[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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