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

                         IRAN IN THE WESTERN HEMISPHERE

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

                                 JOINT HEARING

                                   BEFORE THE

                                SUBCOMMITTEE ON
                             THE WESTERN HEMISPHERE

                                    AND THE

                                SUBCOMMITTEE ON
                         THE MIDDLE EAST AND SOUTH ASIA

                                    AND THE

             SUBCOMMITTEE ON TERRORISM, NONPROLIFERATION AND TRADE

                                     OF THE

                          COMMITTEE ON FOREIGN AFFAIRS
                            HOUSE OF REPRESENTATIVES

                         ONE HUNDRED ELEVENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                OCTOBER 27, 2009

                                   __________

                               Serial No. 111-52

                                   __________

            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
                                     ------

                     Subcommittee on the Western Hemisphere

                       ELIOT L. ENGEL, New York, Chairman
    GREGORY W. MEEKS, New York           CONNIE MACK, Florida
    ALBIO SIRES, New Jersey              MICHAEL T. McCAUL, Texas
    GENE GREEN, Texas                    CHRISTOPHER H. SMITH, New Jersey
    GABRIELLE GIFFORDS, Arizona          DAN BURTON, Indiana
    ENI F. H. FALEOMAVAEGA, American     ELTON GALLEGLY, California
        Samoa                            RON PAUL, Texas
    DONALD M. PAYNE, New Jersey          JEFF FORTENBERRY, Nebraska
    JOHN S. TANNER, Tennessee            GUS BILIRAKIS, Florida
    BARBARA LEE, California
    JOSEPH CROWLEY, New York
    RON KLEIN, Florida
                  Jason Steinbaum, Subcommittee Staff Director
            Eric Jacobstein, Subcommittee Professional Staff Member
               Fred Ratliff, Republican Professional Staff Member
                      Julie Schoenthaler, Staff Associate
                 Subcommittee on the Middle East and South Asia

                      GARY L. ACKERMAN, New York, Chairman
    RUSS CARNAHAN, Missouri              DAN BURTON, Indiana
    MICHAEL E. McMAHON, New York         JOE WILSON, South Carolina
    SHEILA JACKSON LEE, Texas            J. GRESHAM BARRETT, South Carolina
    SHELLEY BERKLEY, Nevada              JEFF FORTENBERRY, Nebraska
    JOSEPH CROWLEY, New York             MICHAEL T. McCAUL, Texas
    MIKE ROSS, Arkansas                  BOB INGLIS, South Carolina
    JIM COSTA, California                GUS BILIRAKIS, Florida
    KEITH ELLISON, Minnesota             DANA ROHRABACHER, California
    RON KLEIN, Florida                   EDWARD R. ROYCE, California
    BRAD SHERMAN, California
    ROBERT WEXLER, Florida
    ELIOT L. ENGEL, New York
    GERALD E. CONNOLLY, Virginia
    GENE GREEN, Texas
                  Howard Diamond, Subcommittee Staff Director
               Mark Walker, Republican Professional Staff Member
                          Dalis Adler, Staff Associate

                                     ------

             Subcommittee on Terrorism, Nonproliferation and Trade

                       BRAD SHERMAN, California, Chairman
    GERALD E. CONNOLLY, Virginia         EDWARD R. ROYCE, California
    DAVID SCOTT, Georgia                 TED POE, Texas
    DIANE E. WATSON, California          DONALD A. MANZULLO, Illinois
    MICHAEL E. McMAHON, New York         JOHN BOOZMAN, Arkansas
    SHEILA JACKSON LEE, Texas            J. GRESHAM BARRETT, South Carolina
    RON KLEIN, Florida
                   Don MacDonald, Subcommittee Staff Director
              John Brodtke, Subcommittee Professional Staff Member
                Tom Sheehy, Republican Professional Staff Member
                 Isidro Mariscal, Subcommittee Staff Associate

                                C O N T E N T S

                                  ----------
                                                                       Page

                                   WITNESSES

    Mr. Eric Farnsworth, Vice President, Council of the Americas.....    19
    Ms. Dina Siegel Vann, Director, Latino and Latin American
      Institute, American Jewish Committee...........................    25
    Mr. Douglas Farah, Senior Fellow, Financial Investigations and
      Transparency, International Assessment and Strategy Center.....    32
    Mohsen M. Milani, Ph.D., Professor and Chair, Department of
      Government & International Affairs, University of South Florida    51
    Norman A. Bailey, Ph.D., Consulting Economist, The Potomac
      Foundation.....................................................    69

              LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

    The Honorable Gary L. Ackerman, a Representative in Congress from
      the State of New York, and Chairman, Subcommittee on the Middle
      East and South Asia: Prepared statement........................     3
    The Honorable Connie Mack, a Representative in Congress from the
      State of Florida: Prepared statement...........................     6
    The Honorable Eliot L. Engel, a Representative in Congress from
      the State of New York, and Chairman, Subcommittee on the
      Western Hemisphere: Prepared statement.........................    15
    Mr. Eric Farnsworth: Prepared statement..........................    21
    Ms. Dina Siegel Vann: Prepared statement.........................    28
    Mr. Douglas Farah: Prepared statement............................    34
    Mohsen M. Milani, Ph.D.: Prepared statement......................    53
    Norman A. Bailey, Ph.D.: Prepared statement......................    71

                                    APPENDIX

    Hearing notice...................................................   106
    Hearing minutes..................................................   108
    The Honorable Albio Sires, a Representative in Congress from the
      State of New Jersey: Prepared statement........................   109
    The Honorable Dan Burton, a Representative in Congress from the
      State of Indiana: Prepared statement...........................   110
    The Honorable Gerald E. Connolly, a Representative in Congress
      from the State of Virginia: Prepared statement.................   112
    The Honorable Gene Green, a Representative in Congress from the
      State of Texas: Prepared statement.............................   114

                         IRAN IN THE WESTERN HEMISPHERE

                                  ----------

                           TUESDAY, OCTOBER 27, 2009,

          House of Representatives,
                    Subcommittee on the
                        Western Hemisphere,
                Subcommittee on the Middle East
                                and South Asia, and
                             Subcommittee on Terrorism,
                                Nonproliferation and Trade,
                                  Committee on Foreign Affairs,
                                                        Washington, DC.
        The subcommittee met, pursuant to notice, at 2:15 p.m. in
    room 2172, Rayburn House Office Building, Hon. Eliot Engel
    (chairman of the Subcommittee on the Western Hemisphere)
    presiding.
        Mr. Ackerman [presiding]. The subcommittees will come to
    order. Today we have a meeting of the three subcommittees
    meeting jointly, the Subcommittee on Western Hemisphere, the
    Subcommittee on the Middle East and South Asia and the
    Subcommittee on Terrorism, Nonproliferation and Trade. First, I
    want to thank my friend, Mr. Engel, for organizing today's
    trilateral hearing on Iran's activities in the Western
    Hemisphere, and thank Chairman Sherman for also bringing his
    subcommittee to the table. Chairman Engel is on his way and I
    just wanted to get started so that we didn't keep everybody
    waiting.
        I don't think it takes a lot of convincing to make the case
    that Tehran's goals in our part of the world are not benign.
    The Ayatollah's foreign policy has always been simple, a good
    offense is the best defense. We see this vividly in the Middle
    East where Iran has built up Hezbollah and Hamas to create
    chaos and terror, and, most importantly, to drive events away
    from Iran and to create a deferent; likewise, in Iraq, where
    Iran has stroked the fires of sectarianism with arms, money and
    political support, all in the hopes of keeping Iraq far
    straight.
        Iran's strategy in Afghanistan is much the same with
    Iranian military aid even going to the Shia hating Taliban, all
    in an effort to prevent the United States and our allies from
    bringing order and stability to Afghanistan. In each case, Iran
    seeks to maximize its gains by betting on insurgents,
    terrorists and militants hoping that their allies will either
    take over the body of politics, or by murder and intimidation
    seize an important or even dominant position in the political
    system over the long term.
        What should worry all of us is Iran's intention to
    establish the same capability in this hemisphere. It is a
    heads, I win, tails, you lose, strategy and it has worked
    remarkably well for a remarkably low cost. Every year the State
    Department reports on sponsors of terrorism and describes in
    remarkable detail the extent of Iran's activities to create
    chaos, turmoil and crisis around the world. Ever since 1979,
    Iran makes threats, supports diversion and dispenses military
    assistance to terrorists at war with their own or other
    governments, and every year, the international community does
    absolutely nothing whatsoever.
        As a major oil producer in a volatile region, the world has
    decided to minimize the significance of Iranian misbehavior.
    While Israel is routinely condemned in the United Nations for
    defending itself against aggression and terror, Iran, which is
    actively making trouble, or developing, or sustaining the
    ability to do so in Afghanistan, Iraq, Lebanon, Egypt, Kuwait,
    Bahrain, Yemen, Morocco, faces not a single word of censure. As
    a feat of diplomacy, it is really quite remarkable. When
    considered in the light of Iran's steady march toward acquiring
    nuclear capabilities, which is in clear contravention of both
    Iran's NPT obligations and three mandates from the U.N.
    Security Council, Iran's success at avoiding punishment is
    altogether astonishing.
        Iran has gone untouched for two reasons. First, by
    supporting Hamas and Hezbollah, Tehran has effectively co-opted
    the Palestinian cause, which, due to the salience of the issue
    and the political weakness of the Arab states, effectively
    neuters the entire Arab league, and with the Arabs goes the
    organization of the Islamic conference. It is not that states
    with strong ties to the United States, like Saudi Arabia,
    Egypt, Indonesia or Pakistan think Iran is undeserving of
    censure. The governments of each of these countries are well
    aware that Iran is the greatest threat to both peace and
    stability in the Middle East and to the international nuclear
    nonproliferation regime.
        The problem is that the governments of every one of these
    countries are absolutely petrified of the price that they would
    pay in public opinion if they acknowledge these convictions
    publicly. Second, Iran has tapped effectively into the
    lingering hostility borne of the anticolonial struggles of the
    last century. Over time, appeals to fight against the United
    States in the west may have less resonance in a world where
    colonial dominance is more of an abstraction than a memory. In
    the present, anticolonialism still delivers the goods
    diplomatically for Iran and has given Iran entry into the
    Western Hemisphere.
        The fact that Iran is seeking hegemony over the Middle East
    and that in June it effectively went to war against its own
    people has apparently done nothing to diminish Iran's
    credibility with some of the developing nations in this part of
    the world. We are not going to be able to constrain Iran until
    we understand the full scope of its ambitions and begin to work
    in a truly comprehensive manner to constrain, counter and
    defeat those ambitions. Today's hearing on Iran and their
    activities in the Western Hemisphere is thus extremely
    important. We will turn next to the ranking member, Mr. Mack.
        [The prepared statement of Mr. Ackerman
    follows:]Ackerman statement deg.

        Mr. Mack. Thank you, Mr. Chairman. I also want to thank
    Chairman Engel for bringing this hearing together and thank all
    the members who are here today as well. One of the greatest
    threats the hemisphere faces is the rising influence of Iran.
    Together with Venezuela, Iran has slowly inserted itself into
    our hemisphere. Today's hearing will address some of these
    concerns. Mr. Chairman, where Ahmadinejad goes, so does
    trouble. Take Honduras, for example. When I was in Honduras and
    met with President Micheletti, he was clear. Honduras will no
    longer side with Ahmadinejad. Under Zelaya's leadership and
    Chavez' influence, Zelaya was moving Honduras close to Iran.
        Zelaya and Chavez, together with their friend Ahmadinejad,
    created conditions that had allowed anti-Semitism to foster.
    Mr. Chairman, the shocking comments of Zelaya supporters are
    unacceptable. Using the Jewish community as scapegoats is
    something we have seen in Venezuela. First, we have Chavez and
    Zelaya claiming that Israelis were behind Zelaya's removal, and
    then Israelis were trying to kill Zelaya. Then we had Radio
    Globo, a staunch supporter of Zelaya. The anti-Semitism of
    Zelaya's supporters is so egregious that I would rather not say
    it here and today, Mr. Chairman. This wave of anti-Semitism
    cannot be tolerated. Of course in Venezuela this is nothing
    new.
        We all have heard the reports: Synagogues being attacked
    and state companies printing anti-Semitic propaganda. I
    actually want to commend some of our witnesses today for
    speaking out against anti-Semitism in Venezuela. The AGC showed
    true leadership when it spoke out against Chavez. Just as the
    AGC has done, we in Congress must make sure the world knows
    what is happening in the Jewish community in Venezuela. I urge
    my colleagues to join my resolution, H. Con. Res. 124, and
    express support for the Jewish community in Venezuela. Mr.
    Chairman, when it comes to Iran and the Western Hemisphere,
    Venezuela is where all the dots connect.
        Many of us already know how close Chavez is to Ahmadinejad.
    This close bond has created dangerous conditions in our
    hemisphere. Hezbollah operating in Latin America, flights from
    Tehran to Caracas and no checks whatsoever, Iranian banks
    operating with Venezuelan banks, a bank link that has one sole
    purpose, to avoid sanctions and fund terrorists. Now we have
    reports of a scientist selling nuclear information to
    Venezuela. Just a few weeks ago, Chavez and Ahmadinejad met to
    strengthen their relationship. At the top of the agenda was how
    to get uranium and how to help Iran of aid sanctions.
        Mr. Chairman, I was a vocal critic of the Bush
    administration and their hands off approach of Hugo Chavez. I
    believe that by failing to confront Chavez we have left a
    vacuum. The Obama administration must take the dangers of Hugo
    Chavez seriously. We must confront Chavez and Ahmadinejad and
    not wait until it is too late. Today, in a bipartisan manner, I
    introduced a resolution with my good friend, Congressman Klein,
    who just stepped out, that calls on the administration to
    designate Venezuela as a state sponsor of terrorism. Venezuela
    is a danger that cannot be overlooked, Mr. Chairman.
        I would like to conclude with Brazil. Reports tell us that
    Ahmadinejad and the President of Brazil are set to hold a
    summit this November in Brazil. Additionally, my understanding
    is that Lula intends to visit Iran next year. As may of us
    know, Brazil was the first country to recognize the most recent
    elections in Iran, elections which I believe were neither fair
    nor free. Brazil is clearly a leader in this hemisphere. That
    said, along with leadership comes responsibility. Brazil should
    not be following Venezuela. Instead, it should be leading. This
    meeting between Lula and Ahmadinejad is one that we will be
    paying close attention to. I call upon President Lula to put
    pressure on Ahmadinejad so that Iran understands that all
    responsible nations stand together. I urge President Lula not
    to take the same path as Chavez. Mr. Chairman, I look forward
    to the hearing today, and thank you for holding the hearing.
        [The prepared statement of Mr. Mack follows:]Mack
    statement deg.

        Mr. Ackerman. Thank you for your opening statement. We will
    tell Representative Klein about your shout out. Chairman
    Sherman?
        Mr. Sherman. Thank you, Mr. Chairman. Iran and Hezbollah
    have increased their influence in Latin America since the
    pernicious involvement that was shown by the bombings of the
    Israeli embassy in Buenos Aires in 1992, and then the bombing
    of the Argentine Israeli Mutual Association in 1994. Since
    Ahmadinejad came to power in 2005, Iran has opened six new
    Latin American embassies, specifically, Colombia, Nicaragua,
    Chile, Ecuador, Uruguay and Bolivia, adding to the embassies
    already in Cuba, Argentina, Brazil, Mexico and Venezuela. This
    hearing is an opportunity to examine our ongoing efforts to
    counter this influence and to isolate those who support
    terrorism.
        Iran has used its petrodollar windfall--or at least the
    illusion that it may be willing to actually spend its
    petrodollar windfall, to influence Latin American nations,
    including the Governments of Bolivia, Ecuador and Nicaragua.
    For example, Iran opened an embassy in La Paz in February 2008
    and pledged more than $1 billion in assistance to Bolivia. In
    turn, President Morales announced his country's intention to
    move its only Middle East embassy from Cairo to Tehran, and
    Bolivia lifted visa restrictions on Iranian citizens.
        In September, 2008, Iran and Ecuador signed an energy
    cooperation agreement. Meanwhile, President Correa, and this
    may or may not be linked, has refused to renew the U.S.
    military's 10-year lease on the air base at Manta. In May, the
    Ecuadorian defense minister was quoted on Iranian television as
    saying that his country wants to work with countries, such as
    Iran, that are willing to help Ecuador develop its defense
    industry.
        In 2007, Iran promised, and I just want to emphasize this
    is a promise, to help fund a $350 million deep water port and
    to build 10,000 houses in Nicaragua. Although Iran has yet to
    fulfill these promises, Nicaraguan officials removed Iran from
    the list of countries whose citizens must get visas in advance.
    I want to point out that there is no visible support among the
    Iranian people for any expenditure of the funds of a struggling
    country in foreign aid to a different hemisphere, namely the
    Western Hemisphere.
        Of greatest concern is the relationship between Iran and
    Venezuela which has been central to Iran's rising influence in
    Latin America. Presidents Chavez and Ahmadinejad have
    collaborated on numerous cooperative ventures worth billions.
        In 2007, Presidents Chavez and Ahmadinejad announced a
    joint $1 billion investment fund would be set up by the two
    countries and would be used to finance projects in friendly
    developed countries. Chavez boasted it will permit us to
    underpin investments, above all, in countries whose governments
    are making efforts to liberate themselves from the so-called
    imperialist yoke.
        Later, in 2008, an article in the Italian periodical La
    Stampa reported that Iran has been using Venezuelan-owned
    commercial aircraft to transport computers and engine
    components to Syria for Syria's missile program. In turn, the
    Iran Revolutionary Guard Corps, including its elite Al-Quds
    unit, has trained the Venezuelan police and secret service.
    Then, in April of this year, Iran and Venezuela signed a
    memorandum of understanding on military cooperation comprised
    of training and mutual exchange of military experiences.
        The U.S. has responded to some degree. In October, 2008,
    the U.S. Treasury Office of Foreign Assets Control designated
    the export development bank of Iran and three affiliates,
    including Banco Internacional de Desarrollo, I am sorry for
    that mispronunciation, in Venezuela as proliferators of Iran's
    WMD programs. OFAC freezes any U.S. assets of these entities
    and prohibits any U.S. person in the United States from doing
    business with them.
        Additionally, in February, 2008, Representative Ros-
    Lehtinen requested that Departments of State and Treasury
    investigate CITGO to determine whether a 2007 petro chemical
    sector agreement between the Governments of Venezuela and Iran
    benefits the American subsidiary, which would be a violation of
    the Iran Sanctions Act. I hope that we focus on the public
    diplomacy in Latin America. We need to remind our friends in
    Latin America that the United States has provided trillions in
    trade, billions in aid; whereas, Iran promises but, aside from
    making investments that are in its own interests, does almost
    nothing. We have to remind the people of Latin America that
    Iran may be involved in that continent region now, but may not
    be a year or two from now.
        In fact, as I pointed out, Iran's involvement in Latin
    America has no visible support among the Iranian people. In
    contrast, America isn't going anywhere. We will be involved in
    Latin America for centuries to come. I see that my time has
    expired. I will use other time to comment upon Hezbollah's
    involvement, Hezbollah being virtually a wholly owned
    subsidiary of Iran. I look forward to hearing the witnesses'
    statements, but I will point out that not only myself, but
    other members of this tripartite subcommittee, will also have
    to go to financial services where we are writing legislation of
    great economic importance, so if I am not here to hear your
    statement, I will be reading it. I know that you have provided
    a written copy. Thank you.
        Mr. Engel [presiding]. We are going to call on Mr. Royce.
    Before we do that, I want to thank Mr. Ackerman for filling in
    for me. After Mr. Royce gives his statement, I will give mine.
    Mr. Royce?
        Mr. Royce. Thank you, Mr. Chairman. Let me first say I
    appreciate very much the fact that we are holding this hearing.
    We had several hearings, Mr. Sherman and myself, a few years
    ago when I chaired the Terrorism Subcommittee on Hezbollah's
    global reach, was one of the hearings that we held. That
    focused on the terrorism in our own hemisphere, the significant
    presence we have. Those of us from California know only too
    well about the case, for example, of Mahmoud Kourani, who was
    trained by Iranian intelligence, a Hezbollah terrorist who made
    his way over the California border in the trunk of a car and
    subsequently was detained and convicted here in the United
    States.
        During these hearings I think a great deal of information
    was focused on the Venezuelan connection to this. During the
    hearing on Venezuela, terrorism hub of South America, the
    subcommittee heard from the State Department that said at that
    time forgers alter Venezuelan passports with childlike ease.
    Most worrisome, they said, Venezuelan Government officials
    direct the issuance of documents to ineligible individuals to
    advance political and foreign policies agendas. Now, given
    growing Iran/Venezuela ties, I think that is a great concern.
        One witness who is with us today, Doug Farah, will
    characterize Iran's relationship with governments and groups in
    our own hemisphere as direct and growing and it is a threat. My
    colleagues have mentioned specific concerns. Two Venezuelan
    companies sanctioned for connection to Iran's proliferation
    activities. Large passenger planes conducting weekly flights
    between Caracas and the capitol of Iran, and yet, there is no
    tourism between these two countries. Hugo Chavez signing a
    number of energy agreements on a visit to Tehran.
        This year's growing threat assessment by the Director of
    National Intelligence noted that Chavez' growing ties to Iran,
    coupled with Venezuela's lax financial laws and lax border
    controls and widespread corruption, have created a permissive
    environment for Hezbollah to exploit. With Iran being a Middle
    Eastern country, this connection, I think, may seem odd to
    some, but I think history is full of oddly twinned rogues
    conspiring together. During my years on this committee I have
    been surprised, certainly, to find some of this history. In the
    1980s, North Korea went into Zimbabwe and trained the fifth
    brigade there, trained them to slaughter and terrorize people,
    and in Zimbabwe I saw the after effects of some of that where
    citizens had been thrown down wells.
        North Korea also worked more recently covertly to assist
    Syria in building a nuclear reactor. The IRA, of all
    organizations, developed connections with the PLO in the Middle
    East and with FARC in Latin America. So it is nothing new to
    have these types of connections from terrorist outfits, but we
    better keep our eyes on our hemisphere, and it might be harder
    and harder to do that because the Wall Street Journal reported
    last month that interviews with diplomatic officials suggest
    that western intelligence in this region is very, very limited.
    That must change.
        We have to do a better job of collecting this intelligence.
    We don't want to find many more Mahmoud Kouranis after the
    fact, after they are in our country, and after they are
    arrested with a terrorist cell on our own soil. One strategy we
    could adopt to confront this threat would be to solidify our
    relationships with those who frankly are not that interested in
    Hugo Chavez' and Ahmadinejad's agenda, that frankly see an
    alternative to that kind of Chavez Ahmadinejad agenda. That
    means moving forward with free trade agreements for Colombia
    and Panama. They are languishing, and that is too bad. Thank
    you, Mr. Chairman.
        Mr. Engel. Thank you very much, Mr. Royce. I would like to
    make my opening statement now. First, I want to say that I am
    delighted that the three subcommittees are working together on
    Iran in the Western Hemisphere. The jurisdiction touches on all
    three subcommittees. It is obviously a very important subject.
    Obviously, looking at the turnout today, there are a lot of
    people here who are interested in doing this, so I am pleased
    to belatedly welcome everyone to today's hearing on Iran in the
    Western Hemisphere. The question I seek to explore in this
    hearing is whether Iran's expanding presence in the Western
    Hemisphere is a threat to our region or merely a nuisance. Is
    it only about expanded trade or is there something more
    nefarious going on? I believe it is both.
        Many poor countries in Latin America and the Caribbean
    actually seek financing from oil rich Iran for development
    projects. Every day, it seems, I hear about another country
    expanding diplomatic relations with Iran or seeking greater
    economic contacts. In fact, trade and investment deals between
    Iran and Latin America now total well over $20 billion. Is
    Iran's expanded presence in the Western Hemisphere nothing more
    than an effort to earn some hard currency? I doubt it strongly.
    First and foremost, we must never forget the 1992 bombing of
    the Israeli embassy in Buenos Aires that killed 30 people, and
    the 1994 bombing of the AMIA building in Buenos Aires that
    killed 85 people.
        While the perpetrators have not yet been brought to
    justice, the state prosecutor of Argentina concluded that the
    bombings were executed by Hezbollah, which is supported by
    Syria and sponsored by Iran. In November 2006 an Argentine
    judge issued arrest warrants in the AMIA case for nine persons,
    including Ahmad Vahidi, who recently became Iran's defense
    minister. Absolutely disgraceful. I would like to commend the
    Government of Argentina for condemning Iran's selection of
    Vahidi as ``an insult to Argentine justice.'' I add my voice to
    President Cristina Fernandez de Kirchner of Argentina, who, in
    her recent speech to the U.N. General Assembly month, demanded
    justice on behalf of the victims of the bombings.
        So the Iranian role in the region is anything but well-
    meaning, and this brings me to Venezuela. When President Obama
    went to the Summit of the Americas he shook hands with
    Venezuelan President Chavez and our countries have now restored
    their ambassadors. Unfortunately, there are few other positive
    things to report. President Chavez recently traveled to Iran
    and Syria, leading sponsors of terror in the Middle East, and
    alleged from Damascus that Israel had committed genocide
    against the Palestinians. This was a vile attack on Israel, and
    I immediately issued a statement condemning these offensive and
    absurd remarks.
        I thought it was a bit strange that he would say this from
    Damascus, which is the headquarters of both Hezbollah and
    Hamas. It is just amazing. However, Venezuela's relationship
    with Iran is more than just an outlet for Chavez' excessive
    rhetoric. The Director of National Intelligence, Dennis Blair,
    recently said that Venezuela ``is serving as a bridge to help
    Iran build relations with other Latin American countries.'' The
    rationale underlying the Venezuelan/Iranian connection is
    apparent. Both leaders, Hugo Chavez and Ahmadinejad, are not
    friends of the United States and seek any opportunity to
    denounce this country.
        Concerns about the Iran/Venezuela axis run much deeper than
    harsh rhetoric and expanded diplomatic cover. A recent op ed in
    the Wall Street Journal by Manhattan's district attorney,
    Robert Morgenthau, raised serious concerns about the expanded
    financial ties between the two countries. He said ``failure to
    act will leave open a window susceptible to money laundering by
    the Iranian Government, the narcotics organizations with ties
    to corrupt elements in the Venezuelan Government, and the
    terrorist organizations that Iran supports openly.'' In fact,
    in October, 2008, the U.S. Treasury Department imposed
    sanctions on Iranian owned banks in Caracas.
        Furthermore, a State Department report has expressed
    concern about weekly flights between Caracas and Tehran where
    passengers and cargo are not subject to proper security checks.
    In the wake of 9/11, for a country to have loose security
    procedures on international flights with Iran is simply
    reckless, if not downright dangerous. I am very troubled with
    agreements signed during President Hugo Chavez' visit to Tehran
    last month. According to press reports, Venezuela would invest
    a 10-percent stake in Iran's south parts gas projects valued at
    some $760 million and provide 20,000 barrels per day of refined
    gasoline to Iran.
        While it is anyone's guess as to whether these schemes will
    ever be implemented, they carry potentially serious
    repercussions. According to the Congressional Research Service,
    investment in Iran's gas fields ``could be sanctionable under
    the Iran Sanctions Act with potential ramifications for U.S.-
    based CITGO, a wholly owned unit of PDVSA.'' If the bill being
    marked up in the Foreign Affairs Committee tomorrow becomes
    law, providing refined petroleum to Iran may also trigger
    sanctions. While some question whether Venezuela has the
    ability to provide gasoline to Iran since it imports gasoline
    to meet its own domestic demand, President Chavez is clearly
    approaching a perilous area.
        Iranian involvement with Latin America also has a
    transnational element. In 2007, while in Brazil, I visited a
    city called Falls de Iguazu, or Iguazu Falls. This city falls
    on the so-called tri-border region between Brazil, Argentina
    and Paraguay. It is known for lawlessness and reports of
    Islamic extremists and Hezbollah agents smuggling to finance
    their bases in Lebanon and elsewhere. The United States is
    working with the governments of the bordering countries in the
    three-plus-one arrangement where we are trying to halt the
    smuggling and the possibility of terror financing. I have no
    information about any active and operative terrorist cells in
    the region, but we must continue our vigilant monitoring. While
    I appreciate Brazilian cooperation in the tri-border region and
    on other issues, I am concerned about President Lula's
    diplomatic outreach to Iranian President Ahmadinejad.
        Immediately after this summer's flawed and stolen Iranian
    election, President Lula said he saw nothing wrong with the
    election and proceeded to invite Ahmadinejad to Brazil. It is
    my understanding that this visit will take place in November.
    When Venezuela expands its relations with Iran, I may not like
    it, but I chalk it up to President Chavez and his altered sense
    of the world. When Brazil expands its ties to Iran just as the
    world is trying to deal with the secretive Iranian nuclear
    program, I am frankly left bewildered. Brazil is a rapidly
    modernizing country which wants to join the U.N. Security
    Council and be a world leader.
        I truly hope Brazil reaches that point. Expanding ties to
    Ahmadinejad who denies the Holocaust and calls for the
    destruction of another nation's state, Israel, is not the way
    to get there. In the future, I think we have to expand our
    dialogue with Brazil on the dangerous role of Iran and
    encourage our friends in Brasilia to reconsider their ties with
    Tehran. So, in the end I am left with two questions: 1. What do
    Latin American countries hope to get out of their relationships
    with Iran; and 2. What should we in the United States do about
    it? As to the first question, some seek money and investment,
    but we must remember with investment comes influence and I have
    serious concerns about expanded Iranian influence in the
    region.
        As for the second question, we must increase our diplomatic
    engagement to better explain our views. I have long been
    concerned that during the previous administration we did not
    pay enough attention to Latin America and the Caribbean and
    this was at our own peril. So who came to fill the gap? Iran. I
    think the Obama administration is today effectively reengaging
    in Latin America and hopefully will be able to describe our
    approach in a way that the region will more readily hear. In
    some ways, we have tarred our own hands. We still do not have
    an Assistant Secretary of State for the Western Hemisphere or
    an ambassador to Brazil because both names are facing a hold by
    Senator DeMint.
        Iran is making inroads into countries in the region and
    Ahmadinejad about to travel to Brazil, I hope that Senator
    DeMint rethinks his position and lifts these holds so we can
    more effectively engage our partners on the dangers of Iran and
    on the myriad of issues which confront the hemisphere. Thank
    you. With that, I would like to call on Mr. McCaul.
        [The prepared statement of Mr. Engel
    follows:]Engel statement deg.

        Mr. McCaul. Thank you, Mr. Chairman. I appreciate this
    joint hearing and the importance of it. In the interest of
    time, I will take a pass so we can move on and hear the
    testimony of the witnesses. Thank you.
        Mr. Engel. Okay. Ms. Watson? Pass. Mr. Fortenberry?
        Mr. Fortenberry. Thank you, Mr. Chairman. I am going to
    forego an opening statement as well.
        Mr. Engel. Mr. Scott?
        Mr. Scott Mr. Chairman, I will forego an opening statement.
    Thank you.
        Mr. Engel. Okay. Mr. Green?
        Mr. Green. Mr. Chairman, it seems like we are on a role. I
    will forego a statement and ask a statement be placed into the
    record.
        Mr. Engel. Okay. Finally, Mr. Klein. I don't want you to be
    intimidated, Mr. Klein.
        Mr. Klein. I am not going to be intimidated. I come from
    south Florida. I am not going to be intimidated on something
    like this. Thank you, Mr. Chairman. I will be brief. I want to
    thank you again for holding the hearing. I thank my friend Mr.
    Mack. He and I have been working together on resolutions and
    dealing with some of the threats from Venezuela and the
    relationships that seem to be developing with President
    Ahmadinejad. Obviously, we are all very concerned about the
    issues that have been developing in this region, and
    particularly with President Ahmadinejad planning on being in
    the region visiting Brazil, Venezuela having pledged oil and
    refined petroleum to Iran, the district attorney of New York
    stating that there are certain banking relationships that
    obviously have to be examined.
        We need to obviously develop a comprehensive policy. At the
    same time, the United States continued to by significant
    amounts of oil from Venezuela. So I think there needs to be
    some reconciliation, but I think what our panel can do for us
    today is give us your perspective so we can understand how to
    best approach this. I thank the chairman.
        Mr. Engel. Well, thank you. Well put, Mr. Klein. I am now
    pleased to introduce our distinguished private witnesses. Eric
    Farnsworth is vice president of the Council of the Americas and
    is no stranger to my subcommittee having given excellent
    testimony many times previously. Dina Siegel Vann is director
    of the Latino and Latin American Institute of the American
    Jewish Committee. She does great work, and I rely on Dina a
    lot. Douglas Farah is senior fellow for financial
    investigations and transparency at the International Assessment
    and Strategy Center. Welcome.
        Mohsen Milani is a professor and chair of the Department of
    Government & International Affairs at the University of South
    Florida. Welcome. Last, but not least, Norman Bailey is a
    consulting economist at the Potomac Federation. Dr. Bailey
    previously testified at our Western Hemisphere Subcommittee
    hearing on Venezuela in July 2008. Welcome back. I thank all of
    you, and we will start with Mr. Farnsworth. Let me say, as I
    always do, that you have 5 minutes each. Could you please, it
    would be helpful if you could summarize your testimony and we
    could enter your actual statements into the record in addition
    to your testimony. Mr. Farnsworth?

     STATEMENT OF MR. ERIC FARNSWORTH, VICE PRESIDENT, COUNCIL OF
                              THE AMERICAS

        Mr. Farnsworth. Thank you, Mr. Chairman, and thank you for
    your generous comments. Good afternoon to you and to the
    members of the subcommittees. If I can, I would like to give
    you the bottom line first. Despite worrisome trends, we are
    dealing with imperfect information regarding the intentions of
    the Iranian regime in the Americas, and therefore, in my
    estimation, the ultimate implications for regional security,
    democracy and development priorities are not entirely clear.
    What is clear is this: Nations that disrespect democratic
    principles in the Americas tend also to be nations that offer
    aid and comfort to global actors who reject the norms of the
    international system, ungoverned regions within countries offer
    permissive environments for mischief making, and a weak inter-
    American system offers little in terms of the ability to
    counterbalance extralegal or threatening acts.
        As the ongoing crisis in Honduras shows, the first priority
    of the hemisphere must therefore be to strengthen democracy and
    the institutions of democratic governance. Although a flurry of
    think tank reports for the new administration ignored this
    central point, this is not a theoretical academic exercise.
    Democracy must be patiently nurtured and reinforced as a
    priority. It is a fundamental national security concern of the
    United States because healthy democracies in Latin America and
    the Caribbean make better partners to advance a common agenda
    consistent with broader U.S. national interests.
        On the other hand, countries where democracy is weak, where
    the institutions of the state are ineffective or where
    democratically elected leaders have in fact curtailed
    democratic institutions for their own purposes have proven time
    and again to be the most likely portals through which unhelpful
    influences, such as Iran, are introduced into the region. Of
    course, each nation of the Americas is a sovereign, independent
    state. Each nation has the right to maintain relations with
    whomever they wish, subject to prevailing international law and
    practice. It is truly unfortunate, however, that any nation of
    the Americas would go out of its way to intensify state to
    state relations with Iran, a regime that has been repeatedly
    identified as a state sponsor of terror, as has already been
    mentioned, which has been directly implicated in the only
    examples of extra regional terrorist acts in the Americas other
    than 9/11, and which is in violation of numerous U.N.
    resolutions.
        In this regard, Venezuela's well-known efforts to midwife
    Iran's entry into the Americas through reciprocal leaders'
    visits, trade and commercial agreements, including air links,
    potential sanctions busting, and friendly votes in bodies such
    as the International Atomic Energy Agency, are at best
    polarizing and counterproductive in the hemispheric context.
    Most recently, in fact, Mr. Chairman, you referred to the
    Morgenthau report, and that also provided some important
    information in terms of the Iranian/Venezuelan links on the
    financial side.
        At the same time, when the list of hemispheric priorities
    includes economic recovery from deep global recession, job
    creation to eradicate poverty, reducing a comparative education
    deficit, among many other things, it makes little obvious sense
    for leaders like those in Bolivia, Ecuador and Nicaragua to
    take actions to undermine the very cooperation that they need,
    and claim to want, from the United States. For Iran, the
    benefits of closer relations in the Americas are not in doubt.
    Iran is able to build commercial relations with other parts of
    the world, especially in agriculture, the regime is able to
    exchange information and technology, particularly on energy,
    and gain access to raw materials, which may include uranium.
        By developing close regional ties, Iran also has the
    ability to leap frog its international isolation, potentially
    evading sanctions, as has been discussed. The regime is also
    able to build international coalitions in support of its
    domestic activities, including potential development of nuclear
    weapons. By expanding its diplomatic representation, Iran has
    enhanced its intelligence capabilities while outreaching,
    should it choose to do so, to nonstate actors and affinity
    organizations which may be working to raise funds through drug
    trafficking and other means in the Western Hemisphere for
    certain activities in the Middle East or which may be building
    their own extra legal capabilities in the Americas.
        With this in mind, the pending visit of Iran's President to
    Brazil next month is of potential concern because Brazil's
    engagement with Iran will give a political boost to the
    Ahmadinejad regime, even as the international community seeks
    in Vienna to find a solution to the nuclear nonproliferation
    dilemma. To the extent the visit does go ahead, one would hope
    that the Brazilians would use the opportunity to reaffirm that
    the Western Hemisphere is no place for Iranian meddling and
    would seek to use their access and emerging hemispheric
    leadership role for the purpose of vocally supporting
    international nonproliferation efforts.
        Mr. Chairman, I appreciated your comments about the pending
    nomination of Tom Shannon as well. I think it is important to
    have an active Ambassador in Brazil to make exactly this point.
    More broadly, these are issues that should be watched
    carefully. In other words, Iran's engagement in the Americas.
    For the United States, several actions are appropriate. We
    should be wary, we should be watchful and we should be prepared
    to act in concert with the international community,
    particularly on the law enforcement side. We should not act on
    incomplete information unnecessarily, nor take steps
    precipitously.
        We must continue to understand better the true nature of
    the threat and pursue actions with others, as may be
    appropriate. Second, we should continue to emphasize the
    hemispheric growth agenda, including trade and investment
    expansion, which has already been mentioned, and the rule of
    law, which will help build strong and expanding middle classes
    and reinforce just, transparent societies that are less prone
    to authoritarian manipulations from elected leaders of any
    ideology or stripe. Finally, I would return to where I began.
    In testimony before the Western Hemisphere Subcommittee earlier
    this year I said that despite our efforts to build democracy
    elsewhere around the world the United States cannot be
    complacent about such matters closer to home.
        Honduras subsequently proved the point I was trying to
    make. Democracy offers no guarantees, but we stand a much
    better chance of achieving our strategic goals in the
    hemisphere, including a peaceful, growing, vibrant region that
    works in tandem with us to address issues of common concern and
    rejects outside meddling from Iran and others, if democratic
    institutions in the Americas are strong. Thank you again, Mr.
    Chairman. I appreciate the opportunity.
        [The prepared statement of Mr. Farnsworth
    follows:]Eric Farnsworth deg.

        Mr. Engel. Thank you very much, Mr. Farnsworth. Ms. Siegel
    Vann?

     STATEMENT OF MS. DINA SIEGEL VANN, DIRECTOR, LATINO AND LATIN
             AMERICAN INSTITUTE, AMERICAN JEWISH COMMITTEE

        Ms. Siegel Vann. Thank you, Mr. Chairman, for the
    opportunity to share with you and with the members of the three
    convening subcommittees a summarized version of our prepared
    statement on the many reasons our organization has been
    following with growing concern the increase of Iran's presence
    and influence in the Western Hemisphere. In fact, AJC brought
    this issue to light in 2005 when Venezuela and Iran made a
    strategic decision to expand their economic and political
    relations, which date back to the creation of OPEC in 1964.
    Since then, Venezuela has become the gateway to heightened
    cooperation between Iran and other countries within and outside
    the former's sphere of influence.
        This seems to have had an impact on the level and intensity
    of anti-Semitic expressions, on bilateral relations with Israel
    and on the quality of the relationship between local Jewish and
    Arab communities. As we continue to travel throughout the
    region and raise the issue with Latin American government
    officials, leaders of Jewish communities and representatives of
    civil society as a whole, we have found that growing concern
    for this trend is shared by many. Some of Iran's main goals and
    activities in the region became quite evident as early as the
    1990s. As has been already pointed out, Iran and Hezbollah are
    thought to be complicit in the bombings of the Israeli embassy
    in Buenos Aires in 1992 and AMIA in 1994 which resulted in 115
    deaths and more than 500 injuries.
        Just last July 18 we commemorated the 15th anniversary of
    the 1994 bombing, the worst anti-Semitic attack since the
    Second World War, and an atrocity labeled as a crime against
    humanity by the Argentine justice system. As Tehran attempts to
    expand its influence in our hemisphere, it is important to
    understand that today, as yesterday, the so-called moderates in
    Iran's ruling circles have been directly involved in exporting
    terrorism and massacring innocents. Although diversification of
    bilateral and regional relations is the sine qua non for
    countries intent on being perceived as global players, the
    alliances struck in the last few years by many Latin American
    countries with Iran could be viewed as somewhat problematic.
        This derives from Iran's confrontational attitude toward
    the United States and Israel and its apparent attempt to take
    advantage of democratic rule, competitiveness and a generalized
    climate of freedom to advance its agenda. All this comes as it
    is increasingly clear that a healthy hemisphere depends on
    nourishing a sense of partnership and connectedness among all
    its nations to ensure regional stability. At his June
    confirmation hearing, the head of the U.S. Southern Command,
    General Douglas Fraser, reaffirmed his predecessor's concerns
    about ``Iran's meddling in Latin America.'' General Fraser also
    underscored that ``the real concern is not a nation to nation
    interaction,'' but rather ``the connection that Iran has with
    extremist organizations like Hamas and Hezbollah and the
    potential risk that that could bring to the region.''
        With the backing of Venezuela, Iran has pursued a proactive
    policy of outreach to other countries in Latin America,
    exploiting anti-American sentiment and offering sorely needed
    funding. Since the election of President Ahmadinejad in 2005,
    the first election, Iran has inaugurated, reestablished and
    increased its diplomatic representation in 10 nations. Against
    this backdrop, many of Latin America's 450,000 Jews are feeling
    quite vulnerable. Of particular concern is the situation of
    communities in countries, such as Venezuela, that maintain
    intense bilateral contact with Iran.
        The use of anti-Semitism as a political tool and virulent
    anti-Jewish, anti-Zionist expressions in the official media,
    particularly during the 2006 Lebanon War and the 2008 Gaza
    operation, seem to have been the result of this alliance.
    Pronouncements from Presidents Chavez and Morales and other
    government officials denouncing Israel as genocidal and racist
    culminated in the severing of relations with the Jewish state
    after six decades of warm and constructive bilateral ties. This
    worrisome trend persisted during President Chavez' recent trip
    to Libya, Syria and Iran.
        There have been several incidents of violence against
    community institutions, the most recent in February, 2009,
    against the Tiferet Israel Synagogue in Caracas. Strained
    relations, and even confrontation, between members of local
    Arab and Jewish communities are another disturbing development
    and contribute to the fracturing of society as a whole. This is
    the result of virulent anti-Zionist rhetoric and media
    campaigns that reflect a concerted attempt to import political
    conflicts alien to the region. Witness what just happened last
    month in Honduras. Anti-Semitism totally unrelated to the
    complex political impasse in the country was utilized in the
    same way it has been done lately in Venezuela, to scapegoat and
    to delegitimize.
        Although a direct cause/effect relationship cannot be
    proven, it is most probable that the development of close
    personal relationships and shared world views and agendas,
    including President Ahmadinejad's stated desire to destroy the
    Jewish state, have had an impact on the state of affairs in the
    region. In this context, we are deeply concerned that despite
    President Lula's best intentions, the programmed visit of the
    Iranian leader to Brazil on November 23 will be perceived by
    many as a gesture of support for his extreme positions. Three
    years ago AGC first published a briefing recording a trend that
    had escaped most of the region's observers.
        Today, although the topic is more commonly discussed,
    evident threats are being ignored or minimized. The mere
    establishment of relations between sovereign nations does not
    in itself constitute cause for concern. Nevertheless, the
    assault on AMIA is a tragic and compelling reminder of the
    potential dangers posed by Iran and its allies to the security
    and well-being of the Americas. Unfortunately, many countries
    have chosen to marginalize this event as they seek expanded
    commercial and diplomatic ties. Indeed, regional and
    international double talk has blocked the Argentine
    Government's efforts to extradite and punish those who
    masterminded the attack, including members of Iran's current
    ruling circle.
        The generalized perception by some governments that the
    AMIA attack is far off in time and disconnected from their own
    reality has provided the necessary conditions for the expansion
    of Iranian influence and activities. Its growing presence could
    certainly have strong implications for democracy and security
    in the region. The growing strategic relationship established
    between countries in the Western Hemisphere and Iran deserves
    our attention and concern. Concerted and decisive action is
    needed to closely monitor the activity of Iran and the groups
    it subsidizes to correctly assess their potential for mischief
    and to establish mechanisms to prevent potentially dangerous
    scenarios. Thank you so much, Mr. Chairman.
        [The prepared statement of Ms. Siegel Vann
    follows:]Dina Vann deg.

        Mr. Engel. Thank you, Ms. Siegel Vann. Mr. Farah?

       STATEMENT OF MR. DOUGLAS FARAH, SENIOR FELLOW, FINANCIAL
     INVESTIGATIONS AND TRANSPARENCY, INTERNATIONAL ASSESSMENT AND
                            STRATEGY CENTER

        Mr. Farah. Well, thank you very much for the opportunity to
    be here to discuss the issue of Iran in Latin America. I think
    that the growing influence of Iran is a significant threat to
    the United States and an underreported part of the equation
    that is driving instability and an uncertainty in Latin America
    from the crisis in Honduras to the rapidly closing space for
    democratic freedoms in Venezuela, Bolivia, Ecuador, Nicaragua
    and elsewhere where the Bolivarian revolution has gained a
    foothold. There is broad agreement that Iran is expanding ties
    with Venezuela forged by the personal friendships between
    Presidents Ahmadinejad and Chavez, respectively; anchor the
    relationship with Ecuador's Rafael Correa and Bolivia's Evo
    Morales.
        Iran's relationship with Nicaragua is slightly different
    given President Daniel Ortega's longstanding personal
    relationship with the Iranian revolutionary leaders dating back
    to his first term as President from 1979 to 1990. A second
    point of general agreement is that Iran, facing international
    sanctions because of its nontransparent nuclear program, is
    primarily seeking political support and leverage against the
    United States rather than true deep economic relationships in
    Latin America. The exceptions are ventures related to strategic
    minerals and hydrocarbon.
        A final and most important point of agreement is that the
    primary and sole real point of convergence between Ahmadinejad
    and Chavez in forging their relationship is their openly
    declared hostility toward the United States and its allies,
    particularly Israel. The leaders make a central point of
    publicly linking the Bolivarian and Iranian revolutions. This
    common desire to build an alternative power structure free of
    the perceived dominance of the empire, as these leaders call
    the United States, is the only real reason that a populist and
    self-described revolutionary, socially and staunchly secular
    government in Latin America would make common cause of a
    reactionary theocratic Islamist regime thousands of miles away.
        Trade relations between Latin America and Iran are still
    minimal, particularly when compared to Latin America's
    commercial ties to the United States. There is no shared
    history or religious heritage, and virtually no cultural bonds
    or linguistic bonds. The only shared platform is the deep
    dislike for a common enemy, and that is the only thing that can
    explain this otherwise improbable alliance. Manhattan district
    attorney Robert Morgenthau, as has been mentioned, last week
    talked about the investigations ongoing in his office into
    Iranian front companies in banks in Latin America. I want to
    focus on a series of these types of relationships that
    highlight this murky and nontransparent web in Latin America.
        For some time it has been known that the Banco
    Internacional de Desarrollo, known as BID, established in
    Caracas in September, 2007, under highly unusual circumstances
    is wholly owned by Iranian financial interests. The Toseyeh
    Saderat Iran Bank owns all the shares and all seven directors
    are Iranian citizens, yet, the BID is registered as a
    Venezuelan entity. The Saderat bank group was sanctioned by the
    U.S. Treasury, OFAC and the United Nations as a financial
    vehicle for the Government of Iran to fund Hezbollah, Hamas and
    other terrorist groups and evade international sanctions. The
    BID itself was sanctioned by OFAC in October, 2008, for its
    links to the Export Development Bank of Iran.
        The Export Development Bank was also sanctioned for
    providing financial support to Iran's ministry of defense and
    armed forces logistics, yet, the Ecuadorian newspaper Loja last
    month revealed that in December, 2008, the Central Bank of
    Ecuador and the Export Development Bank of Iran signed a
    protocol of cooperation in which the Export Bank agreed to
    extend credit facilities of up to $120 million to help
    stimulate exports and imports between the two countries. The
    document commits the nations to find ways for the two countries
    to ``expand their mutual banking relations.''
        Article VI of the protocol states that the Export Bank of
    Iran manifests its readiness to establish a branch of the Banco
    Internacional de Desarrollo, BID, in the Republic of Ecuador
    and the Central Bank of Ecuador will pave the way for this act.
    Two things stand out in this protocol. The first is the total
    amount of exports and imports between Ecuador and Iran over the
    past 2 years has been less than $1 million. A credit line of
    $100 million is not proportionate to any actual commercial
    activity. The second thing is the Export Development Bank, as
    an Iranian bank, is offering to open a branch of the BID in
    Ecuador, confirming that the BID is in fact an Iranian bank
    rather than a Venezuelan institute.
        The concerns about these other unusual activities cloaked
    in official secrecy would be more easily dismissed if not for a
    longstanding and complex web of relationships between state and
    nonstate actors that carry across Iran's relationships with its
    Latin American allies. Iran is the primary sponsor of
    Hezbollah, a terrorist organization that has carried out
    numerous attacks against American citizens, as well as in
    Argentina. Iran, in turn, has a cordial relationship with
    Chavez, who, in turn, has developed a deep relationship with
    the Revolutionary Armed Forces of Colombia, or the FARC, in
    neighboring Colombia.
        Another prominent regional player, Daniel Ortega in
    Nicaragua, has maintained a close relationship with both the
    FARC and Hezbollah for more than two decades. The common
    denominators among the state protagonists are a strongly anti-
    U.S. platform and a sponsorship of nonstate armed groups
    operating outside their national borders. It is therefore
    necessary to ask whether nonstate actors protected by their
    state sponsors will themselves form alliances and further
    threaten the stability of the region, as well as the security
    of the United States.
        Of primary concern is the possible Hezbollah/FARC alliance
    centered on the training of armed groups and drug trafficking.
    Given Iran's ties to Hezbollah and Venezuela and Venezuela's
    ties to Iran and the FARC, and the FARC's history of building
    alliances with other armed groups, and the already existing
    presence of Hezbollah and Hamas and other Islamist groups on
    the ground in Latin America, it would be imprudent to dismiss
    this alignment as an annoyance. It is, instead, I believe, a
    direct and growing threat to the United States and Latin
    America. Thank you.
        [The prepared statement of Mr. Farah
    follows:]Douglas Farah deg.

        Mr. Engel. Thank you, Mr. Farah. Dr. Milani?

      STATEMENT OF MOHSEN M. MILANI, PH.D., PROFESSOR AND CHAIR,
    DEPARTMENT OF GOVERNMENT & INTERNATIONAL AFFAIRS, UNIVERSITY OF
                             SOUTH FLORIDA

        Mr. Milani. Thank you, Mr. Chairman. I am honored to appear
    before you today. There are three key questions about Iran's
    relationship with Venezuela. What is the nature of their
    relationship? Can their axis of unity blossom into a strategic
    alliance between the two? And does this unity pose a national
    security threat to the United States?
        The defining feature of this relationship is political
    cooperation, followed by cooperation in the oil and gas
    industries. Economic and military issues are peripheral to this
    relationship.
        The two countries each view the U.S. as a threat to their
    own survival and believe that they will be more able to defend
    themselves, expand their power through a united front and push
    the world toward a multipolar order.
        Isolated, the two countries support each other. Examples
    include Venezuela's support for Iran's nuclear program and
    Iran's condemnation of the failed coup d'etat against President
    Chavez in 2002. President Chavez was also one of the first
    leaders to congratulate Ahmadinejad after the disputed election
    in June 2009.
        Today, the legitimacy of both governments has been
    questioned by a significant portion of the population and they
    are rather isolated. For Ahmadinejad and Chavez, therefore,
    having an important ally might be as much about domestic
    politics as about international relations.
        Ultimately, oil is what unites these two countries. They
    seek to increase price by lowering production, intend to use
    Euros instead of dollars in their transaction, and have joined
    the Gas Exporting Countries Forum that Iran and Russia formed
    in 2001. They have recently agreed to invest some $700 million
    in others energy sector. Iran reportedly will import up to
    20,000 barrels of gasoline daily from Venezuela in case of new
    sanctions against Iran. They also plan to build a refinery in
    Syria.
        The volume of trade and commerce is limited but growing.
    The two countries have established a joint production company
    to manufacture tractors. Iran is building 2,500 housing units,
    as well as a variety of other factories, in Venezuela.
        Iran, however, represents less than 1 percent of
    Venezuela's total export to the world and is not even among the
    top 13 trading partners with Venezuela, and Venezuela is not
    even among the top 20 countries that trade with Iran.
        In April, 2009, the two countries officially established a
    bank with an initial contribution of $100 million each. The
    bank could obviously become a convenient channel for Iran to
    bypass U.S. sanctions.
        The military cooperation between the two governments is
    growing. Venezuela seems to be anxious to learn from Iran's
    advanced strategies of asymmetrical warfare. Asymmetrical
    warfare could become useful to Venezuela in case of its
    conflict with its neighbors.
        Regarding terrorism--an area beyond my expertise--although
    the Economist conclude that ``there is no firm evidence of a
    continuing and active Iranian inspired terrorist presence in
    the region,'' there are experts who believe otherwise. Iran is
    unlikely to use Venezuelan soil to embark on any terrorist
    activities which would make its most important ally in the
    region vulnerable to allegations of sponsoring terrorism. There
    are other countries that Iran could use.
        Clearly, Iran has made a strategic decision to slowly find
    its way into Latin America. This is part of Iran's policy to
    find ways to neutralize the United States policy of containing
    Iran, bypass U.S. sanctions, and, most importantly, develop
    retaliatory capabilities against the United States should Iran
    be attacked. Although there are no confirmed reports that Iran
    has developed any infrastructure in Venezuela to allow it to
    retaliate against the United States, still Washington must be
    concerned.
        Can this political unity blossom into a full strategic
    alliance? The probability is very low. The two countries seem
    to have recognized that the U.S. will not tolerate such an
    alliance and will react forcefully if needed. Venezuela is not
    among the top foreign policy priorities of Iran, and Iran does
    not seem to be Venezuela's top priority.
        Finally, does this relationship pose national security
    threat to the U.S.? Thus far, I would argue the relationship
    between Iran and Venezuela has been more of an irritant and
    nuisance to the United States, but this nascent alliance has
    the real potential to become a low level threat, and therefore,
    it warrants close watching and diligent monitoring. Thank you.
        [The prepared statement of Mr. Milani
    follows:]Mohsen Milani deg.

        Mr. Engel. Thank you, Dr. Milani. Dr. Bailey? Dr. Bailey,
    could you push your button? I don't think it is on.

    STATEMENT OF NORMAN A. BAILEY, PH.D., CONSULTING ECONOMIST, THE
                           POTOMAC FOUNDATION

        Mr. Bailey. I wish to thank the chairmen of the three
    subcommittees and the members of the committees for this
    invitation. I have the advantage of coming last so that I will
    try not to repeat what has already been said by other
    witnesses, as well as by the members who gave their opening
    remarks.
        The activities of Iran in the Western Hemisphere have been
    made possible thanks to the essential collaboration of
    President Chavez of Venezuela providing Iran an operational
    base from which to expand its influence and operations
    throughout the continent. Many, if not most, of these
    activities and installations are designed to facilitate and
    provide cover for illegal and subversive endeavors that not
    only involve the Iranian Government, but also terrorist
    organizations such as Hamas, Hezbollah, Islamic Jihad, the
    Colombian FARC and ELN and drug cartels from Colombia, Mexico
    and elsewhere.
        The financial aspects of the penetration of Iran in
    Venezuela and elsewhere in the hemisphere have already been
    outlined and this gives, of course, Iran the ability to use the
    Venezuelan banking system to evade financial sanctions declared
    by the United States, the European Union and the United
    Nations. The Treasury Department has sanctioned the Iranian
    banks and various individuals but so far has not sanctioned any
    Venezuelan bank. This is odd because Iran makes extensive use
    of the Venezuelan banking system, especially Banesco, including
    Banesco Panama, Banco Occidental de Descuento, Banco Caroni and
    Banco Guyana. The availability of these financial institutions
    for Iranian use is advantageous to Iran for obvious reasons.
        In the industrial and mining area, the Iranians have
    acquired so-called industrial installations throughout
    Venezuelan territory, including a tractor factory in Bolivar
    State, a cement plant in Monagas, a car assembly plant in
    Aragua and a bicycle factory in Cojedes. Some of these
    installations in reality are used primarily as warehouses for
    the storage of illegal drugs, weapons and other items useful to
    them and their terrorist clients. In addition, the Islamic
    Republic bought a gold mine in Bolivar which indeed produces
    gold, but also produces uranium. Recently, Venezuela signed
    agreements with Iran and Russia for the transfer of nuclear
    technology.
        The weekly flights between Caracas, Damascus and Tehran
    have been mentioned several times. Additionally, however, Iran
    and Venezuela have formed a joint shipping line, the IRISL
    Group. On December 30, 2008, Turkish authorities intercepted 22
    containers marked ``tractor parts'' in the Port of Mersin that
    in fact contained materials for making bombs and weapons bound
    from Iran to Venezuela. IRISL has now been blacklisted by the
    U.S. Government.
        Iranian technical assistance has been provided to Venezuela
    in the areas of defense, intelligence, energy, security and
    industry. Iran has agreed to build an explosives plant in
    Carabobo state and produces weapons in the so-called tractor
    plant in Bolivar. Technical assistance, as we have seen, will
    now be granted to Venezuela by Iran in the area of nuclear
    power and for the purpose of finding and efficiently mining
    uranium deposits. I might add, recently a delegation of
    Iranians went to Bolivia for the same purpose.
        Iranian participation in drug trafficking through Venezuela
    to Central America, Mexico, the United States, Caribbean and
    West Africa and Europe is extensive and the proceeds are used
    to finance further penetration of Iranian interests in the
    region, as well as to fund the terrorist organizations
    mentioned above.
        Ocean-going tuna boats purchased in Ecuador and refitted in
    a shipyard in Panama which was bought by a private sector ally
    of Chavez are now used to transport cocaine across the
    Atlantic. This is perfect because it has tuna on top and
    cocaine below, and the smell of the tuna masks the cocaine. The
    so-called cement plant packages cocaine in bags marked cement
    and are taken by the tuna boats across the Atlantic to West
    Africa, and from there, transshipped to Europe. Other routes
    through Venezuela to Santo Domingo head to the Gulf Coast, and
    to the U.S. west coast and Florida. Cocaine is also flown or
    shipped in boats through Central America, particularly Honduras
    and Guatemala into Mexico, and from there, to the United
    States. Protection of the drug trade by the Venezuelan National
    Guard is notorious. In summary, Iran over the past several
    years has built up an extensive network of facilities
    throughout the region concentrated in Venezuela, Ecuador,
    Bolivia, Central America and Panama, and involved with the
    financing of terrorist organizations, drug trafficking, weapons
    smuggling, money laundering and the provision of chemical
    precursors to the Colombian drug cartels. It is becoming
    increasingly clear that one of the principal motivations of all
    this activity is to be able to retaliate against the United
    Stats if it is attacked, particularly through damaging the
    Venezuelan oil facilities and blocking the Panama Canal.
        In short, the Iranian penetration into the Western
    Hemisphere indeed is a security threat to the United States and
    the rest of the hemisphere. The United States and other
    governments should implement immediate action to confront this
    threat, including action against Venezuelan financial
    institutions, patrolling the mouth of the Orinoco River,
    actively monitoring Iranian activities in Panama and throughout
    the hemisphere while denouncing the activities outlined above
    in hemispheric and international fora. District attorney
    Morgenthau has it right. When will the rest of the government,
    other than the Treasury, come along, not to mention the rest of
    the hemisphere? Thank you very much, Mr. Chairman.
        [The prepared statement of Mr. Bailey
    follows:]Norman Bailey with appendix deg.

        Mr. Engel. Thank you very much. Let me start with the
    questioning. I know that prior to World War II, Hitler and
    Stalin had a pact and they both invaded Poland. We have found
    that in the past marriages of convenience have been made. The
    relationship between a conservative, theocratic government,
    like Iran, and a number of secular leftist governments in Latin
    America seems rather unnatural to me. Forced, unlikely to
    appeal to citizens of those countries. Can someone describe the
    public perception of Iran in countries where the ties are the
    closest, such as Venezuela, Nicaragua and Bolivia? To what
    extent has there been any discord between the idealogy of
    Iran's conservative, theocratic government and that of secular
    Latin American governments, like Venezuela and Bolivia? How do
    moderate leftist leaning governments, like Chile and Brazil,
    view Iran's overtures toward Latin America? Anyone want to take
    a stab at that?
        Mr. Farah. I have just spent some time in Ecuador and in
    Bolivia and I think that most people are fairly oblivious to
    the Iranian presence there. The tractor factory that is
    supposed to be rolling out these tractors is actually rolling
    out about five or six a month that arrive there and sell for
    far more than other tractors that actually function, so it is
    not much of a boon for the people there. There is a cheese and
    milk factory on the Altiplano that is also largely
    nonproductive. So I don't think that there is a great deal of
    connectivity with the people in the regions, but I do think
    there is a great deal of concern in the banking sectors of
    Bolivia, and Ecuador and elsewhere of what the Iranians are
    doing there and the constant Venezuelan accompanying of Iranian
    officials to meetings, and the recruiting of young people, as I
    outline in my written testimony, for training in Iran I think
    is one of the other things that has caused a great deal of
    concern, particularly in Bolivia, Venezuela, Ecuador and from
    the Communist party of the FMLN in El Salvador.
        They have been taking cadres of students and government
    workers over to Iran for training for 30-90 days in
    counterintelligence, crowd control, a whole series of things.
    So I think there is among the people who are in the political
    elites or in these political circles a great deal of concern. I
    think in the strata below that there is not much known about it
    and it is viewed as one of the other sort of ongoing
    multicircus things that President Chavez and others do to keep
    people distracted. I think in the people who actually work in
    the regions, in the areas where Iran is most active, there is a
    great deal of concern about that.
        Mr. Engel. Thank you. Dr. Milani?
        Mr. Milani. To answer your excellent question, I can think
    of three major areas where the two countries have been
    ideologically pushed together. One is the incredible
    similarities between Christian liberation theology and radical
    Shiaism. A number of scholars have written about the
    commonalities between the two, and that is why the two
    countries can form a united front. Second, both Mr. Ahmadinejad
    and Mr. Chavez are populists and believe in the same kind of
    ``model of resistance'' against the U.S. In fact, if you study
    the writings by Chavez and others about the so-called U.S.
    imperialism, they have remarkable similarities to what Khomeini
    used to say, the ``Great Satan.'' I think, finally, the most
    important one is a practical reason: The enemy of my enemy is
    my friend. The two countries see in the United States a great
    threat, and therefore, they have formed a united front.
        Mr. Engel. Thank you. Let me ask one other question. We
    have heard a lot of mention of terrorist groups, like Hezbollah
    or Hamas. We have reports that Hezbollah conducts fundraising
    in Latin America, along with other activities. In March of this
    year in congressional testimony, Admiral Stavridis, then
    Commander of the U.S. Southern Command, or SOUTHCOM, noted that
    two U.S. antidrug operations in 2008 targeted Hezbollah
    connected drug trafficking in Colombia and the tri-border
    region of Argentina, Brazil and Paraguay. Separately, in April
    2009, police in Curacao in the Netherlands, Antilles, arrested
    17 people for alleged involvement in a drug trafficking wing
    with connections to Hezbollah.
        How would you characterize Hezbollah's role in drug
    trafficking in the region in relation to its financing? What is
    the extent of Hezbollah's financial network in Latin America?
    How important is such financing to Hezbollah? What types of
    infrastructure does Hezbollah have in Latin America and the
    Caribbean, and where is it? Is it the tri-border area of
    Argentina, Brazil and Paraguay? Is that the main nexus of
    Hezbollah activities? Or are there other areas of concern in
    the region? Want to try that?
        Mr. Bailey. Well, yes, both Hamas, Hezbollah and other
    terrorist organizations such as Islamic Jihad raise money, and
    have been doing so, for many, many years in the tri-border
    area, and they continue to do so. Another major center for this
    activity is the island of Margarita off the coast of Venezuela
    where the Islamic Cultural Center which has 4-feet thick
    concrete walls and armed guards and is notoriously lacking in
    art exhibits and musical programs is a major center of these
    kinds of activities. It is not only drug trafficking, although
    that is a major source of financing, it is also extortion, and
    kidnapping and other activities of this kind.
        Mr. Engel. Thank you. Mr. Farnsworth, did you have your
    hand up? No?
        Mr. Farnsworth. Well, I would simply reaffirm what Dr.
    Bailey said and add that the tri-border area has traditionally
    been defined as a lawless region of the world, and so, frankly,
    a lot of bad things go on in there. Having said that, it
    clearly is an area where Hezbollah has been active in terms of
    financing some of their operations. I think the key question
    is, what is that money to be used for? I think that it goes to
    my oral testimony about the intentions of the Iranian regime
    and the affinity organizations that it supports. The question
    is, is that money channeled back to the Middle East to be
    utilized for activities in the Middle East region or is it
    designed to be used for activities in Latin America itself to
    expand perhaps the Iranian revolution into the Latin American
    framework? That is the question I think that remains undefined.
        To go the question that you asked, Mr. Chairman, about are
    these activities expanding, I think the answer to that is yes
    because we are seeing now Hezbollah engagement in drug
    trafficking, as Admiral Stavridis said, we are seeing
    engagement in other activities that frankly didn't exist in the
    past, and so it is always a little bit dangerous to predict the
    future, but based on trends, one could anticipate that this
    behavior will increase. Even if that money is designed to
    return to the Middle East, if you will, nonetheless, the
    lawless activities that are going on to engage in that
    fundraising are disruptive, and, in fact, destructive to much
    of Latin America, and drug trafficking is a perfect example, as
    well as to the United States.
        Mr. Engel. Thank you. Well, let me ask my last question to
    Ms. Siegel Vann because this tracks some of your testimony, Ms.
    Siegel Vann. As you mentioned, there has been an uptick in the
    number of anti-Semitic acts in Venezuela. You mentioned the
    thrashing of a synagogue by hooligans, which I think was more
    than just hooligans. There have also been police raids on a
    Jewish center in Caracas in 2004 and 2007. The State
    Department's annual human rights report indicates that
    incidents and attacks against Jewish institutions have become
    more frequent in Venezuela. So let me ask you, to what extent
    is the rise of anti-Semitism in Venezuela linked to the
    country's strengthening its relationship with Iran under
    President Ahmadinejad? That would be Venezuela's strengthening.
        Obviously, Ahmadinejad is known for his anti-Jewish and
    anti-Semitic views. Do you see a pattern of increasing anti-
    Semitism in other countries in the region with increasing
    Iranian engagement, such as Nicaragua or Bolivia? Is the anti-
    Semitic messaging in Latin America similar to the anti-Semitic
    references in Iran?
        Ms. Siegel Vann. Mr. Chairman, we haven't detected an uptik
    in anti-Semitism in other countries other than Venezuela. We
    have seen isolated cases, but we cannot refer it directly to
    Iran's involvement in the hemisphere. What we have seen is that
    in crisis situations, like the Lebanon war or the crisis in
    Gaza at the beginning of this year, we did see that there was
    an increase in radical extremist rhetoric in the media, anti-
    Semitic/anti-Zionist rhetoric, and we can say that that has to
    do very much with the permissive atmosphere that President
    Chavez has created for this type of discourse.
        So even though we cannot see a cause/effect relationship
    exactly, we can say that a new type of discourse is now present
    in the hemisphere where we didn't have it before. Anti-Semitism
    in general terms has become politically incorrect very much in
    most of Latin America, and as Latin American societies become
    more democratic, more inclusive, Jewish communities have really
    enjoyed an atmosphere of tolerance and inclusiveness. We have
    seen that since President Chavez increased its strategic
    cooperation with President Ahmadinejad this type of atmosphere
    has changed.
        Mr. Engel. Thank you. Mr. Mack?
        Mr. Mack. Thank you, Mr. Chairman. I want to follow-up on
    the chairman's question. Clearly, I think we agree that there
    is a threat to the Jewish community in Venezuela. Do you think
    now is the time for the United States Congress to speak out
    against anti-Semitism in Venezuela?
        Ms. Siegel Vann. I believe at this point we have been in
    very close contact with our partners from the Jewish community
    in Venezuela and with other political representatives and
    members of civil society who continually give us an overview of
    what is going on there. The Jewish community now is really
    living in a situation where they don't know what is going to
    happen tomorrow. It is a fact that since the attack against the
    Tiferet Israel Synagogue the atmosphere in Venezuela has
    improved for the community. Attacks in the official media have
    decreased about 70 percent, there is increasing security in
    Jewish institutions, and there are open channels of
    communication with the government, so there has really not been
    any overt attack against the community.
        Having said that, because of the atmosphere that has been
    created, we don't know when this can change. I don't know if
    this is the moment really for the U.S. Congress to intervene. I
    know that the U.S. Congress has been very much involved and
    very much concerned about this situation and it is something
    that the community appreciates tremendously, such as we do, but
    I do believe that at this point it is a wait and see situation,
    but we have to monitor and keep our eyes open and have the
    channels of communication open at this point. I really don't
    know if this is the moment to interfere in a stronger way.
        Mr. Mack. Okay. So the answer was no, you don't think we
    should do that now. So let me ask you this. What has to happen
    that then would make it the right time? I mean, you know, in
    these issues the question always is what do you wait for? Let
    me just finish by saying, you know, we don't want to look back
    and say, wow, you know, we should have moved in Congress and
    with one voice and spoke out against anti-Semitism in
    Venezuela. So the question is, what has to happen? What is it
    that has to happen? We have already seen such an attack on the
    Jewish community in Venezuela. What further has to happen for
    us to do something?
        Ms. Siegel Vann. Well, I think that the message was
    delivered loud and clear during the attack against the
    synagogue. I think that President Chavez understood very well
    that their type of behavior was not correct, and I think that
    he, or the people who followed him, understand that this
    shouldn't be their modus operandi. I do believe that it is very
    important to have the cooperation of governments in the region
    which we did have during those times as well.
        Mr. Engel. If I can just interrupt for a minute.
        Ms. Siegel Vann. Yes.
        Mr. Engel. I just want to point out that this committee,
    the Foreign Affairs Committee, sent a very strongly worded
    letter to President Chavez signed by 11 Democrats and nine
    Republicans. It was truly a bipartisan letter with strong words
    in it. I think Mr. Mack's question is a very excellent
    question, but I do think at times when the United States
    Government speaks out it does have a positive effect. I agree
    with you that the timing has to be right. I am sorry. Just
    wanted to add that.
        Ms. Siegel Vann. So basically I do think that having
    partnerships with different countries in the region has helped
    a great deal. There were many countries that saw the attack
    against the synagogue in very negative ways and approached the
    Chavez government letting him know that this was a no, no. So I
    do believe that our partnerships with different governments in
    the region are a very good dissuasive for this----
        Mr. Mack. Thank you. Let me just point out that there is a
    pattern with Hugo Chavez. He pushes and he pushes until he gets
    in trouble, and then he says he is sorry or he won't do it
    again, and then when no one is looking, he does it again. I
    don't want to wait for the opportunity when he is going to do
    it again. The chairman is right, there was a letter that went
    from this committee, but there is also a resolution in the
    House that I believe is very important that we move forward.
    Maybe tomorrow there will be an opportunity for that. I don't
    know. I think now is the time. It is always the right time to
    speak out against anti-Semitism. So, with that, Mr. Chairman,
    my time is up. Thank you.
        Mr. Engel. Thank you. Mr. Ackerman?
        Mr. Ackerman. Thank you, Mr. Chairman. Iran seems to be
    reaching out to various places in the world, different
    countries. Today, I think we have the Western Hemisphere under
    the microscope. Is what they are doing based on a counter
    reaction to what some of us are trying to do? Notably, to try
    to place the toughest, strongest sanctions upon Iran because of
    their nuclear weapons program in order to prevent eventually
    having to possibly go to war? Are they reaching out to other
    countries so as to undermine the possibility of sanctions so
    that other countries, whether it be Venezuela or some other
    countries in Latin America or all of Latin America, not voting
    in the United Nations for sanctions, are they trying to make
    themselves sanction proof? Mr. Farnsworth?
        Mr. Farnsworth. Well, yes. Thank you for the question. I
    think that that is what the situation has evolved into. I don't
    think that is how it began. This relationship has been budding
    for several years and it really, in my view, is at the behest
    of President Chavez of Venezuela. If you look at what happened
    initially, the Iranian response was not overly receptive, it
    was a little bit skeptical. I believe it was the chairman who
    said well, what is the relationship between these two
    countries? They are dramatically different character nations. I
    think over time the Iranians have realized the value not just
    of a relationship with Venezuela, but frankly being introduced
    into the neighborhood with Bolivia, Nicaragua, Ecuador, and
    that is what is involved in the sanctions issue.
        Mr. Ackerman. Got to get through everybody.
        Mr. Farnsworth. Absolutely.
        Mr. Ackerman. Thank you.
        Mr. Farnsworth. Sure.
        Mr. Ackerman. Ms. Vann?
        Ms. Siegel Vann. Definitely we think that Iran is seeking
    support in the hemisphere in order to sidestep isolation and
    sanctions against them in the Middle East and around the world.
        Mr. Ackerman. Thank you. Mr. Farah?
        Mr. Farah. Well, I think it is clear, particularly given
    the financial institutions that they are working through, that
    that is one of their primary goals because if their banks are
    sanctions to the New York u-turn and they can't go there but
    Venezuelan banks, Ecuadorian banks can, and as long as they
    have access to that, they are not going to be very hurt by the
    sanctions.
        Mr. Ackerman. Dr. Milani?
        Mr. Milani. Yes. I think it is both a reaction to the U.S.,
    but also, it is part of the emergence of Iran as a regional
    player with ambitions to play on global stage. It is very
    important to remember that the foundation of the relationship
    with Hugo Chavez was not laid during Ahmadinejad's presidency,
    but was laid during the tenure of the more moderate Mohammad
    Khatami.
        Mr. Ackerman. Dr. Bailey?
        Mr. Bailey. Yes, definitely, the involvement of Iran in the
    Western Hemisphere is intended to find ways to circumvent
    sanctions and also to prepare itself to retaliate against the
    United States in case it is attacked.
        Mr. Ackerman. Different question. Are any of you aware of
    or tracking the upsurge in the planning or actual construction
    anywhere in Latin America of mosques? Anybody? Something I
    think we have to take a close look at.
        Mr. Farah. The one place where you see a notable increase
    in the presence is in Panama. I am not aware in any other
    country where it is noticeable but Panama is seeing a
    significant upsurge in the presence of Pakistanis and Pakistani
    mosques.
        Mr. Ackerman. Dr. Milani, you seem to have taken a very
    studied but moderate attitude toward the threat of the Iran/
    Venezuela axis and implied that maybe it wasn't the strongest
    of axis' that we should be looking at. I would like to go just
    down the line. If you could pick the biggest, fill in the
    blank, Iran-some Western Hemisphere country axis that we should
    be the most concerned about. Why don't we start with Dr.
    Milani?
        Mr. Milani. Well, I think at this time it would be
    Venezuela, but Brazil would be the key to watch.
        Mr. Ackerman. Dr. Bailey?
        Mr. Bailey. Well, Venezuela obviously, and tremendous
    activity in Panama.
        Mr. Ackerman. Mr. Farah?
        Mr. Farah. I would say the one country with largely ignored
    scrutiny is Nicaragua, and it has the longest and most
    longstanding radical ties to the Iranian revolution, Daniel
    Ortega.
        Mr. Ackerman. Ms. Vann?
        Ms. Siegel Vann. I would say Venezuela, but Chile, even
    though it has the largest Palestinian community in the
    hemisphere, generally very moderate. We have heard that in the
    last few months there has been some presence from foreign
    actors that have been stirring things up among----
        Mr. Ackerman. Thank you. Mr. Farnsworth?
        Mr. Farnsworth. My view is without Venezuela you wouldn't
    have Iran in the region in the way it is, so Venezuela,
    clearly.
        Mr. Ackerman. So we have at least four countries to be--it
    is quite a mix, and I think that fills up our plate. Mr.
    Chairman, back to you.
        Mr. Engel. Thank you, Mr. Ackerman. As you can hear, we
    have three votes and I am told those will be the last votes of
    the day, so I am going to try to see if we can get people to
    ask questions before we have to go to vote. Mr. Royce?
        Mr. Royce. Thank you, Mr. Chairman. Mr. Farah, I mentioned
    in my opening statement some of the observations about our
    intelligence collection there in this hemisphere and a press
    report I saw had an official complaining that we don't even
    have fly overs, another official says we don't even know what
    we don't know, and yet, you pick up the Wall Street Journal and
    there is a story about an intrepid report who shows up at a
    factory that is a jointly owned Iranian and Venezuelan factory,
    so you have done that kind of aggressive reporting throughout
    your career. What is your assessment of intelligence collection
    capabilities here? Then maybe also you could tell us a little
    bit more about your observation on Nicaragua, which is
    something that is off our radar and it would be interesting to
    know. Go ahead.
        Mr. Farah. Thank you, Congressman Royce. I think that
    partly because of the antipathy of Venezuela, Bolivia, Ecuador,
    they have reduced our embassy staffs so much there, especially
    in Bolivia where they have PNG'ed out most of the embassy in
    Venezuela, that we have limited capability and we have not
    concentrated on nonofficial covert type folks in Latin America
    I think for some time, so I think that the intelligence
    gathering is not great there, and I think that the embassies
    have confined so many of their people to such limited access
    across the countries. I was just down in the Lago Agrio region
    on the Colombia/Ecuador border where American embassy personnel
    are simply not allowed to go, and it is this relatively safe
    place and you can actually walk across to Colombia, but there
    is all kinds of interesting stuff going on that you wouldn't
    know about unless you were able to get on the ground there.
        So I think the assessment of our ability to move in the
    hemisphere and our resources allocated to that are minimal, and
    I think it is somewhat concerning. I think that journalists or
    people doing other types of research, such as myself, are
    unconfined by what the embassy rules are and it lets us do a
    lot more than sometimes they are able to. Nicaragua, I would
    say that Daniel Ortega, if you will recall, during the
    Sandinista time Iran had the largest embassy in Nicaragua aside
    from, and they were constantly complaining about the size of
    the U.S. Embassy. There is a history of Ortega where, as you
    recall, the last thing he did in 1990 as he was leaving office
    was grant citizenship to almost 900 foreigners living in
    Nicaragua. Many of them were Red Brigade, and Iranians and
    other folks.
        Violeta Chamorro tried very hard to undo some of that, but
    most of that stayed. So he has a history that goes back. He
    always said, Ortega has always said that the Sandinista and
    Iranian revolutions were twin revolutions, they were same year,
    same anti-imperialists, et cetera, and so I think that as sort
    of a gateway to Central America and given Ortega's longstanding
    history of ties to subversive groups, particularly the FARC and
    the Tumpac Amarus in Peru and elsewhere, that that relationship
    is extremely dangerous. I think what Ortega brings to the table
    is an ability to run clandestine networks that are very useful
    to Iran that other governments simply don't have, including
    Venezuela, don't have near the sense of development of those
    type of networks as Ortega brings to the table.
        Mr. Royce. And what is Ahmadinejad looking for in Brazil on
    his trip there? What do you think his objective is?
        Mr. Farah. Well, I think, you know, Brazil does have
    nuclear technology and is, I think, the emerging leader in the
    hemisphere that is garnering a lot of international attention.
    Lula, I think, until very recently had been very studied in his
    relationship with Iran. If you will look back, he refused to
    meet with Ahmadinejad for several years. When Venezuela
    insisted initially that Iran be brought into this nuclear
    program and asked Brazil to help, Brazil said no because of
    Iran's involvement. I think Lula has changed. I think in the
    last few months he seems to have changed his mind on a lot of
    those issues. I think they are a serious power, their economic
    entry of the world. Chavez is viewed, I think, largely as a
    clown. Lula is not. If he gets legitimized by Lula it is
    something much more important than Chavez could ever give him.
        Mr. Royce. On the other hand, Lula has the opportunity
    basically to send the message after the meeting that Latin
    America is no place for Iran to be meddling, so we will have to
    wait and see how that plays out.
        Mr. Farah. If he were to do that, or to stand up to Chavez
    more publicly, it would have a tremendous impact in the region.
    No question.
        Mr. Royce. The last, I have no reason to believe there is a
    connection, but you read the cases of the myriad, this endemic
    kidnapping that occurs across Venezuela of businesspeople, and
    especially in the province in which the President's brother
    happens to be governor. Who is doing that kidnapping? Is there
    any indication? Is that just local?
        Mr. Farah. I think some of it is spillover from the FARC
    and some of it is people--I think, you know, if you look at the
    homicide in Caracas, it is higher than Medellin was during the
    drug wars of Medellin.
        Mr. Royce. Yes.
        Mr. Farah. So I think the lack of rule of law is endemic
    there, and I think that the Chavez government has proved
    singularly inept at providing that.
        Mr. Royce. Thank you very much, Chairman.
        Mr. Engel. Thank you, Mr. Royce. I would like to try to
    finish this before we go to vote, so I would just see if we can
    restrict the questions maybe to a quick question or two so we
    can give everybody a chance. Mr. Klein?
        Mr. Klein. Thank you, Mr. Chairman. One of the things that
    we have been watching is the transportation issues between
    Caracas and Tehran, air flights. There has also been a report
    by the United States State Department, Country Reports on
    Terrorism, that was published in April of this year that stated
    that Venezuelan citizenship, identity and travel documents
    remain easy to obtain and making the country a potential
    attractive weigh station for terrorist threats. They have also
    assessed from our transportation system that there is a gaping
    hole in aviation security. We have direct flights between the
    United States and Miami, I mean, Miami and Venezuela,
    obviously. Frequent flights. Can you help us assess the threat
    of what is coming in, what is not coming in? Should we be
    developing a policy that deals differently? I mean, I think
    there is some concern about this.
        Ms. Siegel Vann. I think that one of the problems is that
    really we don't have a clear assessment or real understanding
    of the scope of the problem. There is a lot of hearsay and we
    have read a lot of reports regarding people who are in the
    airport, reports through open sources that talk about this. The
    truth is that there is nothing really concrete about it that we
    can point out to. I think it is very important to start
    assessing and start collecting the data that will lead us to an
    assessment of how dangerous this is and if we have to really
    establish some sort of policy with respect to that. The
    flights, I just read last week another report about them, but
    again, the information is really very dubious, even the
    sources. It is not really clear what is going on there. They
    talk about some phantom planes. People really don't know.
        Mr. Bailey. The question, and Dina's response to it, goes
    back to the previous question of how good is our intelligence
    in Latin America? We have, and I know this as from my own
    experience, decent intelligence operations in Mexico and
    Colombia, period. Our intelligence apparatus in the rest of
    Latin America is very, very thin. In order to get the kind of
    information that we need with reference to some of these
    activities, quite frankly, we are not equipped for. Often, open
    source and private organizations do a better job than the U.S.
    intelligence community.
        Mr. Klein. So are we just closing our eyes to the fact that
    this is a place where we have no real good information, and
    cargo and individuals can be coming in from this point to the
    United States without any--I mean, obviously on our receiving
    end there is some level of verification, but is there a concern
    that we should be taking a deeper look at this?
        Mr. Bailey. Well, it is certainly a concern in my mind. It
    is a matter that has to do with the fact that dealing in Latin
    America for the people in the intelligence community is no
    longer a good career path because that is not the way to get
    promoted. You want to deal with the Middle East, and the Far
    East and China, and, you know, et cetera, et cetera.
        Mr. Farah. I would just add that every country in the
    Bolivarian revolution has lifted all visa restrictions on
    Iranians coming and going. Bolivia, Ecuador, Venezuela and
    Nicaragua have all lifted restrictions, so you have no idea how
    many people are coming and going there. Ecuador lifted
    restrictions on everybody and now they are inundated with
    Russian organized crime, Chinese organized crime, and every
    major bust of foreigners or illegal immigrants into the United
    States that aren't Mexican, Guatemalan, pass through Ecuador. I
    think it is one of the serious issues.
        Mr. Engel. Thank you. We have about 4 minutes left. I am
    going to divide it between Mr. Fortenberry and Mr. McCaul. Mr.
    Fortenberry?
        Mr. Fortenberry. Thank you, Mr. Chairman. Let me do this
    quickly. First of all, thank you for holding the hearing. Dr.
    Milani and Dr. Bailey, you hold similar sentiments but your
    conclusions are quite different. Dr. Milani, you drew a loose
    parallel between the Iranian revolution, liberation of
    theology, and you concluded by suggesting that the Iranian
    presence in the hemisphere is a nuisance. Dr. Bailey, you
    suggested prior to this later surge of interest in the
    hemisphere by Iran there was no cultural or political historic
    tie so that, in your view, this rises to a very serious level
    of national security concern. These panels are helpful in that
    you get a spectrum of perspectives, but clearly, there is some
    incompatibility here in the conclusions, so I would like you to
    further unpack your conclusions, please.
        Mr. Milani. Well, I think you need to put the relationship
    in a sort of comparative perspective. When you talk about grave
    national security, what can Iran actually do to the United
    States by its relationship in Venezuela? You have to look at
    the actual numbers economically speaking, in terms of military
    exchanges, and other areas. The only area that I do not know,
    and I am not going to make any judgment about, is of course the
    case of terrorism. If you look at all of the interactions and
    activities between Iran and Venezuela, they are not very
    different from what Iran is doing with many other countries.
        Now, that does not mean Iran is not a threat to the United
    States just because it has the same kind of relationship with
    others, but compare what Iran, for example, is doing in
    Lebanon, what Iran is doing in Afghanistan and Iraq with what
    Iran is actually doing in Venezuela and ask yourself: What is
    the national interest of Iran in Venezuela? There really aren't
    much. I think there is great deal of sensationalization about
    this whole business. That is why I said you need to watch it
    carefully. It has the potential to become a serious one, but
    not yet.
        Mr. Fortenberry. Thank you. Dr. Bailey, you care to
    respond?
        Mr. Bailey. The fact that, as Doug said, terrorists can
    come and go, Iranians and others, freely in these countries,
    the financing of terrorist organizations, the involvement in
    drug trafficking, the capacity, for retaliation, if the United
    States were to attack Iran or, for that matter, if Israel were
    to attack Iran, of damaging the oil facilities in Venezuela and
    blocking the Panama Canal to my mind represents an important
    national security threat to the United States.
        Mr. Engel. Let me call quickly on Mr. McCaul.
        Mr. McCaul. Thank you, Mr. Chairman. I will be brief
    because I have to. I want to follow-up on this potential
    terrorist threat. The alliance between Iran and Venezuela has
    been highlighted very well. I am concerned about also the
    alliance between Hezbollah and the drug cartels in Mexico, the
    movement of human trafficking. We know Kourani was captured. He
    actually got in to the United States. You don't need a visa to
    enter Mexico from Venezuela? Then, when the former Ambassador
    Shapiro is asked about Venezuelan passports, he basically said
    that anybody in this room except for me could probably obtain a
    Venezuelan passport because it can be forged so easily.
        So I think that is of grave concern. I am also concerned
    that if we pass this legislation, the Iran Sanctions Act, that
    Venezuela is going to be one of the first violators of that act
    in terms of sending refined petroleum to Iran. Then what would
    the response be to that? So, with the 30 seconds I have left, I
    am going to throw it to perhaps Dr. Bailey and Dr. Milani.
        Mr. Bailey. Well, there is no question about it that
    Venezuela is in violation of sanctions imposed not only by the
    United States, but by the European Union and the United Nations
    in many different areas, and nothing is happening to them as a
    result of that, with the exception of certain measures taken by
    the Treasury Department. All praise to the Treasury Department.
    It is the only branch of the U.S. Government that is doing
    anything effective about the situation. So, again, I say that
    as far as I am concerned, you don't have to forge Venezuelan
    passports, I will happily give you one, and identity documents
    and so on and so forth. So if you run into somebody in Latin
    America that says his name is Guillermo Rodriguez but he speaks
    Farsi, you can be pretty sure that he is not really a
    Venezuelan.
        Mr. Engel. Dr. Milani, if you could do it quickly, you will
    have the last word.
        Mr. Milani. Thank you. I think any time you try to pressure
    Iran or Venezuela, what you do at the end is make them closer.
    Rather than make them closer, I think you need to have subtle
    ways of creating distance between them, subtle political ways,
    rather than putting them in a corner so that they would need
    one another and therefore they would solidify their
    relationship.
        Mr. Engel. We will let those be the last words. As I can
    see on my screen, we are down to zero minutes remaining in the
    vote. I want to thank all of our excellent witnesses. I want to
    thank Mr. Mack, as always, and I want to thank the chairs and
    the ranking members of the other subcommittees, Mr. Ackerman,
    Mr. Sherman and Mr. Royce, for cooperating. I thank you all
    very, very much. It has been very enlightening to me, and I
    know to the other members of the subcommittees. The hearing is
    now adjourned.
        [Whereupon, at 3:56 p.m., the subcommittees were
    adjourned.]

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