[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]







                     THE IRAN NUCLEAR DEAL AND ITS
                     IMPACT ON TERRORISM FINANCING

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

                                HEARING

                               BEFORE THE

                       TASK FORCE TO INVESTIGATE

                          TERRORISM FINANCING

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               ----------                              

                             JULY 22, 2015

                               ----------                              

       Printed for the use of the Committee on Financial Services

                           Serial No. 114-44


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]







                     THE IRAN NUCLEAR DEAL AND ITS
                     IMPACT ON TERRORISM FINANCING

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

                                HEARING

                               BEFORE THE

                       TASK FORCE TO INVESTIGATE

                          TERRORISM FINANCING

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 22, 2015

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 114-44


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                                  ______

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                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                    JEB HENSARLING, Texas, Chairman

PATRICK T. McHENRY, North Carolina,  MAXINE WATERS, California, Ranking 
    Vice Chairman                        Member
PETER T. KING, New York              CAROLYN B. MALONEY, New York
EDWARD R. ROYCE, California          NYDIA M. VELAZQUEZ, New York
FRANK D. LUCAS, Oklahoma             BRAD SHERMAN, California
SCOTT GARRETT, New Jersey            GREGORY W. MEEKS, New York
RANDY NEUGEBAUER, Texas              MICHAEL E. CAPUANO, Massachusetts
STEVAN PEARCE, New Mexico            RUBEN HINOJOSA, Texas
BILL POSEY, Florida                  WM. LACY CLAY, Missouri
MICHAEL G. FITZPATRICK,              STEPHEN F. LYNCH, Massachusetts
    Pennsylvania                     DAVID SCOTT, Georgia
LYNN A. WESTMORELAND, Georgia        AL GREEN, Texas
BLAINE LUETKEMEYER, Missouri         EMANUEL CLEAVER, Missouri
BILL HUIZENGA, Michigan              GWEN MOORE, Wisconsin
SEAN P. DUFFY, Wisconsin             KEITH ELLISON, Minnesota
ROBERT HURT, Virginia                ED PERLMUTTER, Colorado
STEVE STIVERS, Ohio                  JAMES A. HIMES, Connecticut
STEPHEN LEE FINCHER, Tennessee       JOHN C. CARNEY, Jr., Delaware
MARLIN A. STUTZMAN, Indiana          TERRI A. SEWELL, Alabama
MICK MULVANEY, South Carolina        BILL FOSTER, Illinois
RANDY HULTGREN, Illinois             DANIEL T. KILDEE, Michigan
DENNIS A. ROSS, Florida              PATRICK MURPHY, Florida
ROBERT PITTENGER, North Carolina     JOHN K. DELANEY, Maryland
ANN WAGNER, Missouri                 KYRSTEN SINEMA, Arizona
ANDY BARR, Kentucky                  JOYCE BEATTY, Ohio
KEITH J. ROTHFUS, Pennsylvania       DENNY HECK, Washington
LUKE MESSER, Indiana                 JUAN VARGAS, California
DAVID SCHWEIKERT, Arizona
FRANK GUINTA, New Hampshire
SCOTT TIPTON, Colorado
ROGER WILLIAMS, Texas
BRUCE POLIQUIN, Maine
MIA LOVE, Utah
FRENCH HILL, Arkansas
TOM EMMER, Minnesota

                     Shannon McGahn, Staff Director
                    James H. Clinger, Chief Counsel
             Task Force to Investigate Terrorism Financing

             MICHAEL G. FITZPATRICK, Pennsylvania, Chairman

ROBERT PITTENGER, North Carolina,    STEPHEN F. LYNCH, Massachusetts, 
    Vice Chairman                        Ranking Member
PETER T. KING, New York              BRAD SHERMAN, California
STEVE STIVERS, Ohio                  GREGORY W. MEEKS, New York
DENNIS A. ROSS, Florida              AL GREEN, Texas
ANN WAGNER, Missouri                 KEITH ELLISON, Minnesota
ANDY BARR, Kentucky                  JAMES A. HIMES, Connecticut
KEITH J. ROTHFUS, Pennsylvania       BILL FOSTER, Illinois
DAVID SCHWEIKERT, Arizona            DANIEL T. KILDEE, Michigan
ROGER WILLIAMS, Texas                KYRSTEN SINEMA, Arizona
BRUCE POLIQUIN, Maine
FRENCH HILL, Arkansas




































                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    July 22, 2015................................................     1
Appendix:
    July 22, 2015................................................    47

                               WITNESSES
                        Wednesday, July 22, 2015

Berman, Ilan I., Vice President, American Foreign Policy Council.     6
Dubowitz, Mark, Executive Director, Center on Sanctions and 
  Illicit Finance, Foundation for Defense of Democracies.........     8
Heinonen, Olli, Senior Fellow, Belfer Center for Science and 
  International Affairs, Harvard Kennedy School of Government....    11
Nephew, Richard, Program Director, Economic Statecraft, Sanctions 
  and Energy Markets, Center on Global Energy Policy, Columbia 
  University.....................................................    13
Perles, Steven R., Senior Attorney and Founder, Perles Law Firm, 
  P.C............................................................    10

                                APPENDIX

Prepared statements:
    Berman, Ilan I...............................................    48
    Dubowitz, Mark...............................................    58
    Heinonen, Olli...............................................   266
    Nephew, Richard..............................................   274
    Perles, Steven R.............................................   284

              Additional Material Submitted for the Record

Pittenger, Hon. Robert:
    Congressional Research Service Memorandum, ``Terrorism 
      Judgments Against Iran,'' dated July 20, 2015..............   299
Schweikert, Hon. David:
    ``SWIFT General Terms and Conditions,'' dated July 3, 2015...   303
 
                     THE IRAN NUCLEAR DEAL AND ITS
                     IMPACT ON TERRORISM FINANCING

                              ----------                              


                        Wednesday, July 22, 2015

             U.S. House of Representatives,
                          Task Force to Investigate
                               Terrorism Financing,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The task force met, pursuant to notice, at 4:22 p.m., in 
room HVC-210, the Capitol Visitor Center, Hon. Michael 
Fitzpatrick [chairman of the task force] presiding.
    Members present: Representatives Fitzpatrick, Pittenger, 
Ross, Wagner, Barr, Rothfus, Schweikert, Williams, Hill; Lynch, 
Sherman, Green, Himes, Foster, and Sinema.
    Ex officio present: Representative Hensarling.
    Also present: Representative Royce.
    Chairman Fitzpatrick. The Task Force to Investigate 
Terrorism Financing will come to order. The title of today's 
task force hearing is, ``The Iran Nuclear Deal and Its Impact 
on Terrorism Financing.''
    Without objection, the Chair is authorized to declare a 
recess of the task force at any time.
    Also, without objection, members of the full Financial 
Services Committee who are not members of the task force may 
participate in today's hearing for the purposes of making an 
opening statement and questioning the witnesses.
    The Chair now recognizes himself for 3 minutes for an 
opening statement.
    Over the first several hearings of this task force, members 
have heard foreign policy experts and others testify regarding 
the pervasiveness of Iran's involvement in the financing and 
exporting of terror throughout the Middle East and around the 
globe. We know that Iran is the leading state sponsor of 
terror, and as such, any diplomatic engagements with Iran or 
understanding or agreements with them would be incomplete 
without a clear and full understanding of these facts and its 
impact on the face of global terror financing.
    Today's hearing will explore the recently announced nuclear 
agreement negotiated by the Obama Administration and the P5+1 
nations with Iran, specifically its impact on terrorism 
financing through and by Iran. Most concerning to many members 
of this bipartisan task force is the easing of congressional 
sanctions and with it the danger that a new influx of cash will 
find its way to terrorist organizations threatening to strike 
the United States of America. It appears this agreement fails 
to address the realities surrounding Iran's sponsorship of 
terror while furthering empowering its mullahs by infusing 
billions of dollars into the economy through the lifting of 
sanctions that successfully brought Iran to the negotiating 
table in the first place.
    The Iranian regime has demonstrated a lack of concern about 
its own people. Leaving in doubt the estimated $150 billion in 
funds currently held abroad will allow the Iranian economy to 
fully recover, not to the benefit of the oppressed citizens but 
to the advantage of the next generation of terrorist 
syndicates. A nation so deeply committed to promoting terror 
has lost its right to good-faith agreements. That is why over 
the next 2 months, Members of both the House and the Senate 
will review the fine points of this agreement before voting on 
it, the product of the bipartisan passage of H.R. 1191.
    It is my hope that this hearing, both the questions asked 
by the members and the testimony of our witnesses, provides 
vital information for Congress and the American people when 
looking over this nuclear deal.
    This agreement will determine the future of our Nation's 
foreign policy and the global balance of power. It is far more 
significant than a Presidential legacy or the political goals 
of any party, and cannot take place with an eye on the next 
election or an ideological allegiance. Republicans, Democrats, 
and Independents alike hold the power to turn back a bad deal, 
and I am confident that this task force, rooted in 
bipartisanship, will play an important role in the 
decisionmaking process.
    At this time, I would like to recognize the task force's 
ranking member, my colleague from Massachusetts, Mr. Lynch, for 
an opening statement.
    Mr. Lynch. Thank you, Mr. Chairman.
    I also want to thank our esteemed panel here for your 
willingness to help the task force with its work.
    Last week Iran and the P5+1, which I hate using acronyms, 
but it includes the United States, the U.K., France, Russia, 
China, and Germany, finalized a Joint Comprehensive Plan of 
Action that attempts to ensure that Iran's nuclear program can 
be used exclusively for peaceful purposes and in exchange for a 
broad suspension of many U.S., European, and United Nations 
sanctions.
    I am pleased that today's hearing will present our task 
force with the opportunity to hear from experts with varying 
perspectives on that deal.
    While there is no such thing as a perfect negotiation that 
leads to a perfect deal, I think that with proper 
implementation and compliance, there is a great deal of good in 
this deal. I cite section 3 of the deal, which I find 
particularly comforting, and it says that: ``Iran reaffirms 
that under no circumstance will Iran ever seek, develop, or 
acquire any nuclear weapons.''
    Of course in the next section, the agreement guarantees 
that Iran will have the ability to develop a peaceful energy-
related nuclear industry in exchange for some sanctions relief, 
primarily related to oil and banking, and as well of obtaining 
nuclear weapons release for at least a decade, sanctions 
related to terrorism and human rights abuses will remain in 
place.
    I am cautious but hopeful that we can make this deal work. 
I believe there are still some questions that need to be 
answered. Particularly concerning to our task force is how to 
ensure that the approximately $100 billion in frozen assets do 
not flow to terrorist organizations.
    The State Department has designated Iran as a state sponsor 
of terrorism since 1984 and notes that Iran continues to 
support Hezbollah and the Assad regime in Syria, as well as 
Hamas, Islamic jihad, and others.
    On the other hand, the multi-layered sanctions imposed by 
the United States and its allies have weighed heavily on the 
Iranian people. Treasury Secretary Jack Lew recently stated 
that Iran's GDP shrank by 9 percent in the 2 years ending in 
March 2014 and is now 15 to 20 percent smaller than it would 
have been without the sanctions. Iran's oil, coal, auto, 
aircraft, financial, and textile industries are reeling from 
U.S.-led sanctions, and due to the embargo on aircraft 
components, visitors have regularly expressed dread at the 
prospect of flying within Iran because of the woeful condition 
of their domestic airlines.
    Iran's policies have brought isolation and few allies. Many 
experts view the election of President Hassan Rouhani, the 
relative moderate candidate in that last election, as an 
expression of Iran's desire to move in a new direction. 
Sanctions relief could provide an opportunity for Iran to 
rebuild its economy and invest in infrastructure and embracing 
that moderate future.
    While the opportunity is here, the trust necessary to move 
forward is not. Fortunately, I believe this agreement does not 
require us to place our trust in Iran. Under the deal's terms 
and its roadmap for clarification on nuclear issues in Iran, 
this entire agreement hinges on the adoption and implementation 
of a rigorous International Atomic Energy Agency inspection, 
monitoring, and guidance procedure. Indeed, the agreement 
relies more on the IAEA inspectors. And it is good to see Olli 
Heinonen here, someone who knows a little bit more about that 
than any other party because in the absence of trust, we will 
need the IAEA's assurance that Iran will remain in compliance.
    While we should move forward with care and every precaution 
for ourselves and for our allies, I believe we should move 
forward.
    Mr. Chairman, I yield back the balance of my time.
    Chairman Fitzpatrick. I now recognize the vice chairman of 
the task force, Mr. Pittenger, for 1 minute for an opening 
statement.
    Mr. Pittenger. Thank you, Mr. Chairman. Thank you for 
calling this hearing.
    This agreement, without question, has the most grave 
outcomes of any agreement negotiated by this government. Our 
allies in the Middle East, those whom I have met with on 
countless times, from Prime Minister Netanyahu and other 
leaders of the Arab world, are gravely concerned about the 
outcome. They know their neighbor, they know and have watched. 
Iran over the last 35 years is the greatest exponent of 
terrorism.
    Of course, each of us has concerns over the inspections, 
but clearly this body today is going to address the terrorism 
financing capacities that they will have with $100 billion. No 
less than National Security Advisor Susan Rice, and General 
Dunford, who is President Obama's nominee to be chairman of the 
Joint Chiefs, have expressed those same concerns, that this 
funding will be used for the purposes of building a military 
and terrorism financing.
    So I look forward to our discussions today. And thank you, 
Mr. Chairman, for calling this hearing.
    Chairman Fitzpatrick. I now recognize the gentlelady from 
Arizona, Ms. Sinema, for an opening statement of 2 minutes.
    Ms. Sinema. Thank you, Chairman Fitzpatrick and Ranking 
Member Lynch, for holding this very important and timely 
hearing.
    A nuclear Iran is one of the greatest threats to security 
in the United States and to peace and stability in the Middle 
East. To support this deal, the agreement must end Iran's 
nuclear weapons programs and strengthen the safety and security 
of both the United States and our allies in the Middle East.
    This deal, if Iran does not cheat, prevents Iran from 
obtaining a nuclear weapon for 10 to 15 years. However, I have 
several concerns about the deal's structure, planned execution, 
and broader implications.
    Several questions: Number one, is the United States 
confident in success of the verification regime established by 
this agreement? Number two, what is the exact timing of 
sanctions released by the United States and the EU? And once 
these sanctions are removed and foreign investment floods into 
Iran, can we be confident that sanctions will snap back into 
place if or when Iran cheats? Number three, what are the 
broader consequences of this agreement for our security and 
regional stability? And how will an influx of billions of 
dollars affect the geopolitical balance in the Middle East?
    Iran is the number one state sponsor of terrorism, and the 
current regime is a destabilizing force in the region. Taking 
our most effective sanctions tools from banking and energy 
sector sanctions off the table could limit our ability to 
counter Iranian aggression, stabilize the region, support our 
allies, and avoid military contact.
    Fundamentally, I seek to understand whether this deal 
prevents a nuclear Iran for 15 years with long-term positive 
change in the region or whether it could allow Iran to further 
destabilize the region using financial resources and new non-
nuclear weapons while becoming an empowered nuclear threshold 
state.
    Over the next several weeks, Mr. Chairman, I know we will 
all thoughtfully and thoroughly review the details of the 
agreement, including the comments coming from Iran. And I want 
to thank the chairman and the ranking member for holding 
today's hearing, and thank our witnesses for coming to share 
their expertise with us today. Thank you.
    Chairman Fitzpatrick. The gentlelady from Missouri, Mrs. 
Wagner, is recognized for 1 minute.
    Mrs. Wagner. Thank you, Mr. Chairman, and thank you, Mr. 
Ranking Member, for calling this timely hearing today. We have 
just left our classified briefing, so it couldn't be more 
timely. And I thank you, Mr. Chairman, for sounding the alarm 
about the mistake, I believe of historic proportions, agreed to 
by the Obama Administration last week in Vienna.
    The President has agreed to far-reaching concessions in 
nearly every area that was supposed to prevent Iran from 
acquiring a nuclear weapon. Under this deal, Iran would receive 
$100 billion to $150 billion in sanctions relief and regain 
access to conventional arms and ballistic missiles that has 
been denied for nearly a decade. Iran will be free to transfer 
these weapons, as has been stated, to Hezbollah, the Syrian 
Government, Yemeni rebels, and other terrorist groups. These 
organizations threaten the security of the United States, our 
ally Israel, and the world, and will further destabilize a 
region already in crisis.
    As Prime Minister Netanyahu said when visiting Congress 
earlier this year, ``No deal is better than a bad deal.'' And 
by any measure, this is a bad deal, Mr. Chairman. Congress 
should show the world that America will not accept a nuclear 
Iran.
    I yield back, and thank you.
    Chairman Fitzpatrick. The gentlelady yields back.
    We now welcome our witnesses. Ilan Berman is vice president 
of the American Foreign Policy Council. Mr. Berman has 
consulted with the Central Intelligence Agency and the 
Department of Defense and provided assistance on foreign policy 
and national security issues to a range of governmental 
agencies and congressional offices. He is a member of the 
associated faculty of Missouri State University's Department of 
Defense and Strategic Studies. He also serves as a columnist 
for Forbes.com, and The Washington Times, and is editor of the 
Journal of International Affairs.
    Mark Dubowitz is executive director of the Foundation for 
Defense of Democracies and director of its Center on Sanctions 
and Illicit Finance. He is an expert on sanctions and has 
testified before Congress and advised the Administration, 
Congress, and numerous foreign governments on Iran and 
sanctions issues. He holds a master's degree in international 
public policy from Johns Hopkins University's School of 
Advanced International Studies and Law, and an MBA degree from 
the University of Toronto.
    Steven Perles is senior attorney and founder of the Perles 
Law Firm. Mr. Perles has handled a number of cases before the 
United States Supreme Court, United States courts of appeals, 
and district courts across the country. His litigation 
practices included cases in the fields of Foreign Sovereign 
Immunities Act litigation. He has lectured on the evolution of 
antiterrorism civil litigation at conferences for national 
crime victims' groups. He holds a law degree from the William & 
Mary Law School.
    Dr. Olli Heinonen is a senior fellow at the Belfer Center 
for Science and International Affairs at the Harvard Kennedy 
School of Government. Before joining the Belfer Center in 
September of 2010, Dr. Heinonen served 27 years at the 
International Atomic Agency in Vienna. Dr. Heinonen served as 
the deputy director general for the IAEA and head of its 
Department of Safeguards. Prior to that, he was director at the 
agency's various operational divisions and was an inspector at 
the IAEA's office in Tokyo, Japan. He studied radio chemistry 
and completed his Ph.D. dissertation in nuclear material 
analysis at the University of Helsinki.
    Dr. Richard Nephew is the program director of the Economic 
Statecraft, Sanctions and Energy Markets, Center on Global 
Energy Policy at Columbia University. Prior to this position, 
Dr. Nephew served as the principal deputy coordinator for 
sanctions policy at the Department of State. He also served as 
the lead sanctions expert for the United States team 
negotiating with Iran. From May 2011 to January 2013, he served 
as the director for Iran on the National Security staff. He 
holds a master's degree in security policy studies and a 
bachelor's in international affairs from George Washington 
University.
    The witnesses will now be recognized for 5 minutes each to 
give an oral presentation of their written testimony. And 
without objection, the witnesses' written statements will be 
made a part of the record. Once the witnesses have finished 
presenting their testimony, each member of the task force will 
have 5 minutes within which to ask the witnesses questions.
    On your table, there are three lights: green; yellow; and 
red. Yellow means you have 1 minute remaining, and red means 
your time is up. The microphone is sensitive, so please be sure 
that you are speaking directly into it.
    And, with that, Mr. Berman, you are now recognized for 5 
minutes.

 STATEMENT OF ILAN I. BERMAN, VICE PRESIDENT, AMERICAN FOREIGN 
                         POLICY COUNCIL

    Mr. Berman. Thank you, sir. And thank you, Mr. Chairman and 
Ranking Member Lynch and distinguished members of the task 
force for the opportunity to be here today to speak to you on a 
truly critical issue.
    There is a great deal to say about the Joint Comprehensive 
Plan of Action (JCPOA), as the new agreement with Iran is 
formally called. I simply don't have the time to say it all, 
and on issues like verification and compliance, I think my 
colleagues can acquit themselves much better than I.
    So, if I could, I would like to devote my time to talking 
about one issue in particular, which is the threat potential of 
the Iranian regime and how it will change and expand as a 
result of the JCPOA. This relates directly to the question of 
sanctions relief because under the agreement, the Islamic 
Republic is now poised to receive massive economic stimulus in 
the very near future. Specifically, later this year or at the 
very latest early next year, upon verification by the 
International Atomic Energy Agency that Iran has disclosed the 
requisite details of military-related nuclear work, the United 
States will begin unblocking $100 billion and to $150 billion 
of Iranian revenue from oil sales that have been locked in 
escrow accounts in China, South Korea, and in other nations. I 
think it is necessary to put this in some context precisely 
because it is so large.
    In 2014, the U.S. Government estimated that Iran's total 
annual gross domestic product was $415 billion. So what we are 
talking about here is a quarter, roughly, of Iran's annual GDP. 
I think, with very little exaggeration, what we are talking 
about here is a Marshall Plan for the Islamic Republic, the 
financial equivalent thereof. And while White House officials 
have expressed hope that the Iranian regime will use these 
funds to focus internally, to focus on domestic conditions, on 
improving the economic welfare of ordinary Iranians, it is 
necessary to point out that money is fungible, and an Iranian 
regime that has this kind of economic stimulus package has an 
unprecedented financial windfall that will invariably translate 
into greater capability in two areas.
    The first area is terrorism. Several years ago, the U.S. 
Government publicly estimated that Iran had ``a 9-digit line 
item in its budget for support of terror organizations.'' This 
included $100 million to $200 million annually to Lebanon's 
Hezbollah, as much potentially as $25 million monthly to Hamas 
in the Palestinian Authority, and the list goes on. And this 
assessment was made at a time when Iran was subject to 
stringent international sanctions, and there was no financial 
relief for the Islamic Republic in sight.
    Today, the situation is very different. The resources at 
Iran's disposal in this area are poised to expand 
exponentially, and as a result, what you will see is a much 
greater potential on the part of Iran to translate its 
financial windfall into a financial windfall for its proxies.
    The second issue of particular concern to me is the 
question of Iranian regime expansionism. The Iranian regime 
possesses a distinct manifest destiny. Idealogically, it talks 
about itself as the center geopolitically of the Middle East, 
and it has launched--even in absence of sanctions relief--an 
ambitious effort to expand its influence globally, but in 
particular in the Middle East. What this looks like in practice 
is a massive investment in propping up the Assad regime in 
Syria, which has been estimated to cost the Iranian regime 
something like $6 billion or more annually. The Iranians have 
provided extensive military and economic backing for Yemen's 
Houthi rebels. And, primarily, although not exclusively, but 
primarily because of Iran's assistance, the Houthis have 
managed to change fundamentally the power dynamic in that 
country, and Iran has become a key power broker in Yemen's 
future.
    And the same holds true in Iraq, where Iran already 
processes extensive political influence. The current fight 
against the Islamic State terrorist group and the disarray of 
Iraqi politics has allowed Iran, through both economic and 
military and financial means, to expand its ambit still 
further.
    So what should we expect here? The Iranian leadership 
already believes that it has an unprecedented opportunity to 
dominate the region. The Iranian Supreme Leader, Ali Khamenei, 
said as much in September of 2014 when he declared publicly 
that, ``The power of the West on their two foundations--values 
and thoughts, and the political and military--has become shaky 
and could be subverted.'' Now, with the conclusion of the 
nuclear deal, Iran is poised to have greater resources to 
accomplish this than ever before, and this gets us to the 
question of what we expect.
    The White House has said in public that this deal is merely 
transactional, it is focused strictly on the nuclear issue and 
doesn't touch on other issues, including Iran's support for 
terrorism, but both in scope and in duration and, frankly, in 
its material minutia, what you see is a deal that is 
aspirational. It is one that hopes that the Iranian regime 
will, as a result, turn over a new idealogical leaf. But this 
is not how the deal, how the framework agreement, is being read 
in Tehran. As the Iranian Supreme Leader himself said several 
days ago, Iran remains steadfast in its opposition of the 
United States as well as its efforts to reshape the region in 
its own image.
    So what we end up with is a situation where, although 
Iranian belligerency remains unabated, the Iranian regime, 
through the JCPOA, now has dramatically greater financial tools 
to accomplish its goals.
    Thank you.
    [The prepared statement of Mr. Berman can be found on page 
48 of the appendix.]
    Chairman Fitzpatrick. Mr. Dubowitz, you are now recognized.

   STATEMENT OF MARK DUBOWITZ, EXECUTIVE DIRECTOR, CENTER ON 
   SANCTIONS AND ILLICIT FINANCE, FOUNDATION FOR DEFENSE OF 
                          DEMOCRACIES

    Mr. Dubowitz. Great. Thank you. Chairman Fitzpatrick and 
Ranking Member Lynch, on behalf of the Foundation for Defense 
of Democracies' Center on Sanctions and Illicit Finance, it is 
an honor to testify before you and your task force and an honor 
to be testifying with these distinguished experts.
    I want to focus on the Revolutionary Guard Corps, the IRGC, 
which I think is a major beneficiary of this nuclear deal. And 
this nuclear deal itself is fundamentally flawed in both its 
design and architecture. As a result of these artificial sunset 
provisions, the IRGC, in fact, which controls Iran's nuclear 
and ballistic missile programs, has patient multiple pathways 
to developing nuclear weapons and regional power. Again, as 
long as it is patient and faithfully complies with the 
agreement, Iran over time will develop an industrial size 
nuclear program with near zero breakout, an advanced centrifuge 
powered sneak-out pathway, and multiple heavy water reactors. 
Iran will be able to buy and sell heavy weaponry, with the 
expiration of the arms embargo. Iran will also be able to 
develop long-range ballistic missiles, including an ICBM. And 
let's be clear that most of the economic sanctions are being 
dismantled, unlike the nuclear program.
    Now, I am focusing on the Revolutionary Guards, again, 
because they are the major beneficiary. And, Mr. Chairman, last 
spring, FDD provided the U.S. and U.K. Governments with a 
database of 1,290 IRGC companies and individuals. The full 
lists are in my testimony. I would ask them to be, please, 
entered into the record.
    After 16 months, the United States has not sanctioned any 
of these IRGC entities or individuals. And the nonlisting of 
these entities provides the IRGC with economic benefits and the 
ability to operate without restrictions.
    So the IRGC stands to benefit even more now because of the 
JCPOA. The deal requires the United States and Europe to remove 
numerous IRGC-linked entities from their sanctions list, 
including the most important terrorism finance and money 
laundering facilitator, the Central Bank of Iran. Most Iranian 
banks, including some IRGC-controlled banks, will be permitted 
back onto the SWIFT financial messaging system, giving Iran's 
most dangerous actors access to the global financial system. 
This is deeply troubling, because the IRGC, again, the most 
dangerous actor in Iran, controls at least one-sixth of Iran's 
economy, including major strategic sectors.
    Now, these delistings are a direct challenge to the 
conduct-based nature of the sanctions regime imposed by the 
Obama and Bush Administrations. Those sanctions were designed 
to target the full range of Iran's illicit activities and not 
just Iran's nuclear program. And they were also designed, 
according to Treasury officials, to protect the integrity of 
the U.S. financial system. This was made clear when Treasury 
issued a finding under Section 311 of the USA PATRIOT Act, 
which found that Iran's financial sector, including its central 
bank, was ``a jurisdiction of primary money laundering 
concern.'' Treasury cited Iran's ``support for terrorism and 
the use of deceptive financial practices.'' In short, the 
entire country's financial system ``posed illicit financial 
risks for the global financial system.'' Internationally, the 
Financial Action Task Force confirmed these terror financing 
and money laundering risks.
    Though the 311 was conduct-based, this agreement now calls 
for sanctions relief without a demonstrable change in Iran's 
behavior. This mass delisting includes nearly 650 entities, 
many involved in Iran's nuclear and ballistic missile programs. 
More than 67 percent are going to be delisted from Treasury's 
blacklist within 12 months. After 8 years, only a quarter will 
remain on our lists.
    In 8 years, the United States and the European Union will 
lift sanctions on Fereydoon Abbasi-Davani and Mohsen 
Fakhrizadeh-Mahabadi--they are the Robert Oppenheimer and A.Q. 
Khan of Iran's nuclear weapons development--and Gerhard Wisser, 
who actually ran, helped run A.Q. Khan's proliferation network. 
The EU also lifted its nuclear sanctions on notorious Quds 
Force Commander Qasem Soleimani, though he will remain on the 
EU's terrorism list for now.
    The deal lifts U.S. sanctions on 47 Iranian banks 
designated for proliferation, nuclear and ballistic missile 
activity or for providing financial services to other delisted 
entities. They are all going to get back onto the SWIFT 
financial messaging system.
    Now, the White House assures us that they have a snapback 
mechanism, that they can impose non-nuclear sanctions like 
terrorism, but the agreement itself notes that Iran may walk 
away from the deal and its nuclear commitments if new sanctions 
are imposed. The agreement also contains an explicit 
requirement for the European Union and the United States to not 
interfere with trade and economic relations with Iran. So Iran 
can use these provisions to argue that the reimposition of 
sanctions, even if implemented on terrorism grounds, is a 
violation of the agreement. Iran will threaten to return to its 
nuclear program, and this gives Iran an effective nuclear 
snapback, much more powerful than our economic snapback, to 
intimidate the United States and especially Europe from 
reinstating sanctions.
    Now, Ilan has talked about the hundreds of billions of 
dollars that are going to go back to Iran. And with Iran back 
on the SWIFT system and its banks reintegrated into the formal 
financial system, halting the flow of these funds to bad actors 
will be challenging.
    In short, Congress should require the White House to 
renegotiate and to resubmit an amended deal for congressional 
review that addresses these weaknesses, including the snapbacks 
and sunsets, which are dangerous design flaws of the agreement.
    Mr. Chairman, I am happy to share the other recommendations 
in my testimony during Q&A. Hopefully, this is a good start. 
And thank you for the opportunity to testify.
    [The prepared statement of Mr. Dubowitz can be found on 
page 58 of the appendix.]
    Chairman Fitzpatrick. Thank you.
    Mr. Perles, you are now recognized for 5 minutes.

  STATEMENT OF STEVEN R. PERLES, SENIOR ATTORNEY AND FOUNDER, 
                     PERLES LAW FIRM, P.C.

    Mr. Perles. Thank you very much. Mr. Chairman, Ranking 
Member Lynch, Mr. Pittenger, thank you again for the invitation 
and the honor to testify before you today.
    Over the last 20 or 30 years, my law firm has probably 
represented and reconstructed more terrorist attacks involving 
the death of, or personal injuries, to U.S. nationals than 
perhaps the rest of the private bar combined. We have extensive 
experience reconstructing and then litigating these matters 
against countries like Libya, Syria, Iran, and the Sudan.
    Our litigation portfolio is currently valued at about $17 
billion. During the course of that period, we have separated 
roughly half a billion dollars from the material supporters or 
financiers of these attacks, and we currently hold $1.9 billion 
of Iranian assets that were illicitly invested in New York in 
our trust account awaiting final court order so that they can 
be distributed to various clients.
    I was asked to testify for a very explicit and narrow 
question of expertise: In my view, my opinion, will the release 
of $100 billion to Iran result in an increase in Iran's funding 
of terrorist organizations resulting in the future deaths and 
personal injuries of United States nationals? I think, based on 
Iran's behavior that I have looked at since 1979, the answer to 
that question is, inevitably, yes, there will be a substantial 
increase in funding for those organizations, and they will 
target U.S. nationals.
    In a perverse way of looking at this, Secretary Kerry's 
next objective in the world diplomatic arena is the Palestinian 
peace process. If you study, as we have because of our client 
portfolio, the Oslo Peace Accords, which were negotiated in the 
mid-1990s, you come to the inevitable conclusion that there was 
real peace in the Middle East at the conclusion of Oslo and 
that the Iranians could not tolerate peace in the Middle East. 
It is not consistent with their foreign policy view of how the 
Middle East should be mapped.
    Being unable to tolerate peace in the Middle East, the 
Iranians sponsored a bus bombing campaign designed to destroy 
the Oslo peace process, intentionally targeting American 
students in Israel. The most famous of these is Alisa Flatow of 
New Jersey and other students, like Matt Eisenfeld of 
Connecticut and Sara Duker also of New Jersey. Alisa Flatow 
happened to be the first American student killed in an Iranian-
sponsored bus bombing intended to destroy the Oslo peace 
process.
    You see Iran engaging in the same kinds of conduct even 
earlier, back into the 1980s. The last time the United States 
entered into this kind of agreement with the Iranians was 1981. 
That agreement is known as the Algiers Accords. It resolved--
and resulted in the release of people who were called the 
Tehran hostages. These are the American diplomats who were held 
captive in Iran for more than 400 days. And look at the result, 
again, through my optic. That agreement was executed in 1981. 
Thirty-one months later, the Islamic Republic of Iran detonated 
the largest non-nuclear device ever exploded, resulting in the 
deaths of 241 U.S. servicemen in Beirut. Those service families 
are our clients. The $1.9 billion that we hold in our trust 
account, if this agreement does not interfere with that 
distribution, should be distributed to those families some time 
this fall.
    One country that we have completed the cycle for in this 
country in this kind of litigation is Libya. Muammar Qadhafi 
engaged in a series of bombing campaigns against the United 
States and U.S. interests in the late 1980s, including the 
downing of Lockerbie and the La Belle discotheque bombing, the 
La Belle victims being our client. We separated collectively--
and I am including the work that other law firms did for 
Lockerbie--roughly $3 billion, something in excess of $3 
billion in reparations from Mr. Qadhafi that were distributed 
to American victims. I dare say, in retrospect, if Mr. Qadhafi 
had known in the late 1980s that his bombing campaign was going 
to result in his having to cough up $3 billion to his American 
victims, he would have found some other way to be obstreperous; 
he would not have engaged in that bombing campaign.
    I think that the litigation that Congress has authorized 
American victims of state-sponsored terrorism to engage in 
serves a real national security purpose. There is no amount of 
money that will help compensate a family for the loss of their 
loved ones. The purpose of the litigation is deterrence.
    Thank you, and I apologize for running over.
    [The prepared statement of Mr. Perles can be found on page 
284 of the appendix.]
    Chairman Fitzpatrick. Thank you, Mr. Perles.
    Chairman Fitzpatrick. And we will have an opportunity in 
the Q&A to get further into that issue.
    Dr. Heinonen, you are now recognized for 5 minutes.

 STATEMENT OF OLLI HEINONEN, SENIOR FELLOW, BELFER CENTER FOR 
 SCIENCE AND INTERNATIONAL AFFAIRS, HARVARD KENNEDY SCHOOL OF 
                           GOVERNMENT

    Mr. Heinonen. Thank you, Chairman Fitzpatrick, Ranking 
Member Lynch, and distinguished members of the task force for 
giving me this opportunity to discuss one of the most crucial 
issues in front of us today, the Iran Nuclear Deal.
    In my testimony, I will focus on the verification aspects 
of the Joint Plan of Action, but in my remarks, I am also 
mindful that the reference to the roadmap agreed between the 
IAEA and Iran, while it is publicly available, it has secret 
attachments, which have not been available to me when I made my 
testimony and statement.
    Iran will retain a sizeable nuclear program with its 
supporting nuclear infrastructure. In technical terms, Iran has 
not changed its nuclear course. It will maintain substantial 
uranium enrichment capacity, and it is permitted to expand it 
after 10 years without having technical or economical needs to 
do so. In addition, implementation of the additional protocol 
remains provisional until the time when the IAEA has reached a 
broader conclusion on the peaceful nature of Iran's nuclear 
program.
    This contradicts current IAEA practice. Such conclusions 
have only been drawn by the IAEA when an additional protocol is 
in force and ratified. This is not an easy matter to dismiss, 
as we need to be mindful of potential complications down the 
road should Iran seek to leverage, pull back, or dilute some of 
its obligations at some point in time under its provisional 
status.
    Verification in Iran involves implementation of safeguards 
agreement, additional protocol, additional transparency 
measures agreed to by Iran, and the IAEA-Iran roadmap. The sum 
of these parts is to block or at least to delay all pathways 
for Iran to get the bomb. Our assessments should focus on 
whether the verification provisions measure up to this goal and 
look at the JCPOA's strengths, limitations, and challenges that 
it could face. We also need to ask ourselves, what measures are 
in place that will prevent slippage or account for changing 
circumstances?
    In light of my previous testimonies, I will only speak now 
about some salient points. JCPOA has, from the verification 
point of view, strong points but also vulnerabilities. Without 
additional access to Iran's nuclear facilities, introduction of 
modern monitoring tools to track nuclear material from cradle 
to grave, the IAEA will be able to detect and report in a 
timely manner any substantial diversion of declared nuclear 
material at declared facilities. The measures will also provide 
a high level of confidence that larger declared facilities, 
such as Natanz or the conversion facility in Esfahan, are not 
used to process undeclared nuclear materials.
    At the same time, we know that nuclear proliferation cases 
of the past have opted not to divert declared nuclear material 
but used undeclared nuclear material or undeclared facilities. 
To this end, JCPOA could have included stronger provisions.
    The first one is the expanded declaration. As I pointed in 
my previous testimonies, a complete declaration of all Iran's 
nuclear activities, including the past ones, for example, 
status of equipment and materials from dismantled 
installations, would be important to set a critical baseline 
for monitoring and verification. This is particularly 
significant since Iran's nuclear program has been subject to 
several changes, and has grown substantially since Iran stopped 
its provisional additional protocol implementation at the end 
of 2005.
    Access to undeclared and suspected sites: The JCPOA 
provides for a dispute settlement mechanism should Iran refuse 
to cooperate or challenge the IAEA's request. There are, 
however, concerns that matter. One example is the mechanism by 
which information and evidence is provided that would 
compromise sources of intelligence and give Iran the 
opportunity to take countermeasures to buy time and erase 
evidence.
    Timeliness of access also matters. The comprehensive 
safeguards agreement in 1972, negotiated by the IAEA Board of 
Governors, has a provision that IAEA has access to a nuclear 
installation if it believes that the information gets 
compromised even during the arbitration process.
    In terms of the settlement time, 24 days does not cover 
credibly all plausible scenarios. It is clear that a facility 
of sizeable scale cannot be simply erased in 3 weeks without 
leaving traces. But the likely scenarios involved here would be 
small scale, which would be critical to the weapon 
manufacturing process, such as manufacturing of uranium 
components for a nuclear weapon. But a 24-day adjudicated 
timeline reduces detection probabilities exactly where the 
system is weakest: detecting undeclared facilities, materials, 
and keeping in mind the breakoff times.
    Then I have some additional remarks with regard to the 
manufacturing of centrifuges, possible military dimensions, 
noting that IAEA has to provide a report by mid-December. I 
don't think that this will be a complete existing report which 
will put the PMD issue at rest since IAEA will not have time to 
do all the investigations according to its prevailing 
standards.
    And then I also draw your attention to a couple of other 
things. I think it will be very difficult to use American staff 
on these inspections in the next few years in Iran, which I see 
as significant because U.S. citizens will bring extra skills 
which the IAEA otherwise doesn't have, and then on top of that, 
the IAEA has to, I think, issue a little bit more transport 
reports.
    Chairman Fitzpatrick. Thank you.
    Mr. Heinonen. Thank you.
    [The prepared statement of Dr. Heinonen can be found on 
page 266 of the appendix.]
    Chairman Fitzpatrick. Thank you, Dr. Heinonen, for your 
testimony.
    Mr. Nephew, you are now recognized for 5 minutes.

    STATEMENT OF RICHARD NEPHEW, PROGRAM DIRECTOR, ECONOMIC 
  STATECRAFT, SANCTIONS AND ENERGY MARKETS, CENTER ON GLOBAL 
               ENERGY POLICY, COLUMBIA UNIVERSITY

    Mr. Nephew. Thank you, Chairman Fitzpatrick, Ranking Member 
Lynch, and other members of this task force for inviting me to 
speak to you today. It is an honor to speak to you in my first 
formal testimony before Congress.
    I would like to begin by extending my personal gratitude to 
the members of the U.S. negotiating team. Regardless of how one 
evaluates this deal, we are all most fortunate that this 
country produces dedicated diplomats, civil servants, and 
experts like those who worked on this deal.
    In my opinion, the deal that they negotiated is a very good 
one, especially compared to the most realistic alternatives. 
And any negative consequences can be managed. The deal reached 
satisfies the two most important U.S. national security 
objectives for Iran's nuclear program: one, lengthening the 
time that Iran would need to produce enough nuclear material 
for one nuclear weapon; and two, ensuring that any such attempt 
could be quickly detected.
    With respect to breakout time, the deal delivers, giving us 
years before we have a uranium breakout timeline shorter than a 
year. For plutonium, breakout can be measured in decades. 
Breakout is not the sole measure of a deal, but compared to the 
status quo, 2 to 3 months to break out for uranium with one to 
two weapons worth of plutonium being produced per year at Arak, 
we are far better off with the deal than without it. Further, 
with the transparency steps that Iran has accepted, both 
breakout and any attempt at a covert path will be easier to 
detect quickly. Some of these authorities will remain in effect 
for 20 to 25 years, while Iran's obligations to the IAEA under 
its standard treaties will continue in perpetuity.
    Even some skeptics may agree that within a 10- to 15-year 
band of time, the deal may work as designed but that the 
sunsets present an irreconcilable problem. I disagree that this 
concern is worth killing the deal. The argument against sunset 
presupposes either that there is no point in time in which Iran 
could be trusted with a nuclear program, requiring regime 
change, or that negotiations could possibly have delivered a 
longer sunset. Having been in the room, I believe the length is 
as long as achievable. And in any event, after key restrictions 
lapsed, the United States is also free to declare that Iran's 
nuclear program remains a concern. Getting international 
support to do something about it will require effective 
diplomacy, but it is an option for a future President.
    The other major complaint is that it provides Iran with far 
too much sanctions relief and that the practical effect of 
increasing trade with Iran will render snapback ineffective. 
First, it is a blunt reality that Iran was not going to accept 
major restrictions and invasive monitoring on the cheap. The 
Administration did the right thing in leveraging sanctions 
relief for maximum early nuclear steps. Iran is now under every 
incentive to take the steps required of it as soon as possible, 
which the IAEA will verify before Iran gets an extra dollar.
    Of course, the sanctions relief provided by the United 
States does not equate with unilateral sanctions disarmament. 
The United States retains a number of sanctions authorities 
that will continue to exact consequences for Iranian violations 
of human rights and damage Iran's ability to engage in 
terrorism financing, though I personally believe fears about 
the extent of new Iranian spending in this regard are 
overblown, and, according to the LA Times anyway, so does the 
CIA.
    But foremost of our tools remain secondary sanctions. The 
United States will still be able to pressure banks and 
companies into not doing business with the IRGC, the Quds 
Force, Qasem Soleimani, and Iran's military missile forces. 
Even if the EU and U.N. remove some of these from their lists, 
these bad actors in Iran generally will find business stymied 
until they correct their own behavior in the eyes of the United 
States. This is both due to the direct risk of U.S. sanctions 
and the improvement in international banking practices since 9/
11, a bipartisan effort begun under George Bush and continued 
under Barack Obama.
    The United States will also retain its ability to impose 
sanctions on those trading with Iran in conventional arms as 
well as with respect to ballistic missiles even after U.N. 
restrictions lapse. The United States can also trigger snapback 
of existing sanctions. Even just one JCPOA participant can 
trigger UNSC review and a vote on a U.N. Security Council 
resolution to continue with relief. The U.S. veto power in the 
UNSC gives us the ultimate free hand to reimpose these 
sanctions. This could come with political costs, and many 
skeptics point to these costs as likely meaning that no such 
snapback would ever be triggered, but international reaction to 
U.S. actions will always depend on the context. If the 
rationale for doing so is credible, then chances for success 
will always be higher. Iran too would have much to lose if 
snapback were to be triggered.
    The description of the deal as a Marshall Plan is an 
exaggeration, except that, in Iran, it needs the sort of 
domestic investment that it would provide due to damage with 
sanctions. Iran's leaders would therefore have to carefully 
evaluate the costs and benefits of any course of action that 
threatens the integrity of a nuclear deal. These costs will 
grow as Iran's economy grows. Some may see this as resilience, 
and I see it as Iran having more to lose.
    To conclude, though it is not a perfect deal, I believe 
that the nuclear deal reached by the United States, its P5+1 
partners, and Iran, meets our needs and preserves our future 
options. Like the Algiers Accord, it is necessary even if it 
will have consequences which must be managed, and I urge 
Congress to make the right choice and support this deal.
    Thank you.
    [The prepared statement of Mr. Nephew can be found on page 
274 of the appendix.]
    Chairman Fitzpatrick. We thank the witnesses for their 
testimony, and each of the members of the task force will be 
given 5 minutes now to question the witnesses. I will recognize 
myself for 5 minutes.
    And I will first ask Mr. Berman and Mr. Dubowitz if you 
could respond to a recent statement of National Security 
Advisor Susan Rice, who suggested--admitted, I guess--that some 
portion of the $150 billion that will accrue back to the 
Islamic Republic of Iran as part of the sanctions relief could 
be or would be spent to support international terrorism. So the 
question is to what extent you believe--and, again, $150 
billion is an estimate--that any of these funds would be used 
to enhance the capabilities of their terrorist proxies, 
including Hezbollah, including Houthi rebels in Yemen, who were 
mentioned earlier today, to bring terror not just to the 
region, but to American citizens?
    Mr. Berman. Thank you, sir. I think the best way to 
illustrate the concerns that I have with regard to the fungible 
nature of the money that Iran will get is to harken back to the 
experience that the U.S. Congress and the U.S. Government had 
with post-Soviet Russia in the 1990s. During that decade, we 
implemented a program called Cooperative Threat Reduction, 
colloquially known as Nunn-Lugar, to help the post-Soviet 
Russian Federation dismantle both conventional and 
unconventional weaponry, including ballistic missiles. The 
investment at the time, and I believe it was somewhere on the 
order of $600 million, was intended to widen the pie, so to 
speak, with regard to Russia's ability to execute dismantlement 
that it needed to do anyway. That was at least the rationale 
that was given.
    What was discovered belatedly was that the Russian 
Government had allocated a certain percentage of its defense 
budget for this dismantlement, and an infusion of American cash 
was not sufficient to widen the pie, rather, that money was 
used for other things, including a revival of the Russian 
bioweapons program in the late 1990s.
    I think the same concern is germane here. The sanctions 
relief, and the scope is indeed enormous, it is certainly not a 
Marshall Plan of the 1940s, which was $800 billion for all of 
Europe, but $100 billion for one individual country is still an 
awfully large sum of money. There is that concern that the 
money will, even if it is spent overwhelmingly on domestic 
affairs, will free up other dollars that will be spent on 
terror, perhaps significantly so.
    Chairman Fitzpatrick. Mr. Dubowitz, do you concur?
    Mr. Dubowitz. Yes. I do concur with Mr. Berman. I think 
that we also need to talk about economic relief. It is much 
more than $100 billion. It is much more than $150 billion. We 
are talking about economic relief that will allow Iran to sell 
2\1/2\ million barrels a day, which will increase its revenues 
$15 billion to $20 billion a year, open up its auto sector, 
which represents about 10 percent of the GDP of Iran, its 
petrochemical sector. We are talking about hundreds and 
hundreds of billions of dollars over time.
    Now, I agree with Mr. Berman and I agree with Mr. Nephew. I 
don't think Iran is going to spend all of its money on 
terrorism. Iran will spend some of its money on terrorism. And 
a small percentage of hundred and hundreds of billions or 
dollars means that Iran can keep Bashar Assad in power for more 
time. It costs Iran about $6 billion a year, according to the 
U.S. Special Envoy on Syria, to keep Bashar Assad in power, not 
to mention the hundreds of millions of dollars available for 
Hezbollah and other terrorist organizations.
    But picking up on a point that Mr. Nephew made, the problem 
is that Iran is also going to spend its money on its economy, 
and not just on growth and diminishing unemployment but on 
economic resiliency. See, the Iranians learned from 2012, 2013, 
when we were hitting them with asymmetric shocks to their 
economy that plunged them into a severe recession; they don't 
want to be in a situation again where their economy is fragile. 
So they will keep substantial foreign exchange reserves in 
place and build up the kind of resilience they need down the 
line so then when we try to snap back our sanctions, it will 
not have the kind of asymmetric impact that it had on Iran at 
that time. Economic resiliency is their rainy day fund. That is 
what they are thinking of down the line when they have an 
industrial size nuclear program with near zero breakout, and we 
try to use economic leverage in the future to peacefully 
enforce the deal. I believe we will diminish our peaceful 
enforcement of this deal. We will leave a future President with 
two options: Accept an Iranian nuclear weapon or use military 
force to forestall that possibility, which is why this deal 
makes war more likely, and when that war comes, Iran will be 
stronger and the consequences will be more severe.
    Chairman Fitzpatrick. Thank you.
    Mr. Perles, briefly, if you can, in the Beirut barracks 
bombing in 1983, many of those marines were residents of the 
Commonwealth of Pennsylvania, and some of their families were 
constituents of mine. They have an open judgment against Iran 
for their connection. How do we bring closure to families like 
those?
    Mr. Perles. It is a two-track process, sir. First, we have 
this $1.9 billion of illicit Iranian funds that we captured in 
New York. That money is almost ready for distribution. The 
Supreme Court has solicited the views of the Solicitor General 
of the United States with respect to the underlying statute 
that Congress passed to help us get at those funds. The statute 
is facially constitutional. If the committee could ensure that 
the Solicitor General promptly issues its statement of issue to 
the Court affirming the constitutionality of that statute, we 
should be able to proceed with releasing those funds this fall.
    A second issue, and one that is far more serious from its 
implications, are what are referred to as movement of funds by 
book entry. That process can simply be described as, if you 
have a billion dollars in a bank account in New York and one 
day it is owned by a commercial company and the next day that 
billion dollars belongs to the Islamic Republic of Iran, but 
instead of moving money by SWIFT back and forth, you simply 
keep track of who is earning the benefit of that money by a 
book entry sitting in a bank in Luxembourg, you are able to 
entirely avoid sanctions.
    Chairman Fitzpatrick. Mr. Perles, I am out of time. Maybe 
we could get back to this in a second round of questioning if 
that is possible.
    But I want to recognize the ranking member of the task 
force, Mr. Lynch, for 5 minutes.
    Mr. Lynch. Thank you, Mr. Chairman.
    And, again, thank you to all of our witnesses.
    Professor Heinonen, you have actually in the past been an 
IAEA inspector. Is that correct?
    Mr. Heinonen. That is true.
    Mr. Lynch. Okay. And from our earlier conversations--and I 
again thank you for your willingness to help the task force--
you indicated that you have been on the ground in Iran 
previously with inspection responsibilities. Is that correct?
    Mr. Heinonen. Yes. True.
    Mr. Lynch. Okay. And tell me a little bit about that. How 
long were you there in Iran?
    Mr. Heinonen. Actually, I have never counted the number of 
days I spent--
    Mr. Lynch. Okay.
    Mr. Heinonen. --but I went there for the first time 
actually in 1986, and it was a very different era.
    Mr. Lynch. When was the last time you were in Iran?
    Mr. Heinonen. 2009.
    Mr. Lynch. Okay. So you had a chance to see how the 
inspection protocols were. And I guess to try to simplify it 
for people, on a scale of 1 to 10, let's say 1 is that the 
agreement is worthless, okay, and 10 means the agreement 
provides absolute security, where along the spectrum--you have 
had a chance to read this agreement now and sift through this 
and try to figure out what the inspection protocols and 
monitoring would provide. Where along that spectrum do you 
think you would--on a scale of 1 to 10, what is the value of 
this agreement in your estimation? I am trying to simplify. I'm 
sorry, but it is the best we can do.
    Mr. Heinonen. Yes. It is a little bit difficult to give the 
rating yet because there are a few aspects of this agreement 
which I don't know, like what is the real agreement between 
Iran and IAEA on this possible military dimension.
    Mr. Lynch. The PMD--
    Mr. Heinonen. --so that is a little bit unknown here. And 
this is, then, to do with the setting of the baseline for the 
monetary. And then there are certain answers that are also, I 
think, still in the text with regard to the past activities on 
Iran, and that is why I urge that baseline there.
    Mr. Lynch. Right.
    Mr. Heinonen. If you have a poor baseline, then your 
verification system will get compromised, but with--
    Mr. Lynch. Why didn't we get that?
    Mr. Heinonen. --information available today, I would rate 
it perhaps 7 or 8.
    Mr. Lynch. Okay. Seven or eight.
    Mr. Heinonen. Or higher.
    Mr. Lynch. Okay. I appreciate that.
    Mr. Nephew, I noticed that in the agreement there are 
carve-outs here. If you look at the sanctions that are provided 
with relief, they are almost exclusively regarding nuclear 
activity. They are sanctions that were put in place because of 
past nuclear activity and nuclear research, uranium enrichment, 
things like that, that Congress and the U.N. and the EU and the 
President of the United States have put in because of nuclear 
activity.
    I don't see any lifting of sanctions regarding terrorism or 
funding. And, look, no question about it, Iran has funded 
Hezbollah, has funded Al--not Al Qaeda, they are Shia--they are 
Sunni, rather--but has funded Hamas, has funded Islamic Jihad 
and others. So I am not coating that over in any sense, but the 
agreement is focused on the nuclear activity and not on the so-
called terrorist funding activity. Is that correct?
    Mr. Nephew. Yes, sir, that is correct.
    Mr. Lynch. Is there anything to stop us from maintaining 
the--I had a chance to talk to Mr. Szubin over at Treasury, who 
sort of rides herd on all of these financial sanctions, and he 
tells me that they are going to stay in place. Is that your 
understanding?
    Mr. Nephew. Yes, sir, that is my understanding.
    Mr. Lynch. Okay. And would anything in this agreement stop 
us from, if we saw money going from the central bank to any of 
these groups, we could put sanctions in place against the 
Central Bank of Iran if we saw further violations of terrorist 
financing provisions?
    Mr. Nephew. Yes, sir. That is a possibility. I think the 
big issue at that point will be what the Iranian response would 
be to that. They have the ability to say that they think that 
kind of sanction would violate the terms of the deal because it 
would imperil the rest of their relief, but we have not ceded 
any ability whatsoever to impose sanctions with respect to our 
terrorism, human rights or other related authorities that are 
outside of the nuclear arena.
    Mr. Lynch. Okay. Thank you.
    I have 6 seconds left. I will just yield back my time.
    Thank you, Mr. Chairman.
    Chairman Fitzpatrick. I now recognize the vice chairman, 
Mr. Pittenger, for 5 minutes.
    Mr. Pittenger. Thank you, Mr. Chairman.
    Mr. Perles, you stated in your testimony that your 
representation of victims for you and your legal group has 
enabled $1.9 billion.
    Mr. Perles. Yes, sir.
    Mr. Pittenger. Given that you said that would be a 
deterrent toward future actions, considering Qadhafi and the 
bombings of Lockerbie and La Belle, that perhaps you would be 
thinking about future efforts.
    With that in mind, with this agreement it appears what we 
have done on these cases with these victims is basically wipe 
out this agreement, the result being that these funds would no 
longer be accessible. Is that a concern to you that they would 
not be able to receive the judgments repatriated back to them 
and be accessible?
    Mr. Perles. It is a serious concern to us. As I said to Mr. 
Fitzpatrick, it would be very helpful if the committee could 
ensure that--speaking again for the Beirut Marine barracks 
bombing families--$1.9 billion remains available as an asset. 
Those funds are no longer with the Islamic Republic of Iran--
    Mr. Pittenger. The future funds won't be accessible if the 
case--
    Mr. Perles. Future funds could be a very serious problem. 
There are no future funds currently in the United States. Were 
we to go out and try and reach funds outside the United 
States--and we are trying to do that currently in Italy--I can 
tell you that we have not received a warm reception overseas 
from governments that like to trade with the Iranians.
    In our enforcement activities for the Flatow, Eisenfeld, 
and Duker case in Italy, where I suspect a lot of this $100 
billion will go, as they are Iran's largest trading partner in 
the EU, the Italian foreign ministry has formally entered our 
proceeding against the Iranians in objection to our 
domestication of the Flatow, Eisenfeld, and Duker terror victim 
judgments in Italy. If the Italian courts abide by the request 
of their foreign ministry, essentially, these judgments become 
non-entities in Italy and probably the rest of the European 
Union.
    Mr. Pittenger. Thank you for that.
    Mr. Dubowitz and Mr. Berman, we have provided, repatriated 
back to Iran $700 million a month; in the last 16 months, $12 
billion. We certainly see their footprint throughout the Middle 
East, in Yemen, and Syria, and Iraq. Now they are going to have 
access to substantially more money than that. It will be an 
enormous challenge for the Financial Action Task Force (FATF) 
and our Treasury working with other governments to track these 
funds as they go through the financial system, through the 47 
financial institutions there in Iran and their capacity through 
money laundering.
    What advice--where do you think we should go? Given that 
this could very well be the case, what do you recommend we 
could do to enhance the role of--encourage the role of FATF, 
the 34 nations that work together and the role of Treasury? We 
are going to have a lot more money accessible for terrorism 
financing.
    Mr. Dubowitz. Congressman, my recommendation would be that 
Treasury should submit to House Financial Services an Iran 
sanctions rehabilitation program with benchmarks that the 
financial institutions and the Central Bank of Iran have to 
meet before they are allowed back onto SWIFT. Because here is 
the problem that Mr. Nephew is not telling you about: The 
problem is the Central Bank of Iran is going to go back to 
SWIFT, so are dozens of Iranian banks.
    It would be virtually impossible for us to de-SWIFT those 
banks again, because the head of VTB bank in Russia, when the 
British were talking about de-SWIFTing Russian banks, called 
that an act of war. The Iranians will call that an act of 
economic war. And what they will do is they will use their 
nuclear snapback in this agreement to claim that the 
reimposition of those sanctions and the de-SWIFTing of the 
Central Bank of Iran and other banks constitutes a violation of 
this agreement.
    Now, we might say, that is not true. It is non-nuclear. It 
is terrorism. We have the absolute right to do this. But the 
problem is that the Iranians will then intimidate the 
Europeans, and they will say that we will walk away from the 
agreement, we will engage in nuclear escalation because the de-
SWIFTing of our banks is an act of war. We will never get the 
Iranian banks off SWIFT again. It took an act of God to get 
them off in the first place. We will never get them off again.
    Now, once they are plugged back in the formal financial 
system--and by the way, we have not required them to actually 
rehabilitate. There is no indication that they are no longer 
engaged in illicit financial activities. And by the way, it 
wasn't just nuclear. It was ballistic missiles. It was terror 
financing. It was money laundering. It was sanctions evasion.
    That is the reason the Central Bank got designated in the 
first place, designated by Treasury, in a 311 finding. It 
wasn't just nuclear, Ranking Member Lynch. It was actually a 
range of illicit financial activities that constituted the 
basis for that designation in the first place.
    And so what we have done, essentially, is we have swept all 
of that away for a nuclear deal, and we are allowing all of 
these banks back onto SWIFT to plug back in the formal 
financial system without actually having any indication that 
they have been rehabilitated. So if I were House Financial 
Services, I would require Under Secretary Szubin in the U.S. 
Treasury Department to present a rehabilitation plan to you 
with specific benchmarks, and to demonstrate to you on a timely 
basis over time that these banks are now rehabilitated banks, 
and only then should they be de-designated and put back onto 
SWIFT, because once they are on SWIFT, we are not getting them 
off SWIFT ever again.
    Mr. Pittenger. Thank you. I yield back.
    Chairman Fitzpatrick. The gentleman's time has expired.
    The gentleman from California, Mr. Sherman, is recognized 
for 5 minutes.
    Mr. Sherman. Thank you.
    This deal has the good, the bad, and the ugly. The good and 
the bad happened the first year. We get rid of the stockpiles. 
We decommission two-thirds of the centrifuges. The bad, you 
witnesses have already commented on, they get their hands on 
tens of billions of dollars. The ugly is next decade when they 
could have such an enormous nuclear program that in the words 
of the President, their breakout time would be basically zero.
    So the question, at a minimum, is how do we put ourselves 
in the position where we force a renegotiation of this deal 
before we get to the ugly? There is a natural tendency for--and 
the witnesses have done this. I tend to do it--is to grade the 
deal, as if we are pundits trying to say whether the President 
did a good job or not. And that is a wonderful use of time, but 
we don't have a time machine to go back to June 2015.
    And pundits get to do that, but we have to decide how to 
vote. We have three possible votes coming up. One is a vote to 
approve the deal. That has a 0.0 percent chance of passing. If 
it did pass, it might morally bind future Administrations to 
the deal. So we are not going to do that. The deal is an 
executive agreement, which is below an executive legislative 
agreement, which is below a real treaty.
    So this is the weakest possible exchange of notes among the 
Executive Branch. And if, God forbid, we were to vote to 
approve this, and maybe somebody could claim it was an 
executive legislative agreement, but we won't and it isn't. But 
the real issue before us is whether we vote to disapprove and 
whether we override. And one of the reasons not to vote to 
disapprove is because we will probably fail to override.
    And then we are going to be in a circumstance where we are 
telling the world Congress has not ratified or endorsed the 
agreement, and the proponents are showing a picture of 
themselves celebrating our failure to override the veto. So the 
last vote will be a victory for the 34 percent or the 40 
percent who vote not to override. That is confusing to the 
world. So I am hoping that instead we just vote on a resolution 
to approve and vote it down.
    But if we do override, that has real, legal binding 
effects. We were in the classified hearings, and now I am here 
trying to figure out what those effects would be. Legally, what 
it does is it restores the sanctions and deprives the President 
of his authority to waive the sanctions. Those sanctions are 
not sanctions on Iran. Those are sanctions on British and 
French and Japanese and Indian banks. Those are sanctions 
against Italian and Russian and Chinese oil companies. It is 
easy to say we want to sanction Iran. Start asking people if 
they want to sanction French banks.
    So the question is how other countries react if we try to 
sanction their businesses for doing something our President 
says is a reasonable thing to do, which is, do business with 
Iran as long as they are following the agreement that Congress 
may very well repudiate.
    So, Mr. Berman, how are the French, the Italians, the 
Japanese going to react if Congress wants to punish their banks 
and cut them off from the most important financial banking 
sector in the world, because those banks dared to participate 
in transactions which the President of the United States says 
are legitimate and, oh, by the way, are profitable for the home 
country?
    Mr. Berman. Sir, in a word, not well. And I know you led me 
to that answer, but if you remember, earlier this year, I had 
the privilege of--
    Mr. Sherman. Could they kowtow? Politically, could they 
kowtow? Could they say, look, we are announcing that we are 
going to prevent our banks from doing these transactions, 
prevent our companies from doing these transactions?
    Mr. Berman. Yes.
    Mr. Sherman. The President of the United States thinks they 
are reasonable. We think they are reasonable. We think they are 
profitable. But Congress is so powerful that we are going to 
prohibit our companies from engaging in reasonable and 
profitable business.
    Mr. Berman. Sir--
    Mr. Sherman. Could an Indian--could Moby do that? Could Abi 
do that? Politically, even if they wanted to, could they go to 
their people and say we are kowtowing the Congress?
    Mr. Berman. I think Mr. Dubowitz will have some input as 
well, but my amateurish interpretation of this is absolutely 
they could, provided there is political will to actually 
enforce those sanctions and enforce those measures. Because as 
we have discussed before, one of the bipartisan failings of 
Iran's sanctions up until this point is that while there are 
the legislative means to sanction these banks for engaging in 
this commercial activity with Iran, what we have been lacking 
on both sides of the political aisle has been the political 
will to truly enforce.
    Mr. Sherman. If I can just sneak in one comment. We were 
just in a classified briefing and a nonclassified non-answer 
was, I asked the Administration whether they would follow the 
law, and under those circumstances, punish those banks, and the 
answer was a deafening non-answer. So it is, by no means, sure 
that the President would impose those sanctions, let alone that 
our trading partners would adhere to them and we accede to 
them.
    And I yield back.
    Chairman Fitzpatrick. The gentleman's time has expired.
    The gentleman from Florida, Mr. Ross, is recognized for 5 
minutes.
    Mr. Ross. Thank you, Mr. Chairman.
    And I want to thank the witnesses for being here.
    Mr. Berman, you spoke in your opening statement about the 
use of funds to be funneled as they have been for such things 
as building Iranian regime contacts. For example, I think you 
said that they put $6 billion annually into Bashar al-Assad's 
coffers, and that we are continuing to fund, or they are 
continuing to fund Hezbollah, continuing to fund Hamas, 
Houthis. We had some witnesses testify before this task force 
sometime ago who essentially stated that Iran was the central 
bank of terrorism.
    And so what we are now about ready to do if this deal is 
effectuated is to allow for an increase anywhere from $100 
billion to $150 billion of frozen assets, accounts, and then to 
channel this money through the same infrastructure that has 
been there to fund state terrorism. Now, it seems to me that we 
have allowed, or at least the premise of this negotiation has 
been, let us not have an Iranian nuclear weapon capability, but 
let us do so at the expense of expanding international and 
global terrorism.
    And to that end, I ask, what are we to expect? Are we to 
expect that now those missiles that were funneled down into 
Gaza are going to be more sophisticated? What are we going do 
expect with regard to the missile defense system that now will 
be sold from Russia to Iran? Are we here just basically saying 
that we have licensed the management of nuclear capabilities in 
Iran totally at the expense of expanding terrorism throughout 
this world?
    Mr. Berman. Sir, I think you hit upon what I believe is a 
crucial point, which is that when we begin looking at this 
agreement, one of the, I believe, most sober ways to approach 
it would be to look at the consequences and whether or not the 
United States has the political, economic, and strategic tools 
to manage the consequences that are likely to flow from it. 
Obviously, increased funds allocated to terrorist proxies of 
the Islamic Republic is a tremendous concern.
    Mr. Ross. And it is going to happen, as a matter of fact. 
Let's just look at history. It has happened. And now let's look 
at the history of our relationship with Iran. The only thing 
that we have to rely on to make sure that this deal is 
effectuated as it is written, quite frankly, is the trust of 
Iran. And so, let's look at the history with Iran. Let's see, 
since 1979, on every November 4th, they proclaimed Death to 
America Day.
    Just recently, within the last year, they put a mock 
battleship out in the Persian Gulf and had that attacked and 
sank in the name of destroying the United States. So 
essentially, we have negotiated a deal that says that we are 
going to have to trust Iran, and yet we are going to have to 
trust them through a third party. So have we managed our 
consequences to this point? And if not, what in history has 
given us any indication that this was a deal that we should 
have negotiated?
    Mr. Berman. I don't believe we have. And in my opening 
remarks, I made the point that although the premise that the 
White House has put forward for the deal is transactional in 
nature, that it is limited, it is limited to the Iranian 
nuclear program, the way we have gone about negotiating this, 
and the things that we have put on the table, including massive 
sanctions relief as a result--
    Mr. Ross. And the sanctions have worked. The sanctions have 
worked.
    Mr. Berman. They have. But the ability to rehabilitate the 
Iranian economy and provide additional aid to terrorist proxies 
of the Islamic Republic is a function of the fact that we are 
looking at this deal privately, aspirationally, the idea that 
Iran will turn over a new ideological leaf as a result of these 
negotiations.
    Mr. Ross. And if there is a violation by Iran, the 
realistic expectation of snapback sanctions is not realistic at 
all, is it?
    Mr. Berman. I think there are many technical reasons to be 
very skeptical of snapback, but maybe the most important is the 
fact that, as former Secretary of State Henry Kissinger has 
written about in several books, as you become deeply enmeshed 
in negotiations, such as the ones that we are engaged in today, 
you become a vested stakeholder. And bad consequences--
    Mr. Ross. Exactly.
    Mr. Berman. --are actually worth--
    Mr. Ross. You do it for the sake of having a deal, not for 
the sake of the substance of the deal that would have benefited 
you had you stayed to your principles at the outset.
    Mr. Perles, really quickly, what did the Administration use 
to determine what were considered sanctions for nuclear 
violation, terrorist violations? I just ran out of time, I 
think.
    Mr. Perles. Simple answer to your question: I remain 
totally befuddled. I have no idea.
    Mr. Ross. I agree with you.
    Thank you. I yield back.
    Chairman Fitzpatrick. The gentleman from Texas, Mr. Green, 
is recognized for 5 minutes.
    Mr. Green. Thank you, Mr. Chairman.
    I thank the ranking member as well.
    You never know who is tuned in to these hearings, and for 
this reason, if by chance a family member of someone who is 
being held hostage is tuned in, I would like to make it very 
clear that we are still working to get them returned, those who 
are being held hostage. And while we talk about transactions 
and all of the various ramifications of a deal, we have not 
forgotten them, and that is, I think, important for us to say.
    Mr. Nephew, I notice that you are making notes and your 
name has been mentioned on more than one occasion and you have 
not had an opportunity to respond. Do you have something that 
you would like to say in response to some of the things that 
have been said and directed toward you?
    Mr. Nephew. Thank you, sir, for the opportunity.
    I would say just a couple of things to preserve your time. 
First off, I think there are some distinctions about the way in 
which sanctions were applied against the Central Bank of Iran 
that are relevant here. The United States did not impose a 
designation on the Central Bank of Iran in the traditional 
sense, in part, because we recognized the dramatic economic 
implications that could result from that.
    Instead, we took sanctions decisions that were intended to 
clamp off their ability to get access to oil revenues. It is a 
very unique way of doing business. We also imposed sanctions 
that dealt with basically stigmatizing the Iranian financial 
system for terrorism, money laundering related reasons. So as 
far as I am aware, none of those implications are lifted as a 
result of this deal.
    Now, there are people out there who will still sell oil or 
buy oil from Iran and transact with the Central Bank of Iran, 
but we have not given a green light to believe that the Central 
Bank of Iran is a good institution, or institution that is not 
involved with respect to terrorism or money laundering or any 
of these other things that they are involved with.
    The reality is, though, if you are going to get a nuclear 
deal with Iran, they are not going to do it without real 
sanctions relief, without real economic sanctions relief. And 
the decision that was made by the Administration--and, again, I 
think it was a good decision--was that getting 10 to 15 years 
of real distance from Iranian nuclear weapons breakout was 
worth dealing with a future consequence of Iranian economic 
revival.
    I should also note too, on this issue of $100 billion to 
$150 billion, I think it is an impression that it was a savings 
bank that was opened up for the Iranians, and it is money that 
is pouring in that we can't wait to give back to the Iranians. 
You should bear in mind that this is Iranian money that we have 
been restricting from them that they have not been able to use. 
It is for this reason that they had the economic downturn that 
Secretary Lew spoke about earlier.
    So I think the bottom line is the Iranians do have a lot of 
things they need to do with this money. It is not a gift from 
U.S. taxpayers and it is not manna from heaven for them.
    Mr. Green. Mr. Nephew, you have some knowledge of this. 
Were you associated, in any way, with these negotiations?
    Mr. Nephew. Yes, sir, I was the lead sanctions negotiator 
starting in August of 2013 until I left the government in 
December of 2014.
    Mr. Green. And is it your opinion that we can or cannot 
reopen the negotiations?
    Mr. Nephew. Sir, I do not believe that we can reopen these 
negotiations. I believe that to do so, or to attempt to do so, 
would cripple us in those negotiations, particularly dealing 
with countries like Russia and China, not even to mention our 
European partners.
    Mr. Green. I believe there are others who have opinions 
that differ, so I would like to give some equal time. Let's 
see, Mr. Dubowitz, you have an opinion that varies from this, I 
believe?
    Mr. Dubowitz. Thank you, Congressman.
    I think there is an alternative because President Obama 
always said there was an alternative. He said that no deal was 
better than a bad deal. And the President is a responsible 
Commander in Chief and a responsible executive, and he went to 
these negotiations knowing that he had an alternative to this 
deal. And I believe that we agree with the President; he has an 
alternative. The alternative is to use American power, 
including U.S. secondary sanctions, in the context of the U.S. 
Congress asking this President to negotiate a better deal, 
particularly around snapbacks and sunset provisions.
    Now, if the President doesn't believe in the power of the 
U.S. secondary sanctions, if his argument is that if you vote 
down this deal, the sanctions regime will crumble, then, 
unfortunately, there is no power in the economic snapback 
because the economic snapback actually depends on the power of 
the U.S. secondary sanctions to send a message of fear to the 
marketplace, so that financial institutions and energy 
companies at 7, 8, 9, 10 years when they have sunk in hundreds 
of billions of dollars back into the Iranian economy--by the 
way, contracts that are grandfathered--that they will respond 
by moving out of the Iranian economy.
    So the President can't have it both ways. Either there was 
an alternative to this deal, in which case he was a responsible 
negotiator who went in with the best alternative negotiated 
agreement, or there is no alternative to this agreement, in 
which case he negotiated with the Iranians without an 
alternative.
    Either U.S. secondary sanctions are powerful, in which 
case, Congressman Sherman, they will survive if Congress votes 
no, because, ultimately, they send a message to companies and 
financial institutions based on risk and reputation who will 
not want to go back into Iran, given the power of U.S. 
secondary sanctions; or they are not powerful, in which case we 
are going to have a really significant problem on our hands 
down the line when Iran has an industrial-size nuclear program 
with near zero breakout, significant economic resilience, and 
the banks are all back on SWIFT and we try to go back in order 
to try and impose sanctions.
    Chairman Fitzpatrick. The gentleman's time has expired.
    The gentlelady from Missouri, Mrs. Wagner, is recognized 
for 5 minutes.
    Mrs. Wagner. Thank you, Mr. Chairman.
    And I want to thank the panel for being here today. I have 
to say that I find all of your comments much more enlightening 
and informational than the classified briefing that we just 
attended, by a thousandfold.
    It is an absolute fact that the cumulative effect of 
western sanctions on Iran is a reason that Iran finally came to 
the negotiating table. These sanctions have led to a 15 to 20 
percent decline in Iran's GDP since 2010, and have driven down 
Iran's crude oil sales by some 60 percent. Yet, while Iran's 
economy has significantly declined, their investment in 
terrorism groups and in regional, I will say, proxy militias 
engaged in conflict has remained the same, if not, increased.
    Iran has continued to support, as we have heard from 
everyone, on both sides of the aisle, Hezbollah and Hamas. They 
have involved themselves in conflicts in Egypt, Syria, Yemen, 
and Iraq, and have successfully been promoting further 
instability throughout the region. It would seem logical to say 
that if Iran could find the resources to support terrorism and 
regional turmoil while under the intense pressures of economic 
sanctions, as they have been, they will continue to do so under 
this deal, if not to a greater extent, due to their increased 
access to financial resources.
    In fact, it was National Security Advisor Susan Rice who 
admitted that some of that $150 billion that Iran will receive 
will be spent to support international terrorism. I don't think 
anybody disagrees with that. However, there are some in the 
Administration who have indicated that they believe Iran will 
steer this additional funding into its own economy.
    Mr. Dubowitz, how likely is it that funding will be steered 
towards military proxy groups engaged in destabilizing 
conflicts in the east, including Iraq?
    Mr. Dubowitz. Congresswoman, it is very likely that they 
will spend money on terrorism in supporting Assad. It's also 
very likely that they will spend money on economic resiliency. 
And I think, unfortunately, the conversation, the debate is 
getting lost, because economic resiliency from our perspective 
is a very, very bad thing. Because economic resiliency means 
that Iran can fortify its economic defenses against future 
economic pressure.
    Now, Dr. Heinonen has spoken about verification inspection, 
but a verification inspection is only as good as enforcement, 
and the IAEA does not enforce. The United States of America 
enforces. So it will be the United States of America that will 
enforce this deal against Iranian stonewalling and cheating.
    And if we have lost our ability to use peaceful economic 
leverage to enforce this deal, the Iranians will therefore 
cheat incrementally, daring us to respond for them using 
military force. No President will use military force against 
incremental cheating. And Iran will have the ability not just 
to break out or sneak out to a bomb, but to inch out to a bomb.
    Mrs. Wagner. The United States will only have secondhand 
knowledge of Iranian facilities, to be perfectly honest, as we 
will not and cannot be directly involved in the process of 
monitoring or of verification. Oh, I wish I had an hour to 
visit with each and every one of you.
    I understand Iran's status as a state sponsor of terrorism 
was not part of this deal. Do you believe, Mr. Berman, that 
Iran will seek to be removed from the state sponsor of 
terrorism list?
    Mr. Berman. Ma'am, I don't think, necessarily, that is a 
proximate goal, although it is certainly something that, 
provided the politics, the political wind shift in that 
direction, may be raised with regard to Iran.
    Where I think we enter the zone of danger with regard to 
increased Iranian sponsorship of terrorism as a result of the 
JCPOA is precisely the fact that under the current structure of 
the deal, and under the current mechanisms in the hands of the 
U.S. Treasury Department, the Financial Action Task Force, and 
other bodies that are tasked with overseeing this, we simply 
don't have mechanisms that allow us to provide responses that 
are short of walking away from the table.
    In other words, there are no scalable responses to Iranian 
cheating. And, as Mr. Dubowitz said, Iran is far more likely to 
inch out of its obligations with regard to the deal than to 
break out and make a sprint for the bomb. And as a result, what 
we have is we have a scale problem. Currently, we don't have 
the ability, short of abandoning the process altogether, to 
exact tactical punishments from the Iranians for instances of 
malfeasance, including additional funding for terrorism.
    Mrs. Wagner. Mr. Berman, as I am running out of time--and 
let me just say this: Mr. Dubowitz, I am very interested in 
your discussion about the rehab plan and the Central Bank of 
Iran. I spent 4 years as United States Ambassador to Luxembourg 
from 2005 to 2009. I am very, very familiar with the Central 
Bank of Iran, and I would consider one of the most important 
things I have ever done in my entire life was to stop terrorist 
financing from being laundered and sent through the Grand Duchy 
of Luxembourg.
    So I am very interested in your thoughts on SWIFT and the 
rehab plan, and I would love to pursue that with you in the 
future.
    I am sorry about my time. I yield back, Mr. Chairman.
    Chairman Fitzpatrick. The gentlelady's time has expired.
    Mr. Himes of Connecticut is recognized for 5 minutes, with 
advice to the members of the task force, we are in the middle 
of the vote. So at the conclusion of Mr. Himes' questioning, we 
will go into recess. We will reconvene at approximately 6:35 
for the remainder of the questions.
    Mr. Himes?
    Mr. Himes. Thank you, Mr. Chairman.
    This is clearly a challenging decision for the Congress. It 
is the opposite of a black-and-white decision. If there is 
anybody who is under the misapprehension that this is an easy 
call, I think that speaks more to their credibility and bona 
fide than it speaks to their understanding of what is a very, 
very complicated thing.
    And to illustrate that, this hearing, the undercurrent of 
this hearing is how shocked we are to learn that as a result of 
this deal, Iran may get some money. There is a little 
controversy over how much money: the figure of $100 billion to 
$150 billion keeps being bandied about. I will let those of you 
who are saying $100 billion to $150 billion work this out with 
the Treasury Secretary. He estimates the money at $56 billion.
    Setting that aside, we are shocked that this terrorist 
regime is going to get money. Folks, this was the deal. We 
voted for the sanctions for the express purpose of taking away 
the money to force them to the table to negotiate the deal. 
Now, we may agree that the deal is good or bad, but to 
negotiate the deal whereby they would get that money back. And 
now we are shocked, shocked to learn that this bad regime is 
getting the money back.
    Now, bad regime, we get it. We know that. I am on the 
Intelligence Committee. I see that day in and day out. You do 
these deals with bad regimes. In the 1970s and the 1980s, we 
did these deals, these similar nuclear deals with China and 
with Russia at a time where I would daresay they were probably 
both committing things that would qualify as crimes against 
humanity. But we do these deals not with our friends but with 
our enemies.
    And context is important here, because we find ourselves 
with a deal. It turns out when you negotiate with Persians, you 
don't get everything you wanted. You have a deal with some 
things that make you uncomfortable. But what about the history 
of deals? Yes, there was the Algiers agreement whereby we freed 
some hostages.
    We haven't mentioned, by the way, the deal that was struck 
by the Reagan Administration in 1985, 2 years after the Marine 
bombing killed over 200 Marines, whereby the Reagan 
Administration provided conventional arms to Iran so that 
hostages would be released so that U.S. law could be violated 
to fund the contras, violating the Boland Amendment.
    George W. Bush tried to strike a deal in which there would 
be no enrichment. That deal fell apart and we found ourselves 
with 19,000 spinning centrifuges. So the question I have--and 
the idea is that context is important. This isn't a great deal. 
You don't get a great deal in situations like this. I 
personally believe that the idea that we can just shut it all 
down--and the President's coming under a lot of criticism here. 
The Russians, the Chinese, the U.K., French, the EU, this was a 
P5+1 deal.
    My question is--and I haven't gotten a good answer on this. 
I have 2 minutes left--if we unilaterally say no to something 
that the world negotiated, that the Security Council has 
endorsed, that the EU has endorsed, what scenario results in us 
being in a better position than the position of having 15 
years--and I understand they may cheat--but 15 years in which 
we have some confidence--unless they cheat--that they are not 
building a bomb? What happens that puts us into a better place 
than we are in if we accept this deal?
    I just open that up for a scenario that is better than 
accepting the deal.
    Mr. Dubowitz. Congressman, first of all, this is not a 15-
year deal, and it is not even a 10-year deal. You have to look 
at this deal not through the prism of nuclear physics. You have 
to look at this deal through the prism of Iranian economic, 
conventional, and military power. The Iranians have negotiated 
an agreement that in terms of their deal structure, it is 
front-loaded.
    Mr. Himes. But you do agree, this is a nuclear deal?
    Mr. Dubowitz. That is not a nuclear deal. We are lifting 
the arms embargo. We are lifting ballistic missile 
restrictions, so it is not just a nuclear deal.
    Mr. Himes. Got it. But from the standpoint of developing a 
nuclear weapon, the centrifuge and the enriched uranium is, in 
fact, a 10- to 15--unless they cheat--there is a 10- to 15-year 
period in which there is high confidence and high visibility 
that they are not building a bomb, right?
    Mr. Dubowitz. Actually, I don't think that is true at all.
    Mr. Himes. Why not?
    Mr. Dubowitz. In fact, by year 8\1/2\, they begin to 
develop advanced centrifuges. By year 10, they begin to enrich 
at the Natanz facility and install a limited number of 
sanctions--
    Mr. Himes. But they can enrich above 3.67, right?
    Mr. Dubowitz. No. What they have done is they have phased 
this so they can start introducing on an industrial scale 
advanced centrifuges. So right at year 15, they can actually 
enrich not to 3.67 percent, not to 20 percent, but to 60 
percent, because they will use that as justification that they 
are going to have a nuclear-powered navy.
    So what the Iranians have done is they have front loaded 
the sanctions relief; they are getting the arms embargo lifted, 
the ballistic missile restrictions lifted; they are fortifying 
their regional presence; they are getting back in the formal 
financial system; and they have negotiated themselves a patient 
pathway to a bomb.
    So when that pathway actually comes--because we are not 
cutting off the pathways, we are delaying them and then we are 
expanding them--when it finally comes, Iran will be much 
stronger economically from a nuclear perspective, from a 
ballistic missile perspective, regionally, and with respect to 
terror financing and its proxies.
    So when it comes, Congressman, the problem is is we are in 
a worse situation because we now have a hardened regime with an 
industrial-sized nuclear program at near zero breakout, which 
means it is undetectable breakout. And they have multiple 
enrichment facilities buried in an amount and looking like 
Fordow. And then we have a problem on our hands. Now, the 
problem on our hands at that point is we have no other peaceful 
way to stop them, which is why this deal, in my opinion, is 
going to lead to war. And it will make war more likely.
    The other thing that I want to take issue with is we didn't 
put these sanctions in place to respond to Iran's nuclear 
program. The U.S. Treasury Department, over two 
Administrations, said these were conduct-based sanctions. Your 
task force is about illicit financial conduct. Your task force 
should be very concerned that we are lifting sanctions on the 
Central Bank of Iran and letting all these banks back onto 
SWIFT despite to think none of these banks have been 
rehabilitated from an illicit financial perspective. That is a 
concern.
    Chairman Fitzpatrick. The gentleman's time has expired. I 
appreciate it.
    I ask unanimous consent--I know we said we are going to go 
to recess. The House Foreign Affairs Committee chairman is 
here, Mr. Royce, who would like to be recognized. Without 
objection, Mr. Royce is recognized.
    Mr. Royce. Thank you, Mr. Chairman.
    To get a clear sense of the consequences of Iran's support 
for terrorism, I just wanted to give the task force one 
horrific example. On January 20, 2007, a convoy of SUVs cleared 
several checkpoints to reach a government compound that 
included our American security team. Once inside the base, the 
vehicle occupants, who were wearing U.S. uniforms provided to 
them, and speaking English, by the way, fatally shot one 
soldier, and they kidnapped four other U.S. soldiers.
    With U.S. and Iraqi forces in pursuit, these Iranian-
supported militias executed our four soldiers in cold blood. 
One was the father of two small children from southern 
California. Hezbollah, the Quds Force, and their Shia militia 
proxies were behind this attack. And shortly after, U.S. forces 
apprehended Ali Musa Daqduq, senior Hezbollah operative, who, 
together with the IRGC, masterminded that particular attack.
    Unfortunately, the current Administration did not retain 
custody of this individual, and an Iraqi court released him in 
2012. And the point is this: There are many amongst the IRGC 
who have had to operate under the restrictions that sanctions 
have placed on them. And sanction are being lifted. But they 
remain committed to harming the United States. And I don't take 
their chants of ``Death to America'' as an idle threat.
    As part of the nuclear agreement, the Obama Administration 
is committed to bringing the Central Bank of Iran, and a number 
of major Iranian financial institutions back into the global 
financial system, a financial system that is much different 
today than the one that Iran knew in 2012, between the increase 
of cryptocurrencies and the increase in the use of non-banks, 
our vulnerabilities to Iran's terror finance apparatus have 
increased. And our legislative and regulatory structures have 
not been adjusted for some time, and my concern is that their 
effectiveness is beginning to decline.
    So my question to Mr. Dubowitz and to Steve, to Mr. Perles 
as well is, what specific measures would you recommend Congress 
take to effectively address these vulnerabilities?
    And I will add one other question to you, Steve, 
Clearstream, a known money launderer for Iran is still moving 
Iranian money out of New York to Luxembourg through an illegal 
book entry system to keep the Beirut Marines, the families of 
those Marines, from enforcing their judgment. In your 
experience, what is OFAC doing about this kind of book entry 
based laundering for Iran?
    If you don't have time to finish this, by the way here, we 
could have it for the record. But Mr. Dubowitz and Mr. Perles, 
if you would like to give it a shot.
    Mr. Dubowitz. Thank you, Chairman Royce.
    You are exactly right. Europe is going to become a 
Revolutionary Guards economic free zone. The Europeans are 
lifting sanctions on the Revolutionary Guards and the Quds 
Force. Iran's Revolutionary Guard and Quds Force can now 
operate much more freely in Europe.
    What would I do? First, Congress should require that the 
IRGC be designated as a foreign terrorist organization. It 
should also be designated under Executive Order 13224 for 
directing and supporting international terrorism. The IRGC is 
only designated for proliferation purposes under U.S. law.
    Second, as I mentioned earlier, Chairman Royce, this task 
force and Congress should require Under Secretary Adam Szubin 
to present a rehabilitation program to you with specific 
benchmarks to explain how these financial institutions, 
including the CBI, will be rehabilitated, and to demonstrate to 
you that they are no longer engaged in a full range of illicit 
financing.
    Mr. Royce. Thank you, Mark.
    Steve?
    Mr. Perles. Thank you, sir.
    Let me start by saying that the Karbala attack that you 
referred to in Iraq is one of my cases, and I promise you, sir, 
I will see that case through to the end. The Department of 
Defense issued POW medals to each of these servicemen and, of 
course, they were presented to their families. No nation, let 
alone Iran, gets to take a U.S. serviceman into POW status and 
extrajudicially execute them. I promise you, sir, I will see 
that case through to the end. The conduct there is patently 
offensive by any standard.
    Mr. Royce. And I think we better get the rest of the answer 
for the record in writing.
    And, Mr. Chairman, I think you and I better make tracks to 
that vote right now. Thank you.
    Thank you, sir.
    Chairman Fitzpatrick. The task force is in recess. We 
appreciate the perseverance of the witnesses. We will be back 
at approximately 6:35. Thank you.
    [recess]
    Chairman Fitzpatrick. This hearing is called back to order. 
We appreciate the perseverance of the witnesses and your 
testimony today.
    Mr. Rothfus of Pennsylvania is recognized for 5 minutes of 
questions.
    Mr. Rothfus. Thank you, Mr. Chairman.
    Again, i thank the panel for sticking with us through that 
series of votes. And I apologize for your inconvenience, but 
thank you for being here.
    I want to talk a little bit about the idea of the 
intermingling of the types of sanctions; nuclear, nonnuclear, 
ones that were directed towards terror. I am looking at a 
report that the Bipartisan Policy Center put out last week. And 
they noted that throughout negotiations with Iran, the position 
of the United States has consistently been that it would only 
lift nuclear-related sanctions as part of a final agreement.
    Given the complexity of the U.S. sanctions regime and 
numerous overlapping reasons for which sanctions have been 
placed on Iran, distinguishing between those measures which are 
and are not nuclear-related would pose a significant challenge 
to the deal's implementation.
    They continue with their analysis, and they say out of more 
than 800 entities listed for sanctions relief under the JCPOA, 
the Bipartisan Policy Center analysis finds the total of at 
least 81 agencies, companies and persons, that were sanctioned 
for reasons that are either explicitly nonnuclear or could be 
contested as nonnuclear, these include entities that have been 
involved in developing ballistic missile systems, weapons 
smuggling, supporting terrorism, and violating human rights. 
Under a strict interpretation of what constitutes nuclear-
related sanctions, these entities should not be subject to 
sanctions relief.
    Mr. Dubowitz, I wonder if you want might want to comment on 
that and give and me your opinion of how much of an issue this 
is?
    Mr. Dubowitz. Thank you, Congressman. I think it is a big 
issue. And I think what the Administration has done is that 
they started to try to recharacterize nonnuclear sanctions as 
nuclear sanctions so that they could provide sanctions relief 
under the JCPOA. Let me give you an example. Ballistic missile 
financing was considered to be a separate example of illicit 
conduct. And so, there are a number of designations of Iranian 
banks. The designation of the Central Bank of Iran included in 
its--on its predicate, the financing of ballistic missiles, but 
the Administration had a problem, which is that the Iranians 
were demanding negotiations that a number of these entities be 
de-designated, including the Central Bank of Iran. And so what 
they have done is they have taken ballistic missile financing, 
and they have recharacterized that as nuclear financing.
    Mr. Rothfus. You might think you would have gotten a 
concession if you are releasing a terrorism-related sanction or 
a missile-related sanction, that you would have gotten a 
commitment from Iran, for example, that they stop exporting 
terror.
    Mr. Dubowitz. That is true. But what we have to be careful 
of here is because the Administration is saying, we retain the 
rights to designate on terrorism and human rights ground. But 
the fact of the matter is that terrorism and human rights 
sanctions, for the most part, are not economic sanctions. And 
as a result, what we are effectively doing is we are 
dismantling the economic sanctions regime while still retaining 
the right to go after Iran for terrorism and human rights 
purposes. The problem is if we ever try to go after Iran for 
anything that is considered economic, the Iranians will point 
to the agreement, and they will say, there is a clause in there 
that you promised not to interfere with the normalization of 
trade and commercial affairs, and they will say that basically 
we retain a nuclear snapback to walk away from the agreement. 
So we have dismantled the economic sanctions regime and the 
Administration has done that by recharacterizing, effectively, 
nonnuclear sanction that--
    Mr. Rothfus. Thank you. That is one of the issues I think 
people really need to take a look at as they look at this 
agreement.
    Now, I want to direct this one to Mr. Berman. Earlier this 
year, the G-20, whose 34-member countries constitute the 
world's major financial centers met in Istanbul and committed 
to take action to more aggressively combat terrorism financing 
around the world. The G-20 enlisted the assistance of the 
Financial Action Task Force (FATF), which will hopefully issue 
a report later this year on how to prevent terrorist 
organizations from using the global financial system for 
fundraising. Should the JCPOA be implemented? How much damage 
does it do to this effort by the G-20 and the FATF?
    Mr. Berman. Thank you, Congressman. I think it does a 
considerable amount of damage, because the sheer volume of 
potential funds that will be transferred from Iranian coffers 
to its terrorist proxies inevitably will complicate the 
analysis of the Financial Action Task Force and also strain 
existing mechanisms to monitor and interdict--
    Mr. Rothfus. How much easier is it going to be for Iran to 
launder money through the financial system to fund its 
terrorist proxies under this agreement?
    Mr. Berman. I think that is a good question. I am going to 
defer to my colleague, Mr. Dubowitz.
    Mr. Dubowitz. The problem is that FATF, at the end of the 
day, has fundamentally actually depended on American financial 
sanctions powers. So, on the one hand, you could say that 
because we retain U.S. financial sanctions, we still have 
power. On the other hand, it also relies on the ability to get 
other nations to go along with us. And what we have effectively 
done under this sanctions regime is we have dismantled the EU 
sanctions. The EUs, they are lifting all of their sanctions 
because the majority of them are nuclear sanctions.
    And so as the Europeans go back to business, the Chinese, 
the Russians, and everybody else, it is going to be much more 
difficult to seek the kind of consensus that we need at FATF in 
order to actually crack down on Iranian list of financial 
flows, because our very partners are going to be so deeply 
invested in the Iranian economy, that it will be more difficult 
than it has been in the past to persuade them to enforce these 
regulations on their financial institutions.
    Mr. Rothfus. I think my time has expired. Mr. Chairman, I 
yield back.
    Chairman Fitzpatrick. The Chair now recognizes the 
gentleman from Arizona, Mr. Schweikert, for 5 minutes.
    Mr. Schweikert. Thank you, Mr. Chairman. I would like to 
ask for unanimous consent to put some documents into the record 
in regards to the charter SWIFT.
    Chairman Fitzpatrick. Without objection, it is so ordered.
    Mr. Schweikert. Thank you, Mr. Chairman.
    Mr. Dubowitz, you are the only one up here who has actually 
talked about SWIFT. And this is something I have been trying to 
get my head around and wanted to focus on just for a couple of 
minutes. First, in 30 seconds--20 seconds, describe the 
backbone of what SWIFT is.
    Mr. Dubowitz. Congressman, if I wanted to wire money to 
you, I am going to wire money from my financial institution to 
your financial institution, SWIFT provides the financial 
messaging codes that, essentially, allow my financial 
institution to identify my bank account and identify your bank 
account to your financial institution, so that wire 
transactions can take place. SWIFT is the international 
backbone and the global standard for financial messaging that 
facilitates financial flows around the world.
    Mr. Schweikert. Okay. And the secure international backbone 
of electronic movement of money? Simple enough? And Belgian 
charter. So walk me through a conceptual idea. Let's say this 
agreement moves forward, and all of a sudden, Iranian 
institutions, banks, others that actually would be--have had a 
SWIFT membership, would be able to move money. Except for the 
fact that if I am here reading the SWIFT charter, both the 
country and an institution that have been involved in bad acts 
don't have rights to access that system.
    So what happens here? I have here, where we are obligating 
ourselves and countries to this agreement, at the same time, I 
have a private electronic backbone moving money that is not 
allowed to do this, that is the first question. How does that 
end up working?
    Mr. Dubowitz. The issue is that under the SWIFT bylaws, 
they can deny access to any financial institution that brings 
the SWIFT system into disrepute. SWIFT connects to something 
called Target 2, which is essentially the EU's equivalent of 
the U.S. Fed wire. Under the Target 2's bylaws, it said that no 
bank engaged in proliferation sensitive financing, terror 
financing, or money laundering should be accessing Target 2 
through SWIFT. Of course, that fits Iran to a letter, which is 
why, ultimately, in 2012, EU regulators ordered SWIFT to de-
SWIFT designated Iranian banks.
    The problem: Now they are going to de-designate all of 
those Iranian banks, including the Central Bank of Iran. EU 
regulators will, whether they order or strongly suggest to 
SWIFT that SWIFT reSWIFT or allow them back into the SWIFT 
system. And, by the way, there are a lot of bad banks on the 
SWIFT system. There are Russian banks, as I mentioned, who are 
still there. The problem has been that the Russian banks that 
are still there, as I mentioned earlier, the head of the B-C-D 
Bank of Russia said if you de-SWIFT my bank, that is an act of 
economic war.
    So the problem is, SWIFT, I think, will allow these banks 
back on. Once they are back on, it would be very difficult to 
de-SWIFT them again, despite the bylaws. Because the only thing 
that ultimately got SWIFT to move was congressional pressure in 
2012 threatening sanctions against SWIFT that led to a chain 
reaction.
    Mr. Schweikert. For the chartering country, which is 
Belgium--
    Mr. Dubowitz. Correct.
    Mr. Schweikert. --what do its laws end up affecting here? 
And my fear is if there is a change of government in Iran, or 
something happens, are they able to make an excuse at some 
point saying, you haven't given us full access to the world's 
financial systems, so we are going to blow up the agreement on 
their end.
    Mr. Dubowitz. If I am Iran, that is exactly what I am going 
to do all the way through this process. I am going to keep 
claiming that I am not getting sufficient economic relief. 
Because economic relief, the sufficiency of economic relief is 
a relative basis. So what Iran would do is claim that they are 
not getting it, and then they will use that, excuses to not 
actually fully comply with their nuclear--
    Mr. Schweikert. Not to allow an inspection. I am just 
seeing this sort of tit-for-tat negotiations coming out of 
nowhere. And also, the fact of the matter is--and forgive my 
language, sort of the bastardization of the movements of 
electronic money and the ethics that we particularly, in this 
country, have been trying to drive into this. And now we are 
about to say, oh, except for in this case, ignore the bad acts. 
Use the international system that we have helped create, and it 
is okay to move at least these bad actors' money.
    Mr. Dubowitz. To me, this is the--essentially, this is 
dropping a bomb on Treasury's mandate. Because Treasury's 
Office of Terrorism Financial Intelligence (TFI) was set up to 
protect the integrity of the U.S. financial system, the global 
financial system, from bad actors. It wasn't set up to get a 
nuclear deal. It was set up to protect the integrity of their 
financial system from money laundering, terror financing, 
proliferation-sensitive financing and sanctions of Asia. And by 
giving a nuclear deal--this nuclear deal to Iran and 
dismantlement of our sanctions regime, we are effectively 
saying it is not about conduct-based sanctions anymore. It is 
about diplomatic achievement. Now we made this mistake before 
with North Korea and Banco Delta Asia. North Koreans got all 
those sanctions relief, and they got a nuclear weapon, and we 
lost our economic leverage on North Korea.
    My fear is we are going to do the same thing again. And 
these have deep consequences for our sanctions programs writ 
large, including against Russia and other targets.
    Mr. Schweikert. Mr. Chairman, I appreciate your patience. I 
am just waiting for the day that we are going to owe a family 
or many families an apology because we allowed this backbone to 
finance some horrible act, and we allowed them to use our own 
systems. With that, I yield back, Mr. Chairman.
    Chairman Fitzpatrick. The gentleman yields back. The 
gentleman from Texas, Mr. Williams, is recognized for 5 
minutes.
    Mr. Williams. Thank you, Mr. Chairman.
    And thank all of you for hanging in there with us tonight. 
We appreciate it.
    I am one of those who really wants to take care of America 
first, and not Iran first. I think a lot of us here on the task 
force are concerned about trusting Iran. Obviously, 
historically speaking, many of us find it hard to believe that 
Iran will actually allow for an open and honest process when 
inspecting their nuclear sites. Determining how the JCPOA will 
treat military site inspections is something I am really 
concerned about. Most importantly, however, the fact that the 
President agreed to a deal that lacked inspection, anytime, 
anywhere, I believe will have serious consequences. And I am a 
small business owner myself. I make deals all the time, and I 
am still concerned why we negotiate when ``death to Americans'' 
and ``death to the Israelis'' is a common theme among the 
people we say we can trust.
    Now, my question to you, Mr. Heinonen, is the following: I 
have heard you say that the 24-day window will allow Iran to 
cheat, that Iran has not changed its nuclear course, it is 
keeping all the options open for building nuclear arms. Can you 
explain your comment?
    Mr. Heinonen. Thank you, Congressman. And I will seize the 
opportunity also to clarify my rating with Ranking Member 
Lynch, who asked about it earlier today. He asked me to rate 
the deal on a scale from 1 to 10. And as you see from my 
testimony, I actually have divided this testimony in three 
parts. One part is the nuclear facilities with nuclear 
materials; one is the rights and provisions to access on 
nuclear activities, where I raised those concerns, and there is 
a third category, which I mentioned in my written statement, 
which are some other activities which are proscribed, like 
activities related to acquisition of computer software to 
design nuclear explosive devices, certain multipoint detonation 
systems.
    When I looked at the rating for each of those, I think it 
is better to look at each of those and you make your own risk 
assessment on that.
    The first one, when I said rating 7 to 8, this is for 
nuclear facilities, the way I see it. And why it is not higher 
is because there is this dispute settlement process which you 
mentioned 24, up to 24 days or even more. But then, if you ask 
me to keep the rating for this access to suspected sites on 
nuclear sites, I don't think that I would be give more than 5, 
if we use this rating.
    And then if you ask my opinion, which other possibilities 
to find these computer codes, and someone using them, that is 
actually even not really inspection procedure for that, I think 
it is a zero. It is not even 1. So I think that this clarifies 
an answer to your concerns.
    And we need to keep also in our mind that the timeliness 
here is of essence. It is probably most with the time when 
Iran's capabilities increase. And just as an example, I am not 
a sanctions expert, but when you come to year 15, when Iran can 
have any number of investment facilities, anyplace, actually, a 
little bit deeper in ground than in Fordow, they can produce 
oil enrichments they want, then the break-off time goes down, 
goes to the weeks or even smaller. And then if you add this 
manufacturing of weapon components and others, they are 
prepared, that adds another 2 or 3 weeks to this whole picture. 
I don't think that the sanctions have any meaning at that point 
of time, because Iran already achieved what it needed in a 
worst case.
    Mr. Williams. My next question is directed to you also, 
sir. How important is it that Congress knows which military 
sites and scientists the Administration tends to demand access 
to?
    Mr. Heinonen. That is a difficult question.
    Mr. Williams. That is why I asked you.
    Mr. Heinonen. I think it is important for the international 
community to know these names and installations in public. And 
the reason for me is that there are some other states which may 
have the information which, for example, the United States of 
America Government doesn't have. So by disclosing these names, 
these places, we achieve two things: We engage the other states 
to the process and this really reinforces the system and makes 
any concealment by Iran much more difficult. It also makes the 
verification system much more transparent when the names are 
known.
    Mr. Williams. Thank you.
    Mr. Chairman, I yield back.
    Chairman Fitzpatrick. The gentleman from Arkansas, Mr. 
Hill, is recognized for 5 minutes.
    Mr. Hill. Thank you, Mr. Chairman. Dr. Heinonen, I was 
interested in talking about, for a minute, the IAEA annexes to 
the agreement. Secretary Kerry really was quite dismissive of 
those in the briefing to Congress earlier this afternoon.
    What amount of importance should we put on the Iranian 
document with IAEA in terms of studying it as a part of fully 
understanding the verification regime, inspection regime?
    Mr. Heinonen. I think it is one of the most important 
activities. I have been dealing with Iran for 12 years in a 
row. And one of the most difficult things is to get things 
written down on paper. What was not written, what was not 
specified was allowed. So, therefore, I think that all of those 
documents should be available for IAEA member states. I don't 
see any technical reason why those should be--seek the 
information from the member states of the IAEA. IAEA perhaps 
keep some of those information in technical briefings, but, 
again, I think that the transparency of the process requires 
those to be disclosed so that we can see what kind of 
confidence level we have for this verification regime which is 
foreseen.
    And as I said in my statement earlier today, I think at the 
time from mid-August to mid-December, it is much, much too 
short to solve this PMD problem. And then I also pointed out 
that this IAEA is looking for all the facilities in the annex 
of November 2011 report. But Mr. Amano himself has said that 
there is some other information which came after this. And the 
way I read this JCPOA doesn't really keep this opportunity to 
IAEA to go to verify at this stage that other information.
    Last, knowing from my own experience from earlier years is 
that the IAEA, which reports only information which it is sure 
at that point of time and information which meets its standards 
for the veracity of the information. So I am sure that there 
were also some pieces which, for those reasons, that Mr. Amano 
decided not to include in this program. So, therefore, I see in 
essence that the [inaudible] of the governments and the 
legislative parts will see those details, so that they can do a 
full assessment of what we can achieve, and what we cannot 
achieve, because after all, these are the elements of your risk 
assessment.
    Mr. Hill. Right. And I feel like Secretary Kerry, as I 
said, Mr. Chairman, was dismissive, and I hope that you will 
speak with Chairman Royce about making sure that we see these 
annexes and know the detail of the verification regime.
    A question for Mr. Berman: You were talking about the GDP 
in your written testimony and potential amounts of money that 
are being released. Give me some feel for the flow in addition 
to any near frozen money that is released. What kind of monthly 
flow you think their revenue would be, and also, tell me what 
you think the actual amount of foreign reserves should be for 
their belt-and-suspenders approach of having adequate cash on 
hand were snapback sanctions to come back? How much money would 
you estimate? Ten percent of GDP? More? What would you say?
    Mr. Berman. I think that is a good question. And it comes 
down to sort of a term-of-art calculus. I think the numbers 
that we heard earlier from other members of the task force when 
we talked repatriation of sanctions of frozen funds that have 
already been released in the context of $12 billion to date, I 
think that is a useful barometer to look at when we look at the 
sum of money that is expected to be provided.
    Mr. Hill. How much would you say would be held in reserves? 
Ten percent of the GDP? Would that give them that kind of 
surety that they would--
    Mr. Berman. I think that is a reasonable estimate. My 
colleagues might disagree, might have a different estimate.
    Mr. Dubowitz. Just to give us a sense of this, in 2012, 
2013, Iran's full accessible foreign exchange reserves were $20 
billion, economy of about $350 billion GDP. That is why they 
were at 4 to 6 months in a severe balance of payment crisis to 
the point where we could have actually accelerated the 
sanctions and brought them to severe crisis. Would let up. We 
gave them $12 billion, which took their foreign exchange 
reserves, increased it by 60 percent to $32 billion. Now we are 
going to give them at least $100 billion.
    Now, their foreign exchange reserves are going to get to 
$132 billion, and they have effectively gone from 6 percent of 
their GDP to almost 40 percent of their GDP. So that what we 
have done is we built up their foreign exchange reserves, which 
now increases their economic resilience, and with that kind of 
foreign exchange reserve rainy-day fund, over time, it is go to 
make it very difficult for us to snap back sanctions and create 
the kind of economic pain and time.
    And Dr. Heinonen is right. When their industrial size near 
zero breakout days away from actually breaking out to a nuclear 
weapon, our ability to actually impose that kind of economic 
coercive force at that time would be significantly diminished, 
because it would take much longer to have any kind of impact, 
never mind the impact we had in 2012.
    Mr. Hill. Thank you.
    Mr. Berman. Might I add one additional factoid just to 
round out the discussion? I think it is useful to point out 
when we were having the earlier discussion about the amount of 
constriction that has occurred with regard to the Iranian 
economy as a result of sanctions, we heard about a fifth with 
regard to sort of the constriction of Iranian GDP. If these 
numbers are anywhere near accurate, if we are, indeed, looking 
at $100 billion to $150 billion, we are actually providing or 
facilitating the expansion of the Iranian economy by a 
significant portion. We are wiping clean the constriction that 
occurred as a result of sanctions, and we are actually forcing 
an expansion.
    I think that should be noted because, as I said before, 
money is fungible, and this expanded revenue is likely to 
trickle in various ways to Iranian regional activities as well 
as to terrorism.
    Chairman Fitzpatrick. The gentleman's time has expired. We 
will now proceed to a second round of questions, and I would 
seek unanimous consent to do so. So, without objection, I will 
now recognize Mr. Sherman of California for 5 minutes.
    Mr. Sherman. I have heard reports that Iran really has as 
little as $28 billion or as much as $150 billion. I would like 
to know how much money they have on deposit, and then what are 
the obligations that the host bank or the host country is going 
to extract from that because obviously, nobody is going to give 
Iran its money if it owes it to a domestic vendor, or if it 
owes it to the bank where they have the deposit.
    So, Mr. Nephew, how much do they have worldwide gross, and 
how much of that is obligated?
    Mr. Nephew. So, sir, thank you for the question. I would 
have to defer to the colleagues at the Treasury Department for 
a very accurate, specific set of numbers. My last information 
suggests, again, that they have somewhere between $100 billion 
and $150 billion in total reserves worldwide. Some of that is 
in Iran, and some of that is in--
    Mr. Sherman. When you say ``in Iran,'' you mean they have 
currency of another country in a vault in Iran, or they have 
their own money, which, of course, they have an unlimited 
amount of?
    Mr. Nephew. No, sir, that they have some other country's 
currencies as well as gold, which would also tend to count as 
the reserves as well.
    Mr. Sherman. Okay. So excluding what is in their country, 
we obviously, we are not giving back to them, what do they have 
outside their country?
    Mr. Nephew. And, again, my estimate would only be 
preliminary. I have to defer to Treasury. I would say somewhere 
in the neighborhood of--
    Mr. Sherman. Trying to get a straight answer out of 
Treasury is impossible, and in a classified briefing, it is 
almost impossible. So can you tell me what percentage is in 
China? What percentage is in Japan? Korea? What percentage is 
in India?
    Mr. Nephew. I would say a large percentage is in China, 
probably in the neighborhood of 20 to 30 percent.
    Mr. Sherman. Okay.
    Mr. Nephew. I would say that another, maybe 20 percent, is 
in Japan, and that the rest is spread between Korea, India, and 
Turkey, which are the other main oil importers from Iran.
    Mr. Sherman. And none is in Europe, because they stopped 
importing a while ago?
    Mr. Nephew. Right. There is some that is in Europe, but, 
again, if we are talking percentages, you are probably in the 
single-digit percentages.
    Mr. Sherman. Okay.
    Mr. Heinonen, and this picks up on earlier questioning, we 
are being told that 24 days is enough, because whatever Iran 
does is going to have this signature, and you are going to be 
able to tell that something radioactive was there.
    What I am most concerned about is can they perfect and 
create a raise of their IR-8 centrifuges? Now, in order to 
build these centrifuges, they are going to have to test them 
and calibrate them. Do they need to use gasified uranium to 
calibrate, or could they use an alternative gas in order to 
create an array of centrifuges, what I will call a virgin set, 
it has never touched uranium, there is nothing reactive in the 
room, but they are ready to go?
    Mr. Heinonen. Congressman, when you develop this kind of 
centrifuge, actually it is basically a three-step process. The 
first step is you do what is called a mechanical testing. You 
just get them to spin and see that they survive long enough 
under the very conditions where they are running. The next step 
after that is normally that people use some other gas, like the 
Xenon--
    Mr. Sherman. Like what?
    Mr. Heinonen. --like Xenon, which is noble gas.
    Mr. Sherman. Okay.
    Mr. Heinonen. But that is the centrifuge, just to see that 
they work, because Xenon has several isotopes so you can see 
the enrichment factors. So this is very open and second step. 
And the beauty of that, if I may say, is that it doesn't cause 
any corrosion or--
    Mr. Sherman. It is an inert gas, yes.
    Mr. Heinonen. Yes, inert gas. And then the third step is 
when you run with the uranium gas to see that it still really 
works as it was designed.
    Mr. Sherman. Is there any substitute for the third step 
that does not leave a radioactive signature?
    Mr. Heinonen. I don't think that you can perfect the 
centrifuges in such a way that it can survive--
    Mr. Sherman. So the 24 days might be long enough to catch 
them if they went to the third step. They can do computer 
modeling. Obviously, we would never catch that.
    Mr. Heinonen. Sir, I don't think that this 24 days has much 
to do with that because these, first of all, things are 
happening in different places. And when you go through the 
tests, the last step of the tests, you don't need to test so 
many machines.
    Mr. Sherman. You don't need to calibrate each one.
    Mr. Heinonen. No. You need to use uranium hexafluoride. You 
need a room, which is probably the size of this. That is all 
that you need. And then if you have 3 weeks' time to sanitize 
it, as Mr. Albright also agrees with me, it is doable if you do 
the planning in advance. And this is, I think, we need also to 
recognize that when people talk about the reception techniques 
of Iran in 2003, they were ad hoc arrangements. They were 
caught by surprise. But if they have to do it today, they would 
have very different--
    Mr. Sherman. You are saying you could actually use uranium 
hexafluoride gas in a centrifuge in a room like this and walk 
into that room 24 days later and not be able to detect that 
there had been any radioactive material in that room?
    Mr. Heinonen. Yes, you can. But you have to plan it in 
advance how you dismount--you can design it in such a way that 
this can be done swiftly. And I want to remind you, that there 
were places in--
    Mr. Sherman. I would hope that you would issue a paper or 
something on this to get it the kind of definitive press 
coverage because we are being told and the American people are 
being told that the 24 days is not too long because if they are 
doing anything with uranium involved, it can be detected. And 
you are saying not if you plan it in advance?
    Mr. Heinonen. Yes. There were cases in 2003 that the IAEA 
did not find in certain places enriched uranium, even though 
there should have been.
    Mr. Sherman. So if we just happened to bring a box of 
uranium into this room, hopefully without us in it, and then 
moved it out of this room in a few days, it is not certain that 
you could detect that uranium had been in the room?
    Mr. Heinonen. Provided that you renovate the room.
    Mr. Sherman. Renovate the room. Okay. That usually takes 
more than 24 days, but this is the U.S. Congress.
    I yield back. And I am referring to this exact room.
    Chairman Fitzpatrick. The vice chairman of the task force, 
Mr. Pittenger, is recognized for 5 minutes.
    Mr. Pittenger. Thank you, Mr. Chairman.
    Mr. Heinonen, 20 years ago, when we negotiated with the 
North Koreans, we had the support of allies over there, and the 
Japanese, who supported it; South Korea. Is the world safer 
because of that agreement? Is the world safer because of the 
agreement that we have with North Korea that was negotiated 20 
years ago?
    Mr. Heinonen. North Korea, yes, I was actually involved 
myself from the IAEA side for the Agreed Framework. I think 
that the vision of the people who designed the Agreed Framework 
at that point in time was that North Korea regime would not be 
a very long time. So this agreement, which was supposed--has 
now lasted 2 decades, was not supposed to last 2 decades. And 
that is why the provisions were like they were.
    Mr. Pittenger. Excuse me. Is the world safer today?
    Mr. Heinonen. No, for sure not in North Korea.
    Mr. Pittenger. Thank you. That is my question.
    In my discussions with IAEA in Vienna, my understanding is 
that they are limited, when they have access, just to those 17 
sites. Is that correct?
    Mr. Heinonen. Yes.
    Mr. Pittenger. They can't go anywhere else in the country?
    Mr. Heinonen. At this point in time, no. But when this 
additional protocol provision is sent in, this extra 
transparency undertaken by Iran will be implemented, IAEA can 
have access to additional places.
    Mr. Pittenger. To additional places?
    Mr. Heinonen. Additional places.
    Mr. Pittenger. Predetermined, pre-agreed. But restricted to 
that, and not accessible to anywhere else in the country. If 
there is some other clandestine effort taking place, do we have 
access to go to other places besides the 17 approved sites?
    Mr. Heinonen. The problem is that there are certain 
limitations for this access, which I have explained in my 
written testimony. This is not anytime, anywhere. You need to 
justify in writing why you want to go there, and what is the 
information which drives you.
    Mr. Pittenger. But if I could, just for times sake, is that 
clarified to just be the approved sites, those 17 sites? Can 
they say, ``We want to go to another part of the country?''
    Mr. Heinonen. According to this agreement, yes.
    Mr. Pittenger. Okay. Since the Iranians can stall through 
the ICPA for at least a month or more, in reality, several 
months, how would we know if Iran is removing compromising 
material during this time, and how significant is this lead 
time? Does it compromise the inspection process?
    Mr. Heinonen. Yes, it cuts. And this is the reason why I 
made the clarification to my statement with regard to the 
access of suspected and undeclared sites. There, the detection 
probably is much lower because of this time-lapse between the 
request of access and going there, and in addition to this 
extra certification which IAEA has to give and which the 
counterpart can use to deceive the organization if it so 
wishes.
    Mr. Pittenger. Okay. Thank you.
    Thank you, Mr. Chairman. I yield back.
    Chairman Fitzpatrick. The gentleman yields back.
    The Chair recognizes himself for 5 minutes.
    Mr. Dubowitz, the Administration has stated that all 
sanctions relief is from the nuclear sanctions regime only. And 
after reviewing the list of entities and individuals de-
designated, which I think you referred to in your opening 
statement--I think that was the list you referred to, and if it 
was, we want to include it as part of the record.
    My question to you is, do you agree with the 
Administration's statement?
    Mr. Dubowitz. As I mentioned earlier, Mr. Chairman, the 
Administration is taking non-nuclear sanctions and 
recharacterizing them as nuclear sanctions. So, on that basis, 
I don't agree with the Administration. There were sanctions put 
in place that were not related to Iran's nuclear program. They 
were related to Iran's ballistic missile program, its money 
laundering, it's a list of financial activities. And if you 
look at the Central Bank of Iran, which to me is a classic 
example of this, and there are other examples, but the Central 
Bank of Iran was designated, legislatively designated and 
designated by the Administration, and there was a finding under 
Section 311 of the PATRIOT Act, and there were numerous 
Treasury statements to confirm that it was engaged in a range 
of illicit financial activities, nuclear, ballistic missile, 
terrorism, money laundering, sanctions evasion, and yet, the 
Administration is essentially allowing the Central Bank of Iran 
back in the global financial system.
    I disagree with Mr. Nephew. There are other ways to 
negotiate this. There are ways to actually allow the CBI back 
partially. There are ways to actually put down specific 
benchmarks and say to the Iranians: Once you have established 
and met those benchmarks, then we will rehabilitate your 
Central Bank of Iran. But we are not going to wipe away all of 
these illicit financial activities just because we have a 
nuclear agreement. That could have been proposed and won in a 
negotiation. It is not good enough to say that the Iranians 
would have rejected it, and therefore, we took it off the 
table.
    Chairman Fitzpatrick. Why do you think that is happening?
    Mr. Dubowitz. I don't want to speculate what is in the 
minds of negotiators, and I have a lot of respect for the men 
and women who put a lot of their years of their lives into 
this, including Mr. Nephew. But I do think that we went into 
these negotiations and I believe that the fundamental precept 
on the sanctions side was that we can sweep away these 
sanctions, but we will reinstate them if we have to. And that 
is the construct. The construct is we will take them away, and 
we will reimpose them if we need to; instead of saying, how are 
we going to defend the sanctions architecture in key ways so 
that we maintain the economic leverage, particularly on the 
full range of Iran's illicit financial activities, and that 
said to the Iranians: We will give you relief here, but we are 
not giving you relief there until you establish that your banks 
are no longer engaged in the full range of illicit financial 
activities. That could have been a separate construct. I think 
we could have defended that. I think we would have had 
international support for that, but at the end of the day, the 
Administration had a very different construct: Take it all way 
and reimpose it if they cheat.
    Chairman Fitzpatrick. My concern is that some of those de-
designations may affect the rights of American citizens who 
have judgments against Iran.
    And, Mr. Perles, in my first round of questioning, we 
talked about the Beirut barracks bombing, a case I believe you 
were involved in. We spoke off the record before the hearing 
about how after September 11th, the district that I represent, 
Bucks County, Pennsylvania, had too many families who lost a 
loved one in the Towers and in other places around the country. 
Fiona Havlish was a lead plaintiff in the case. I think Ellen 
Saracini was involved in the case against the Islamic Republic 
of Iran. They did receive a judgment in excess of a billion 
dollars, which is yet uncollected. I saw a Congressional 
Research Service list of total awards against Iran, and this, 
excluding punitive damages, just compensatory damages, exceeds 
$20 billion and doesn't even include the Havlish case from my 
district.
    So what message are we sending to--and I completely 
associate myself with the remarks of Mr. Green earlier about 
the four individuals who are hostages today in Iran. We speak 
their names on the Floor of the House, and we don't forget 
them, and we continue to work for them.
    What message are we sending to the individuals who have 
claims and judgments uncollected against the Republic? Might 
those claims be wiped out as part of this agreement? Any of 
you?
    Mr. Perles. As counsel for many of the claimants, and I 
spoke earlier with you off the record, we share an enforcement 
activity with the Havlish plaintiffs and the Justice Department 
in New York. The target of that enforcement activity was a 
skyscraper, 650 Fifth Avenue in Manhattan, that Iran was using 
as a money laundering facility. We sit at the knife's edge 
today, not knowing what the impact of this agreement will be on 
all of those enforcement activities. We don't know what 
instruction the Administration will give to the Justice 
Department with respect to this joint seizure that we have done 
with the Havlish plaintiffs. We are simply stuck in stasis in 
this wait-and-see attitude.
    What we do know is at least in the case of this bookkeeping 
entry system that we touched upon earlier, which is really the 
world's largest hawala banking system--that is all it is at the 
end of the day, is the world's largest hawala banking system. A 
Federal judge in Manhattan last year asked OFAC to comment on 
the lawfulness of this hawala system. This is Clearstream SA, a 
Luxembourg country owned by Deutsche Borse running what we 
track--I have no idea how much money really went through the 
account. We were able to track $1.67 billion of Iranian money 
going out of JPMorgan Chase by this bookkeeping system. And 
OFAC, frankly, declined to opine upon the lawfulness of that 
sort of transaction. From a practitioner's perspective, that is 
very frightening because if a Clearstream can move Iranian 
money in and out of New York by book entry without it being a 
violation of law, the entire sanctions regime--and I am not 
talking about Iranian sanctions; I am talking about sanctions 
across-the-board--collapses. It means that any drug cartel, for 
example, could move their money to Luxembourg in a Gulfstream 
and have a Luxembourg-based bank move it into the U.S. system 
by book entry. It is unreportable and--
    Chairman Fitzpatrick. Mr. Perles, that skyscraper to which 
you are referring, Fifth Avenue in Manhattan, New York City, I 
believe is owned by Assa Corporation, which is alleged to be a 
shell corporation controlled by Iranians.
    Mr. Perles. That is correct.
    Chairman Fitzpatrick. My concern is that the Assa 
Corporation is on the list of organizations to be de-
designated, which goes back to Mr. Dubowitz's concern, what 
does this have to do with nuclear sanctions, and what is really 
happening here, and what is the impact? Perhaps that is a 
subject for another hearing.
    Mr. Dubowitz. Mr. Chairman, if I could just add one quick 
thought. Mr. Nephew said that we are going to give $100 billion 
of Iran's money back to Iran. It is interesting, I wonder if 
U.S. negotiators, maybe you can ask Secretary Kerry this, did 
they ever say to the Iranians: Of the $100 billion that we are 
going to give you back, we are going to take X percent, and we 
are going to use that to satisfy the claims for the judgments 
of Iranian victims of terrorism. So before we give you money 
back so you can use it to create future victims of Iranian 
terrorism, you are going to pay those judgments out of that 
money. And we are going to give you, for every dollar that we 
give you--for every dollar that we take, we are going to give 
80 cents back to you and 20 cents back to the victims of 
Iranian terrorism. That would have been an easy way to have 
settled this issue.
    Chairman Fitzpatrick. My time has well expired.
    And the vice chairman of the task force is recognized for 
the final question of the hearing.
    Mr. Pittenger. Thank you, Mr. Chairman.
    Mr. Perles, in representation of your clients, you made 
contact with OFAC, DOJ, the Solicitor General, as I understand, 
on behalf of your clients--
    Mr. Perles. On a variety of matters related to--yes.
    Mr. Pittenger. --in seeking assistance on their behalf. Can 
you tell us the nature of that? We understand that your request 
was denied on one occasion at least, and you didn't--you were 
rebuffed by them? Could you give us some context for that, and 
is this consistent with your previous work with the government? 
Had they been cooperative in the past, and why were they not 
this time?
    Mr. Perles. What we currently see could be more 
appropriately characterized as nonresponsiveness. And we just 
talked about the fact that a Federal judge asked OFAC to opine 
upon the lawfulness of this gigantic hawala banking system. We 
were in touch with OFAC after that request was made, and OFAC 
simply failed to respond. They advised the Federal judge that 
they were not going to respond.
    We had hoped to be finishing up our activities at the 
Supreme Court last spring. We were waiting for the Solicitor 
General to opine upon the constitutionality of statutes that 
you gentlemen passed to assist victims of terror. We are still 
waiting. I certainly hope that the Solicitor General will opine 
upon the constitutionality of those statutes this fall, but we 
have no schedule. We really don't know where we are.
    That is a very different contrast to where we were at the 
conclusion of the Bush Administration. Stuart Levey, for whom I 
have enormous respect, turned intelligence data over to us so 
that we could seize $1.9 billion that was transient in New 
York. At that time, he said to us: Your point of contact in the 
Treasury will be the General Counsel of OFAC. The General 
Counsel of OFAC gave me a phone number to call when I needed to 
reach him. It was always answered by a recording, and I always, 
without fail, received a call back from him within 10 minutes 
of the time I called. We just don't see that anymore. It is 
just not happening.
    Mr. Pittenger. So you have seen a reluctance on behalf of 
those who represent our government to assist American citizens 
in their claims against Iran?
    Mr. Perles. Yes, sir.
    Mr. Pittenger. Thank you very much.
    I yield back.
    Chairman Fitzpatrick. The gentleman yields back.
    I would like to, again, thank our witnesses for their 
testimony here today.
    The Chair notes that some Members may have additional 
questions for this panel, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 5 legislative days for Members to submit written questions 
to these witnesses and to place their responses in the record. 
Also, without objection, Members will have 5 legislative days 
to submit extraneous materials to the Chair for inclusion in 
the record.
    Without objection, this hearing is adjourned.
    [Whereupon, at 7:42 p.m., the hearing was adjourned.]
    
    
    
    
    

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                             July 22, 2015
                             
                             
                             
                             
                             
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