Transcripts For CSPAN3 Key Capitol Hill Hearings 20141114 :

finishing up the inheritance here when michael first joined as a fellow and you know, at the end of the day, he would come by either my office or his office and his endless curiosity for for how this would play out, his love of the wonderfully ambiguous nature of dealing with the iranian. the questions of whether or not the specifics of the deal led to a much greater political kind of reconciliation, a subject that my great colleague, mark, will take up in a moment. he was also wonderfully into the weeds. and wonderfully competitive in that way that somebody's who's been a reporter all his life can be. when i r reported in the book after i wrote after i had done the inter hans than the united states had been involved in a lengthy cyber saab technology, that was really the first use of a cyber weapon by the united states against another state, i think michael was probably the first person who called me the day they ran the excerpt in the paper. and his mind had moved three chess steps out to how the iranian would respond to this. whether or not they would have to set up their own cyber capability, whether they would step back our effort. whether the publications would help or hurt negotiations. he was completely wrapped in all of the elements of this, so i'm really sorry he's not here today because i'm sure that he would stand up and heartily disagree with several things i'm going to say, so, make sure that you discount my comments to that. continues to look at this deal, one way, away that many in iran look at it and in congress look at it is a political deal. don't bother with the details. i don't want to count centrifuges, how many tons of low uranium the iranian have. i want to know if we have the political will on both sides to make a decision that will end 35 years of enemity between these two countries and gip to move us into a different place. that's one way to look at the deal. people at the webs labs would look at it and the way president obama has to look at it given what the people of the united states has said and given what he's said about the outlier state, which i think was in an interview with me and peter baker. in any case, it was an interesting -- take it and go with it. in the end it's as much about politics, we have to have the assurance that it did break out and sneak out are two different ways i'll describe in a moment. that we would have significant notice. is that president obama's definition of what our goal is here, which is to stop iran from having the ability to produce a nuclear weapon, is slightly different from the way the israelis define it, which is stopping iran from becoming a threshold state. and in that same interview, where he used out liar state, we asked the president, are you willing to let iran get to that screwdriver step away, are you willing to allow them to accompany nuclear cape bable state and how would you define it and he thought about it and said i'm not going the parse that issue for you. once they started doing that, you end up getting into an argument with congress, with israel, with the saudis -- i follow the yogi berra rule, which is don't make predictions, especially about the future, but if i had one safe prediction here, it is if there is a deal, it won't be perfect by any means. and it will start that argument that the administration has tried to delay for many, many years about how close is too close. how do you define break out. would you have time to respond. would you have the political will to respond. would israel respond without us. that's why it's important if there is a deal, it is strong enough that it can witt stand all of those kinds of questions. it's not really a choice for a political and technical deal. you're going to have to have both. i think wendy sherman and secretary kerry have both used the same phrase in the past month or two. the united states has got to caught off each one. the first two are the same pathway from different places. they are enriching uranium either at the plant or the deep underground plant that iran had hidden for years, which it informed the iae of, iaea about, moments before president obama and some fellow leaders revealed its existence in 2009. if there is more fuel on hand in iran, you need to have fewer centrifuges so that fuel -- bomb grade uranium. if you have less fuel in iran, you can have more centrifuges and so, the story that we ran twa ten days ago that stribed an interesting temporary agreement that's been reached between iran, russia and the united states, we don't though how much, so that it could be turned into fuel for the nuclear reactor at bashir, could be the key that unlocks this. it could be one of the technical solutions that unlocks the political equation. ss where those two circles meet, but it leaves many things open. there are some who will go back to the original position, which is you can't afford to have any centrifuges or nuclear fuel in iran and that in fact was the position of the bush administration when their line was not one centrifuge spins. unfortunately, they turned down a deal in which they might conceivably -- a few hundred centrifuges and now, we're in a negotiation with iran -- so, as rob suggests, we're going to have a deal in which they have some spending and the question is, can you limit that enough. the politics of this come as a matter of national pride. roughly ten times its exand pan capacity. if michael was here today, he could sit down and describe to you much better what those are, but the remarkable thing is that you had tsupreme leader, a cler, talking about the throughput of centrifuges. i don't think i've heard a national leader do that. certainly never president obama do that. the difficulty this creates is that the negotiators have to find a way to strike a deal that at some point in the future doesn't get in the way of the supreme leaders ultimate goal still being the national goal out here. and if he had simply said a number around the existing capacity, i think that would have been possible. by setting a number that was so high, he's made this -- unfortunately, he didn't say one. so, one of the big arguments is how long would this deal last and when it's over, does iran just become like japan? it can produce, there will be inspectors who come in and out, but it will essentially be lifted of any sanctions, we would essentially trust them with the technology. fort o's a lot harder to bomb. it's deep under ground. united states has one weapon that believes could get at it. the third pathway to a bomb is producing plutonium. that would be through iraq reactor. it looked like it had come wup a face saving there, turning this into a research and development plant. i don't think the americans cared whether that deal was going to crack a bit and we'll have to see on the 24th whether they'll come up with a solution, but the essential element is that the israelis so far have never let one of their adversaries fuel one of these reactors. the iraqis were about to in 1981. they lost the reactor. the syrians were about to in 2007. that disappeared one night, so it's important here that they get to a point where they're not actually fuelling it. the last element, the last pathway to a bomb is the one that one that the fewest people in congress discuss. gets almost no discussion in the political realm. and yet, if you went out to los alamos or rivermore, the big y12 complex in tennessee, it's the one that captivates everybody who's got technical knowledge of this. the covert pathway to obama. whether it exists now or not, you don't know or may exist at some point in the future. and so, two of the bigs elements of the deal to look at if they actually get to one. in two weeks. is whether or not it provides enough assurance that inspectors can track back to the earliest elements of nuclear material and this was something that fascinated michael from the production of yellow cake through to the processing and so forth, so they made sure that the fuel never gets diverted to a place we don't know about. secondly, whether you could have very invasive inspex in all the little shops around tehran from the electric plant on, where they produce the terrafugias themselves. and thirdly and this would be the hardest one for the iranian because it gets so much an issue of national pride. answer the 12 questions that go back to 2003 and take you to the current day, about what work was done if any. on what they call the possible military dimensions, but which essentially means work on the design of a weapon and you've all read about the laptop that was slipped out of iran in 2005 and other evidence that's come out. the iranian have said it's all fabrications, but the fact of the matter is that this creates a division between those who say look, this is all about the future. thg article stof b b tholook ifd the full past, then you don't understand how long it would take them once they have the fuel to actually make a weapon. the united states has never declared itself fully on this issue. it has said it's up to the iaea to certify these guys are come clean, but they've never quite said how much they're going to press that. you should be looking for that. because it gets to the question of how invasive is inspections will be. how embarrassing the questions will be, whether the answers that iran provides. they would have to provide in public. or not. so, that's the, the sort of nuts and bolts of it. to back off just a bit in conclusion here, what are the options if this is as rob suggests, a muddle through. and i would never bet against rob. just as i would never bet against michael. it would, i think, be just short of a miracle to have a full agreement by the 24th. with all of the details ready to publish. i could go on to write about something else, but i think it is unlikely. my guess is that birkhead be some agreements. another extension, more discussion and this becomes more like the mideast peace process where you try to revolve a few issues and come back and try to add on to it and you hope that you're not back slipping on the ones you've agreed on. there are some risks here that the same thing that's happened will happen in a much smaller agreement in 2009, where everybody stood in front to have cameras, said we have an accord, this involves fuel for the tehran research reactor and went back to tehran and the supreme leader killed it. so, even if you hear there's a deal on the 24th, the question is will the leader have endorsed it prior to that announcement. or will he look for it later? and the same question could be asked here was the question clearly believes he can do the sanctions lifting by his own authority. there are many inin congress, ib ib including a newly elected republican majority in the is that the who want to take a vote on this. and that could have a big effect on the outcome. they might well hesitate to sign a deal. if we were in their position, we might well take the same position. if on the other hand, the president tried to get that lifting early on in the agreement, a, it would probably fail. not just because of republicans, but democrats. and b, he would not be in a position to have his fingers on the sanctions. he wants to lift sanctions as the iranian perform. and the best way to do that is just to suspend them so that if the iranian stop performing, he can put them back on. that does not lend itself well to congressional votes, so don't look at the 4th as a deadline. look at the 24th as the end of a quarter. in all of this. because in the political process, in iran and in the united states, there's going to be a lot left. i often say to people, getting this deal doesn't require having one deal. it requires having three deals. it's a deal between the u.s. negotiators and the iranian negotiators. it's actually probably the easiest one of the three. there's a deal between the president and the foreign minister in iran and supreme leader and the irgc. that's a really tough deal. and there's a deal that has to be struck between our president and our congress. and that's an equally tough deal. so, the 24th is a fascinating marker. i'm sorry michael won't be around to have it in his book. i'm looking forward to reading those parts he swung by me at earlier sections, but i think we've got a long way to go on this one. >> thank you, david. the nuclear negotiations were playing out against the backdrop of sectarian war in syria and iraq which threaten the viability of those states. the campaign against isis to explore how this regional tunnel is affecting the negotiations. we'll turn now to mark. >> thanks, david, for depressing everyone thor rely especially by comparing it to the middle east peace process. but it's a real honor to be here and wen h rob asked me to be on the panel and said they were doing it in honor of michael, of course i said yes, although i said you know, the iran nuclear negotiations and details are not a primary topic of my coverage and there are people far more expert, like rob, david, j jay solim soloman, there are more aspects that you are familiar with. at the risk of violating the washington rule, i think i would stick to what was i was more familiar with, which i think is a critical part of everything we've just discussed, which is how what is happening in the middle east is really central to these negotiations. i want to say that you know, i spend 15 months at the wilson center, some of the 15 months i've had professionally and working on my book and i can't think of my time at the wilson center without also thinking of michael. he's an integral part of my memories at this place. sort of sharing offices close by and then we would meet for lunch and then we also shared a terrific research assistant, jessica, who's here. so, michael and fought over her time and because she was that good and just the conversations i had with him about these ongoing endless negotiations and how to incorporate them into his book and the memories i had would be there would be another round of negotiation that was announced, whether it would be in vi enna or moscow or some other place. michael was so torn. i've just got to stay, finish this book, but i really want to be there. i think i can go. i think i can just get on a plane and go. i'd say, well, michael, do you think you go, you could get really good access, they'll let you? no, no, we're just going to be shut out. but rerealized that being there was important and he was a reporter and that is i think the first rule of being a reporter is that you have to be there to find the story. and michael truly believed that and he couldn't imagine you know, being, this was a topic that was so central to his coverage. not being there for whatever was happening critically at that time. i think that was to his credit that he just felt like he always had to be where the action was and that's really what is a really strong memory for me about michael and on the issue of isis, iran, the how all of the recent events in the middle east play into what david and rob just discussed, i think that the last six months to put it mildly just made everything a lot more complicated. rob said at the outset that you know, would be hard to imagine several months ago or a year ago having a discussion on this topic without the prospect of a possible air strikes or a military action in iran. i think also equally ll lly implausible, we could have a discussion on this topic and iran and the united states are working close with common interests on a critical issue in the middle east. that's isis and the fight against isis. if you just back up for a second, you had before the last six months, before the summer, you had this sort of calcified set of issues. on iran, iraq, syria. that meant that the things were pretty intractable and weren't going to move. just to set the picture, you had a bloody civil war in syria, that went on and on with a horrendous loss of life. that iran was directly invested in, but clearly, the obama administration was not. the obama administration, president obama himself said time and time again that this was not a fight that the united states could make a difference in. and so, therefore, it was his role to keep the united states out of it. we heard in so many interviews, he would compare the syrian conflict to an african civil war or something really marginal on when the u.s. looked at his own interests. and that was the civil war against assad. the effort to oust assad. there was this debate about whether to do more, whether to arm the rebels, whether the cia or pentagon should do it. president obama never really plooefed it. he didn't believe it was that important. on the other hand, you had iran, which was clearly heavily invested in suffering the assad regime along with the russians, flowing money, personnel, troops, weapons to the assad regime because it saw keeping the assad regime alive was central to iran's interest. so, there was this real mismatch of interest between tehran and the united states and in some ways, that allowed at least from the united states point of view, to conpartmentalize the issue. from the broader issue of syria, the violence in the middle east because the united states was not all that invested. this was going to be part of president obama's legacy. maybe the lynch pin of his foreign policy legacy was dealing with the ran yawn program. and the lack of interest in other programs really allowed the administration to be so singularly focused on that, but then, june and july happened and what we saw was the push by isis to go into northern iraq, to take over mosul, to make a march on baghdad. already, they had carved out large parts of syria, but that was not part of the radar. but then it became an iraq problem and became a real question of does isis threaten background, where the united states for obvious reasons, has a lot more invested, given the events of the last ten years, so we now see the united states once again militarily, directly militarily involved in iraq and also with air strikes in syria. this has totally changed the landscape of how we deal with these various partners. you now have instead of assad being the enemy, supported by iran, you now have a common enemy, that everyone is lined up against. so, it is the one enemy that iran, israel, saudi arabia, the pope, the united states, sounds like a joke. that they're all basically have come out against isis because isis is seen by so many as such a significant threat. so, that has really scrambled to some degree, the picture. and changed the calculus for the various parties. and it's no longer in many ways, as simple as it was back before isis made its advance. so, because for that reason, i think that it's going to have at least a tan impact because the u.s. interests have shifted. the u.s. now has much of an interest in beating back isis as it does denuclearizing iran and the attention now paid at the highest levels of the national security sill to isis to be impact in syria and iraq. it was very, very little attention compare today what it is today, so how does iran interpret that? i think it could be interpreted in a couple of dichbt ways. jay wrote this great story last week and obama's letter and obama's letter reaching out to the iranian for help with isis. but also a discussion about how the war against isis will impact the ongoing negotiations. i think iranian as rob indicated might interpret this as leverage. it knows it would need iran's help in order to beat back isis. so, my guess is that the iranian at least see this as more leverage on their part than six, seven months ago because the united states does need them to some degree. i don't see anytime soon direct military cooperation between the united states and iran, but i would certainly guess that there is some, if not direct, but indirect intelligence discussion going on, not intelligent discussion, discussion about intelligence, between the to sides because that's what intelligence officials do. they try to figure out what the other side's up to. especially when there is some common ground. it's a little bit of speculation on my part, but i wouldn't be surprise surprised at all. there is this common interest that they might interpret as leverage and could interpret could overplay because they could think well, this is their chance to get the most of what they can get because the united states needs them against isis. but there's a risk here as well and i think that the danger that faces iran is iran is that not only overplaying the hand, but completely misplaying its strengths. iran is overstretched right now. not only do they now have a regime in syria to help prop up, which they're still trying to do. they now have to deal with the isis threat. in iraq. there's been some reports that the quds force doesn't have the manpower to do what it does in iraq and they're relying on irani conventional military to along the border of iraq, to fight isis. so, iran does not have limitless military resources. and they've already got this one flailing regime in syria to support and they presumably do not see the prospect of having to fight a year's long war against isis. as something that they relish because of their own limitations. the other reason why time isn't necessarily on the side of iran is because of as either rob or dave alluded to, b the price of oil. so, the price of oil is sinking. this is obviously putting pressure on iran. because you know, the more it sinks, the more it's going to feel even more the grip of the sanctions and so, that would be another reason why iran shouldn't necessarily think that just because the united states needs them for isis, they can play out the clock longer and longer. just a couple of points to close. i think that as president obama has indicated, this war against isis is going to be long. it is going to be something that's probably kind of low grade for some period of time, it's going to, there's no one is predicting that isis can be defeated easily. so, in that case, on the bright side, it looks like the united states and iran might have common interests on a significant suggest for a long time to come. as long as this war is fighting because as long as isis is a threat, united states and iran will continue to have common spress. but the big question remains at the end and i don't think anyone is really directing, dealing with this head on because we don't really know, is what is the future of assad? for the time being, the decision is being made that -- the campaign, it now wants to train rebel forces in syria to fight. and then somewhere down the road, we'll deal with the assad problem. but when that happens, however many years from now. that's what could put the united states and iran on a collision course because then, once again, their interests will come head on. and hopefully, before that happens -- >> thank you, mark. before opening up to the floor, one or two threads of the discussion i'd like to pursue. the first is the question of whether the nuclear agreement is linked to other issues or conpartmentalized. einstein said politics is more difficult than physics. in the case of the iranian nuclear challenge, start with david, how do you view the linkage issue? i argued that conpartmentalizing the agreement may be the way of fin eszing this gap between the technical and political. that provides a long enough breakout point, there's space on the technological continuum to reach an agreement and in that workout does suggest a political narrative that's not unattractive to both sides. we've stood up to bullying, we've preserved the rights. america could say they're not a -- we've got assurances on that. possibly playing and bringing the november 24th negotiations to some type of resolution? >> i do think that's a narrative that will bring it to some resolution. whether by november 24th is another question. >> i thought it was interesting at the united nations in september that sa reef and secretary kerry were both saying these issues are not linked. we are not going to do a trade off of the nuclear deal for cooperation on isis and so forth. a deal on dealing with isis is a temporary thing of a year or two or three and may get executed or not, but the half-life of the deal of uranium or plutonium. they need something lasting, and that doesn't mean that the two are unrelated. to trade off the nuclear for uncertain gains elsewhere i think would have been unwise for the u.s. i also think it would have been unwise for the iranian. as mark sukted, they're stretched extremely thin. oil prices are dropping. if you believe the projections out there, they're going to drop some more. the last thing they might want to have happen is for the iranian to come back on the market with more oil and bring the price down even faster. so, if you are the supreme leader and you're playing this out, i think that you want to keep the possibility of a in hopes that it will give you some advantages, but you don't want that to be terribly explicit. so, if you had a model here, think of president kennedy and removing the missiles in turkey. if i was the united states or the iranian, i'd probably want to keep it the same way. >> mark, in your presentation, you mentioned that in iraq, the united states and iran, are kind of tas idly supporting the -- a shiite government and in syria, their interests begin to diverge over the future of assad and i know it's a, the u.s. policy toward assad is sort of a current point of debate about whether the united states will make the overthrow the assad regime a priority or not relative to the campaign against isis. how do you see that playing out over time, especially when you have -- assisting the iraqis when you have iranian forces there and they may be coming up into proximity with each other and there's a chance of ina inadvertent military, action between two sides that run up against each other inside iraq. how do you see these issues getting worked out? >> you raised this sort of very intriguing prospect of american forces in some capacity in iraq. in some kind of at least coordination with whatever iran is doing against a common enemy. the current debate obviously in iraq is to what extent the u.s. advisers there are going to be engaged in combat. that was very much -- certainly the chairman of the joint chiefs of staffs have indicated that these advisers, in order to do the advising that the pentagon envisions, they will be working with iraqi forces on the ground, calling on air strikes, that type of thing. that raises some very interesting prospects for whatever they are doing and whatever iran is doing to beat back isis in iraq. i think the real question, i think that we can't answer at this point is to what extent the syria, what is the ground picture in syria is going to look like. obama has ruled out american boots on the ground in syria. it is hard to imagine he is going to go back on that during his final two years. if there is a military presence in syria, who will they be fighting and to what exdoes this extent of iran and the united states once again go an o collision course because assad remains at the center of the picture and in my mind, in the reporting i've seen, i still haven't figured out whatever force is being trained to be the boots on the dwround, the rebel force being trained in various places, what they're going to do. who they're going to fight and how that is going to be worked out. without american presence or the presence of another arab nation there. which is just a far more complicated project. >> let's open to the floor now for questions and comments. if speakers could please identify themselves, yes. diana first. >> thank you. >> announced earlier that they have -- eight new reactors in iran. whether this is bidding or an actual agreement is uncertain, but what are the impacts of that announcement for nuclear reactors, first followed by four others for the nuclear talks with the u.s. and the five. >> david, you broke story -- earlier in the last week about the possibility of fizzle terrib material going to russia and now, this new development that they may build reactors because one of the issues has been iran is spinning these centrifuges for fuel that don't exist so, this opens the door to the possibility that there might be some practical needs for the fuel cycle program. what's your take? >> diana, r it's an excellent question and i think that the upside of this for the iranian is that one of the weaknesses in their argument until now have been we're enriching fuel for a set of reactors that do not exist. the only reactor was s the one atiba sheer, the russians will be supplying it through 2021. the agreement announced was a bit vague. it talked initial ly about two reactors, the possibility of moving up toing eight. it's a lot easier to announce reactors and build reactors. it would be easier to see if a not in my backyard movement crops up in iran. that would be an interesting story. what it does though is that it creates a rationale of sorts under which the iranian could justify going up to president, to the supreme leaders 190,000 centrifuges or existing text message as a rationale for fuelling these when they get built. we know it takes so long to o build them, they would have time to go do this after an agreement was over. so, to that degree, it helps. the other side of that though is that iranian right now are incredibly inefficient producers of uranium and if they wanted to do this at a cheaper price, they would be the enriched uranium, the fuel on the open market. there is a glut of it, particularly after the japanese closed down so many of their reactors following fukushima. but there was a glut before that time. shipping to it russia, fabricating into this specialty fuel to go fuel these reactors. but if in fact it is a way of maintaining control and people can see what they're producing, if it's regularly leading, we have a high confidence level that the russians are doing this correctly, then it's a potential solution. and there's no reason that the iranian shouldn't be allowed to go ahead and produce this assuming that there's an understanding about what happens to the spent fuel out the back, which so that it doesn't turn into plutonium fuel. >> barbara slavin. >> thanks. may i add my sympathies about michael. he was a member of our iran task force and very, very helpful in that regard. again, possible military dimensions, how important is it to be clarified, are you surprised that obviously nothing would happen until november 24th. is it necessary for the findings to be pub bly sized, could they be kept, could this be a long process that does not lose face for the iranian, who insist they never intended to build nuclear weapons. >> very good question. i think in many ways, the toughest issue for the iranian. because if you believe in the intelligence, prior to 2004, there was something that resembled the manhattan project. if you believe that and we don't won't know fl you get that amount of data. there are sort of three levels of the answer to your question. one is is should the iranian have to respond to this because it's an iaea investigation arngs obligation and they've said they would answer the questions. secondly, i think for the, my own personal view and not as a reporter, it makes particularly no difference, but if you're going to enforce iaea norms in the future against other states, i think giving somebody a pass is a little bit problematic because then you've got to justify it the next time and the time after that. the second question is do you make it public? that adds to the embarrassment question. in a post wicky leaks post snowden world, operating with an organization that has 180 some odd members, whose on control over information has been less than a little bit less than full. it's been sort of a mark of daifld full in employment act over the years when you consider how much information and you, too, when you were a full time reporter and today in the work you do, the iaea as you know is a very important source of information, whether they sbed to be at times or not. i can't imagine that information would stay secret forever. it boggles the mind to imagine that and the third question is even if you don't reveal the history, do you want to make sure that the iaea is constantly interviewing the scientists who worked on those programs. to make sure they are gainfully employed on something other than a nuclear weapons project and so far, the iaea has not been able to interview any of them and the iranian have made the point that when their nuclear scientists show up in public some place, the odds sticky bomb ends up on the side of their car, so they have some good reasons not to want to reveal who their scientists are. >> we have an overflow room. we talked about the possibility of the muddle through scenarios, l let's talk about the politics of that. if there is a deal that sort of pockets whatever progress has been made and opens the door to future negotiations on outstanding issues, how will that play you know, here and the potentially there. it would there? it would be a delicate balancing act. on the one hand, you want to maintain the pressure on iran, but there would have to be something in if for iran to go along with it. and the politics here particularly with the change in congress are complicated. on the iranian side, the politically loaded question we have discussed it to be. how do you both see kind of the interim option sort of playing out if that's the outcome on november 24th. >> i think this would be tough with congress because a partial deal by necessaity will not hav a lot of specificity about timelines and sharp measures and so you're in the position of lifting some sanctions without complete clarity unless it's announced about the iranians do in return. i think for the iranians, it would be difficult as well. because the u.s. position and the position would be we can't discuss permanent lifting of sanctions until you have a permanent deal. and i'm not sure how much the iranians want to live with a temporary lifting of sanctions. i don't know what the rest of the region would think, but that's more mark easter toir. >> i think they would be very nervous. any attempt by iran to read the u.s. political situation would be quite difficult. like what it means for them shs the republican takeover of the senate, just as it is for our own political analysts to read the political situation. i think that whether iran sees benefit or risk of the new congress i think once again it goes to rob's point of it's important for them to realize the opportunity when they have it. >> i think we'll close it there. we'll turn to the director of the centers of the middle east program for closing remarks. i should add it was the middle east program that has sponsored today's event and we thank them for that. >> thank you, a special thank to speakers. you couldn't have done a better job. i wish he was with us to share his views. i know he would have loved the discussions. in the last piece he offered for defense on may 19 of this year, he thought the two sides faced differences and had drawn into a brick wall. when i read this the next day, i started arguing with him and i told him i think it's a mud wall and not a brick wall. neither i was able to convince him nor he was able to convince me. he was not 100% optimistic but he was not hope for about the possibilities of a deal by novemb november. he was still skeptic when our colleague saw him shortly before he passed away. he was not interested at all to talk about his health. he was interest. ed in talking about the nuclear negotiations and what was the data. he was intimately familiar with the details of the negotiations. he was present at almost all the meetings off the negotiators in europe. e he knew and had talked to most of the principle. and i remember when he went there to talk to the russian deputy foreign minister, i argued with him and i said, you don't have to go just because he wants to talk to you. he said, no, this is an opportunity i don't want to miss. every time there was a negotiator's meeting, he wanted to be there and was there and in the last six, seven months i tried to talk him out of attending the meeting especially the one in geneva, which i think was his last meeting in july of this year, but he went and i'm certain if he were still with us, he would have been finding stories from over the weekend. and he was working on a book on the negotiations at the time of his death. he showed me the first 60 pages because i constantly nag at him and i said i want you to show me something. so one day he walked in and gave me 60 pages, and he opens the book with his one and only visit to iran charting the difficult route that lay ahead. and he was hoping to complete the book by december so it did not leave to complete it, but if we at the wilson center, his colleagues will get hold of the man script, we would make sure to finish it for him. but book r no book, we are at the center, his colleagues and editors will always remember his measured insight and observations as the negotiations with iran go forward. so we are very thankful that you're all here. we are very thankful to the family who joined us this afternoon and please join us to a reception which is in the dining i am so pleased with the programming especially the history aspects. i just real america, a short clip where jfk gave a speech in berlin. i enjoy the history programs where the cameras go in and one sees the actual class being conducted by the professors. i have always found that to be wonderful. i enjoyed when they went to colorado springs and we heard them talk about the garden of the gods and pikes peak. so once again, please, please keep up the good work. you c-span are the only good that came out of the congressional recess because that meant you put on book discussion, the history. i wasn't prepared to remember the names of the programs the actual programs, but keep up the great work, thank you. >> i'm calling to comment on the america center for progress presentation tonight from the secretary of health and human services. i'm really upset about that because. i would like c-span to also have a panel of mr. groouber and some of the others who have a very different impression of the aca. they did a same polishing act that they did with presenting this material to us. they assumed that we're so dumb that we can't get the details that we're stupid, as he said. but we can sense when there's a deceptive and sleazy going on. and that's why the vote was like it was. >> continue to let us know what you think about the programs. call us at 202-626-3400. or e-mail us or send us a tweet. coming up tonight on c-span 3, the house financial services committee. examines efforts to disrupt isis funding. then attorney general eric holder briefs reporters on international prosecution of isis members. later a discussion on the expansion of isis in the middle east. after that remarks by the israeli prime minister benjamin netanyahu. next a look at u.s. strategy against isis. thursday david cohen, the undersecretary of treasury for terrorism and financial intelligence outlined his agency's work to attach the terror group's funding sources. this hearing of the house financial services committee is three hours. >> the committee will come to order. the chair will declare a recess at any time. before we begin, if you think you are in a strange room, you are. we did not change the portraits, as i have announced previously to the committee. our hearing room, i think, is the last hearing room in the raburn building to receive a sound upgrade and other modifications to make the room ada compliant. as a reminder to all members, we will be a no maddic tribe between now and theoretically the end of march. we hope that doesn't mean mid-w mid-wmid mid-may. and we will take whatever committee room our friends will allow us to have. so if you see chairman shoouser on the floor, thank you for his kindness in allowing our committee to use his committee room. this hearing is entitled terrorist financing and the islamic state. i wish to advise members who are unaware we have two panels today. we also have organizing meetings for the 114th congress that are ensuing. so we are going to release the administration witness, secretary cohen, at noon. we will convene the second panel at that time. then the hearing will be gavelled down at 1:00. please know this will be our first hearing on this vitally important topic. it will not be our last. so members who don't have an opportunity to ask questions, if need be, we can call the witnesses back in the future. and at least for those on the republican side of the aisle, once we have the second panel begun, wherever we last left in the cue, those who didn't have an opportunity to ask questions, we'll start with you on the second panel. i now wish to recognize myself for one minute for an opening statement. the 9/11 commission estimated that al qaeda's brutal evil attack on 9/11 cost the terrorist half a million dollars. so terrorists were able to murder 3,000 of our fellow countrymen and inflict immeasurable suffering upon our nation. today we face another terrorist enemy for which a half a million dollars appears to be pocket change. organization that reportedly raises between $1 and $2 million a day. and unlike al qaeda and other terrorist groups with which we are familiar and rely mainly on private donations in spate sponsorship to fund their activities, isil is internally financed rather and apparently is sitting on assets of almost $2 billion. so today's hearing continues this committee's ongoing efforts to ensure our government is doing everything possible to stop the islamic state and other terrorists from using the global financial system to pay for their evil activities. fighting the financial war against terror will demand constant innovation and improvement. the tools we have use d in the past may not be suitable for the future. i look forward to hearing from the witnesses on what may be necessary to upgrade and improve our capabilities to starve the terrorists of the money they so desperately need to carry out their attacks. i will now recognize the ranking member for three minutes for an opening statement. >> thank you very much, mr. chairman, for scheduling today's hearing. i would like to thank undersecretary cohen and each of our other witnesses for being here today. i'm looking forward to hearing about the administration's efforts to degrade isil's financial capability and to review the effectiveness of our current legal framework in deteriorating terrorists and money laundering known as isil or isis is an incredibly violent organization that has shown a particularly callous disregard for human life for shocking and brutal tactics that include beheading, mass murder and rapes and more recently allegations of chemical weapons use. the group is tremendously destabilizing force across large swaths of iraq and syria and the brutal campaigns have approximately u drawn the condemnation appropriately drawn of the broader international community. in addition to the horrific massacres, kidnappings and decapitations, officials believe that isil is one of the richest terrorist groups to ever exist with estimated assets in access of $1 billion. unlike most other terrorist groups, which tend to rely heavily on foreign sponsors, isil generally raises funds internally limiting available to the treasury department to cut them off. from the formal financial system regardless. the ability to sanction and block assets remains vital to ensure that over the long run the united states and our allies can shut down any funds that are tied to elicit oil sales, extortion and kidnapping for ransom. as we make progress in curtailing isis's internal funding schemes, it may be forced to rely more heavily on types of funding that would most likely have to flow through the formal financial system. to guard against this and all other efforts to finance terrorist activities, treasury, our financial regulators, the department of justice as well as congress must work diligently to strengthen the enforcement and deterrent value by over o of our aipt money laundering laws. due to concerns that the department of justice and regulators have not met the tasks of holding banks and their executives sufficiently accountable for blatant violations of law designed to staunch the flow of funds to terrorist groups, i join with my democratic colleagues earlier this congress to introduce a legislation that would close loopholes, encourage the flow of information related to elicit activity and strengthen powers to hold bank executives accountable for their role in safeguarding our national security among other things. i hope that as part of this committee's discussion of the adequacy of international banking policy, we take a hard look at the proposal that democrats have put forth, but has yet to be considered by this committee. i yield back the balance of my time. >> the chair now recognizes the chairman of our capital market subcommittee, the gentleman from new jersey, mr. garrett for one minute. >> i thank the chairman for holding this hearing today. isis inherits the claim to the evil legacies of senseless brutality and inhumanity. if given the opportunity, isis would try to harm americans here in the homeland. as a member of congress, who represents a district across the river what once was the twin towers, i know we cannot be cavalier about security threats such assist partnerships our commander-in-chief hasn't appreciated this. i'm concerned how seriously president obama has taken this threat. so i look forward to the hearing and witnesses. i hope to get a better understanding of what has been done and what must be done to not only to degrade but actually to eliminate this terrorist threat. thank you, mr. chairman. >> the chair now recognizes mr. sherman for a minute and a a half. >> thank you, mr. chairman. i spent substantial amount of time on these issues at our terrorism subcommittee over on foreign affairs. we have learned that qatar is a major source of funds, both at the governmental level but also allowing citizens to donate to hamas and isis. isis is now much more internal. there are those that attack the president's who have an oversimplistic view of the situation. ist cyst evil, but many of isis's enemies are just as evil and more dangerous than isis. given this complicated circumstance, simplistic attacks on policy don't really further our situation i'm concerned that the electricity continues to be on in all the cities that isis controls. this means that either we are providing that electricity from dams under the control of the iraqi government or we're allowing isis to operate electric generation facilities. either way isis is able to sell electricity because we're unwilling to turn the lights off. we're in a difficult circumstance because the civilians that live under isis's rule are hostages and to some extent supporters of isis. but we did not hesitate to bomb targets that occupied europe and can't hesitate to bomb targets in isis-controlled northern iraq and eastern syria. finally, we have learned that the control of the new york fed and its ability to clear dollar transactions is perhaps the most powerful sanction that we have against terrorist states like iran and i'll be interested to see whether that would play a role. it has brought iran to the point they are willing to pretend o to negotiate with us. i yield back. >> the chair now recognizes the vice chairman of the subcommittee, the gentleman from pennsylvania, mr. fitzpatrick for two minutes. >> i thank you, mr. chairman. this past month i had the opportunity to travel to the e region to investigate terror financing at meeting in qatar and turkey with the department of treasury officials to roubd out my understanding of terror financing and specifically the threat posed byist uist. i look forward to working with my colleagues on this committee to provide oversight over the government's response to isis and ensure that we have all the tools necessary to meet this unique challenge. isis is an enemy unlike any oh. they have their roots in al qaeda and iraq, they have not only learned from previous experiences, they have evolved and not just an organization committed to acts of terrorism but have designs on establish. ing their own state. the structure creates a unique challenge. for one of the means that we have traditionally employed to combat terrorist threat, which is go after their money and resources. this mission to degrade and defeat isis demands coordination. our national security transcends all other and i look forward how we can work together to protect the american people. i yield back. >> the chair recognizes mr. lynch for a minute and a half. >> thank you very much, mr. chairman. i want to thank the secretary and the other panelists for working with the committee and helping with our work. as co-chair of the task force on anti-terrorism financing along with my colleague mr. king from new york, we have done a lot of work in this area in the traditional sense where we're trying to block terrorist organizations from using legitimate financial system. this problem presents a different type of issue, where a lot of rev of knew are being generated internally by isis. and its totally different scale. we're talking $1 to $2 a day in terms of their revenue. i would be interested in hearing from the secretary on what we're doing in turkey along the northern border of syria there. i just came back from irbil and look at the situation in northern iraq as well as in turkey. we're concerned about the poorest nature of that border and how it elicits shipments are still being handled both through turkey and parts of syria. so will be interested in hearing the comments on that. i want to say thank you for the work you have done so far. i think it's been commendable in terms of the work you have done. >> the chair recognizes the gentleman from florida for one minute. >> thank you, mr. chairman and thank you for holding this hearing. i want to thank our panelists for their testimony today. as you pointed out, it costs the terrorists who murdered thousands of zi citizens on 9/11 $500,000 to plan and execute their attack. in a single day, isil is estimated to bring in more than double that amount through elicit business practices. we must dismantle and destroy this terrorist organization before more american lives are put at risk. from selling oilg to taxing and extorting businesses to kidnapping, isil is a criminal organization with numerous resources that have perpetuated reign of terror across the middle east. i look forward to working with my colleagues to ensure the federal government uses every tool to prevent isil and all terrorist groups from acquiring the funds to reign their terror. i u yield back. >> the chair recognizes the gentle lady from ohio for one minute. >> thank you, mr. chairman and undersecretary and the other panel i panelists. today we're examining the important topic of terrorist financing in islamic tats, specifically how the trigs group known as isil obtains financial resources to further their operations in iraq, syria and the middle east. each night my constituents turn on the news and they find reports of isil's acts and the brutality gejs gejs women aid workers and journalists. this must stop. while the military is providing aid to moderate rebels and legitimate governments to defeat isil, we must also highlight the efforts of other agencies within the administration and how federal resources may be coordinated to erode and ultimately eradicate i'll u i'll. the u.s. government is combatting terrorist financing, attempting to choke off sources of funding for isil and related organizations. mr. chairman and my other colleagues here, i look forward to working with you because the hearing on this topic not only protects our financial interests, but our national security interest as well. thank you, and i yield back. >> the chair recognizes the gentleman from indiana for one mant. >> thank you, mr. chairman and thank you for calling this important hearing. mr. chairman, islamic state is one of the most well armed and well financed organizations. they are the moegs bar baric as well. since 2013 they have recruited thousands of fighters from around the world, swept through iraq and syria and killed thousands of innocent people who do not conform to their ways. it's reported that islamic state controlled around 60% of the oil fields in syria, which are bringing in massive daily revenues to fund their operations. one of the most effective ways the u.s. has disrupted terrorists has been to cut off financing limiting their ability to plot and plan attacks. multd pl revenue streams may require new tactics. so today i'm looking forward to hearing exactly how we are identifying and blocking financial intermediaries to keep them in a strong position. is our current strategy working? are allies doing all they can? thank you to the witnesses for appearing today and i look forward to this conversation. i yield back. >> last the chair recognizes the gentleman from north carolina for one minute. >> thank you, mr. chairman, for calling this critical hearing. the threat seems to be growing and the summer we were told there were about 15,000 soldiers. now between 40 and 80,000 soldiers. our best hope and opportunity appears to me to be to intercept the transport of funds coming from the sale of oil. of course, there's extortion and other means. it does beg the question whether we have enough on the ground to make these interceptions. another area of real opportunity is with software that's available. i met with several times as chairman of the task force on terrorism. many national software companies and with the sophisticated available, i hope that the department is making every effort to utilize the software to engage these funds as they get into the international financial system. thank you. >> we now turn to our treasury department witness, the undersecretary for terrorism in financial intelligence, a position to which he was confirm ed in june of 2011. mr. cohen leads the department's policy enforce mement rel toir intelligence functions, aimed at identifying and disrupting the lines of financial support to international terrorist organizations. prior to his current service, he held other positions at treasury, practiced law in the private sector. we welcome you, mr. undersecretary, to the committee. without objection, your full written statement will be made a part of the record after your oral remarks. you're now recognized for five minute summary of your testimony. >> good morning, chairman, ranking member waters and -- >> could you pull the microphone a little closer? >> certainly. good morning, chairman, ranking member waters, distinguished members of the committee. i thank for the invitation to appear before you today to testify on this very important topic. i will focus my testimony this morning on the treasury department's efforts to undermine isil's financial strength as part of the administration comprehensive strategy to disrupt and defeat isil. we're determined to defeat isil not just because of its brazen atrocities, but also because it threatens core u.s. interests. isil threatens american personnel and facilities, it threatens our regional allies and if left unchecked, it could pose a direct threat to the u.s. homeland. that's why under the leadership of president obama, a broad coalition of more than 60 partners has come together to stop this threat. isil has been grabbed the world's attention for its brutality but also for its substantial wealth. so i'd like to outline how we are focused on undermining isil's foundation. our work is one of several kpli rimt ri lines being taken by the coalition. these include military operations and training, additional humanitarian assistance, stemming the flow of foreign terrorist fighters into and out of syria and iraq and exposing the hypocrisy of propaganda. the military components are bolstering our work in the financial foundation. as would the rest of the campaign our efforts to combat the finance iing will take time parks and extensive collaboration. but so long as isil terrorizes the people of iraq and syria and threatens u.s. interest, we will remain committed to degrading its financial strength. our strategy. involves three elements. the first is working to cut off isil east main sources of funding. i'll ul has raised a significant amount of money from selling oil it extracts from the fields in iraq and syria. from mid-june until e recently, isil's daily oil revenue was $1 million. although it's now likely lower thanks to coalition airstrikes. to further disrupt this market, we are targeting for sanctions anyone who trades in isil east stolen oil. it is true that the oil moves in e elicit networks that are largely outside of the formal economy. but at some point, that oil is acquired by someone who makes use of the financial system and is vulnerable o to sanctions. we are working with our partners as well as with regional companies to clamp down on the cross border smuggling. next isil like other terrorist organization kidnaps civilians to profit from ransoms paid to obtain their release. isil has taken in at least $20 million from ransoms this year. to address this, we are redoubling our engagement with foreign partners as we urge them to subscribe to a no ransoms policy. refusing to pay ransoms not only make s it less likely that innocent civilians will be kidnapped, it deprives terrorists of funding critical to deadly aspirations. isil also takes in some funds from financial supporters and we'll continue to target them for sanctions. we intend to make sure that donations do not become a more significant to isil as we squeeze its other revenues. as the revenue that isil generates from crime and extortion by demanding cash at gunpoint, shutting down this source of funding ultimately will require breaking but treasury has a crucial role to play and that brings me to the second element of our strategy. restricting access to the international financial system in order to impair its ability to collect funds from abroad and to store, move and use the funds it acquires locally. the ability to use money or fund external operations depends on its access to the banking system. so we are working with iraqi authorities, iraqi banks and international banks and regulator os to prevent isil from using bank branches located in territories where it operates. the third element of our strategy aims to dismantle the financial foundation through targeted sanctions on its leadership and financial facilitators. this will make it harder for isil to conduct commercial activity and also clearly identify who stands behind this evil organization. before concluding i'd like to make one final point. we should not confuse funding with financial strength. while isil is well funded, terrorist group's financial strength turns not just on its income but also on its expenses and ability to spend money freely. in that regard, isil faces significant financial burdens. paying its fighters and attempting to govern sprawling territory is expensive. and isil does not have the money to meet its costs. as we make progress in diminishing revenue, we will further exploit this vulnerabili vulnerability. thank you and i look forward to addressing your questions. >> the chair recognizes himself for five minutes. my understanding is that the ability to block terrorism funds derived from executive order 13224 issued by president bush shortly after snen part of that executive order certain entities and individuals can be designated as specially designated global terrorists. i think the initial list has grown from 27 to now 800, which is important because it means that funds in the u.s. can be blocked, u.s. persons and eptties are no longer permitted to do business with those on the list. it is my understanding that so far only four members offist uist have been designated global terrorists by treasury and it is my understanding that these four are not involved with major funding sources of the elicit petroleum trade to the black market. so it strikes me as a little bit of a -- well it does strike me as a low number. can you describe briefly some of the challenges here and what should be the expectation of this committee and the american people going forward? >> absolutely, mr. chairman. as you know, the authority to impose sanctions on terrorists and terrorist financiers, it's authority we have used in att k attacking the financial foundations of a wide variety of terrorist organizations including al qaeda and isil's predecessor al qaeda in iraq. so we have over the years used this authority to designate in more than two dozen individuals and entities some of whom are in the current manifestation of isil, some of whom are part of isil east ant see dent in al qaeda and iraq. we are continuing to look for opportunities to use this tool to designate these individuals. as you note, it freezes their assets. it prevents their use of the u.s. financial system. but equally importantly, it also has ramifications overseas. >> i understand what it does, but we only have four people on the list. so is this an intelligence challenge? is it a priority challenge? again, what should be our expectation here? >> specifically with regard to your question on the oil trade, there is work that needs to be done to get better insight into precisely who is involved in that oil trade. is our intel agencies are working day and night to develop that intelligence. we're working with partners in the region as well to help us gain better insight into that. as we identify the individuals who are involved in that oil trade, they are vulnerable under this authority. as i noted in my remarks, what we are particularly eager to identify are the individuals who have some foothold in the formal financial system. because we can designate people who are in syria and iraq who have no -- >> if i could, my time is running out. i'm going to attempt to set a good example here. besides the question of priorities, we have mentioned the executive order. . is there any other legal authority that the administration is depositing that it needs on a go-forward basis to deal with financing? >> mr. chairman, i think we have the legal authorities that we need. mostly the executive order, we have a host of other authorities that are potentially available to us to address terrorist financing and the financial activity relate odd it. one of the keys to our ability to designate, which is just one aspect of our plan of attack. >>. i understand. >> is to develop better insight, better intel. i can tell you that that work is underway. we have -- >> the remaining time i have let me get this last question in dealing with intel. my search of the record seems to indicate that there has been really only one significant terrorist finance prosecution by the justice department and as a texan it received a lot of press in my hometown of dallas. but i'm unaware of any other major terrorist finance prosecution. you're representing treasury and not justice here, but can you at least describe the intel sharing between treasury and justice? because again, one significant prosecution seems to be a dearth. >> mr. chairman, i'm not sure there's only been one terrorist financing prosecution. i think, in fact, there have been many -- >> well significant may be a term of art, so proceed. >> defer to my colleagues at the department of justice, who i understand file an annual report with congress about their activities in prosecuting terrorist financing. in terms of information sharing between treasury and justice, we are very, very closely linked up with justice on a policy level and also on an information sharing level. i think probably the best but by no means the only is our relationship between our financial intelligence unit and the justice department in sharing information that they obtains regarding financial activity that could potentially be used for a whole host of financial prosecutions. >> i have run past my time u. the chair recognizes the ranking member for five minutes. >> thank you very much, mr. chairman. the questions that i have perhaps are questions that should only be asked in a classified briefing. and so rather than delving into some of the questions that i have about what we have not been able to do, i will simply say this. many of us were shocked and surprised that we appear to know so little about isis when the information finally reached public view. it is inconceivable that we have what we think is one of the best intelligence agencies in the world that isis could have developed this far with sophisticated operations for selling oil and other kinds of things that it's doing without us knowing what they were doing. so without asking the questions that i would ask in a classified briefing, i would simply ask you, have you been engaged treasury been engaged with the cia and other who is have the responsibility for vejs in ways that we can catch up with how far they have developed and what they are doing? i heard what you said about their inability to spend the money and they are short of the money because of the payouts they have to do, e et cetera. but how can we have confidence in that kind of representation without knowing what you have done to fix the system or to mend the lack of communications that got us to the point. that we are with too little information about isis. >> i don't want to understate our insight into isil financing on a whole host of areas because i do think we have good information. we need better information, but we are not by any means completely blind to how isil is raising its funds. on the oil transactions in particular, the situation there is that this oil smuggling that isil is now taking advantage of had been going on for quite some period of time. you had people who were stealing oil from iraqi and syrian wells, selling it through the black market that has existed in that part of the world for a long time, but what changed is when isil came in and took over the fields. it became isil that was the beneficiary of this preexisting smuggling network. in years past, when it was not a terrorist organization that was involved in this smuggling network, it frankly wasn't a high u priority for our intelligence community to understand who was involved in the smuggling of iraqi or syrian oil. it's now an enormously high priority to identify these individuals, but what has changed is you now have isil as the beneficiary because they have control of the oil coming out of the ground. the work to identify external funding networks for isil is something that we have been very much involved in for many years to understand and to take action against the funding networks coming out of the gulf. kw qatar was referenced earlier. we have been engaged over the years to both better understand the financing networks in the gulf and to take action to cut those funding networks off. so we are working very closely with the intelligence community and other members of the intelligence community so we have the information we need in order to execute the policy. >> i don't want to cut you off, by my time is running out. let me just say that to date, many of us are uncomfortable with the fact that isis has gotten as far as it's gotten, raised as much money as it has raised and is reeking havoc without us having known r more about them. we invest a lot of money in our intelligence operation here many this country and we don't expect to be this far behind because of it. i yield back the balance of my time. >> as ae reminder to state the obvious, this is an open hearing. a side bar conversation between myself and the ranking member, we anticipate a classified hearing very early in the next congress. the chair recognizes the gentleman from new jersey, subcommittee mr. garrett. >> thanks, mr. chairman. i have had a number of concerns with this administration's approach to combatting isis from the very beginning. the administration including the president has underestimated the threat that isis poses to the region and to the united states. his early on characterization of isis, the jv team, suggests that the president was not informed of the threat. so it's also concerning that the reports that the president missed more than half of his security briefings at the beginning of the administration. so looking to you from your perspective within the department of treasury, do you believe the necessary information is now being communicated to the president and do you think the information was always being communicated to the president and other senior administration officials over the last year and a half? >> congressman, i don't accept the premise of your question. the president and the national security team as a whole has been focused on the terrorist threat that we see coming out. >> the premise of the question was that the president saw this as not a significant terrorist threat. the president said this was the jv team, meaning there were other more luming issues. that's from the president's comments. so you're saying the president misspoke when he said that it wasn't a problem before and now it's a problem? >> i will always allow the president to speak for himself, but i'm telling you the national security team from the president on down has been focused like a laser on the threat of terrorism coming from this part of the world and elsewhere as well. >> that's really the question. >> i can tell you that because i have been part of this team from the outset. we have been working day and night to degrade u al qaeda, degrade al qaeda affiliates and as well as the terrorism organizations that have grown up in the turmoil in syria, we are working hard to ensure that we have both the snfgs we need in order to address the financing threats in the way that these organizations are financed. >> just as a se maic because yo used the term to degrade and then eliminate. has our attention been simply to degrade al qaeda and now isis? or is our intention has been to eliminate them? >> i think i said degrade, disrupt and defeat isil. and -- >> during other military engagements, veterans day, we talked about world war ii. we never said we're going to degrade our enemies there. we said we were going to defeat them. both the president and now you as well say our intentions seem to be to degrade them for a period of time and then take that step. >> the objective is to defeat i'll skpil al qaeda. there's a process involved here that particularly on the financing side officially what we're looking to do is to degrade their access to funding ultimately to lead to e defeat of this terrorist organization. >> i would hope. >> there's no misunderstanding. >> i assume you consult and coordinate with dod as well. it's my understanding that the u.s. employees threat finance cells to track financial transactions in the middle east. you're nodding yes. it's my understanding these units have been pulled out of iraq as a result of the troop withdrawal. can you explain how the lack of resources hasn't impacted our fight against financing and also within the time we are here, i think the administration is talking about removing them from afghanistan as well. will that have an impact upon your intelligence gathering if that goes forward? >> picking up on the classified supplement to the hearing, i can give you an expansive setting in that setting. i can tell you that the iraq finance cell that had had existed a decade ago was dismantled when the activity, the fighting on the ground was ramping down but i would like to leave the answer to a cls if ied setting. what we're doing to enhance our intel collection. >> time of the gentleman has expired. the chair recognizes the gentle lady from new york. >> thank you, mr. cohen. isis is the richest terrorist organization on earth and financially sophisticated unlike the other terrorist organizations we have dealt with that raise their money from outside sources. they basically raise it and spend it internally in iraq and syria. and one way to crack down on them is to crack down on the companies that are financing terrorism. the ranking lady waters and introduced a bill called the incorporation law enforcement assistance act which would require the disclosure of very basic information from corporations of who their benefit owners are. i was pleased in august when treasury proposed a rule to implement many parts of my bill. i would like to know what is the update on this. what is happening with the rule that you put into place? >> congresswoman, you highlight an important issue with the issue of shell companies. the rule that you are referring to we proposed a final rule in august. the comment period on that final rule actually i think the comment period expired in august. we are in the process of reviewing the comments that i think we received over 120 comments on that proposed rule. i should probably not get into anymore detail on where we are in terms of issuing the rule, but we are deeply committed and have been as a number of years to getting better transparency into the beneficial owner. in the president's budget this year, there was a proposal for legislation that would enhance our insight into the beneficial owners of legal entities at the time they are formed so we would be able to address this in two ways. both when they open a bank account and also when a company is formed better insight into who the beneficial owner is of a company that's formed. so we are continuing to pursue this very vigorously and -- >> it just seems like common sense to me and something we should have implemented yesterday. and i think that's something we could jointly work on is requiring this and helping you move forward with your rule making more quickly bypassing it in a bipartisan way in congress. secondly, you testified that they are making money off extortion and their territorial gains as they took e over the bank and so forth. one of the ways that we can contain them is to obviously go after their territory. but go after how they can hold on to that territory, which is huge cars, tanks, infrastructure equipment. have we moved to block their ability to purchase this sanction companies, the materials that they immediate to hold on to geographic areas? >> clearly, one important line of effort to address isil's hold on geographic territory is the defense department's line of activity working with the iraqi security forces -- >> obviously, we support the military, but they also have a procurement system. can e we cut off their ability to purchase cars, tanks -- >> absolutely. >> and are we moving to do that? >> part of our strategy is to deprive isil of access to the financial system. because one way they can try to procure vehicles. >> we could cut off their banks and territories. have we looked at that? >> we have. and we have worked closely with the iraqi central bank and with the iraqi banks that have branches in the territory where isil operates to ensure that isil does not have the opportunity to use those banks to make payments for whatever reason including the reasons that you cite. >> and then, of course, the third area is to cut off their revenue from the illegal oil sa sales that they are controlling. and they can't all be in cash. it's too much money. you were saying it was like a million a day. now it's down to a million or two a week. what are we doing to cut off the transactions that are not in cash? it's got to be through banks. >> we are working to understand exactly how those transactions occur whether it is in cash or through banks. through banks, we will be able to address that. >> which means we don't know. >> the chair recognizes the gentleman from texas. >> thank you, mr. chairman. thank you for being here. as you were kind of laying out the plan that treasury has for the counterterrorism financing, i think one of the things that came to my mind was two things. one, how long do you think it will take to get into this plan to the point where we see some diminishing amount of resources go into isil? >> it's a very good question. it's a hard question to answer. we have begun to e see some d n diminishment in revenue from the oil sales. as i noted, they were earning, on average, about $1 million a day over the summer. in particularly because of the airstrikes, the mobile refineries as well as other military activity, we have seen a decrease in the -- in what we estimate to be the revenue sales from about a million dollars a day to several million a week. there is some progress there. the history of our counterterrorism financing work has been more generally that it is small steps that you can see over time having a real impact. so i don't expect i'm going to be able to come back to this committee a month from now and be able to give you a balance sheet that says okay, this is exactly what isol has today and then a month later show a decrease. i do think that the strategy we're employing will impair isol's access to funding. it will impair their ability to use the funding that they have. and we'll see a real impact on isis, but it will take a dedicated effort over some period of time. >> now one of the things that came to mind was we almost sounded like we were ramping up this anti--terrorism infrastructure. we have been fighting these terrorists for a long time. so are we now really taking it seriously, or is this a different situation -- i'm not clear as to where we have been and why we are just now i think you know maybe taking this more serious. >> well, we have been working for years on degrading the access of terrorist organizations to funding. whether it is al qaeda, al qaeda affiliate, hezbollah, hamas, you name it, we are working on this including al nusra fronts and al qaeda in iraq and fronts as well as isol. what we are doing is talking more about the integrated strategy we have to defeat isol and go after its financing. but this is a reflection of a lot of work that has been done over many years. >> now, recently in september isol released 46 hostages like you said -- from turkey. and the turkish president said no ransom was paid. the president of the united states said no ransom was paid. but there are a lot of different ways to compensate for someone. and i think it is kind of outside of isol's pattern here of releasing hostages even though you state they're using hostages to raise money. are you absolutely sure that there was no quid pro quo to releasing those hostages and isol? >> congressman, recognizing these are open hearings, i think this topic may be better addressed in a closed session. i can tell you it is the u.s. policy not to make a concession or ransom to any type of hostage-shaking terrorist organizations. we are very aggressive in our efforts to ensure that others around the world adhere to a similar policy. we believe that is the best way to protect all of our citizens is for everyone to adhere to no ransom policy. >> final question before my time runs out. what are the metrics that you use to -- in other words you have this plan you use. what are the metrics that indicates okay, we're being successful? >> well, most importantly is we will continue to get insight into how isol is raising its funds and the ability to use the funds. and we can get extensions on how they feel they're using the financial stress. we do get information on the financial -- wherewithal of these organizations and we'll be able to track it that way. >> the time of the gentleman has expired. chair now recognizes the gentleman from california, mr. sherman. >> some of my colleagues have talked about the surprising strength of isis. i think instead it is the incredible and surprising weakness of the iraqi government and military, which easily conceded territory, handed over weapons. left the bank vault open in mosul and elsewhere. the problem is the government in baghdad, we under a previous administration installed mr. nouri maliki, a man whose evil is only exceeded by his incompetence. a man who refused to enter a status of force agreement not only with this administration but refused to enter a long-term agreement with the prior administration that had installed him. and instead, wanted and succeeded in getting american troops out so that he could further oppress the sunnis in the middle of his country. secondly, we talked about how powerful isis is. let's keep in mind, the hezbollah, assad, iran alliance access has par more money and greater ability to carry out terrorist agendas outside the area. we have had discussions of their export and the smuggling of oil. do we have -- and this comes from the gentleman from illinois, mr. foster, do we have the technology to sample oil that might be on sale in turkey? and say we know what field that oil came from? that came from an isis-controlled field in syria. that came from northern iraq. is that technology available or is oil more or less fungible? >> your question is at the outer edges of my knowledge of oil. but i can tell you this mostly from my work on the iran sanctions, different oil has different properties. it is often possible to tell where oil comes from although i'm also told there are some similarities among fields. i can't tell you with great certainty we'll be able to do that but i believe so. >> we all want to go after isis. the policy issue is do we go after isis in a way that causes harm to the civilians under its control? as i said in my opening statement we didn't hesitate to bomb occupied europe. if a businessperson of good character and reputation in mosul wants to buy something from europe using the international banking system, a civilian item, do we try to stop that? >> well, congressman, it's -- we obviously would not try to stop a decent citizen in mosul -- >> well, we certainly did in europe, you can't say i want to occupy this area, let's buy food from argentina and ship it over, use the banking system. but you're saying if i need a replacement part for my factory in mosul i can just buy it on line? >> no, i'm not saying that -- what -- >> do we prevent the honest business person in occupied mosul from conducting civilian transactions? >> well, what prevents most directly the citizen from conducting transportations is isol. and isol's efforts to control that territory. but the use of the banking system to make a transaction coming out of the area as i noted earlier is what we're attempting to prevent. >> okay. you have answered this question, but with two inconsistent answers. if you get an international banking transaction where a civilian business person, not affiliated with isis but located in mosul is moving its investments around on wall street or is trying to buy replacement parts for his factory is that something where if a bank is involved in that transaction they will be sanctioned? >> it's not related to isol in any way? >> well, except the guy is located in mosul. >> well, there is obviously an intelligence question imbedded in there, do we know this person is or is not affiliated with isol? if he is not affiliated with isol, it is not a sanctionable transaction. >> when we get serious it will be, we did not conduct ourselves in world war ii, we noticed it was nazi territory. i yield back. >> could i just briefly -- our efforts to prevent isol from making use of the banking system would effectively prevent that transaction. but we're not targeting the civilian in mosul who is currently being dominated and subjugated by isis. those people are dominated as well. what we're trying to do is keep isis from making the transaction -- >> chair now recognizes the gentleman from new mexico, mr. pierce. thank you, mr. chairman, thank you. we -- i appreciate your efforts to create national security and diminish the terrorist threat. are you in the -- realm where you lay out a fairly complex strategy in this report. are you in the rooms where the strategy is being formulated? >> yes. >> on a scale of one to ten when you talk about depleteing the

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