[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
MAJOR BENEFICIARIES OF THE IRAN DEAL:
IRGC AND HEZBOLLAH
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HEARING
BEFORE THE
SUBCOMMITTEE ON
THE MIDDLE EAST AND NORTH AFRICA
OF THE
COMMITTEE ON FOREIGN AFFAIRS
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 17, 2015
__________
Serial No. 114-92
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COMMITTEE ON FOREIGN AFFAIRS
EDWARD R. ROYCE, California, Chairman
CHRISTOPHER H. SMITH, New Jersey ELIOT L. ENGEL, New York
ILEANA ROS-LEHTINEN, Florida BRAD SHERMAN, California
DANA ROHRABACHER, California GREGORY W. MEEKS, New York
STEVE CHABOT, Ohio ALBIO SIRES, New Jersey
JOE WILSON, South Carolina GERALD E. CONNOLLY, Virginia
MICHAEL T. McCAUL, Texas THEODORE E. DEUTCH, Florida
TED POE, Texas BRIAN HIGGINS, New York
MATT SALMON, Arizona KAREN BASS, California
DARRELL E. ISSA, California WILLIAM KEATING, Massachusetts
TOM MARINO, Pennsylvania DAVID CICILLINE, Rhode Island
JEFF DUNCAN, South Carolina ALAN GRAYSON, Florida
MO BROOKS, Alabama AMI BERA, California
PAUL COOK, California ALAN S. LOWENTHAL, California
RANDY K. WEBER SR., Texas GRACE MENG, New York
SCOTT PERRY, Pennsylvania LOIS FRANKEL, Florida
RON DeSANTIS, Florida TULSI GABBARD, Hawaii
MARK MEADOWS, North Carolina JOAQUIN CASTRO, Texas
TED S. YOHO, Florida ROBIN L. KELLY, Illinois
CURT CLAWSON, Florida BRENDAN F. BOYLE, Pennsylvania
SCOTT DesJARLAIS, Tennessee
REID J. RIBBLE, Wisconsin
DAVID A. TROTT, Michigan
LEE M. ZELDIN, New York
DANIEL DONOVAN, New York
Amy Porter, Chief of Staff Thomas Sheehy, Staff Director
Jason Steinbaum, Democratic Staff Director
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Subcommittee on the Middle East and North Africa
ILEANA ROS-LEHTINEN, Florida, Chairman
STEVE CHABOT, Ohio THEODORE E. DEUTCH, Florida
JOE WILSON, South Carolina GERALD E. CONNOLLY, Virginia
DARRELL E. ISSA, California BRIAN HIGGINS, New York
RANDY K. WEBER SR., Texas DAVID CICILLINE, Rhode Island
RON DeSANTIS, Florida ALAN GRAYSON, Florida
MARK MEADOWS, North Carolina GRACE MENG, New York
TED S. YOHO, Florida LOIS FRANKEL, Florida
CURT CLAWSON, Florida BRENDAN F. BOYLE, Pennsylvania
DAVID A. TROTT, Michigan
LEE M. ZELDIN, New York
C O N T E N T S
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Page
WITNESSES
Emanuele Ottolenghi, Ph.D., senior fellow, Foundation for Defense
of Democracies................................................. 6
Matthew Levitt, Ph.D., Fromer-Wexler Fellow, director, Stein
Program on Counterterrorism and Intelligence, Washington
Institute for Near East Policy................................. 37
Suzanne Maloney, Ph.D., interim deputy director, Center for
Middle East Policy, The Brookings Institution.................. 48
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Emanuele Ottolenghi, Ph.D.: Prepared statement................... 8
Matthew Levitt, Ph.D.: Prepared statement........................ 40
Suzanne Maloney, Ph.D.: Prepared statement....................... 50
APPENDIX
Hearing notice................................................... 62
Hearing minutes.................................................. 63
The Honorable Gerald E. Connolly, a Representative in Congress
from the Commonwealth of Virginia: Prepared statement.......... 64
MAJOR BENEFICIARIES OF THE IRAN DEAL: IRGC AND HEZBOLLAH
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THURSDAY, SEPTEMBER 17, 2015
House of Representatives,
Subcommittee on the Middle East and North Africa,
Committee on Foreign Affairs,
Washington, DC.
The subcommittee met, pursuant to notice, at 2:07 p.m., in
room 2172, Rayburn House Office Building, Hon. Ileana Ros-
Lehtinen (chairman of the subcommittee) presiding.
Ms. Ros-Lehtinen. The subcommittee will come to order.
After recognizing myself and Ranking Member Deutch for 5
minutes each for our opening statements, I will then recognize
any other member seeking recognition for a minute. We will then
hear from our witnesses.
And, without objection, your prepared statements, madam and
gentlemen, your prepared statements will be made part of the
record.
Members may have 5 days to insert statements and questions
for the record, subject to the length limitation of the rules.
The Chair now recognizes herself for her remarks.
As we confront the fallout from the Iran nuclear deal, it
is important that we examine two critical networks, as they are
two critical criminal networks--that stand to gain the most
from sanctions relief: The Islamic Revolutionary Guard Corps
and Iran's proxy, Hezbollah.
Made up of at least 150,000 personnel, the Revolutionary
Guard Corps is responsible for Iran's external and internal
security, including the protection of the key strategic oil
waterway, the Strait of Hormuz; the development of Iran's
ballistic missile program; and maintaining order and control of
the Iranian people.
It oversees the Quds Force, the asymmetric war and terror
operators of the IRGC, who are behind the deaths of hundreds of
American service men and women and coalition forces in Iraq and
who continue to plan operations on the ground in Iraq and Syria
while undermining our national security interests.
The IRGC is Iran's single largest economic actor. It owns
the country's largest construction company, its main
telecommunications company, and controls at least 25 percent of
the Tehran Stock Exchange. The IRGC owns and controls banks,
its officials sit on and control the boards of private
companies, and it is the primary player in the construction and
infrastructure sectors as well as, increasingly, the energy
sector.
Because the IRGC controls so much of the Iranian economy,
it is poised to gain billions from the deal and Iran's economic
growth. When the administration argues that the Iranian regime
will invest its sanctions relief into infrastructure, what they
are not telling you is that the IRGC, a terror organization in
its own right, will be the one cashing in on all the
infrastructure, all the construction, all the energy projects.
Companies are already lining up to do business with Iran, and,
as the sanctions come off, more money will be funneled to IRGC
companies, who will then turn right around and use that money
for their nefarious activities.
As such a big player in Iran, the IRGC has a vested
interest in maintaining its alliance with the regime and
ensuring the regime's survival, both inside Iran by maintaining
its authority over the people of Iran but also by continuing to
expand regionally and fulfilling its hegemonic ambitions.
Fulfilling those ambitions requires the continued work of
the Quds Force--training Shia militias in Iraq, funneling funds
and arms to Syria's Bashar al-Assad, and supporting Houthi
fighters in Yemen. Incredibly, the Iran deal delists and lifts
certain sanctions from some of the same people leading these
very actions, including the current Quds Force commander,
Soleimani, and the former Quds Force commander and Defense
Minister Vahidi. And, as we know, he is wanted by Interpol for
his role in the AMIA Jewish community center bombings in Buenos
Aires.
As a matter of fact, almost half of the entire nuclear
agreement is pages and pages of delisting of individuals, of
companies, and vessels from the U.S. or EU sanctions list.
The second organization that will benefit enormously from
sanctions relief is one of the world's most dangerous and
capable terror organizations, Hezbollah. Trained, equipped, and
funded by the Quds Force, Hezbollah is said to be responsible
for some of the world's most infamous terror attacks, including
the 1983 U.S. Marine barracks bombing in Beirut, the AMIA
Jewish community center which I just referenced, and the 1996
Khobar Towers bombing, just to name a few.
A stronger Hezbollah undermines our interests in Lebanon,
where that fragile country continues to grapple with internal
strife. And its forces are deeply involved and critically
important to Iranian efforts in Syria, helping Iran to prop up
Assad and prolonging the chaos, the destruction, the tragedy
that is spreading further and further outside the borders of
Syria.
Hezbollah's leader recently reaffirmed the terror
organization's ideological partnership with Iran, saying that
the nuclear deal would not stop Iran from providing it material
and financial support. And now that we have lifted Iran's arms
embargo and ballistic missile sanctions, Hezbollah will soon be
able to obtain even more sophisticated weaponry in order to
carry out operations like the one we recently saw with a terror
cell in Kuwait.
Sanctions relief from the Iranian deal will not only free
up resources for Iran to spend more on Assad, it will allow
Hezbollah to extricate itself from Syria, where its forces have
been bogged down, and return to its focus of its top priority
and target: The democratic Jewish State of Israel. The
possibility that Hezbollah will launch attacks against Israel
is increasingly likely thanks to the Iran deal and Iran's
increasing capability to provide assistance and advanced
weaponry.
We must consider the impact of both direct and indirect
sanctions relief from the Iran deal and what these additional
resources will do for the Iranian regime's next steps in the
region, including what it will do for the capabilities of
Iran's proxies, like Hezbollah, and the consequences for our
own interests and the interests of our allies.
I look forward to hearing from our witnesses on exactly who
and which entities stand to gain the most from this disastrous
agreement, what we can expect next from the IRGC and Hezbollah,
and what we here in Congress can do to prevent this from
happening.
So pleased to yield to the ranking member, Mr. Deutch of
Florida.
Mr. Deutch. Thank you, Madam Chairman.
And while this is not the first hearing we have had to look
at Iran's sponsorship of terrorism, it takes on new
significance in the wake of the nuclear agreement, as Iran
stands to gain access to billions of dollars.
After the Iran deal debate, it is important that the
administration and my colleagues continue to be clear about the
nature of this regime. Iran was designated a state sponsor of
terror in January 1984, after it orchestrated the deadly U.S.
Embassy bombing in Beirut which killed 63, the horrific attack
on the Marine barracks that killed 241 U.S. servicemembers, and
the bombings of the U.S. and French Embassies in Kuwait. Both
1983 attacks were carried out by what would become Hezbollah.
Despite the U.S. designation in 1984, in September of that
year Hezbollah carried out another attack on the U.S. Embassy
annex in Beirut, killing 23. It was Hezbollah that hijacked TWA
Flight 847, resulting in the death of a U.S. Navy diver. It was
Hezbollah that bombed the Israeli Embassy in Argentina and the
AMIA Jewish center in the early 1990s.
It was a Hezbollah-linked group that bombed the Khobar
Towers in Saudi Arabia, killing 19 U.S. Air Force personnel in
1996. It was Hezbollah that blew up a tourist bus of Israelis
in Bulgaria in 2012. And it was Hezbollah that attempted to
carry out dozens of foiled terrorist attacks around the world--
all of this done, of course, with financial and material
support from, and at the direction of, the Iranian regime.
Iran has continued to supply Hezbollah with weaponry to
fight alongside Assad's forces in Syria. Weapons transfers from
Iran to Hezbollah have allowed the terrorist organization to
amass an arsenal of nearly 100,000 rockets in Lebanon, with the
ability to reach every corner of Israel. Iran's terror proxies
are directed by the Iranian Revolutionary Guard Corps' elite
Quds Force, led by the infamous general Qasem Soleimani, who
has been spotted on the battlefields of Iraq and, according to
reports, may have just recently again visited Russia, his
partner in Syria. The IRGC is aiding the Houthis in Yemen and
stirring unrest via their allies in countries throughout the
Gulf.
The IRGC is the most powerful economic actor in Iran. In
fact, no one has benefited under sanctions more than the
potentially hundreds of IRGC-owned companies that no longer had
to deal with international competition for construction or
energy projects, and no one will likely benefit more when these
IRGC-owned companies are delisted and sector-based sanctions
removed.
Now, there are certainly disagreements over exactly what
Iran will do with its sanctions relief. No doubt this regime,
which is obsessed with its own survival, will use money to
revitalize Iran's economy. President Hassan Rouhani was elected
on his pledges to bring real economic relief to the people of
Iran, and, by all accounts, he wants to deliver. But it is
logical that some portion of Iran's newfound wealth will flow
to its terror proxies. And regardless of how you feel about the
nuclear deal, no one can dispute that Iran remains the world's
largest state sponsor of terrorism.
Despite crushing U.S. international sanctions, Iran has
sustained its destabilizing activity with relatively limited
resources, but that will soon change. In fact, not only did
Iran receive sanctions relief, but it received repeal of the
arms embargo and ban on the transfer of ballistic missile
technologies in 5 and 8 years respectively. Now we are faced
with the reality of advanced weaponry sales to Iran that will
undoubtedly fall into the hands of Hezbollah, Hamas, Shiite
militias, and other bad actors like Al Shabaab in East Africa.
The IRGC already possesses ballistic missile capabilities
that threaten its neighbors. Now, in 8 years, it will be free
to purchase technologies to advance its program. This committee
held a hearing on Iran's quest for intercontinental ballistic
missiles earlier this summer, where experts testified that the
only logical use for an ICBM is the delivery of a nuclear
warhead.
My colleagues on this committee are split on support for
the JCPOA, but we cannot allow our already-expressed positions
to hinder our efforts to work together to do whatever we can to
block Iran's ability to exploit its anticipated windfall for
dangerous and destructive activities.
We must now come together for a practical discussion on
what more the United States can do to counter Iran's
destabilizing activities in the region and around the world.
This means increasing intelligence cooperation with Gulf
partners, strengthening the capabilities of our friends in the
region, enhancing Israel's qualitative military edge,
redoubling our efforts to interdict weapons shipments, and
continuing to enforce existing and to impose new sanctions
against those who support terrorism or engage in human rights
abuses. If they received nuclear proliferation sanctions relief
under the deal but they support terror or abuse human rights,
then the individuals or entities must continue to be
sanctioned.
I look forward to hearing from our experts today as to what
steps the U.S. and the international community can take to
blunt the impact of Iran's newfound financial resources and the
strengthening of the dangerous regime.
And I yield back.
Ms. Ros-Lehtinen. Thank you very much, Mr. Deutch.
Mr. Cicilline.
Mr. Cicilline. Thank you, Madam Chairman and Ranking Member
Deutch, for calling this hearing today.
It is absolutely critical that, as the Joint Comprehensive
Plan of Action is implemented, Congress and the administration
are relentless and vigilant in monitoring its implementation
and that we work together with Israel and with our allies in
Europe and the Middle East to combat the destabilizing activity
of Iran throughout the region.
In order to strengthen its implementation, Congress should
introduce legislation as necessary, and I look forward to
working with my colleagues on this committee in doing so to
ensure that the necessary steps are taken.
In particular, I have expressed to the President my strong
support for an expedited renewal of the Israeli defense
agreement for a new 10-year period. And, of course, robust
funding must be provided by Congress. Additionally, Congress
must provide additional financial resources to support the
implementation and monitoring process through the IAEA and
increase funding for U.S. intelligence and diplomatic
activities.
The administration must also develop a specific plan with
the P5+1 and Israel to respond to any violations of the Joint
Comprehensive Plan of Action by Iran and to work together to
confront Iran's destabilizing activities in the region. In
addition, we must continue to aggressively pursue appropriate
non-nuclear sanctions against individuals and organizations
responsible for terrorism activity and violations of human
rights.
There is no question that the IRGC and Hezbollah will
continue to take actions to support terrorism throughout the
region, and it is incumbent upon the United States to ensure
that we have a robust action plan to combat these activities in
close cooperation with our allies. I look forward to hearing
the witnesses' suggestions for actions we can take to mitigate
the dangers posed by Hezbollah and the IRGC.
And I thank the witnesses for being here.
And, with that, I yield back.
Ms. Ros-Lehtinen. Thank you very much, Mr. Cicilline.
Ms. Meng of New York.
Ms. Meng. Thank you, Chairwoman Ros-Lehtinen and Ranking
Member Deutch, for your longstanding stellar leadership here. I
know that you have worked closely and very hard on issues of
terrorism, Iran's funding of it, and this recent deal very
closely.
While I appreciate that many of my colleagues have voiced
disapproval of the Joint Comprehensive Plan of Action during
last week's vote, I am troubled with the prospect of it moving
forward. In addition to the direct outcome of the Iran deal
with regards to nuclear capabilities, there are serious
concerns about Iran's access to funds, especially given their
track record of funding universally recognized terrorist
groups.
I am interested in hearing the consequences of this deal as
it relates to these beneficiaries and ways that we can mitigate
any potentially disastrous outcomes.
Thank you. I yield back.
Ms. Ros-Lehtinen. Thank you so much.
And hearing no other requests for time, I am pleased to
present our panel.
First, we are pleased to welcome Dr. Emanuele Ottolenghi,
who is a senior fellow at the Foundation for Defense of
Democracies. Previously, Dr. Emanuele headed the Transatlantic
Institute in Brussels, and he has advised several foreign
ministries in Europe on the subject of Iran.
We welcome you, sir.
Second, we welcome back a good friend of our subcommittee,
Dr. Matthew Levitt, director of the Stein Program on
Counterterrorism and Intelligence for the Washington Institute
for Near East Policy. Previously, Dr. Levitt served as the
Deputy Assistant Secretary of Intelligence and Analysis at the
U.S. Department of the Treasury, a branch chief under the
Director of National Intelligence, and a counterterrorism
advisor to the State Department's Special Envoy to the Middle
East.
Welcome back.
And last but certainly not least, we welcome back Dr.
Suzanne Maloney, who is the interim deputy director of the
foreign policy program for the Brookings Institution. Dr.
Maloney has served as an external advisor to the State
Department on issues related to Iran. She has also served as a
policy planner for the Middle East for the Secretary of State
and the director of the Council on Foreign Relations' task
force on U.S. policy toward Iran.
Welcome to all three. Your written remarks will be made a
part of the record. Please feel free to summarize.
And we will begin with you, Dr. Emanuele.
STATEMENT OF EMANUELE OTTOLENGHI, PH.D., SENIOR FELLOW,
FOUNDATION FOR DEFENSE OF DEMOCRACIES
Mr. Ottolenghi. Thank you, Chairman Ros-Lehtinen, Ranking
Member Deutch, and members of the committee. On behalf of FDD
and its Center on Sanctions and Illicit Finance, I am very
grateful for the opportunity to testify.
Iran's Islamic Revolutionary Guard is the regime's top
exporter of terrorism and a deadly instrument of domestic
repression. My testimony describes how, regrettably, the Guards
will benefit greatly from the Joint Comprehensive Plan of
Action.
The JCPOA dismantles most of the international nuclear
sanctions against Iran, thereby creating a major stimulus
package for its economy. The IRGC and the Supreme Leader's
business empire will be its main beneficiaries. Their economic
ascendance will fortify their domestic influence.
Although the U.S. retains the legal edifice of sanctions
against the IRGC, it is insufficient to exclude the IRGC from
this windfall for four reasons: First, on implementation day,
just months from now, the JCPOA lifts or suspends sanctions
against entire sectors of the Iranian economy. The IRGC is
active in each sector. IRGC companies will get the lion's share
of business opportunities.
Second, the lifting of sectoral bans will provide the IRGC
easier access to dual-use technology in the aerospace, defense,
and nuclear sectors.
Third, on implementation day, the JCPOA will delist
companies that assisted the IRGC's nuclear and missile
procurement efforts, as well as its support for Hamas and
Hezbollah and for the Assad regime in Syria. A change of
behavior was not a condition for their delisting.
Fourth, most IRGC companies were never identified as such
by EU or U.S. authorities. Treasury has listed only 19 IRGC
individuals, 23 companies, 4r military entities, and 2 academic
institutions. The EU has listed just 25 companies. My written
testimony names hundreds of companies owned or controlled by
the IRGC that should have been designated.
Absent the change in approach by Congress or the
administration, the post-sanctions economic climate will likely
benefit the IRGC because, in practice, the global business
community looks to the U.S. Treasury for a way to assess risk.
Companies seeking to reenter Iran will assume that what is not
explicitly forbidden is allowed.
Let me offer you the example of Iran Aluminum Company, or
IRALCO, Iran's largest aluminum producer. The EU sanctioned it
in 2012 because it had assisted Iran's nuclear procurement,
including a contract to supply aluminum to Iran's Centrifuge
Technology Company. The U.S. never designated IRALCO, even
though it is partially owned by an IRGC investment company that
is under U.S. sanctions. And because IRALCO was only sanctioned
for nuclear-related activities, the EU will delist it on
implementation day.
Madam Chairman, I therefore strongly recommend that, first,
there be an increase in U.S. designations against the IRGC
because of the IRGC's unequivocal role in terrorism and other
nefarious activities. If Congress and Treasury were to
designate hundreds of IRGC companies before implementation day,
this would send a very strong message to the business community
contemplating Iranian contracts.
Second, to help this process along, Congress should require
Treasury to lower the threshold for designations. As I explain
in greater detail in my written testimony, the IRGC has engaged
in a pattern of obfuscation to hide its control of many
corporations. Even with a minority share, the IRGC often
controls these companies through the board of directors.
Congress can also mandate that Treasury maintain and publish an
IRGC watchlist to identify and report on companies that do not
yet reach the designation threshold.
Third, Congress should also require the State Department to
designate the IRGC as a foreign terrorist organization.
Designating the IRGC as an FTO will provide another warning to
foreign companies considering business in Iran. Listing the
IRGC as an FTO will also emphasize that the IRGC cannot be
decoupled from the Quds Force; they are one and the same.
Fourth, Congress can leverage future trade agreements with
Europe to limit the IRGC's operations there. Congress should
require the Transatlantic Trade and Investment Partnership
between the U.S. and the EU to stipulate that any European
company contracting with Iran must certify that none of the
business partners are associated in part or in whole with the
IRGC, requiring also that the EU report annually on European
companies investing in Iran, placing local merchant
transactions under public scrutiny. At a minimum, Congress
should encourage international corporations to demand an
exclusion clause to halt commercial activities with all
suspected or designated IRGC entities.
These are just a few highlights from my written testimony.
I thank you for the opportunity to testify, and I very much
look forward to your questions.
[The prepared statement of Mr. Ottolenghi follows:]
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Note: Appendices to the above prepared statement may be found on the
Internet at http://docs.house.gov/Committee/Calendar/
ByEvent.aspx?EventID=103958
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Ms. Ros-Lehtinen. Thank you very much for those
recommendations, Doctor.
Dr. Levitt?
STATEMENT OF MATTHEW LEVITT, PH.D., FROMER-WEXLER FELLOW,
DIRECTOR, STEIN PROGRAM ON COUNTERTERRORISM AND INTELLIGENCE,
WASHINGTON INSTITUTE FOR NEAR EAST POLICY
Mr. Levitt. Chairman Ros-Lehtinen, Ranking Member Deutch,
members of the committee, thank you for the opportunity to
appear before you today to discuss the recent activities of two
of the major beneficiaries of the Iran deal: The IRGC and
Lebanese Hezbollah.
Allow me to focus on Hezbollah.
Iran is Hezbollah's primary benefactor, giving the Lebanese
party and militant group some $200 million a year, in addition
to weapons training, intelligence, and logistical assistance.
But over the past 18-plus months, Iran had cut back its
financial support to Hezbollah, a collateral benefit of the
unprecedented international sanctions regime targeting Iran's
nuclear program as well as the fall in oil prices.
The cutback mostly curtailed Hezbollah's political, social,
and military activities inside Lebanon. Its social service
institutions cut costs. Employees received paychecks late or
were laid off. Funding for organizations like its satellite
television station Al Manar were reduced.
By contrast, Hezbollah's Syrian operations, which have been
a priority for Tehran given its commitment to defending the
regime of Bashar al-Assad, have shown no sign of financial
hardship. In fact, Hezbollah is busier than ever, especially in
Syria, where it is engaged in expensive militant operations and
support activities.
Meanwhile, the group has expanded its regional activities
further afield, straining its coffers, even as it had to cut
back on its activities in Lebanon. With renewed funding from
Iran, even a little bit of funding, Hezbollah would be more
aggressive at home and abroad, challenging less militant
parties across the Lebanese political spectrum and boosting its
destabilizing activities outside of Lebanon.
The war in Syria has dramatically changed Hezbollah. The
group is now a regional player engaged in conflicts far beyond
its historic area of operations. The strongest indicators of
Hezbollah's transformation are structural. Since 2013, it has
added two new commands, one along the Lebanese-Syrian border
and one in Syria itself, to its existing bases in Southern and
Eastern Lebanon.
This points to a serious commitment to conflicts well
beyond Lebanon's border. Today, there are between 6,000 and
8,000 Hezbollah operatives in Syria. Meanwhile, Hezbollah has
transferred key personnel from its traditionally paramount
southern command to Syria and even to Iraq and to Yemen.
Hezbollah's transformation into a regional actor is acutely
felt by the group's operatives themselves. ``We should not be
called Party of God,'' one Hezbollah commander told the
Financial Times. ``We are not a party now. We are
international. We are in Syria, we are in Palestine, we are in
Iraq, and we are in Yemen. We are wherever the oppressed need
us. Hezbollah is the school where every freedom-seeking man
wants to learn.''
Meanwhile, Hezbollah remains committed to conducting
terrorist activities around the world. And just about a year
ago last September, the National Counterterrorism Center warned
they remain concerned the group's activities could either
endanger or target U.S. and other Western interests, not just
Israel.
In April 2014, there was a Hezbollah operative arrested in
Thailand; in November 2014, another in Peru, and this man had
married an American citizen. Most recently, there was a new
plot thwarted in Cyprus, where an individual who was a dual
Lebanese-Canadian citizen had stockpiled 8.2 tons of ammonium
nitrate. And, according to Israeli investigators, Hezbollah was
using Cyprus as a point of export from which to funnel
explosives for a series of attacks not just in Cyprus but
elsewhere in Europe.
It is against this backdrop that sanctions relief will take
place. And whatever amount of money Iran receives, it will
presumably spend the bulk of these moneys on pressing domestic
needs, but it will undoubtedly also direct substantial funding
to foreign adventures. And that is something that none of us
can tolerate. Even a small percentage of the lower-end
estimates of Iran's sanctions relief would provide a windfall
to its proxies.
In all likelihood, Iranian support for such behaviors will
only increase in the wake of a deal. Iranian leaders who backed
the deal will likely feel the need to prove their anti-American
and pro-revolutionary bona fides, especially since the deal is
widely seen in Iran as a victory for Rouhani and his allies
over the IRGC and hardliners.
It is important to note, also, that we are losing at least
one critical tool to combat Hezbollah's financing. In March
2014, then-Treasury Under Secretary David Cohen touted the
collateral counterterrorism benefit of counterproliferation
sanctions targeting Iran's banking and oil sections. He said,
and I quote:
``In fact, the success of our unprecedented Iran
sanctions regime, including sanctions on Iranian
financial institutions and Iran's ability to sell its
oil, has had the collateral benefit of squeezing
Tehran's ability to fund terrorist groups such as
Hezbollah.''
That will no longer be the case even as Iran remains, in the
words of the Financial Action Task Force, an ongoing and
substantial money-laundering and terror-financing risk.
A few weeks ago, a Saudi Hezbollah operative, Ahmed al-
Mughassil, was detained in Lebanon. He was the mastermind of
the 1996 Khobar Towers bombing. Hopefully, this is going to
lead to a whole lot more intelligence-sharing between us and
our Gulf allies. It should reveal a tremendous amount of
information about Hezbollah, Lebanese Hezbollah, Saudi
Hezbollah's connections to the IRGC.
One area of inquiry and action that could yield
particularly positive results would be to target in fairly
quick suggestion a variety of Hezbollah front companies and
logistics nodes around the world. The theme of my written
testimony is that Hezbollah relies heavily on such fronts to
carry out its operations from Europe to Iraq, from China to
Dubai.
But that can't be all we do. As Emanuele said, we need to
also designate IRGC and Quds Force elements, as well, or the
Iranians will feel that all we are doing is targeting their
other proxies.
There are many areas of the Iran deal that warrant close
attention as the deal moves toward implementation. Contending
with what Secretary of the Treasury Jack Lew referred to as
``Iran's menacing behavior,'' in particular through the Quds
Force and Hezbollah, must be at the top of the list. Failure to
do so would not only undermine the logic of the Iran deal as
articulated by the administration, it would add to the very
real trust deficit currently affecting our relationships with
allies both in the region and around the globe.
Thank you very much.
[The prepared statement of Mr. Levitt follows:]
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Ms. Ros-Lehtinen. Thank you, Dr. Levitt.
Dr. Maloney?
STATEMENT OF SUZANNE MALONEY, PH.D., INTERIM DEPUTY DIRECTOR,
CENTER FOR MIDDLE EAST POLICY, THE BROOKINGS INSTITUTION
Ms. Maloney. Chair Ros-Lehtinen, Ranking Member Deutch,
members of the committee, thank you so much for the opportunity
to appear before the committee today on this very important
issue.
The wide-ranging sanctions relief incorporated in the Iran
nuclear deal has elicited what I believe to be a widely shared
sense of affront at the appearance of rewarding Tehran after
decades of bad behavior. And this is magnified by the irony
that Washington is being forced to effectively cede the most
effective instrument in its policy toolbox, the sanctions
regime, at the very moment when its efficacy has finally been
confirmed, even as some of the most strategically relevant
aspects of the Iranian challenge remain unabated. That
unescapable reality underscores the importance of identifying
and implementing new mechanisms for addressing Iran's
problematic regional policies.
Let me emphasize just two aspects of my written testimony.
The first is the question of what Tehran will do with the money
that it receives from the sanctions relief and the new trade
and investment that is facilitated by the post-deal context.
The public discussion of the deal and its provisions have
tended to emphasize the availability of new resources for
Tehran's support of terrorist groups and other violent proxies,
as well as its assiduous efforts to extend its influence across
the region. However, it should be acknowledged that the most
pressing needs facing Tehran today are not those related to its
regional posture but to its domestic economy.
The sanctions regime that was so effective in succeeding in
shifting Iran's approach and changing its longstanding nuclear
recalcitrance did not come as a result of restrictions that
impeded its ability to sustain its regional policies but,
rather, because of the more immediate and potentially
unsettling implications for the stability and the survival of
the regime at home. The sanctions were felt far more
immediately and more profoundly by the average Iranian than by
the average beneficiary of Tehran's terror subsidies.
And it was these concerns about the erosion of Iran's
economic base and the legitimacy of the system that generated
the decision to negotiate in full seriousness and the elevation
of Hassan Rouhani. For this reason, it is important to
appreciate that the domestic requirements and priorities will
loom large in the allocation of deal-related windfalls that
will accrue to Tehran over the course of the next year. Rouhani
is keenly concerned with Iran's dire economic predicament.
Rehabilitation is ranked at the top of his agenda, in parallel
with the nuclear file.
This isn't simply a matter of policy preferences for
Rouhani and his team. Iran has real politics, and its
population is impatient to reap the peace dividend that it was
promised more than 2 years ago when they elected Rouhani to the
Presidency with the expectation of an end to the nuclear
impasse.
Let me also speak to the question of how sanctions relief
will impact Iran's regional policies. Unfortunately, the long-
term track record is clear: Iran's support for terrorism has
never been driven primarily or even substantially by resource
availability. In fact, Iran's most destructive regional
policies have been undertaken and sustained at times of epic
sanctions and economic constraints.
These policies were initiated during the early post-
revolutionary period, just at the moment that Iran's economy
reached its lowest point as a result of revolutionary chaos and
upheaval and the eventual Iraqi invasion of Iran and throughout
the long, brutal, and costly war that followed. In fact, many
of Iran's worst regional abuses took place during this first
decade, mentioned during the chair and the ranking member's
statements: The cultivation of Hezbollah, the 1983 and 1984
bombings, and the direct and deadly assistance to subversive
groups around the region.
The same trends have held course over the past decade as
externally imposed economic pressures as well as the fall in
oil prices have reached or even surpassed the heights of the
hardships during the war. Sanctions have provided no remedy to
Iran's efforts to extend its influence through nefarious
activities and allies and its substantial investment in fueling
and fighting conflicts in Iraq and Syria.
Even since 2010, as the world has targeted Iran's regional
power projection and its support for terrorist proxies, there
is little evidence that sanctions have impeded Iran's most
destabilizing policies.
So the question that concerns the committee today is, what
can we do? My colleagues have, I think, provided a number of
important and constructive recommendations. Sanctions relief
will undoubtedly exacerbate the challenges that we face, but
the nuclear deal takes one of the most pressing aspects of the
problem off the table at least for the next decade.
This provides us an opportunity to construct a bipartisan
approach here at home and to, for the first time in the history
of the Islamic Republic, really create a multilateral, durable
alliance that addresses the regional challenge that Iran poses.
Thank you.
[The prepared statement of Ms. Maloney follows:]
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Ms. Ros-Lehtinen. Thank you very much.
And we have just been called to the House floor for a
series of votes, but we will not be able to come back. I will
turn in my questions to you. If I can give you a homework
assignment, to answer these for me, I would appreciate it.
And let me turn to Mr. Cicilline in the remaining time for
the questions. He is recognized.
Mr. Cicilline. Thank you, Madam Chair.
And thank you again to our witnesses.
I am interested, Dr. Maloney, you said that Iran's support
for terrorism has never been determined by availability of
resources, which suggests that the advent of additional
resources--I guess, explain, sort of, what you mean by that
before I----
Ms. Maloney. I think simply if you look at the long-term
track record of the Iranian regime has done around the region,
it has not been dictated by either the availability of or the
lack of availability of funds. And, in fact, we have seen the
intensification of its worst policies, whether it is in
Lebanon, Iraq, or in Syria, at times of greatest economic
pressure. The regime always finds ways to fund the guns; it is
the butter at home that suffers.
Mr. Cicilline. And certainly the argument has been made
that there will be some pressure on Rouhani and the regime to
respond to some of the very pressing domestic issues that face
the Iranian people. But I would ask each of the witnesses, what
are the things--you know, presuming some portion of the
sanctions relief will be directed to activities that Iran is
currently engaged in in the region, destabilizing activities,
and presumably some increase in that, what are the best things
that we can do, that Congress can do, to help mitigate the
impact of those activities, reduce the likelihood that they
will happen, or impose significant costs on Iran for engaging
in that activity? What would you recommend as the one or two
things, actions we can take as a Congress to respond to that?
I guess start from left to right.
Mr. Ottolenghi. Thank you, sir.
I would suggest three things.
The first is that you retain, both Congress retains and the
administration retains, legal instruments to go after entities
involved in aiding and supporting terrorism. And these
instruments also allow you to prod and press allies who in this
current climate may be less inclined to take action.
One clear example is the case of the Iranian private
airline Mahan Air. Mahan Air has been an accessory to Assad's
war crimes by transporting weapons and personnel, including
foreign militias, back and forth from Iran to Syria. It
continues to do so, as far as my record tells me. The latest
flight happened 2 days ago. So they are not deterred.
Now, the problem with Mahan Air is that is only under U.S.
sanctions. Europeans have never sanctioned Mahan Air, and, in
the current climate, Mahan Air is actually expanding its
destinations in Europe. So----
Mr. Cicilline. I want to give the other witnesses--but you
said you had three things. If you could just tick them off.
Mr. Ottolenghi. Yes.
The second thing is that a lot of the funds that will go to
economic projects in Iran will actually be allocated through
public contracts and vendors to IRGC companies. So this will be
an indirect way to help IRGC companies get funds.
And the third thing is that a lot of the IRGC personnel has
never been sanctioned, will not be affected by travel bans, so
will be a lot more free to travel around the world in
procurement efforts. Again, going after these individuals more
vigorously will help contain their activities.
Mr. Cicilline. Thank you.
Dr. Levitt?
Mr. Levitt. Thank you.
In brief, I would just say I completely agree with Dr.
Maloney that Iran has funneled money, whether it had it or not,
to these types of activities. But it is true that when they
have had more money they have funneled more. As I noted, they
have cut back on Hezbollah's budget, and we expect that to pop
up again.
The general theme here is that there has to be a cost. We
have never incurred serious costs, political costs, for actual
acts of terrorism--not after the Marine barracks, not after the
Embassy, not after Khobar. It would be very interesting to see
what happens after we get more information out of Mughassil to
see what happens then.
There is a tremendous amount of work to be done, as Emanuel
suggested, with the Europeans--formally, in terms of helping
them understand the structure, how serious we are about this,
and then informally.
And Treasury Department swears up and down, and I believe
them, that they intend to go on new dog-and-pony shows of the
kind that I went out on when I was the DAS for intel to educate
people about the risks of doing business with Iran. We can no
longer tell people, ``Don't do business with Iran,'' but we
sure can highlight the risks. And the risks are massive,
because the IRGC is more embedded in the Iranian economy now
than it ever was before. And this would be very effective.
Mr. Cicilline. Dr. Maloney, I think I have a few seconds
left.
Ms. Maloney. Very quickly, the focus, as Matt has just
said, on building a real coalition with Europe, I think, is the
kind of kryptonite that we need to go after Iran on these
issues. We have spent 36 years trying to find a way to impede
Iran's support for terrorism. What worked on the nuclear issue
was that kind of international multilateral coalition.
Mr. Cicilline. Thank you.
I thank the chairman.
Ms. Ros-Lehtinen. Thank you so much.
And I will just make a last statement before we go vote.
The administration has attempted to assuage concerns that Iran
will not use its sanctions relief to support terror, that the
money is already tied up in other ventures. But, as we have
heard, the IRGC is one of the major actors of the Iranian
economy, with a presence in nearly every sector.
Administration officials also tell us that U.S. sanctions
against IRGC and its officials will not be lifted. However, it
is clear that we have only scratched the surface when it comes
to sanctioning IRGC companies. As you pointed out, all of the
subsidiaries--and their subsidiaries are not under sanctions
like their parent companies. And so how effective can our
remaining sanctions be if these subsidiaries remain free from
sanctions?
So we will leave that intriguing topic for the next
hearing. Thank you so much, ladies and gentlemen.
And, with that, our subcommittee is adjourned.
[Whereupon, at 2:45 p.m., the subcommittee was adjourned.]
A P P E N D I X
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