted to do. I think theres a paragraph in your testimony where it says the problematic construct in iran is that they were an equal. That illustrates what im talking about. It correct me if im wrong, if somebody challenges the iranians to an inspection over a suspected violation of the agreement, they first of all can question an object and stall any challenge they want to. They can interrogate people making the request, they can object to a reimplementation of sanctions and they can appeal anything to the joint committee that they sit on. Is that correct . Yes or thats my reading as well. Not only is there potential 24 day period of time for Due Diligence to get to an inspection but theres an additional way to keep that inspection from taking place. Am i correct . Yes there is discussion on how many days that means. It means there could be more than 24 days to solve and challenge. Whats been negotiated in the letter of the jc poa is the right to be wrong and walk away. They get the nuclear snapback and i call it the hectors veto. Whatever you call it they get the ultimate sanction which is to start a Nuclear Program if they dont like it. When he read the opening preamble to the agreement where they say they will not develop Nuclear Weapons, but from the day it signed they can eventually get to the position where they can. It may be as long as 15 years or eight 1 2 in the half in the most liberal interpretation, but either way you take that combined with the wiggle room theyve negotiated with with the joint commission, it gives them ability to have Nuclear Weapon. When the chairman asked the question yesterday about an alternative to agreeing to the deal or war, there should be because we need to reclaim some of the quality we should have in this agreement. Once it signed there will be bumps and bruises. They have negotiated a lot of things but we are pretty much expose. I want to call peoples attention to attention to one other thing and thats paragraph 29. It says the eu and the Member States in the United States of america consistent with their respective laws will refrain from any policy specifically intended to directly and adversely affect the normalization of trade and Economic Conditions of iran not too undermanned and successful implementation from jc poa. It looks like from the beginning this is a speedbump for for all of us to have any snapback of reimplementation of sanctions or any other tool we might want to use if we suspect they violated the agreement. Is that correct . Thats correct and the reason i highlight that paragraph, i think its essential because it reinforces and illuminates what the intent of the deal is for iran. It makes sense. They want reintegration into the International Financial order. The reason these sanctions have been so darn effective post9 11, a regime that has been subject to sanctions for three decades has come to the table. Why . Because they were unplugged from the global and Financial System. We interfered we interrupted their very trade and economy. My my point is if we want to preserve that power Going Forward for human rights we may have just negotiated away the effective use of those kind of measures. That was was the point of my testimony. We all know what got them to the table to negotiate with us was not that they reese specked us unlike us. Its that we were squeezing them. When they got to the table to negotiate from day one, it brought them up to be a co equal with the United States when it was our power and leverage that brought them there in the first place. Thats thats what concerns me so much about the way the negotiation ended up. We raised and elevated their stature and gave them windows along the way to violate exactly what they promised in the preamble which was to not develop a Nuclear Weapon. Thank you. Mi out of order . You can all collectively decide. Go ahead. Thank you thank you mr. Chairman and the witnesses. Ive enjoyed, i havent finished reading treasuries were but i would recommend all to read a book hes written about the really significant advance in how treasury has been an implement of our Foreign Policy of sanctions. Its a wonderful book. I agree with the comment senator menendez made about the iaea and digging more into their situation whether it be agreements they may have with iran or just getting Comfort Level with how they inspect. I dont dont want to leave this room with an unstated what i think would be an inaccurate impression that we dont trust the iaea or they dont know what theyre doing. If i can just to remind everybody of a painful history. In march of 2003, the iaea issued an opinion that they said they have found no evidence or plausible indication of the revival of a Nuclear Weapons program in iraq. That was in march 2003. The administration at the administration at that time immediately jumped out crashed the iaea said they were wrong and said the United States needed to initiate a war that has proven highly costly in american lives in treasure and instability in the region. Thats because the administration said no we have better intel and they do have a program of weapons of mass distraction. We need to worry about the Mushroom Cloud and we need to begin this war because they wont disarm. The iaea was right. The United States was wrong. There was a significant generation altering consequence affect. I completely get the notion that we want to dig into what the iaeas going to do on this. I dont want to leave this room with the impression that they havent demonstrated their chops. They hadnt been perfect either. There were weaknesses were weaknesses in the north korean negotiation especially with respect to north korean covert programs. The International Community went back to add the Additional Protocol that iran is required to ratify and fix challenges. Lets not leave the impression that the iaea doesnt know what theyre doing. One of the critical decisions we made, we trashed their conclusions, they conclusions, they were right, we were wrong in a war that shouldve never been started. Thats an editorial opinion. I dont want you to think and i dont know if you are referring to my. Know. I agree. I want to know what theyre going to do and do they have the wherewithal financially. I agree. The agreement said they will put between hundred and 30 and 150 inspectors into iran. If they have the ability to do that, i think thats critical. I just wanted to make sure regarding that unstated point. I was intrigued and going back as part of understanding this deal, trying to understand the status and see before negotiations started before the public phase began. I went back to look at the speech that Prime Minister netanyahu gave in 2012 and he had a quote that was interesting. Seven years of International Sanctions have hurt irans economy, but lets be honest, they havent stopped irans Nuclear Program. I think it suggests that the sanctions have been incredibly effective in hurting their economy and getting them to the table to negotiate. Certainly the congressional sanctions have been at the core of it, however the Prime Minister was honest as you look at the data it would suggest the sanctions did not stop Irans Nuclear problem. In some way because of a resistance mentality or a defiance mentality the sanctions may have accelerated centrifuge develop to 19000. It enriched uranium levels. Do you share that view . Did sanctions slow down the Nuclear Program . I would say it did have an impact in terms of iranian supply and procurement efforts. It did cause difficulty. I think your point is exactly right. If you look at since the end of 2011, they had about 9000 center fuses. Had about 9000 center fuses. At the end of 2013 they had 20000. This is while our sanctions were as intensive intense as they possibly could have been. It was always a means to an end and that was the book dramatic outcome. It probably wasnt the end of a Nuclear Program but it was putting it under significant restraint and very aggressive monitoring. Thank you again for your kind remarks. I think youre right. I dont think sanctions was a Silver Bullet here or was ever going to be a Silver Bullet. Ive argued we needed multiple points of leverage. I think its important to keep in mind they have multiple purposes. To richards point, they can throw sand in the gears of what throw sand in the gears of what a country is trying to do, it can help deter actors willing to act as sanction parties and it can ultimately hopefully change behavior in policy. I think the reality is the iranians were brought to the table because of the sanctions but they were also facing the reality of internal economic mismanagement demographics that were not conducive to regime stability and i would argue the green movement. They were able to crush it in the infancy but the very threat to the regime with instability and external pressure is really what drove them back to the table. You are absolutely right, sanctions, sanctions alone wasnt going to do it. Sanctions were a necessary element to getting them to the table. The reason i ask about your thoughts about the Prime Ministers statement is, this is a risk analysis and a very complicated one where every option has both some predictable upsides and downsides and then some unpredictable upsides and downsides. One of the alternatives we have to contemplate is if we walk away from a deal, and we think that reimpose and sanctions, assuming we can get the International Partners to go along and i think thats a big assumption, but reimposing sanctions and getting everybody to go along will lead to a better do deal. It could lead to a better deal but it could not. Were just months away but in 15 years they could be months away to creek crossing a threshold. I think some of them acknowledge that a deal is just a deal. Sanctions couldnt get up a better deal . They could. They. They could also lead to an acceleration of the iranian Nuclear Program which could put us in a worse position. We might might find different percentages for that but were dealing with some upside risk and some Downside Risks and some are known and some are unknown and thats why this is a very complicated analysis. Thank you. Just to further clarify the ie aea position we have to talk to people non stopped to get a comparison to the regime thats going to take place in iran versus those that have taken place in other places. I know the secretary of state has mentioned this is by far the best we ever had. Most people dispute that. The that. The one most people are talking about in iraq was much better inspection regime. It was much better. I noticed the other day in his testimony, he twisted it around i dont know if he was trying to do that, to indicate we had a lot of eyes on the ground when we invaded. Thats not what i was talking about. Its back in that 2003 timeframe. The ability to thousand three timeframe. The ability to go anywhere or anyplace was much better with iraq then it is with this. I think thats all the more reason we need to get them in to understand. At least the elements we know thus far is certainly much better and the anywhere, anytime inspection that could be 24 days or 74 days is very different than what we had in iraq. You are absolutely right but we purchase those better inspections with the war. We got the significant in inspections as a result of golf were one. I dont want to go to war to get us slightly better inspections regime. I. I want this one to be as strong as it can be. Yes i dont know. Senator rubio. Thank you i want to continue with that point. On the one hand the continue thought of what we thought was the strategy which was the International Sanction that had an impact on irans economy. They continue to make progress in their enrichment capabilities and so forth. It was a combination of International Sanction and the threat of credible military threat. Nobody wants talk about that but that was on the table. The pres. Even said that if it came down to it the u. S. Would do that if it was necessary. Versus what we have now which is a deal that argues what we will deal as it will slow them down and in ten years if they want to break out, advise us ten years of time and assuming everybody complies with everything. Thats my problem with this. In eight or ten years, which sounds like a long time to everyone, thats nothing. It goes very quickly. Thats if we are optimistic. In ten years iran will be in a much stronger position, in fact i a much stronger position, in fact i think they will be immune to International Pressure compared to where they are today. Heres why. If. If they are to use the sanctions relief in the billions of dollars that it will free up and i know everybody once to believe that going to invest in hospitals and roads and everything to win the next election. I promise they will win the next election. Theyre not worried about that as much as they are there need to modernize their enrichment capability into a 21st century industrial system. I will fall right in line with the mandate that they gave to negotiators that is dont agree to anything thats irreversible. Go as far as you need to go to get the sanctions removed but dont do anything thats irreversible. Well have less less center fuses but the be better. Heres what else they will continue to do. They will continue to build their capability. Iran in 1010 years will have conventional capabilities that could potentially drive us out of the persian gulf because the price of being there will be too high. They could threaten an aircraft carrier, they will continue to build lawn longrange rockets. Theyre doing it to target the United States. Theyre looking at the North Koreans and saying yes they have one but we dont know whether its going to hit because they dont have good guidance but its going to hit somewhere. That alone has made north korea immune and they will continue to build up their stair get in the region. I will argue that has given