[Senate Hearing 113-582]
[From the U.S. Government Publishing Office]




                                                        S. Hrg. 113-582

            IRAN: STATUS OF THE P5+1 NEGOTIATIONS WITH IRAN

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

                                HEARING

                               BEFORE THE



                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 29, 2014

                               __________

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                COMMITTEE ON FOREIGN RELATIONS         

             ROBERT MENENDEZ, New Jersey, Chairman        
BARBARA BOXER, California            BOB CORKER, Tennessee
BENJAMIN L. CARDIN, Maryland         JAMES E. RISCH, Idaho
JEANNE SHAHEEN, New Hampshire        MARCO RUBIO, Florida
CHRISTOPHER A. COONS, Delaware       RON JOHNSON, Wisconsin
RICHARD J. DURBIN, Illinois          JEFF FLAKE, Arizona
TOM UDALL, New Mexico                JOHN McCAIN, Arizona
CHRISTOPHER MURPHY, Connecticut      JOHN BARRASSO, Wyoming
TIM KAINE, Virginia                  RAND PAUL, Kentucky
EDWARD J. MARKEY, Massachusetts
               Daniel E. O'Brien, Staff Director        
        Lester E. Munson III, Republican Staff Director        

                              (ii)        

  




















                            C O N T E N T S

                              ----------                              
                                                                   Page

Cohen, Hon. David S., Under Secretary for Terrorism and Financial 
  Inteligence, U.S. Department of Treasury, Washington, DC.......     9
    Prepared statement...........................................    10
    Responses to questions submitted for the record by:
        Senator Bob Corker.......................................    67
        Senator Marco Rubio......................................    69
Corker, Hon. Bob, U.S. Senator from Tennessee, opening statement.     3
Heinonen, Olli, Ph.D., senior fellow for research at the Belfer 
  Center for Science and International Affairs, Harvard Kennedy 
  School of Government, Cambridge, MA............................    43
    Prepared statement...........................................    45
Menendez, Hon. Robert, U.S. Senator from New Jersey, opening 
  statement......................................................     1
Sherman, Hon. Wendy, Under Secretary for Political Affairs, U.S. 
  Department of State, Washington, DC............................     4
    Prepared statement...........................................     6
    Responses to questions submitted for the record by:
        Senator Bob Corker.......................................    65
        Senator Marco Rubio......................................    68
        Senator Jeff Flake.......................................    70
Singh, Michael, Lane-Swig senior fellow and managing director, 
  The Washington, Institute, Washington, DC......................    51
    Prepared statement...........................................    53

                                 (iii)

  

 
                       IRAN: STATUS OF THE P5+1 
                         NEGOTIATIONS WITH IRAN

                              ----------                              


                         TUESDAY, JULY 29, 2014

                                       U.S. Senate,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:01 a.m., in 
room SD-419, Dirksen Senate Office Building, Hon. Robert 
Menendez (chairman of the committee) presiding.
    Present: Senators Menendez, Boxer, Cardin, Shaheen, Coons, 
Murphy, Kaine, Markey, Corker, Risch, Rubio, Johnson, Flake, 
McCain, and Paul.

          OPENING STATEMENT OF HON. ROBERT MENENDEZ, 
                  U.S. SENATOR FROM NEW JERSEY

    The Chairman. This hearing will come to order. We have two 
panels today to give us an overview of the status of the P5+1 
talks, looking back at what we have learned over the last 6 
months and looking ahead at what might change between now and 
November that ultimately gets us the type of deal we all hope 
for.
    What I would like to hear from our witnesses, who have been 
across the table from the Iranians, given the underwhelming 
concessions achieved to date, is what you have learned over the 
last 6 months that leads you to believe that we can reach a 
comprehensive deal in the next 4 months.
    Now, I think everyone knows where I stand. I have been 
skeptical of the Iranians' sincerity from day one and I cannot 
say that I am any less skeptical today than I was 6 months ago. 
I do not believe Teheran has had a change of heart about its 
nuclear program. If it did, I would think that the whole 
militarization aspect of it would be part of something that 
still have to be negotiated, but would be up front. As a matter 
of fact, I think it should have been up front from the very 
beginning in order so that we could define truly the nature of 
these negotiations in a way that the world would not just 
suspect that Iran was pursuing nuclear weapons, but would know 
it.
    I do believe that the Iranians want relief from sanctions 
and that is why they are at the table. I also believe we have 
leverage in this negotiation and that we should use it to get a 
good deal, and if not a good deal then no deal at all.
    Now, on that I will say that I have joined with the 
administration many times and Secretary Sherman has on 
different occasions publicly and privately said that no deal is 
better than a bad deal. But lately I hear refrains from the 
administration: But if no deal, what? Which suggests that, in 
fact, if we have no deal there are those who suggest that that 
is a choice between getting some type of a deal or having to go 
to a military action. I reject that as a choice. I believe that 
there are significant interim steps in between that lead us far 
from that ultimate conclusion.
    I also get concerned when I hear ``If no deal, what?'', 
because that implies that you have to get a deal at any cost. 
So I know that there are those in the disarmament community and 
in the editorial pages who suggest that those of us who want to 
really make sure that we get a good deal somehow have this 
penchant for wars. I find it particularly amusing as it relates 
to myself. I was one of the handful of people who voted against 
the war in Iraq, for example, at a time that it was 
overwhelmingly popular to vote for war.
    But as someone who has followed this for 20 years from my 
days in the House of Representatives on the House Foreign 
Relations Committee to the present, I know that the Iranians 
have gotten us to a point that by defying the international 
community we now accept things that we would never have thought 
were acceptable--levels of enrichment; changing their facility, 
not closing their facility at Fordow; changing the nature of 
their plutonium reactor at Arak.
    So they have succeeded in moving us well along the lines of 
what they ultimately wanted by defying the international 
community, including the present President of Iran, who has 
boasted about that while he was moving that program along he 
was able to keep the West from significantly sanctioning Iran.
    So if past is prologue, I think my skepticism is well 
rooted.
    Now, what I want to know is whether you believe an 
extension will give us a good deal; a deal that alters Iran's 
nuclear heading, postpones breakout, dismantles Iran's illicit 
nuclear infrastructure, puts us in place of a long-term 
inspection, verification, and monitoring regime, and calibrates 
sanctions relief to specific benchmarks, including a resolution 
of the possible military dimension of Iran's program.
    Now, I want to be very clear. I am not looking for the 
State Department's talking points today. I want to hear from 
our panelists why they believe, based on their experience over 
the last 6 months, four additional months will make a 
difference. What the committee needs to hear now is what 
happened at the negotiating table that brought Iran closer to 
their view to a deal if only they had another 4 months.
    Now, let me close by saying what I have always said: I 
support the administration's diplomatic efforts. I have always 
supported a bipartisan two-track policy of diplomacy and 
sanctions. At the same time, I have always believed that we 
should only relieve pressure on Iran in exchange for long-term 
verifiable concessions that will fundamentally dismantle Iran's 
nuclear program, and that any deal be structured in such a way 
that alarm bells will sound from Vienna to Washington, Moscow, 
and Beijing, should Iran restart its program any time in the 
next 20 or 30 years.
    I also want to be clear today that I do not support another 
extension of negotiations. At that point Iran will have 
exhausted its opportunity to put real concessions on the table 
and I will be prepared to move forward with additional 
sanctions.
    With that, let me recognize Senator Corker for his remarks.

             OPENING STATEMENT OF HON. BOB CORKER, 
                  U.S. SENATOR FROM TENNESSEE

    Senator Corker. Thank you, Mr. Chairman. I want to say that 
I think those are excellent opening comments and I think there 
has been bipartisan concern about where Iran is. Actually, 
looking back over our notes, we look back at the hearing we had 
on October 2013, where I think Wendy and David both were here 
and we talked about the extraordinary effort internationally 
that had been put in place to get Iran where they were when 
these negotiations began.
    I think the statement you mentioned--and hopefully this 
will play out in this way--but Iran's compliance with all U.N. 
Security Council resolutions would be the ultimate test as to 
whether they really were willing to deal with us in the 
appropriate way.
    I think all of us wish you well and all of us--I do not 
know of a soul here that does not want to see this resolved in 
a diplomatic way. I know we have had numbers of briefings, 
classified, some unclassified, and I will say in fairness the 
chairman is right. I mean, in each case on the important issues 
we feel the goalposts move.
    In March, of course, the issue of enrichment was basically 
agreed to. It is going to be very difficult, I think, to walk 
that back. But then on so many issues that are related and tied 
to this, we see the goalposts again continue to move. I know 
that David's testimony today has done a good job, I think, with 
sanctions. He is going to talk about the relief that Iran is 
getting during this next 4-month extension.
    But I think all of us are concerned that the--rightly so, 
and I think you are concerned, too--that the international 
community, having come together to put pressure on Iran the way 
that we have, is dissipating and will be very difficult to 
bring back together if we end up in the wrong place here.
    So I will close. I think that the chairman's comments speak 
well for most of the committee, candidly. I will just close by 
saying this. I hope that today you will publicly commit that 
there will be absolutely no more extensions, none; no matter 
where we are at the end of this 4-month period, there will not 
be additional extensions.
    We will either come to a final agreement or not, because I 
think people are very, very concerned about what happens if we 
have a series of rolling interim agreements, if you will.
    Secondly, I hope you will commit, as John Kerry has said, 
that there needs to be congressional buy-in. I hope you will 
agree to some format that gives Congress the ability to weigh 
in on this final deal. I know everybody says these sanctions 
cannot be waived without Congress. Well, they can. They can be 
waived without Congress weighing in.
    I actually believe that acknowledging Congress playing a 
role in one of the biggest issues that this administration is 
going to deal with relative to reaching agreement on nuclear 
issues--I think that Congress can be an important and valuable 
backstop to the administration as they negotiate this, because 
I know that Congress has sent out very, very strong signals as 
to what they believe, what we believe, would be an acceptable 
arrangement.
    So thank you for being here. I appreciate your service to 
our country. I appreciate the updates that we received by phone 
and in person. Again, all of us want to see success, but are 
very concerned about where we are at this moment.
    The Chairman. Thank you, Senator Corker.
    For the record, your full statements will be included in 
the record, without objection. We would ask you to summarize 
them in about 5 minutes or so, so we can enter into a dialogue 
with you. With that, Madam Secretary, you are recognized.

STATEMENT OF HON. WENDY SHERMAN, UNDER SECRETARY FOR POLITICAL 
       AFFAIRS, U.S. DEPARTMENT OF STATE, WASHINGTON, DC

    Ms. Sherman. Good morning and thank you, Chairman Menendez 
and Ranking Member Corker and distinguished members of the 
committee. I am pleased to be here along with Under Secretary 
Cohen to discuss the status of negotiations related to Iran's 
nuclear program. As you say, you have my written statement, so 
I will summarize its key points.
    Mr. Chairman and members, our goal is to prevent Iran from 
obtaining a nuclear weapon. The diplomatic process in which we 
are currently engaged was designed to achieve that goal 
peacefully and durably. We have a basic metric for a good 
agreement: one that cuts off all of Iran's potential paths to a 
nuclear weapon--the plutonium path with the current Arak 
reactor, the path through the underground facility at Fordow, 
the path through swift breakout at the Natanz enrichment plant, 
and the path that would occur in secret, which we will deal 
with through intrusive measures.
    And we will tie our sanctions relief to Iran's performance, 
only providing relief to Iran after it has taken verifiable 
steps as part of a comprehensive agreement and maintain the 
capacity to tighten the pressure if Iran fails to comply.
    I cannot tell you today that our diplomacy will succeed 
because I am not sure that it will. I can tell you that in the 
past 6 months we have made significant and steady progress. We 
have exchanged ideas, narrowed gaps on key issues, and 
identified areas where more hard work is required.
    For instance, we have had productive discussions about how 
to reduce the dangers posed by the facilities at Arak and 
Fordow, about the protocols necessary for transparency, and 
about the disposition of Iran's stockpiles of enriched uranium. 
No issues have been neglected. None have been finally decided 
because nothing is agreed until everything is agreed. And on 
some we still have substantial differences, including the 
question of enrichment capacity.
    As you know, Mr. Chairman, there is a limit to how detailed 
I can be in this open session and still preserve the leverage 
we need in support of the goal we seek. However, the bottom 
line is that, although serious obstacles do remain, we are 
moving in the right direction.
    For that reason, roughly 2 weeks ago the parties to the 
negotiation agreed to extend our deliberations for 4 additional 
months. We agreed to this extension because we had seen 
significant progress in the negotiating room and because we can 
see a path forward, however difficult, to get to a 
comprehensive plan of action. We will use this time to continue 
working toward that comprehensive plan for ensuring that Iran 
does not obtain a nuclear weapon and that its program is 
exclusively peaceful.
    I note that a year ago Iran's nuclear program was growing 
and becoming more dangerous with each passing day. That is no 
longer the case. Last November, as a first step in this 
negotiation, we reached consensus on a Joint Plan of Action. In 
return for limited and targeted sanctions relief, Iran agreed 
to freeze and even roll back key elements of its nuclear 
activities. In fact, the JPOA has temporarily blocked each of 
the paths Iran would need to go down to build a nuclear weapon.
    Many observers openly doubted whether Iran would keep its 
commitments under the Joint Plan. But according to the IAEA, 
Iran has done what it promised to do during these past 6 
months. The result is a nuclear program that is more 
constrained, more transparent and better understood than it was 
a year ago, a program that has been frozen for the first time 
in almost a decade.
    Meanwhile, as Under Secretary Cohen will make clear, 
sanctions relief for Iran will remain limited to amounts that 
will do little, if anything, to heal Iran's deep-seated 
economic problems.
    Over the next 4 months, the valuable safeguards that freeze 
Iran's nuclear program will remain in place as we strive to 
negotiate a comprehensive and longer term plan. I will be blunt 
and say that we will never rely on words alone when it comes to 
Iran. We have, and we will insist, that commitments be 
monitored and verified and that the terms of access and 
inspection be thoroughly spelled out.
    Our goal is to structure an agreement that would make any 
attempt to break out of such an agreement so visible and so 
time-consuming that Iran would either be deterred from trying 
or stopped before it could succeed.
    Speaking more generally, I want to emphasize that 
engagement on one issue does not require and will not lead to 
silence on others. The United States will not hesitate to 
express its view and to put pressure on Iran when it is 
warranted, whether in relation to the government's abysmal 
human rights record, its support for terrorism, its outright 
hostility toward Israel, or its detention of political 
prisoners, journalists, and American citizens.
    Mr. Chairman and members of the committee, on this issue we 
are united in our goals. We are determined that Iran not obtain 
a nuclear weapon. It is only because of the leverage created by 
the executive and legislative branches of this government, by 
our allies and partners, and by the U.N. Security Council that 
Iran has come to the negotiating table in what we believe to be 
a serious way.
    But we all know that sanctions are a means, not an end. We 
are now in the process of determining whether the end we seek 
can be achieved through a diplomatic process. That effort is 
worthwhile because a positive outcome would be preferable to 
any alternative. A comprehensive agreement would ease anxiety 
and enhance stability throughout the Middle East. It would 
reduce the likelihood of a regional nuclear arms race. It would 
eliminate the potential threat of nuclear blackmail. It would 
contribute to the security of Israel and to our partners 
throughout the region and it would make our own citizens safer.
    Between now and the end of November we will continue our 
pursuit of these welcome ends, and it is with those high 
purposes in mind that I respectfully thank you and ask you 
again for your support. I thank you for the opportunity to be 
here. I will be pleased to respond to every question and be as 
specific and detailed as I possibly can, Mr. Chairman, in this 
open session.
    Thank you.
    [The prepared statement of Ms. Sherman follows:]

                  Prepared Statement of Wendy Sherman

    Good morning, Mr. Chairman, and Senators. I am pleased to be here 
and appreciate the opportunity to discuss with you the status of 
negotiations related to Iran's nuclear program.
    Although there are many aspects of these deliberations that I will 
discuss today, the participants have agreed that, to give this process 
the best chance of success, we will refrain from speaking in public 
about the specific details of the negotiation. With that caveat, I will 
be as frank as possible. President Obama, Secretary Kerry, and the 
entire administration understand how vital a role Congress and this 
committee play in shaping U.S. policy toward Iran. We remain committed 
to regular consultations, to hearing from you, and to sharing ideas. We 
all have the same goal, which is to make the world a safer place both 
in the near future and for generations to come.
    To that end, we seek to negotiate a comprehensive plan of action 
that, when implemented, will ensure that Iran cannot acquire a nuclear 
weapon and that Iran's nuclear program is exclusively peaceful. A good 
deal will be one that cuts off the various pathways Iran could take to 
obtain a nuclear weapon: a uranium pathway, through its activities at 
Natanz and Fordow; a plutonium pathway, through the Arak heavy water 
reactor; and a covert pathway. It will therefore need to include tight 
constraints and strict curbs on Iran's program, and enhanced monitoring 
and transparency measures to ensure that any attempt to break out will 
detected as quickly as possible.
    In Vienna, 2 weeks ago, we decided to continue our work toward our 
goal by extending the terms of the previously negotiated Joint Plan of 
Action for 4 more months--until November 24. I will have more to say 
about that decision in a minute, but first let me review how we arrived 
at this juncture.
                  rallying the international community
    In 1968, Iran signed the Nuclear Non-Proliferation Treaty, which 
required it to allow International Atomic Energy Agency (IAEA) 
inspections and to develop nuclear power only for peaceful purposes. 
However, over the past 20 years, it became apparent that Iran's 
Government had engaged in a variety of undeclared nuclear activities. 
As detailed in numerous IAEA reports, these activities covered the full 
spectrum of the nuclear fuel cycle and suggested an intent that was far 
from peaceful. Iran also built a secret enrichment facility at Fordow, 
and in Arak, a heavy water reactor ideal for producing weapons-grade 
plutonium. Meanwhile, Iran was conducting research of a type that could 
facilitate the eventual construction of a bomb. These actions placed 
Iran in clear violation of its international nonproliferation 
obligations.
    In 2009, when President Obama took office, he indicated America's 
willingness to engage directly with Iran to find a diplomatic solution, 
but Iran failed to respond positively, thus demonstrating clearly that 
the obstacle to a comprehensive resolution was in Tehran, not in 
Washington. Working together, the administration and Congress then 
constructed a much tougher bilateral and multilateral sanctions regime, 
even as we continued to offer Iran a diplomatic pathway to resolve our 
concerns about its nuclear program. The international community, having 
witnessed our decision to give diplomacy a chance, was increasingly 
supportive, and their efforts to comply with--and amplify--our 
sanctions have proved crucial in ramping up the pressure on Iran.
    In June 2010, the Security Council approved stricter curbs on 
Iran's nuclear and shipping activities and barred Tehran from 
purchasing heavy weapons such as attack helicopters and missiles. In 
July of that year, the European Union (EU) prohibited joint ventures 
with Iran's petroleum sector and banned the sale of equipment used in 
natural gas production. In subsequent months, the EU tightened 
sanctions on banking, energy, and trade; outlawed transactions 
involving Iran's financial institutions; and embargoed the purchase of 
Iranian oil.
    These stiffer multilateral sanctions were complemented by 
additional bilateral measures--imposed by the United States and a 
number of other countries--that targeted Iran's economy in general and 
its financial and energy industries in particular. The cumulative 
weight of these restrictions contributed in Iran to more than halving 
oil exports, rising inflation, a sharp decline in the value of the 
local currency, and higher unemployment.
    Sanctions, however, are a means, not an end. The key question was 
what impact they would have on Iran's decisionmakers and whether they 
would choose to engage.
                        the joint plan of action
    In June 2013, Hassan Rouhani was elected President of the Islamic 
Republic with a popular mandate to fix the economy, a goal that will 
only be fully achievable if nuclear-related sanctions are lifted. Last 
September, a telephone conversation between Presidents Obama and 
Rouhani--spurred in part by earlier and direct diplomatic contacts at a 
lower level--set the stage for a restart of formal negotiations between 
Iran and the P5+1.
    On November 24, 2013, after several rounds of intensive 
negotiations with Iran, we reached consensus on a Joint Plan of Action 
(JPOA), a mutual set of commitments that halted the advance and even 
rolled back parts of Iran's nuclear program. The implementation of the 
JPOA started in January and was originally scheduled to last 6 months. 
In that time, Tehran pledged to cap its stockpile of low-enriched 
uranium. It agreed to stop enriching uranium to 20 percent and to 
convert or dilute its stockpile of uranium that had already been 
enriched to that level. It promised not to fuel or install remaining 
components at the research reactor in Arak. It consented to increase 
its transparency by providing additional information and managed access 
to key sites by the IAEA. And it allowed inspectors to have daily 
access at the Natanz enrichment facility and the underground plant at 
Fordow. In these past 6 months, the IAEA has verified that Iran has 
complied with its commitments; it has done what it promised to do. In 
addition, the JPOA has provided time and space to negotiate a more 
comprehensive, long-term solution by keeping Iran's program from making 
more progress during that period.
                                 vienna
    Meanwhile, from January to July, the negotiating teams were hard at 
work in search of a durable and comprehensive settlement. Based 
primarily in Vienna, our discussions on all issues were serious and 
exhaustive. Our experts spent hundreds of hours engaged in dialogue 
about the technical details. We made tangible progress in key areas, 
including Fordow, Arak, and IAEA access. However, critical gaps still 
exist on these and a number of other important elements--including the 
pivotal issue of uranium enrichment capacity--that must be part of a 
comprehensive plan.
    Under the current 4-month extension, the commitments under the JPOA 
will remain in effect. And, in fact, Iran has agreed in the time ahead 
to substantially increase the pace at which it is turning its stockpile 
of 20 percent enriched uranium oxide into fuel plates, including 25 
kilograms over the next 4 months. That will make it much harder for 
that material ever to be used for a weapon. Iran will also mix depleted 
uranium with its inventory of up to 2 percent enriched uranium. The 
result is essentially a dilution of approximately three metric tons of 
material to its natural state and a step further away from the kind of 
highly enriched uranium that could be employed in a nuclear weapon.
    In return, the P5+1 and EU will continue to suspend the narrow 
group of sanctions that we committed to suspend when the JPOA was 
negotiated and will allow Iran access to $2.8 billion dollars of its 
restricted assets, the 4-month prorated amount of the JPOA.
    To sum up, under the JPOA, instead of becoming more dangerous over 
time, Iran's nuclear activities have been more constrained, more 
closely inspected, and more transparent. This is the first true freeze 
in Iran's nuclear program in nearly a decade.
    Meanwhile, sanctions relief for Iran will continue to be targeted 
and limited to amounts that will do little, if anything, to heal Iran's 
deep-seated economic ills. From the perspective of international 
investors, Iran will remain closed for business. The overall sanctions 
regime will still be in place. Iran will continue to be cut off from 
the global financial system. Iran's oil sector will still be negatively 
affected by sanctions, as will Iran's currency. All told, we have 
sanctioned nearly 680 Iranian individuals and entities under our Iran 
sanctions authorities. And as we have demonstrated in the past few 
months, and throughout the past half dozen years, the Obama 
administration will continue to enforce sanctions rigorously and 
thoroughly.
    We will also not hesitate to put pressure on Iran when that is 
warranted--whether in relation to the government's abysmal human rights 
record, its support for terrorism, its hostility toward Israel, or its 
detention of political prisoners. Engagement on one issue does not 
require--and will not lead to--silence on others. As I have noted 
repeatedly, we continue to press Iran to allow U.S. citizens Amir 
Hekmati and Saeed Abedini to return to their families as soon as 
possible, and to help us locate Robert Levinson, who went missing in 
Iran in 2007. We are also concerned about reports of Washington Post 
reporter Jason Rezaian's detention in Iran, along with two other U.S. 
citizens and the non-U.S. citizen spouse of one of the three. We call 
on the Iranian Government to immediately release Mr. Rezaian and the 
other three individuals as soon as possible.
    Let me emphasize that the decision to extend the nuclear 
negotiations was taken only after careful thought. Each of the 
countries represented in Vienna, when weighing both sides of the issue, 
believed that it continues to be in our interest to identify a mutually 
acceptable framework. We did not want to allow impatience to prevent us 
from doing all we could to contribute to the future security and safety 
of the Middle East.
                          america's commitment
    I stress that these negotiations are fully in keeping with the 
administration's fundamental position. As President Obama has affirmed 
on numerous occasions, the United States will not allow Iran to obtain 
a nuclear weapon. That policy was in place prior to this negotiation; 
it is in place now; and it remains our solemn commitment. Because of 
the manner in which these negotiations have been structured and the 
pressure Iran continues to feel, Iran's leaders have a strong and 
ongoing incentive to reach a comprehensive resolution. If they cannot 
do that, then we will respond with greater pressure and with greater 
backing from the international community to do so because of our 
consistent and good faith efforts to resolve this situation 
diplomatically.
                             looking ahead
    Mr. Chairman, our purpose in entering these negotiations was to 
test Iran's unambiguously stated and often repeated commitment to an 
exclusively peaceful nuclear program. Accordingly, we have proposed a 
number of pathways whose elements would, in fact, give the world 
confidence that Iran's program is and will continue to be exactly that. 
As we have said from the beginning, this is a negotiation where every 
element of a resolution must come together in order for any aspect to 
work. It would not make sense to foreclose one route to a nuclear 
weapon and leave a second avenue untouched; nor would it be sensible--
given Iran's history of illicit conduct--to equate Iran's promises with 
actions. We need far-reaching and tangible commitments on all fronts. 
That is the only way.
                             final thoughts
    The next 4 months will allow us to determine whether a diplomatic 
solution is possible. As we have said many times, from the perspective 
of the United States, no deal is better than a bad deal. And yet, let 
us not forget that a comprehensive resolution, if we are able to arrive 
at one, will benefit people everywhere. It will ease anxiety and 
enhance security throughout the Middle East. It will reduce the 
likelihood of a nuclear arms race in the region. It will eliminate the 
potential threat of nuclear blackmail. It will contribute to the 
security of Israel, the Gulf States, and our partners throughout the 
region. Compared to any alternative, it will provide a more 
comprehensive, lasting, and peaceful solution to the concerns generated 
by Iran's nuclear activities.
    Mr. Chairman and members of the committee, after our intense 
deliberations in Vienna these past 6 months, we believe strongly that 
it is worth taking additional time to pursue these very complicated and 
technical negotiations. We wouldn't have agreed to an extension if we 
did not have an honest expectation that we have a credible path 
forward; but we would have finished long ago if the task were simple. 
We still have work to do. We still have time to determine whether we 
can close the gap between what Iran has said it intends and what it is 
willing to do.
    From the outset, these negotiations have been about a choice for 
Iran's leaders. Officials in Tehran can agree to the steps necessary to 
assure the world that their country's nuclear program will be 
exclusively peaceful, or they can squander a historic opportunity to 
end Iran's economic and diplomatic isolation and improve the lives of 
their people.
    Meanwhile, all of our options remain, as does our determination to 
resolve one of the most pressing national security issues for America, 
for the region, and for the world.
    In closing, I want to say to you on behalf of the entire 
administration that we welcome your thoughts, thank you for giving 
diplomacy a chance to succeed, respectfully solicit your support, and 
will be pleased to respond to any questions you might have.

    The Chairman. Secretary Cohen.

STATEMENT OF HON. DAVID S. COHEN, UNDER SECRETARY FOR TERRORISM 
   AND FINANCIAL INTELLIGENCE, U.S. DEPARTMENT OF TREASURY, 
                         WASHINGTON, DC

    Mr. Cohen. Chairman Menendez, Ranking Member Corker, 
distinguished members of the committee, thank you for your 
invitation to appear before you today along with my colleague, 
Under Secretary Sherman, to discuss the extended Joint Plan of 
Action. I will focus my oral testimony this morning on our 
efforts to maintain intense pressure on Iran, to help achieve a 
successful outcome in the negotiations over its nuclear 
program, and the ever-mounting pressure that Iran will continue 
to face during the extended Joint Plan of Action period as the 
P5+1 seeks a comprehensive and long-term resolution to the 
international community's concerns over Iran's nuclear program.
    When we announced the Joint Plan last November, we said 
that we did not expect the relief package in the JPOA to 
materially improve the Iranian economy, and it has not. The 
depths of Iran's economic distress, distress that resulted in 
large measure from the collaborative efforts of Congress, the 
administration, and our international partners, dwarfed the 
limited relief in the Joint Plan of Action.
    So today as we start to implement the extended JPOA, Iran 
remains in a deep economic hole. The value of Iran's currency, 
the rial, has declined by about 7 percent since the JPOA was 
announced last November. Since 2011, Iran has lost about $120 
billion in oil revenues. It lost $20 billion in revenues in the 
first 6 months of the JPOA and stands to lose an additional $15 
billion in oil revenues during the next 4 months alone. Iran's 
economy today is 25 percent smaller than it would have been had 
it remained on its pre-2011 growth trajectory.
    Now, when we entered into the JPOA some predicted that our 
sanctions regime would crumble, and some also argued that 
Iran's economy would rebound dramatically. Neither occurred. 
The fact is as we enter the 4-month extension of the Joint Plan 
of Action our sanctions regime remains robust and Iran's 
economy continues to struggle. And we remain confident that 4 
months from now our sanctions will continue to bite and Iran's 
economy will remain under great stress.
    The 3 to 4 billion dollars' worth of relief that the 
extended Joint Plan of Action may provide Iran pales in 
comparison to what Iran needs to dig itself out of its deep 
economic hole. We expect that firms will continue to shun Iran, 
as was the case during the first 6 months of the Joint Plan of 
Action. Firms have good reason to remain reluctant about doing 
business in Iran. The overwhelming majority of our sanctions 
remain in place. Iran continues to be cut off from the 
international financial system and is largely unable to attract 
foreign investments. Iran is still shut out of the United 
States, the world's largest and most vibrant economy, and 
precluded from transacting in the dollar. And there are a 
sweeping set of nearly 680 Iran-related sanctions designations, 
developed in concert with partners around the world, remains in 
place.
    Throughout the JPOA period, we have also vigorously 
enforced our sanctions, recognizing the essential role that 
financial pressure played in the lead-up to, and now during, 
the Joint Plan of Action and how important maintaining that 
pressure will continue to be during this extended Joint Plan of 
Action period. Indeed, since the Joint Plan was negotiated we 
have imposed sanctions on more than 60 entities and individuals 
around the world for evading U.S. sanctions against Iran, 
aiding Iranian nuclear and missile proliferation, supporting 
terrorism, and for abusing human rights.
    Throughout this short-term extension of the Joint Plan, I 
can assure you that we will continue to make certain through 
word and deed that banks, businesses, brokers, and others 
around the world understand that Iran is not open for business 
and Iran will not be open for business unless and until it 
assures the international community of the exclusively peaceful 
nature of its nuclear program.
    While this 4-month extension will provide additional time 
and space for negotiations to proceed, it will not change the 
basic fact that Iran's sanctions-induced economic distress has 
not receded. And over the next 4 months my colleagues and I 
within Treasury and throughout the administration will continue 
to echo President Obama's clear message, namely that we will 
come down like a ton of bricks on those who seek to evade our 
sanctions. That will help provide our negotiators leverage as 
we explore the possibility of a comprehensive and long-term 
resolution to the international community's concerns over 
Iran's nuclear program.
    I am happy to respond to any questions the committee may 
have.
    [The prepared statement of Mr. Cohen follows:]

                  Prepared Statement of David S. Cohen

    Chairman Menendez, Ranking Member Corker, and distinguished members 
of the committee, thank you for your invitation to appear before you at 
this important time to discuss our implementation of the extended Joint 
Plan of Action (JPOA).
    I will focus my testimony today on our efforts to continue to 
maintain pressure on Iran in order to achieve a successful outcome in 
the negotiations over its nuclear program. I will also provide an 
overview of the limited, temporary, and reversible relief in the 
extended JPOA. And, finally, I will discuss the ever-mounting pressure 
that Iran will continue to face as the P5+1 seeks a comprehensive and 
long-term resolution to the international community's concerns over 
Iran's nuclear program.
                    the state of the iranian economy
    When we announced the JPOA last year, we said that we did not 
expect the relief package in the JPOA to materially improve the Iranian 
economy. And it has not. The depths of Iran's economic distress--
distress that resulted in large measure from the collaborative efforts 
of Congress, the administration, and our international partners--
dwarfed the limited relief in the JPOA. And so today, as we start to 
implement the short-term extension of the JPOA, Iran remains in a deep 
economic hole.
    It is useful to focus on three key indicators of Iran's economy, 
the rial (Iran's currency), its revenues, and its reserves. Judging by 
these three measures, the Iranian economy is doing worse today than it 
was at the outset of the JPOA.

   Rial: Iran's currency, the rial, has depreciated by about 50 
        percent since January 2012 and has declined by about 7 percent 
        since the JPOA was announced last November. Iran's central bank 
        governor earlier this year bemoaned the fluctuations in the 
        value of the rial in light of persistent costs and delays in 
        obtaining hard currency and the limited tools available to 
        intervene effectively in the currency market. In this regard, I 
        would note that it remains sanctionable to provide U.S. dollar 
        banknotes to the Iranian Government.
   Revenue: The cumulative impact of our sanctions since 2011 
        has caused Iran to lose about $120 billion in oil revenues--the 
        key driver of Iran's economic growth. Iran will forgo an 
        additional $15 billion in oil revenues during the next 4 months 
        alone as the sustained impact of our oil sanctions, which took 
        effect in early 2012, continue to exact their toll on Iranian 
        earnings. Moreover, Iran will only be able to use a small 
        fraction of the revenue it earns from crude oil sales during 
        the extended JPOA period, because its oil revenue continues to 
        go into overseas accounts restricted by our sanctions.
   Reserves: And the vast majority of Iran's approximately $100 
        billion in foreign reserves remain inaccessible or restricted 
        by sanctions. This money can only be used for permissible 
        bilateral trade between oil-importing countries and Iran and 
        for humanitarian trade.

    Iran's economy is 25 percent smaller today than it would have been 
had it remained on its pre-2011 growth trajectory; it will not recover 
those losses for years to come. Meanwhile, Iran's annual inflation 
rate, at about 26 percent, is likely to remain high, and is one of the 
highest in the world. Unemployment also remains high, and Iran is cut 
off from the foreign investment that it needs to promote job growth and 
infrastructure development.
    At the time we entered into the JPOA, some made dire predictions 
that our sanctions regime would crumble, and that Iran's economy would 
rebound dramatically. It is now clear, that did not happen. To the 
contrary, Iran's experience under the JPOA has reinforced its knowledge 
that real economic relief can come only if it obtains comprehensive 
sanctions relief, and that can only come about if it is prepared to 
enter into a comprehensive plan of action that ensures that Iran cannot 
acquire a nuclear weapon and that its nuclear program is exclusively 
peaceful.
                 sanctions relief in the extended jpoa
    The P5+1 has committed in the JPOA extension period to continue the 
limited, temporary, and reversible sanctions relief of the JPOA, and to 
authorize the release to Iran of a small fraction of its restricted 
overseas assets in return for Iran's commitment to continue to abide by 
the conditions on its nuclear program as set out in the JPOA, and to 
take a number of additional steps to constrain its nuclear program.
    Over the 4-month period of the extended JPOA, and provided that it 
satisfies its commitments under the extension, Iran will be allowed to 
access, in tranches, $2.8 billion worth of restricted funds. This 
amount is the 4-month prorated amount of funds made available under the 
original JPOA.
    Other aspects of the JPOA sanctions relief also will remain in 
effect for the next 4 months, including sanctions related to Iran's 
petrochemical exports, its crude oil exports to current purchasers at 
current average levels, its automotive sector, the purchase or sale of 
gold or precious metals, the licensing of safety-related repairs and 
inspection for certain airlines in Iran's civil aviation industry, and 
the facilitation of a financial channel for humanitarian trade, tuition 
payments, U.N. payments, and medical expenses incurred abroad.
    Altogether, we value the sanctions relief in the JPOA extension at 
about $3 to $4 billion. This is comprised of the $2.8 billion worth of 
restricted funds that Iran will be permitted to access plus the value 
that we assess the other elements of the sanctions relief are worth.
                       extended relief in context
    We do not expect this minimal relief to alter the underlying 
negative fundamentals of Iran's troubled economy. We are confident in 
this assessment for the same reasons that we were confident in December 
that the JPOA would not undermine our sanctions regime: Iran is in a 
deep economic hole and we will continue to enforce our sanctions to 
send a clear message that now is not the time for businesses to re-
enter Iran.
    The value of this limited relief pales in comparison to the 
aggregate macroeconomic effects of our sanctions to date and Iran's 
revenue losses, both of which will continue to accumulate during the 
next 4 months. Even with the diminished value of Iran's gross domestic 
product--valued at about $360 billion today using the open market 
exchange rate--the $3 to $4 billion or so in relief over the next 4 
months pales in comparison.
    In short, Iran's economy will remain under great stress. Remaining 
sanctions and their substantial structural problems will undercut key 
industries and contribute to persistent budget deficits and sustained 
high unemployment. Moreover, until a comprehensive solution is reached, 
we anticipate that most foreign firms will decline to re-enter Iran, as 
was the case during the first 6 months of the JPOA.
           the international sanctions regime remains robust
    Firms have good reason to remain reluctant about doing business in 
Iran. The overwhelming majority of our sanctions remain in place, and 
we firmly intend to continue enforcing our sanctions vigorously.
    Iran continues to be cut off from the international financial 
system with its most significant banks subject to sanctions, including 
its central bank. All the Iranian banks designated by the EU remain cut 
off from specialized financial messaging services, denying them access 
to critical networks connecting the rest of the international financial 
sector. And the fact remains that any foreign bank that transacts with 
any designated Iranian bank can lose its access to the U.S. financial 
system.
    Investment and support to Iran's oil and petrochemical sectors also 
is still subject to sanctions. And there are severe restrictions on 
providing technical goods and services to the Iranian energy sector.
    Broad limitations on U.S. trade with Iran remain in place, meaning 
that Iran continues to be shut out of the world's largest and most 
vibrant economy and precluded from transacting in the dollar.
    Our sweeping set of designated Iran-related actors--developed in 
concert with partners around the world, including in the EU, Canada, 
Australia, Japan, South Korea, and Singapore--remains in place. We have 
used our Iran-related authorities to sanction nearly 680 persons, a 
number that is complemented by the hundreds of Iranian individuals and 
entities against which our partners have also taken action. This 
multilateral effort to target those involved in Iran's illicit conduct 
remains the cornerstone of the unprecedented sanctions regime that we 
have built in recent years.
    Finally, we remain vigilant in our efforts to counter Iran's 
support for terrorism, its abuse of human rights, and its destabilizing 
activities in the region. We are committed to maintaining those 
sanctions and have an active diplomatic campaign aimed at persuading 
other jurisdictions and financial institutions to cut them off as well. 
Nothing in the JPOA, the extended JPOA, or in a comprehensive deal that 
may come, will affect our efforts to address Iran's malign activities 
in these areas.
               vigorous enforcement of existing sanctions
    Throughout the JPOA, we have demonstrated vigorous sanctions 
enforcement, recognizing the essential role that financial pressure 
played in the lead-up to, and now during, the JPOA, and how important 
maintaining that pressure will continue to be during this extended JPOA 
period. We are determined to continue to respond to Iran's evasion 
efforts, wherever they may occur.
    Since the JPOA was negotiated, we have imposed sanctions on more 
than 60 entities and individuals around the world for evading U.S. 
sanctions against Iran, aiding Iranian nuclear and missile 
proliferation, supporting terrorism, and for carrying out human rights 
abuses. This amounts to nearly 10 percent of all of our Iran-related 
designations and listings since we first took action against Iran's 
Atomic Energy Organization in 2005. We have also continued to enforce 
our sanctions against entities and individuals that violate Iran-
related prohibitions, resulting in penalties and settlements for 
violations of the regulations enforced by the Office of Foreign Assets 
Control of more than $350 million during the past six months. We have 
been very clear to both our international partners and to Iran that 
these targeting and enforcement efforts will continue throughout the 
next 4 months of the JPOA extension.
    In addition to our designations and enforcement actions during the 
JPOA, my colleagues and I have made clear to banks, businesses, and 
governments around the world that the sanctions relief provided to Iran 
is limited, temporary, and reversible, and that the overwhelming 
majority of our sanctions remain in place. The simple fact remains that 
foreign banks and companies still have to decide whether to do business 
with Iran, or with the United States. They can't do both. Nothing in 
this respect has changed.
    These actions have sent a resounding message to the international 
business and financial communities: Iran is not open for business 
today, nor will it be until it ensures the international community of 
the exclusively peaceful nature of its nuclear program.
    Throughout this short-term extension of the JPOA, I can assure you 
that we will continue to make certain that businesses and governments 
around the world understand this. I personally plan to travel to 
several countries in the coming weeks to meet with government and 
private sector counterparts to explain the continued limitations of the 
sanctions relief under the JPOA extension. And I know my colleagues 
within Treasury, at the State Department and elsewhere in the 
administration will do so as well. We will all echo President Obama's 
clear and firm message--namely, that we will come down ``like a ton of 
bricks'' on those who evade or otherwise facilitate the circumvention 
of our sanctions.
                               conclusion
    While this 4-month extension will provide additional time and space 
for the negotiations to proceed, it will not change the basic facts and 
numbers on the ground. The Iranian economy is in deep distress and an 
additional 4 months of limited sanctions relief will not change that. 
In the meantime, we will not let up one iota in our sanctions 
enforcement efforts, and we are prepared to take action against anyone, 
anywhere who violates, or attempts to violate, our sanctions.

    The Chairman. Thank you both.
    Before I get to the negotiation questions, I do have a 
question for you, Madam Secretary, about the detention of the 
Washington Post's correspondent in Teheran, Jason Reszayen, who 
I understand is a dual citizen, including a citizen of the 
United States, and his wife, who were arrested at their home 
last Tuesday. Since their arrests, no one has heard from them; 
and two U.S. citizens working as freelance photographers are 
also being held. To my knowledge, no charges have been brought 
and the detainees apparently have no access to legal counsel.
    Can you tell me what we are doing in this regard?
    Ms. Sherman. Yes. Thank you for raising this. It is of 
great concern to all of us, as is the continued detention of 
Amir Hekmati and Pastor Abedini and our concern about Robert 
Levinson, who has been missing for a very long time and we 
believe in Iran. We have, in fact, used our appropriate 
channels, principally the Swiss, to make known our concern 
about this apparent detention of American journalist and his 
wife and the additional photojournalists.
    There is absolutely no reason for this to occur. I read 
with interest the Washington Post editorial, with which I 
entirely agree. We are a country that believes in press 
freedom. This is a reporter who has been reporting for some 
time, had been in Vienna with us, in fact during the 
negotiations, and we call on Iran to release all of these 
people, including Pastor Abedini, Amir Hekmati, and to help us 
in every way possible to return Robert Levinson home as well.
    So thank you for raising this, and we will use every 
channel we have, Mr. Chairman, to continue to bring American 
citizens home.
    The Chairman. Well, I appreciate that. More than raising 
it, I am concerned when U.S. citizens are detained by the 
Iranian Government. And I do not even understand the case of 
this reporter because, having read some of his articles, it 
seemed rather, I will not say favorable, but it certainly was 
balanced in his reporting.
    So in the midst of negotiations, how is it that the 
Iranians detain U.S. citizens for what is from all apparent 
purposes nothing of any great consequence? I just, I do not get 
it. I do not get it, like I do not get the Ayatollah talking 
about 190,000 centrifuges at a time that we are trying to 
reduce the number of centrifuges. Even if he did not have it 
time specific, 190,000 centrifuges is beyond the pale of what 
we need.
    So I hope we are vigorously going to pursue this with the 
Iranians and I hope they understand very clearly that actions 
like these undermine whatever negotiating posture they have at 
the table.
    Let me ask you with reference to something that I think 
should have been a condition precedent. I think you and I have 
discussed this, but it certainly is a concern to me, which is 
the military, the possible military dimensions of Iran's 
program. I do not look at this as simply just to understand the 
past and say, you see. I look at it as a measurement for the 
future. If you do not know what Iran's military program was, 
you do not know to what point they progressed that will cause 
us concern that they are at a point maybe farther along than 
anyone suspects and a short jump toward being able to 
militarize their nuclear program for nuclear weapons.
    And I think the world would have looked at these 
negotiations in a totally different way if that had been 
established up front. Now, my understanding from public 
reports--forget about private briefings--is that they are 
incredibly reticent to come clean on this issue. So what 
options are on the table for addressing the possible military 
dimensions of Iran's program, and will you insist--I do not 
think that this is giving away a negotiating posture--on access 
to persons, places, and documents for the IAEA to make this 
determination?
    Ms. Sherman. Thank you very much, Mr. Chairman. We 
absolutely agree that possible military dimensions of Iran's 
program must be addressed as part of a comprehensive agreement. 
As you know, the International Atomic Energy Agency has a 
protocol under way to do that. It has been very difficult. Iran 
has been reluctant to come forward with the kind of information 
about people, places, and documents that----
    The Chairman. Did they not recently say they are missing a 
deadline?
    Ms. Sherman. They may indeed. There is an August 25 
deadline coming up for some of the considerations. We have been 
in very close touch with Director General Amano because in our 
dealing with possible military dimensions in a comprehensive 
agreement we want to make sure we do not undermine the 
independence of the IAEA, but rather use the negotiations as 
leverage to get the compliance that is required, while at the 
same time ensuring that the IAEA can do its job and that we do 
not interfere with that in inappropriate ways, given their 
independence.
    That said, I quite agree with you. If there is not access 
to what the IAEA needs to know about Iran's past, it is 
difficult to know that you will have compliance about Iran's 
future. How this will ultimately get resolved we have had quite 
a bit of discussion about. We have not reached a resolution on 
this issue. It is a very serious issue and must be resolved as 
part of a comprehensive negotiation. So I agree with you.
    The Chairman. Let me ask you with reference to--assuming a 
good deal that we could all embrace--what is going to be 
critical after 20 years of deception is the monitoring and 
verification regime, which is why I have called for long-term 
inspections and a verification regime.
    Some call that a suggestion of a deal-breaker. I do not 
quite get it. It seems to me that if you deceive for 20 years 
and you advance your program to a point that we are now 
accepting some level of enrichment, that we accept Fordow, 
which was supposed to be closed, that we were told that Arak 
was going to be dismantled either by them or by us, and now we 
are accepting all these things, that a long-term verification 
and management agreement is incredibly important, not a deal-
breaker, but a deal-maker.
    What monitoring and verification measures beyond the 
additional IAEA protocols are we seeking in a final agreement? 
And what types of verification measures are being considered to 
halt the procurement of key proliferation-sensitive goods as 
well?
    Ms. Sherman. Thank you, Mr. Chairman. Transparency and 
monitoring is absolutely critical and core to any agreement. As 
I said, one of the pathways of greatest concern is, of course, 
covert action, and transparency and monitoring are the elements 
that help ensure that if there is a covert program one knows it 
in time to be able to take action and to stop it from happening 
in the first place.
    In fact, in the Joint Plan of Action the fact that we can 
now have managed access to centrifuge production, to rotor 
production, to uranium in mines and mills gives our 
intelligence community and our experts the kinds of information 
that allow us to know whether something is being sent over to 
some other place and is not in the pipeline as is required to 
be inspected.
    So in addition to modified Code 3.1 and the additional 
protocol, which are absolutely critical to a comprehensive 
agreement--and I believe Iran understands that--on each of the 
measures that will be agreed to we will decide whether, in 
fact, an additional element of transparency and monitoring is 
needed over the entire duration of this agreement. And the 
duration of this agreement, we agree with you, ought to be 
quite a long time, given how many years of concern have been 
raised by the international community.
    So in some cases that will be access to sites. In some 
cases that will be other technical means of verification. But 
we will go element by element and make sure that there is, in 
fact, a specific monitoring and verification measure that 
matches up with that.
    The Chairman. Let me ask you the specific question I asked 
before, and then I will turn to Senator Corker. Persons, 
places, and documents. Is that an unreasonable expectation in 
order to have the type of verification--both of the possible 
military dimensions or, prospectively--for 3 years before we 
found their underground facility. I do not know that while we 
agreed to something that allows them to do X, that they do not 
go ahead with their capacity somewhere else that we find 3 
years later. But 3 years is going to be too late.
    Ms. Sherman. We will do whatever the IAEA requires for 
verification. They have in the past required persons, places, 
and documents. I think they see the places and documents as the 
most important because they want to go and have direct access 
and look for themselves. The persons issue, as I think you 
know, is an issue for Iran, but it is one that is on the table 
and of great concern to us. Their concern is, to be very blunt 
and open about it, is if you name individuals that those 
individuals might find that their lives are quite short.
    The Chairman. I think that there are ways for them to 
create access to individuals in their secure facilities that 
would guarantee that their lives would be extended.
    Ms. Sherman. I agree, I agree.
    The Chairman. Senator Corker.
    Senator Corker. Thank you, Mr. Chairman.
    Ms. Sherman, is the administration in agreement that 
November 24 is the end of these negotiations, there will be no 
more extensions, that we either reach an agreement by that date 
or this negotiation is over?
    Ms. Sherman. Senator, I have learned in negotiations that 
it is very difficult to say what will happen at the end of any 
given period of time. If you had asked me where we would be at 
the end of this 6 months that has just preceded, it would have 
been hard to predict that we are exactly where we are today. 
Our intent is absolutely to end this on November 24 in one 
direction or another, but what I can say to you is that we will 
consult Congress along the way.
    I greatly appreciate that Congress has permitted classified 
briefings during active periods of negotiation to maintain 
whatever leverage we have. We will continue those classified 
conversations, and when November 24 comes whatever decision we 
make will be a joint one with the United States Congress.
    Senator Corker. And you understand the concerns people 
have----
    Ms. Sherman. I absolutely do.
    Senator Corker [continuing]. About a series of rolling 
interim agreements?
    Ms. Sherman. I do. And indeed, we made a very conscious 
decision not to go for a 6-month extension, which was possible 
under the JPOA, because we thought we would just get to month 5 
before anything would happen. So we are concerned about talks 
for talks' sake as much as you are.
    Senator Corker. Then for the inspections regime, I think as 
the chairman alluded to and many people in these other settings 
have alluded to, if the inspection period is something short of 
20 years or so we have really not done much, right? In other 
words, if we do not have a full inspection regime, if this 
agreement does not last for a long, long time, we really have 
dissipated all of our leverage for something that really does 
not matter.
    What is the minimum length of time that is being discussed 
for an agreement of this type at present?
    Ms. Sherman. We believe that the duration of this should be 
at least double digits and we believe that it should be for 
quite a long time. I am not going to put a specific number on 
the table today because that is a subject of very sensitive 
negotiations. But I am happy to discuss that with you in a 
classified setting.
    Senator Corker. Again, I think you understand the 
concerns----
    Ms. Sherman. I do.
    Senator Corker [continuing]. That all of us have relative 
to something that is not very, very long term.
    Ms. Sherman. And we share that.
    Senator Corker. Okay. Do you believe that they are agreeing 
to all their obligations in the JPOA?
    Ms. Sherman. I do, and the IAEA has verified, which is even 
more important than my judgment.
    Senator Corker. So one of the areas where we have disputed 
this--and we have talked about it a little bit back and forth--
is they agreed, there was an agreement that they were not going 
to export more than 1 million barrels per day. They are above 
that number, significantly above that number. I guess I would 
just ask the question, if they are significantly above the 
number they have agreed to, how are they in agreement with the 
JPOA? We believe they are at 1.4 million. I think you can 
verify that to be sure, I think. So how are they in agreement?
    Ms. Sherman. Well, actually, Senator, I talked with our 
experts yesterday about this because I imagined that it would 
get asked today, and it is our assessment, having most of the 
data, though not having the last 20 days of July yet, that we 
will be within range of 1 to 1.1 million barrels per day, which 
is what, in fact, we had said would be the aggregate amount.
    Now, some of the public data that is published includes two 
elements that are not part of that assessment. For those 
countries that are still allowed to import Iranian oil, though 
at the aggregate amount at which they were at at the time of 
the JPOA, that does not include condensates, and some of the 
public data includes condensates, which pushes up the number.
    Secondly, some of the public data includes the oil that is 
headed to Syria and that pushes up the number, and indeed Iran 
gets no money directly from the oil they give to Syria, so they 
get no economic benefit to it. So if you take out the 
condensates----
    Senator Corker. I got it. If I could----
    Ms. Sherman [continuing]. And take out Syria, we are at 
about 1 to 1.1.
    Senator Corker. I think that, just for what it is worth, 
the subtraction of condensates is a--I forgot what they called 
new math when I was a young man, but it is a very creative way 
of not counting all of their exports. We disagree strongly with 
those numbers.
    But just think about what you just said. They are shipping 
oil to Syria. I will say it one more time: They are shipping 
oil to Syria instead of sending them money. They are working 
against us in that regard, and you do not count that as an 
export. I just find that to be ludicrous.
    Ms. Sherman. Well, though we do have other sanctions 
through other channels for the export of that oil to Syria. So 
we do take enforcement action on that export.
    Senator Corker. Let me ask you this, two more questions. 
Secretary Kerry was in and said on April the 8th that the 
administration is obligated under law to come back to Congress 
for any relief of statutorily imposed sanctions on Iran, and 
any agreement with Iran will have to pass muster with Congress. 
Can you confirm that that is the case, and will you come to 
Congress prior to providing any relief associated with a 
comprehensive agreement? If not, why not?
    Ms. Sherman. Senator, we believe strongly that any lifting 
of sanctions will require congressional legislative action.
    Senator Corker. Lifting, but you can waive. I want to get-- 

I heard you talk about the words, it is tough to resolve, a 
minute ago. I want you to clearly state to me: Will you, or 
will you not, come to Congress before lifting, whether it is a 
waive, a temporary waive, a skate down the road, whatever? No 
way will you lift any kind of relief on Iran, period, after 
this next agreement is reached or not reached, without coming 
to Congress?
    Ms. Sherman. We cannot lift any sanctions without 
congressional action. We can, as you said, suspend or waive----
    Senator Corker. Right.
    Ms. Sherman [continuing]. Under the current legislation. We 
will not do so without conversations with Congress. If you are 
asking, Senator, whether we are going to come to Congress for 
legislative action to affirm a comprehensive agreement, we 
believe, as other administrations do, that the executive branch 
has the authority to take such Executive action on this kind of 
a political understanding that might be reached with Iran. I 
cannot tell you whether we will or not.
    Senator Corker. I got that. I understand Article 2 of the 
Constitution. But I want to go back to what you are saying. You 
came and had a conversation with us, you and your 
representatives, and basically told us that you were extending 
the agreement. That is a conversation.
    Ms. Sherman. Well--yes.
    Senator Corker. I just want to go back and I want you to 
clearly--waiving, suspending. You have told me you do not have 
to come back to Congress, and I would like to figure out a way 
that you do. I have been unsuccessful so far. But I want you to 
clearly state, on the waiving or suspending of any kind of 
sanctions, because you have the right to do that, you say you 
will have a conversation. Again, the conversations have been: 
This is what we are going to do. That is a very unsatisfactory 
place for us to be.
    So you are telling me you cannot be any more clear than 
coming and having the same kind of conversations we have had in 
the past, where in essence you are telling us what you are 
going to do?
    Ms. Sherman. Senator, the United States Congress and the 
United States Senate has oversight authority, has legislative 
authority. You are free to decide what action you think is 
appropriate for any executive branch decisions by any 
administration, and I understand those prerogatives quite 
clearly and I will commit to you that you will not be surprised 
by reading in the newspapers decisions or judgments that we 
have made, that we will keep you completely informed about what 
we are doing in these negotiations, as we have throughout these 
last 6 months.
    Senator Corker. Well, thank you. I know my time is up. I 
think the world understands that that is a zero commitment and 
it is not in keeping with what Secretary Kerry said on April 
the 8th. I know the goalposts keep moving and I think you can 
continue this hearing as evidence of why so many of us have the 
concerns we have.
    Again, we wish you well.
    The Chairman. Senator Cardin.
    Senator Cardin. Well, thank you, Mr. Chairman.
    Let me thank both of our witnesses that are with us today 
for your continued service to our country. These are extremely 
challenging issues.
    Going back to the start of these negotiations, I think we 
got off to a rough start between Congress and the 
administration. It caused, I think, more division than perhaps 
was in the best interest of this country. I want to thank you 
and acknowledge that I think, particularly in recent months, 
the cooperation between the administration and Congress has 
gotten much stronger. The openness of the briefings I think has 
been of much higher quality, and we thank you for that. The 
input from Congress has been pretty direct.
    I think the administration has done a commendable job in 
keeping our negotiating partners together in unity, despite the 
challenges of international events. So I think we have made a 
lot of progress and I just want to acknowledge that.
    I could not agree with you more that the objective is the 
visible ability, assuming we have an agreement, but the visible 
ability to determine if that agreement is not being adhered to. 
And as you point out, it would be very time-consuming to get 
back to the ability to produce a nuclear weapon. That is 
certainly the goal, and I think we all acknowledge that a bad 
agreement is worse than no agreement at all.
    I think the language that we have been using has been 
pretty clear about that, the language that you have used, that 
if there is a failure here there will be tougher sanctions and 
tougher isolation, is absolutely accurate.
    I just really want to follow up on one of Senator Corker's 
points, and that is November 24 would not be the end of this 
process. Because if I understand, if you are successful, 
Congress and the administration have to work together. The 
sanctions are not going to be removed all at once. There is 
going to be, I assume, a transition period that will require 
Congress and the administration to be on the same page on this.
    So I just encourage you to use the same process that you 
have used during the last few months, which I think has been a 
much healthier process between the two branches of government 
that share the same objective. We have shared the same 
objective from the beginning. So I hope that you will continue 
to do that.
    I want to just talk about the one part of your statement, 
Secretary Sherman, that you mentioned, and that is, we will 
also put pressure on Iran when it is warranted, whether it is 
in relationship to the government's abysmal human rights 
record, its support for terrorism, its hostility toward Israel, 
or its detention of political prisoners.
    This has been, and is going to be, a lengthy process. Of 
course, we are focused on an extremely important priority for 
the United States and that is a nonnuclear Iran. But at the 
same time, Iran has other issues that are problematic to a 
relationship with the United States from the point of view of 
constructive relationships, and we have to use every tool that 
we can to deter them and to put a spotlight on the things that 
they are doing.
    You then say you will not be silent. I assume silence means 
more than just words, that we will take actions in other areas, 
and nothing that we are doing in these negotiations would 
compromise our ability to speak out about these other issues 
that are critically important to the United States.
    Ms. Sherman. I could not agree more, Senator. Where it 
comes to our sanctions on terrorism, our sanctions on human 
rights, they will continue in place. We have been quite clear 
with Iran that, although if we get to a comprehensive agreement 
there might be first suspension and then ultimately, after some 
period of time and after verification by the IAEA of a variety 
of benchmarks, ultimately perhaps lifting, that where it comes 
to our sanctions regarding terrorism, human rights, they will 
stay in place.
    It is quite concerning, the actions that Iran takes in all 
of the arenas that you just mentioned--human rights, terrorism, 
fomenting instability. As the chairman said, who can imagine 
that detaining an American journalist helps these negotiations? 
In the past, I know it has been quite in the news of late, 
although Hamas creates many of its own rockets these days, a 
lot of the original supply of those rockets came from Iran. So 
the security of Israel is not only tied to this nuclear 
agreement, but it is also tied to their horrific rain of 
rockets that are coming down on Israel today.
    So all of these areas we need to continue to have vigorous 
enforcement of our existing sanctions, take what other actions 
we can to mobilize the international community to condemn these 
actions, and to insist that they stop.
    Senator Cardin. I might point out--and again, at the end of 
the day, we must be together on this. It might be the preferred 
practice to use the waiver authority that you have rather than 
changing the underlying law in the event that we have to act 
quickly if there are problems in compliance, rather than having 
to wait for Congress to pass a new law and getting that to the 
administration.
    So I just point out there are advantages to the tactics 
that are used at the end of the day. But I agree completely 
with Senator Corker and I think Secretary Kerry; it is 
critically important that we are together on this at the end of 
the day. I hope that will happen--and I know that you agree.
    Secretary Cohen, I want to ask you one question about the 
challenges that you might be having today, considering that 
Europe and the United States are working for stronger sanctions 
against Russia. Russia is one of our negotiating partners in 
regards to Iran. Does that cause some challenges for you? I 
hope not. I hope that we are able to have more than one 
relationship at a time. This committee has been on record 
strongly supporting additional sanctions against Russia in 
regards to its actions with Ukraine. But is that affecting our 
ability to speak out as a unified voice in regards to Iran?
    Mr. Cohen. Thank you for that question, Senator. The answer 
is not in the least. Our efforts to address Russia's 
destabilizing activities in Ukraine, its invasion of Ukrainian 
sovereignty and territorial integrity, have not been impeded 
one iota by the very important work that Under Secretary 
Sherman and the team have been undertaking in Vienna.
    We have been pursuing a, I think, very powerful and 
calibrated strategy to impose pressure on Russia with respect 
to its activities in Crimea and now in eastern Ukraine. We have 
been working very closely with our counterparts in Europe and 
elsewhere to coordinate these actions. I think there have been 
press reports in the last 24 hours or so of additional 
sanctions yet to come. So I would stay tuned for that.
    But we have not encountered any difficulty in terms of 
working with our partners or working ourselves to impose 
pressure on Russia in relation to the activities in Ukraine.
    Senator Cardin. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Senator Johnson.
    Senator Johnson. Thank you, Mr. Chairman.
    I have not had the years of experience with this issue as 
the chairman has, but the chairman was talking about moving the 
goalposts and I do have a lot of experience with negotiation. 
Certainly, when I sit down to negotiate I want to know and have 
a very clear understanding of what my goal is. I would also 
like to understand what the goal of the party is that I am 
negotiating with.
    So my understanding is the goal of the world community, 
including the United States, as this all began was pretty well 
expressed in United Nations resolutions, correct? Ms. Sherman, 
can you state what that was?
    Ms. Sherman. Yes, indeed, Senator. There have been more 
than one U.N. Security Council resolution regarding Iran's 
nuclear program, but it is to ensure that Iran cannot obtain a 
nuclear weapon and that its program is exclusively peaceful.
    Senator Johnson. Was not the goal of the resolutions to end 
the enrichment program, to bar Iran from enriching uranium?
    Ms. Sherman. Actually, what the language in the Security 
Council resolution is is that Iran should suspend enrichment, 
and in fact does not stop enrichment, bar enrichment, but urges 
that Iran suspend enrichment until there is assurance on behalf 
of the international community that its program is entirely 
peaceful; and in fact, even anticipates that they could resume 
if, in fact, they did provide that assurance.
    That said, Senator, the administration position has been 
that the preference is that Iran not have an enrichment 
program, and that remains the case. In every negotiation I 
remind Iran that that is the case. They can get anything they 
need on the open market. They do not need an indigenous 
program. Nonetheless, at the end of this comprehensive 
agreement there is the potential for a very limited enrichment 
program for practical specific needs, under very intrusive 
mechanisms of monitoring and verification.
    Senator Johnson. But as you said, there is no reason 
whatsoever to have enrichment, if your goal is only to have a 
peaceful, nonweaponized program, correct? There is none 
whatsoever. You can easily obtain these materials on the open 
market. You do not need to enrich to have a peaceful nuclear 
program.
    Ms. Sherman. That is correct, and that is true of virtually 
every country in the world, and yet there are several countries 
that do have indigenous enrichment programs, some of our 
closest allies in fact.
    Senator Johnson. Mr. Cohen, you made a pretty good case 
that, yes, we have relaxed sanctions, but the economy of Iran 
is still suffering quite severely. Again, I want to get back to 
the motivation then of Iran. They have suffered horribly in 
terms of economics and yet they will continue to enrich.
    Would this not be very easy for them to just solve this 
problem by stopping enrichment?
    Mr. Cohen. I think that is----
    Senator Johnson. The answer is ``yes.'' I am trying to get 
to a point here. I am trying to find out what is motivating 
Iran. We can sit here and talk about a peaceful nuclear 
program. That is not their aim, correct? Let us get it on the 
table. Let us show a little clarity here in terms of what 
Iran's objective is here.
    Ms. Sherman. Senator, if we all were not concerned that 
Iran wanted to obtain a nuclear weapon, we would not be in 
these negotiations. They would not have been going on for some 
time. So of course we have concern. Up until 2003, the United 
States in a public intelligence estimate said indeed we 
believed Iran had been attempting to get a nuclear weapon. The 
intelligence community's assessment, which they can discuss 
further with you in private session, is that in fact after 2003 
that particular program ended.
    But of course we have that concern.
    Senator Johnson. Here is my question. Why do we continue to 
pretend publicly that Iran will enter some agreement where it 
will be a peaceful nuclear program, that it will be exclusively 
peaceful? That will never happen. As long as they can enrich, 
they are doing it because they want to have that threat of 
being able to weaponize their nuclear program, correct?
    So why not be honest? Why not be clear in terms of what 
Iran's motivations are? Why do we delude ourselves?
    Ms. Sherman. I do not think we delude ourselves at all. As 
I said in my opening comments, what we are trying to do is to 
cut off every pathway to a nuclear weapon, to cut off their 
pathway through plutonium in their current Arak reactor, to cut 
off the pathway of highly enriched uranium through Natanz and 
Fordow, to cut off their pathway to a covert program by using 
intrusive monitoring and inspection.
    So this is not about trust. This is not about being--some 
have illusions, some kind of illusion about them. This is about 
verification. This is about monitoring. This is about assurance 
to the international community. This is about inspections. So 
this is not about trust, Senator.
    Senator Johnson. In a negotiation you want to maintain 
leverage. Now, I will stipulate, Secretary Cohen, that there is 
still pressure from a sanctions standpoint, but not as much. We 
certainly dissipated that negotiating leverage. But also just 
the fact that we implicitly agreed to their enrichment program 
also gave up an awful lot of negotiating leverage, did it not? 
Ms. Sherman?
    Ms. Sherman. Senator, we made a judgment, the President of 
the United States made a judgment, that we could say that there 
was the possibility for a very limited enrichment program, 
mutually agreed, under strict limitations, with intrusive 
monitoring for a long period of time, to in fact deal with the 
international community's concerns about Iran's nuclear 
program.
    As a result of that and that ability to have that element 
as a possibility on the table, brought about the Joint Plan of 
Action. That Joint Plan of Action has ensured that in fact we 
have frozen the program at this time.
    Senator Johnson. We have that in the testimony. I have 
heard that.
    Let me ask my final question, and I will say ``if.'' If 
this fails on November 24, what then?
    Ms. Sherman. I think we will have very serious decisions to 
make. We will have consulted with you all along the way of 
these 4 months, a lot of that in closed session so that I can 
provide a great deal of detail to you, and we will decide what 
judgments we need to make.
    There is no question, we have said if Iran will not reach a 
comprehensive agreement that cuts off all of their pathways to 
a nuclear weapon and that gives the international community the 
assurance we are looking for then we will step up right with 
you to additional sanctions and to considering all of the 
options which the President of the United States says remain on 
the table.
    Senator Johnson. Would it not be smart right now to declare 
exactly what would happen, to create a little more negotiating 
leverage so maybe Iran gets a little more serious about this, 
as opposed to just talking about serious decisions or, even 
worse, maybe serious consequences?
    Ms. Sherman. I can assure you that in our negotiations with 
Iran we are quite direct about what will happen and what could 
happen if we cannot reach a comprehensive agreement. They have 
no doubt about the United States resolve, absolutely none.
    The Chairman. Senator Shaheen.
    Senator Johnson. Thank you.
    Senator Shaheen. Thank you, Mr. Chairman.
    Thank you both for being here today and for all of your 
efforts to try and reach a comprehensive agreement with Iran.
    Under Secretary Cohen, you talked a little bit in your 
opening statement about the economy in Iran. Shortly after the 
JPOA was announced, there were a number of business delegations 
from various countries, many of our allies, that went to Iran 
to, I assume, talk to them about prospects for business either 
in the interim or after a deal was reached. I wonder if you can 
talk about what we know about any of those discussions and 
whether we are still seeing the number of trade delegations 
continuing to go to Iran?
    Mr. Cohen. Yes, Senator. We are not seeing as active a flow 
of trade delegations going to Iran as we did I think in the 
initial days after the Joint Plan of Action was reached. We 
were very clear at that time to our partners around the world 
and others that talk, if it moves into deals, consummated deals 
that cross our sanctions lines, that we will take action.
    And we did, in fact, take a series of actions during the 
course of the Joint Plan of Action to make very clear that this 
was not just an idle threat, but we were very serious about 
continuing to enforce the vast sanction architecture that 
remains in place.
    So we----
    Senator Shaheen. Can you just----
    Mr. Cohen. Sorry. Go ahead.
    Senator Shaheen [continuing]. Delineate a couple of those 
in detail, so that we have some idea of exactly what was done?
    Mr. Cohen. The sanctions? Sure. We took----
    Senator Shaheen. Our response to the trade delegations.
    Mr. Cohen. The response to the trade delegations was not 
specifically to--we had a number of outreach opportunities to 
governments to make clear to them that we did not think this 
was a great time to be engaging with Iran, even in 
conversations. Many of these trade delegations were from 
private businesses, not government-sponsored, and the way that 
we conveyed the message to those delegations was both through 
public messaging as well as through the sanctions designations 
that we took.
    I do not think anyone was confused that we were going to 
sit back and allow sanctions violations to occur during the 
Joint Plan of Action without responding. We took action and I 
think that message was conveyed very clearly.
    Senator Shaheen. If we do not reach a deal with Iran, to 
what extent do we expect our allies and other partners who have 
been involved in enforcing the sanctions regime to continue to 
be willing to comply with that effort?
    Mr. Cohen. It is obviously difficult to predict the future 
in exactly how this will play out. But I do not have any doubt 
on two scores: One, if we do not reach a deal we will continue 
to enforce our sanctions very, very vigorously. The truth of 
the matter is, because of the significance of the United States 
economy, the significance of the United States financial 
system, the significance of our sanctions, that if there is not 
a deal the sanctions pressure on Iran will be maintained and 
intensified through actions of the United States alone.
    But, that being said, I am also confident that we will be 
able to continue to rally to international community to the 
objective that people have subscribed to, which is that we are 
all working together to try to achieve resolution to the 
concerns with Iran's nuclear program. And there was complete 
buy-in to the notion that this dual-track approach of pressure 
on the one hand, but the opportunity to negotiate on the other, 
was the right way to proceed.
    I think we will be able, if necessary, to regenerate that 
effort.
    Senator Shaheen. I certainly agree that we are committed to 
seeing those sanctions stay in place. I just am concerned about 
where the rest of the international community is, particularly 
Europe and Turkey and some of our other allies.
    Mr. Cohen. What I can say is that in the runup to the 
negotiations we I think were quite successful in persuading 
even somewhat reluctant allies to the wisdom of the approach, 
and if we 
are not able to reach an agreement with the Iranians I think 
the utility of a sanctions approach with the opportunity to 
negotiate will again be persuasive to our partners around the 
world, particularly as compared to the alternative of Iran 
developing a nuclear weapon.
    So I think we will have work to do, but I am optimistic 
that we will be able, if necessary, to bring together the 
international community to impose even more significant 
pressure on Iran if that is what is necessary.
    Senator Shaheen. Under Secretary Sherman, are we seeing--
you referred to the Russia-Ukraine situation and responded to 
that. But are we seeing any fallout from what is happening in 
Israel and Gaza, or also what is happening in Iraq having any 
impact on our negotiations?
    Ms. Sherman. We have not to date. I cannot say that it will 
not in the future, but so far all of our negotiating partners 
have been very focused on what is happening in the negotiation 
room. It is not to say that on the margins there is not 
discussions of Ukraine, Iraq, or when we go back together what 
is happening horrifically in Gaza, what is happening 
horrifically, most importantly, to Israel's security. But so 
far everyone has stayed very focused on what is happening in 
the negotiating room.
    Senator Shaheen. You talked about monitoring and continued 
inspections. What other metrics are we looking at in 
determining whether this is going to be a good deal for us or 
not?
    Ms. Sherman. As I mentioned, Senator, the metric is really 
whether we have cut off every possible pathway to a nuclear 
weapon and whether there is assurance that their program is 
exclusively peaceful. So have we cut off a plutonium pathway? 
There are two pathways to fissile material for a nuclear 
weapon. One is plutonium, one is highly enriched uranium. So 
Natanz and Fordow are in the uranium boat and Arak in the 
plutonium.
    Then thirdly, whether in fact we have cut off the pathways 
to a covert program. There is no way in any country to 100 
percent guarantee that there will be no covert effort. But what 
you can do is have enough intrusive mechanisms to assure 
yourself that if there is a covert program you are going to 
know about it in time to stop it or that it will never get 
under way.
    Senator Shaheen. Thank you.
    The Chairman. Senator Risch.
    Senator Risch. Thank you, Mr. Chairman.
    Ms. Sherman, in the kindest and gentlest terms previously I 
have urged that you do something about getting Pastor Abedini 
and the other two Americans released. As you know, I was 
incredibly critical of you guys because you cut billions loose 
without demanding this tiny, tiny little thing as far as Iran 
is concerned.
    I am going to ratchet that up a little bit. You did it 
again. You have cut billions loose without getting those three 
guys released. Do me a favor, do America a favor, do the 
Abedini family a favor. Tell them next time you are not going 
to give them any more money unless they cut these three people 
loose.
    I can almost guarantee they are going to do that. You are 
talking about billions of dollars and you are talking about 
three people that we really, really need out of prisons in 
Iran. Try it, just try it, and see what happens. I am willing 
to bet you they are going to cut those three loose in return 
for the money that you have available to give them.
    I want to move from that, Mr. Cohen, to talk about 
sanctions. You know, there are a lot of us that were pretty 
critical about--well, very critical--about the temporary and 
partial relief from sanctions. We have lots and lots of 
concerns about it, and those concerns have not gone away.
    You made a statement that I find very interesting. You said 
that: Well, if this thing fails, no problem; our sanctions 
alone will be able to do what we need to do to impose the 
difficulties on the Iranian economy. With all due respect, I 
think that that is incredibly naive. If they sidle up to the 
Russians, the Chinese, the Indians, and the Turks, they can do 
just fine regardless of the fact that there is United States 
sanctions on.
    I do not know how you are going to get this genie back in 
the bottle now that you have had this relief. I cannot imagine 
what that phone call is going to be like between President 
Obama and Mr. Putin regarding putting those sanctions back on. 
So I wish you well in that regard, but I think this is going to 
be very, very difficult if it fails. And I hope it does not 
fail. I hope you guys are incredibly successful. I hope that in 
November the Iranians say: We have changed our ways; we are 
going to be good people; we are not going to pursue these 
things. I hope you get there.
    But I have, given the history we have got with this 
country, I have real reservations. So I wish you well in that 
regard, but I think you need to be thinking a little bit more 
deeply about how you are going to put that genie back in the 
bottle.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Senator Coons.
    Senator Coons. Thank you, Chairman Menendez, and thank you 
to our witnesses.
    I support the administration's ongoing efforts to ensure 
that we completely eliminate any pathway for Iran to acquire a 
nuclear weapon and that we succeed in dramatically limiting 
their nuclear program. But I remain deeply concerned about some 
critical and unresolved issues in these negotiations--the 
status of the Arak heavy water reactor, the future of the 
Fordow enrichment facility, Iran's ongoing ability or hopefully 
lack thereof to enrich uranium, and the military dimensions of 
their program, including in particular those carried out at the 
Parchin facility.
    That is why I joined Chairman Menendez and others in 
calling for a robust and aggressive and thorough inspections 
and verification regime that would include full Iranian 
compliance and access for inspectors, that has been 
unprecedented. We also called for full Iranian disclosure on 
the military dimensions of the nuclear program and enforcement 
mechanisms for a future deal, because I am convinced that if 
there is success in negotiations, whether in November or after 
the reimposition of sanctions in some next stage, we will then 
be in a very difficult period, where over many, many years we 
have to sustain sanctions, sustain an intrusive inspection 
regime, and keep our allies engaged with us. And over 5 or 10 
or 20 years the temptation for the Iranians to cheat, given 
their past history, given their regional destabilizing efforts, 
I think will be very strong.
    So if I might, first about Fordow as a facility. Secretary 
Kerry recently spoke of finding a different purpose for the 
Fordow enrichment facility that would ensure it cannot be used 
for nuclear weapon purposes. Could you explain what purpose 
Iran could possibly have for a facility constructed and 
configured and in the location of Fordow?
    Ms. Sherman. I will say as much as I can in this session, 
Senator. There is agreement that Fordow will not be an 
enrichment facility, that the only enrichment facility will be 
Natanz, if there is an enrichment program at all. And what 
happens to Fordow is under discussion. There are several ideas 
that have been put on the table. Some of them we could probably 
agree to. Some of them we absolutely could not agree to. So 
that is a subject of negotiation.
    I am happy in a classified session to tell you quite 
specifically what those different options are.
    Senator Coons. The JPOA requires Iran agree to inspections 
under the IAEA additional protocol. What progress has been made 
and what assurances can you give us that the IAEA has the 
funding and the staffing, the scope and the capability, they 
really would need to be able to carry out over the long haul 
really intrusive, really reliable inspections? And have they 
had full access during the JPOA period and have they been 
denied access to any of the facilities I have referenced?
    Ms. Sherman. The IAEA just issued a report recently in 
which they said that Iran had complied with all of their 
obligations under the JPOA, that the IAEA had had all of the 
access that it had asked for under the JPOA and could verify 
that the obligations had been met.
    Indeed, when the JPOA was being finalized we obviously were 
in close consultation with the IAEA. They put together what 
they thought they would need in terms of budget to meet those 
additional obligations. The international community came forth 
quite quickly and supplied all of the money that was needed. 
If, in fact, we are able to get a comprehensive agreement--and, 
as I have said, I am not sure whether we will or not yet--I am 
sure the IAEA will need additional resources and I would expect 
the international community to come forward, because, quite 
frankly, any additional budget the IAEA needs is small potatoes 
compared to the cost of Iran having a nuclear weapon.
    Senator Coons. Madam Under Secretary, I suspect you could 
sign--speaking for myself, you could sign me up as an 
enthusiastic funder of the most aggressive and searching 
inspection regime possible for the IAEA. Distrust and verify. 
Given Iran's past and current and likely future activities 
supporting terrorism in the region, supporting the worst sorts 
of regimes, and cheating on their nuclear commitments in the 
past, I think we should be investing heavily in a proactive 
inspection regime.
    Ms. Sherman. Agreed.
    Senator Coons. So, Under Secretary Cohen, that turns me to 
a subject we have engaged in over some time. When you testified 
before the Financial Services Appropriations Subcommittee in 
April, I asked you about the burdens facing your group, the 
Office of Terrorism and Financial Intelligence within Treasury. 
You have had the number of sanctions programs steadily expanded 
from, I think, 17 to 40 today, and there have been even more 
recent developments in terms of the scope and complexity of the 
sanctions we and our allies are taking on against Russia and 
against many other nations.
    Of course, the largest and most complex of these is against 
Iran, and I just want to commend you again. The work that you 
and folks within OFAC have done----
    Mr. Cohen. Thank you.
    Senator Coons [continuing]. I think has made this possible.
    I asked whether you needed any more resources. You demurred 
and said that the President's budget request was fully 
sufficient, as I understand in your role you should. A number 
of us advocated for adding additional resources. The Senate 
bill adds $4.5 million to your underlying budget of $102 
million and the House added even more beyond that.
    Do you currently really have the resources and the staff 
you need? I am gravely concerned that we will have great 
difficulty keeping together the sanctions regime over the long 
haul, particularly if there is some temporary relief that after 
an interim agreement or a long-term agreement expands. You have 
done a great job so far at keeping a group of unlikely allies 
at the table and at enforcing these sanctions. Do you not need 
more resources to do this?
    Mr. Cohen. Well, Senator, first let me again express my 
appreciation, the appreciation of folks back at Treasury, for 
your comments and for your support. Outside of this hearing 
room, it is noted how much you appreciate and support our work. 
So I do want to convey that.
    In terms of the resources, we do have sufficient resources 
and that is in part because we are not in this alone. We work, 
obviously, very closely with the State Department, very closely 
with elements of the intelligence community. Really, the effort 
with respect to Iran, with respect to Russia, the sanctions 
programs writ large, it is an interagency effort. We have the 
lead in the design and implementation and enforcement of these 
sanctions programs, but we draw on the resources of many others 
around the administration to do this.
    We are stretched. I think I, the last time we spoke about 
this, acknowledged that people are working flat out, and they 
are. That is true at Treasury, it is true elsewhere as well. 
But we do think that we have the resources we need to ensure 
that our sanctions programs are effectively implemented, and we 
will continue to do that.
    Senator Coons. Well, just in closing, I for one would like 
to see that we have invested everything we can, that you are 
not in front of us a year from now explaining that somehow the 
sanctions regime came unglued because we did not invest enough 
in it, that somehow the IAEA inspections failed to catch 
cheating by Iran because we did not invest enough in it.
    I think there is a real chance that we will be reimposing 
tougher sanctions on Iran and I want to make sure that we have 
the abilities, skills, and resources to do it.
    Thank you for your testimony today.
    The Chairman. Senator Rubio.
    Senator Rubio. Thank you, Mr. Chairman. I want to thank you 
for holding this hearing and both of you for being here and the 
work you do. I want to preface what I am about to say with 
that. I know you have difficult work to do.
    But my opinion is this entire thing is a disaster. It is 
not just an embarrassing diplomatic failure; this is a 
dangerous national security failure, in my opinion. I want to 
examine for a moment going into this negotiation what the goals 
were of both sides. I think ours are pretty transparent and 
clearly stated. We wanted to prevent a nuclear-armed Iran. That 
was our hope. That is why we had sanctions and that is why we 
went into this, in the hopes that Iran would say: Well, we are 
going to walk away from the things you need for a weapons 
program; we are going to prove to the world that we have 
changed our behavior and we are going to try to become a 
responsible member of the international community. That was our 
goal.
    Their goal was different. And I believed this all along. I 
have said this in the past. I believe you believe this. And 
that is that they went into this goal, they went into this 
negotiation, with a simple goal: They wanted to achieve the 
maximum amount of sanctions relief that they could get without 
having to agree to any irreversible concessions on their 
nuclear program.
    I want to examine for a moment what we have given up just 
to get a Joint Plan of Action. The first thing is we have 
implicitly agreed that they now have a right to enrich at any 
level. I know that we are going to argue that we can always 
pull that back, but we have walked away from multiple United 
Nations Security Council resolutions and have implicitly agreed 
that Iran now has a right to enrich. That is going to be the 
baseline for this or any future negotiation moving forward, 
that they now have some sort of inherent right to enrich and 
reprocess.
    The second thing that has happened just to get a Joint Plan 
of Action is Iran has enjoyed real relief here. It is not just 
the direct sanctions that have been lifted. It is the indirect 
relief that they have gotten, the increases in consumer 
confidence and the confidence of businesses in their economy.
    The third thing is it stopped the momentum. There was real 
international momentum on sanctions, which is what ultimately 
probably even brought them to the table in some respects. That 
momentum has now been stopped in its tracks. In fact, it is 
worse than that. It has now made it more difficult to reimpose 
sanctions in the future, to try to go back and say: If you 
violate this we are going to reimpose sanctions. The task of 
doing that has now become more difficult.
    The fifth is we have left completely untouched the missiles 
program that they have, which they continue to develop. Let me 
explain to people, to the extent anyone is watching this at 
home, what that missile program is about. They are developing a 
long-range rocket that will be able to reach the United States 
and other places in Europe. That is what they are developing 
and that is what they are headed toward. There is only one 
reason why you develop a rocket like that and that is to put a 
nuclear warhead on it.
    That is not mentioning they are a state sponsor of 
terrorism. There is no nation on Earth that uses terrorism more 
than they do as an element of statecraft.
    So let us back up and look at Iran's point of view in this 
whole thing. They now have achieved an acknowledged right that 
did not used to exist, an acknowledged right to enrich. They 
have stopped the momentum on more sanctions. They have made 
future sanctions even harder. They are not concerned about the 
United States carrying out any military action against them. In 
fact, I would say they view it as almost a near impossibility 
at this stage.
    I know we are going to hear all this talk about, well, you 
know, this whole thing is contingent on other things and 
bragging about all the things that can be in a future deal. A 
nuclear weapon program has three critical components: 
enrichment, weaponization, and the delivery of that weapon. On 
enrichment, we have now given them an acknowledged right to 
keep that capacity. On weaponization, that has been outsourced 
to the IAEA, which has already said they are having trouble 
getting into some of these sites, like some of the secret 
military sites of the past. They will not even show us what 
they did in the past. And I have already talked about how the 
missiles remain untouched.
    And by the way, if they violate--let us say you do reach a 
deal with them. If they violate any component of this, it will 
all be based on our ability to do two things: find that 
violation and punish that violation. In the finding of that 
violation, we are dealing with a government that has 
consistently had a secret program.
    And I promise you they will rope-a-dope us. You can think 
you are going to have inspectors crawling all over the place. 
They can rope-a-dope us for months at a time. Hopefully the 
world is--in their mind, hopefully the world is distracted by 
some other crisis somewhere on the planet and they rope-a-dope 
us on the inspection element of it.
    On reimposing sanctions, well, reimposing international 
sanctions, let me tell you how hard that is going to be. The 
Russians, or at least the separatists that they are arming, 
just shot down a commercial airplane. They just killed almost 
300 innocent civilians. And we have had to drag our allies and 
others kicking and screaming just to increase sanctions a 
little bit more. So how hard do you think it is going to be to 
reimpose sanctions on this thing if it falls apart?
    I just think the danger here is quite frank. We are going 
to wake up one day--after this administration is long gone, 
some future President or future administration is going to wake 
up one day and realize they have had a secret weaponization 
program all along, all they have to do is flip the switch now 
on the enrichment capability, they have a long-range weapon 
that they can arm, they are either a threshold nuclear power or 
in fact become a nuclear power.
    At that point what will we have? A country that now has 
spread their influence of terrorism so they can asymmetrically 
attack those who seek to impose sanctions against them, a 
sanctions regime that fell apart years ago and is almost 
impossible to put back together, with Europeans and other 
countries now heavily invested in their economy, a country that 
will basically have a nuclear weapon--think of North Korea, but 
motivated by radical Islamic beliefs--with the capability to 
hit major United States cities, not to mention our allies in 
Europe, and of course Israel.
    And by the way, all these rockets that are landing in 
Israel from Gaza, guess where they came from, many of them? 
From Iran. That is what these people do.
    So look, I think we all hope and wish that this thing would 
work out, but I think there are very few among us on this 
committee that think that it will. And I am sad that we are 
going to be wrong about it. And I am also sad that anyone who 
criticizes this deal is often characterized as a warmonger, 
that we just want to go to war and carpet bomb people.
    On the contrary, here is what I do not want to see: I do 
not want to see us fall into a situation where sanctions is no 
longer an option because you cannot put it back together and 
now war is the only option, because war is a terrible thing, it 
is a horrible thing. The only thing worse than war is crazy 
people with a nuclear weapon that can reach the United States 
of America on a rocket. That 
is the only thing that is worse than a war with regard to this 
situation.
    I hope I am wrong. I do not believe that I am. And I fear, 
Mr. Chairman, that some day soon we will wake up to the reality 
that they have done a North Korea on us, they have acquired a 
nuclear weapon, they can hold the world hostage with that 
weapon, and there is very few or little we can do about it.
    Senator McCain. Mr. Chairman, Mr. Chairman.
    The Chairman. Yes, Senator?
    Senator McCain. Would my dear friend from California allow 
me 30 seconds to make a statement? I have to go.
    Senator Boxer. Absolutely.
    Senator McCain. I appreciate that.
    The Chairman. Senator McCain.
    Senator McCain. Mr. Chairman, it has become obvious to me 
and even more obvious in the hearing here today that this is 
really in every aspect a treaty that is being considered with 
Iran, and I believe it requires the advice and consent of the 
United States Senate and I hope we can move forward with 
legislation that would require that.
    I thank you, Mr. Chairman. I thank my friend from 
California.
    The Chairman. Senator Boxer.
    Senator Boxer. Mr. Chairman, thank you and Senator Corker 
for holding this hearing.
    I do not have questions for the panel because my staff has 
told me while I was at another hearing my questions were 
responded to. So I will go over those.
    But I have to say that some of the language I just heard 
from Senator Rubio--I wish he was here--brings back the 
rhetoric of days past. We do not want the smoking gun to be a 
mushroom cloud. I think the whole issue that we face is so 
complicated that we have to, I believe, strongly support these 
diplomatic efforts so that none of that does come true.
    The whole world is watching. So this is an opportunity to 
prevent Iran from acquiring a nuclear weapon. I have said many 
times that we have an obligation, our generation--we are here 
now--to test this window of opportunity. That is all it is.
    And I think the administration has been really honest about 
it. As I remember, the President himself said there is a 50-50 
chance. You know, a 50-50 chance. So it may not work out and 
all the hyper rhetoric may be something we turn to and more. 
But right now we have an obligation to test this window, 
because I think it is in our national interest, the benefit of 
our kids, the kids of the world, and in the interests of our 
allies in the region like Israel.
    And I think our language should reflect that, although we 
are very skeptical, we are very supportive of this opportunity. 
Israel's security is threatened on so many fronts, from 
terrorists in Gaza launching rockets and digging tunnels and 
all the things we know about. We also know the rise of ISIS in 
Syria is a horrible threat. So the opportunity, as the world 
moves in a bad direction, to focus our attention on something 
good, I do not think it should be lost.
    I know how hard our negotiators have been working, 
tirelessly, on a comprehensive agreement. I know it is tough. 
It is incredibly difficult and complex, which is why we have 
another extension. I just want to be on the record, in the 
midst of these sensitive negotiations, I am not going to force 
the administration into a corner by dictating a preferred 
outcome or prematurely ratcheting up any sanctions, because we 
have got lots of time to do that. And I think trying to attach 
language on Iran to other bills, as I have faced with the U.S.-
Israel Strategic Partnership Act--that ought to be a clean bill 
and not be burdened by this incredibly sensitive, complicated 
matter.
    I want to be clear, and I have written my own letters. I 
have not gone on the letters that have 80 signatures. I have 
said any final agreement must be air-tight, it must be 
verifiable, and it must be long-lasting. We cannot accept 
anything less because we cannot trust Iran. We all know that. 
And if Iran walks away from the negotiating table it will be a 
sad day for them, too, because we will all come together in 
support of a robust U.S. and international response that 
includes the immediate restoration of any suspended sanctions 
and additional, biting sanctions on Iran.
    I would go further and make it clear, so let everyone hear 
my voice, this Senator, that all options have to be on the 
table should Iran attempt to continue its illicit nuclear 
program, and I mean all options.
    So the next 4 months are critical, and I hope and pray that 
they will result in a comprehensive final agreement that is 
acceptable to the United States and to our allies and that 
brings a peaceful end to this nuclear program.
    This is a historic chance. We could let it pass us by or we 
can all work together, being very clear, it is worth a chance. 
We see how easy it is to go to war. We see that all over the 
globe. And may I hasten to add, some of my colleagues I have 
heard in at least 6 to 10 cases say: Go to war, America, go to 
war, America.
    We need to resolve these issues, and war is a last resort, 
not a first resort. So this is an opportunity that we have. I 
do not want to gloss over how hard it is. I share the 50-50 
view. Could go one way, could go the other. But lord, if we can 
have it going the right way I think we should be very 
supportive.
    I just want to say this to you, Wendy. I call you ``Wendy'' 
because you are my buddy. I think it is very important to keep 
Congress informed, and I think some of the complaints that we 
hear are legitimate complaints. We know it is hard. We know 
there are details. We know you are working 24/7. But in the 
kind of government that we have, we are all in this together. 
It used to be foreign policy stopped at the water's edge. It is 
not that way, for whatever reason. It is not that way. That 
means it is even more important that you let us know every 
twist and turn, because at the end of the day I do not think 
that there are any of us that would turn away from a solid, 
verifiable agreement. And at the end of the day there are not 
any of us that will not use all the tools at our disposal if 
there is no agreement. So how important it is for you to keep 
us informed.
    That is my statement, and I thank you.
    The Chairman. Senator Flake.
    Senator Flake. Thank you. I appreciate this hearing and I 
appreciate the testimony.
    I am among those who believes that we ought to test every 
opportunity. I think this is an opportunity. It may not bear 
fruit, but I think it is incumbent on us to test it, and I 
applaud the administration for doing so.
    I just want to clarify a couple of numbers that came out. 
Mr. Cohen, you had mentioned the amount of sanctions relief 
that they had taken advantage of, but I have got a $3 to $4 
billion figure. Is that what is expected with the extension of 
the JPOA or what they have realized so far? I know the initial 
estimates were about $8 to $9 billion. Can you tell us how much 
they have taken advantage of and how much will be taken 
advantage of over the next couple months?
    Mr. Cohen. Certainly, Senator. The $3 to $4 billion figure 
that I referenced in my oral testimony is our top end estimate 
of what Iran may enjoy in terms of sanctions relief in the next 
4 months. That is comprised of the $2.8 billion in its own 
restricted assets that it will be getting access to over the 
course of the next 4 months and then some figures for 
additional petrochemical sales and auto exports, which we 
estimate will be worth about $500 million altogether.
    So the low end of that estimate is about $3.3 billion. 
Obviously, precisely how Iran is able to take advantage of the 
continued suspension of the petrochemical and the auto 
sanctions is an estimate. We will see how it turns out.
    For the initial JPOA period, initial 6 months, our estimate 
going in was that Iran would enjoy about $6 to $7 billion as a 
maximum in terms of its relief. I think that estimate was 
actually overstated. Our best figures are that Iran earned or 
enjoyed a little over 5 billion dollars' worth of relief in the 
JPOA period, no relief on the petrochemicals suspension, very, 
very little in terms of the auto sanctions.
    Senator Flake. And the reason for that is it is difficult 
for them to take advantage of it because of the interlocking 
nature of the sanctions that are out there, is that right?
    Mr. Cohen. That is right. One key fact is that Iran remains 
cut off from the international financial system. So even though 
it is now not sanctionable to engage in petrochemical sales or 
auto sales with Iran, it is still difficult to find financial 
institutions to do that work.
    Senator Flake. I think we all acknowledge the reason that 
Iran is at the table is because of the effectiveness of these 
sanctions, and I would submit it is largely because it has been 
Iran versus the West rather than Iran versus just the United 
States. So it is important to keep our allies on board here.
    Do you have a concern--I will address this to Ms. Sherman. 
Do you have a concern that if we were to not extend and not 
continue with these negotiations, that our allies may cut their 
own deal or move on without us?
    Ms. Sherman. Senator, listening to some of your colleagues, 
I wrote down: ``Without diplomacy, we will not be able to keep 
the sanctions together,'' which is exactly your point, that, in 
fact, we certainly should not have proceeded with an extension 
if we did not think there was some significant progress and the 
possibility of a comprehensive agreement. We should have called 
it a day.
    But, having seen some progress and heading in the right 
direction and seeing the possibility that we might get to a 
comprehensive agreement, though I do not know the end of the 
story yet, we thought it was critical to take diplomacy to the 
very last possible promise that we might get to a comprehensive 
agreement, because that does keep the international community 
united in the enforcement of sanctions.
    If our partners and even those who are not so much our 
partners saw that we were going to cut diplomacy short, then 
those sanctions enforcement would have frayed much more 
quickly.
    So we do not have any guarantees here. I do not know that 
we will get to an agreement at the end of these 4 months. But I 
do agree with your point that without going this extra mile, 
given that there was some significant progress in the talks, we 
would have a much harder time keeping the sanctions together. 
And I think Under Secretary Cohen, since he is nodding, does 
agree.
    Senator Flake. Thank you for making that point. I am 
concerned that when these sanctions fray, if they fray, then it 
will not be as effective. Unilateral sanctions very seldom work 
and we have got to keep the community together. That is why I 
think it is important to explore the diplomacy avenue as much 
as we can.
    Is there a concern among the Iranians that we get to the 
end of this and the ability of the United States to deliver on 
sanctions relief is in question, given what Members of Congress 
have said? And will the administration come back to Congress 
for statutory relief of these sanctions, or what is going to be 
the mechanism in your view at that point if an agreement is 
reached?
    Ms. Sherman. Let me start and let Under Secretary Cohen 
then comment. I can assure every Member of the United States 
Senate and of the House of Representatives that Congress is a 
constant topic of conversation by the Iranians. They are well 
aware of Congress' authorities, not only in terms of oversight, 
but in terms of legislation.
    We have been very clear that initially there will only be 
suspension of any of our sanctions regime and of the 
international community's, that the lifting of sanctions, for 
which we must return to Congress for statutory relief, will 
only come when certain benchmarks verified by the IAEA are 
reached, and they are very serious and substantive benchmarks, 
because this has to be a durable agreement and it will only be 
durable if the United States Congress and other institutions 
and governments around the world believe that the compliance is 
real and sustainable over a period of time.
    Senator Flake. I hope the Iranians do understand that if an 
agreement is reached that is verifiable that we will follow 
through with sanctions relief. I hope they also understand that 
if we do not reach an agreement, that existing sanctions will 
be enforced and additional sanctions will be added. But I think 
both sides of that equation need to be understood.
    Did you have something to add?
    Mr. Cohen. Only, Senator, that in the course of this Joint 
Plan of Action we have committed to certain suspensions of 
sanctions, and one of the things that we have done to sort of 
reinforce the point both that we will continue to enforce the 
sanctions that are in place as well as in good faith fulfill 
our commitments on the release side, is to take very seriously 
what we have committed to on the sanctions relief, so that the 
Iranians as they go into these negotiations can understand that 
there is potential light at the end of this tunnel if they take 
the steps necessary.
    So we have been I think working very hard on both sides of 
the coin, as you describe.
    Senator Flake. Thank you.
    The Chairman. Senator Markey.
    Senator Markey. Thank you, Mr. Chairman.
    Ambassador Sherman, there has been a lot of discussion 
amongst nuclear nonproliferation experts about the potential 
for a proliferation cascade in the Middle East if Iran were to 
obtain a nuclear weapon. It is critical that the current 
negotiations succeed in preventing Iran from developing a 
weapon, but even if under a final agreement Iran retains a 
domestic uranium enrichment capability I am concerned that this 
could still raise fears in the region and prompt other states 
to reconsider their contingency plans and nuclear posture.
    It has been reported that both Saudi Arabia and Jordan are 
interested in pursuing nuclear cooperation agreements with the 
United States. How will we be able to convince these countries, 
our partners, to agree not to demand the right to enrich 
uranium as part of these agreements if we allow Iran to 
maintain its enrichment capability, especially since we just 
concluded a nuclear cooperation agreement with Vietnam that 
allows Vietnam to enrich uranium as well?
    Ms. Sherman. Thank you, Senator. There is no question that 
our consultations with partners and allies in the region is 
quite critical to ensure that we do not have a proliferation 
cascade in any way, shape, or form. Part of that will be if 
indeed there is a comprehensive agreement with Iran and they do 
have a very small, limited domestic program, that it be very 
small, that it be very limited, that it be subject to intrusive 
monitoring mechanisms, so that there are not incentives for 
other countries to want to proceed down that road.
    As you know, the United States does not recognize that any 
country has a right to enrichment. We do not believe that is a 
right under the NPT and we will continue to vigorously enforce 
that perspective.
    Senator Markey. Again, I want to comment on the Iran 
Government leadership recently claims that the country will 
need an industrial-scale enrichment capability to generate 
nuclear power. The interim deal stated that in a final 
agreement Iran's enrichment program would be, ``consistent with 
practical needs.'' This is a country with the second-largest 
natural gas reserves in the world. As I have noted before 
several times in this committee, Iran flares off, wastes that 
is, the equivalent of 13 nuclear reactors' worth of natural gas 
each year, which they could use to produce electricity.
    So I urge you to keep in mind as we negotiate over what 
Iran's practical needs for nuclear power are that it is a very 
duplicitous game that they are playing, since they flare the 
natural gas that our country uses for electrical generation and 
many other countries in the world. So we should just be deeply 
skeptical that there is any legitimate civilian purpose in this 
enrichment program, and I just want to again continue to make 
that point.
    The nuclear cooperation agreement that we have with the 
United Arab Emirates includes a commitment by the United Arab 
Emirates not to enrich uranium or reprocess spent fuel, but it 
also allows for the agreement to be renegotiated if other 
countries in the region get more favorable terms. So if Jordan 
or Saudi Arabia demand the right to enrich or reprocess in 
response to an inadequate Iran agreement, the UAE could make 
the demand as well since that is part of the agreement.
    Is it not possible that a final agreement with Iran that 
allows enrichment to continue will cause a proliferation 
cascade in the region as other countries begin their own 
programs?
    Ms. Sherman. As I said, Senator, we are very well aware of 
the potential risks of any agreement that allows any country to 
enrich, because we do not believe that any country has a right. 
We also believe that fuel is available on the open market for 
power generation. So if indeed we reach a comprehensive 
agreement, and that is not a sure thing at all, and there is an 
enrichment program in Iran, we believe it must be very small, 
very limited, attached to a practical need. That certainly 
would not be industrial-size capacity, to be sure. Indeed, Iran 
has talked about Bushehr, which is fueled by Russia. We believe 
Russia should continue that commitment and it has committed to 
do so and Iran does not need to have an enrichment program to 
provide fuel for Bushehr.
    So we agree with your concern and so therefore we believe 
that this should be a very limited, very small, attached to a 
practical need, under very intrusive monitoring that would be a 
disincentive for any other country to want a similar program.
    Senator Markey. I appreciate that. And again, this Vietnam 
agreement does allow Vietnam to enrich and I just think it does 
create a precedent that is a very small step from something 
that is much more profound.
    Are you concerned that other regional players, such as 
Turkey or Egypt, would seek to develop their own uranium 
enrichment capabilities, and how could that impact regional 
tensions?
    Ms. Sherman. We certainly hope that no one goes down this 
road. We are trying to create incentives to do otherwise and 
disincentives to proceed in this manner. We think that there 
are much more economical ways to get fuel for power generation 
and would not encourage any country to go down this road. 
Clearly, we want to make sure that we have in place tremendous 
compliance risks for Iran should we get to a comprehensive 
agreement if they do not comply.
    Senator Markey. Again, the greater the enrichment program 
in Iran is, the greater the risk then that there is a transfer 
of that material into other countries or subnational groups 
that could be used against American interests. So the smaller 
the program, obviously the more likely that we will not see 
that kind of a diversion.
    So again, we are very close now to reaching that cascading 
point, and we have held it off for decades, since President 
Kennedy warned us about it. We have pretty much held the number 
of countries to a very small number.
    In a June report, the U.N. panel of experts that monitors 
Iran's sanctions reminded us that Iran continues to maintain 
wide-reaching transnational illicit procurement networks. It 
uses front companies to obtain materials on the global market 
for its nuclear and missile programs under the guise of 
legitimate commerce. These are complex operations, including 
transport, shipping agents, freight forwarders, warehouses, and 
airlines, and they violate U.N. Security Council Resolution 
1737, passed in 2006, which bans the provision of items to Iran 
that could be used in its nuclear and missile programs.
    If Iran gains further sanctions relief and expands 
international trade as part of a nuclear deal, what challenges 
would that pose to our efforts to disrupt this facilitation and 
procurement network which exists even today?
    Mr. Cohen. Senator, that U.N. report is exactly right. Iran 
does continue to try to illicitly acquire material through 
these procurement networks. We continue to identify and disrupt 
those networks where we find them and have taken action in the 
last several months to disrupt some of these networks.
    Going forward, if there is an agreement one of the issues 
that we will confront and that we are focused on is how to 
ensure during the course of this long-term agreement, if there 
is one to be had, that we are able to continue to ensure that 
the Security Council resolutions and our own sanctions on 
proliferation activity are respected as the agreement rolls 
out.
    Senator Markey. Let me just ask very quickly: At the 
Parchin military base, given Iran's ongoing efforts to hide 
incriminating evidence by paving over the site with asphalt, do 
you agree that gaining access to this facility is an 
increasingly urgent priority? They are acting, Iran, in a very 
suspicious fashion.
    Ms. Sherman. We are concerned about all of the things Iran 
does to avoid their obligations under the NPT and their 
obligations to U.N. Security Council resolutions and the IAEA 
systems analysis that is under way, and Parchin is certainly a 
critical element of that.
    Senator Markey. Will a final agreement include Parchin, so 
that we can be sure that there is no clandestine activity 
occurring at that site?
    Ms. Sherman. The final agreement will include the IAEA 
being satisfied that the possible military dimensions of Iran's 
program have been addressed.
    Senator Markey. So that includes the inspections?
    Ms. Sherman. From the IAEA's perspective, that is certainly 
where they are today.
    Senator Markey. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Senator Corker for a final comment.
    Senator Corker. Thank you, Mr. Chairman, and thanks for 
having this hearing and for all your work on Iran and its 
nuclear activities.
    I want to thank the witnesses again for being here. For 
those in the listening audience, one of the natural questions 
one would ask is, what are the gaps now between where we want 
to be and where we want to close. We have obviously had those 
kinds of Q&A in another setting and obviously we realize that 
in an open setting that is not a good thing to have discussed. 
But I do want to say, look, I know Senator Flake mentioned that 
he believes this is a historic opportunity. Look, I do too. I 
think all of us--I think you know that everyone up here really 
does want to see a diplomatic solution, and everyone 
appreciates the work that all of you are doing.
    I think that when the JPOA came out and basically 
acknowledged enrichment you saw some--it elicited pretty strong 
responses from all involved. As Senator Markey was just 
mentioning, we just went through some 123 agreements with other 
countries. Here we are pushing our friends to not enrich, and 
yet we open these negotiations acknowledging enrichment. So 
there are a lot of concerns. All of us wish you success. There 
are a lot of concerns.
    I do want to just close by saying this, though. In spite of 
the fact that we want you to be successful--I heard what you 
said today and in essence you said there is no deadline. I 
know, I know you have got to fudge a little bit because you do 
not know what is going to happen. But I think in essence it was 
said there is not a deadline, and I hope there is a deadline.
    Ms. Sherman. Our intent is to end this the 24th of 
November.
    Senator Corker. I know you talked about double-digit 
minimum length. I just want to say--and I know that maybe that 
is better said in a classified setting. But I just want to say 
again, unless it is really, really long we have done nothing, 
we have done nothing.
    The goalposts are moving a little bit, I mean, even 
relative to what you guys are saying you are going to do with 
Congress, the acknowledgment that in essence you are going to 
have a conversation. Rose Gottemoeller called me this morning 
at 8:30 and we had a conversation about the violations of the 
INF Treaty that we have known about for some time because we 
access classified documents. But I read about it last night in 
the New York Times.
    That is not exactly the kind of consultation we expect. It 
is not lost on us that at the end of this, even though it 
coincides with when the JPOA began or discussions began. They 
end on November the 24th, which is likely beyond the ending of 
any lame duck session that may occur after the election. That 
does not go lost on us.
    So I would just say that, again, it appears to me that what 
you are saying is that you are going to do whatever you wish to 
do, you are not going to consult Congress, you do not believe 
that that is your responsibility. You are going to have a 
conversation with us, but we are not going to really have the 
ability, even though we put these sanctions in place--and by 
the way, it was my amendment in Banking that pushed this to 
multilateral types of sanctions which you have pursued.
    But again, I think what you have said today is that 
Congress 
is relevant relative to raising concerns, not relevant relative 
to whether this is going to be approved by Congress or 
sanctions waived. I just think that that is something that all 
of us who serve in this body--this is one of the biggest 
agreements that will likely be entered into, if we enter into 
one, and in essence Congress is playing no role other than 
raising questions.
    So, Mr. Chairman, I hope that there is some way that we 
will figure out to deal with that. I think that is a major 
lapse in our responsibilities. And I thank you for your 
continued concern about this issue, and thank the witnesses for 
their work. But the goalposts are moving.
    Ms. Sherman. With all due respect, Senator, I take the 
prerogatives of the United States Congress incredibly 
seriously, as does President Obama and Secretary Kerry, and we 
do not believe it is merely a conversation. We believe it is a 
consultation. We believe you have oversight authorities. We 
believe you have legislative authorities.
    We have worked very closely to provide you with real-time 
information, often in classified sessions because there is an 
ongoing negotiation, which we are very appreciative that you 
have permitted. We will continue to do so. It is in our 
interest that Congress know what we are doing every step of 
this negotiation and it is very critical that the United States 
of America be one, Congress and the administration working 
together, if we are to achieve a comprehensive agreement and 
then to carry out that comprehensive agreement durably over a 
sustained period of time that gives us all the assurance that 
every pathway to a nuclear weapon is closed off and that their 
program is entirely peaceful. I quite agreed with your opening 
statement and the chairman's that we all share the same goal.
    The Chairman. I had said final words, but Senator Paul has 
returned and I want to accommodate him. So Senator Paul.
    Senator Paul. Thank you very much.
    Secretary Sherman, how significant is it that the Iranians 
have now converted their 20 percent stockpile to 5 percent?
    Ms. Sherman. What they have done is taken their up-to-20 
percent and either diluted it or oxidized it, and under the 
extension they are going to take 25 kilograms--that is about 
20, 25 percent of what they have of the oxidized up-to-20 
percent--and turn it into metal plates for the Teheran research 
reactor, which means the likelihood of it being reconverted 
back to enriched uranium is extremely low.
    All of that is very important. They will in addition, as a 
result of this extension, oxidize all their up-to-2 percent 
stockpile, which is over 3 metric tons. Although it does not 
have significant what we call SWU's, separative work units, 
which is the way that you talk about the energy in this 
material, in a breakout scenario it would be significant. So we 
are glad both those things are being done.
    All of that said, we are of course concerned about their 
up-to-5 percent stockpile. That is capped under the JPOA, but 
we will want to deal with that stockpile and every other kind 
of stockpile they have as a part of any comprehensive 
agreement.
    Senator Paul. But you would call it a significant evidence 
of compliance, converting the 20 to 5?
    Ms. Sherman. Well, actually they have oxidized or diluted 
their entire up-to-20 percent stockpile and the IAEA has said 
that they have met their obligation.
    Senator Paul. What is the administration's position on the 
Menendez-Corker bill to institute more sanctions? I believe 
also part of the bill is that there would be no right of any 
enrichment; whether or not this would be persuasive and to be a 
cudgel that entices or encourages them to do what they need to 
do or whether or not it would push them away from the 
negotiating table?
    Ms. Sherman. We believe, Senator, that we believe at this 
point it would push them away from the negotiating table and, 
quite importantly, it would probably push our P5+1 colleagues 
away from the negotiating table. So although I have great 
respect for the chairman and for Senator Corker and for all the 
Members of the U.S. Senate and I believe the intentions here 
are all absolutely right on, which is to keep the pressure on 
Iran to do what is necessary here to give the international 
community the assurance we are looking for and to cut off all 
the pathways to nuclear weapons, the administration believes 
quite strongly that at this moment in this negotiation 
additional legislative action would potentially derail the 
negotiation, and that Iran is quite clear that the Congress 
will pass legislation at any moment that it is deemed 
absolutely necessary to do so.
    Senator Paul. Can you quantify how much this going from 20 
to 5 delays the breakout time? Is that quantifiable? Does it 
make it 6 months, the breakout time? Does it add 5 months? Is 
it quantifiable?
    Ms. Sherman. What I prefer, Senator, if I could, is in 
terms of specific breakout times and elements, to have the 
intelligence community brief that in a classified setting.
    Senator Paul. But it is--you say it delays it? It obviously 
has to be a step in the right direction to go from 20 to 5.
    Ms. Sherman. Every element that we can deal with helps on 
breakout, but until we get a comprehensive agreement we will 
not have a durable agreement that will give us the kind of 
assurance we are looking for.
    Senator Paul. And it is another significant step going from 
oxides to fuel plates?
    Ms. Sherman. It is an important step, because the ability 
to turn it back into enriched material is that much more 
difficult, yes.
    Senator Paul. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Well, thank you both. Let me just conclude 
with some summary thoughts. We all appreciate your service. No 
one here questions that. It is only because of the importance 
of the issue that everybody feels as they do.
    Let me just make a comment. There is a difference--and I 
think we have gotten better at this. But you know, notification 
is different than consultation. Notification is when you tell 
us, we are doing X, Y, or Z. Consultation is when you say, we 
are doing X, Y, or Z and what do you think, and how do you 
incorporate some legitimate views so that if and when you get 
to a final agreement people will have a sense of confidence on 
that.
    So I just urge you to think about not just telling us what 
you are doing, but consulting in a way in which there is input 
taking place that when it can be agreed upon can be 
incorporated.
    Secondly, on the sanctions, I heard your response and I 
will just say once again for the record, the problem--of course 
the Iranians know we will pass sanctions if they do not agree. 
It is the lead time that will be necessary. Every sanctions 
that I have authored with other colleagues has required a 
minimum of 6 months notification to the international community 
and to businesses, and then the process of setting them into 
enforcement and enforcing them takes longer.
    Unfortunately, that amount of time is greater than the 
amount of time for breakout if the Iranians determine that they 
want to break out. So that is the fundamental conflict I have 
about saying we can wait, but the consequences of the impact of 
those sanctions will be less so.
    There would be no greater Thanksgiving Day gift than for 
you to all be successful, for our country, I believe for the 
Iranian people, and for the world. But the concerns here I 
think are very legitimate. In our next panel that is going to 
come up, which is an excellent panel, I look at the testimony 
of Mr. Heinonen, who spent 27 years as the Deputy Director of 
the IAEA, well respected. One of the things he says in his 
testimony: As the Iranian Ambassador's recent letter to the 
IAEA demonstrates, Iran continues to challenge, inter alia, the 
agency's right and obligation to verify the correctness and 
completeness of Iran's declarations under the comprehensive 
safeguards agreement, the legality of the IAEA board's 
resolutions, and the IAEA Secretariat's practices in reporting 
its findings in its reports to the IAEA board and the U.N. 
Security Council.``
    Now, that letter was just June the 4th of 2014. So you say 
to yourself, wow, they are challenging basically everything the 
IAEA is doing and yet we are in the midst of negotiations 
thinking that on some of the key questions we have discussed, 
like the military dimensions of their program, we are going to 
get there in 4 months when you do not start actually 
negotiating--maybe there is something going on in between, but 
you are not meeting until September.
    Secondly, I appreciate what Treasury has been doing, but 
even despite what you are doing, part of the challenge that we 
face is that, yes, Iran's economy is bad, but it is better than 
it was. And that is part of the positive, that sentiment that 
is created by virtue of the Joint Plan of Action and its 
extension which is helping in my perspective to create some 
modest growth.
    You know, GDP is expected to grow at 2 percent. That is 
modest, but it is a huge improvement over Iran's economic 
performance in the 2012-13 fiscal year, when GDP contracted by 
6.6 percent. Inflation is beginning to go down the first 
quarter of 2013, so the rate of inflation dipped below 20 
percent, a worrisome number, but certainly less than half of 
the inflation that it was at 45 percent. The rial has gone up 
in its value. The stock market has gone up in its value.
    So there are consequences for--positive consequences for 
Iran, negative for what we consider the continuing of pressure 
to get them to do the right thing.
    Finally, you know, I spent a fair amount of time reading--
and I will not talk about which of my friends in the press with 
their editorials. But I went back and read years of editorials 
about North Korea. And my God, it was amazing to me that the 
language that was used about the aspirations that we were 
seeking in North Korea is the language--I do not know whether 
it is the same editors, but it is the language that is being 
used now as it relates to Iran.
    And to be very honest with you, if there is an example of 
that ``no deal is better than a bad deal,'' from my perspective 
it is the framework agreement that was devised with North 
Korea, because it failed to dismantle its illicit nuclear 
infrastructure, it limited inspections to a singular nuclear 
complex. And we all thought it was a success. Then we later 
learned that North Korea repeatedly cheated on the deal. Then 
they quit the deal, then they detonated their first nuclear 
explosion. We cannot have that as it relates to Iran.
    So look, I am glad to hear that you say the Iranians pay 
attention to Congress. If they want to pay attention to 
Congress, they should let go of Dr. Abedini and every other 
American they have hostage. That would send a hell of a 
message.
    Secondly, only because the stakes are so high that the 
passions are so strong--so we have a deep respect for what you 
both and those who work with you are doing and we have a mutual 
goal. I believe we have a role to play to help you with that 
mutual goal. You may not always like it, but I think at the end 
of the day it is positive.
    With the thanks of the committee, this panel is excused. 
Let me call our next panel: Dr. Olli Heinonen, who is a senior 
fellow for research at the Belfer Center for Science and 
International Affairs at the Harvard Kennedy School of 
Government; and Mr. Michael Singh, who is the Lane-Swig Senior 
Fellow and managing director of the Washington Institute.
    We want to thank our witnesses who are leaving and those 
who are joining with them. We would ask you to do so quietly. 
We want to tell our new panel that your full statements will be 
included in the record without objection and we would like you 
to summarize more or less in 5 minutes so that we can have the 
type of give and take we just had with our first panel.
    I would like to also announce that Dr. Gary Samore, who was 
listed on the hearing notice to be a witness, unfortunately 
took ill today and so we do not have the benefit of his 
expertise today, but we hope to do so at some other time.
    Dr. Heinonen.

 STATEMENT OF OLLI HEINONEN, PH.D., SENIOR FELLOW FOR RESEARCH 
  AT THE BELFER CENTER FOR SCIENCE AND INTERNATIONAL AFFAIRS, 
      HARVARD KENNEDY SCHOOL OF GOVERNMENT, CAMBRIDGE, MA

    Dr. Heinonen. Thank you. Chairman Menendez, Ranking Member 
Corker, members of the committee, thank you for inviting me to 
address this hearing.
    Since 2002 we have experienced many adverse actions taken 
by Iran. Iran has not suspended its enrichment and heavy water 
reactor-related activities, not cooperated with the IAEA on 
outstanding issues, particularly with those which raise 
concerns on the military dimensions of Iran's nuclear program. 
The implementation of the JPOA has generally proceeded well, 
but the negotiations have also seen headwinds.
    The Iranian Ambassador's letter in June to the IAEA 
demonstrates that Iran continues to challenge the agency's 
right and obligation to verify the correctness and completeness 
of declarations, the legality of the IAEA board resolutions, 
and the IAEA's Secretariat's practices in reporting its 
findings.
    Due to the fact that Iran has been running parts of its 
nuclear program first clandestinely and without fulfilling its 
NPT reporting obligations and disregarding Security Council 
resolutions, the onus of proof bears heavily on Iran to show 
that its nuclear program is entirely peaceful.
    I have recently published with David Albright and Andrea 
Sticker an analysis on five principles which the negotiators 
crafting the comprehensive agreement should follow. I highlight 
some of those basic principles.
    The first one: Stable provisions. It is important for the 
credibility and durability of an agreement to minimize the 
opportunities for violations and delays to achieve compliance. 
The first requirement is that Iran provides a complete 
declaration of its past and current nuclear program, which then 
will serve as a clearcut baseline for the verification and 
monitoring activities to be conducted by the IAEA.
    Another important provision is the technical parameters of 
the nuclear program. An example of what would create an 
unstable and highly reversible situation is, for instance, 
suggestions that involve lowering the amount of enriched 
uranium in Iran while increasing the number of allowed 
centrifuges to 10,000 or more 
IR-1's in order to increase the breakout times.
    Keeping enriched uranium stocks exceedingly low would be 
impossible in practice. Practicalities of operating a 
centrifuge plant and a uranium conversion or fuel production 
plants would lead to larger enriched uranium stocks, 
compromising the goal of longer breakout times.
    Experiences from various agreements since 2003 also 
demonstrate the importance of unambiguous baselines for 
monitoring of Iran's undertakings. Ambiguity in parameters 
leads to potential slippage.
    With regard to the practical needs, I would pass them here, 
but they are in the written text and go straight to the 
effective verification.
    Timely detection and prevention of the development and 
acquisition of nuclear weapons or a state's capability to 
produce them is a complex task. There are things which we know 
and there are aspects of such programs which we perhaps can to 
a certain degree deduce, but also features which we do not 
know.
    The IAEA must provide prompt warning of violations, 
determine the correctness and completeness of declarations, 
establish the total number of centrifuges acquired by Iran and 
the size of its natural and enriched uranium stocks, and 
establish confidence in the absence of undeclared nuclear 
material and activities, including assurances on the absence of 
nuclear weapons-related efforts.
    The long-term agreement must establish a range of other 
verification provisions, also referred to as Additional 
Protocol Plus.
    Moreover, military sites do not form sanctuaries. The IAEA 
has right to conduct inspections on those under the existing 
agreements when appropriate. Iran has to provide the IAEA with 
unconditional and unrestricted access to all areas, facilities, 
equipment, records, people, and materials which IAEA needs to 
do its work.
    Adequate verification also requires Iran to verifiably stop 
its efforts to procure key proliferation-sensitive goods 
illegally for its nuclear program. If not stopped, Iran could 
secretly acquire such items for clandestine activities.
    To ensure that the IAEA has the necessary legally binding 
authorities to conduct the additional verification work, the 
agreement between P5+1 and Iran should be endorsed by the U.N. 
Security Council.
    Possible military dimensions. Iran's most serious 
verification shortcoming remains its unwillingness to address 
the IAEA's concerns about past and possibly ongoing military 
dimensions of its nuclear programs. For the IAEA to conclude 
that all nuclear material is in peaceful use, this is not 
possible unless Iran satisfies the IAEA in this key area.
    Unless properly addressed, it would be difficult to create 
a meaningful and robust verification regime for Iran. Such 
additional long-term monitoring took place in South Africa from 
1993 until 2010 until the then-IAEA was able to conclude that 
all nuclear material was in peaceful use.
    Irreversibility. Irreversibility is the heart of the 
dispute about Iran limiting plutonium production at the Arak 
nuclear reactor. The simple fix is for Iran to remove the 
currently installed core and replace it with a smaller one not 
able to hold enough natural uranium to run the reactor. With 
these changes to the Arak reactor, there will be also no need 
for heavy water production. Regular, light water could be used 
in this reactor and heavy water could be shipped out.
    Iran has also resisted making concessions about what to do 
with the centrifuges that would exceed a cap on the total 
agreed number of installed centrifuges. If not removed and 
rendered harmless, Iran could within months reconstitute 
operations and create a sizable breakout capability.
    Adequate response time, the last point. An agreement must 
provide sufficient time to mount an effective response to major 
violations by Iran. IAEA reports form a key part of the 
monitoring of compliance. The member states can use these 
detailed reports to complement their findings from their 
activities conducted by national means.
    While breakout time does not include the total time to 
produce a nuclear weapon, the production of weapon-grade 
uranium is the more difficult and time-consuming portion of 
making a nuclear weapon. Once Iran has enough weapon-grade 
uranium at its disposal, material would vanish and go to covert 
sites for further weaponization efforts, which could be small 
in size, without visible detectable signatures, as was the case 
in South Africa.
    In summary, the actual verification process will be time-
consuming and will stretch over many years, especially more so 
for a nuclear program that had been largely clandestine in 
nature and complex. It took the IAEA for medium-sized nuclear 
programs in European countries with a comprehensive safeguards 
agreement and additional protocol implemented about 5 years to 
conclude that all nuclear material in these countries was in 
peaceful use.
    Forthcoming and proper cooperation from Iran could set a 
tone for the country to have in place a limited nuclear 
program. A meaningful and robust verification system with 
additional authorities endorsed by the U.N. Security Council is 
needed to support a long-term deal.
    Thank you.
    [The prepared statement of Dr. Heinonen follows:]

                Prepared Statement of Dr. Olli Heinonen

    Chairman Menendez, Ranking Member Corker, distinguished members of 
the committee, thank you for inviting me to address this hearing on 
``Iran: Status of the P-5+1.''
    In my testimony, I will focus on the verification aspects of 
elements needed in a comprehensive nuclear agreement with Iran, which 
is being negotiated as a next stage to the Joint Plan of Action (JPOA) 
concluded in Geneva on 24 November 2013.\1\ I base my remarks on the 
implementation of the comprehensive safeguards agreement (CSA) and 
relevant U.N. Security Council resolutions on Iran, recent experiences 
from the implementation of the JPOA, and complemented with personal 
experience drawn additionally and in particular, from the IAEA 
verification activities in South Africa after its dismantlement of its 
nuclear weapons program, Libya, Syria, and North Korea.
    When we look at the lessons learned on nuclear proliferation cases 
of the last couple of decades, states have chosen to use undeclared 
nuclear materials at undeclared locations or facilities at declared 
sites to which the IAEA had not had full access. Proliferators also 
took advantage of weaknesses at the front end of the nuclear fuel cycle 
by exploiting the use of yellow cake for uranium conversion at 
undeclared facilities. In order to achieve their objectives, states 
often, in addition to secrecy, stalled, misled or obfuscated to buy 
time and delay the IAEA in its verification mission. Since 2002, we 
have experienced many of these adverse actions taken by Iran. Iran has 
not heeded to the resolutions of the United Nations Security 
Council,\2\ which have asked it, inter alia, to suspend all enrichment-
related and heavy water-related activities, and to cooperate with the 
IAEA on all outstanding issues, particularly with those which raise 
concerns on the military dimension of Iran's nuclear program.\3\ Both 
the implementation of the JPOA and the Framework on Cooperation \4\ 
have generally proceeded well, but negotiations have also seen 
headwinds as reflected in Secretary Kerry's op-ed on 1 July 2014 in the 
Washington Post on where Iran needs to be. Moreover, as the Iranian 
Ambassador's recent letter to the IAEA demonstrates,\5\ Iran continues 
to challenge, inter alia, the Agency's right and obligation to verify 
the correctness and completeness of Iran's declarations under the CSA, 
the legality of the IAEA Board resolutions, and the IAEA Secretariat's 
practices in reporting its findings in its reports to the IAEA Board 
and the U.N. Security Council.
    Due to the fact that Iran has been running parts of its nuclear 
first clandestinely and then without satisfactorily fulfilling its 
reporting obligations to the IAEA and disregarding U.N. Security 
Council resolutions, the onus of proof bears heavily on Iran to show 
that its nuclear program is entirely peaceful.
    I have recently published with David Albright and Andrea Stricker 
\6\ an analysis on principles, which the negotiators crafting the 
comprehensive final agreement should follow. Five fundamental 
principles are:

          1. Stable provisions;
          2. A nuclear program meeting Iran's practical needs;
          3. Effective verification;
          4. Adequate irreversibility of constrains, and
          5. Sufficient response time in case of violations.

    In the following I will highlight some details that should be 
included to a final agreement negotiated. I will note a need for 
possible additional U.N. Security Council resolutions, and points to 
bear in mind on future reporting of the IAEA on safeguards 
implementation in Iran.
                           stable provisions
    It is important for the credibility and durability of an agreement 
that it is crafted to minimize opportunities for violations and delays 
to achieve compliance.
    The first requirement is that Iran provides a complete declaration 
of its past and current nuclear program as it did partially in 2003 
when it started to implement the suspension agreement with the EU3. 
Such a declaration forms a clear-cut and essential baseline for the 
verification and monitoring activities by the IAEA.
    Another important provision is the technical parameters of the 
nuclear program. An example of what would create an unstable and 
reversible situation that should be avoided is, for instance, 
suggestions that involve lowering the amount of enriched uranium Iran 
has access to while increasing the number of allowed centrifuges to 
10,000 or more IR-1 centrifuges in order to increase breakout times. 
The instability arises from Iran continuing to make enriched uranium 
and maintaining residual stocks of enriched uranium to fuel research 
reactors. Keeping enriched uranium stocks exceedingly low would be 
impossible in practice. Practicalities of operating a centrifuge plant 
and a uranium conversion and fuel production complex would lead to 
larger enriched uranium stocks, compromising the original goal of 
longer breakout times. Such a proposal would require Iran to take 
actions almost monthly to keep its stocks below the agreed enriched 
uranium cap, something unlikely to be accomplished easily.
    Our experiences from the implementation of the JPOA already 
demonstrate that stocks of low enriched uranium have grown due to 
logistical or operational difficulties. Any violation of the cap could 
be sudden and difficult to respond to. Regulating numbers of 
centrifuges is a far sounder approach than controlling enriched uranium 
stocks.
    The third aspect to the stability equation is that by establishing 
a baseline, it also helps determine operating parameters. Experiences 
in implementing the various agreements with Iran since 2003 clearly 
demonstrate the importance of establishing unambiguous baselines for 
monitoring Iran's undertakings. Ambiguity in parameters (such as 
enrichment capacity, stocks of nuclear material, access to locations) 
leads to potential slippage. It is also necessary to specify explicit 
parameters for other fuel cycle facilities such as on laser enrichment. 
And it is important to include to the provisions that proscribed 
activities should not outsourced to other countries.
             practical needs of the iranian nuclear program
    Limiting Iran's centrifuge program to say 2,000 to 4,000 IR-1 
centrifuges is consistent with Iran's actual needs for enriched uranium 
for many years.\7\ This number of centrifuges would provide Iran with 
sufficient enriched uranium for its existing research reactor programs 
and account for modest growth in them.
    Besides breakout considerations, the simple fact for a smaller 
number of centrifuges is that Iran does not need to refuel the Bushehr 
reactor. Indeed, these limits would not allow for the fueling of the 
Bushehr nuclear power reactor. Recently, Iran's Supreme Leader in 
essence expressed this demand when he stated Iran requires enough 
centrifuges to produce about 190,000 kilograms of uranium hexafluoride 
separative work units per year (kg UF6 swu/year). In more standard 
units, this number would correspond to almost 130,000 kg U swu/year, 
which is equivalent to over 130,000 IR-1 centrifuges.
    Iran's position of needing to produce its own fuel has to be 
measured against the realities that demonstrate why it in fact should 
not. Without extensive outside assistance in the form of key equipment, 
raw materials and advanced technology, Iran has limited prospect of 
actually building so many IR-1 centrifuges or an equivalent number of 
advanced centrifuges to fuel the Bushehr reactor over the next decade 
or two. It will need to continue relying on importing fuel from Russia 
or another major supplier. We also need to keep in mind that Iran has 
not demonstrated an ability to produce fuel of sufficient quality for 
the Bushehr nuclear power reactor, a key safety issue.
    Moreover, Russia has not welcomed the idea of Iranian produced fuel 
in the Bushehr reactor. Russian concerns arise from the fact that 
having potentially defective Iranian fuel inserted into the Bushehr 
reactor, and fears of an accident which it, as the reactor supplier, 
could be held liable for. Such an events will also lead to reputational 
damage of Russian reactors.
                         effective verification
    Effective verification is an important core principle, but there 
are several challenges to overcome. Timely detection and prevention of 
the development and acquisition of nuclear weapons or a state's 
capability to produce them is a complex task. Development of weapons of 
mass destruction is one of the closest kept secrets of a state. There 
are things, which we know, and there are aspects of such programs, 
which we can perhaps to certain degree deduce, but also features, which 
we do not know.
    In addition, Iran has refused to make concessions in this area. The 
IAEA must provide prompt warning of violations, determine the 
correctness and completeness of Iran's declarations, establish the 
total number of centrifuges produced by Iran and the size of its 
natural and enriched uranium stocks, and establish confidence in the 
absence of undeclared nuclear activities or facilities, including 
providing assurances on the absence of nuclear weapons related 
activities in Iran.
    The strength of the IAEA verification system is access to nuclear 
material, facilities, equipment and people. To this end, the IAEA has, 
under its Comprehensive Safeguards Agreement (CSA) and Additional 
Protocol (AP), significant tools available if fully implemented and 
utilized. Iran argues that ratifying the Additional Protocol is enough 
but while such a step is welcome, it is not sufficient. The long-term 
agreement must also establish a range of other verification provisions, 
which collectively are often known as Additional Protocol Plus.
    Throughout the long history of discussions on the scope and content 
of its nuclear program, Iran has often offered ``transparency'' to 
build international confidence on its nuclear program. Recently 
President Rouhani has again publicly stated Iran's readiness for 
greater transparency. More importantly, such transparency should be 
understood and implemented in a meaningful and systematic way. Even in 
the name of ``transparency,'' where Iran decides to ``show'' a place 
previously off limits (imposed by Iran), such inspection visits can 
have meaning only if substantially new information and discussions take 
place, and explanations are provided on the scope and content of the 
nuclear program. Hence openness should be clearly defined and become a 
legally binding undertaking, and not treated as good will visits to be 
granted when problems arise.
    To minimize further the effects of the unknowns, it is important to 
understand the historical production and acquisition of uranium and its 
compounds by Iran. As part of the information obtained from the Iranian 
mines and milling facilities under the Framework for Cooperation,\8\ 
Iran has provided information on uranium production of mines in Gcchine 
and Ardakan. It is important that the IAEA shares those actual numbers, 
and whereabouts of those materials with its member states, which may 
have additional information to complement the statements made by 
Iran.\9\ This would also provide the member states indications on 
Iran's compliance with its undertakings. Releasing of such information 
by the IAEA will not jeopardize its independent assessment of Iran's 
declarations, but will complement information available.
    Going further, according to the provisions of the CSA, a state has 
to declare all nuclear material in its territory. Thus military sites 
do not form sanctuaries, but the IAEA has right to conduct inspections 
on those under a CSA and complementary access under an AP, when 
appropriate. Iran has to provide the IAEA with unconditional and 
unrestricted access \10\ to any and all areas, facilities, equipment, 
records, people, materials including source materials, which are deemed 
necessary by the IAEA to fulfill its requirements under the safeguards 
agreement, and to verify the correctness and completeness of Iran's 
declarations. These are needed both to understand the scope of the 
nuclear program as well as address the possible military dimensions (or 
PMD) aspects.
    Accomplishing adequate verification, including the IAEA 
establishing that Iran's program is exclusively peaceful, will take 
many years. Just as an example, it took to the IAEA for medium size 
nuclear programs in European countries with CSA and AP implemented, 
about 5 years to conclude that all nuclear material in these countries 
was in peaceful use. Duration of an agreement for 20 years is 
reasonable in light of the two decades of Iran's noncompliance with its 
safeguards obligations and noncooperation with the IAEA.
    A comprehensive agreement should also take the opportunity to 
assess the usefulness of strengthening certain linkages. For instance, 
the Sanctions Committee on Iran that was established under UNSC's 
Resolution 1737 \11\ is a separately run mechanism from the IAEA 
verification process. At a minimum, these two bodies could be allowed 
to share information. It might also be reasonable to consider whether 
monitoring the implementation of sanctions should be assigned to a 
special unit to be established within the IAEA.
    Adequate verification also requires Iran to verifiably stop its 
efforts to procure key proliferation-sensitive goods illegally for its 
nuclear programs. If not stopped, Iran could secretly purchase the 
wherewithal for secret nuclear sites or activities. This requires a 
continuation of national and United Nation Security Council sanctions 
on proliferation sensitive goods for the long term. However, an 
agreement will need to eventually allow for monitored Iranian purchases 
for its legitimate nuclear programs and civilian industries while 
ensuring that Iran is not buying goods illegally for banned activities.
    Another important factor are the financial and human resources of 
the IAEA. In order to meet the verification requirements, the IAEA 
needs additional expertise on sensitive technologies. The arrangements 
have to be made that this staff has also access to Iranian facilities 
and can participate to discussions with Iranian expertise. Such 
arrangements worked well in South Africa and Libya, where the IAEA used 
its additional experts in addition to inspectors designated under the 
CSA.
    To ensure that the IAEA gets the necessary legally binding 
authorities to conduct the additional verification work indicated in my 
statement, it is recommended that the U.N. Security Council endorse the 
agreement between P5+1 and Iran.
                      possible military dimensions
    Iran's most serious verification shortcoming remains its 
unwillingness to address the IAEA's concerns about the past and 
possibly on-going military dimensions of its nuclear programs. For the 
IAEA to conclude that all nuclear material is in peaceful use, this is 
not possible unless Iran satisfies the IAEA in this key area.
    There are reports that much of the nuclear weapons related work by 
the military institutions came to halt in 2003. On the other hand, the 
IAEA has assessed in its reports that some of this R&D has continued 
since. It is important to understand the status of Iran's PMD efforts, 
noting that one of the last duties of Iranian personnel and 
organizations involved was to document work done. One plausible reason 
for such effort could have been to save information for further use. 
Unless properly addressed, it would be difficult to create a meaningful 
and robust verification regime for Iran. Such additional long-term 
monitoring took place in South Africa from 1993 until 2010 until the 
IAEA was able to conclude that all nuclear material in South Africa is 
in peaceful use. Otherwise, it would also render difficult for the IAEA 
to determine with confidence that any nuclear weapons activities are 
not ongoing-- 
a necessary ingredient for a long-term deal.
    The list of IAEA questions on the PMD is long. While the recent 
Framework for Cooperation agreements between Iran and the IAEA are 
welcome, the process is far from over. Many of the issues on the list 
above are interconnected, and they cannot be solved in isolation and 
not through the step-by-step process. In other words, there should be 
an understanding and actions provided by Iran that allows the IAEA to 
address the whole picture of the military dimension concerns. That 
should be an unambiguous condition to achieving a final accord that is 
meaningful in safeguards terms.
    The agreement should also have provisions to ensure that Iran will 
decommission, dismantle or convert to nonnuclear or peaceful use in a 
verifiable and irreversible manner nuclear related equipment, 
materials, facilities and sites that contradict the provisions of the 
safeguards agreement or the spirit of Article III of the NPT. Such 
installations will be subject to a long-term monitoring by the IAEA.
    Finally, limiting nuclear capabilities at known sites does not make 
sense if at the same time the deal makes it easier for Iran to make 
weapon-grade uranium at military sites. The comprehensive agreement 
must focus on both potential pathways as necessary for adequate 
verification to be carried out.
                            irreversibility
    Irreversibility is understood as accepting that perfect 
irreversibility may not be possible but in practice recognizes that the 
restoration of the previous, unconstrained situation should take a long 
time--on order of years and not months. In the case of Iran, a long-
term agreement would have little lasting value if Iran can reverse the 
constraints in a matter of days or months. The case of North Korea 
contains many examples where nuclear constraints imposed on 
reprocessing and the operation of the 5 MWe reactor were quickly undone 
and Pyongyang resumed its production of nuclear materials for nuclear 
weapons. This case also contains important examples of North Korea 
being unable to establish previous levels of plutonium production when 
an agreement ended. North Korea shut down its large gas-graphite 
reactors, ending their ability to make large amounts of weapon-grade 
plutonium, as a result of the 1994 U.S./DPRK Agreed Framework. When 
this agreement ended suddenly in 2002, North Korea was able to 
reestablish its small plutonium production capability. After 2009, 
North has put the reactor again in operation after reconstruction of 
the cooling system for the reactor.
    Irreversibility is at the heart of the dispute about Iran limiting 
plutonium production in the Arak nuclear reactor. As a heavy water 
reactor Arak with its design can relatively easily make weapon-grade 
plutonium at a production rate sufficient to make enough weapon-grade 
plutonium up to two nuclear weapons per year. Iran has suggested 
reducing plutonium production in this reactor by using enriched uranium 
rather than natural uranium; other analysts have suggested in addition 
lowering the power of the reactor. It is true that combined, these 
proposals would reduce plutonium production to a fraction of the 
current value. However, both of these steps are reversible and Iran 
could in a straightforward, quick manner turn back the clock to a 
reactor able to make significant amounts of weapon-grade plutonium. The 
simple fix is for Iran to remove the currently installed core and 
replace it with a smaller one not able to hold enough natural uranium 
for the reactor to work. Iran so far resists this proposal.
    With the above changes to the Arak reactor, there would also be no 
need for heavy water production--regular, ``light'' water could be used 
instead in this reactor. The heavy water could be shipped out and sold 
on the international market. This step would further make the Arak 
reactor changes reasonably irreversible.
    Iran has also resisted making concessions about what to do with the 
centrifuges that would exceed a cap on the total agreed upon number of 
installed centrifuges. If the cap is say 4,000 IR-1 centrifuges, Iran 
would need to remove and render harmless almost 15,000 centrifuges 
installed in its Natanz and Fordow enrichment plants. If left 
installed, Iran could within months reconstitute operations and create 
a sizeable breakout capability. Thus, any proposal to keep excess 
centrifuges at the centrifuge plants is highly reversible and allows a 
quick reconstitution of dangerously unstable breakout times.
                         adequate response time
    An agreement must provide sufficient time to mount an effective 
response to major violations by Iran. There are two parts to this 
principle--one involves intrusive and effective IAEA inspections able 
to promptly detect and report noncompliance and the other recognizes 
that even the most intrusive inspections are alone inadequate to 
provide enough response time in the case of Iran. The latter's adequate 
response time requires significant limitations on content and 
parameters of Iran's nuclear programs and translates into a need to 
limit Iran's pathways to making nuclear weapons.
    IAEA reports form a key part of the monitoring of compliance from 
the point of view of P5+1 and the international community. The member 
states can use these reports to complement their findings from their 
activities conducted by national means. From a practical point of view, 
the quarterly reporting on progress and findings by the IAEA should be 
sufficient. However, the IAEA should consider releasing factual 
information as it becomes available. Timeliness of conclusions depends 
on several parameters. This would entail the detection of the event, 
asking the clarification, additional sampling.
    Much of that depends on the cooperation of the inspected party, but 
also on the event itself. While diversion of declared material is 
easily detectable, some more sophisticated events may take longer to 
detect. The IAEA's practice is to review each finding and claim 
meticulously, spending a fair amount of time and resources to refute or 
confirm any claim. Revised explanations provided by the inspected state 
also slow down the IAEA. This process needs to be re-thought. The IAEA 
verification system has its technical limitations. One of the tools the 
IAEA uses is environmental sampling, which has resulted in long in-
between lead times. The latest IAEA report to its Board of Governors 
indicated that the environmental sample analysis results for Natanz 
FPEP, FEP, and Fordow were 28 January 2014, 5 February 2014, and 28 
January 2014, respectively.\12\ If additional samples and 
clarifications are required, the results will in practice take 6 
months. The IAEA work process needs to be factored into an overall 
understanding of timeliness of response.
    An effective metric of adequate limits on Iran's main overt pathway 
to nuclear weapons, its centrifuge program, is breakout time, which 
measures the length of time Iran would need to produce enough weapon-
grade uranium for a single nuclear weapon. This technical breakout 
value is converted via detailed breakout calculations into an 
equivalent number of centrifuges that would be installed in Iran, which 
results in an oft-stated limit of about 2,000-4,000 IR-1 centrifuges 
remaining in Iran as part of a comprehensive deal.
    There are other reasons to make known breakout times longer. In the 
past, Iran has conducted activities, and concealed them in such ways 
that were not quickly detected or stalled in letting the IAEA to 
proceed with its investigations. Achieving the necessary evidence to 
judge with high confidence that violations have indeed occurred is time 
consuming and intelligence reliant in key cases, such as the discovery 
of the once-covert Natanz and Fordow Fuel Enrichment Plants, 
clandestine centrifuge R&D at Kalaye Electric, black market nuclear 
related imports including imports of nuclear material, some with 
possible military uses.
    There is also the still unresolved file on the development of 
nuclear weapons. The IAEA has not yet been able to verify that Iran has 
submitted all its nuclear material to the IAEA safeguards. We do not 
also know how many centrifuges Iran has manufactured and where they are 
today. Moreover, a larger program also makes it easier for Iran to hide 
illicit foreign procurements, some of which could be slated for a 
clandestine program. To this end, it is also important--as mentioned in 
my testimony on 10 June 2014--that Iran has to report all imports and 
manufacturing of single and dual use items regardless whether the end 
user is the nuclear program and provides the IAEA access to that 
information and items.\13\
    While breakout time does not include the total time to produce a 
nuclear weapon for testing underground or mounting on a missile, the 
production of the weapon-grade uranium is the more difficult and time 
consuming portion of making a nuclear weapon. Once Iran has enough 
weapon-grade uranium for a weapon, the material would ostensibly vanish 
to covert sites for further weaponization efforts, which could be small 
in size without visible detectable signatures as it was in the case of 
South Africa. Additional concerns are the facts that Iran may have 
received sufficient amount of design information to avoid testing. If a 
gun-type nuclear device is a goal, it requires more material, but there 
is no need for testing. Thus, the priority must be to limit Iran's 
ability to first produce the weapon-grade uranium.
                               in summary
    The actual verification process will be time consuming and will 
stretch over many years, especially more so for a nuclear program in 
Iran that had been largely clandestine in nature, broad and complex. 
Forthcoming and proper cooperation from Iran could set the tone for the 
country to have in place a limited nuclear program. A meaningful and 
robust verification system with the requisite elements is needed to 
support a long-term deal.

----------------
End Notes

    \1\ Communication dated 27 November 2013 received from the EU High 
Representative Concerning the text of the Joint Plan of Action, IAEA, 
INFCIRC/855, 27 November 2013.
    \2\ United Nations Security Council Resolution 1929, 9 June 2010.
    \3\ The involvement of military institutes includes support to the 
acquisition of nuclear technology, building the nuclear infrastructure, 
and work related to acquisition of nuclear materials, nuclear source 
materials, and key raw materials, and production of single use nuclear 
equipment. Of concern is also work by these organizations related to 
neutron physics, neutron sources, high explosives, missile re-entry 
vehicle, which appear to have the characteristic of nuclear weapon 
development.
    \4\ Joint Statement on a Framework for Cooperation, GOV/INF/2013/
14, IAEA,11 November 2013.
    \5\ Communication dated 4 June 2014 received from the Permanent 
Mission of the Islamic Republic of Iran to the Agency regarding the 
Report of the Director General on the Implementation of Safeguards in 
Iran, IAEA, INFCIRC/866, 13 June 2014.
    \6\ D. Albright, O. Heinonen, and A. Stricker, ``The Six's'' 
Guiding Principles in Negotiating with Iran, ISIS, 3 June 2014.
    \7\ Defining Iranian Nuclear Programs in a Comprehensive Solution 
under the Joint Plan of Action, ISIS, 15 January 2014.
    \8\ Implementation of the NPT Safeguards Agreement and relevant 
provisions of Security Council Resolutions in the Islamic Republic 
Iran, GOV/2014/28, paras 7-8, IAEA, 23 May 2014.
    \9\ Recent IAEA reports have acknowledged the receipt of such 
information, but no quantities have been shared with the member states 
in written reports.
    \10\ Due to the nature of the verification and monitoring such 
access should be done in short notice at, inter alia, centrifuge 
assembly and component manufacturing plants and at enrichment 
facilities.
    \11\ United Nations Security Council Resolution 1737, 23 December 
2006.
    \12\ IAEA, ``Implementation of the NPT Safeguards Agreement and 
Relevant Provisions of Security Council Resolutions in the Islamic 
Republic of Iran,'' GOV/2014/28, 22 May 2014.
    \13\ Olli Heinonen, Testimony on ``Verifying Iran's Nuclear 
Compliance,'' The United States House Committee on Foreign Affairs, 10 
June 2014.

    The Chairman. Thank you.
    Mr. Singh.

    STATEMENT OF MICHAEL SINGH, LANE-SWIG SENIOR FELLOW AND 
  MANAGING DIRECTOR, THE WASHINGTON INSTITUTE, WASHINGTON, DC

    Mr. Singh. Chairman Menendez and Ranking Member Corker, 
thanks for this opportunity to address the committee.
    I am a strong supporter of a diplomatic resolution to the 
Iran nuclear crisis and I have been involved with the P5+1 
talks since their inception. I am concerned, though, that we 
are not close to a true diplomatic resolution, that in fact if 
we have a deal it is likely to be one which in fact postpones a 
real diplomatic resolution and weakens our ability to achieve 
such a resolution.
    If we have a deal in this next 4-month period, I am 
concerned that it is going to be one which falls short of what 
should be our minimum requirements. It is not likely to require 
Iran to dismantle anything, including those facilities that it 
built illegally in violation of NPT requirements. It would, in 
fact, probably permit Iran to engage in more nuclear activity 
than it engages in today under the JPOA. It probably will not 
require Iran to come clean on its past weaponization activities 
or give inspectors access to military sites, as Dr. Heinonen 
said. It will not deal most likely with ballistic missiles, 
which are such a vexing threat in places like East Asia, as we 
have seen in other reports. And it would allow Iran in a matter 
of years to be free of any constraints whatsoever on its 
nuclear program.
    What we get in exchange for this deal is a commitment by 
Iran not to build nuclear weapons. But of course, the very 
reason we are engaged in this process is that Iran has violated 
similar commitments in the past.
    We would also get enhanced inspections, but I do think that 
we are placing too much stock in what inspections can actually 
achieve, because they would be hampered by, first, just the 
sheer size of Iran's nuclear program that we would leave in 
place under such a deal, and by Iran's refusal to come clean on 
its past work, as Dr. Heinonen said, and frankly the absence of 
a clear willingness on the part of the United States or the 
international community to enforce those inspection 
requirements. I think that the larger the nuclear program we 
leave in place, the less likely the international community is 
going to be to punish incremental cheating on those 
obligations.
    The Iranian regime, as both of you know, plays a major role 
in destabilizing the Middle East and supporting terrorism. 
Frankly, the arms embargo that is in place against Iran, which 
would address for example its provision of rockets to groups 
like Hamas, that comes from Resolution 1747, which is a nuclear 
resolution, which could get lifted as part of a deal.
    This sort of deal that we are talking about would leave 
tremendous nuclear capabilities in the hands of that regime and 
embolden and enrich that regime. It would also have other 
negative implications for American interests. It would give 
other states in the region an incentive to match Iran's nuclear 
capabilities. It would undermine our nonproliferation efforts 
globally and encourage the spread of that enrichment and 
reprocessing technology to other places. And, frankly, it would 
damage our own influence and prestige; they are already pretty 
damaged, and this is the issue upon which those things will be 
most judged in the Middle East.
    How have we reached the juncture that we are at right now? 
Well, if you look at the JPOA, in exchange for temporary, 
reversible steps by Iran we made major concessions that the 
Iranians have been seeking for a long time: that it could 
enrich uranium indefinitely and that any constraints on it 
would be in any case temporary.
    We have this saying that nothing is agreed until anything 
is agreed. Things are more complicated than that. It will be 
very difficult to take back these concessions. I think the 
Iranians will seek to pocket these and use them as a baseline 
for any future negotiations.
    We also, frankly, have not put forward a threatening 
alternative to an agreement, which I think has led Iran to 
reject even very generous offers. Our sanctions threat has been 
undermined and we have not responded to that increase in oil 
exports that we were talking about earlier. Our military threat 
has been undermined because of the paralyzed indecision with 
which we have faced situations in Syria, Iraq, Ukraine, and 
elsewhere.
    And it was an error for us to stray from what had been our 
previous approach, which was dismantling for dismantling: Iran 
dismantles those illegal nuclear facilities in exchange for the 
dismantling of sanctions against it. Iran and frankly sometimes 
our own officials have portrayed that approach as maximalist, 
but I do not think it is maximalist. In fact it is reasonable, 
because Iran, as was stated before, has no need for those fuel 
cycle activities which we are asking it to forgo, but it does 
have a need for sanctions relief, a deep need for sanctions 
relief.
    We should be prepared, and we are prepared, to accept a 
civilian nuclear program in Iran, on the condition that Iran 
import its nuclear fuel, as most countries in the world, 
including the United States, do.
    I think the only scenario in which we should be prepared to 
live with a significant Iranian nuclear capability is one in 
which we see evidence of a broader strategic shift by Iran, and 
it is clearly not in evidence today, given Iran's support for 
terrorism and its refusal to even be transparent with us about 
what it has done on the nuclear issue in the past.
    The most important question for policymakers now is how to 
make a good deal, one which advances U.S. interests, more 
likely. We need to not only adopt a firmer line in these talks, 
but we need to enhance our leverage by making those 
alternatives to a deal look worse.
    We can do that in a couple if different ways. We can 
strengthen our sanctions threat, first by a unified message 
from the White House and Congress that, yes, more sanctions 
will follow an agreement. I think action on that is required 
now.
    We need to act more energetically in response to those, 
what appear to be dissipation, as some of the members said, of 
the sanctions and the increase in the oil exports in 
particular. We can strengthen our military threat, which is 
also critical here, by sending clear messages about our 
enduring commitment to this region and then backing up that 
message with adequate defense and diplomatic and intelligence 
resources, by taking firmer steps to counter Iranian support 
for terrorism--the provision of rockets to Gaza and things like 
that--to counter the impression that Iran gets a free pass as 
long as these talks are going on. And we can try to strengthen 
our weakened alliances in the region, which have really 
withered to a point we should not have let them reach.
    So to conclude, I worry that we have become captive to a 
false choice between a flawed deal and the prospect of a 
military conflict. I reject that false choice. I think our true 
choice is between a deal which will set back our interests and 
a firmer approach to diplomacy which holds out hope of 
advancing those interests.
    Thank you very much.
    [The prepared statement of Mr. Singh follows:]

                  Prepared Statement of Michael Singh

    Chairman Menendez, Ranking Member Corker, and members of the 
committee, thank you for inviting me to discuss the United States 
diplomatic efforts to end the threat posed by Iran's nuclear ambitions. 
I have closely followed the P5+1 talks since their inception--first as 
an aide to the Secretary of State, then as the official responsible for 
Iran at the National Security Council, and now as a research scholar--
and while I strongly support a diplomatic resolution to the Iran 
nuclear crisis, I am concerned at the juncture at which we now find 
ourselves.
    Our negotiators' mantra with regard to these negotiations is, as it 
should be, that ``no deal is better than a bad deal.'' But how can one 
tell a good deal from a bad deal, from the point of view of the United 
States?

   A good deal is one which clearly advances American 
        interests--not only our interest in nuclear nonproliferation 
        globally, but in the stability of the Middle East and our 
        prestige and influence in that region, which has in recent 
        years declined sharply.
   The talks are a diplomatic effort to address the grave 
        threat to our interests--shared with our allies in the region 
        and beyond--posed by Iranian nuclear efforts.
   As in any negotiation, any agreement must also be acceptable 
        to Iran; but whether any particular deal is acceptable to Iran 
        depends not only on the content of that deal but on whether 
        Iranian authorities believe the alternatives to the deal would 
        be worse.

    Our negotiators appear to be on the cusp of a historic deal with 
the Iranian regime. Whether that deal is a historic accomplishment or a 
historic error, however, depends on whether it durably ensures that 
Iran is prevented from acquiring nuclear weapons and advances our 
interests in the region broadly, or whether it leaves the region less 
stable, our allies less confident in our resolve, and Iran with 
sufficient residual nuclear capacity to develop nuclear weapons in the 
near future.
        status of commitments under the ``joint plan of action''
    On the surface, the interim agreement or ``Joint Plan of Action'' 
(JPOA) between Iran and the P5+1 has largely performed as advertised.

   On July 20, the International Atomic Energy Agency reported 
        that Iran has met its commitments under the JPOA.
   The Obama administration has reported that the sanctions 
        relief provided to Iran has remained at or under its initial 
        estimate of $6-$7 billion.

    However, some questions exist about both claims.

   The Bipartisan Policy Center reported that Iran has managed 
        to increase the efficiency of its installed IR-1 centrifuges by 
        25 percent in the last 6 months.
   The Foundation for Defense of Democracies and Roubini Global 
        Economics have placed the value of direct sanctions relief at 
        $11 billion if condensate exports--not covered by sanctions--
        are accounted for, and indirect relief at an even higher figure 
        depending on what portion of Iran's increased economic growth 
        is attributable to a rise in consumer and business confidence 
        stemming from the JPOA and sanctions relief.
   Iranian oil exports have steadily risen since the signing of 
        the JPOA; they averaged 1.25 091.3 million barrels per day over 
        the first 6 months of 2014 and currently stand at 1.4 million 
        barrels per day.
   Much of this rise is attributable to an increase in Chinese 
        oil imports from Iran, which averaged 627,742 barrels per day 
        during the first 6 months of 2014, up 48 percent from the same 
        period last year. This significant increase has not drawn a 
        response from the United States as far as I am aware.
   It is important to note that even though oil export revenue 
        is higher than anticipated, that revenue remains difficult for 
        Iran to access due to the requirement it be placed in escrow.

    It is important to bear in mind, however, that the JPOA did not 
address all of Iran's nuclear activities.

   The JPOA provided for a halt in the progress in certain 
        activities, along with a reduction in Iran's level of 
        enrichment and stockpile of 20-percent-enriched uranium, but it 
        allowed other nuclear activities to continue apace.
   The agreement did not address two of the three elements of 
        Iran's nuclear program--ballistic missiles and weaponization 
        research (or ``possible military dimensions'' or PMD).
   Missiles have not been addressed at all, whereas the 
        question of weaponization has been left with the IAEA, which 
        has reported a disappointing lack of progress even as Iran has 
        continued to deny inspectors access to the Parchin site while 
        engaging in work there likely designed to obscure its past 
        activities.
   Even the one element of Iran's nuclear effort addressed by 
        the JPOA--fuel fabrication--was dealt with only partially, as 
        Iran continues to stockpile more than enough enriched uranium 
        for a nuclear weapon and to develop advanced centrifuges that 
        if installed would reduce its breakout time further.

    The JPOA ``timeout'' applied not only to Iranian nuclear progress, 
but also to Western economic pressure, the momentum of which had been 
building.

   For Iran, the JPOA provided a reprieve from what had been 
        steadily mounting economic pressure. Per a study by my 
        colleague, Dr. Patrick Clawson, at the Washington Institute for 
        Near East Policy, Tehran for its part has used the ``time and 
        space'' provided by the JPOA to make key macroeconomic 
        adjustments--spending cuts, exchange rate adjustment, a 
        tightening of monetary policy--to stabilize its economy.
   Clawson's study finds that these adjustments have decreased 
        Iran's rate of inflation from over 40 percent in early 2013 to 
        17 percent today, and have put the country on track to achieve 
        1.5 percent GDP growth this year and 2.3 percent per year 
        thereafter, even without sanctions relief.
   As such, Iran's current oil exports would easily provide 
        sufficient foreign exchange to balance its current account were 
        it able to access that revenue.

    At a deeper level, the JPOA represented a significant diplomatic 
advance for Iran. In exchange for easily reversible and explicitly 
temporary pauses to selected nuclear activities, Iran obtained 
concessions from the United States which it had sought since the 
beginning of this diplomatic process in 2003.

   The United States implicitly renounced the requirement--
        enshrined in multiple U.N. Security Council resolutions whose 
        legitimacy Iran had denounced--that Iran suspend enrichment, 
        reprocessing, and heavy water-related activities, and gained 
        American acknowledgement that Iran would continue to enrich 
        uranium indefinitely.
   Furthermore, it secured legitimacy for its facilities at 
        Natanz and Arak, which had been constructed secretly and in 
        violation of Iran's Nonproliferation Treaty obligations.
   Finally, it established that any limitations on Iranian 
        nuclear activities--short of the actual construction of a 
        nuclear weapon--would be temporary.
                progress of negotiations under the jpoa
    The JPOA represented a shift in the underlying negotiating 
framework from addressing Iran's violations to addressing its purported 
``practical needs'' for nuclear fuel cycle activities.

   Previously the U.N. Security Council had required that Iran 
        suspend all such activities, leaving open the question of 
        whether and when they would be permitted to resume.
   This position was reversed by Obama administration 
        officials, who termed it ``maximalist'' or, in the words of 
        then-Senator John Kerry in 2009, ``ridiculous.''
   Yet it was neither--the P5+1 had been prepared to offer Iran 
        not only sanctions relief but a long list of other incentives 
        in exchange for Iranian agreement to halt its nuclear 
        activities. In other words, we offered Iran something which it 
        needed desperately in exchange for something it did not, if its 
        claims to eschew nuclear weapons are true.
   For Tehran to have turned down this offer--as well as more 
        recent offers conceding significant fuel cycle activities--
        suggests that it values those activities more than economic 
        relief, which is hardly a sensible position for a country 
        blessed with abundant fossil fuel reserves, and which in any 
        event has been offered the opportunity to obtain nuclear fuel 
        through import like nearly every other country with nuclear 
        power.
   It is this Iranian position--not the P5+1 requirement that 
        Iran suspend fuel cycle activities--that is unreasonable. Yet 
        by not challenging it, we have found ourselves tactically on 
        our heels.
   Having won this ground, Iran staked out a truly maximalist 
        position--that it required not just the 19,000 centrifuges it 
        possessed as the talks began, but an additional 100,000 
        centrifuges or more.
   As a result, it is able to portray, however cynically, its 
        most recent offer to simply maintain its current centrifuge 
        stocks in exchange for sanctions relief as a significant 
        compromise.

    Since its signing, there have been few signs that the JPOA is 
leading to an agreement that will advance American interests.

   The United States has significantly reduced its long-
        standing demands of Iran. In addition to the major concessions 
        made merely to obtain the JPOA, the United States reportedly 
        made others, including that Iran's Arak research reactor could 
        remain a plutonium-producing heavy water reactor, albeit with 
        modifications, and that the Fordow enrichment facility need not 
        be closed.
   In addition, there are few signs that weaponization research 
        or missiles will be specifically addressed in a deal.
   The major constraints on Iran in a deal will likely be on 
        its number and type of centrifuges, its level of uranium 
        enrichment and plutonium production, and the size and 
        composition of its enriched uranium stockpile. Iran will also 
        be required to accept enhanced inspections.
   These are important issues, to be sure, but the restrictions 
        will in any event be temporary. There is as yet no indication 
        that Iran will be required to dismantle or ship out any part of 
        its nuclear infrastructure.
   Thus, an agreement will neither be comprehensive--even with 
        respect to nuclear issues--nor final, but will likely permit 
        Iran greater nuclear activities than it conducts under the 
        JPOA.
   Rather than requiring that Iran dismantle its nuclear 
        program in exchange for the dismantling of sanctions, we are 
        seemingly poised to alleviate the pressure on Iran in exchange 
        for its promise to temporarily halt the expansion of the 
        program it has already built in defiance of its international 
        obligations.

    Successful negotiation depends not just on how each party values a 
particular deal, but whether it deems the alternatives to a negotiated 
agreement as better or worse for its interests. We have not persuaded 
Tehran that the alternative to a deal would be damaging to Iranian 
interests.

   Iran likely perceives that the two most threatened 
        alternatives to a diplomatic settlement--additional sanctions 
        or a military strike--have become less threatening since the 
        signing of the JPOA.
   Persuading oil importers such as China--whose oil imports 
        from Iran, as I have already noted, have been rising during the 
        past 6 months despite sanctions without attracting any American 
        response--would be difficult absent a clear demonstration of 
        U.S. will, especially if Iran does not significantly ramp up 
        its nuclear activities upon the collapse of talks.
   American military credibility, already undermined by our 
        failure to enforce the President's declared redline on Syria, 
        has suffered further as we have greeted crises in Iraq, 
        Ukraine, and the South China Sea with paralyzed indecision.

    In sum, the United States begins the next 4 months of talks at a 
significant disadvantage.

   Iran has already extracted valuable concessions from the 
        P5+1, which Tehran will seek to pocket and establish as a new 
        baseline for any future diplomacy.
   Even as the value to Iran of a diplomatic settlement has 
        declined, the prospect and cost of the threatened alternatives 
        have as well, reducing Iran's incentive to accept even generous 
        offers.
   Those generous offers might be warranted were there evidence 
        that Iran were undergoing the sort of ``strategic shift'' we 
        have long sought; but Iran's support for terrorism, 
        destabilizing regional activities, and anti-American vitriol 
        continue unabated.
   In this context, a narrow deal that leaves Iran with 
        significant residual nuclear weapons capability would set back 
        American interests rather than advance them.
   The urgent task before American policymakers, if they are to 
        achieve a worthwhile diplomatic solution to the Iran nuclear 
        crisis, is to alter this equation.
                             the way ahead
    The fundamental bargain between the United States and Iran should 
be dismantling for dismantling--Iran dismantles its illicit nuclear 
infrastructure in exchange for the dismantling of nuclear sanctions.

   The U.S. should remain prepared to accept a civilian nuclear 
        power program in Iran, but one which depends on imported fuel; 
        the U.S. should not accept indigenous fuel cycle activities in 
        Iran until it has established its peaceful intent.
   Congress should insist that nuclear facilities built in 
        violation of Iran's NPT obligations be dismantled; this is 
        important not only for regional stability, but for the 
        integrity of the nonproliferation regime globally.
   Iran will portray these terms as overly harsh, but in fact 
        they impose no hardship on Iran's economy or its people; on the 
        contrary, Iran would enjoy a civilian nuclear program that 
        operates similarly to those in many other countries, including 
        the United States, and much-needed economic relief.

    The alternative--permitting Iran a large nuclear infrastructure--
strikes me as imprudent and unlikely to succeed in the face of Iranian 
determination to advance its nuclear weapons capability.

   The success of any deal which leaves Iran with a large 
        residual nuclear capability would depend first on the extent 
        and intrusiveness of inspections.
   Yet those inspections will be hampered by the size of Iran's 
        nuclear program, its refusal thus far to come clean on past 
        nuclear activities and thus provide inspectors with a 
        ``roadmap,'' and by hesitancy to grant inspectors access to 
        military facilities such as Parchin, which are likely as vital 
        to Iranian nuclear efforts as declared civilian facilities.
   Those same factors would decrease the likelihood of 
        detecting covert nuclear facilities, which is important given 
        that the intelligence community judges that Iran is likely to 
        use such facilities, not its declared sites, if it chooses to 
        make a nuclear weapon.
   The success of a deal would further depend on whether the 
        consequences for Iran of cheating are sufficiently severe, 
        which in turn depends on our and our allies' willingness and 
        ability to enforce the deal.
   Because re-imposing sanctions could be a slow and uncertain 
        process, in the event of Iranian cheating Washington would 
        likely be left with an unpalatable choice between mere 
        diplomatic reprimands and military action. It is important that 
        we act prudently now to avoid finding ourselves in such a 
        corner in the future.

    A deal of this sort would have potentially negative implications 
for U.S. interests in the Middle East and beyond.

   It would embolden and enrich a regime which has demonstrated 
        a willingness to support virtually any group or cause which is 
        opposed to U.S. interests.
   It would lend credence to Iranian efforts to portray the 
        United States as irresolute and unreliable, and to call into 
        question the legitimacy of the U.N. Security Council.
   It could lead U.S. allies in the region to seek to match 
        Iranian nuclear capabilities, and to counter Iranian activities 
        in the region without coordinating with the United States.
   Finally, it would undermine U.S. efforts to limit the spread 
        of enrichment and reprocessing technologies globally, which are 
        inherently dual-use in nature.

    Thus the sort of deal the P5+1 has offered--permitting Iran a 
bounded residual nuclear capacity in exchange for enhanced 
inspections--should only be contemplated if we see evidence that Iran 
is undertaking a broader strategic shift.

   While offering no guarantee of success, evidence of such a 
        shift would provide confidence that Iran would be committed to 
        upholding a deal rather than determined to evade its 
        constraints or exploit its loopholes.
   Examples of such evidence would be willingness by Iran to 
        come clean on its past nuclear activities, and to curtail 
        destabilizing activities such as support for terrorism and the 
        provision of arms to proxy militias.
   Such steps should be considered as conditions for any final 
        sanctions relief. This would also hold benefits for Iran, as it 
        would hold out the prospect of normalized relations with the 
        international community and the lifting not just of nuclear 
        sanctions, but sanctions more broadly.
   Given that these issues are unlikely to be addressed in the 
        current negotiations, and the importance of seeing evidence 
        that Iran is complying with an agreement before irreversibly 
        alleviating pressure, any sanctions relief should be back-
        loaded.

    Success in the negotiations depends on more than just the content 
of our offers--it depends on increasing the credibility of our 
threatened alternatives to an agreement. If Iran's alternatives look 
worse, it is more likely to accept a negotiated agreement.

   The threat of sanctions can be made more credible via a 
        unified message from the White House and Congress that pressure 
        will be increased if talks do not succeed by November 24.
   Sanctions can also be strengthened by responding with 
        greater alacrity to the increase in Iranian oil exports.
   Our military credibility can be enhanced by making clear our 
        continuing commitment to the Middle East through messaging--
        particularly by making clear that the ``rebalance'' to Asia and 
        our pursuit of energy ``independence'' do not portend a retreat 
        from the region--and backing up that commitment with adequate 
        military and diplomatic resources and by seeking to strengthen 
        our seriously weakened alliance system in the region.
   Our military credibility can also be strengthened by 
        responding more vigorously to other threats to regional 
        stability, particularly in Iraq and Syria, and by taking 
        additional steps to counter destabilizing Iranian policies, 
        particularly its provision of arms to groups such as Hezbollah, 
        Hamas, and Palestinian Islamic Jihad.
   Finally, Congress and the administration should jointly 
        ensure that, whether or not a deal is reached with Iran, we 
        continue to devote adequate intelligence and diplomatic 
        resources to monitoring and responding to Iranian activities; 
        we cannot afford to shift those resources elsewhere in the 
        belief that, in the wake of a deal, we can move on to other 
        problems.

    Achieving a nuclear agreement that adequately secures our interests 
and those of our allies will be difficult and require patience, and 
taking steps to reassert our commitment to the Middle East, reassure 
allies, and deter Iran will require effort and resources when other 
crises around the world are competing for both. But these two broad 
lines of action can be mutually reinforcing--Iran is more likely to 
accept and adhere to a stringent nuclear accord if it perceives that 
the U.S. is willing to hold out at the negotiating table and is not 
looking for a quick exit from the region, and any adverse regional 
consequences of an agreement may be less if it is perceived to reflect 
American resolve rather than diffidence. To state that ``no deal is 
better than a bad deal'' is only meaningful given some yardstick for 
what makes a deal ``good'' or ``bad''; for the United States, that 
yardstick must be the extent to which a deal advances our--and our 
allies'--strategic interests in the Middle East and beyond.

    The Chairman. Thank you both for your testimony. You bring 
up some very important points.
    Dr. Heinonen, you wrote in an article recently that, 
``Negotiations in Vienna have shown that the principles driving 
the positions of the P5+1 are markedly different than those of 
Iran.'' Can you explain the two sets of principles you are 
referring to, behind the P5+1 and the Iranian positions, and 
why those two different sets of positions make it more 
difficult to reach an agreement?
    Dr. Heinonen. I think if we look at the history of the last 
11 years--these negotiations have been going 11 years; really, 
this is a story of now 4,000 nights and not 1,000 nights--and 
you look at what has been the driving force in Iran, they want 
to maintain and save their nuclear program in the format what 
it is today, which will include uranium enrichment and it will 
probably include also the capability to produce plutonium in a 
heavy water reactor.
    This has been all along there, through these hardships. You 
read the statements made by Mr. Rouhani in 2005 when he left 
office, how he explained how he was able under those difficult 
circumstances to preserve the enrichment program by suspending 
it for a while and how he was able to rescue the uranium 
conversion program.
    And then we look to the talks of today. When the Supreme 
Leader says that we want to have 190,000 centrifuges and 
produce uranium fuel for Bushehr reactor, it is clear that the 
bottom line is the enrichment program has to survive.
    Then you look which are the challenges Iran is facing if 
they want to produce that nuclear fuel. The first thing is the 
mere fact, actually they do not have enough uranium in their 
soil to support such a program. So what good is then for you if 
you are able to do enrichment if you cannot find the soil from 
your own--uranium from your own soil?
    Then when you look at this one, look at the fuel 
manufacturing technology which they do not yet have, the sole 
reason is they want to preserve the enrichment program from, as 
some Senator said here before.
    Then the other side of the gulf is that actually we do not 
want to have any enrichment program with Iran because of a 
number of reasons. So I think this is what I meant in this 
writing. This is a very different starting point and, 
unfortunately, now the situation is that the spiritual leader 
went and said it is 190,000. It is a great number, a big 
number.
    The Chairman. Let me ask you, what do you read into the 
letter--that I referenced before to Secretary Sherman that is 
in your testimony--by the Iranian Ambassador, questioning all 
of the IAEA's authorities in this regard?
    Dr. Heinonen. Well, this is----
    The Chairman. Is it buying time? Is this extending the 
period? What do you think is the intent, from your experience 
at the IAEA?
    Dr. Heinonen. I think that this tells me that when the 
agreement will be there, whatever will be negotiated, now 
hopefully in the next few months, when it comes to the 
implementation then IAEA steps in and starts to talk with Iran 
how to do these things in practice. Since these are the same 
people who are part of the negotiations, they are still 
posturing the old language which was there. So the IAEA 
negotiations will start in headwinds and every action IAEA 
tries to take could be challenged by this thing of, okay, it is 
not within your legal authority to do this and this, and we 
will end up with these implementation problems.
    The Chairman. So you are saying that, even presuming that 
the P5+1 negotiators can reach an agreement in 4 months, that 
then there will be a whole other set of negotiations with the 
IAEA as to how in fact those agreements will be enforced?
    Dr. Heinonen. Yes, this is the practice.
    The Chairman. Let me ask you then, what lessons should we 
draw from the failure of the framework agreement with North 
Korea as we deal with this one?
    Dr. Heinonen. Yes, I was part of the IAEA side in 1994. I 
think that there are several lessons. The first thing which we 
learned here is exactly the same, challenging the authority of 
the IAEA. You remember that North Korea was about to leave the 
NPT and therefore they said that they are not bound with the 
provisions of the safeguards agreement and therefore the IAEA 
did not have any authority to do certain things, and they 
challenged every step in that process of what the IAEA did in 
practice.
    I can give you an example. We were not even able to use the 
word ``inspection'' because ``inspection'' is in the safeguards 
agreement and therefore you cannot use it. I do not think Iran 
will take that line, but it will be an uphill battle. There 
will be headwinds, as we already see in the difference in views 
in the implementation of this framework of cooperation between 
Iran and IAEA. Very recently, Mr. Salehi challenged some of the 
statements and actions taken by IAEA with regard to the 
military dimension. It was a very different interpretation from 
the agency paper versus what Mr. Salehi said in public.
    The Chairman. So when I hear Secretary Sherman say, well, 
they will have to satisfy the IAEA, that can be, based upon 
Iran's present status or actions, litigated for some time in 
terms of what the IAEA believes is appropriate for verification 
and enforcement on all the dimensions, including the possible 
weaponization elements, while the sanctions relief is 
suspended?
    Dr. Heinonen. I think this is a good remark. The only thing 
that I we say, that these provisions need to be enshrined to 
this agreement in such a way that it becomes legally binding 
and when one is not in compliance the noncompliance has 
consequences.
    The Chairman. Let me ask you one final question from your 
experience at the IAEA. Is a good model the South African 
model, which ultimately admitted in 1993 to possessing a 
nuclear program with military dimensions, and then showed 
unprecedented cooperation by allowing anywhere, any time 
inspections? It took them 17 years to get a clean bill of 
health, but is something along those lines appropriate? I think 
that is probably less of a program than we are talking about in 
Iran, but what is your perceptions of that?
    Dr. Heinonen. It is less of a program, it was more of a 
program, because they had much more nuclear material which had 
not been declared before and there was a history of operation 
of enrichment for 20 years. One of the stumbling blocks was 
actually verification of the wastes. They were in 70,000 
barrels and it took a long, long time just to go through those.
    But why it was successful was that actually the government 
had changed their view. They had given up their nuclear weapons 
program. They wanted to close that chapter in the history of 
South Africa, and in order to do that they needed someone to 
certify that and that organization was the IAEA. So the 
cooperation was there. Once they did this disclosure in 1993, 
it was easy to go because the whole government was set up to 
help the IAEA to complete its mission.
    But if that change does not take place in Iran, that they 
want to come--that they come clean, want to come clean from 
their past, it is going to be difficult, as it was in North 
Korea.
    The Chairman. So even though in this case South Africa had 
determined as a government that it wanted to end that chapter 
in its history, wanted to end its nuclear program, it took 17 
years to get a clean bill of health, with the government 
willing and wanting to end its nuclear program? I think that is 
pretty instructive as to when we say long-term verification and 
enforcement agreements, it is very different, the two paradigms 
here, between where Iran is at and where South Africa was at.
    Senator Corker.
    Senator Corker. Thank you, Mr. Chairman, and thank you both 
for being here.
    I listened, Mr. Heinonen, to some of the complications 
relative to having this negotiation after the fact. I know that 
is the way it has to occur, but I wondered. We keep pressing 
about the full transparency of what their program was about in 
the past and relative to what IAEA would be doing in the 
future, how important is that to understand fully what their 
program was in the past?
    Dr. Heinonen. You do not need to know every nut and bolt 
from the program, but you need to know how far they got, for 
two reasons. One reason is that it is a part of your risk 
assessment, how much unknowns you tolerate when you agree with 
the number of centrifuges, if you allow them to have a sort of 
breakout--certain centrifuges enrichment capability. That is 
one reason.
    The second reason with your unknowns is that you certainly 
do not want to--you want to know how far they got and you want 
to see that they are not reconstituting the program. So 
therefore you need to know what was done, where it was done, 
and how it was done. This exactly took place in South Africa. 
Still in 2010 the IAEA inspectors visited some of the military 
sites to confirm that those actions are not reconstituted.
    So I see it as a very important in setting the baseline so 
that a proper, robust, reliable monitoring scheme can be 
established.
    Senator Corker. When you do that, how do you know that, 
when people are sharing with you what they were doing in the 
past, how do you know that that is in reality what they were 
doing in the past?
    Dr. Heinonen. It is actually a number of things. We 
normally call it multielement analysis. You look what the 
people tell you, you look at the experiments they have been 
doing. Do they make sense, do they fit to the nuclear program 
at that point in time when they do those experiments? You can 
indirectly confirm it by seeing the equipment which they have 
both for that and some other events which have taken place.
    So it is like a mosaic where you have bits and pieces all 
over and which then will have some gaps, but from that mosaic 
you can establish a relatively cohesive picture of what has 
been taking place. Then there should be no outliers and no 
inconsistencies.
    Senator Corker. One last question along those lines.
    I think, especially with a country like Iran that has 
multiple silos and arrangements with entities that sometimes 
are part of government, sometimes are not, how do you know that 
there is not some clandestine program? The IAEA goes in, they 
inspect what we know of. How do you have assurances, especially 
with a country like Iran, that there are not some other 
activities that are taking place? And what kind of abilities 
does the organization have to actually figure that out?
    Dr. Heinonen. IAEA has its own authorities and its own 
practices and skills. But it heavily draws also from the 
support of the member states. Actually, this is the reason why 
I wrote in my testimony also that it is important that the IAEA 
reports in a very transparent way what they have seen, what 
they have been told, what is where, so that the member states 
can, which have their own national means to find some of those 
details or have formed their own picture about the nuclear 
program, can see is this consistent with what the IAEA sees and 
what Iran tells.
    Therefore the reporting is the important thing, and that is 
why it disturbed me quite a lot when the Ambassador in his 
letter to Mr. Amano said that he does not like the way IAEA put 
some technical details to the report, because this is I think 
one of the keys to success of the IAEA. Only then IAEA can 
serve its member states if it has that information.
    Senator Corker. Mr. Singh, thank you. Thank you for your 
testimony and the answers.
    The goalposts continue to move as we talk about where this 
deal is going. But I just want to give a hypothetical. Let us 
say that the administration ended up in a situation with 3,000 
centrifuges, no Arak, no Fordow, and very extensive and 
intrusive inspections. How would that affect Iran's behavior in 
the region? How would that affect their ability in the future? 
How would it affect the neighborhood?
    Mr. Singh. Well, it is important to note first of all that 
that sort of deal does not seem to be in prospect, because on 
some of those issues you mentioned, Senator, we have already 
made significant concessions----
    Senator Corker. I appreciate your testimony, candidly, and 
feel very aligned with much of what you had to say. But let us 
just go back to, again, we have unfortunately seen the 
goalposts move, but let us just say that, hypothetically, that 
is where things ended up. Talk to me about the response?
    Mr. Singh. I think that a lot of it will depend upon not 
just the sort of particulars in the deal, but the context as 
well. Look, some of our allies are not happy with the 
concessions that we made. They would like us to have not made 
those concessions. But I think that if we had a sort of----
    Senator Corker. Some of our allies as part of the P5?
    Mr. Singh. That is a hard question to answer, because some 
of our allies in the P5+1 may not be happy with those, but they 
are unlikely to say that publicly. I think some of our allies 
in the region, both Israel and some of the Gulf States, have 
been more outspoken in the way they feel about that.
    So the risk is to our position in the region, and how folks 
perceive the nature of the agreement. Therefore I think the 
context of our policy in the region is important to how allies 
and others will judge it. Do they view it as an expression of 
American resolve or do they view it as an expression of 
American weakness?
    If we have the right policy context--what are we doing in 
Syria, what are we doing on Iraq, are we repairing our alliance 
system in the region--we can influence how folks see an 
agreement, and we can especially, very importantly, influence 
how they view our willingness to actually uphold an agreement.
    In my view, our allies think that the concessions we have 
made on enrichment--conceding any number of centrifuges 
whatsoever to Iran--is not good to have conceded. They think 
that we should not have done that. That that is a view that is 
widely shared in the region.
    But again, the context is very important and so to improve 
that situation, to improve how it is perceived, there are 
certain steps we can take.
    Senator Corker. This is the last question I will have. You 
alluded to the fact that we started off in a not great place, 
and I think people on both sides of the aisle here are 
concerned about where we began. But you said in your testimony 
that you felt like we could get to a good end still. So with 
where we began and where we are, how would you go about doing 
that?
    Mr. Singh. Look, I think that the reality is we are where 
we are in the negotiations, and so the question before us here 
is how do we take the situation and make a good deal out of it, 
make the best situation out of it. First, I think that Congress 
obviously has a role to play in that. I think there has to be 
broad buy-in politically for this agreement to succeed in the 
long term, because of course Congress will have a role in 
lifting sanctions. The next administration, whatever it is, 
will have a role in upholding this agreement. So I think you 
need to have that broad political buy-in and that is very 
important.
    Look, I do think that from where we are now we should be 
focused on those principles which Dr. Heinonen articulated and 
making sure that whatever agreement comes out is as strong as 
possible. But I do think that we should consider that any final 
sanctions relief again be dependent not just on these 
particular steps, but on evidence of that broader strategic 
shift by Iran, evidence that Iran is in fact going in a 
different direction, and therefore there is perhaps more trust, 
more confidence that they will actually uphold their side of 
the bargain.
    Then frankly, again, we can take steps on the other side, 
because for a state to agree to a deal is not just about what 
is in the deal. It is about what is the alternative, and we 
need to make steps to make that alternative look worse from 
Iran's perspective. I think that means strengthening the 
credibility of the sanctions threat, strengthening the 
credibility of the military threat. I think if we do those 
things, then perhaps we can influence Iran's perception of what 
is a good deal.
    Senator Corker. Thank you both. I know it is a lot of 
trouble to prepare testimony and be here. We all benefit 
greatly from it and I want to thank you both for being here. 
Typically, about noon at these hearings things kind of clear 
out to other meetings, but I know people are paying attention 
and have read your written testimony. So thank you.
    The Chairman. Well, thank you, Senator Corker. Sometimes 
our second panels, with all due respect to the first panel, is 
as important, if not more insightful.
    So let me ask you one final set of questions. I want to 
revisit, Dr. Heinonen, something you responded to Senator 
Corker which to me is not insignificant. Basically, you said 
when the Iranian Ambassador, among their complaints to the 
IAEA, was complaining about the way in which the IAEA was 
issuing its reports to its member states, that the reason that 
it is important for the IAEA to issue its report to its member 
states in the manner in which they are doing is because then 
member states can use their own intelligence and information to 
judge whether what the IAEA has been told is along the lines of 
what they know from their intelligence or is deviating 
significantly from it, in which case in this case Iran, if that 
were the case, would not be coming clean.
    Is that what I am hearing you say?
    Dr. Heinonen. Yes, this is one thing, certainly. The other 
thing is that the member states can then do their own 
independent judgment how well Iran complies with the 
requirements of, let us say, the P5+1 agreement.
    The Chairman. So it is not insignificant when the Iranian 
Ambassador says, I do not like the way, I do not agree, I think 
you are not reporting correctly. It may look like an 
insignificant element, but it can be very significant if member 
states are going to make a judgment whether there is a 
forthcoming Iran in this respect.
    Dr. Heinonen. Yes. This complaint has been there about the 
last 5 years from the Iranians. It started to arise somewhere 
around 2007, 2006. So it has been quite some time there. It is 
repeated, repeated. I personally thought that with this new 
team there in Teheran that this kind of language disappears, 
but apparently it is not the case.
    The Chairman. Mr. Singh, one final set of questions. You 
argued that during the interim agreement the United States made 
concessions to Iran, including on uranium enrichment. What 
other concessions do you feel were made? How do you judge what 
Iran did in response under the agreement? How do you judge the 
concessions, what you define as concessions, versus what Iran 
did?
    You also, in response to Senator Corker, said we need to 
strengthen our sanctions regime, our military threat. What are 
examples of what you would suggest would do that?
    Mr. Singh. Sure. On your first question, look, I think the 
whole underlying dynamic of the negotiations has changed in a 
fundamental way. When we were crafting U.N. Security Council 
resolutions in the 2000s and we got a number of unanimous U.N. 
Security Council resolutions, the point was to address these 
Iranian violations of its international obligations and put the 
burden on Iran to demonstrate its peaceful intent.
    I do feel as though now that narrative, that underlying 
framework, has shifted to this question of providing Iran's 
practical needs or satisfying its purported rights in a way 
that is safe and monitored and so forth. That is a very 
important shift. One of the things that Iran has tried to do in 
addition to its effort to undermine the credibility of the IAEA 
is to show that it stood up to the U.N. Security Council, whose 
legitimacy it has also impugned.
    So that in itself, that change in the dynamic, is an 
important change in itself. When it comes to the particulars, I 
think we made that vital concession on Iran enriching 
indefinitely, which is something that Iran has been seeking 
since literally the inception of these talks in 2003. We 
conceded that any constraints that Iran is under will be 
temporary in nature and perhaps quite short, in fact, in 
nature, and so that Iran will be treated like any other state 
at the end of this process, despite again those obligations.
    We have granted some implicit legitimacy to those 
facilities, which, remember, were constructed in secret and in 
violation of its NPT obligations. That includes Natanz, Fordow, 
Arak, and some other facilities, which now will remain in place 
and not be dismantled, I believe.
    We have not forced Iran to address the weaponization 
question or the ballistic missile question. So I think all of 
these things are significant concessions that we have made in 
the course of these talks.
    On the second part--how do we bolster the credibility of 
the ``or else,'' as it were. Look, I do think it is important 
that there be a clear message to Iran about what are the 
consequences for not reaching a decent agreement by the end of 
these talks. I think that should be a unified message. Here is 
an issue where I think there is strong bipartisan agreement in 
the United States and the messages we are sending should 
reflect that strong bipartisan agreement.
    I do think it is very important that we continue to enforce 
vigorously the sanctions which are already in place, that have 
not been suspended as part of the JPOA. I am concerned, for 
example, by reports that China's oil imports from Iran have 
increased 48 percent if you look at the first 6 months of 2014 
compared to the first 6 months of 2013. And yet there has not 
been as far as I can tell an appreciable response.
    Now, part of that is condensates, but I am not sure why 
that should be important to a U.S. policymaker because that 
strikes me as a technical loophole in sanctions that could be 
corrected.
    When it comes to the military credibility, I think, look, 
that is harder, because I think we have implanted in the minds 
of folks around the world the idea that we are a lot less 
inclined to address situations like those in Syria, in Iraq, 
and elsewhere in a sort of forceful way. We did not enforce the 
red line in Syria. We have not done much of anything, frankly, 
in Syria to uphold our stated policy. We have responded in 
similar ways to Iraq. When it comes to Ukraine, for example, I 
think our response has been relatively modest compared to what 
is actually happening there.
    So part of the answer is addressing some of these 
situations around the world in a more purposeful and a more 
decisive way. I think we need to stress our continuing 
commitment to this region. I think the messaging often that we 
send out is that, well, we are pivoting to a different region, 
we may not have much of an interest in this region anymore 
because of energy independence and things like that. I think it 
is important that we get that message straight.
    Then again, since especially 2011 I think some of our 
alliances in the region have suffered and I think we need to 
again rebuild that security architecture which we once enjoyed 
in the region.
    So I think there are a number of steps on either side of 
the ledger when it comes to reenforcing that credibility. But 
again, without that ``or else'' I do not see why Iran would be 
motivated to accept a deal which places restrictions on its 
activities.
    The Chairman. I would note that the one thing that is very 
clear to me is that military assets that did not exist or were 
not in position in the region are placed in the region, which 
should send the Iranians a very clear message that if in fact 
we cannot strike a deal and if sanctions, ratcheted up 
sanctions, do not get them to rethink a break in negotiations 
if that is what happens, that there is a real credible threat, 
because those assets were not in the region prior to this 
process, they are in the region now, and I would hope that that 
would be some sense of messaging to them.
    Well, look. With the thanks of the committee for your 
expertise, and I hope we can continue to call upon you, the 
record will remain open until the close of business tomorrow. 
With the thanks of the committee, this hearing is adjourned.
    [Whereupon, at 12:43 p.m., the hearing was adjourned.]
                              ----------                              


              Additional Material Submitted for the Record


                Responses of Wendy Sherman to Questions 
                    Submitted by Senator Bob Corker

    Question. During the hearing you argued: ``if you are asking . . . 
whether we are going to come to Congress for legislative action to 
affirm a comprehensive agreement, we believe, as other administrations 
do, that the executive branch has the authority to take such executive 
action on this kind of a political understanding that might be reached 
with Iran.''

   What kind of ``political understanding'' are we seeking 
        from Iran (please cite the previous types of political 
        understandings you have in mind here)? Will this be a treaty? A 
        congressional-executive agreement? An executive agreement? If 
        an executive agreement, how and why does it fall short of an 
        arms control treaty or congressional-executive agreement?

    Answer. The Senate has a constitutional role in giving its advice 
and consent to the ratification of treaties, which are legally binding 
international agreements. All the States participating in the 
negotiations on a comprehensive solution with Iran have taken the 
position that the resulting document would not impose international 
legal obligations. This intent will be carefully reflected in the 
drafting of the document. It is not uncommon for states to conclude 
that a nonlegally binding arrangement would best promote their 
objectives (for example, the Helsinki Final Act, the Proliferation 
Security Initiative, the Nuclear Suppliers Group, and the Missile 
Technology Control Regime).
    If Iran fails to live up to its commitments, the United States and 
our allies will have the flexibility to reimpose sanctions, both under 
the terms of a comprehensive solution and as a matter of U.S. law. Even 
though the comprehensive solution would be neither a treaty nor an 
executive agreement, Congress of course has an important role in U.S. 
foreign policy, and we will continue to keep Congress closely apprised 
of our progress in these negotiations.
    The views of the Congress are significantly informing our approach 
to these negotiations. Building the sanctions regime was a major 
achievement in which Congress played a leading role, and if 
negotiations are successful, the administration will work with Congress 
to develop an appropriate mechanism for long-term sanctions relief.
    However, any measure calling for a vote by Congress on a potential 
comprehensive deal between the P5+1 and Iran risks dividing the United 
States and our P5+1 partners and undermining our position vis-a-vis 
Iran by signaling that U.S. negotiators are not empowered to make 
decisions and sowing doubt about U.S. intentions. Congress now has a 
responsibility to facilitate a successful conclusion of the 
negotiations by giving the President and our partners the space needed 
to pursue negotiations.

    Question. Is it the position of the administration that the spread 
of enrichment and reprocessing should be halted? How does an agreement 
that allows Iran to enrich uranium impact the administration's ability 
to achieve gold standard civil nuclear cooperation agreements across 
the Middle East? Throughout other regions? Do we lose our moral ground 
in asking nations to forgo enrichment and reprocessing when we 
acknowledge Iran--globally recognized as a poor actor--as an enricher?

    Answer. The Obama administration has continued to uphold and 
promote long-standing U.S. policy opposing the spread of enrichment and 
reprocessing (ENR) technologies. The United States employs a range of 
measures, both multilateral and bilateral, to help minimize the spread 
of ENR technologies around the world.
    As for Iran, in line with the Obama administration's policy 
opposing the spread of ENR technologies, the JPOA has halted the 
progress of Iran's nuclear program and rolled it back in key respects, 
including by committing Iran to limit its enrichment capacity and to 
dilute or fabricate into fuel its stockpile of near-20-percent low 
enriched uranium. The JPOA specifies that a comprehensive solution 
would involve a ``mutually defined enrichment programme with practical 
limits and transparency measures to ensure the peaceful nature of the 
programme.'' While we believe Iran's fuel needs could and should be met 
by the international market, we are prepared to consider in the end 
state a strictly limited enrichment program consistent with Iran's 
practical needs, but only if the Iranians accept rigorous limits on, 
and transparent monitoring of, the scope and level of enrichment 
activities, capacity--where it is carried out--and stocks of enriched 
uranium.
    If we can reach an understanding with Iran on strict constraints, 
then we can contemplate an arrangement that includes a very modest 
amount of enrichment while also constraining Iran's capacity to obtain 
a nuclear weapon. Such an outcome is preferable to the alternative; a 
program that is unconstrained and less monitored that could be used to 
produce material for nuclear weapons. It should also be noted that, 
with respect to reprocessing, the JPOA halts further progress on the 
reactor at Arak and provides that Iran will not engage in reprocessing 
or construction of a facility capable of reprocessing, and it further 
states that a comprehensive solution would continue this prohibition 
and ``fully resolve the concerns related to the reactor at Arak.''
    More broadly, we will continue our efforts to prevent the spread of 
ENR technologies, making use of the various tools at our disposal to 
achieve our nonproliferation goals. As part of this effort, we seek to 
ensure that states make the choice to rely on the international market 
for fuel cycle services. If we are not sufficiently convinced that 
potential nuclear cooperation with a particular country would be 
consistent with our policy goals on ENR, we would not conclude a 123 
Agreement with that country.

    Question. In October 2013 you testified that ``we don't have a lot 
of time [to negotiate].'' Now you've put more time on the clock. Will 
you commit that this will be the one and only extension of the interim 
deal?

    Answer. We extended the Joint Plan of Action until November 24, 
2014, which is 1 year from the date we concluded the Joint Plan of 
Action in Geneva. The Joint Plan of Action references the year 
timeframe for negotiating a comprehensive agreement, stating: ``The 
final step of a comprehensive solution, which the parties aim to 
conclude negotiating and commence implementing no more than one year 
after the adoption of this document . . . ''
    We decided to extend these negotiations because we have made 
progress and we see a path forward, although we have more work to do on 
many key issues. We are focused on doing everything we can to reach a 
comprehensive solution that assures the international community that 
Iran's program is for exclusively peaceful purposes.

    Question. Is it still the administration's requirement that (in 
your own words) Iran ``come clean on its past actions as part of any 
comprehensive agreement'' and completely resolve any and all concerns 
about the Iranian nuclear program's military dimensions?

    Answer. Resolution of our concerns about the possible military 
dimensions (PMD) of Iran's nuclear program is an important part of a 
comprehensive deal. Our position is that Iran must fully cooperate with 
the International Atomic Energy Agency (IAEA), including by providing 
access to facilities, individuals, documents, and information requested 
by the IAEA. Our approach to timing and sequencing of sanctions relief 
for a comprehensive deal makes clear that Iran will not get the 
sanctions relief it seeks until PMD issues are resolved to the 
satisfaction of the IAEA.
    We will not reach any final deal unless and until we are satisfied 
that there can be no further military dimension to Iran's nuclear 
program and that any past efforts to develop a nuclear warhead are 
permanently discontinued.

    Question. Has Iran complied with all elements of the Joint Plan of 
Action and its associated implementation guidelines? Iran has exceeded 
the 1 million barrel per day crude export limits for every month of the 
JPOA, averaging roughly 1.3 million barrels per day over the first 6 
months of 2014 and currently at 1.4 million barrels per day. Explain in 
detail how they have complied with this requirement using your official 
estimates.

    Answer. Since the Joint Plan of Action (JPOA) went into effect on 
January 20, 2014, we have continuously tracked data on Iran's crude oil 
exports to evaluate Iran's adherence to its JPOA commitments. We now 
have data covering almost the entire JPOA period. The data suggest that 
our efforts were successful. From January 20 through June, Iran's 
average daily crude oil export volumes remained at the level that 
existed when the JPOA came into force: 1-1.1 million barrels per day. 
This is a testament to the unity of purpose the international community 
has displayed in encouraging Iran to work with us and our allies on a 
comprehensive solution to its nuclear program. We have also maintained 
engagement at the highest level with all six of Iran's current 
purchasers of crude oil, urging them to continue abiding by our JPOA 
understanding on their levels of crude oil imports.
    It should be noted that some reports of Iran's ``crude oil'' export 
volumes include not only crude oil but also other hydrocarbon liquids, 
such as condensate. These reports thus make Iran's crude oil export 
volumes appear larger than they actually are. In accordance with 
congressional legislation, these other hydrocarbon liquids are not 
covered by the JPOA.
    Furthermore, Iran's reported crude oil export volumes often include 
shipments to Syria. We are indeed concerned about Iran's crude oil 
deliveries to Syria, but not in the context of JPOA compliance since 
Syria is not a paying customer. Since Syria does not pay, it does not 
meaningfully contribute to Iran's economy, which in turn means that 
shipments to Syria do not relax the pressure on Iran during the 
negotiations. I assure you however, that we are closely following the 
crude deliveries to Syria and addressing it.
    Final data for July are still outstanding, but once that is in I 
would be happy to arrange a classified briefing that reflects 
information for the complete JPOA period. We do not expect it to have a 
material effect on the overall volumes.
                                 ______
                                 

               Responses of David S. Cohen to Questions 
                    Submitted by Senator Bob Corker

    Question. A recent study by the Washington Institute for Near East 
Policy argued Iran used the ``time and space'' provided by the JPOA to 
stabilize its economy, leading to a decrease in inflation from over 40 
percent in early 2013 to 17 percent today, and projecting 1.5 percent 
GDP growth this year and 2.3 percent per year thereafter, even if they 
do not get further sanctions relief.

   What is your assessment of this report and these 
        macroeconomic indicators? Do you dispute the overall trajectory 
        of the Iranian economy?

    Answer. The Iranian economy remains under enormous economic 
pressure. For the year ending in March 2013, Iran's real GDP contracted 
by almost 7 percent, pushing Iran's economy into a deep recession. 
Iran's economy then contracted a further 2 percent through March 2014. 
Whatever growth Iran may achieve is over a significantly smaller base. 
Although year-over-year inflation is around the levels WINEP estimates, 
Iran's average annual inflation remains one of the highest rates in the 
world.
    These metrics, moreover, must be considered against the backdrop of 
Iran's ongoing economic disorder. In 2014 our oil sanctions alone 
deprived Iran of over $40 billion in oil revenue--well over twice the 
total estimated $14-15 billion value of the JPOA, and since 2012 it has 
foregone or been denied full access to more than $200 billion in oil 
revenues. It will forgo another $15 billion over the course of the 
latest JPOA period from lost oil sales. Moreover, as a result of the 
recent decline in oil prices--which Iranian officials have described as 
a ``new sanction''--the government has said it is considering a budget 
based on a price of $40/barrel of oil, as opposed to $100/barrel the 
previous year. In addition, the vast majority of Iran's approximately 
$100 billion in foreign exchange holdings, including revenues from oil 
sales, are largely inaccessible or restricted by sanctions. The Iranian 
rial, moreover, has depreciated by around 56 percent since November 
2013 when the JPOA was concluded. The limited, temporary, and 
reversible sanctions relief provided for under the JPOA has by no means 
alleviated the Iranian economy's fundamental weaknesses.
    It is true that since the election of President Rouhani in June 
2013, there has been some improvement in a few economic indicators. 
President Rouhani, in stark contrast to his predecessor, has taken 
policy measures to stabilize the economy that have contributed to 
improving economic performance. That improvement, however, is largely 
independent of and cannot be solely attributed to the limited sanctions 
relief in the JPOA. For Iran to have any hope of realizing meaningful, 
sustainable economic progress, it needs more significant sanctions 
relief, and that can only be achieved if Iran can assure the 
international community that its nuclear program is, and will remain, 
exclusively peaceful.

    Question. What is your estimate of the effects on Iran's economy of 
the sanctions relief likely to be provided in any final nuclear deal? 
Will sanctions relief include Iranian access to SWIFT?

    Answer. If Iran commits to undertake the steps necessary to assure 
the international community that its nuclear program is and will remain 
exclusively peaceful, it can expect to see significant sanctions 
relief, potentially including increased access to the international 
financial system. The JPOA provides that a comprehensive solution 
regarding Iran's nuclear program would include the lifting of our 
domestic, nuclear-related sanctions, in addition to U.N. Security 
Council sanctions. The effects on Iran's economy will depend on the 
precise contours of the relief, which are core subjects of our ongoing 
negotiations with Iran. Any such relief would depend on Iran taking 
specific nuclear steps and our confidence that Iran is living up to its 
commitments. However, U.S. sanctions dealing with Iran's support for 
terrorist groups such as Hamas and Hezbollah and its human rights 
abuses will remain in place.

    Question. In the event of Iranian noncompliance with a 
comprehensive agreement, how will relief be structured in such a way to 
punish Iran for such a violation?

    Answer. The sanctions relief that would be provided in any 
comprehensive solution will depend on Iran's continued compliance with 
its own commitments. We will take action as appropriate in the event 
Iran fails to abide by its commitments. The United States and the EU 
will be in a position to reimpose sanctions promptly, and we are 
seeking to structure UNSC sanctions relief to ensure that those 
sanctions will snap back into place in the event that Iran does not 
meet its commitments.
                                 ______
                                 

                Responses of Wendy Sherman to Questions 
                    Submitted by Senator Marco Rubio

    Question. Has there been any progress made during your multiple 
discussions with Iranian officials in obtaining the releases of 
Americans imprisoned or missing in Iran such as Pastor Saeed Abedini, 
Robert Levinson, or Amir Hekmati?

    Answer. The U.S. Government is dedicated to the return of Robert 
Levinson, and dual U.S. citizens Saeed Abedini, Amir Hekmati. We also 
call on Iran to release U.S.-Iranian citizen, Jason Rezaian, and the 
others who were detained with him.
    The President, the Secretary, and I have raised the cases of Mr. 
Levinson, Mr. Hekmati, and Mr. Abedini directly with the Iranian 
Government. We have made clear that we are calling on Iran to release 
Mr. Hekmati and Mr. Abedini, and to work cooperatively with us to 
locate Mr. Levinson, so they can be reunited with their families.
    At our request, the Swiss Government, in its role as our protecting 
power, has also continued to raise the issue on our behalf, as have 
other countries that we have asked to press Iran to cooperate on these 
cases.
    We will continue to pursue all available options until all three 
Americans return home safely.

    Question. Will any of these issues--support for terrorism, human 
rights, or captive American citizens, be addressed as part of any final 
agreement with Iran?

    Answer. Discussions through the P5+1 have focused exclusively on 
the nuclear issue. However, even as we negotiate with Iran over its 
nuclear program, we continue to take issue with Iran's human rights 
abuses, state sponsorship of terrorism, its detainment of U.S. 
citizens, and its destabilizing activities across the region. We will 
not ignore this behavior even if we are able to reach a nuclear deal 
with Iran.

    Question. Have you made clear to your Iranian interlocutors that it 
is Congress and a future administration that will make decisions about 
long-term sanctions relief and not the current administration?

    Answer. It is still too early to determine what an exact sanctions 
relief package would look like, but comprehensive sanctions relief 
would require a mix of executive and legislative actions. Iran is aware 
of that dynamic. Iran is also aware that we are seeking a long-term 
comprehensive agreement. Under that agreement, sanctions relief would 
come only after Iran has taken certain steps, as verified by the 
International Atomic Energy Agency (IAEA). We do not believe that our 
concerns would be resolved at the start of implementation of a 
comprehensive deal, as it will likely take Iran time to complete the 
many steps it will have to take.

    Question. Have you indicated to them that U.S.-Iranian relations 
will not substantially change until progress is made in these 
nonnuclear areas?

    Answer. Iran is aware of our deep and serious concerns with its 
activities. It understands that a comprehensive agreement over its 
nuclear program--if possible--will not detract us from taking issue 
with a great deal of its behavior, including its human rights abuses, 
state sponsorship of terrorism, detention of U.S. citizens, and 
destabilizing role in the region. We will not ignore this behavior even 
if we reach a nuclear deal, and we will not hesitate to put pressure on 
Iran when it is warranted.
                                 ______
                                 

               Responses of David S. Cohen to Questions 
                    Submitted by Senator Marco Rubio

    Question. Can you confirm that Chinese oil imports from Iran were 
48 percent above the 2013 levels? What level of Chinese imports would 
result in imposition of sanctions?

    Answer. Public reports of China's purchases of Iranian crude oil 
must be carefully interpreted. For instance, reports of China's ``oil 
imports'' often include not only crude oil but also other hydrocarbon 
liquids and petroleum products. These reports can thus make China's 
purchases of Iranian crude oil appear larger than they actually are. 
The Joint Plan of Action (JPOA) between P5+1 and Iran only applies to 
purchase levels of crude oil from Iran by current customers, including 
China.
    It is also important to distinguish fluctuations in China's (or any 
other country's) purchases of Iranian crude oil--due to seasonality, 
delivery schedules, weather, and other factors--from the trend in those 
purchases over the full JPOA period. For example, while public reports 
indicate that China's April purchases were above trend, the same 
reports indicate that China's August purchases were significantly below 
trend. Bearing these month-to-month fluctuations in mind, we continue 
to closely monitor China's imports, as well as those of Iran's five 
other oil customers, over the remainder of the JPOA period.

    Question. Iranian oil exports overall stand at 1.4 million barrels 
per day, 40 percent higher than the limit envisaged in the JPOA. What 
does this Iranian violation of the JPOA's terms say about their 
willingness to abide by the requirements of a future agreement?

    Answer. Since implementation of the Joint Plan of Action (JPOA) 
began on January 20, 2014, we have continuously tracked data on Iran's 
crude oil exports in light of the provision in the JPOA that such 
exports remain at pre-JPOA levels. The data suggest that our efforts 
have been successful. Throughout the JPOA to date, Iran's average daily 
crude oil export volumes remained at the level that existed when 
implementation of the JPOA began: 1-1.1 million barrels per day. This 
is a testament to the unity of purpose the international community has 
displayed in encouraging Iran to work with us and our allies on a 
comprehensive solution to its nuclear program. We have also maintained 
engagement at the highest level with all six of Iran's current 
purchasers of crude oil (i.e., China, India, Japan, South Korea, 
Turkey, and Taiwan), urging them to continue importing Iranian crude 
oil at the levels that were in existence when implementation of the 
JPOA began.
    It should be noted that some public reports of Iran's ``oil 
export'' volumes include not only crude oil but also other hydrocarbon 
liquids and petroleum products. These reports can thus make Iran's 
crude oil export volumes appear larger than they actually are. The JPOA 
only applies to purchase levels of crude oil from Iran by current 
customers.
    Furthermore, Iran's reported crude oil export volumes often include 
shipments to Syria. We are indeed concerned about Iran's crude oil 
deliveries to Syria. Since Syria is not a paying customer, however, 
these shipments do not meaningfully contribute to Iran's economy, 
which, in turn, alleviates concerns that these shipments to Syria relax 
the pressure on Iran during the negotiations.
    We would be happy to discuss these and other issues in more detail 
in an appropriate setting.
                                 ______
                                 

                 Response of Wendy Sherman to Question 
                    Submitted by Senator Jeff Flake

    Question. Any deal reached with Iran would be of historic 
magnitude, and of great importance to the United States as well as the 
rest of the world. Such matters have in the past been negotiated 
through treaties, a recent example of which is the New START agreement 
with Russia. Treaties require approval by the Senate. However, the 
administration has negotiated other matters of great importance such as 
the Strategic Partnership Agreement with Afghanistan without 
consultation of Congress.

   How has the administration determined what international 
        matters of great importance will be subjected to approval by 
        the Senate, and which ones will not?
   Will any final deal with Iran be subject to approval of the 
        Senate on the merits of the deal itself?
   Do you believe the Senate should weigh in on any final 
        agreement?

    Answer. The Senate has a constitutional role in giving its advice 
and consent to the ratification of treaties, which are legally binding 
international agreements. All the States participating in the 
negotiations on a comprehensive solution with Iran have taken the 
position that the resulting document would not impose international 
legal obligations. This intent will be carefully reflected in the 
drafting of the document. It is not uncommon for states to conclude 
that a nonlegally binding arrangement would best promote their 
objectives (for example, the Helsinki Final Act, the Proliferation 
Security Initiative, the Nuclear Suppliers Group, and the Missile 
Technology Control Regime).
    If Iran fails to live up to its commitments, the United States and 
our allies will have the flexibility to reimpose sanctions, both under 
the terms of a comprehensive solution and as a matter of U.S. law. Even 
though the comprehensive solution would be neither a treaty nor an 
Executive agreement, Congress of course has an important role in U.S. 
foreign policy, and we will continue to keep Congress closely apprised 
of our progress in these negotiations.
    The views of the Congress are significantly informing our approach 
to these negotiations. Building the sanctions regime was a major 
achievement in which Congress played a leading role, and if 
negotiations are successful, the administration will work with Congress 
to develop an appropriate mechanism for long-term sanctions relief.
    However, any measure calling for a vote by Congress on a potential 
comprehensive deal between the P5+1 and Iran risks dividing the United 
States and our P5+1 partners and undermining our position vis-a-vis 
Iran by signaling that U.S. negotiators are not empowered to make 
decisions and sowing doubt about U.S. intentions. Congress now has a 
responsibility to facilitate a successful conclusion of the 
negotiations by giving the President and our partners the space needed 
to pursue negotiations.

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