    [House Hearing, 111 Congress]
    [From the U.S. Government Publishing Office]

           IRAN: RECENT DEVELOPMENTS AND IMPLICATIONS FOR U.S. POLICY

    =======================================================================

                                    HEARING

                                   BEFORE THE

                          COMMITTEE ON FOREIGN AFFAIRS
                            HOUSE OF REPRESENTATIVES

                         ONE HUNDRED ELEVENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 JULY 22, 2009

                                   __________

                               Serial No. 111-31

                                   __________

            Printed for the use of the Committee on Foreign Affairs

     Available via the World Wide Web: http://www.foreignaffairs.house.gov/

                                     ______

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                          COMMITTEE ON FOREIGN AFFAIRS

                     HOWARD L. BERMAN, California, Chairman
    GARY L. ACKERMAN, New York           ILEANA ROS-LEHTINEN, Florida
    ENI F.H. FALEOMAVAEGA, American      CHRISTOPHER H. SMITH, New Jersey
        Samoa                            DAN BURTON, Indiana
    DONALD M. PAYNE, New Jersey          ELTON GALLEGLY, California
    BRAD SHERMAN, California             DANA ROHRABACHER, California
    ROBERT WEXLER, Florida               DONALD A. MANZULLO, Illinois
    ELIOT L. ENGEL, New York             EDWARD R. ROYCE, California
    BILL DELAHUNT, Massachusetts         RON PAUL, Texas
    GREGORY W. MEEKS, New York           JEFF FLAKE, Arizona
    DIANE E. WATSON, California          MIKE PENCE, Indiana
    RUSS CARNAHAN, Missouri              JOE WILSON, South Carolina
    ALBIO SIRES, New Jersey              JOHN BOOZMAN, Arkansas
    GERALD E. CONNOLLY, Virginia         J. GRESHAM BARRETT, South Carolina
    MICHAEL E. McMAHON, New York         CONNIE MACK, Florida
    JOHN S. TANNER, Tennessee            JEFF FORTENBERRY, Nebraska
    GENE GREEN, Texas                    MICHAEL T. McCAUL, Texas
    LYNN WOOLSEY, California             TED POE, Texas
    SHEILA JACKSON LEE, Texas            BOB INGLIS, South Carolina
    BARBARA LEE, California              GUS BILIRAKIS, Florida
    SHELLEY BERKLEY, Nevada
    JOSEPH CROWLEY, New York
    MIKE ROSS, Arkansas
    BRAD MILLER, North Carolina
    DAVID SCOTT, Georgia
    JIM COSTA, California
    KEITH ELLISON, Minnesota
    GABRIELLE GIFFORDS, Arizona
    RON KLEIN, Florida
                       Richard J. Kessler, Staff Director
               Yleem Poblete, Republican Staff Director
                David S. Abramowitz, Chief Counsel deg.
                    Kristin Wells, Deputy Chief Counsel deg.
            Alan Makovsky, Senior Professional Staff Member
           David Fite, Senior Professional Staff Member deg.
       Pearl Alice Marsh, Senior Professional Staff Member deg.
         David Killion, Senior Professional Staff Member deg.
            James Ritchotte, Professional Staff Member deg.
             Michael Beard, Professional Staff Member deg.
             Amanda Sloat, Professional Staff Member deg.
             Peter Quilter, Professional Staff Member deg.
                    Daniel Silverberg, Counsel deg.
         Brent Woolfork, Junior Professional Staff Member deg.
        Shanna Winters, Senior Policy Advisor and Counsel deg.
          Laura Rush, Professional Staff Member/Security Officer deg.
            Genell Brown, Senior Staff Associate/Hearing Coordinator

                                C O N T E N T S

                                  ----------
                                                                       Page

                                   WITNESSES

    Patrick Clawson, Ph.D., Deputy Director for Research, The
      Washington Institute for Near East Policy......................     8
    Abbas Milani, Ph.D., Co-Director, Iran Democracy Project, Hoover
      Institution, Director, Iranian Studies, Stanford University....    17
    Michael Rubin, Ph.D., Resident Scholar, The American Enterprise
      Institute, Senior Lecturer, Naval Postgraduate School..........    24
    Suzanne Maloney, Ph.D., Senior Fellow, Saban Center for Middle
      East Policy, The Brookings Institution.........................    32
    Mr. Karim Sadjadpour, Associate, Middle East Program, Carnegie
      Endowment for International Peace..............................    43
    Orde F. Kittrie, J.D., Professor of Law, Arizona State
      University, Co-Director, Iran Energy Project, Foundation for
      Defense of Democracies.........................................    51

              LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

    Patrick Clawson, Ph.D.: Prepared statement.......................    11
    Abbas Milani, Ph.D.: Prepared statement..........................    20
    Michael Rubin, Ph.D.: Prepared statement.........................    28
    Suzanne Maloney, Ph.D.: Prepared statement.......................    36
    Mr. Karim Sadjadpour: Prepared statement.........................    46
    Orde F. Kittrie, J.D.: Prepared statement........................    53
    The Honorable Howard L. Berman, a Representative in Congress from
      the State of California, and Chairman, Committee on Foreign
      Affairs: Letter from the Iranian American Bar Association dated
      July 22, 2009..................................................   106
    The Honorable Keith Ellison, a Representative in Congress from
      the State of Minnesota: Op-ed by Trita Parsi, Ph.D.............   110

                                    APPENDIX

    Hearing notice...................................................   114
    Hearing minutes..................................................   115
    The Honorable Howard L. Berman: Prepared statement...............   117
    The Honorable Gerald E. Connolly, a Representative in Congress
      from the State of Virginia: Prepared statement.................   119
    The Honorable Michael E. McMahon, a Representative in Congress
      from the State of New York: Prepared statement.................   121
    The Honorable Sheila Jackson Lee, a Representative in Congress
      from the State of Texas: Prepared statement....................   122
    The Honorable Ron Klein, a Representative in Congress from the
      State of Florida: Prepared statement...........................   125

           IRAN: RECENT DEVELOPMENTS AND IMPLICATIONS FOR U.S. POLICY

                                  ----------

                            WEDNESDAY, JULY 22, 2009

                      House of Representatives,
                                  Committee on Foreign Affairs,
                                                        Washington, DC.
        The committee met, pursuant to notice, at 10:10 a.m. in
    room 2172, Rayburn House Office Building, Hon. Howard L. Berman
    (chairman of the committee) presiding.
        Chairman Berman. The committee will come to order. I
    believe the ranking member will be joining us in just a moment.
    But before I begin my opening statement, I want to make mention
    several procedural issues.
        In the context of all of our hearings, we request that the
    audience members do not hold up or wave signs, make gestures to
    attract attention, stand up and protest, stand up and shout or
    yell your views, or otherwise disrupt the hearing. And we will
    ask the Capitol Police to remove anyone from the room who
    violates this policy. It is the policy of the Capitol Police to
    arrest anyone ejected from a hearing room.
        After the ranking member and I make our opening remarks,
    the chairman and ranking member of the Middle East and South
    Asia Subcommittee will have an opportunity to make 3-minute
    statements. I would strongly encourage other members to submit
    their statements for the record or make any comments they may
    have during their time for questioning, which will be extended
    for this hearing only.
        Because we have such a large panel, I would ask all the
    witnesses to summarize their statements in 5-7 minutes. Your
    entire written statements will be made a part of the record.
        Finally, the ranking member and I have agreed that all
    members will be given 7 minutes to question the witnesses. This
    means that both the questions and answers must be completed
    within 7 minutes, and we will enforce that time limit strictly.
    It is not the intention of the chair to break for lunch. We are
    going to plow right through until we are done and now I will
    yield myself time for the opening statement.
        No, I am not bringing food, either.
        On June 12th, Iranians went to the polls in what was
    expected to be a close Presidential election. But instead of a
    down-to-the-wire contest, the Iranian Government almost
    immediately declared that the incumbent had been reelected in a
    landslide. This hearing takes place in the wake of 6 weeks of
    post-election turmoil and uncertainty, the most significant
    internal upheaval since the 1979 revolution. Hundreds of
    thousands of courageous Iranians have taken to the street in
    defiance of the regime to protest the election results.
        The regime responded brutally to these peaceful
    demonstrators. By the government's own admission, at least 20
    protestors were killed and some 500 are in prison awaiting
    trial. Most human rights groups say the actual numbers are much
    higher, with some putting the number killed well into the
    hundreds.
        Iran also barred its domestic and foreign press from
    covering the demonstration; shut down cell-phone coverage and
    the Internet for long periods of time to limit communication
    among the dissidents; arrested foreign journalists; and, in
    total disregard of international law, broke into the British
    Embassy to arrest local hires.
        The people of Iran should know that the over 1 million
    Iranians living in America and hundreds of millions of other
    Americans stand in awe of their courage to stand up for free
    election. Have no doubt, the American people stand with you.
        Post-June 12 events in Iran raise many questions. Has the
    regime, as many have said, now lost much, if not all, of its
    legitimacy? Is the clerical elite now irrevocably divided? Has
    the Iranian Revolutionary Guard Corps become the dominant force
    in the country? If so, what are the implications of these
    developments? Should we expect further turmoil? Is the regime's
    survival in question? And, most important, what are the
    implications for United States and international efforts to
    prevent Iran from developing a nuclear weapons capability?
        The facts on the ground are deeply disturbing. Iran has
    made significant progress on its nuclear program, far exceeding
    expectations of the recent past. According to the International
    Atomic Energy Agency, Iran has now installed more than 7,000
    centrifuges, and has produced enough low-enriched uranium to
    fuel a nuclear explosive device, were that low-enriched uranium
    to be transformed into highly-enriched uranium.
        And some would point out that this describes only Iran's
    overt programs; in many quarters, the suspicion lurks that Iran
    also has a covert program that is even further along.
        The nuclear issue is urgent and it is of such overriding
    importance to America's national security--and to regional
    stability--that we can't afford to drop the ball. Whatever our
    feelings about the authoritarian regime in Tehran, that regime
    continues to hold the reins of power, and for now, I believe
    President Obama is correct in continuing to pursue a policy of
    engagement.
        Why? Because our previous policy of seeking to isolate the
    regime simply did not work. Nothing we have done has slowed
    Iran's drive to acquire a nuclear weapons capability. And only
    by making a good-faith effort to engage Iran can we build the
    support we need from the international community to impose the
    crippling sanctions necessary should engagement fail.
        But while it is important to pursue engagement, it is also
    critical that these efforts be time-limited and that the
    administration be prepared to try a different approach if Iran
    is not cooperating.
        As I understand it, that is exactly the administration's
    policy. The President recently said that Iran's willingness to
    engage will be reevaluated in early fall after the September
    24-25 G-20 meeting in Pittsburgh. He has also said that
    ``[w]e're not going to create a situation in which talks become
    an excuse for inaction while Iran proceeds'' on its nuclear
    efforts. In short, if I can paraphrase the President, we should
    not allow Iran to run out the clock.
        I agree with the President's timetable. If by autumn the
    Iranians are not responsive to United States efforts to engage
    them, it likely will be time to move on, hopefully in close
    coordination with our allies in other key countries.
        That is also my approach regarding H.R. 2194, the Iran
    Refined Petroleum Sanctions Act, which I introduced with the
    ranking member in April, and which is now co-sponsored by well
    over half the Members of the House. My bill would impose
    sanctions on companies that are involved in exporting refined
    petroleum products to Iran or in helping Iran to increase or
    maintain its existing domestic refining capacity.
        This legislation would force companies in the energy sector
    to choose between doing business with Iran or doing business
    with the United States. The Iranian economy is heavily
    dependent on imports of refined petroleum, so this
    legislation--if it becomes law--would significantly increase
    economic pressure on Iran and hopefully persuade the regime to
    change its current course.
        When I introduced H.R. 2194, I said that I did not intend
    to immediately move it through the legislative process. I
    wanted--and still want--to give the administration's efforts to
    engage Iran every possible chance to succeed, within a
    reasonable time frame. I view the bill as a ``sword of
    Damocles'' over the Iranians--a clear hint of what will happen
    if they do not engage seriously and move rapidly to suspend
    their uranium enrichment program, as required by numerous U.N.
    Security Council resolutions. If engagement doesn't work, then
    I am prepared to mark up the bill in committee early this fall.
        Thus far, Iran has not been responsive--not on the
    bilateral front, and not even on the multilateral front. Last
    month, Iran cancelled its attendance at the G-8 Ministerial in
    Trieste, Italy. It has refused to set a date for the next P5+1
    meeting. It is now late July--close enough to the
    administration's time-limit, and to my own, that Iran should be
    able to hear the clock ticking.
        I am now pleased to turn to my ranking member, the
    gentlelady from Florida, Ileana Ros-Lehtinen for any opening
    remarks she might want to make.
        Ms. Ros-Lehtinen. Thank you so much, Mr. Chairman.
        Thank you for holding this hearing on Iranian internal
    political and economic developments and the implication for
    United States policy. We have an impressive group of witnesses,
    and I look forward to receiving their input.
        Mr. Chairman, I had hoped, however, that since this is the
    first full committee hearing on Iran we have held this year,
    and in light of your statement during the June 10th floor
    debate on the Foreign Relations Authorization Bill, that the
    committee would have hearings in July on how multilateral
    sanctions and the engagement process, the diplomatic process,
    has worked, that we would have heard from administration
    witnesses, and I hope that that will happen.
        I respectfully request a follow-up hearing with senior
    administration officials on this topic. As I mentioned in the
    hearing earlier this month on the proposed U.S.-UAE Civil
    Nuclear Cooperation Agreement, I am an equal opportunity
    worrier. Last July, in a hearing before this committee, I
    criticized the Bush administration's endorsement of an expanded
    incentive package under the P5+1, stating it granted undue
    legitimacy and leverage to the regime in Tehran, and the only
    thing we have to show for this approach is that Iran is now 2
    years closer to nuclear capabilities.
        And my remarks, sadly, are as true today as they were then.
    Just in the 7 years since Iran's illegal nuclear program was
    uncovered, the United States position has gone from imitating
    the successful Libya model and calling for a complete,
    permanent, verifiable dismantlement of Iran's nuclear program;
    to calling for the cessation of enrichment reprocessing to
    temporary suspension, to the current United States position,
    whereby the U.S. has accepted a so-called Iranian civilian
    nuclear program, is pursuing direct engagement with the Iranian
    regime, and is now engaged in a proliferation of nuclear
    cooperation agreements with other countries in the Middle East.
        Secretary Clinton stated earlier today that the U.S. would
    upgrade the defense capabilities of, and extend a defense
    umbrella over, United States allies in the Persian Gulf. This
    was met with much concern and skepticism in Israel, where Dan
    Meridor, the Minister of Intelligence and Atomic Energy, told
    Army Radio, ``I was not thrilled to hear this American
    statement that they will protect their allies with a nuclear
    umbrella, as if they have already come to terms with a nuclear
    Iran.''
        I would ask our witnesses today for their views on this
    U.S. approach, whether it signals an acceptance by the United
    States of a nuclear Iran, and how this impacts sanctions
    efforts and other efforts. Please comment.
        Turning to recent developments inside Iran and how these
    could affect the regimes' and our strategic calculations, the
    so-called supreme leader must now resort to manipulating
    elections and using force against unarmed demonstrators to
    preserve the regime's hold on power. Regime authorities have
    detained independent-minded individuals, repressed
    organizations under the guise of protecting the regime against
    what it labels as internal enemies, saboteurs, even
    revolutionaries.
        A process that has gone largely unnoticed outside of Iran
    is the rise of the Iranian Revolutionary Guard Corps or IRGC.
    The rule of the mullahs has been significantly replaced by the
    Iranian Revolutionary Guard Corps, a quasi-military
    organization which has become the predominant power in that
    country. The IRGC controls large swaths of the economy and
    society. It uses its police and military forces to ensure
    obedience. It even has a dominant role in Iran's nuclear
    weapons and ballistic missile capabilities.
        And it is only in this context that we can fully understand
    what is now taking place in Iran following the sham elections
    of June 12. In addition to providing us their analysis of
    Iran's internal developments, I would appreciate it if our
    witnesses would address how these are affecting the regime's
    influence outside of the country and how we can capitalize on
    any political and economic vulnerabilities.
        For decades, Iran has spread unrest around the world,
    directly and through its proxies, such as Hamas and Hezbollah.
    Tehran has also facilitated attacks on United States forces in
    Iraq and in Afghanistan. The regime continues to pursue long-
    range missiles and seeks to enhance its chemical and biological
    weapons capabilities.
        The most salient issue is Iran's nuclear weapons program.
    Admiral Mike Mullen, the chairman of the Joint Chiefs of Staff,
    recently said, ``The clock has continued to tick on Iran's
    development of nuclear capabilities, and our time to stop them
    is running out.'' Ahmadinejad has declared many times that
    negotiations regarding Iran's nuclear program are dead. He
    reiterated that position on May 25th of this year and again
    last month. It is time for our policy to be based on facts and
    not on hope.
        It is long past time that we apply a badly needed sense of
    urgency to our policy toward the Iranian regime. It is time for
    us to fully realize that a regime that tortures, oppresses, and
    violently suppresses dissent, that only has disdain for its
    people, is not a regime that the U.S. should be legitimizing.
        I look forward to receiving the testimony of our witnesses
    today, listening to your recommendations on what the United
    States can do to support the people of Iran while undermining
    the ability of the regime to threaten its people, the region,
    and global peace and security.
        Thank you, as always, Mr. Chairman, for this hearing and
    the ability to ask great questions to our wonderful witnesses.
        Thank you.
        Chairman Berman. Thank you.
        And I am very pleased to recognize the chairman of the
    Middle East and South Asia Subcommittee, the gentleman from New
    York, Mr. Ackerman.
        Mr. Ackerman. Thank you.
        Mr. Chairman, I don't think it is a secret that I have been
    a very active advocate of sanctions in Iran. For many years, I
    have thought it essential to force Iran to pay a price, some
    price, any price, for its regional subversion, its state
    sponsorship of terrorism and, most of all, its nuclear
    proliferation. In this last regard, however, I feel it may
    already be too late for sanctions.
        In April of last year, I warned that our thinking about the
    Iranian nuclear problem needed to change. I suggested then that
    ``Options that years ago would have seemed reckless have now
    become essential leverage if we are going to be successful in
    peacefully getting Iran to back down. With Iranian
    proliferation on the horizon, what is feckless is in fact
    reckless.'' That is what I said a year ago.
        As have many others, I supported the administration's
    efforts to engage Iran. In my travels through the Middle East
    and here in Washington, I have asked Israelis and numerous Arab
    leaders if they supported the President's approach to engage
    Iran. Every single intelligence chief, Minister, King, Prince,
    President, head of state, responded exactly the same way;
    America's engagement is long overdue and absolutely essential.
    And then when I ask them if they thought it would work, to a
    man, they said, absolutely not. I don't think they are wrong
    either.
        Recent events in Iran are instructive. But confronted by a
    challenge, Iran's rule is responded like any other pack of
    thugs with regime-sponsored violence and other disregard for
    human life. And it should be noted, the concerns and views of
    the rest of the world matter to them not in the slightest. In
    short, with their backs against the wall, Iran's rulers didn't
    care who or how many got hurt.
        Unfortunately, these events don't bode well for the
    administration's effort; whether or not bilateral discussions
    are going on right now or not, I don't know. But either way, I,
    frankly, have little hope that Iran's rulers will give up their
    nuclear ambitions in any case.
        What we have seen of late strongly suggests that Iran's
    rulers would gladly break the country in half in order to
    preserve their grip on power, and even given what has happened
    in Iraq and what has not happened in North Korea, I suspect
    Iran's thugocracy sees nuclear arms as their ultimate insurance
    policy.
        All of this is to say that we need to start thinking again,
    not just about sanctions and not just about what constitutes
    so-called crippling sanctions, but whether there is any level
    of economic sanctions sufficient to compel a change in Iran's
    nuclear program. And as we consider this question vis-a-vis
    Iran, I would suggest we think seriously about the decade of
    truly comprehensive sanctions on Iraq, which ultimately failed
    to resolve concerns about weapons of mass destruction that
    didn't even exist. Does anyone think that the Ayatollah
    Khomeini is a nicer guy than Saddam Hussein?
        This is reality; Iran is marching swiftly toward either a
    bomb or either a latent nuclear capability. This development is
    deeply destabilizing in an already deeply unstable region.
    Successful proliferation by Iran will most likely destroy the
    NPT and the international law against norm against nuclear
    proliferation. If left unaddressed by the United States and the
    rest of the international community, as seems to be the case
    right now, Israel will have to either live under Iranian
    nuclear sword or act preemptively themselves.
        In April of last year, I concluded by saying, I am not
    calling for another war; I want to prevent one. But we may have
    to go right up to the brink to be considered serious and
    credible----
        Chairman Berman. The time for the gentleman has expired.
        Mr. Ackerman. To make nuclear weapons unacceptable.
        Chairman Berman. The gentleman from Indiana, the ranking
    member of the Subcommittee on the Middle East and South Asia,
    Mr. Burton, is recognized for 3 minutes.
        Mr. Burton. Thank you.
        Mr. Chairman, I have been one of your strong supporters of
    2194, and I can't for the life of me figure out why we are
    waiting month after month to bring that bill to the floor. It
    has 260 co-sponsors. Everybody understands the threat that Iran
    opposes, and we are sitting here talking.
        They have been developing a nuclear weapons program, as I
    understand it from staff, for almost two decades. They haven't
    made any allusions about stopping or creating any illusions
    about stopping that nuclear program. They are not going to
    stop.
        And unless we start imposing sanctions, real sanctions
    right now, like your bill would do, give the President the
    authority, we are giving him the authority to do it; let's do
    it. I mean, he has tried to reach out to them. He has said that
    he is willing to talk and all that other stuff. It ain't
    working, and it is not going to work.
        They have, as you just said, 7,000 centrifuges right now.
    They are developing a nuclear capability. And I know B.B.
    Netanyahu. And I know that he is a man that doesn't want to
    have a conflict over there. But I don't believe he or the
    Government of Israel is going to sit back if they have
    intelligence information and wait for them to complete a
    nuclear weapons program or a delivery system.
        We are messing around by waiting and not imposing sanctions
    today. Every day that we wait, we are risking a major conflict
    over there. Now, from the United States' standpoint, we are
    getting what 30, 35 percent of our energy from that part of the
    world right now. We don't need a conflagration that might
    involve nuclear weaponry. I mean, it would be horrible.
        And so, you know, the people over there, obviously, the
    people over there are good people. They like America for the
    most part, the people over there. It is not the people; it is
    the government. And we need to start putting pressure on that
    government post haste, and we haven't been doing it.
        If we start putting the hammer to them, if we give the
    President the authority and he starts getting our allies to
    stop them from getting refined oil back in their country, that
    will put extreme pressure on that government, because the
    people over there are already upset because of these elections.
    And there is a very good chance that the people of Iran would
    make some move to overthrow that government and bring in a real
    democratic government that they could live with.
        But for us to keep--I mean, I don't know how many hearings
    I have been to. I have been on this committee now for 27 years.
    I don't know how many hearings I have been to where we were
    talking about how we can work with Iran or how we want to work
    with Iran; we want to open up a dialogue. It isn't going to
    work. The one thing about North Korea, you know they are going
    to lie. Iran doesn't have to lie. They keep telling us they are
    not going to pay any attention to us, and they go right ahead.
    We need to impose sanctions now, not later.
        Chairman Berman. The time of the gentleman has expired.
        We have an excellent group of witnesses, some focused on
    the economic issues and some focused on the political issues in
    terms of the issues raised up until now and in Iran.
        I am going to introduce them in the order that they will be
    asked to testify.
        First is a familiar face to this committee, Patrick
    Clawson, deputy director of research at the Washington
    Institute for Near East Policy. He previously spent 5 years at
    the National Defense University's Institute for National
    Strategic Studies, and 4 years at the IMF, the World Bank and
    the Foreign Policy Research Institute. He is the author or
    editor of over 25 books, including, ``The Last Resort:
    Consequences of Preventa deg.tive Military Action
    against Iran,'' published in 2008. And he has interesting ideas
    about how to take credit for the sun rising in the east.
        Abbas Milani is the co-director of the Iran Democracy
    Project at the Hoover Institution. He is also the Hamid and
    Christina Moghadam director of Iranian studies at the Stanford
    University. He has previously taught at the University of
    California at Berkley.
        Michael Rubin is resident scholar at the American
    Enterprise Institute and a senior lecturer at the Naval Post-
    Graduate School's Center for Civil Relations. He previously
    served as the editor of Middle East Quarterly and is a staff
    advisor on Iran and Iraq at the U.S. Department of Defense. He
    is the author of numerous books, including the forthcoming,
    ``Talking to the Enemy: The Promise and Perils of Engagement.''
        Suzanne Maloney is a senior fellow at the Saban Center for
    Middle East Policy at the Brookings Institution. She previously
    served on the State Department Policy Planning Staff, and as
    director of the 2004 Council on Foreign Relations Task Force on
    U.S. Policy towards deg. Iran. She has published
    widely on Iran and her forthcoming book from Cambridge
    University Press will analyze Iran's political economy.
        Karim Sadjadpour is an associate at the Carnegie Endowment
    for International Peace. He was previously the chief Iran
    analyst at the International Crisis Group. He is a frequent
    media contributor for organizations such as the BBC, CNN, and
    the New York Times. He has lectured at Harvard, Princeton and
    Stanford Universities.
        Orde Kittrie is a professor of law at Arizona State
    University and a visiting scholar at the John Hopkins School of
    Advanced International Studies. He is also a senior fellow at
    the Foundation for the Defense of Democracies, where he co-
    directs the Iran Energy Project. He previously served 11 years
    in the State Department where he worked on trade and nuclear
    issues.
        This is our excellent panel.
        And Patrick, why don't you start it off?

       STATEMENT OF PATRICK CLAWSON, PH.D., DEPUTY DIRECTOR FOR
        RESEARCH, THE WASHINGTON INSTITUTE FOR NEAR EAST POLICY

        Mr. Clawson. Mr. Chairman, honorable members, thank you for
    the privilege of permitting me to testify today. I have
    prepared a statement that I would like to submit for the
    record.
        Chairman Berman. All statements will be included in the
    record.
        Mr. Clawson. Thank you, Mr. Chairman.
        Let me put on my economist hat to address the state of
    Iran's economy and its vulnerability to foreign economic
    pressure.
        First a word about Iran's overall economic situation. There
    is no country in the Middle East that has suffered more from
    the oil curse than Iran. Iran had spectacular economic growth
    when its oil income was modest. Indeed that oil revenue fueled
    the growth.
        But after the 1973 oil price rises, Iran became addicted to
    oil while the rest of the economy suffered. That was true under
    the Shah and has gotten worse under the Islamic Republic.
        For years, the different political factions in Iran have
    all agreed that the economy was in bad shape and that drastic
    steps were needed, but no one has been willing to tackle the
    entrenched interests, and so, therefore, the country's economy
    has suffered.
        The problem with the oil curse has been on full display in
    the last decade. Since 2000, oil prices have been on the rise.
    From 2000 to 2003, the average price was 50 percent higher than
    it had been in the 1990s. And from 2004 to 2008, things got
    even better for Tehran; each year the oil price rose 30
    percent.
        With this windfall, Iran's economy has grown at 6 percent a
    year on average, which is faster than that of the United States
    or other industrial countries. However, it is a lot slower than
    the double-digit growth which should have been possible with
    this windfall. And Iranians have been profoundly unhappy about
    their country's economic performance because they realize what
    a missed opportunity the last few years have been.
        The oil windfall has been misused by President Ahmadinejad.
    He has taken that money and used it to engage in populous
    policies designed to secure short-term popularity at the
    expense of long-term growth. The budget for grants and
    subsidies went from $11 billion when Ahmadinejad took office to
    $25 billion this year. An equivalent increase in the United
    States would be if we spent an extra $550 billion a year on
    grants and subsidies. And that is just the explicit subsidies
    in the budget.
        There is also an implicit subsidy which comes from pricing
    oil and natural gas well below world market rates. The former
    central bank governor of Iran estimates those implicit
    subsidies at $45 billion a year; while the IMF estimates them
    at $85 billion a year. Even at the lower figure, the equivalent
    for the United States would be a $2.1 trillion subsidy.
        While this oil windfall has been largely wasted, it has had
    a substantial foreign policy impact. The additional oil income
    swamped the impact of increased foreign economic pressure. Iran
    could easily afford the higher price on its imports that came
    because of our sanctions operations. After all, Iran's imports
    tripled in the last 5 years. Given such a spectacular increase
    in the availability of foreign goods, it was hard to make the
    case that foreign sanctions were holding back growth.
        In short, the last few years have been a particularly
    difficult time for foreign economic pressure to have much
    impact on Iran.
        But the prospect for the next few years is entirely
    different. Oil revenues are declining instead of rising, and
    that is going to pose serious problems for Iran funding its
    imports and paying for its government budget. If oil prices
    stay at their current level, Iran's export earnings will be
    down $20 billion from last year.
        Now, at first, Iran could use its ample foreign exchange
    reserves to make up for the shortfall, but those reserves are
    going to run out, certainly within 3 years, and if oil prices
    fall, they will run out even faster.
        Then there is the government budget problem. The government
    spending has been increasing at a brisk pace under Ahmadinejad.
    At present oil prices, Iran will run a considerable budget
    deficit. And furthermore, Iran is not in a position to finance
    that deficit by borrowing from domestic banks because
    Ahmadinejad has ordered the banks to lend money for
    politically-favored but uneconomical projects. So the banks are
    in poor shape.
        In sum, the current situation in which Iran's economy is
    likely to do poorly in the next few years is a perfect moment
    for the international community to impose additional sanctions
    on Iran. No longer can Iran afford to offset the impact of
    those sanctions with a flood of higher oil income. On the
    contrary, the sanctions will come at a time of looming economic
    hardship, and there is excellent reason to expect that Iranian
    public opinion will blame the economic problems on the
    hardliners' isolation of Iran from the international community.
    In other words, we are in the position of being able to take
    credit for that which is going to happen anyway. And in
    politics, if you can get credit for making the sun rise in the
    East, take it.
        Foreign pressure will not cause Iran's economy to collapse,
    nor should that be our goal. But such pressure may well be able
    to contribute to what is becoming an intense debate inside Iran
    about the wisdom of a confrontational and isolationist policy
    toward the international community. That debate offers the best
    prospect for a fruitful resolution of a nuclear impasse,
    because those who want Iran to join the world are not willing
    to pay a high price for a nuclear program which they
    increasingly see as part of the Ahmadinejad agenda, not as part
    of a national project.
        Thank you, Mr. Chairman.
        [The prepared statement of Mr. Clawson
    follows:]Patrick Clawson deg.

        Chairman Berman. Thank you very much, Dr. Clawson.
        And now, Dr. Milani.

     STATEMENT OF ABBAS MILANI, PH.D., CO-DIRECTOR, IRAN DEMOCRACY
        PROJECT, HOOVER INSTITUTION, DIRECTOR, IRANIAN STUDIES,
                          STANFORD UNIVERSITY

        Mr. Milani. Good morning, Mr. Chairman.
        Thank you to the ranking member and the rest of the
    committee.
        Let me begin by saying that the last time I talked to this
    committee, Congressman Lantos held the gavel, and he embodied
    for me in his life and vision the best of America as the City
    on the Hill. I am humbled by his memory and would like to
    remind us of his service.
        I, too, have prepared a statement that I would like to
    submit to you, but I will try to make my presentation as much a
    direct answer to some of your questions as a summary of the
    statement, if I may.
        I think Iran is in a purgatory today. I think it is in a
    state of flux unlike anything that it has experienced in its 30
    years. I can say with some certainty that I think it is the
    most serious crisis this regime has faced, the most serious
    political crisis this regime has faced.
        The problem is that neither of the two sides that are now
    facing off seem to have the power to dislodge the other or
    control the other.
        We are in what political scientists call a condition ripe
    for the rise of a kind of a Napoleon. That Napoleon might have
    already risen. The Revolutionary Guards, as you have indicated,
    have now become a virtual state within the state and run much
    of the economy, all of the military literally. They have their
    own intelligence agencies. They have their own prison. They
    have their own points of entry. They bring in counterfeit
    commodities that are estimated to gain them $15 billion, $16
    billion a year alone on that account.
        So they, along with Khamenei and Ahmadinejad, this
    triumvirate I think organized already a coup in Iran. I think
    Iran, for all practical purposes, can no longer be called a
    republic, but Islamic government, an Islamic government run by
    this triumvirate.
        I think the days of Mr. Khamenei as Velayat-e Fagih.
    Velayat-e Fagih is a theological concept that indicates that
    the words of one man are the words of the divine and must end
    all debate, must end all tension within the regime. And up to
    now, Khamenei's words were in fact allegedly divine. They did
    in fact end all crises, but now, for 20 days, he has gone out
    of his way to try to make this election stick, and he has not
    succeeded.
        Last Friday's prayer by Rafsanjani was a direct challenge
    to Mr. Khamenei, was a direct challenge to everything he has
    said since the election. So what will happen in the next few
    weeks will tell us who will actually rule Iran in the next few
    years.
        I am not at all convinced that the triumvirate's coup
    attempt has succeeded. They have the upper hand because they
    have the military, because they have the goons, because they
    have the ability to pay this machinery of oppression. But look
    at the tape of Ahmadinejad's last visit to the city of Mashhad.
    Look at the few number of people who they succeeded to bring in
    the city of Mashhad, that was supposed to be one the
    strongholds, and compare that to the number of people, the
    millions, who came out for Rafsanjani.
        So I think part of the problem for the Obama administration
    is that this situation is in a flux, and we still do not know
    who shall emerge victorious in this battle.
        There are three major contradictions in Iran today. I think
    we need to be aware of them. The most important one is between
    the people and the regime. The people have shown now clearly,
    categorically, that they do not want this regime. Millions came
    into the streets, took life and limb in hand, and declared
    death to their dictator. There is no clear alternative of where
    they want to take the regime except that they want it to be
    more democratic.
        And their contradiction with this regime is fundamental and
    structural. This regime cannot solve the problem of the Iranian
    society. It cannot solve it because 1 million people join the
    labor force every year. Unemployment is double digits. For the
    youth, that is three-fifths of the society, unemployment is
    estimated to be between 25-40 percent. A disproportionate
    number of the educated entering the labor force are college-
    educated women.
        Another problem with the regime also related to women.
    Women have been relentless in fighting this regime and fighting
    the misogynist laws that occasionally exist in Islam against
    women. Women have not given up an inch, and they have continued
    to fight. And many of the social networks that they have
    created were in fact the networks that were used by the
    demonstrators after June 12th.
        The economy is a major problem for the regime. As Professor
    Clawson has suggested Ahmadinejad had his hand on $200 billion.
    Much of it is unaccounted for; $36 billion of it is simply
    unaccounted for. Where the rest has gone is very little clarity
    about this. We know he has spread some of it in the smaller
    cities and the countryside building roads, but that comes
    nowhere close to the total amount that he has squandered.
        We know he has given away $5 billion last year alone to
    regime proxies around the world. This is the figure that was
    suggested inside Iran from reliable sources with figures. How
    much to Syria? How much to Hezbollah? How much to Hamas? How
    much to Latin America? As we speak, Israel's Foreign Minister
    is traveling to Latin America to counter Iran's influence, not
    in the Middle East but in Latin America. All of this was
    possible because of the oil windfall, because of the oil curse.
    I think the tide is now beginning to turn for the regime. And I
    think the people, because of this contradiction, are
    irreconcilably opposed to the status quo.
        The second contradiction, and again in its depth and
    severity unlike anything the regime has ever experienced, is
    between elements of the regime itself. Karubi, Rafsanjani,
    Moussavi, Khatami, name only the four. These have been the head
    of one of the three branches of Iranian Government for a total
    of 34 years, longer than the regime has existed. Now they are
    in clear opposition to with Khamenei. Now they are part of the
    coalition for reform. They are not all of the same opinion, but
    they are all of the opinion that Khamenei has overreached, and
    that the election must go. That is an incredible moment of
    crisis.
        There is a third----
        Chairman Berman. Dr. Milani, this is fascinating, but I
    think, if you could just bring it to a conclusion, there will
    be ample time for more hearing of your thoughts during the
    question-and-answer period.
        Mr. Milani. Okay, in terms of----
        Chairman Berman. Just finish it up.
        Mr. Milani. I think on the question of engagement, my
    suggestion is that there must be engagement, but we must be
    very careful when this engagement begins. We must wait for the
    dust to settle in Iran to realize who wins this. Before we
    engage with someone, we need to know who that someone is. But
    engagement, I think there is, as you suggest, no other
    alternative but engagement as the first next step.
        [The prepared statement of Mr. Milani
    follows:]Abbas Milani deg.

        Chairman Berman. Dr. Rubin.

       STATEMENT OF MICHAEL RUBIN, PH.D., RESIDENT SCHOLAR, THE
         AMERICAN ENTERPRISE INSTITUTE, SENIOR LECTURER, NAVAL
                          POSTGRADUATE SCHOOL

        Mr. Rubin. Mr. Chairman, Ranking Member Ros-Lehtinen,
    honorable members, thank you for this opportunity to testify.
        On July 15th, Secretary of State Clinton spoke of
    engagement in the course of a broader foreign policy address.
    About the Islamic Republic, Clinton said, we know that refusing
    to deal with the Islamic Republic has not succeeded in altering
    the Iranian march toward a nuclear weapon, reducing Iranian
    support for terror, or improving Iran's treatment of its
    citizens.
        Secretary Clinton is correct to note the challenges the
    Islamic Republic poses but is incorrect to blame her
    predecessors rather than the Islamic Republic itself for the
    failure of diplomacy. It is a myth that the United States has
    not engaged Iran. Every administration since Jimmy Carter's has
    engaged the Islamic Republic.
        In each case, it was not lack of good will on Washington's
    part but rather the regime leader's disinterest which lead to
    failure. Ironically, the most hardline U.S. administration
    toward Iran was Bill Clinton's, at least in its early years.
        National Security Council official Martin Indyk made dual
    containment the central pillar of U.S. strategy. As Iranian
    sponsorship of terrorism and its pursuit of nuclear technology
    accelerated, the Clinton administration ratcheted up sanctions,
    issuing two executive orders in 1995, the prohibiting
    transactions that would lead to the development of Iranian
    petroleum resources; and then, second, imposing a ban on United
    States trade with and investment in Iran.
        Then, in 1996, Congress passed the Iran-Libya Sanctions
    Act, which empowered the United States to act against private
    companies investing in Iran.
        Many U.S. policymakers, however, were unhappy with
    containment. There seems to be little justification for the
    treatment the United States currently affords Iran because of
    its nuclear program, former National Security Advisor
    Brzezinski and Scowcroft argued, suggesting an end to
    unilateral sanctions and proffering of incentives, such as
    greater commercial exchange.
        Iranian President Mohammad Khatami's election, however,
    lead the Clinton administration to renew its efforts at
    dialogue. Clinton jumped at the chance to bring Iran in from
    the cold. He ordered withdrawn and destroyed the FBI's report
    detailing the Islamic Revolutionary Guard Corp's involvement in
    the Khobar Towers bombing.
        Within weeks, Secretary of State Albright sent a letter to
    Khatami expressing Washington's desire for government-to-
    government dialogue.
        The initiative foundered after the Iranian Government
    refused to move forward with any dialogue so long as U.S.
    sanctions and trade bans remained in place. While former
    National Security Advisor Scowcroft criticized the Clinton
    administration for obstinacy, Clinton's caution was prudent.
    Years later Abdollah Ramezanzadeh, the Khatami Government
    spokesman, acknowledged Tehran's lack of sincerity explaining,
    ``We had one overt policy, which was one of the negotiation and
    confidence-building, and a covert policy, which was
    continuation of the activities.''
        Still Clinton remained persistent in pursuit of dialogue.
    After Albright spoke to the American Islamic Congress in 2000--
    sorry, the American Iranian Council in 2000, the Islamic
    Republic's ambassador at the United Nations said that Iran
    would be ``prepared to adopt proportionate and positive
    measures in return.''
        While his response made headlines, a year later, Iranian
    authorities had not offered any discernible measures. Khatami
    explained that the United States had simply not offered enough
    for Albright's initiative to merit any response.
        Ultimately, Albright's unilateral concessions backfired.
    Foreign Minister Kamal Kharrazi responded to Albright's
    ``confessions'' of past U.S. malfeasance by demanding
    reparations. On July 16th, 2000, the Iranian Government tested
    a Shihab-3 missile, a deliberate attempt to undercut
    accelerating Arab-Israeli peace talks. Supreme Leader Khamenei
    poured cold water on any optimism when, in a July 27th
    statement, he urged that any negotiations, let alone
    rapprochement, with Washington would be ``an insult and treason
    to the Iranian people,'' a position which he retains.
        Despite the demonization of George W Bush, Bush was more
    open to diplomacy with the Islamic Republic than any other
    President since Carter. In 2001 and 2002, United States and
    Iranian diplomats met to discuss Afghanistan, and the next year
    Iranian U.N. Ambassador met senior United States officials
    Zalmay Khalilzad and Ryan Crocker in Geneva.
        Some say Bush missed a grand bargain opportunity in 2003,
    but as even pro-engagement officials, like former Deputy
    Secretary of State Richard Armitage, acknowledge, this is more
    a myth that resulted from wrongly a  deg.ascribing
    Iranian authorship to an attention-seeking Swiss diplomat's
    personal initiative.
        Many advocates of engagement say that its previous failure
    can be ascribed to the failure to provide adequate incentive or
    to truly embrace the strategy. Here the European Union provides
    insight as it long pursued engagement unencumbered by
    meaningful coercion.
        Beginning in 1992, the European Union undertook a policy of
    critical dialogue. Critical engagement did not lead to any
    noticeable improvement in Iran's human rights conditions, which
    indeed worsened during the course of the dialogue. Persecution
    of religious minorities like Bha'is increased and censorship
    remained heavy-handed. Between 1992 and 1996, the Iranian
    Government refused to allow a U.N. Special Representative on
    Human Rights in Iran to visit the country. Between 1995 and
    1996, the height of the dialogue, Iranian use of the death
    penalty doubled.
        Engagement has also failed to alter Iranian support for
    terrorism or proliferation activities, issues which more
    directly impact United States national security. The 2007
    National Intelligence Estimate indicated that the Islamic
    Republic maintained a covert military nuclear program until
    2003. That is throughout Khatami's Dialogue of Civilizations.
    IAEA reports from the period suggest a deliberate counter
    effort that spanned many years to conceal material, facilities,
    and activities that were required to have been declared under
    the safeguard agreements.
        Earlier this summer, Hassan Rowhani, Iran's former nuclear
    negotiator, acknowledged to an Iranian interviewer that the
    Iranian leadership's previous suspension of uranium enrichment
    at the behest of European negotiators was more tactical than a
    true concession. We did not accept suspension and construction
    of centrifuges and continued the effort, she said; we needed a
    greater number.
        Despite finding in 2003 that Iran had been developing a
    uranium centrifuge enrichment program for 18 years, German
    Foreign Minister Joschka Fischer corralled European Union
    authorities to urge giving the Islam Republic another chance so
    as not to diminish leverage.
        Too often, and this is my fear with the Obama
    administration, the desire to preserve leverage to wield in
    future diplomacy becomes a chief argument against ever
    utilizing or pursuing punitive measures based on an adversary's
    actions. In a diplomatic calculation, ensuring continuation of
    talks supersedes reality.
        Of course, diplomacy is the strategy of first resort. It
    always has been. Unfortunately, it does not always succeed.
    Engagement has shown itself no magic formula for three reasons,
    and I offer these in conclusion.
        First, it takes two to tango, what Carter, Bush the elder,
    Reagan, and Bush the younger learned, but their domestic
    critics have not, is that the impediment to engagement lies not
    in Washington, but in Tehran. When Under Secretary of State
    William Burns sat down with his Iranian counterpart in Geneva
    in July 2008, Mohammad Ja'afi Assadi, commander of the Iranian
    Republican Guard Corps ground forces, quipped that Washington's
    desperation showed that ``America has no other choice but to
    leave the Middle East region beaten and humiliated.''
        For diplomacy to be effective, the target government must
    empower its diplomats to negotiate over contested issues and
    then abide by agreements reached. Unfortunately, Iranian
    diplomats hold no sway over Iran's nuclear program or terror
    sponsorship. These are the purview of the Islamic Revolutionary
    Guard Corps and the Office of the Supreme Leader.
        And lastly, the Obama administration appears intent to
    sequence policies. Comprehensive strategies, however, have not
    only diplomatic but also informational, military, and economic
    components. Absent any effort to lay the groundwork for either
    containment or deterrence, both military strategies, Washington
    is signaling to its allies that the U.S. commitment to protect
    them is empty.
        Arab states and Iran's neighbors----
        Chairman Berman. Doctor, we do have to----
        Mr. Rubin. Okay, I will.
        Appear more concerned than Congress that neither Obama nor
    Clinton have articulated by what metric the administration will
    judge success. This is of paramount importance to prevent
    Iranian officials from simply running down the clock.
        [The prepared statement of Mr. Rubin
    follows:]Michael Rubin deg.

        Chairman Berman. Thank you very much.
        Dr. Maloney.

       STATEMENT OF SUZANNE MALONEY, PH.D., SENIOR FELLOW, SABAN
        CENTER FOR MIDDLE EAST POLICY, THE BROOKINGS INSTITUTION

        Ms. Maloney. Thank you and good morning.
        Mr. Chairman and members of the Committee on Foreign
    Affairs, thank you very much for giving me the opportunity to
    comment on the past 6 weeks of upheaval in Iran and the
    consequences of the these developments for the United States
    and our policy options toward Tehran.
        In the aftermath of events that have challenged all that we
    thought we knew about Iran, it is particularly valuable for the
    committee to address this issue and to engage in a serious
    reassessment of the most effective means for Washington to
    influence Tehran's policies and its future course.
        The Islamic Republic has entered a new and ultimately
    unpredictable phase of its perpetually gripping history. Iran
    and the regime are now forced to contend with an almost
    unprecedented array of internal challenges that are both
    complex and interconnected.
        The outrage over the electoral manipulation has spawned a
    genuine if still embryonic opposition movement, perhaps for the
    first time since the mid-1980s in Iran, that boasts at least a
    symbolic leadership and a compelling popular mandate.
        The other profound consequence for the Iranian regime, as
    some of the previous panelists have suggested, is the cleavage
    within the political elite. There has always been factional
    bickering within Iran, but we have never seen anything at this
    level. And we have never seen the direct assault on the
    authority of the Office of the Supreme Leader.
        In doing so, the crucial component of the Iran's elite has
    begun to separate itself from the regime to promote the
    opposing agenda of a nascent mass-based movement. This is
    highly significant.
        There are at least three potential directions that Iran's
    volatile course may yet take. Khamenei's power grab may yet
    herald the arrival of an increasingly despotic Iranian regime,
    unconstrained by the niceties of limited electoral institutions
    or any pretense of popular legitimacy.
        We can see in Iran's past some precedent for this. In the
    mid-1980s, the Iranian regime ferociously defended the system
    and the newly established theocracy against internal threats,
    both real and perceived. We may well see a reprise of that
    history.
        There are at least two alternatives scenarios that would
    seem more encouraging in the short term. The first would entail
    some negotiation of a modus vivendi among Iran's hardliners and
    the quartet of moderate leaders that others have referred to.
    This could look anything like a super-empowered reform movement
    in which you saw a kinder, gentler Islamic Republic, or a
    complete capitulation by the reformist leaders to become a sort
    of loyalist opposition along the lines of the Iranian freedom
    movement, which existed for well over a decade after the
    Islamic Revolution.
        The third potential scenario at present seems out of reach
    but remains the most dramatic threat to the Iranian regime.
    Given time and further catalysts, the elite defections and
    popular resentment might yet morph into something more
    powerful, and Iran might experience the genesis of a serious
    sustained opposition movement dedicated to ousting the current
    regime.
        Among the most important factors influencing Iran's future
    trajectory and the tools available to the international
    community are those related to the Iranian economy. As Dr.
    Clawson suggested, Iranians must contend with double-digit
    inflation; power shortages; a tumbling stock market; stubbornly
    high unemployment rates, particularly among the large, young
    population; increasing dependence on volatile resource
    revenues; and perhaps most ominously for the leadership, a
    rising tide of indignation among its people.
        Ironically, of course, Ahmadinejad was elected on the basis
    of a campaign back in 2005 that focused on the economic
    grievances of Iranians. And yet he governed on the basis of
    ideology. And as a result, the President himself bears much
    direct responsibility for the current state of Iran's economic
    affairs. His heavy-handed interference with monetary policy and
    free-wheeling spending contributed to spiraling inflation
    rates. His provocative foreign policy and reprehensible
    rhetoric has done more to dissuade potential investors than any
    United States or United Nations sanctions. His disdain for the
    technocracy and his somewhat quixotic economic notions have
    undermined much of the progress that was made in previous years
    to liberalize the Iranian economy and address its underlying
    distortions. And he spends like a drunken sailor, as Dr.
    Clawson has suggested.
        The senselessness of these policies provoked a firestorm of
    criticism through his last several years in office. Notably,
    the critiques were not limited just to his factional
    adversaries. Much of the disquiet voiced about the economic
    police of the Ahmadinejad regime has emerged from sources
    ideologically inclined to support the President and his patron,
    the supreme leader, including traditional conservatives with
    longstanding links to the bazaar and the centers of clerical
    learning.
        As both Dr. Clawson and Dr. Milani suggest, what had
    particularly galled many Iranians was the opportunity lost in
    the past few years. Iran's oil revenues during Ahmadinejad's
    first term exceeded 8 years of income earned during both the
    Khatami and the Rafsanjani presidencies. Nearly 40 percent of
    Iran's oil earnings over the past 30 years came during the past
    4 years. And no one knows, as both Dr. Milani and Dr. Clawson
    have suggested, where much of the  deg.this money has
    gone.
        The unrest of the past 6 weeks will only aggravate Iran's
    economic dilemmas and put durable solutions to the perpetual
    problems of uncontrollable subsidies, unaccountable spending,
    that much further out of reach. The crisis will persuade more
    Iranians who have the means and/or ability to leave the
    country. Even in advance of any multilateral sanctions,
    political risks and the increasingly unpalatable nature of the
    new power structure will dissuade investors and reduce the
    competitiveness of the Iranian economy.
        The events since June 12th have changed Iran in a profound
    and an irreversible fashion. It would be fruitless, even
    counterproductive, to proceed as if this were not the case. The
    United States must adjust both its assumptions about Iran and
    its approach to dealing with our concerns about Iranian
    policies.
        But the turmoil in Iran has not altered our core interests
    vis-a-vis Iran, nor has it manifestly strengthened the case for
    alternatives to the Obama administration's stated policy of
    diplomacy.
        As a result, I remain a supporter of the American strategy
    of engaging Iran. The United States is going to have to deal
    with an increasingly paranoid and dogmatic Iranian regime, one
    that is preoccupied with a low-level popular insurgency and
    schism among its leadership.
        Still, the Obama administration's interest in engagement
    was never predicated on the palatability of the Iranian
    leadership but on the urgency of the world's concerns and the
    less promising prospects of the array of policy alternatives.
        How do we draw thuggish theocracy to the bargaining table?
    The hurdles are not insurmountable. The context for the
    successful 1980 to 1981 diplomacy that lead to the release of
    the American hostages was at least as challenging of that of
    today. At that time, you also had a situation in which most of
    the moderates had been forced out of the Iranian Government,
    and the people who we were sitting across the bargaining table
    from were from a particularly hardline group of people whose
    authority, credibility, and ultimate goals were very much
    obscure.
        A successful agreement entailed months of work and many
    false starts, but a variety of tools, including secret
    diplomacy, the involvement of a third-party mediator as a
    guarantor for the eventual agreement, helped facilitate an
    outcome. Perhaps a critical factor in the success of the
    hostage negotiations was Iran's desperate need for economic and
    diplomatic options after the Iraqi invasion.
        In a similar respect, any U.S. effort to negotiate with
    Tehran will benefit from the identification of
    counterincentives that can similarly focus the minds of Iranian
    leaders and expedite the path of negotiators. This is the
    proper role for coordination with U.S. allies on an
    intensification of sanctions should engagement fail. And here
    we should focus our efforts on Beijing.
        We shouldn't presume too much with respect to the efficacy
    of sanctions. There are no silver bullets, and sanctions, in
    fact, haven't proven successful in the past in reversing
    Iranian policies. But they work best when they alter the
    perceptions, timing, and utility of swaying a critical
    constituency, and this is where our efforts should be focused.
        Finally, to conclude, let me just say that we are facing a
    situation of intense fluidity in Iran, and we should always be
    applying a test of the ``island of stability'' sort of rhetoric
    that was used by the Carter administration in the run up to the
    Iranian Revolution. We don't know simply whom we are going to
    be dealing with in a year's time in Iran.
        Thank you.
        [The prepared statement of Ms. Maloney
    follows:]Suzanne Maloney deg.

        Chairman Berman. Thank you.
        Karim.

       STATEMENT OF MR. KARIM SADJADPOUR, ASSOCIATE, MIDDLE EAST
          PROGRAM, CARNEGIE ENDOWMENT FOR INTERNATIONAL PEACE

        Mr. Sadjadpour. Thank you.
        Mr. Chairman, it is an honor to be here with you today.
        It took us 30 years, took the United States 30 years to
    finally prepare ourselves to recognize the legitimacy of the
    Iranian regime just when the Iranian regime has lost its
    legitimacy, and this is truly the dilemma the Obama
    administration faces dealing with a disgraced regime which
    presents urgent foreign policy charges, while at the same time
    not betraying this incredibly courageous population.
        I would like to make a few points about the domestic
    implications for Iran and also a few points about the
    implications for United States foreign policy.
        In my mind, there have been two important casualties of the
    last 6 weeks. The first is the moniker of the Islamic Republic
    of Iran. Iran has ceded any claims, any pretensions of being a
    republic. In my opinion, Iran has now become a cartel of
    hardline Revolutionary Guardsmen and hardline clergymen, who
    have made, as Abbas said, tremendous amounts of money the last
    few years and are unwilling to cede power. They describe
    themselves as so-called principle-ists, but in reality their
    real principles are power and greed.
        The other important casualty from the last 5 weeks has been
    the loss of legitimacy of the Supreme Leader Ayatollah
    Khamenei. For the last two decades, he had carefully cultivated
    this image of a magnanimous godfather who stays above the fray.
    But those days of Khamenei wielding power without
    accountability are now over. He has tied himself firmly with
    the fate of President Ahmadinejad, and it is unprecedented to
    have hundreds of thousands of people taking to the streets now
    chanting, ``Marg bar Khamenei,'' death to Khamenei.
        A word about the population. According to Mohammad Bagher
    Ghalibaf, who is the mayor of Tehran, himself a former senior
    Revolutionary Guard commander, 3 million people took to the
    streets in Tehran at the height of the protests. And I can tell
    you from talking to people throughout Iran, and just viewing
    the images, that these demonstrators have truly encompassed an
    incredibly wide swath of Iranian society. They transcended age,
    religiosity, gender, geographic location. The scale of the
    demonstrations has certainly decreased the last few weeks
    because the regime does repression very well, and they are able
    to prevent large amounts of people from congregating in one
    area, but the nightly protest chants of ``Allahu Akbar,'' God
    is great, reminiscent of the 1979 Iran revolution, in order to
    keep the momentum going, have continued unabated.
        Now a word about the opposition. The bulk of the leadership
    of the opposition and their brain trust is now either in
    prison, under house arrest, or unable to freely communicate. So
    you have this tremendous popular outrage, but you don't have
    the leadership which is able to tap into this tremendous
    popular outrage and channel it politically. That is the dilemma
    both the demonstrators and the opposition currently face.
        A word, however, about the costs of this repression for the
    regime, both the political costs and the financial costs. As
    Abbas mentioned, we have seen unprecedented fissures in Iran.
    It would be unheard of that a pillar of the 1979 revolution,
    Hashemi Rafsanjani, has come out now in the opposition
    implicitly questioning the legitimacy of the Supreme Leader.
    Former President Mohammad Khatami, who received 24 million
    votes not long ago, has called for a referendum. So truly at
    the level of the political elite, there is unprecedented
    fissures.
        I think what we should focus on and what would truly be
    devastating for Khamenei and Ahmadinejad would be fissures
    amongst the regime's security forces, namely the Revolutionary
    Guards. So far we haven't seen that, but the Revolutionary
    Guards are a very large entity, 120,000 men. And whereas the
    senior commanders are hand-picked by Khamenei, and they are
    going to likely remain loyal to him, the rank and file, both
    empirically and anecdotally, we have seen, are much more
    representative of Iranian society at large.
        Also a word about the financial costs of this repression.
    It cost a lot of money to have a state of martial law, to have
    overflowing prisons, to have communication blackouts, and to
    prevent Iranians from viewing satellite broadcasts from abroad.
    It is estimated that for the regime to jam the satellite
    broadcasts from Voice of America Persian Language Service and
    BBC Persian, it cost them several thousand dollars per minute.
    Multiply that over a 5-week period, and we see that the regime
    is truly bleeding tens of millions of dollars just to retain
    this level of repression.
        Now a brief word on the implications for U.S. policy. I
    would first say that I believe President Obama's overtures have
    played a role in accentuating the deep internal divisions
    within Iran. A couple months ago I encountered a fairly senior
    conservative, pragmatic official, Iranian official, in the
    Middle East, who remarked to me that there is a lot of pressure
    now on hard-liners in Tehran to justify their enmity toward the
    United States. What he said to me, to paraphrase, is that if
    Iran can't make nice with Barack Hussein Obama, who is
    preaching mutual respect on a weekly basis, and sending us
    noerooz greetings, it is pretty obvious the problem lies in
    Tehran and not Washington. And I think the cleavages we have
    seen in the last 6 weeks, the Obama administration's initial
    overtures, I think, had played a role in that.
        I do believe, however, that it is time to reassess U.S.
    policy postelection, and what I would argue is that we should
    not be thinking or talking about engagement yet. Just as we
    didn't want to intervene in Iran's internal affairs after the
    election by forcefully coming out in favor of the opposition, I
    think by prematurely engaging before the dust has settled in
    Tehran, we may implicitly endorse these election results,
    demoralize the opposition, and unwittingly tip the balance in
    favor of the hard-liners, namely Khamenei and Ahmadinejad. So I
    don't say renounce engagement, but let us hold off until the
    dust settles.
        I believe--yeah. Okay. Just one last point, and that is
    that we shouldn't underestimate the magnitude of this moment.
    Iran is the only country in the Middle East in which if you
    hear about popular protests, it doesn't give you indigestion.
    You hear about popular protests in Saudi Arabia, Egypt, and
    Jordan, it is not a hopeful sign. And Iran certainly, as we
    have seen, these young people are agitating for greater
    political voice, greater economic freedoms, greater social
    freedoms. And they may not achieve this within the next weeks
    or months or even years, but we should appreciate the magnitude
    of what has transpired the last few weeks, and we should
    certainly try to pursue policies which don't deter this moment
    and do not alter its trajectory.
        [The prepared statement of Mr. Sadjadpour
    follows:]Karim Sadjadpour deg.

        Chairman Berman. Thank you very much.
        And now our final witness, Professor Kittrie.

     STATEMENT OF ORDE F. KITTRIE, J.D., PROFESSOR OF LAW, ARIZONA
    STATE UNIVERSITY, CO-DIRECTOR, IRAN ENERGY PROJECT, FOUNDATION
                       FOR DEFENSE OF DEMOCRACIES

        Mr. Kittrie. Chairman Berman, Ranking Member Ros-Lehtinen,
    distinguished members of the committee, thank you for the
    opportunity to speak with you today. I have been asked to focus
    on how to use sanctions to leverage the economic vulnerability
    to which Dr. Clawson and others referred.
        Disappointingly, the Obama administration's outstretched
    hand has thus far been met with a clenched Iranian fist. Until
    now that outstretched American hand has been accompanied by the
    maintenance of existing sanctions. Congressional sanctions
    bills have, as the chair said, served as a kind of sword of
    Damocles, hanging high over the head of the Iranian regime. Yet
    Iran's nuclear power has raced forward, and Iran's leadership
    has continued to insist there are no incentives that could
    induce it to halt or even meaningfully limit its nuclear
    program.
        It has become increasingly clear if the Iran regime is
    going to be peacefully persuaded to halt its illegal nuclear
    program, we will first need to change its cost-benefit
    calculus. In light of this and the regime's brutal measures to
    crush the postelection protests, it is time both to increase
    the weight of the sword of Damocles hanging over the Iranian
    regime's head and to begin lowering the sword.
        In a moment I will suggest some ways in which the sanctions
    threat to Iran can be increased and made more imminent, but
    first a threshold question: Can strong sanctions really
    contribute to stopping an illicit nuclear weapons program? The
    answer is yes. For example, strong U.N. Security Council
    sanctions were a pivotal factor in inducing Libya's Government
    to allow British and American Government experts to enter Libya
    and completely dismantle its WMD infrastructure by April 2004.
    As the ranking member said, that should be our goal with regard
    to Iran.
        In addition, it was discovered in the wake of the United
    States occupation of Iraq, too late unfortunately, that strong
    U.N. Security Council sanctions had helped destroy Iraq's
    nuclear weapons program and prevent Saddam Hussein from
    restarting it between the Gulf War in 1991 and the coalition
    occupation of Iraq in 2003. However, the sanctions imposed on
    Iran by the international community thus far are much weaker
    than the sanctions that helped stop the Libyan and Iraqi
    nuclear weapons program. The Security Council's Iran sanctions
    are still far to weak to, A, persuade Iran's leadership that
    the benefits of proceeding with its nuclear program are
    outweighed by the sanctions costs of proceeding with it; to, B,
    meaningfully contain Iran's nuclear program; or, C, deter other
    countries that are watching from someday following Iran's lead.
    That is unfortunate, because Iran's heavy dependence on foreign
    trade leaves it potentially highly vulnerable to strong
    economic sanctions.
        The following are some ways in which Congress could both
    increase and make more imminent the sanctions to Iran. Number
    one, I urge the committee to do what it takes to position the
    Iran Refined Petroleum Sanctions Act for immediate enactment if
    no significant progress is made by the time of the G-20 summit
    meeting. If I understood correctly, the chair just announced
    for the first time that he sees early fall as a time frame for
    an IRPSA markup, and I commend him for that sharpening of his
    timeline.
        Number two, Congress can and should in the meantime
    continue its smaller steps to squeeze Iran's suppliers of
    refined petroleum and other strategic goods. Steps such as
    encouraging the executive branch and governments at the State
    and local level to use their own discretion and market power to
    put Iran's key suppliers to a business choice between the
    United States governmental and Iranian markets.
        Number three, while IRPSA is an excellent bill, a cut-off
    of Iran's refined petroleum supplies may not be sufficient to
    convince the Iranian regime that the benefits of its nuclear
    program are outweighed by the sanctions costs of proceeding
    with the program.
        There are a number of provisions in other Iran sanctions
    bills that I urge be passed alongside IRPSA. I list them all in
    my written statement. These additional provisions include, and
    I will highlight just a few, first, provisions that would cut
    off most remaining direct United States trade with Iran.
    According to recent reports by the Associated Press and other
    sources, the United States had $685 million in exports to Iran
    in 2008. That is an 80-fold increase over the $8 million in
    United States exports to Iran in 2001. An 80-fold increase. It
    will be harder for the United States to convince Europe to put
    stronger sanctions on Iran if the United States does not itself
    stop trading directly with Iran. President Clinton had in 1995
    banned essentially all U.S. trade with Iran; however, the U.S.
    had in 1999 and 2000, in a gesture to the relatively moderate
    Khatami, eased the trade ban. The United States should reclose
    these exceptions to direct trade with Iran.
        Another step, another provision, that should be added or
    passed alongside, provisions such as those in H.R. 1327 that
    would encourage and facilitate State and local divestment from
    companies doing business with Iran; and finally, provisions
    such as those in the ranking member's H.R. 1208 that would
    strongly discourage and reduce the transshipment of sensitive
    goods to Iran through third countries.
        In conclusion, the United States' considerable leverage of
    Iran's suppliers of refined petroleum and other strategic goods
    may mean that aggressive unilateral sanctions could have a
    dispositive impact on Iran's economy and thus its nuclear
    program. In the face of persistent Russian, Chinese, and
    European reluctance to impose strong sanctions on Iran,
    creative and aggressive U.S. unilateral sanctions may turn out
    to be our last best hope for peacefully convincing Iran that
    the cost of its nuclear program is too high.
        Thank you.
        [The prepared statement of Mr. Kittrie
    follows:]Orde Kittrie deg.

        Chairman Berman. Well, thank you all very much. Very
    interesting, provocative testimony.
        I will yield myself 7 minutes, our new, once only time
    limit for this question-and-answer process. I am going to focus
    just first on the political issue. A few of you spent some time
    talking about--one of you referred to it, I think Dr. Milani--
    as sort of a purgatory, an uncertainty. Dr. Maloney and Karim
    Sadjadpour spoke about how this thing might play out. But let
    me try and push you.
        You are experts, so you are supposed to predict when you
    don't know. Is the near-term existence--I mean, I took it at
    least some of you were approaching the point of saying the
    near-term existence of the regime is in question. And is the
    opposition movement more about restoring the legitimacy and
    integrity of the regime or about a regime change? A few of you
    who want to take that up could start with that.
        Mr. Milani. I think the opposition, in my mind, is divided
    in two groups. Some, like Rafsanjani, are more moderate.
    Rafsanjani, I think, wants a more refined version of the status
    quo. Moussavi and the rest of them, although they have not
    articulated it, I think want a return--some of them have
    implicitly said they want a return to the first draft of the
    Constitution. People forget the first draft of the Islamic
    Constitution did not have the concept of velayat-e fagih, where
    one spiritual ruler has absolute sway. The first draft of the
    Constitution was, in fact, a republican draft. Only when
    Khomeini realized that the opposition is weak, only when he
    realized that the crisis, the American hostage crisis, and the
    war with Iraq has created for him a situation did they ram
    through the Parliament, the constituent assembly, this
    provision of the law.
        I think that concept is now dead because Rafsanjani's words
    are no longer accepted. And many of the top clerics in Iran--
    shi'ism has a very strong, peculiar structure. There are
    ayatollahs, and there are lower figures, hojjatoleslams. The
    ayatollahs have almost universally, with the exception of two,
    spoken against the status quo, spoken against the suppression;
    have considered it a sin to beat on innocent people. One old
    ayatollah, Mr. Montazeri, has basically issued a fatwa that
    says Mr. Khamenei no longer has the virtue, the capacity to
    hold the position that he has.
        So the crisis, I think, is a very serious crisis for the
    regime as we know it, but whether a democratic alternative will
    come out of it as we understand democracy is unknown.
        Chairman Berman. Anyone else want to come in on this?
        Mr. Sadjadpour. I would say in general that preelection
    this was a referendum on Ahmadinejad. Postelection, I think
    this is a referendum in many ways on Ayatollah Khamenei
    himself. And in general terms, Abbas is right that the
    opposition, I think, casts a very wide net. There is a
    diversity of opinions. But I would say broadly speaking, they
    want to see the disempowerment of the unelected institutions in
    Iran, namely the institution of the Supreme Leader and the
    Guardian Council, and the empowerment of the elected
    institutions, namely the institution of the Presidency and the
    Parliament.
        Ms. Maloney. I think that gets to the nature of your
    question, the near-term continuation of the regime, what kind
    of regime will it be? Clearly the de facto opposition leaders,
    the four political leaders, Rafsanjani, Khatami, Moussavi, and
    Karubi, who are the kind of nominal leaders of what we are
    calling an opposition, are not people who are looking to move
    beyond the system. They are looking for some substantial
    greater, or lesser in some cases, modification of the system,
    much as Khatami sought to do when he was President. What he has
    talked about is not dissimilar from what he tried to do in
    terms of limiting the Office of the Supreme Leader and
    elevating and empowering the elected offices of the Iranian
    system.
        What the population wants, I think, is still unclear. The
    protesters, in the aftermath of the election, tried very hard
    to make it clear that they were not, in fact, challenging the
    system. They focused their grievances on the election itself.
    But once you begin to attack the Office of the Supreme Leader,
    once you begin to say, ``Marg bar Khamenei,'' or, ``Ahmen
    eraft,'' reprising one of the famous lines in the newspaper in
    1979 about the Shah, I think you begin to raise questions about
    the longevity of the system. They are not short-term questions,
    though.
        Mr. Clawson. If I may just quickly add, those who stormed
    the Bastille were loyal subjects of the King. I don't think
    that is how the French Revolution turned out. These things have
    a dynamic, and if Khamenei goes because of protests, expect
    further change.
        Chairman Berman. And that is a nice segue into the question
    of what does that change mean for the United States? What
    changes in tone or policy might follow on? A couple of
    questions that are very important from my point of view: What
    does it mean in the context of a uranium enrichment program?
    What does it mean in terms of the continued financial support
    for terrorist organizations? Is it foregone that those policies
    continue, or is what Dr. Clawson hinted at, the potential of
    greater change, in the offing?
        Mr. Milani. You know, when the confrontation between Israel
    and Gaza occurred, Iran did virtually nothing, virtually said
    nothing. And I think that was a reflection of the fact that
    they were economically straddled. They no longer had the $1
    billion to give to Hezbollah to give out as insurance for
    rebuilding the houses.
        But when we think about sanctions, unless the sanctions are
    crippling, the sanctions have also a positive point for the
    regime. The regime has used the sanction as an excuse to cover
    its economic incompetence. It keeps blaming the United States
    for these problems. Unless we can come up with the kind of a
    sanction that will do to Iran what the international sanctions
    did to South Africa, and I would be all for that, a half-baked
    sanction that gives the regime the excuse to offer as an
    alternative this explanation for why there isn't energy in the
    street, why there are no lights at night I think would
    politically help the regime.
        Chairman Berman. So in the context of our earlier metaphor,
    the regime also tries to claim why the sun rises in the East,
    and it is the fault--okay. I am happy to recognize my ranking
    member, Ms. Ros-Lehtinen.
        Ms. Ros-Lehtinen. Thank you so much, Mr. Chairman.
        Questions for Dr. Rubin and Dr. Kittrie: Earlier this week
    Secretary Clinton stated that ``we want Iran to calculate what
    I think is a fair assessment, that if the United States extends
    a defense umbrella over the region, if we do even more to
    develop the military capacity of those allies in the gulf, it
    is unlikely that Iran will be any stronger or safer.''
    Secretary Clinton also said that North Korea must agree to
    irreversible denuclearization before returning to multilateral
    disarmament talks.
        How can we account for such a contradictory position, given
    the President's June 4th statement that he said Iran should
    have the right to access peaceful nuclear power if it complies
    with its responsibilities under the Nuclear Nonproliferation
    Treaty? Why would the administration now demand full
    denuclearization of North Korea, yet not do so for Iran nor
    Syria? Do you believe that this, in fact, is the
    administration's acceptance of a nuclear Iran?
        I will ramble on here, and then whatever time you have got
    left. The GAO recently reported that the International Atomic
    Energy Agency has provided Iran and other state sponsors of
    terrorism millions of dollars in nuclear assistance over the
    past decade. The GAO recommended that Congress consider
    restricting the U.S. contribution to the IAEA for its technical
    cooperation program. I have introduced legislation to do just
    that. I would like your comments on whether this would put
    significant pressure on the Iranian regime.
        Thank you, Mr. Chairman. And thank you to the witnesses.
        Mr. Rubin. I will start, if I may, very briefly.
        The contradictory statements that come out of the
    administration on proliferation undercut our policies across
    the board. And anyone that looks at the North Korean press or
    the Iranian press will certainly see reference to the other in
    those cases.
        With regard to the broader problems, we see Iran's nuclear
    breakout as an untenable issue, untenable for U.S. national
    security. The problem is that other regional states, most
    specifically Israel, see it as an existential threat, and
    unless we are seen to have credibility in that our diplomacy is
    going to advance to the point where Iran will not become a
    nuclear weapons-capable power, then we risk Israel making a
    calculation based upon its own interests, which could plunge
    the region into chaos.
        Ms. Ros-Lehtinen. Thank you.
        Mr. Kittrie. Thank you.
        The U.N. Security Council, in Resolution 1737 of December
    2006, explicitly ordered Iran to, without further delay,
    suspend proliferation-sensitive nuclear activities, including
    all enrichment-related and reprocessing activities, and work on
    all heavy-water-related projects. The IAEA--not the Obama
    administration, not the Bush administration, the IAEA--has
    explicitly stated, including in its June 2009 report, that Iran
    has not abided by those legally binding orders of the Security
    Council.
        I am troubled by the administration's implication that
    perhaps something less than the U.N. Security Council
    resolutions would be acceptable. The NPT regime is at stake,
    and I think we need to do whatever it takes from a sanctions
    perspective to make sure that Iran abides by those legally
    binding U.N. Security Council resolutions.
        Ms. Ros-Lehtinen. Thank you.
        And I just have 3 minutes left. Can a regime that now
    defines itself and its domestic legitimacy by its nuclear
    weapons program be convinced to effectively discard that
    program?
        Mr. Rubin. I am not sure that it can be without some robust
    coercion. One of the things which I chafe at when I hear the
    media is the description of Iran's nuclear program. What we are
    actually talking about when it comes to a potential nuclear
    weapons program is the command and control of the Office of the
    Supreme Leader and Islamic Revolutionary Guard Corps. As Karim
    alluded to in his testimony, while we talk a great deal about
    the political spectrum, hard-liners, reformers and so on, when
    it comes to the IRGC, that tends to be a black box when it
    comes to the political factions therein. We simply don't know a
    lot about what is going on inside the IRGC, and that should
    scare us to death, considering it is not the Iranian people or
    the protesters in the street that are going to have any say in
    this program, it is going to be the Islamic Revolutionary Guard
    Corps and the Office of the Supreme Leader.
        Should change come, Iranians are, of course, fiercely
    nationalistic. But our problem, and the International Atomic
    Energy Agency's problem, has been Iranian noncompliance with
    nuclear safeguard agreements. It would be a lot easier to
    verify Iran's intentions should there be much more significant
    change across the board in Iranian society.
        It should also lastly be noted that the Iranian people are
    far more moderate than the Iranian Government is, and
    therefore, if the Iranian Government were to somehow become
    much more accountable to its people, that would also have a
    moderating effect on the issues not only of nuclear intentions,
    but also of state support for terrorism.
        Mr. Kittrie. Your question is a good one, and as it
    happens, there are some very interesting precedents, both the
    Iraq and Libya precedents, where these dictators gave up their
    nuclear programs under pressure, and indeed, there are also a
    number of instances of where countries have given up actual
    nuclear arsenals, including Kazakhstan, Belarus, Ukraine, and
    South Africa. All had actual nuclear arsenals that they gave
    up. So if we play our cards right, I think there is reason for
    optimism.
        Ms. Ros-Lehtinen. Thank you so much.
        Thank you, Mr. Chairman.
        Thank you to the witnesses.
        Chairman Berman. Thank you.
        I wish Iraq had told us they had given it up.
        The gentleman from New York, Mr. Ackerman.
        Mr. Ackerman. Thank you, Mr. Chairman.
        Engagement. I think I have seen the movie before. I would
    concede that I saw it in a different theater, but that doesn't
    disqualify me from thinking that I suspect that I can remember
    how it ends. If there is a chance that we could have engagement
    with Iran, with whom right now would we negotiate?
        I ask that question fervently believing that despite the
    fact that there may be some confusion over who comes out on
    top, I would be shocked if I thought any of you would suggest
    that they have stopped their nuclear weapons program while that
    dynamic is happening.
        Who would you talk to if you were the President and made a
    phone call? Or would you not talk to anybody until some of the
    dust settles, and it becomes clearer with that clock ticking
    within the alligator?
        Mr. Clawson. Personally, I would wait for their phone call.
    I think that the ball is in their court----
        Mr. Ackerman. Okay.
        Mr. Clawson [continuing]. And that we shouldn't rush, and
    that we have shown the world that we are interested in
    engaging, and that----
        Mr. Ackerman. So you would allow them to continue to
    develop their nuclear weapons program with the Israeli clock
    ticking at the same time?
        Mr. Clawson. I wouldn't be in any great rush to engage with
    them.
        Mr. Ackerman. Okay. Dr. Maloney?
        Ms. Maloney. I think that is the reality. I am sorry,
    Maloney and Milani, we often find ourselves conflated here, but
    I think that is where the administration is at this point.
    There have been a number of gestures that were made earlier in
    the year. The administration is prepared for a response and, I
    think rightfully so, is going to play out this clock.
        Mr. Ackerman. Okay. Dr. Milani?
        Mr. Milani. You know, my sense is that the two clocks, the
    nuclear clock and the democratic clock, are interlinked. This
    regime cannot be relied on to abide by its words. Even if it
    promises to stop its nuclear program, a regime that----
        Mr. Ackerman. You have seen the movie, too.
        Mr. Milani. I have seen the movie. But I would say that
    engaging with them creatively and wisely helps the democratic
    clock. We will not have a resolution of the nuclear program
    unless we have a democratic regime in Iran. Every policy, in my
    view, that tries to stop the nuclear program must have the
    democratic clock.
        Mr. Ackerman. Okay. Dr. Sadjadpour?
        Mr. Sadjadpour. I am not a doctor yet, but, you know, I
    think there is a policy which reconciles these two goals of
    preventing Iran's--or deterring Iran's nuclear ambitions, while
    at the same time helping to facilitate the conditions for the
    Iranian people.
        But I would simply agree with what Patrick Clawson said,
    that the Obama administration has made tremendous efforts to
    reach out to Tehran. The dust hasn't settled in Tehran, so we
    shouldn't reach out yet.
        Mr. Ackerman. Okay. We are 0 for 4 on negotiating.
        Dr. Rubin?
        Mr. Rubin. If the Supreme Leader and the IRGC aren't
    prepared to talk on nuclear and terrorism issues, we need to
    consider what our plan Bs, Cs and----
        Mr. Ackerman. 0 for 5.
        Professor Kittrie.
        Mr. Kittrie. The offer of dialogue is----
        Mr. Ackerman. Press your button.
        Mr. Kittrie. The offer of dialogue is on the table. I don't
    think we should just sit back and wait. I think we should be
    squeezing the Iranians as time goes on in the ways I described.
        Mr. Ackerman. 0 for 5\1/2\.
        In order for us to have any effect on the process of
    stopping a nuclear program, we have often talked about big
    carrots and big sticks, which I think the administration has
    referred to previously, and certainly the chairman has
    advocated in the past. The question is really the big sticks,
    which we have not implemented whatsoever. Should we be right
    now, as quickly as we can, ratcheting up critical sanctions in
    which we get as many international players involved?
        Mr. Clawson. Mr. Chairman, as big a problem as the stick
    has been that Khamenei thinks our carrot is poisoned. He thinks
    that, in fact, our objective is to overthrow his regime through
    a velvet revolution. And so, therefore, he is completely
    unconvinced that doing a deal on the nuclear issue is going to
    bring him any benefit whatsoever.
        Mr. Ackerman. If there were big sticks in effect, if we
    indeed were able to realize a rapid implementation of sanctions
    that had a more crushing impact on their economy, does not that
    help us?
        Mr. Clawson. Our problem is he thinks we are going to keep
    up those sanctions until he goes. He thinks that our real
    objective is to get rid of him and to get rid of his system. So
    he thinks that the nuclear issue is just their latest ruse that
    we are using for our goal of a velvet revolution.
        Mr. Ackerman. My question is, don't economic sanctions help
    the people in the street?
        Ms. Maloney. Iran is a rational actor. The regime makes
    cost-benefit calculations. It has reversed policy on very
    critical issues, including the decision to end the war after
    Khomeini inveighed against that for years.
        Mr. Ackerman. Who would make that decision now? With
    everything going on, who would make that decision now? Is there
    anybody able to make that decision?
        Ms. Maloney. The Supreme Leader, deg. Ayatollah
    Khamenei.
        Mr. Milani. I don't think Khamenei is no longer in a
    position to make that decision. I think a clique of the
    Revolutionary Guards are as much in charge of Iran's foreign
    policy as Khamenei is, and I think without their say, that
    won't happen. Again, I think you have to remember there is
    something very unusual about the Iranian people. They are the
    only pro-American Muslim society. We need to keep that in mind.
        Mr. Ackerman. Yes.
        Mr. Sadjadpour?
        Mr. Sadjadpour. I think the most devastating blow to the
    Iranian economy would be a precipitous decline in oil prices. A
    $1 decline in oil price is about $900 million lost annual
    revenue for Iran. And a country which can most effectively
    bring oil prices down in the near term is Saudi Arabia.
        Mr. Rubin. If we are interested in diplomacy, coercion
    amplifies diplomacy.
        Chairman Berman. The time of the gentleman has expired, and
    the gentleman from Indiana, Mr. Burton, is recognized.
        Mr. Burton. You know, Mr. Chairman, it seems to me there is
    three avenues to solve the problem. One is a dialogue, and we
    have tried that, and it hasn't worked. That kind of thing was
    tried with Libya, and it didn't work. And then Ronald Reagan
    bombed the hell out of Libya, and that changed everything
    pretty quick. And when the Israelis decided to knock out the
    nuclear development program in 1982, and they were criticized
    for it, that changed the attitude of Iraq a little bit,
    although Saddam Hussein was still a lunatic.
        It seems to me that if we don't impose sanctions
    immediately, really strong sanctions, nothing is going to
    change over there. And I would like to give you an example.
    Most of you are too young to remember, but after the Treaty of
    Versailles in World War I, the Germans weren't supposed to have
    over 100,000 people in their military so they would never be a
    threat to Europe anymore. Instead, a man named Adolf Hitler
    used 100,000 people to train a multimillion-man army. And
    because we wanted to make sure there was peace in the world,
    and we were involved in trade, Rolls Royce engines were being
    sold to the Luftwaffe in Germany, and he built up the biggest
    military machine in history. And instead of trying to put
    economic pressure on Adolf Hitler, we tried to negotiate with
    him. We tried to talk to him. We didn't put any sanctions on
    him. And in 1938, Lord Chamberlain went to Munich, came back
    with a piece of paper saying, ``Peace in our time,'' gave away
    the Sudetenland, and 60 million people died.
        You know, we are in the atomic age. We are in the nuclear
    age now. If we don't deal with this now, we could see what
    happened in World War II to be child's play. There could be
    millions and billions of people killed in a nuclear
    conflagration, not to mention the economic problems that would
    arise after you have a war in the Middle East, where so much of
    our energy comes from. So we have to do something now.
        I mean, all this talk is great, and I really appreciate the
    intellectual approaches that you are talking about and how we
    ought to be talking to them and working with them. We have been
    trying. We tried, and we tried, and we tried, and it hasn't
    worked. And so it seems to me the next thing we do is we use
    the hammer, and that is a sanction. We take the chairman's
    legislation, and any other legislation we can come up with, get
    it passed, get our allies to work with us as much as possible,
    put a freeze on all their assets in the United States, hammer
    these guys really hard right now; and then if that doesn't
    work, and they continue with all these development programs,
    these centrifuges and everything else they are doing over
    there, then something is going to have to be done to stop them,
    because they want to destroy Israel, and they have said that we
    are not their best friend, and they don't much care about doing
    something like that to America. This is a world threat in my
    opinion. Just one voice up here, but I think a lot of my
    colleagues share this view.
        I think it is extremely important that all sanctions be put
    in place as quickly as possible. Let them know we mean
    business, and let them know that the next stage is going to be
    something that they are not going to want to have happen. It
    worked with Libya, and I think it would work there as well. We
    don't want to hurt those people. The people in Iran are good
    people. They like America. They dress like Americans in many
    cases. They try to live like Americans. But those guys in
    charge over there need to get the message, and these sanctions
    are the way to get the message to them, and they need to know
    what is going to happen next.
        Now, Israel is threatened. A nuclear weapons program that
    develops a nuclear capability with a delivery system threatens
    the very existence of a very small country called Israel. And
    they have nuclear weapons. Unless we do something and do it
    relatively quickly, in my opinion, we are going to see a real
    threat of a conflagration over there that nobody wants.
        And I hope you will just take what I have said to heart. I
    know you have differences of opinion. I know some of you have a
    much more pacifistic approach, a much more reasonable approach.
    But if you look at history and see what has happened in the
    past, you know that there is a real correlation between the way
    we treated what happened in World War II and what is happening
    right now. You have to let them know you mean business. You
    have to impose those sanctions, and they have to know what is
    coming next if they don't deal with it.
        And I yield back.
        Mr. Clawson. Sir, if I may say that as you indicated, the
    prospects for diplomacy are poor. Frankly, so are the prospects
    of resolving this problems deg. through sanctions.
        Mr. Burton. How do you know that? How do you know that? How
    do you know if we put the hammer on them as far as the bill
    that the chairman is talking about and the President would
    utilize, how do you know if we froze all their assets here in
    the United States, how do you know if we didn't get our allies
    to do some of this that it wouldn't work? To say that it won't
    work, the people are out on the streets right now because of
    the election. You think if the cost of everything goes up, and
    the unemployment rate goes through the ceiling that they are
    not going to want to do something about it?
        Mr. Clawson. Mr. Khamenei doesn't care much about the
    economy.
        Mr. Burton. Well, he will if they are out there in the
    streets after him with guns and knives and everything else. And
    that is what is happening. That is what happens when the people
    feel the pressure from sanctions that are severe. And we can do
    it. Their assets are here. Their production of oil, their need
    for oil and gasoline. This idea--I am about out of time. But
    this idea that you can negotiate with a tyrant who sends people
    into the surrounding countries to blow themselves up because
    they are going to go to Valhalla or someplace, I mean, he
    doesn't--he is a power-hungry man, and the only thing he
    understands, like any bully in a school yard or a world
    theater, is strength. And the first fist you give him is
    sanctions that are so severe that everybody feels it in that
    country, and then I think you will see a lot of uprising in the
    people. And then if that doesn't work, you have to do something
    else.
        Chairman Berman. Would the gentleman yield?
        Mr. Milani. Congressman, the United States negotiated with
    Hitler. The United States negotiated with Stalin. The United
    States, President Nixon unilaterally began negotiations with
    Mao Zedong that was personally responsible for the death of 30
    million people and 10 million people during the Cultural
    Revolution. The fact that these are despots and dictators does
    not mean that we should not negotiate with them. It means we
    should not allow them to be dictators.
        A unilateral United States sanction helps Rafsanjani,
    Khamenei, and the regime, and it will because there is China
    out there. There is Russia out there. There is Venezuela out
    there. These guys have created an international brotherhood of
    despotism. You are not working in isolation. Germany, the
    United States ally, just sold $700 million of the most
    sophisticated equipment for censoring people and beating up
    people. Well, stop those, and you will stop the regime.
        Chairman Berman. The time of the gentleman who was around
    for the signing of the Treaty of Versailles has expired.
        Mr. Delahunt.
        Mr. Delahunt. Thank you, Mr. Chairman. I don't know how you
    follow that, the Versailles Treaty. When was the Versailles
    Treaty tried?
        I guess, Mr. Milani, you know, I understand the hammer. I
    guess let me pose this question again to the panel, but let me
    start with Dr. Milani, because I think I agree with what he was
    going to say. The issue is, from where I see it, if we use the
    hammer, is there a likelihood that the nationalist impulse
    among the Iranian people will rally and support the current
    government?
        Mr. Milani. I think if the Iranian people feel like the
    nation is under assault, if there is a military strike, I would
    be extremely surprised if people don't rally around the regime.
    That is why I think a military option in this current situation
    is the only thing that will save this tyrannical triumvirate
    that has seized power.
        Mr. Delahunt. But I am going to the tough sanctions, the
    kind of sanctions that were being described by my friend from
    Indiana.
        Mr. Milani. I think Patrick Clawson is right, Khamenei does
    not want to negotiate. To start negotiating with the United
    States is the end of his regime. We have to make him an offer
    he can't refuse.
        Mr. Delahunt. What is that offer?
        Mr. Milani. The offer is we are willing to sit and talk
    with you unconditionally on every issue, human rights,
    nuclear----
        Mr. Delahunt. The so-called grand bargain.
        Mr. Milani. Not a grand bargain. In fact, I have argued in
    my paper that the grand bargain is a good bargain for the
    regime. The regime says, give me security, I will make a
    promise that I won't make the bomb. If you buy that, I have a
    bridge in San Francisco to sell you. This is a regime that lies
    to its own people; it is going to lie to you.
        That is not good enough. Talk with them the way Ronald
    Reagan talked to the Soviet Union. He talked about nuclear in
    the morning; he talked about human rights in the afternoon.
    Shultz is sitting a few doors from my office, and he mastered
    the process of negotiating with murderous, tyrannical regimes.
    The U.S. knows how to do this. The U.S. has successfully done
    this. This is not a superpower. These are--as he said, this is
    thugs, this is the Soprano family ruling a country. And it is
    not that difficult to talk to the Sopranos, but you can't do it
    through empty threats, and you can't do it through threats that
    they can bypass when they have China and Russia.
        Mr. Delahunt. In other words, you can't do it by way of
    unilateral sanctions. It has to be multilateral sanctions to be
    effective to get their attention.
        Dr. Maloney?
        Ms. Maloney. I would just add that I think this is one of
    the problems with the Refined Petroleum Sanctions Act, which is
    that, one, you will conceivably split the people from the
    regime. Iran can withstand a cut-off of refined products. The
    people who will suffer are those without access. There is an
    inordinate amount of smuggling that goes on in this part of the
    world, and the regime and those with access to power will
    probably have plenty of gasoline. It is the kids in the street,
    it is the people who earn their living driving a taxi cab in
    their off hours who will suffer, and they may not blame the
    regime, they may well blame us. But the larger problem is this
    issue of unilateral versus multilateral.
        Mr. Delahunt. Is that the core of the problem that we have?
        Ms. Maloney. Absolutely. And I think this is where we have
    a potential opportunity here, because we typically--our
    diplomacy is focused on Russia first and then dealing with
    China secondarily as a country that will follow Russia's lead
    on this particular set of issues. They have very different
    interests at stake. The Chinese depend upon energy sources from
    the gulf. This is why they are so interested in Iran. They are
    investing in Iran for the long term. They are signing a lot of
    deals. They are not actually putting a lot of money into the
    country. And this is because they are trying to secure a place.
        What they need to understand is that Iran is in a period of
    flux, and that as they seek to secure a long-term position in
    Iran, they need to be doing so with an eye to the fact that the
    structure of power is changing and is likely to change further.
    We can have that kind of a conversation. We may well be able to
    begin to get the Chinese to appreciate the power and utility of
    sanctions, and that would have much more influence on the
    regime's outlook and the regime's decision making than
    sanctions that are largely targeted toward the population.
        Mr. Delahunt. Mr. Clawson?
        Mr. Clawson. So far I see no evidence whatsoever that the
    public opinion in Iran has blamed the economic problems of the
    country on sanctions. Quite the contrary, the blame has been on
    the regime for its hard-line policies that isolate Iran from
    the rest of the world. And so we are in the exact obverse
    situation we are in in Cuba, where the regime has been
    successful in blaming its problems on sanctions. In Iran, by
    the contrary, problems----
        Mr. Delahunt. Has the Iranian Government made the effort to
    ascribe their economic woes to the existing sanctions?
        Mr. Clawson. Not very much, and when it does, it usually
    blows back in their own face, because the response from the
    populace is, then why are you adopting these stupid policies
    that are isolating us from the world? It is the same regime
    which cuts off the Internet which cuts Iran off economically
    from the rest of the world. The people of Iran blame the hard-
    line government for cutting Iran off economically, socially,
    culturally from the rest of the world. That is the big issue in
    Iran. Do you want to be part of the world, or don't you? And we
    are on the side of the angels.
        Mr. Delahunt. Let me--my time is running out. If a tough
    sanctions legislation as proposed by the chairman should come
    out of the committee, would you recommend that the sanctions be
    mandatory, or should discretion be vested in the executive in
    terms of their application so to allow for, if you will, a more
    agile response?
        Mr. Clawson. One has to have confidence in an
    administration when one provides it with that kind of
    authority, because there is a long history of administrations--
    --
        Mr. Delahunt. That is neither a yes nor a no.
        Mr. Clawson. I have modest confidence in the
    administration, so my answer is yes.
        Mr. Delahunt. Okay. So it is a kind of yes.
        Ms. Maloney. Unless you are prepared to sanction China, you
    have to provide some sort of waiver authority to the
    administration.
        Mr. Delahunt. Okay. Dr. Milani, yes or no, please.
        Mr. Milani. I don't think unilateral sanctions work.
        Mr. Delahunt. You don't think they work, so you are a no.
        Sir? Karim?
        Chairman Berman. I think----
        Mr. Sadjadpour. I will say one word.
        Chairman Berman. One word.
        Mr. Sadjadpour. We should defer to the opposition
    themselves instead of trying to decide for them here from
    Washington.
        Chairman Berman. The time of the gentleman has expired.
        Mr. Rohrabacher, your choice, 2 minutes now or 7 minutes
    when we come back?
        Mr. Rohrabacher. How about 5 minutes now?
        Chairman Berman. You will do it without me.
        Mr. Rohrabacher. That is fine. Let us just go very quickly.
        Number one, this has been a great panel. And let me
    associate myself with Dr. Rubin. We will not--dialogue means
    nothing unless there is force behind it, especially with
    tyrants and gangsters, which we are dealing with. For the
    record, the United States needs to act rather than just talk.
    And even in terms of what we are saying has been wrong in the
    last 12 months. We actually--what we have been saying portrays
    us as weak. Apologizing to a tyrant, apologizing to people who
    murder their own people is not taken as something that, oh,
    that must be sincere; now we can negotiate honestly with this
    person because he has apologized.
        I would hope that this administration breaks out of this
    psychological mind-set that it has got in terms of America as
    the cause of all the problems of the world, and the suffering
    can be drawn back to some mistake America made 30 or 40 years
    ago. Let me note that we did not overthrow communism, we did
    not defeat communism without a major conflagration by simply
    using words.
        And I certainly appreciate the witness who suggested that
    Ronald Reagan knew how to talk to the Soviet Union, because he
    not only talked, he acted. And that is the basis of my question
    here. We can do more than just sanctions. It sounds like to me
    that what we have been presented, well, we have economic
    sanctions, or we talk to them, or we just don't engage. Well,
    what about the other option that has been very successful with
    the Orange Revolution in Ukraine and other revolutions, and
    especially the overthrow of Soviet communism, in that we should
    have covert support for those elements within a dictatorship,
    in this case Iran, so that they will have the material well-
    being and the where-for-all to take on that government
    themselves? Could an operation of covert support work in Iran?
    And just very quickly down--first Mr. Rubin, yes, sir.
        Mr. Rubin. Well, with regard to President Reagan, one
    opportunity we missed with Iran was in December 2005, when we
    missed a Lech Walesa Gdansk moment, when for the first time in
    the Islamic Republic, an independent trade union formed among
    Iranian bus drivers. If we are going to make the Iranian
    Government more accountable to its people, we should
    certainly--and we can most certainly join with the Europeans in
    this--voice a great deal more support for independent trade
    unions in Iran like we did in Poland.
        Mr. Rohrabacher. Let us note this.
        Chairman Berman. Dana, I am going to----
        Mr. Rohrabacher. Can I come back?
        Chairman Berman. You absolutely can come back. And when we
    come back, I do want--I am going to use the chairman's
    prerogative to explain what I think is a slight
    misunderstanding of my idea of the strategy of my legislation.
    And--but after Ms. Woolsey, who is going to take the chair,
    because she would rather talk to you than make the first of the
    series of five that we are now on.
        We will recess probably for about 25 or 30 minutes. Talk
    among yourselves. But we intend to come back and finish this,
    and we very much appreciate your indulging our little problem
    we have with votes on the House floor.
        Ms. Woolsey.
        Ms. Woolsey [presiding]. I thank you. We are going to have
    one more question. That is my question, because I can't come
    back.
        Thank you, panel. You have been so interesting. I couldn't
    believe it was 7 minutes for each of you. You were wonderful.
        We talked about pro-American Islamic society. So anybody
    can answer this, but this is a huge--I have got a couple really
    big questions. I am going to ask them both, and then you can
    answer as you want, and then I will go vote.
        Are the young people, are the women that are part of the
    resistance part of this pro-American Islamic society, or is it
    just my generation and not your generation? Dr. Maloney, those
    of us--and, Dr. Clawson, those of us that have been around a
    long time, is it only people like us? That is one question.
        The other question is--and I was very concerned about this
    when I was, you know, supporting in my heart the opposition and
    cheering them along, but when it gets to modifying the system
    as being the core reason for the opposition at this point, how
    will that change the uranium enrichment program? Will it be
    that different?
        So those are my two questions.
        Mr. Milani. What was the second question?
        Ms. Woolsey. I can't hear you.
        The second one was about the modification of the system
    being the goal, and how will that change the uranium enrichment
    program and their cause?
        Mr. Clawson. If I may address the second question. As Karim
    Sadjadpour has often said, everybody in Iran wants a nuclear
    program so long as it doesn't have a cost. But it does have a
    cost, and if the cost of the nuclear program is isolation from
    the world, that is not a cost which those in the protest
    movement are prepared to see their government pay. And so if
    this protest movement is successful, there is excellent
    prospects that we can resolve the nuclear impasse, because the
    debate in Iran is not should we have a nuclear program or not,
    the debate in Iran is should we connect with the outside world.
    Khamenei's answer is no. And the protest movement's answer is
    yes. If the price of connecting with the outside world is
    compromising on the nuclear program, those in the protest
    movement would say pay that price.
        Ms. Woolsey. All right. That gives me hope.
        Dr. Maloney?
        Dr. Milani.
        Mr. Milani. On the question of enrichment, we have actually
    an empirical answer to your question. There is a poll. Almost
    90 percent of the Iranian people in that poll conducted by an
    American group----
        Ms. Woolsey. That we trust so much.
        Mr. Milani [continuing]. That we trust--in the poll almost
    90 percent of the people said that Iran should provide adequate
    guarantees to the United States and the rest of the world that
    its nuclear program is peaceful, and then continue the program
    in cooperation with the West. In other words, 90 percent of the
    people don't want this confrontational path that the regime has
    taken. And I think a disproportionate number of the Iranian
    youth and women, the women's movement are also pro-West,
    prodemocracy, pro-United States.
        Ms. Woolsey. Okay. Dr. Maloney?
        Ms. Maloney. I will answer the first question for the most
    part because I don't disagree with what Patrick has said or,
    frankly, what Abbas has just said. But in terms of the views of
    women and youth, I spent a little bit of time in Iran, not
    recently. Karim has spent more time and more recently. None of
    us were there during the protests, but I will tell you that the
    general sentiments of the Iranian people as expressed to
    Americans who visit is almost uniformly positive. Whether you
    are at the Ministry of Islamic Guidance, or whether you are
    simply walking down the street, you become something of a rock
    star if you are an American. And I think that sentiment has
    continued. It doesn't always correspond to similarly positive
    feelings toward the U.S. Government or toward U.S. policies.
    But there is a general appreciation for American culture,
    American history, a respect for American ideals, and a hunger
    that is widespread and infects the Basij as well as the pro-
    Western youth as much.
        Ms. Woolsey. People to people they like us still.
        Ms. Maloney. Exactly.
        Ms. Woolsey. Okay. Mr. Sadjadpour?
        Mr. Sadjadpour. I would group together the two questions by
    saying that I think the vast majority of not only the Iranian
    population, but also the Iranian political elite behind closed
    doors recognize that this ``death to America'' culture of 1979
    is absolutely bankrupt today. And it has really brought nothing
    but economic malaise and political and social repression. And I
    think that includes the reform movement, the opposition as
    well. And I think that a changed orientation toward the United
    States and toward the Middle East peace process would result if
    this opposition movement ever came to office. And I think it
    would also change the orientation of the nuclear disposition as
    well.
        Ms. Woolsey. Okay. Thank you.
        Dr. Rubin?
        Mr. Rubin. I tend to agree, but with the cautionary note
    that ultimately it is the guys with the guns that control
    things. The Iranian people aren't the impediment. And then the
    dialogue-to-dialogue exchanges, we still don't get to the main
    issues of concern to U.S. national security, which is what is
    going on within the Islamic Revolutionary Guard Corps, which
    certainly is not as pro-American as ordinary Iranian people.
        Ms. Woolsey. Professor.
        Mr. Kittrie. Your excellent question about the Iranian
    people, I think, goes to the issue of what would be their
    response to enhanced U.S. sanctions? There was an implication
    by a number of the panelists that, in fact, enhanced U.S.
    sanctions might lead the Iranian people to blame the United
    States, be a ``rally around the flag'' kind of effect for the
    regime.
        I disagree. From what I have seen, I think you can look at
    the example of Under Secretary Levy's sanctions that have had a
    significant impact, and the Iranian people are blaming the
    regime for their economic problems. If you look specifically at
    IRPSA, the Iran Refined Petroleum Sanctions Act, you know, what
    happened in 2007 when the Iranian regime had to ration fuel,
    people rose up against the regime. They would have to ration
    fuel again if IRPSA went into effect. The BBC has called such a
    step dangerous for the government of an oil-rich country like
    Iran, where people think cheap fuel is their birthright.
    Squeezing Iran's gasoline imports would remind the Iranian
    people that instead of choosing to invest in improving refining
    capacity to meet Iran's growing demands----
        Ms. Woolsey. Okay. Thank you. I do have to go vote also.
    Thank you very much for taking this extra time.
        The committee is in recess briefly. We have four more votes
    after this one. So thank you again.
        [Recess.]
        Chairman Berman. The committee will come to order.
        I am going to use the chairman's prerogative. I have cut a
    deal with Mr. Rohrabacher, so I can use my prerogative, and he
    can get an extra 1 or 2 minutes.
        Just to clarify some of the questions and points made, I
    think, regarding the strategy here, I think it is good to get
    those on the record. First, I believe assets of the Iranian
    regime have been frozen in the United States since 1979. Now, I
    like ``The Producers'' as a play, but I think you can't keep
    selling 1,000 percent of this.
        So, secondly, with a few exceptions--and I am actually
    surprised to hear the notion of the level of bilateral trade
    between U.S. and Iran. But with a few exceptions, we pretty
    much have a, quote, deg. ``unilateral embargo,'' a
    comprehensive set of sanctions. I don't know if that 80-fold
    increase in trade is all pistachio nuts, carpets--well, the big
    thing was we have exempted food and medicine from all
    embargoes. And if you want to challenge that issue, I think,
    okay, but let's clarify that that has to be--I like pistachios,
    but that would not account for an 80-fold increase in trade. So
    it must be the food and medicine exemption.
        Mr. Clawson. Mr. Chairman, if you will allow me, it was 90
    percent wheat, U.S. sales of wheat to Iran.
        Chairman Berman. Ah, yes. We used to do that to Iraq, I
    remember.
        Third, Dr. Rubin earlier talked about you have a plan A,
    and you better have a plan B and a plan C and a plan D. My
    legislation I view as plan C.
        Plan A is to make it clear that, whether it is bilaterally
    or multilaterally, the United States is prepared to engage with
    the leadership of Iran. That, I think, the President has made
    clear in many different times, in many different fora. And, as
    we have talked about earlier, it hasn't been responded to.
        Plan B is the issue of international sanctions. No one can
    argue with a straight face that unilateral sanctions are
    anywhere near as effective as tough international sanctions.
    And there are key players that make up part of that.
        I took note of the fact that what had been a timeline on
    the engagement of the end of the year became a move to an
    assessment of plan A at the G-20 in late September. And,
    presumably--I know the groundwork is being laid for a plan B
    now. It is my belief that, at the summit, the single longest
    time spent discussing any subject in the meetings between
    President Obama and Medvedev and Prime Minister Putin was the
    subject of Iran. And I believe other efforts are going on, as
    well.
        Plan C, for me, it isn't that my bill is unilateral
    sanctions by the legislation we have. There are already
    unilateral sanctions. These are extra territorial unilateral
    sanctions, which I am talking about some time in the early fall
    marking up in this committee and moving out.
        And there is an aspect of this that can have an impact if
    it is actually enforced by an administration, because it does
    force some critical companies to choose between doing business
    with the United States and people involved with the sale of
    refined petroleum products or investments in the energy sector
    or increasing Iranian refining capacity. It requires these
    companies to choose.
        Other countries hate those sanctions, but sometimes, in the
    context of their hatred, it makes them more open if they think
    we are seriously moving down that road toward considering
    taking the international sanctions issue more seriously. So it
    is in that context that I have proposed this bill and have the
    timeframe I had.
        And, with that, I am happy to recognize the gentleman from
    California, Mr. Rohrabacher, for 5 minutes.
        Mr. Rohrabacher. Thank you very much, Mr. Chairman. And,
    again, let me congratulate you on choosing an excellent group
    of witnesses today.
        Each and every one you has made a contribution to my
    understanding of what is going on. And I hope that people read
    your testimony who weren't here.
        Especially, of course, Dr. Rubin, I already congratulated
    you, because I think that some of the fundamentals that you
    talked about were very clear and very to the point. And they
    are truisms that need to be recognized if you are going to have
    any real influence in this world.
        Theorizing and philosophizing will get someone nowhere when
    dealing with a gangster or a tyrant. And soft talk--and if I
    had any criticism of this administration, it has been the soft
    talk. And soft talk does no good, even if you have a big stick.
    If you talk softly or if you apologize, it will be taken as a
    sign of weakness. And I believe that is what has happened with
    the current administration and those goons that control the
    Iranian people.
        Tough condemnation of human rights violations and
    aggressive vocal support for the cause of freedom can have an
    impact. Speaking too softly to tyrants certainly will have a
    negative impact, but speaking aggressively and condemning
    tyranny can actually have a positive impact. So weak remarks
    are likely, as I say, to be seen as weakness.
        Now, to Ronald Reagan, who was mentioned, he knew how to do
    it. Well, he used tough rhetoric, and I am very grateful that I
    had the opportunity to work with President Reagan for 7 years.
    I was one of his senior speechwriters. But let me note that it
    wasn't just the rhetoric. It was also that Ronald Reagan had
    acting programs that he personally had approved, covert
    operations, to weaken the Soviet Union.
        And so our choice isn't, as Mr. Burton might have been
    mistakenly interpreted as saying, we need to have military
    action or threaten military action. We don't need to do that.
    There are other actions that can take place, which leads me to
    the question for the panel.
        Number one, do you think that freezing the bank accounts of
    the mullahs who have robbed their people of hundreds of
    millions, if not billions, of dollars would have an impact,
    number one?
        Number two, should we have the covert support, which we
    have not been? And do you believe that, had we over these last
    10 years been providing covert support, which would have given
    money and other type of financial support behind those people
    within the Iranian society, the young people, the other
    nationalist elements there that oppose the mullah dictatorship,
    would that have made an impact, as it did with the Soviet Union
    when we supported solidarity and we supported various pro-
    freedom elements within the Soviet bloc?
        So those are my two questions about freezing the assets--
    and, for the record, I think that the United States should,
    right now, step forward, find out where that money is, and
    freeze the bank accounts of every one of those mullahs who run
    their country with an iron fist.
        And, number two, if we are going to succeed, we need to
    support, not just vocally, the cause of freedom in Iran, but we
    need to support those people who are struggling on the ground
    so they know they have outside support. Would that make a
    difference?
        Right on down the line, very quickly.
        Mr. Clawson. Interesting indications suggest that there
    have been significant amounts of money transferred by some of
    those mullahs to Europe in the last 2 months. And I would hope
    that we could help provide European governments with
    information about this.
        There is some considerable interest to Europe in freezing
    money along the lines you described for human rights reasons
    and also for banning their travel. Because a number of those
    people, especially their family members, go to Europe on a
    regular basis on shopping trips.
        Mr. Rohrabacher. And the second part of it, very quickly,
    because we only have a little bit of time, would covert
    support--for example, the union that was mentioned already--
    unions and other religious groups, other national groups and
    other student groups, would that have a chance at succeeding?
    And could it have already succeeded had we done so 10 years
    ago?
        Ms. Maloney. To the first question, let me just say that,
    obviously, there are no bank accounts of regime officials in
    this country. We would need cooperation from Europe, and
    particularly from the Gulf, from Dubai, where much of the
    regime's money is banked.
        And if we had a blanket frozen order, what we would likely
    do is pick up accounts associated with Hashemi Rafsanjani, who
    is, of course, now a de facto leader of the opposition. So it
    would have to be somewhat targeted in the way that we did that.
        In terms of covert support, I think that would be
    disastrous. It would be exactly the wrong lesson to take from
    what we have just seen on the streets. Iranians want an
    authentic opposition movement. They don't want our money; they
    don't want our involvement in what they see as an indigenous
    movement.
        Mr. Rohrabacher. And you know that--just for the record,
    the only time any revolution has ever worked against tyrants,
    including the American Revolution, they had outside support,
    especially the Orange Revolution.
        Ms. Maloney. Not in 1979.
        Mr. Rohrabacher. Well, in----
        Chairman Berman. The time of the gentlemen has expired.
        The gentlelady from Texas, Ms. Sheila Jackson Lee, is
    recognized for 7 minutes.
        Ms. Jackson Lee. Thank you very much, Mr. Chairman, for
    this hearing. And courtesies have been extended by the members,
    primarily the members of this panel, for giving us your
    insight.
        Many of us are reminded of the apartheid fight in South
    Africa, when those who loved South Africa dearly rose and asked
    for sanctions by the world. Bishop Tutu, whose love of his
    country can never be challenged, felt compelled to stand in the
    eyes of the world and ask that his nation be condemned.
        I believe it is important to stand in the eyes of the world
    in solidarity with what has to be one of the most provocative
    expressions of opposition in Iran for a very long time. I stand
    in solidarity. I believe individual voices of this country
    should be raised continuously. I make a plea to our
    nongovernmental organizations to take up this cause.
        Today, I want to salute entertainers who are now on a
    starvation strike, artists who typically are called, in many
    instances, ``soft,'' whose voices we may not know here in the
    United States, but are clearly raising their ire.
        So my questions go to this whole world attitude, and where
    is the outrage? Where are the voices? Where is the United
    Nations?
        It is difficult to promote sanctions when you think of what
    could happen to the most vulnerable and children. So I am going
    to start with those questions.
        One, where is the world outrage for what is occurring? And
    let me pose my questions to--if I can find my list--let me
    start with Dr. Milani, if I can, on that question.
        Mr. Milani. I absolutely share your wonder about where the
    rage is. Ahmadinejad, a Holocaust-denying anti-Semite, came to
    New York, and no more than 1,000 people went to protest his
    arrival. There should have been hundreds of thousands of people
    demonstrating his presence there. If they had done so, he would
    not come back for more and more.
        Every time he comes back here, he gets treated like a rock
    star. He gets asked the same repeated questions about whether
    he, in fact, has denied the Holocaust, whether he, in fact, has
    asked for the destruction of Israel, and not a single serious
    question about the fate of journalists in Iran, about prisoners
    in Iran, about the Baha'is of Iran, about other religious
    minorities is asked.
        Ms. Jackson Lee. My time is short, and I appreciate what
    you have given us.
        Professor Kittrie, would you answer the question of
    sanctions?
        I come from energy country, Houston--sanctions on my
    domestic producing or domestic-owned petroleum companies.
    Sanctions on the most vulnerable, babies needing milk--what
    kind of story will come out of a sanctions regime?
        Mr. Kittrie. Sure, thank you for your question.
        The ``Iran Refined Petroleum Sanctions Act,'' in fact,
    doesn't target U.S. companies. The only companies that supply
    gasoline to Iran currently are a handful of European companies
    and one Indian company. And it is those companies that would
    bear the brunt.
        And, in fact, U.S. companies have long been cut out of,
    have long been prohibited by sanctions from selling gasoline to
    Iran. And I would think they might be supportive of leveling
    the playing field and having those European companies play by
    the same rules.
        Ms. Jackson Lee. Let me ask Dr. Maloney, because I believe
    in free speech and equal time, on your position on the
    engagement and sanctions.
        Ms. Maloney. On the question of this particular act?
        Ms. Jackson Lee. World outrage, and I believe that you have
    expressed some question about sanctions.
        Ms. Maloney. On the question of world outrage, I actually
    think that there has been a lot of sympathy voiced around the
    world by, as you suggest, entertainers and celebrities who are
    conducting this hunger strike in New York, rock bands--U2 has
    swathed their concerts in green. There has been a lot of
    interest in Iran, probably more interest in Iran than countries
    like Burma, China, elsewhere, where we see----
        Ms. Jackson Lee. Can you answer the question about the
    sanctions, your position on that?
        Ms. Maloney. Well, I think you raise an interesting point.
    Thus far, we have not heard the voices of Iranian opposition
    leaders calling for greater sanctions, as we did here with
    South Africa. And I think that would be an important barometer
    to watch for.
        Ms. Jackson Lee. Dr. Rubin, what about her point? We have
    not heard from the activists in Iran.
        And what kind of leader would Mousavi have been? Would we
    have been more pleased with him?
        Mr. Rubin. The presidency in Iran is more about style than
    about substance on the issues of concern to U.S. Foreign
    policy: Nuclear proliferation and terrorism. The problem is
    with the Revolutionary Guard and with the Office of the Supreme
    Leader.
        With regard to sanctions and opposition, it is hard to--
    certainly, Hashemi Rafsanjani is not the opposition figure. He
    is widely disliked inside Iran.
        The issue is that, when it comes to what has been said
    before with regard to taint, we are darned if we do, we are
    darned if we don't, because whether we do act covertly or not,
    the regime media apparatus is going to accuse us of
    interference. So we might as well base our policy on what we
    believe to be correct and right.
        Ms. Jackson Lee. Dr. Sadjadpour, let me just ask you this
    pointed question: Do we have a breach in this Iranian
    Government that we can build on democracy? Do we have the
    potential of a regime change? Is this sustainable? What do we
    need to sustain it?
        I know your position on sanctions, but there has to be some
    evidence to you that we need a change.
        Mr. Sadjadpour. I wouldn't use the term ``regime change'';
    I would use the term ``regime transformation.''
        And, actually, on sanctions, I think that there are many
    members of the opposition and the population who are actually
    starting to come around. Their views toward sanctions have
    changed. They are not in a position to publicly articulate that
    right now.
        Ms. Jackson Lee. They see value in it.
        Mr. Sadjadpour. They are starting to see value in it.
        Ms. Jackson Lee. And do you not believe that this is a
    historic time in Iran, for the government to change? Our words
    may be different, but since I speak Americanese, ``government
    change,'' this is not a time for government change?
        Mr. Sadjadpour. Absolutely, I think this is a truly
    historic moment. And I think that we shouldn't underestimate
    the magnitude of what has transpired the last 6 weeks and, I
    think, what may continue to transpire.
        Ms. Jackson Lee. It is sustainable?
        Mr. Sadjadpour. I believe that it is going to be very
    difficult for the regime to go back to the status quo ante,
    because sacred red lines have been crossed.
        Ms. Jackson Lee. Thank you, Mr. Chairman. I yield back my
    time.
        Chairman Berman. The time for the gentlelady has expired.
        The gentleman from Arizona, Mr. Flake.
        Mr. Flake. I thank the chairman and thank the witnesses. I
    was able to read a lot of the testimony, but I wasn't able to
    hear much. So I apologize if I plow ground that has already
    been plowed.
        But the last vote on sanctions we had in this committee, I
    think it was 45 or so to one, me being the one. I am reluctant
    to use economic sanctions as an instrument, in this case. I
    have always felt that the difference between Iran and some of
    the other countries that we deal with is you don't have a
    population that is inherently anti-American. And I am loathe to
    make them so. And so, I have heard some of the comments. I know
    that is a concern that many of you have. And if some want to
    elaborate on that, I would appreciate it.
        And, also, first, I wanted to ask Dr. Maloney, if you will,
    with this new proposal on sanctions, it would affect some
    European countries, one Indian country you mentioned. I think
    we all recognize that, to the extent sanctions could be
    effective, we have to do them on a multilateral basis. And that
    involves our European allies, and we need to pull them into it.
        Would enacting these petroleum sanctions make it more or
    less likely that we could get cooperation with our European
    allies in a broader set of multilateral sanctions?
        Ms. Maloney. I think the Europeans are coming around to the
    issue of sanctions support in a much more significant way, but
    it is still episodic, it is still very spotty across Europe.
    The British, the French are probably not too far from at least
    being willing to consider a wholesale ban on investment and
    trade. The Germans, the Italians remain in a very different
    place, although the human rights issue now changes their
    calculations, to some extent.
        There had been a lot of European companies that have left
    Iran of their own volition, both because of the political risks
    but also because of some moral suasion from the Treasury
    Department. And I expect to see more of that.
        But, obviously, to the extent that we engage in the
    business of potentially sanctioning trade partners, whether it
    is in Europe or Chinese state oil companies that are now
    talking to the Iranians about investment in their refinery
    sector, then we are going to have some repercussions.
        And I think that is why, as Chairman Berman has suggested,
    the next round, the sort of plan B needs to focus on what we
    can do multilaterally, what we can do that has the broadest
    international buy-in. Because that is what is going to have the
    greatest effect on Iran's decision-makers.
        Mr. Flake. And that is my premise. I believe that if we
    want to be successful, we have to have that buy-in. And what I
    am asking, if Dr. Milani or somebody else wants to comment,
    would enacting this new sanctions regime, these tertiary
    sanctions, make it more or less likely that we can get that
    buy-in that we need?
        Mr. Milani. I would like to continue essentially what my
    friend, Mr. Sadjadpour, said. I think if you asked the Iranian
    democratic leaders inside Iran about the effectiveness of
    sanctions, 2 months ago, they would have almost universally
    told you that they have helped the regime, they haven't helped
    our cause.
        But now things have changed. Things have changed in two
    ways. First, when oil was at $120, the regime found a way of
    circumventing the embargo and, in fact, benefitted from it.
    Revolutionary Guard commanders became billionaires over these
    illicit trades; the sons of these clerics that created 10,000
    companies in the United Arab Emirates whose sole job was to get
    commodities into UAE and send them to Iran. UAE suddenly became
    Iran's biggest trading partner. But now with oil at $70, with
    them needing about maybe $40 billion at least to keep the
    subsidies going, they are not going to be able to circumvent.
        Second, the regime is now shaken to its core. And some of
    the leaders inside Iran, though they cannot yet publicly come
    out and say it, are suggesting that this sword must be held
    over their head for the regime to know that there is a limit of
    what it can do to the Iranian people and that the world is
    willing to stand with the Iranian people if the regime doesn't
    back down.
        I am hearing for the first time--in fact, just before I
    came here, I talked to someone, and that was precisely the
    position that they had. And this is someone who is a very
    important member of the opposition inside Iran.
        Chairman Berman. Professor Kittrie, you wanted to get into
    this, I think.
        Mr. Kittrie. Thanks, yes.
        With respect to our allies and the impact that this might
    have on them, we have seen, very interestingly, an example with
    Under Secretary Levey, who has been talking to banks all across
    Europe, and those banks have been getting out of the business
    of doing business with Iran. And there hasn't been a rally-
    around-the-flag effect in Iran, nor have our allies
    particularly complained aggressively.
        I think we will see the same thing if the Iran Refined
    Petroleum Sanctions Act is passed. In fact, there is just a
    handful of companies that supply gasoline to Iran. One of those
    that supplied, British Petroleum, already got out. When,
    frankly, Chairman Berman and Congressman Sherman and some
    others started making a fuss about this issue last fall,
    British Petroleum got out.
        Total, I know, I know is on the fence as to whether to get
    out or not. Reliance, the Indian company, got out for 2 months
    earlier this year and got back. These companies are on the
    verge of getting out of this business. They will get out, and I
    don't think their governments are going to make a big fuss
    about it.
        Mr. Flake. Dr. Rubin or Sadjadpour?
        Mr. Sadjadpour. Thanks for your thoughtful question,
    Congressman.
        I would say that in a couple of years of being based in
    Iran and traveling throughout the country, it was very, very
    rare that--people always complained about the economic malaise,
    but when you would ask them why, they would complain about
    corruption and mismanagement. It was very, very rare that
    people would cite U.S. sanctions as the root of their economic
    problems.
        I would support unequivocally sanctions or prohibitions on
    companies like Siemens Nokia, which have provided the Iranian
    regime repressive technologies. Unequivocally, I would support
    that.
        And, lastly, I keep going back to this issue of oil. And I
    recognize that, you know, sanctions are something that you in
    the Congress can do. But, again, just the statistic is quite
    startling, that a $1 drop in oil prices is about $900 million
    lost in annual revenue for Iran. And if we really want to hurt
    this regime, I think a precipitous decline in oil prices would
    be the best way to do it.
        Chairman Berman. The time of the gentleman has expired.
        The gentleman from Arkansas, Mr. Boozman.
        Mr. Boozman. Thank you, Mr. Chairman.
        I appreciate the testimony. I think it has really been very
    helpful to help us understand what is going on.
        I think we all agree that, certainly, there is unrest over
    the economy, freedoms, and the list goes on and on. I guess I
    don't see any evidence at all, though, that with the regime
    change, with the current regime change that might be coming on
    board, that that group will renounce nuclear weapons.
        Some of our allies have said that this is going to happen
    within the next 6 months, that they are right on the verge. So
    I believe in going forward vigorously with talks, sanctions, et
    cetera. But the reality is, none of that has worked in the last
    5 or 6 years, and we are facing this very looming deadline. If
    Iran goes nuclear, all of our work on nuclear proliferation for
    the last decades will be down the tubes.
        So with that being said, I would really like for you to
    comment. I support, if Israel feels like it, it needs to defend
    itself based on what Iran has said it is going to do with
    nuclear weapons once it acquires it. I support them 100 percent
    if they feel like they need to go forward and defend
    themselves.
        What I would like to know from you all is what you feel
    like Hamas and Hezbollah in Iran will do in retaliation. And
    then, again, how important it is that we as a Congress, we as
    an administration resupply and do what it takes to help Israel
    during those very crucial hours after that happens.
        We will start with you, Professor Kittrie.
        Mr. Kittrie. Sure. Thank you.
        You raise the option of an Israeli military strike on Iran.
    I mean, it is not a good option. Nor is a U.S. military strike
    on Iran a particularly good option. I certainly wouldn't
    recommend them today. Although, on the other hand, the only
    thing worse than a U.S. Military strike on Iran would be a
    nuclear-armed Iran.
        The challenge is that, if you go in and try and take out
    Iran's nuclear program, you really have to do the job right.
    There are a lot of sites that are well-hidden. There are sites
    that we may not know about. And for one squadron of Israeli
    planes to go and drop a few bombs, it worked in Osirak; it may
    well not work with respect to Iran.
        So if anybody is going to do a military strike, it would
    have to be the United States, because only the U.S. has the
    capacity, the manpower to do the job right.
        Mr. Rubin. Well, I just have three quick points.
        The United States should not be the practice of sacrificing
    allies. That is not realism; it is just stupid.
        Two, a nuclear Iran would feel itself overconfident. And
    one of the greatest threats we have to Middle East peace and
    security is overconfidence or states not understanding the
    others' red lines. After the 2006 Hezbollah-Israel war, the
    Secretary-General of Hezbollah, Nasrallah, said that if he had
    known how Israel would have reacted, he never would have
    launched the operation he did that started the war. The problem
    is, a nuclear Iran--Ahmadinejad and the IRGC and the supreme
    leader, surrounded by like-minded people, may be prone to
    overconfidence and miscalculation.
        The last point I want to make which has direct relevance to
    both the popular protests which we have seen and the issue of
    Iran's ideology is that a lot of people say that, should Iran
    develop nuclear weapons capability, we could live with a
    nuclear Iran because they are not suicidal. The problem is
    that, among certain portions of the people that would be in
    command and control, specifically within the supreme leader's
    circle and the IRGC, there may be people that are ideologically
    committed to the destruction of Israel.
        Now, should there be a popular uprising when Iran has that
    nuclear capability, they may feel they have nothing to lose,
    with the calculation that ``Look, we are done for anyway. And
    is the United States or Europe really going to retaliate
    against an already changed regime?'' Therefore, it is essential
    for the peace and stability in the region that Iran not be
    allowed to get this far in the first place.
        Thank you.
        Mr. Boozman. And with Iran having nuclear ability, then the
    Saudis and the whole region are going to feel threatened,
    aren't they, and also start the proliferation? We are already
    hearing, perhaps, deals with Pakistan and things like that,
    with the Saudis.
        Mr. Rubin. You are absolutely correct. It would be a
    cascade of instability, and the nuclear nonproliferation regime
    would be dead.
        Mr. Sadjadpour. Also, three quick points, Congressman.
        I would slightly disagree with Michael here, in the sense
    that I think that what we have seen from the last 6 weeks is
    that this Iranian regime is incredibly odious, but it is not
    suicidal. On the contrary, it ruthlessly wants to hold on to
    power.
        The second point is that the problem we have with Iran has
    far more to do with the character of the regime than its
    nuclear ambitions.
        And the third point is that, if we bomb Iran, I feel that
    we could do serious damage to this opposition movement and
    alter its trajectory and further entrench these odious
    hardliners in Tehran.
        Mr. Boozman. So do you feel like Iran is serious about
    doing what it says, if they have nuclear weapons, to Israel?
        Mr. Sadjadpour. What do they say they are going to do?
        Mr. Boozman. I think they have made it clear that they
    don't feel like Israel should exist. And Israel is probably a
    one- or two-bomb country.
        Mr. Sadjadpour. Well, they have never articulated a policy
    of military destroying Israel. They articulated a policy of a
    referendum in Israel, which is essentially----
        Mr. Boozman. So, for you, that is way too far of a stretch,
    if you felt----
        Mr. Sadjadpour. Again, I would just simply reiterate that
    the problem we have with this regime, in my opinion, is the
    character of it, not its nuclear ambitions. And if we bomb the
    regime, we are going to extend its shelf life indefinitely.
        Mr. Milani. I think, first of all, whether it is Israel or
    in conjunction with the United States, the United States will
    be blamed for it. No one in Iran or in the Middle East
    believes, whether right or wrong--there is, as you well know, a
    prevalence of conspiracy theories, where people will believe
    that the United States is complicit in it.
        I think it would be the gravest mistake Israel has made. I
    think it would be counterproductive to Israel's security. I
    think it would be extremely counterproductive for the U.S.
    Thousands of U.S. soldiers sit within a missile strike of
    Iranian soldiers and Revolutionary Guards.
        And I can tell you that, if they are attacked, they will
    respond. And there will be thousands of collateral damage. They
    know that this strike might come. They have fortified their
    bases. They have taken it and put it in some of the most
    sensitive places underground in the city of Esfahan. So you are
    going to have a lot of unfortunate collateral damage.
        Chairman Berman. The time of the gentleman has expired.
        The gentleman from Florida, Mr. Klein, is recognized for 7
    minutes.
        Mr. Klein. Thank you, Mr. Chairman.
        And thank you. I appreciate you all being part of this
    panel today.
        As has been stated by many of the colleagues up here and
    many of you as well, the choices of what the United States can
    or should do fall into a few different categories. I do support
    the notion of trying, recognizing that we may not succeed and
    we need to have our plans B and C, et cetera, in place. But,
    certainly, in terms of the discussions to stage and setting up,
    if necessary, for what would be the next stage would be
    significant or what I would call crippling sanctions, which I
    think would be appropriate.
        I am from Florida, and I just heard recently that the
    company Vitol, the European company which apparently supplies
    over half of the refined oil to Iran, or gasoline, is
    constructing a $100 million fuel facility in Port Canaveral,
    Florida.
        And, again, those are the kinds of transactions and
    investments that I think the United States needs to be
    concerned about. And if we are going to have a serious
    conversation of creating strong economic impact or the effect
    of an impact which will cause a change of behavior, not only
    throughout the United States, because we have limited capacity
    and involvement with them, but throughout Europe and Asia and
    other places.
        My question--maybe I will start with Professor Kittrie and
    Dr. Clawson--is, how responsive do you think companies like
    Vitol will be if we pass legislation in the United States which
    says that you make choices, you either do business with Iran
    and you don't do business in the United States? How effective
    is that? How will a company like Vitol or others react to that?
        Mr. Clawson. One problem we have had in the past is if
    other governments, such as European governments, think that our
    policies are utterly inappropriate, then they would encourage
    their companies to ignore our legislation and assure those
    companies that, in fact, they will provide political and
    economic cover for them to ignore what we are doing.
        But what we have seen recently, with the actions of the
    Treasury Department, especially Stuart Levey, is that, instead,
    the attitude of European governments has been to say to
    European banks, ``Well, the Americans may be a bit pushy here,
    but they do have a good point.'' And I think that that would be
    the attitude of a lot of European governments if we were to
    enact sanctions about refined petroleum products; is that,
    indeed, there are a number of European governments, some of the
    most important European governments, that are frustrated that
    smaller European states are blocking EU action on this issue.
    And a number of the big European governments would be quite
    delighted to go to their companies and say, ``You know, the
    Americans have a point here. You really ought to think about
    this one.''
        Mr. Klein. So your opinion is that the European governments
    may react favorably to this legislation. But, more
    specifically, these multinational businesses that are making
    their own decisions--some of which are impacted by governmental
    authority and some are not.
        And I guess the question with a company like Vitol--I am
    just using them as an example, though--is, if you have
    millions, hundreds of millions, possibly billions of
    opportunity to do business in the United States, these are
    behavior--they obviously have to weigh that against the rest of
    the world and what they are going to be doing.
        Mr. Clawson. Well, in a situation where your home
    government says to you, ``We are going to get the Americans off
    your back; we are going to really threaten the Americans if
    they try to go after you,'' then the company will say, ``Well,
    we can ignore what the Americans are doing because we will be
    protected.'' But in a situation where their home government
    says, ``You really ought to listen to what the Americans are
    saying,'' then the company will say, ``Uh-oh, we better change
    our policies.''
        And I think we are much more in that latter situation than
    we were in--the former situation is was prevailed with regard
    to the Iran-Libya Sanctions Act in the 1990s. And we are not in
    that situation at all now, not at all.
        Mr. Klein. Professor Kittrie?
        Mr. Kittrie. Yeah, I agree with the gist of what Dr.
    Clawson had to say. I mean, we have seen, in fact, that
    congressional efforts with respect to these gasoline suppliers
    to Iran have already begun to work. British Petroleum got out
    of the business of supplying gasoline to Iran. Reliance
    Industries, an Indian firm, got out of the business of
    supplying gasoline to Iran for 2 months earlier this year. And
    the press reports, the trade press reports, said it was due to
    the efforts of Congressman Berman and Congressman Sherman, due
    to their letters that they wrote to the Ex-Im Bank raising
    questions about loan guarantees.
        With respect to Vitol specifically, they are a privately
    held Swiss company. They are in it to make money. If you put
    them to a business choice where it is clear that they are going
    to lose more business in the United States than the profit they
    are making in Iran, they are going to choose the U.S. market.
        You mentioned Port Canaveral. Frankly, Los Angeles
    International Airport, LAX, buys some $600 million a year of
    jet fuel from Vitol. And if, you know, the L.A. City council
    that runs LAX puts Vitol to a choice, that by itself may be
    enough to get Vitol out of the business of supplying gasoline
    to Iran.
        Mr. Klein. Okay. And as a follow-up to the question,
    sanctioning suppliers of refined petroleum--obviously, refined
    petroleum is an important issue for Iran because of their
    capacity. Do you recommend this sanction?
        Let me quickly just go down the row, if we can. United
    States Congress, do you recommend that we lead on this sanction
    of limiting refined petroleum entering into Iran?
        Mr. Kittrie. Oh, yes, absolutely.
        Mr. Rubin. Yes, absolutely.
        Mr. Sadjadpour. I would say I am not there yet until the
    opposition has reached that point, but I think they are getting
    there.
        Mr. Milani. I approve it in precisely the manner that the
    chairman indicated, as plan C. After plan A and B fails, then
    the plan C is certainly called for. And I think, by then, many
    Iranian democrats will be calling for it, as well.
        Ms. Maloney. I think, unless you have figured out a way to
    deal with the Chinese--and that would be part of your plan B,
    but also needs to be factored in here--you are likely to spark
    a trade war with the Chinese as a result of this. And I am not
    sure that is what the U.S. economy needs. So I am not in favor
    of it.
        Mr. Clawson. Give the President the authority so he can use
    this as an important part of the way that he bargains with the
    Chinese and others for multilateral sanctions to much to the
    same end.
        Mr. Kittrie. Let me just point out, China provides no
    refined petroleum to Iran----
        Ms. Maloney. They are in talks to upgrade a number of
    Iranian refineries right now.
        Mr. Kittrie. They are in talks to upgrade them, but
    currently they provide none.
        Mr. Klein. Thank you, Mr. Chairman.
        Chairman Berman. All right, thank you.
        The gentleman from California, Mr. Royce, is recognized for
    7 minutes.
        Mr. Royce. Thank you, Mr. Chairman.
        You know, Ahmadinejad once made the comment that ``I pray
    to God that I will never know anything about economics.'' And
    based on the inflation rate at 20 percent and the official
    statistic now of 30 percent unemployment, it looks like his
    prayers have been answered.
        And the question I have is, there seems to be a growing
    consensus that petroleum--and I know it can be a lynchpin for
    this reason. I have seen a clip of an interview in Iran of cars
    backed up for 4 hours. And one of the fellows in line who is
    being interviewed says, ``You mean this regime has millions of
    dollars to send to Hezbollah, and we are standing here in this
    gas line for 4 hours without petrol?''
        It seems to me that this would be a lynchpin in this. But I
    am wondering what else could be a chokepoint, in terms of
    affecting that kind of an attitude, creating that kind of
    animus. We have examined other concepts for something along the
    lines of a South African-type, apartheid-type sanctions. What
    do you think would really do the trick?
        Dr. Clawson?
        Mr. Clawson. A ban on travel by the families of the key
    regime figures, many of whom go on regular shopping trips or
    other trips to Europe. That is something that the United States
    and Europe can act on together. These people are not interested
    in going to Moscow for shopping. They want to go to Harrods.
        There is precedent for what we and the European Union did
    together with regard to the former Yugoslavia, where we, by the
    end, acting outside of the United Nations, had banned the
    travel of 600 named individuals, targeting regime figures.
        Mr. Royce. I think that is a great concept.
        Go ahead, Doctor.
        Mr. Rubin. Thank you very much.
        Before, it was talked about perhaps one should sanction
    Nokia and the other companies which are contributing to Iran's
    ability to repress. You don't need any sanction there. If the
    President and Congressmen and Senators would publicly name and
    shame these companies, it would have great effect. Generally
    speaking, public exposure of corruption is a theme which
    resonates inside Iran.
        And when it comes to credibility, for example, of U.S.
    outreach, oftentimes the regime will say, ``Oh, what the United
    States is doing is just propaganda.'' But instead of the Open
    Source Center, for example, simply translating and distributing
    national press, if it focuses on the local press, if it reads
    back verbatim, word for word, stories of labor movement strikes
    and other instances of local corruption, amplifies local
    stories into international stories, the Iranian Government
    cannot say that that is simply external propaganda, because all
    you are doing is reading back its own press but on a national
    level.
        Mr. Royce. Let me make another observation. We have Iran
    spinning 5,000 centrifuges, and I guess soon it is going to be
    7,000. So that is reality, that is a nuclear weapons program.
    And Iran continues this relationship with North Korea.
        So let me ask a question. There has been a lot of well-
    documented evidence in terms of the proliferation between the
    two. India forced down that plane that was carrying,
    presumably, missile parts to Iran from North Korea. And we
    understand the North Korean motivation for this: It is cash.
        But let's look at it from the other perspective, because
    that is something I don't understand. What is Iran's motivation
    for its technology transfer and its engagement up in North
    Korea? Is that technology, or is there something else?
        Nobody has commented on this relationship, and I just
    wondered if there is any perception as to what the incentive is
    on the Iranian side for this.
        Mr. Milani. You know, if the regime makes the decision--and
    I don't think they have made it yet--to go from becoming a
    virtual nuclear state to an actual nuclear state, in other
    words if they decide to weaponize, then they also have to
    decide to find a way of delivering that weapon somewhere. They
    need missiles. And I think North Korea has been very much
    helping them in developing the kind of technology that allows
    them to put a warhead on and deliver it.
        Mr. Royce. So the North Korean experimentation with three-
    stage ICBMs and miniaturization on nuclear warheads is
    something that, apparently, Iran is attempting to--is there
    kind of a consensus that that is probably the rationale for
    this relationship?
        Mr. Clawson. The North Korean rationale seems to be money.
        Mr. Royce. Right. That I understand.
        Mr. Clawson. But the Iranian rationale, as Dr. Milani
    suggested, is that this is a powerful way for them to get
    access to technology they would like. I mean, they would much
    rather have that technology from other sources, and they turned
    to the North Koreans because they can't find anyplace else.
        Mr. Royce. And the specific technology that is in question
    here are three-stage ICBMs, the long-range ICBMs, and
    miniaturization to put it on that kind of an ICBM.
        We are cutting back on our strategic defense initiative, at
    this point. It would seem like an inopportune time to do so,
    given not only North Koreans doubling down on their efforts to
    develop this capability, but the presumption now that perhaps
    the transfer of that potential capability to Iran would give
    the Iranians long-range delivery capability.
        Mr. Rubin. Correct.
        Mr. Clawson. This regime has been very excited about what
    it describes as its space launch programs. And so we see every
    reason to believe that the regime is interested in developing
    very long-range missiles. And that would be technology which
    would be ideally suited for carrying a nuclear warhead that
    long distance.
        Mr. Royce. Yes, Doctor, go ahead.
        Mr. Rubin. Indeed, there are many reasons why we continue
    to doubt Iran's explanation that their nuclear program is
    intended for civilian use only. It is not just their trade with
    North Korea for nuclear technology. There are a number of other
    factors, as well.
        Mr. Royce. Thank you, Mr. Chairman.
        Chairman Berman. Thank you. The time of the gentleman has
    expired.
        The gentleman from California, Mr. Costa, is recognized for
    7 minutes.
        Mr. Costa. Thank you very much, Mr. Chairman.
        One of you mentioned earlier today, likened this regime to
    the Sopranos. If we reflect on that as an analysis, I mean,
    organized crime reached its heyday in the 1920s and the 1930s,
    but we spent another 50 years, some would argue still today,
    combating organized crime. I am not so sure we have the same
    luxury in terms of dealing with this regime over that kind of a
    time period.
        I want to move from sanctions a bit and talk a little bit
    about some of the other influences in the area. First, the
    other Arab states in the neighborhood. Are we, either formally
    or informally, using all the tools available?
        I mean, certainly, if, in fact, the result of it is a
    nuclear weapon in Iran, we know that there is going to be a
    reaction to that with the other Arab states. Are they as
    focused on this as we are?
        Yes, Mr. Rubin.
        Mr. Rubin. The other Arab states are certainly, especially
    in the Persian Gulf, are very cognizant of it. The problem is
    that if they do not believe that we are serious, if they do not
    see an effective effort for sanctions and other reasons, then
    they will come to the conclusion that they have no choice but
    to accommodate with the Islamic Republic of Iran. Therefore,
    our intentions should go beyond dialogue. And I should say that
    organized crime wasn't simply defeated by talking to them.
        The other issue which we need to focus on is the continued
    pursuit of the Gulf Security Dialogue, which--George Bush
    relaunched an initiative that had been initiated by the Clinton
    administration. And the basis of the Gulf Security Dialogue
    isn't just talk; it is to enable the Persian Gulf emirates on
    the other side of the Persian Gulf, the Arab states, to better
    defend themselves, to better implement containment.
        And this is what we had talked about before, when it comes
    to what is taught in our U.S. military academies, the DIME
    paradigm, where every component should have a diplomatic,
    informational, military, and economic component. And when I
    talked about ``military,'' I am not talking about bombing. I am
    talking about containment, and I am talking about deterrence.
    And that actually amplifies diplomacy, when they are all done
    in conjunction.
        Mr. Costa. And you don't think this administration is using
    all of those elements in this strategy?
        Mr. Rubin. No, the problem with this administration, in my
    opinion, is that we are prone a little bit too much toward
    sequencing rather than using these multiple aspects of strategy
    in which the sanctions bill will play a part to amplify the
    diplomacy and to amplify the package as a whole.
        Ms. Maloney. Let me just disagree with that, because I
    don't think that, at this stage, we are in a position where we
    can say we are holding back with the Gulf states.
        The Gulf Security Dialogue, launched by the Bush
    administration, was, for all intents and purposes, an arms
    sales package, massive arms sales package, which obviously has
    its role in reassuring those states. We didn't ask anything in
    response from them, in terms of their support either from the
    Iraqi Government, for example, or their support for tougher
    sanctions against Iran. It was a gift, and I believe it served
    a purpose.
        This administration has been very up front in going to the
    Gulf states, talking to them about Iran, about ensuring the
    continuing defense cooperation that is an integral part of our
    regional strategy.
        Mr. Costa. And, on that point, to the other gentleman's
    notion, do you think they believe that we are serious?
        Ms. Maloney. I think they do believe that we are serious.
    On the other hand, their long-time--it predates us, predates
    this regime in Iran--their strategy for dealing with local
    threats is balancing. And so they balance their relationship
    with the United States with a continuing relationship with the
    Iranians.
        They are not prepared to cut off their nose to spite their
    face. They are not prepared to break ties with Tehran. They are
    not, in the case of most of the smaller Gulf states, prepared
    to engage in serious economic pressure on the Iranians, because
    it would have direct and very problematic impact on their own
    economies.
        And so I think we have to recognize that we need to help
    reassure them, but if we are looking to do more to pressure
    this regime, we are going to also have to ask more from the
    Gulf states.
        Mr. Costa. And you think we are doing that?
        Ms. Maloney. I don't believe that we are there yet. I think
    that those conversations occur, but, obviously, you know, the
    focus of efforts so far of this administration has been on
    engagement. But, notably, obviously, Dennis Ross, who is the
    Secretary's envoy for this issue, his very first international
    trip was to the Gulf states.
        Mr. Costa. Yeah, quickly, Mr. Sadjadpour, because I want to
    move into another direction.
        Mr. Sadjadpour. I agree with Suzanne's point. And I would
    simply add that I fear that many of the Persian Gulf countries,
    the smaller ones, don't necessarily share the United States'
    interest, meaning I think the United States would love to see a
    more progressive, democratic Iran emerge. I think the----
        Mr. Costa. Which is not necessarily in their interest.
        Mr. Sadjadpour. Exactly. They don't necessarily want to see
    Iran emerge from its self-inflicted isolation.
        Mr. Costa. And they are probably not so sure about the
    consistency of our policy.
        Mr. Sadjadpour. Of the U.S. policy?
        Mr. Costa. Right.
        Mr. Sadjadpour. Well, I think that, in many ways, they want
    to see the status quo ante. They want to see a beleaguered,
    isolated Iran. They don't want to see Iran get bombed, and they
    don't want Iran to get the bomb.
        Mr. Costa. Well, let's talk about internally. And I know
    there have been comments about it earlier, with regards to the
    elections and the protests since the elections. And the
    comments of Rafsanjani and some of the others seem to be rather
    outspoken in this aftermath of the election.
        Where do you think this is all going, in terms of--I mean,
    obviously, there seems to be a challenge for power among the
    council. And how does this play out? I mean, I think it is
    fascinating from an outsider, but we are not in the inside. And
    this, obviously, isn't a transparent process.
        Mr. Milani. I think there are two tracks to watch. One is
    the Mousavi track, to watch what the popular people will do,
    led by Mousavi and Khatami. And Khatami's recent announcement
    that there should be a referendum is truly a remarkable
    statement coming from him.
        Mr. Costa. Is that getting reported throughout the country?
        Mr. Milani. It is very much reported. And he has already
    received literally a death threat by the Keyhan, which is a
    mouthpiece of Khamenei. Shari'atmadari is the editor, and he
    has already written an editorial saying that this idea is
    concocted in Washington. In fact, he attributed it to a
    commentator here, Michael Ledeen. He said this idea came from
    Michael Ledeen. And that Khatami will pay a very heavy price,
    Khamenei also threatened.
        But in Rafsanjani's speech, there was a very key sentence.
    He said, ``Everything I am saying I am saying after consulting
    with people in those two clerical bodies.'' Both of which he
    leads.
        Mr. Costa. In other words, he has more support.
        Mr. Milani. Absolutely.
        Mr. Costa. If I might, one more question, Mr. Chairman?
        Chairman Berman. Actually, the time has more than expired,
    so I think----
        Mr. Costa. Thank you.
        Chairman Berman. Yeah, the time of the gentleman has
    expired.
        The gentleman from Texas, Mr. Poe.
        Mr. Poe. Thank you, Mr. Chairman.
        Thank you for being here.
        I am a believer in self-determination. I commend the
    Iranian people for speaking out. I admire them for that.
        I think it should be clear that America's quarrel is not
    with the people of Iran; it is the way they are being treated
    by their own government and run roughshod, black-booted thugs
    killing Iranian citizens on the streets.
        My concern is how we approach that from an official point
    of view. I mean, the Iranian Government blames us for all the
    unrest anyway. After the crooked elections, we took--the
    administration took I think somewhat of a soft approach on what
    took place over there, that it was unfortunate or whatever.
    Would it help--this is an opinion question for you--would it
    help with the issue of self-determination if the United States
    was more vocal in supporting the people of Iran in determining
    their own destiny?
        Dr. Rubin, you are looking at me first, so go for it.
        Mr. Rubin. Generally speaking, if the United States uses
    its bully pulpit in a very careful manner and talks about how
    we value freedom, we value liberty, we value the ability of
    elections to matter, that is very important. We should not get
    into the nuts and bolts of specific opposition figures,
    especially since we have a habit of misidentifying who the
    opposition figures truly are. But there is no reason why we
    should be ashamed of moral clarity.
        Mr. Poe. All right. Anybody else want to weigh in on that?
        Yes. Dr. Clawson, go ahead.
        Mr. Clawson. Actually, the regime in Iran has been blaming
    the Europeans much more than blaming us, and particularly
    blaming the British.
        Mr. Poe. They never liked the British.
        Mr. Clawson. Very true. But it was also intriguing, the
    considerable contrast between the statements of the Chancellor
    of Germany and the President of France with the President of
    the United States; and it is an interesting situation when we
    see the French President being much more active, supporting a
    stand of principle than the United States President.
        Mr. Poe. So my question is, if we were more vocal, the
    bully pulpit, for example, idea, would that help that country
    have self-determination? That is my question.
        Mr. Clawson. Certainly the leaders like Khamenei believe
    that is the case.
        Mr. Poe. All right.
        Mr. Clawson. And I suspect he knows his country better than
    I do.
        Mr. Poe. All right.
        Mr. Sadjadpour. I like Michael's term about moral clarity.
    These themes which universally resonate of justice and freedom
    without anointing a particular party or individual I think are
    the right way to go. I think we should continue to condemn
    human rights abuses. There is even a U.S. citizen now
    languishing in Evin prison, Kian Tajbakhsh.
        And I would also add--this is in response to some of the
    questions earlier--that we should also try to provide the
    Iranians the means for self-determination, meaning now
    communications--they have great difficulty communicating.
    Internet is down. They are not receiving news from the outside
    satellite broadcasts. Anything we can do to help lift that
    communications embargo I think would be a great service to
    them.
        Mr. Poe. My next question is the protests since the
    election. Do you think that this is going to--is this a flash
    in the pan or is this going to be a continuous opposition to
    the government? I am not talking about the players, so to
    speak, and the different leaders. But is this something that is
    going to keep going or is this just something that happens in
    the summer? Dr. Rubin?
        Mr. Rubin. Iran is a tinderbox, and it has been a tinderbox
    for some time. The issue is whether the Iranian Government is
    better at putting out sparks than--and if the sparks will get
    out of control. Some people like Rafsanjani want to preserve
    the regime but want a controlled burn. Ultimately, this is why
    greater U.S. attention to the state and the factions within the
    Islamic Revolutionary Guard Corps and the security forces
    becomes so important.
        The problem with muddle-through reform is that if you are
    the Supreme Leader--and we don't want to engage in projection.
    He may really believe that sovereignty comes from God, not the
    people. Therefore, it doesn't matter what 90 percent of the
    people think. Then you are not going to be responsive to the
    will of the people. The question for U.S. policy should be, how
    can we create a template upon which the Iranian people can take
    action in their own hands?
        Mr. Poe. Dr. Milani?
        Mr. Milani. I don't think this is a flash in the pan. I
    don't think this is the 1999 student movement, where they can
    throw a few thugs and throw some students off the fourth floor
    and quiet it down. This is a much larger movement in terms of a
    social base; and it has enormous support amongst both stalwarts
    of the regime like Rafsanjani, Khatami, and the clergy.
        We haven't talked about the clergy. Many of the most
    influential Shiite clergy have said either nothing in support
    of Ahmadinejad or have taken Ahmadinejad and Khamenei to task.
    They are an enormous force that I think indicate--their silence
    indicates that the rift is much bigger and the problem is much
    more serious than a flash in the pan.
        Mr. Poe. The opposition, different factions--and without
    giving me how many you think there are, are the opposition to
    the government--are they generally united or are they
    independent entities all in opposition?
        Dr. Milani, what do you think?
        Mr. Milani. I think the opposition right now is clearly
    united inside Iran around the issue of the election, around the
    issue of the fairness of the election, and around the issue of
    the overreach of Mr. Khamenei and his Revolutionary Guard
    cohorts in making this coup. The demand of the opposition is to
    turn this coup back and create a more democratic, less despotic
    personal government. I think everybody is in agreement with
    that.
        Mr. Poe. I think the best hope for Iran, in my opinion, and
    the best for the Middle East and the United States, is a regime
    change, without going into dealing with the issue of nuclear
    weapons.
        And I will yield back the rest of the time that I don't
    have.
        Chairman Berman. Such as it is.
        The gentleman from Georgia, Mr. Scott, is recognized for 7
    minutes.
        Mr. Scott. Thank you, Mr. Chairman.
        First of all, Dr. Milani, I felt that you gave a very
    descriptive, very riveting analysis of describing the situation
    and the volatility and the precariousness that Iran is in as a
    result of this crisis from the election. But my concern is that
    we interpret this uprising, this revolt properly. And I think
    it would be good for us to examine why and examine it from the
    perspective of the people who are doing the uprising and not
    just automatically assume that they are rebelling against what
    has become the standard attitude toward Israel or the standard
    attitude toward developing nuclear weapons.
        So I would like to find out from each of you to what degree
    is this crisis and this uprising and this surge for liberty and
    democracy and the revolution against this--revulsion against
    the election returns has to do with their dissatisfaction of
    Iran going down a nuclear track and Iran's very professed
    disdain for Israel?
        So if we can say that the reason they are upset is not just
    because it was a bad election but because we, the people of
    Iran, are not interested in pursuing a nuclear weapon--and I
    don't know if that is the case or not--or we in Iran, the
    people in Iran, we are upset and our crisis is because we don't
    like this attitude against Israel.
        So I would like to get your comments, and each of you,
    because these are the issues that concern us. We don't want
    them to get a nuclear weapon. We don't like their attitude
    toward Israel. What degree of this uprising and disdain and
    crisis can we take from this to support our two interests?
        Mr. Clawson. Sir, I don't think anyone is on the street in
    Iran because of the nuclear program or because of Israel. But
    they are on the street because they would like to see Iran
    reintegrated back into the world and better connected with the
    world, and they don't want to see their country isolated from
    the world. That is the issue for these people. And that is true
    about cultural isolation; it is true about political isolation;
    it is true about the difficulty of travel; it is true about
    economic isolation. They don't want to be isolated from the
    rest of the world.
        And if in that context then being seen as supporting
    terrorists and being seen as having an unacceptable nuclear
    program is part of this isolation and much as many people in
    Iran who are out there on the streets who think it would be
    good for Iran to have nuclear weapons, if they have to give up
    much of the nuclear program in order to end their isolation
    from the world, I don't think it is going to be a tough call
    for them. I think they would be prepared to do that.
        Mr. Scott. Okay.
        Mr. Milani. I refer again to a poll that was done, a poll
    that was done by a group in Washington. It is as close to a
    scientific poll--it had a flaw. It was done outside from phone.
    It had that flaw. But they talked to about 1,000 people. Fifty-
    two percent of those asked said Iran should recognize the State
    of Israel. Ninety percent said Iran should make all the
    necessary--give all the necessary guarantees to the West that
    its nuclear program is not military in return for scientific
    cooperation.
        As Patrick said, Iranians want to join the world. There are
    24 million Internet users in Iran. There are 500,000 bloggers
    in Iran. This is not a country that can be ruled by a medieval
    ideology that says I speak for God. They want that change, and
    they want to come to the rest of the world and join the 21st
    century.
        Chairman Berman. Dr. Maloney wants to respond.
        Ms. Maloney. Let me jump in and just add that I am from
    Boston, so I live by the maxim that all politics are local. To
    what I can interpret--obviously, none of us were in Iran for
    the protests, so we are all looking through the glass darkly--
    most Iranians were provoked to take action that they haven't
    taken in the past because of the simple outrage of the just
    blatant rigging of the election. And this speaks to how
    important the electoral process is for Iranians, how important
    the tradition, this 100-year-old tradition of constitutionalism
    is in this country and how even elections that were never fully
    free and fair provided a voice for Iranians that they valued.
    And when that was taken away from them, they were prepared to
    go to the streets in a way they never have before.
        Mr. Scott. Okay. Yes.
        Mr. Rubin. I would certainly agree that all politics are
    local. The issues here are both the Iranian people and the
    United States Government face a common adversary in the Iranian
    state security apparatus, albeit for different reasons and
    different interests.
        That said, we have seen protests over the years. The
    teachers union protesting in Tehran under the banner ``forget
    about Palestine and think about us.'' In 2006, there were
    protests when the Tehran government wanted to send money to
    Lebanon after the 2006 war. This is one of the reasons why I do
    think it is essential that the United States doesn't miss
    another Lech Walesa moment and we do support the growing and
    nascent independent trade union movement inside the Islamic
    Republic of Iran in order to force the Iranian regime to become
    more accountable to its people. It is in both our interests and
    theirs.
        Mr. Scott. And my final remark is that I hear this, but, on
    the other hand, you are saying for the United States not to get
    involved. I think that was the consensus before we left to go
    to vote. It was stay away. I mean, don't interfere at all.
        Mr. Rubin. That is not--so there is no consensus.
        Mr. Scott. Oh, you were the only one then.
        Mr. Rubin. I don't know.
        Mr. Scott. Wasn't that the consensus, that our best deal
    here is to allow this thing to work out?
        Chairman Berman. There was a majority view of let the
    Iranian people own this, not us. That may have been a consensus
    view. But the notion of detachment totally may not have been a
    consensus.
        Mr. Rubin. Correct.
        Mr. Clawson. I think we probably all support Michael's call
    for an endorsement of moral clarity and principles. We would
    all say that we should be actively supporting our principles,
    not just things we see in the G-8 statement and so on.
        Chairman Berman. I think the time of the gentleman has
    expired.
        The gentleman from New Jersey.
        Mr. Smith. Thank you, Mr. Chairman.
        Chairman Berman. Mr. Smith.
        Mr. Smith. Thank you for assembling an excellent panel and
    for an outstanding hearing, which has brought a lot of clarity
    to this debate. So I thank each of our witnesses for your
    testimony.
        A few years ago, I read a very disturbing and a very
    insightful book by Edwin Black called, ``IBM and the
    Holocaust.'' In his heavily footnoted book, the author points
    out that, beginning in the early 1930s, Nazi Germany was
    significantly aided and abetted in its plan of conquest and
    genocide by IBM and its subsidiaries. IBM helped Hitler to
    create the Hollerith punch card technologies to identify Jews
    so they could be targeted for asset confiscation, deportation,
    ghettoization, slave labor, and finally extermination.
        And the question was often asked, where did Hitler get all
    the names? Well, IBM provided that and helped the Nazis develop
    that capability.
        It is well-known today that certain governments are using
    modern technology, including technology from the United States,
    to violate fundamental human rights. We have had several
    hearings in this room on the shameless collaboration of certain
    Internet giants, from Google to Yahoo and others, in aiding and
    abetting the Chinese dictatorship. As a matter of fact, I have
    introduced legislation, the Global Online Freedom Act, which is
    designed in part to compel at least transparency as to what
    they are doing; and hopefully we will mark that up soon or some
    day.
        On June 22nd, the Wall Street Journal reported that
    Siemens--and a couple of our distinguished witnesses have
    already made mention of that--and Nokia during the latter half
    of 2008 provided the Iranian regime with the capability not
    only to block communication but also to monitor it and to
    gather information about individuals and to alter that
    information in order to spread disinformation. This
    sophisticated system, which the Wall Street Journal
    characterized as the world's most sophisticated system for
    controlling and censoring the Internet, was used, as we all
    know, to suppress the uprising after the fraudulent elections.
        On the same day, the Wall Street Journal reported that
    Siemens, again enabling the Iranian Government, had reported
    that the company expected to land some $21 billion worth of
    stimulus contracts globally, of which some $8 billion would
    come right from the United States. And, as we know, several
    California politicians and Iranian human rights advocates are
    trying to pressure that Siemens not be awarded hundreds of
    millions of dollars in sales at the L.A. Metropolitan
    Transportation Authority, which I think sends a very clear
    message; and I hope they succeed.
        But I would deeply appreciate--since there is so much
    stimulus money in this country and abroad in the pipeline, that
    money is almost assuredly going to be spent--what your views
    would be on limiting those dollars from going--as we can;
    hopefully, other countries will do the same, which would be my
    view--to companies like Siemens.
        Because the complicity with the Iranian crackdown obviously
    hasn't stopped. You know, the communications center continues
    and e-mails are being interrupted every day. Information is
    being gleaned from it and used in a repressive way by the
    regime.
        I would appreciate all of your thoughts on that. Should we
    limit our stimulus money or other contracts as well to
    companies like Siemens?
        Mr. Milani. First of all, a point of clarification. I wrote
    a letter to the office--the MTA office objecting to it and
    threatened that I would write a letter to the editor in the
    L.A. Times. I got a letter back saying that they are not about
    to give Siemens anything, that the deal is something else, and
    it is with a different company.
        But I 100 percent agree. I think it would send an
    incredible message to the Iranian people if you could sanction
    a company like Siemens. If people in Iran learn that companies
    that are complicit in this regime's crimes get punished, that
    would be the most invigorating message that that democratic
    movement can hear.
        Now whether it is possible to do it or not, you folks know
    that much better than I do.
        Mr. Sadjadpour. I would just simply second Abbas' comments
    and say I would also unequivocally support a prohibition of
    repressive transfers of technology to regimes like Iran; and I
    think it would send a wonderful signal if Siemens, Nokia--
    McAfee is another company--would be censured and punished for
    this.
        Ms. Maloney. Let me just at least suggest an additional or
    even alternative route, which is that, you know--and I am not a
    tech person, but I think one of the difficulties with dealing
    with technology is it is constantly evolving. And whatever we
    preclude the Iranians from getting today, they will be able to
    develop or get their hands on. And I would suggest that the
    bulk of our efforts in this regard should be focused on finding
    alternative ways for Iranians to communicate and providing that
    to them to the extent that we can.
        I know that there are a lot of people with Internet
    expertise and particularly in the Iranian American community in
    California who have already begun talking about this, and there
    were likely efforts under way even before June 12th. But, you
    know, providing mechanisms for Iranians to communicate with one
    another that evade whatever technology their government is able
    to get its hands on--because, you know, we may block Siemens,
    but we may not be able to block the Chinese and Russians, who
    can provide similar technology.
        Mr. Kittrie. I agree wholeheartedly with the gist of what
    you are saying.
        I also happen to think that we should be looking to help
    the Iranians find other ways of communicating. But the fact of
    the matter is that there are certain technologies that are
    cutting edge. There was a study recently, two-thirds of Iranian
    industry depends heavily on German machinery. If Germany
    stopped exporting, stopped servicing that machinery, the
    Iranians wouldn't be able to turn to--you can't just put a
    Russian part in a German machine.
        I think it is a great idea that we put companies to a
    choice between the United States market and the Iranian market,
    and then we consider doing that as well with the stimulus
    funds. I think that would be a very powerful tool.
        Mr. Rubin. I also agree with the gist, in addition to which
    we don't need to enact any legislation for the White House to
    become much more active in naming and shaming these companies.
        The other point I would make--and I concur with Dr. Maloney
    with regard to providing independent media. I would note that
    while in the previous administration the Iran Democracy Fund
    was quite controversial, the plurality of money in that went to
    Radio Free Europe and Voice of America's television and radio;
    and it is important that that not be withdrawn.
        Chairman Berman. I thought it went to polling.
        Mr. Rubin. The Iran Democracy Funds.
        Chairman Berman. Yeah.
        Mr. Rubin. Oh.
        Chairman Berman. The time of the gentleman has expired, and
    the gentleman from----
        Well, first, I want to say people here are grandfathered
    in. Anyone else who straggles in now, not going to be
    recognized. At some point, we have to show some mercy to the
    panel and to the chairman.
        Mr. Ellison. In other words, Ellison, Pence, Sherman,
    Berman, and Costa for 1 minute each. Mr. Ellison.
        Mr. Ellison. Thank you, Mr. Chairman; and thank you to the
    panel.
        Given that President Obama's projection in terms of when
    negotiation or engagement will have run its course as being
    September was before the new political situation we see with
    the election, do any of you think that we might delay that
    deadline and sort of take that deadline off the table and sort
    of begin counting, if ever we want to do that counting, after
    the political environment has settled down? Mr. Rubin?
        Mr. Rubin. Very quickly, the issue isn't just the deadline.
    The issue is that neither the Obama administration nor the
    Clinton State Department has not indicated the metrics by which
    they are going to judge that engagement.
        Mr. Ellison. Yeah, Mr. Rubin, that is a good point. But I
    only got 7 minutes. So is there anybody who wants to answer the
    question I asked?
        Mr. Clawson. The problem we face is that the nuclear
    program is advancing; and if we let this issue slide until the
    dust settles, we have got a real problem, especially with our
    Israeli friends, who are already very nervous.
        Mr. Ellison. I will take that as a no.
        Mr. Clawson. I am saying we are stuck between a rock and a
    hard place. Because it is going to be very--I would agree with
    my colleagues that engagement now is tough to do and that there
    is much reason to wait for the dust to settle. However,
    hopefully, that is not nuclear dust. And the problem we face
    is----
        Mr. Ellison. I think we all understand that. I get that.
    But I just want to----
        Does anybody think that, given that this timeline was set
    forth before this new situation, should we consider this
    September deadline as sort of a--should we be more flexible
    with that, understanding some of the points that have been made
    already? Mr. Milani? Dr. Milani, excuse me.
        Mr. Milani. I agree with you. I think the September
    deadline was an arbitrary deadline, and I think it is going to
    be impossible to imagine that from now until September anything
    substantive can happen between Iran and the United States,
    particularly because I don't think we still know who we will be
    engaging with in Iran. I think it is unwise to engage with Iran
    before we know who it is that is in power.
        Mr. Ellison. Dr. Sadjadpour?
        Mr. Sadjadpour. I would agree with what Abbas just said.
    And I will say that probably a better approach would be to--
    instead of rushing into engagement so we can meet the September
    deadline for failed negotiations in order to then pursue
    crippling sanctions which will foment unrest and create
    fissures among the regime, that already exist right now, the
    agitated population and the fissures. And let's let this
    process play out. Let's wait until the dust settles before
    attempting engagement.
        Mr. Ellison. My concern about rushing into negotiation now
    would be that they would inevitably fail, and then there is a
    real cost to failed negotiations. Because, in my subjective
    opinion, there are people who want war; and they would get what
    they want without ever letting negotiation really have an
    opportunity to succeed.
        I just disclosed my own bias.
        Let me ask this question. Has the 2003 NIE comment about
    weaponization been altered since--has that been revisited and
    reviewed and therefore changed--and thereafter changed since
    they made that pronouncement that the weaponization program
    ended in 2003? Have they revised and changed their perspective?
        Mr. Clawson. You would know better than we what the
    intelligence community may have done.
        Mr. Ellison. No, I am not on that committee, so I don't----
        Mr. Clawson. The intelligence community may have done.
        May I point out they said in the NIE that they had a high
    confidence that Iran had suspended its program in 2003 but
    moderate confidence as to whether or not the suspension was
    continuing.
        Mr. Ellison. Thank you very much.
        In terms of the weaponization in 2003, has that been
    revised and changed? Because, of course, there is this thing
    that some have already alluded to, which is this ticking clock.
    And I guess if they haven't restarted or if we don't have
    evidence that they have restarted, I mean, do we have--I mean,
    you know----
        Mr. Clawson. Sir, I don't know anyone in the technical
    community who believes----
        Mr. Ellison. Thank you very much.
        Mr. Rubin. You might want to ask the IAEA, which----
        Mr. Ellison. Let's talk about the IAEA for a moment. The
    IAEA has recently indicated that their level of cooperation is
    not what is expected, but they have not--unless you guys can
    correct me--said that they have restarted a weaponization
    program.
        Mr. Clawson. They haven't looked for one.
        Mr. Ellison. Ms. Maloney?
        Mr. Clawson. They don't look for one. Since they don't look
    for one, they----
        Mr. Ellison. I would like to hear Ms. Maloney's opinion on
    this issue.
        Ms. Maloney. I think you get at the fundamental ambiguity
    that is the problem that we are all trying to deal with with
    the Iranian nuclear program, which is we don't know what we
    don't know, and the IAEA doesn't know what it doesn't know.
        Mr. Ellison. Right.
        Ms. Maloney. And there are many skeptics about the state of
    the Iranian weaponization activities, but at least the
    intelligence community assessment of 2007 still stands that
    this was stopped in 2003. The difficulty, of course, is that
    without that level of cooperation, without any sort of
    confidence----
        Mr. Ellison. I got it----
        Ms. Maloney [continuing]. And access to those facilities--
    --
        Mr. Ellison. I am at 1:26. I am sorry. And I want everyone
    know my sharpness is not designed to comment on your view. I
    respect all of your views and thank you for them. But I have to
    move on, so I can get my questions answered.
        Okay, we have had about 15 years of Iranian sanctions and
    about 30 years of limited--in deference to Dr. Rubin's point--
    limited engagement. It hasn't been total isolation. Dr. Rubin
    is right about that. But I would say limited engagement.
        My question is, if we were to pass these crippling
    sanctions that have been talked about, could we impact the
    Iranian economy unilaterally, or does--have we sanctioned
    ourselves out of economic sanctions? Do we have any more cards
    to play against the Iranian economy or have they built a world
    around themselves such that they really don't need us very
    much?
        I would like to know Mr. Sadjadpour's opinion on this.
        Mr. Sadjadpour. I think what will concentrate minds in
    Tehran is not when they wake up in the morning and they see
    there is an amplification of existing U.S. sanctions but when
    they see the Chinese and the Russians and Indians are not
    returning their phone calls. So certainly if it is pursued in a
    multilateral fashion I think it would impress them much more.
        Mr. Ellison. Dr. Milani, can we impact the Iranian economy
    unilaterally, or don't we depend upon the cooperation of the
    world community?
        Mr. Milani. I don't think the United States can
    unilaterally impact the Iranian economy. They don't buy much of
    its oil, they don't sell much to it, and unless there is----
        Mr. Ellison. Dr. Milani, I have to ask you a question real
    quick and forgive me for this. Can the United States gather the
    world community around--can I finish?
        Chairman Berman. No. You got a lot of questions in there,
    but----
        Mr. Ellison. I was in a rush, and I appreciate everybody's
    indulgence.
        Chairman Berman. It is past the time.
        And the gentleman from Indiana, Mr. Pence, is recognized
    for 7 minutes.
        Mr. Pence. Thank you, Chairman. I want to thank you and the
    ranking member for calling this very timely hearing.
        I want to thank this distinguished panel for your testimony
    today. I look forward to reviewing the balance of this hearing.
        As the chairman knows, this is an area of profound interest
    to me; and I am grateful for the leadership and the intellect
    represented on the panel.
        As I am sure this panel knows, quite recently Chairman
    Berman and I authored a resolution for the Congress that
    expressed the support of the people of the United States of
    America for Iranian citizens who embrace freedom, human rights,
    civil liberties, and the rule of law. It condemned the ongoing
    violence against demonstrators by the Government of Iran and by
    pro-government militias, as well as the ongoing government
    suppression of independent communication.
        I want to take this public opportunity to thank Chairman
    Berman for the bipartisan and, if I may say, statesmanlike
    approach that you took to moving that legislation in an
    expeditious and substantive manner.
        To this panel, I would say, as news comes to us of
    challenges from former leaders in Iran, reformers, to the hard
    line taken by Iran's Supreme leader, the question obviously
    before Congress and before the American people is the subject
    of this hearing. That is, what role will the United States play
    in a relationship with Iran and how might we best, I would add,
    expand the horizon of freedom in that nation by our conduct?
        Now, I believe the American cause is freedom, and in that
    cause we must never be silent. Those of us who cherish that
    tradition of bold, pronounced rhetorical leadership on behalf
    of freedom in the world have been troubled, frankly, by this
    administration's first 6 months on the world stage. The
    President has traveled the globe, often apologizing for
    America's past. It seems to me that he has passed by a number
    of opportunities to advance the cause of freedom in the global
    debate. And this administration, I believe, has met each
    international crisis, whether it be in Honduras--the country of
    Honduras or Iran with an unpredictable foreign policy.
        In the streets of Iran, hundreds of thousands of Iranian
    dissidents rallied to have their votes properly counted and
    their voices heard. Sadly, the Iranian Government responded
    with a violent crackdown of the dissidents. The
    administration's first response was not to,
    quote, deg. ``meddle in the internal affairs of Iran.''
        While the administration waited, Congress acted and spoke
    forcefully into the world debate, as did the EU, as did other
    countries. And while the President found his voice after
    Congress acted, the mixed message on our commitment to the
    freedom the people of Iran were clamoring for on their streets
    was regrettable. The President often says, ``The arc of history
    bends toward justice.'' I would argue the arc of history does
    bend toward justice, but it also teaches us that weakness
    emboldens evil, and rogue dictators grow stronger when
    appeased.
        Recently, Secretary of State Clinton, I believe speaking at
    the Council on Foreign Relations, reaffirmed the commitment of
    the United States of America to a policy of engagement; and I
    know it has been much of the discussion this afternoon. And I
    guess my question--I would direct it to Dr. Rubin, if I may--is
    the Secretary of State, I believe--although I don't have a copy
    of her speech in front of me--she referred to a commitment to
    engagement with the leaders of Iran. She said Iran has the
    opportunity to be, quote, deg. ``a constructive actor
    in the region.''
        And I would just--I would ask you, Dr. Rubin, given your
    written testimony that I had a chance to review and your
    comment that the administration is going with sequenced policy,
    is it proper for the United States of America to denote who are
    the leaders of Iran in an engagement if the people of Iran by
    the millions have not agreed on who are the legitimate leaders
    of Iran?
        And does it serve the interests of freedom, first for the
    Iranian people, and freedom in the world stage, for us to
    pursue engagement following a clearly discredited and
    fraudulent election, followed by violence, and one that I
    believe evidence in the news media in the last 3 days indicates
    continues to foment unrest within that country?
        Mr. Rubin. I would just respond with two points.
        First of all, it is a fallacy to believe that engagement is
    a strategy that can be implemented without a cost. And with
    regard to who the leaders of the Iranian people are, I do think
    that it is important that we not snatch defeat from the jaws of
    victory and make the same mistake three times.
        Mr. Pence. In which respect?
        Mr. Rubin. With regard to siding with a government and
    against reform when the Iranian people had already made up
    their minds that that government no longer had popular
    legitimacy.
        Mr. Pence. I am going to startle the chair and yield back
    the balance of my time.
        But I had that one question. I am grateful to the panel,
    and I do appreciate the voices of all the intellectuals on this
    panel. This is an extremely important question. The chairman
    and the ranking member I know are grateful for your time, and
    we will continue to avail ourselves of your thinking on this
    topic.
        Chairman Berman. Thank you very much. The time of the
    gentleman has been yielded back; and the gentleman from
    California, Mr. Sherman, is recognized for 7 minutes.
        Mr. Sherman. Thank you, Mr. Chairman.
        We have engaged with Iran. We did so through our European
    friends. Throughout that process, for virtually every day, the
    centrifuges turned. If the Iranian powers that be were serious
    about negotiations, they would agree not to be going in the
    wrong direction while they were negotiating. They would freeze
    the centrifuges.
        It will take years for sanctions to affect the Iranian
    economy, perhaps a shorter time to have some political effect
    inside Iran.
        The gentleman from Minnesota talks--focuses on the NIE and
    weaponization. We had hearings in our subcommittee on
    nonproliferation, and a number of things emerged.
        First, weaponization is very, very hard to detect. It can
    take place anywhere. Whereas the creation of the fissile
    materials is a major industrial process. So we don't know
    whether they have resumed weaponization or not. What we do know
    is weaponization is the easy part--not completely easy, but the
    easy part--and they could suspend weaponization until next year
    and still be very much on target to have a nuclear device by
    the end of 2012.
        What they have to do to have a weapon by the end of 2012 is
    keep producing the fissile material. For that, they need the
    centrifuges; and the centrifuges are turning now. That NIE
    report buried in footnote number one the important aspect of
    the report and was perhaps deliberately designed to be
    misinterpreted.
        It is true that all serious sanctions have got to affect
    the behavior of European and other foreign businesses. That is
    why all our sanctions bills are designed to affect the behavior
    of foreign companies.
        Of particular note--and the chairman will agree--that those
    of us from Los Angeles also believe that all politics is local,
    and we have two very local things happening directly relevant
    to this hearing. I believe it is Thursday the MTA will vote
    whether to go with the contract I believe they have already
    approved but are reviewing again with an Italian firm, AB, or
    instead reject that contract and in effect give it to Siemens.
        I hadn't thought of the MTA as a major foreign policy
    instrumentality of the United States, but I for one--and
    perhaps the chair will join me in this--will call our friends
    on the MTA and let them know the role that Siemens is playing
    in Iran.
        The second is Vitol, a major supplier of refined petroleum
    to Iran, just acquired a company that has--I believe it is a
    month-to-month contract to provide jet fuel at LAX. So we could
    just in L.A. County have a dramatic effect on two of Iran's
    leading business partners. And I think it is particularly
    important that we do so. Because the front page of the
    Washington Times, the number one story was about Siemens, Iran,
    and the Los Angeles transportation system.
        I don't believe in punishing European companies just for
    the joy of doing so. The purpose is to affect their behavior,
    and the best way to affect their behavior is in something that
    is widely publicized. Also, I think at least one of the
    witnesses says that is the kind of message that people in Iran
    would want to see.
        I want to bring to the attention of everyone here H.R.
    3284, which Mr. Royce, Mr. Klein, and I introduced based on a
    theft of intellectual property from Senator Schumer and that
    prohibits Federal contracts with firms that provide monitoring
    or blocking Internet equipment to Iran.
        And that brings us to our friends Nokia and Siemens, and my
    question for the panel is that the Nokia Systems network Web
    site says that they sold Iran a product marketed as
    intelligence solutions monitoring center. They disclaim having
    provided more advanced technology. And perhaps one or two
    members of the panel would want to comment.
        Do you believe Nokia Systems when they say they didn't
    provide the deep packet inspection add-on, and do you think we
    should give Nokia Siemens a pass if all they sold was an
    intelligence solutions monitoring center?
        Do I see someone who wishes to respond?
        Mr. Rubin. Dr. Rubin.
        Mr. Rubin. Sir, that would be like saying, if you were
    Nokia, that don't worry, we only shot the victim in the
    abdomen; we didn't shoot them in the chest. The net effect of
    it is the same, and it is quite unfortunate and shameful on
    Nokia's part.
        Mr. Sherman. Nokia Siemens part.
        Yes, Mr. Sadjadpour.
        Mr. Sadjadpour. I would just say I am not a technical
    expert myself, but I have spoken to several technology experts
    who disagree with Nokia Siemens' assertion that they simply
    provided this benign technology to the regime.
        Mr. Sherman. They have been remarkably non-forthcoming with
    the press and others. They flatly say, well, we did only in the
    abdomen, but they have been unwilling to provide information
    about what they did to the victim's chest.
        I would like to shift here. I don't know if anybody has the
    answer to this. What are the foreign cash reserves of the
    Iranian regime?
        Mr. Clawson. About $80 billion.
        Mr. Sherman. $80 billion.
        Mr. Clawson. It is not clear how much of that is actually
    usable. There is some reason to think that, in fact, the usable
    reserves are more like $50 billion. And to what extent is
    Iran's----
        Mr. Milani. Could I add?
        Mr. Sherman. Yes, Doctor.
        Mr. Milani. I don't think we have any clear indication that
    that is in fact the figure.
        Mr. Sherman. You think corrupt officials may have kind of
    spent that without notifying anybody?
        Mr. Milani. Ahmadinejad has dipped into it several times
    and has dipped into it in spite of the law. And when members of
    the Parliament tried to look into it----
        Mr. Sherman. Let me just interrupt with one thing. To what
    extent is Iran's credit rating enhanced by the new IMF facility
    that provides roughly $2 billion in special drawing rights but
    also gives the IMF the new capacity to bail out the Iranian
    economy should the IMF choose to do so?
        Mr. Clawson. There is very little chance the IMF would
    choose to do so, because Iran's policies are exactly the kind
    the IMF has warned against on many different occasions.
        Mr. Sherman. So they would have to change their economic
    policies in order to get that. Of course, they probably would
    rather change their economic policies than their political and
    nuclear policies.
        I yield back.
        Chairman Berman. All right. Everyone has had a chance.
        First, I want to ask unanimous consent to include a letter
    from the Iranian American Bar Association in the record of this
    hearing.
        [The information referred to follows:]Berman
    FTR deg.

        Chairman Berman. Secondly, I am going to recognize myself
    for two short questions; and if somebody else hung around, they
    can get two short questions, too.
        Question number one. In fact, I am just going to make it
    one short question. An analysis firm called STRATFOR produced a
    paper sometime soon after the Iranian election which appeared
    to have a sophisticated mathematical analysis, which for me
    means they had a bunch of numbers in different paragraphs, and
    therefore I assumed it was sophisticated. The thrust of it was
    that all this stuff about election-rigging and the breadth of
    the opposition was massively overstated. That if you looked at
    the different logical population centers, Ahmadinejad would
    have won a resounding victory with a fair count. That
    essentially the opposition to him is isolated to some college
    students, some feminists, a few discontented mullahs. That the
    notion that there is some groundswell in Iran against the
    supreme leader and Ahmadinejad is hyperbole, exaggeration,
    almost mythology.
        Now, in all fairness, that was done at least a month ago.
    But it is contrary to what a number of you particularly focused
    on internal Iran political developments have been saying. So I
    would like your reaction. I don't know if you saw that paper.
        Mr. Milani. I have read the paper, and I think it is deeply
    misinformed. It doesn't take into account many of the data that
    we have acquired since then, many of the evidence about how
    they rigged the election, about 15 million ballots that were
    printed without authorization and without numbers and many
    other things that basically show us that the government did in
    fact steal the election. Three million people, according to the
    Mayor of Tehran, came out in Tehran out of a population of 12
    million. That is a quarter of the population.
        Chairman Berman. Came out not for the election.
        Mr. Milani. To oppose the election. They came out to oppose
    the election.
        Chairman Berman. Out in the streets.
        Mr. Milani. A quarter of the population came out for 5
    days. That would be like 80 million people demonstrating in
    America for 5 days. When you have that level of support, to
    then claim that there are only feminist pockets that support
    this Moussavi is absolutely I think ridiculous.
        If the regime had the ballots, they would have produced it.
    They could have solved the problem very easily. The only person
    that has been allowed to see a ballot is Mr. Rezai's
    representative. Mr. Rezai said they opened one ballot for us.
    Seventy percent of the ballots in there were in one
    handwriting, in one pencil and for one candidate. That is the
    ballot they opened.
        Chairman Berman. Ballot box.
        Mr. Milani. Ballot box, I am sorry.
        Chairman Berman. Mr. Sadjadpour.
        Mr. Sadjadpour. Congressman Berman, Ahmadinejad went from
    5.7 million first round votes in 2005 to 24.7 million first
    round votes in 2009, an increase of 19 million after overseeing
    an economy in which inflation doubled, economic malaise deeply
    increased. That is the first point.
        Second point is that I think that the images really say it
    all. They deeply discount this analysis from STRATFOR that this
    was simply an isolated movement of students in northern Tehran.
        And, lastly, as Abbas alluded to, if you genuinely win an
    election two to one, you don't need to imprison thousands of
    people and kill hundreds. You agree to a recount.
        Chairman Berman. Anybody else? All right.
        Ms. Maloney. No, I mean it is important to actually take
    this notion on. Because as much as there is kind of unanimity
    on this panel and probably in most of Washington that it was a
    rigged election, I do hear these strands of skepticism when I
    talk to people. And I find it sort of inconceivable, because
    there is so much anecdotal evidence, reports of things
    happening in the Interior Ministry before the election was
    called.
        There is statistical analysis which shows that the way that
    the votes were reported had to have been concocted rather than
    real. But there is also the gut level analysis of anyone who
    knows anything about Iran and the Iranian people. Nobody found
    the idea that nearly two-thirds of the electorate wanted
    another 4 years of Ahmadinejad credible. And I think that is
    more powerful than anything else.
        Chairman Berman. Mr. Costa.
        Mr. Costa. Thank you very much again, Mr. Chairman, for an
    excellent hearing. And what a very good panel that we have here
    today.
        It is a follow-up, and you partially have answered it, I
    think, but on the line of questions I was asking earlier, and
    that is the battle that is taking place among the highest
    levels of leadership within Iran. And is this just a battle for
    the leadership for power or is it something bigger like for the
    hearts and minds of the Iranian people? Is there really below
    that level of the highest council a fermenting of this
    population that are 30 and younger, or half the population is
    30 years of age or younger that want a different Iran, a new
    Iran? Yes.
        Mr. Milani. I think it is both. I think we have a major
    rift within the clerical leadership. Some of the clergy who
    were with the regime have now completely taken a different
    side, like Mr. Khatami, Mr. Karubi, Mr. Rafsanjani, and Mr.
    Montazeri, who was one of the founding fathers of this regime
    has just issued a fatwa that basically says Khamenei is not
    morally fit to have this job.
        There is another bunch of clergy who have never been inside
    the government who oppose the idea of velayat-e fagih. They are
    also speaking out against the current status, because they
    realize that people are becoming completely areligious, if not
    anti-religious. They are trying to save some of the religion
    for them.
        And, finally, the youth, which are modern, savvy, want a
    job, and 40 percent of them are without a job.
        Mr. Costa. And secular many of them.
        Mr. Milani. And for that I have anecdotal as well as
    empirical evidence.
        Again, that poll shows that the majority of the people want
    the spiritual leader's job elected. That basically means the
    presidency elected by people.
        Mr. Costa. Anyone else care to comment?
        Chairman Berman. Mr. Ellison.
        Mr. Ellison. Again, I want to join Mr. Costa and the chair
    in thanking the panel. It has been a great panel.
        I also would like to ask unanimous consent to have an op-ed
    from Mr. Trita Parsi to be entered into the record.
        Chairman Berman. Without objection, his op-ed will be
    included.
        [The information referred to follows:]Ellison
    FTR deg.

        Mr. Ellison. You know, I would love to see Iran be a
    constructive and positive force in the Middle East, not
    contribute to dissension within Israel and Palestine and
    southern Lebanon but actually help bring parties to a good
    resolution. I would like to see the talents of its people
    flowered forward. And I really do join my colleagues in really
    hoping for the best for the Iranian people.
        My big question is how. How? What is the best way forward?
        So I will say that I haven't been persuaded that the best
    thing for us to do is to rush to crippling sanctions. Because,
    quite frankly, we need the world community to support our
    efforts if it is going to be successful. We have sanctioned
    ourselves out of sanctions unilaterally.
        How do we get the world--and I am talking about the whole
    world--to help us out the way sanctions brought about change in
    South Africa if we do not give real diplomacy a chance to work?
    And not the kind of diplomacy that says, well, we tried, so
    let's oil up the guns. That is the concern that I have.
        I am not in principle against sanctions, if that is what we
    need to do, but I am skeptical of this idea that we only--that
    we can't move anything past September, that there is going to
    be a nuclear weapon in October if there is not one. I am just
    very concerned about that.
        And so I would just like to get your reaction to some of my
    fears. Help me feel more comfortable, if you think I am wrong,
    about my analysis. And, Mr. Kittrie, I have heard you before,
    so let's let somebody else get started. Dr. Milani and Mr.
    Sadjadpour are the first two I would like to hear from.
        Mr. Milani. Sir, I think your concern I completely share. I
    think the Iranian people have the capacity to really become a
    major force for change. Iran has been a bellwether state in the
    Middle East. If there is democracy in Iran, I think there will
    have an effect for the rest of the region. And I think they
    deserve better than this leadership. And I think the United
    States is in the position to help them by sending the kind of
    messages that we talked about.
        I agree with you. Unilateral sanctions will only enrich the
    Revolutionary Guards some more.
        Mr. Ellison. And hurt the people.
        Mr. Milani. Unless it is--as I said, unless it is an
    internationally sanctioned and participated, like what they did
    to South Africa, that would cripple the economy. Unless the
    world agrees not to buy oil from these people. These unilateral
    sanctions pours deg. water, as we say in Iran, in
    their pot rather than the pot of the people. But sending a
    message to Siemens and others that doing this kind of thing in
    Iran has a price to pay I think will help a great deal.
        Mr. Sadjadpour. I agree with that.
        Mr. Ellison. Anybody else?
        Chairman Berman. All right. Again, I want to thank the
    panel very much. You gave us some wonderful information and
    analysis. I thought it was an excellent panel, and I am very
    grateful for the nearly 6 hours that you spent here. Well, 5.
    Thank you very much.
        [Whereupon, at 2:36 p.m., the committee was adjourned.]

                                A P P E N D I X

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                                   Connolly statement deg.
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