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










    IRAN NUCLEAR DEAL OVERSIGHT: IMPLEMENTATION AND ITS CONSEQUENCES

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

                                HEARING

                               BEFORE THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           FEBRUARY 11, 2016

                               __________

                           Serial No. 114-143

                               __________

        Printed for the use of the Committee on Foreign Affairs



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                      COMMITTEE ON FOREIGN AFFAIRS

                 EDWARD R. ROYCE, California, Chairman
CHRISTOPHER H. SMITH, New Jersey     ELIOT L. ENGEL, New York
ILEANA ROS-LEHTINEN, Florida         BRAD SHERMAN, California
DANA ROHRABACHER, California         GREGORY W. MEEKS, New York
STEVE CHABOT, Ohio                   ALBIO SIRES, New Jersey
JOE WILSON, South Carolina           GERALD E. CONNOLLY, Virginia
MICHAEL T. McCAUL, Texas             THEODORE E. DEUTCH, Florida
TED POE, Texas                       BRIAN HIGGINS, New York
MATT SALMON, Arizona                 KAREN BASS, California
DARRELL E. ISSA, California          WILLIAM KEATING, Massachusetts
TOM MARINO, Pennsylvania             DAVID CICILLINE, Rhode Island
JEFF DUNCAN, South Carolina          ALAN GRAYSON, Florida
MO BROOKS, Alabama                   AMI BERA, California
PAUL COOK, California                ALAN S. LOWENTHAL, California
RANDY K. WEBER SR., Texas            GRACE MENG, New York
SCOTT PERRY, Pennsylvania            LOIS FRANKEL, Florida
RON DeSANTIS, Florida                TULSI GABBARD, Hawaii
MARK MEADOWS, North Carolina         JOAQUIN CASTRO, Texas
TED S. YOHO, Florida                 ROBIN L. KELLY, Illinois
CURT CLAWSON, Florida                BRENDAN F. BOYLE, Pennsylvania
SCOTT DesJARLAIS, Tennessee
REID J. RIBBLE, Wisconsin
DAVID A. TROTT, Michigan
LEE M. ZELDIN, New York
DANIEL DONOVAN, New York

     Amy Porter, Chief of Staff      Thomas Sheehy, Staff Director

               Jason Steinbaum, Democratic Staff Director




















                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

The Honorable Stephen D. Mull, Lead Coordinator for Iran Nuclear 
  Implementation, U.S. Department of State.......................     4
Mr. John Smith, Acting Director, Office of Foreign Assets 
  Control, U.S. Department of the Treasury.......................    11

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

The Honorable Stephen D. Mull: Prepared statement................     7
Mr. John Smith: Prepared statement...............................    13

                                APPENDIX

Hearing notice...................................................    56
Hearing minutes..................................................    57
The Honorable Jeff Duncan, a Representative in Congress from the 
  State of South Carolina: Material submitted for the record.....    59
The Honorable Gerald E. Connolly, a Representative in Congress 
  from the Commonwealth of Virginia: Prepared statement..........    64
Written responses from the Honorable Stephen D. Mull to questions 
  submitted for the record by the Honorable Michael T. McCaul, a 
  Representative in Congress from the State of Texas.............    66
 
    IRAN NUCLEAR DEAL OVERSIGHT: IMPLEMENTATION AND ITS CONSEQUENCES

                              ----------                              


                      THURSDAY, FEBRUARY 11, 2016

                       House of Representatives,

                     Committee on Foreign Affairs,

                            Washington, DC.

    The committee met, pursuant to notice, at 10:04 a.m., in 
room 2172 Rayburn House Office Building, Hon. Edward Royce 
(chairman of the committee) presiding.
    Chairman Royce. This hearing will come to order. This 
morning the committee continues our extensive oversight of the 
Obama administration's nuclear agreement with Iran, and its 
consequences for the national security of the United States, 
the consequences also for our allies. As you may know here, I 
feel those consequences are quite dire.
    January 16th was ``Implementation Day,'' and that marked an 
historic turning point in the Middle East because in a snap, 
Iran's record was cleared, its pariah status was dropped, and 
this reconnected Iran to the international trade and financial 
system. Now, with access to $100 billion in unfrozen assets and 
sanctions wiped away, Iran has instantly become the dominant 
country in the region. The regime has achieved this all without 
having to end its aggression against its neighbors. It still 
calls for the overthrow of the governments in Bahrain and in 
Saudi Arabia and in other regional states. It has done it 
without swearing off on its support for terrorism.
    And the Iranian economy was, frankly, prior to this 
hemorrhaging--hemorrhaging because the sanctions which we had 
pushed had worked. The sanctions we pushed in 2010 and 2012 had 
led by 2013 to the implosion of the economy there. Now, now 
Iran's leaders are predicting swift growth. And they are 
probably right, because we see these European countries that 
have observed that the sanctions dam is broken, and they are 
sprinting into the Iranian market to cut billions in deals and 
to invest there, and they are making a mockery of the 
administration's claim that sanctions could ``snap back'' if 
Iran cheats. You tell me if these companies are going to turn 
back when Iran stiffs international inspectors.
    The Revolutionary Guards, already Iran's ``most powerful 
economic actor''--now those are the words of our Treasury 
Department--the ``most powerful economic actor,'' why would 
that be the Iranian Guard? Because they are the ones that 
nationalized the construction firms and the companies. So they 
are only going to grow more powerful with this additional 
international investment.
    Just hours after the agreement's implementation, the regime 
disqualified 2,967 of roughly 3,000 moderate candidates from 
running in the parliamentary elections later this month. And 
after the administration finally responded to Iran's missile 
tests with very minor sanctions, very de minimis sanctions, 
Iran's ``moderate'' President, as he is called, ordered the 
military to accelerate its intercontinental ballistic missile 
program. That is aimed here--at the United States--and it is 
designed to carry a nuclear payload. That ICBM program that 
they are running where the Ayatollah says it is every 
military's mission to help mass produce, and duty to help mass 
produce, ICBMs.
    Now worse, the administration continues to go out of its 
way to appease the Iranian regime, and even thanked Iran after 
it recently seized 10 U.S. sailors in a highly provocative act, 
if you ask me. I mean when was the last time we have seen U.S. 
sailors taken off their ship with their hands behind their 
heads, guns trained on them, their ships stripped, photographs 
for propaganda purposes taken, photographs of one of these 
sailors crying appearing in the Iranian press, and then medals, 
medals given to those Iranian agents who took them into 
custody.
    It appears the administration is determined to protect this 
deal at all costs. And just look at how the Obama 
administration backed away from a new bipartisan U.S. law 
ending visa waiver travel for those who travel to Iran, Iraq, 
Syria, after an outcry, after an outcry from the Iranian 
regime. And the administration has now decided to basically 
ignore the laws--and Iran's ongoing sponsorship of terrorism--
by stretching a narrow national security waiver far beyond 
reason. President Obama signed this bill into law, but has 
essentially allowed Iran's Supreme Leader to veto it.
    And in an unusual move, the State Department settled a 
decades-old financial settlement the day after ``implementation 
day,'' sending the Iranian regime a check for $1.7 billion. As 
you know, Mr. Ambassador, the committee eagerly awaits answers 
from the State Department to the many questions surrounding 
that surprise payment. The administration had countless 
opportunities to seek committee input to this matter in 
advance, but purposefully did not do so. That's the conclusion 
I have to reach.
    Iran has never complied with any, any of its past nuclear-
related agreements. We are watching this to see if this time it 
will be different. But even if Iran meets all the 
administration's expectations, in a few short years the accord 
will leave it the dominant power in the Middle East, and only 
steps away from the capability to produce nuclear weapons on an 
industrial scale. All the while--and this is the most vexing 
part to me--all the while, Iran's leaders continued on Friday 
to chant ``Death to America.'' Many of us are struggling to see 
how this tilt toward Iran makes us safer.
    I now recognize the ranking member for any opening comments 
he may have.
    Mr. Engel. Thank you, Mr. Chairman. And thank you again for 
calling this hearing.
    Ambassador Mull, welcome to the Foreign Affairs Committee, 
Mr. Smith. I know, Ambassador, your current role is the latest 
stop on a distinguished career as an American diplomat. And no 
matter whether we supported the Iran deal or opposed it, we are 
fortunate to have you as our point person on implementation and 
we are grateful for your service.
    Mr. Smith, welcome to you. Thank you for your service. Your 
office has led the way in cracking down on some of Iran's worst 
offenses. In my view, Treasury could be doing even more if we 
had an Undersecretary for Terrorism and Financial Intelligence. 
But the nomination of Adam Szubin is bogged down in the Senate 
Banking Committee, despite the urgent need to cut off Iran, 
ISIS, North Korea, and others from their resources. The Senate 
should confirm Mr. Szubin immediately.
    This is far from the first time the Foreign Affairs 
Committee has held a hearing on Iran. We have held many 
hearings. We understand exactly what the deal was and is. But 
today's hearing is distinctly different from any we have had 
before because the Iran deal has been implemented, nuclear-
related sanctions have been lifted, and Iran no longer has 
enough fuel to make a nuclear weapon.
    Again, no matter what anyone's position was on the Iran 
deal--and I strongly opposed the Iran deal--this ship has left 
port, and now we need to decide which course to chart. One 
option would be to continue bringing up legislation designed to 
undermine the deal. The House has passed two bills like this 
already, largely along party lines. These are symbolic votes, 
none that have become law. In my view, they are not a valuable 
use of this committee or Congress' time.
    So I don't think we should treat the Iran deal the way we 
have dealt with the Affordable Care Act, voting again and again 
to repeal it even though it is a settled issue.
    Again, I didn't like it. I voted against it but it passed. 
So there is another option. And the other option, the one I 
support, is to work in a bipartisan manner to hold Iran's feet 
to the fire and ensure there are serious consequences with 
nefarious behavior. There is a lot we can and should be doing, 
and I am confident that we can work across the aisle to find 
common ground that we can build on.
    Iran remains the world's most active state sponsor of 
terror and a chronic human rights abuser. Iran continues to 
break into national law with impunity. We don't trust Iran, and 
our policies must reflect that. That is why I am glad we 
slapped new sanctions on Iran for testing two medium range 
ballistic missiles late last year, tests that were a blatant 
violation of the U.N. Security Council Resolution governing the 
nuclear deal.
    And there are other problems we need to address. An Iran 
freed from most sanctions can spread more resources to bad 
actors throughout the region, strengthening the murderous Assad 
regime, reinforcing Hezbollah, boosting the Houthis in Yemen, 
and supporting Shia militias in Iraq. As the chairman pointed 
out, it really is galling when after we sign an agreement with 
Iran, they continue, their leaders continue, to yell ``Death to 
America.'' It really is galling.
    But we need to work together on new legislation that will 
crack down on this other dangerous behavior of Iran and shore 
up our allies and partners in the region. So, Ambassador Mull 
and Mr. Smith, I look forward to hearing from you about the 
implementation of the JCPOA, the monitoring and verification 
that Iran is living up to its commitments, and what else we can 
be doing with respect to Iran, outside the scope of the nuclear 
deal, to help make our country safer and enhance stability in 
the region.
    Iran had sanctions lifted because of the nuclear agreement. 
But there are a lot of things that Iran has not yet done, and 
there are a lot of bad things that Iran is doing that I think 
will warrant additional sanctions, for instance, Iran's 
continued support for terrorism. That is not something we can 
turn a blind eye to, and we shouldn't.
    So we need to figure out the way we can be most effective, 
what we can do in respect to Iran, again outside the scope of 
the nuclear deal, because during the nuclear deal we were told, 
well, we can't really talk about anything else, we can only 
talk about the nuclear deal. And so, again, it is galling when 
we look at Iran.
    It is, I think the frustration that you heard from the 
chairman is, frankly, the frustration that all of us have with 
Iran, Iranians and with their bad behavior and with their not 
changing at all after they sign an agreement, showing no good 
faith whatsoever, poking us in the eye, continuing to walk on 
the line and walk over on their own way. We really must hold 
their feet to the fire.
    So I look forward to your testimony, gentlemen.
    Thank you, Mr. Chairman. I yield back.
    Chairman Royce. Thank you, Mr. Engel.
    So this morning we are joined by a very distinguished 
panel. We have Ambassador Mull, who serves as the Lead 
Coordinator for Iran Nuclear Implementation at the Department 
of State. Prior to this appointment, Ambassador Mull served as 
the Ambassador to Poland and as Executive Secretary of the 
State Department.
    Mr. Smith is the Acting Director of the Office of Foreign 
Assets Control at the Treasury Department. Prior to joining 
OFAC, Mr. Smith served as an expert at the United Nations al-
Qaeda and Taliban Sanctions Committee and as a trial attorney 
at the U.S. Department of Justice.
    Without objection, the witnesses' full prepared statements 
will be made part of the record. And members here will have 5 
calendar days to submit any statements or questions or 
extraneous material for the record.
    So, if you would, Mr. Ambassador, please summarize your 
remarks. We will go to you first.

 STATEMENT OF THE HONORABLE STEPHEN D. MULL, LEAD COORDINATOR 
   FOR IRAN NUCLEAR IMPLEMENTATION, U.S. DEPARTMENT OF STATE

    Ambassador Mull. It is a pleasure, Chairman Royce, Ranking 
Member Engel, and all the distinguished members of this panel. 
I appreciate the opportunity to meet with you today to testify 
on the progress we have had on implementing the Joint 
Comprehensive Plan of Action, or the JCPOA.
    This is a really important deal for America's security, and 
that of our friends and allies around the world. And I welcome 
Congress' oversight and partnership in making sure we get this 
exactly right.
    On January 16th, the International Atomic Energy Agency 
issued a report verifying that Iran had completed its key 
nuclear steps under the JCPOA, thus reaching Implementation 
Day. Those commitments signified that Iran had dismantled two-
thirds of its installed centrifuge capacity, including all of 
its most advanced centrifuge machines, and drastically rolled 
back its enrichment program, which had been growing 
exponentially over the past decade.
    It shipped out almost all, about 25,000 pounds worth, of 
its enriched uranium material. Going forward, Iran can possess 
no more than 300 kilograms of up to 3.67 percent enriched 
uranium for the next 15 years.
    Further, Iran removed the core of its Arak reactor and 
rendered it inoperable by filling it with concrete, cutting off 
the path by which Iran could have produced significant amounts 
of weapons grade plutonium.
    Iran placed its nuclear program under an unprecedented and 
continuous IAEA verification and monitoring regime, using 
modern technologies like electronic seals and online enrichment 
monitors that can detect and report cheating. The IAEA also has 
oversight of Iran's entire nuclear fuel cycle, from uranium 
mills to enrichment facilities and centrifuge production 
plants, ensuring that Iran cannot divert nuclear materials to a 
potential covert program without detection.
    Furthermore, any goods and technology usable for nuclear 
purposes must now go through a procurement channel administered 
by the United Nations Security Council, creating yet another 
layer of transparency, oversight, and monitoring into Iran's 
nuclear program.
    Iran is now also provisionally applying, as a result of 
this agreement, the Additional Protocol to its Comprehensive 
Safeguards Agreement with the IAEA. This, along with the 
JCPOA's special provisions to address disputes regarding IAEA 
access to an undeclared location within a short period of time, 
ensures that the IAEA will have all the access it needs to keep 
ongoingly verify Iran's commitments.
    As a result of these actions, in keeping with the deal, on 
January 16th the United States, the European Union, and the 
United Nations Security Council lifted nuclear-related 
sanctions against Iran, allowing the resumption of some 
international commercial and investment activity with Iran. In 
keeping with our commitments, we will not try to block 
commercial activity that the JCPOA permits. However, we will be 
closely monitoring it to be ready to act with the substantial 
existing authorities that we still have as a government if that 
activity supports goals that are hostile to our interests in 
Iran's terrorism or in Iran's ballistic missile program.
    All U.S. sanctions on Iran that are not nuclear-related 
remain in effect. As evidenced just a few weeks ago when we 
designated for sanctions a number of individuals and entities 
for supporting Iran's ballistic missile program, the JCPOA in 
no way limits our ability, or will, to use these tools to 
respond to Iran's other destabilizing activities.
    That is precisely why our allies and nations around the 
world support this deal: It eliminates the threat of a nuclear-
armed Iran, it gives the international community unprecedented 
tools to ensure Iran's nuclear program remains exclusively 
peaceful going forward, and it does not limit our ability to 
respond to Iran's destabilizing policies and actions. In sort, 
it makes the world safer for all of us.
    Just a few weeks ago, Israeli Defense Forces Chief of Staff 
Lieutenant General Gadi Eisenkot acknowledged that the JCPOA 
reduces the immediate Iranian threat to Israel because it 
``rolls back Iran's nuclear capability and deepens the 
monitoring capabilities'' of the international community into 
Tehran's activities. In those same remarks, Eisenkot also said 
that he believes that ``Iran will make great efforts to fulfill 
their side of the bargain.''
    The JCPOA was not built on a prediction of what the future 
will bring. It is built on a solid verification regime. And my 
team and I will continue working every day to confirm that Iran 
is living up to its JCPOA commitments or face the consequences.
    The administration looks forward to continuing to engage 
with this committee and with the Congress in general on this 
important topic. I look forward to answering your questions 
today.
    Thank you.
    [The prepared statement of Ambassador Mull follows:]
    
    
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    Chairman Royce. Thank you, Ambassador.
    Mr. Smith.

STATEMENT OF MR. JOHN SMITH, ACTING DIRECTOR, OFFICE OF FOREIGN 
        ASSETS CONTROL, U.S. DEPARTMENT OF THE TREASURY

    Mr. Smith. Good morning, Chairman Royce, Ranking Member 
Engel, and distinguished members of the committee. Thank you 
for the invitation to appear today before you to discuss our 
actions on Implementation Day of the Joint Comprehensive Plan 
of Action, or the JCPOA, and our efforts to enhance and enforce 
our Iran-related sanctions going forward.
    I will be addressing the key steps that my office, the 
Treasury Department's Office of Foreign Assets Control, or 
OFAC, took to fulfill the U.S. Government's sanctions-related 
commitments on Implementation Day. And I will address the many 
Iran-related sanctions authorities that remain in place and how 
we approach our responsibilities to enforce those authorities.
    The JCPOA is a strong deal that protects the national 
security of the United States and our partners and allies 
overseas. And Implementation Day was a significant milestone of 
the JCPOA. In exchange for Iran verifiably completing its key 
nuclear-related commitments under the JCPOA, we lifted nuclear-
related sanctions on Iran.
    We took our steps on Implementation Day only after the 
International Atomic Energy Agency verified that Iran had 
completed its key nuclear commitments under the JCPOA. The deal 
gives us the necessary flexibility to respond to Iran if it 
fails to comply with its JCPOA commitments, including the 
ability to fully snap back international and domestic 
sanctions. As the agency tasked with implementing and enforcing 
U.S. economic sanctions, we are clear-eyed about the fact that 
Iran remains a state sponsor of terrorism and continues to 
engage in other destabilizing activities. We believe it is 
crucial to continue to implement and enforce the sanctions that 
remain in place.
    On Implementation Day, the United States took action with 
respect to sanctions in two key areas. The first, and most 
significant, was to effectuate the lifting of nuclear-related 
secondary sanctions, which are sanctions that are directed 
toward non-U.S. persons for activity outside of U.S. 
jurisdiction.
    The second area concerns three relatively narrow exceptions 
to our primary embargo on Iran, which remains in place. On 
Implementation Day, OFAC issued a Statement of Licensing Policy 
establishing a favorable licensing policy with respect to 
exports or re-exports to Iran of commercial passenger aircraft 
and related parts and services to be used exclusively for 
commercial passenger aviation. We also issued a general license 
authoring the importation into the United States of Iranian-
origin carpets and foodstuffs, and we issued a general license 
authorizing U.S.-owned or -controlled foreign entities to 
engage in activities involving Iran that are consistent with 
the JCPOA and applicable U.S. laws and regulations.
    To assist the public in understanding all the sanctions 
modifications effective on Implementation Day, OFAC also 
published on our Web site a summary of the actions we took, as 
well as hyperlinks to documents that explain in detail the 
contours of the sanctions lifting, including a guidance 
document that describes in detail the lifting of the nuclear-
related sanctions and the sanctions that remain, a set of more 
than 85 frequently asked questions, and information on the 
changes that we made to the various sanctions lists.
    While we have fulfilled our Implementation Day commitments 
to lift the sanctions specified in the JCPOA, OFAC continues to 
administer a robust sanctions regime targeting Iran outside of 
the nuclear arena, and the range of Iran's troubling 
activities. Broadly, the U.S. primary embargo on Iran remains 
in place. This means that U.S. persons generally remain 
prohibited from engaging in transactions or dealings with Iran 
or Iranian entities, unless such transactions are exempt from 
regulations or authorized by OFAC.
    In addition, secondary sanctions continue to attach to the 
more than 200 Iran-related individuals and entities on OFAC's 
Specially Designated Nationals and Blocked Persons List, what 
we call our SDN List, as well as any such persons we add to the 
SDN List in the future. And Treasury remains fully committed to 
using our existing sanctions authorities to target Iran's 
support for terrorism, its human rights abuses, its ballistic 
missile program, and its destabilizing activities in the 
region.
    Thank you. And I welcome your questions.
    [The prepared statement of Mr. Smith follows:]
    
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    Chairman Royce. Thank you, Mr. Smith.
    Let me start, Mr. Smith, with the fact that you note in 
your testimony that there are still hefty secondary sanctions 
available for anyone who is connected to the IRGC or Iran's 
support for terrorism. Why then haven't we been able to do more 
on Mahan Air, which is the Iranian passenger airline that also 
happens to be the favorite with the country's Islamic 
Revolutionary Guard Corps?
    The IRGC uses this particular company to ferry its weapons 
and its personnel into Syria to aid the Syrian regime. And 
after Quds Force Commander Soleimani flew to Moscow to enlist 
Russian support for a counter-offensive to salvage the Syrian 
regime, these flights to Syria actually increased. And so last 
year your colleague at Treasury testified that regardless of 
the deal, a foreign bank that conducts or facilitates a 
significant financial transaction with Iran's Mahan Air will 
risk losing its access to U.S. financial systems.
    So, instead of more action to ground these planes as part 
of a prisoner deal, the White House agreed to lift an Interpol 
Red Notice against Mahan's chief executive and a senior manager 
whom the U.S. Treasury said was responsible for the airline's 
sanctions evasions operations. So if we are serious, we could 
take immediate action against those financial institutions that 
transact on this Iranian airline's behalf in Asia and Europe 
and the Gulf, we should slap heavy fines on European and Asian 
ground service companies working with the airlines. Are we 
going to do that?
    Mr. Smith. Sir, we have been very engaged around the world 
on the question of Mahan Air. We have reminded our allies, our 
partners and other third countries of the secondary sanctions 
that remain with respect to Mahan Air.
    We have continued to designate those entities that try to 
support Mahan Air around the world. We did some designations 
several months ago. We continue to look at those targets.
    And we continue to engage with governments around the world 
on the need to stop working with Mahan Air. And we are going 
after the finances where we can. Yes, indeed.
    Chairman Royce. Yes, but I have just got to point out, so 
unless those heavy fines--I mean it is one thing to jawbone and 
to say this--but in the meantime they are expanding their 
operations. And in the meantime they are flying into Syria on a 
regular basis. And you see what is happening in Aleppo in terms 
of the encirclement of Aleppo. As that support comes in it has 
very dire consequences in Syria.
    And what I don't see is the push-back.
    Let me give you another example. So what is the specific 
national security interest that justifies this claimed waiver? 
We know what happened. We passed legislation here that said you 
don't get an automatic visa waiver. You have got to go through 
the regular process so that we can check if you go to Syria or 
you go to Iran or you go to Sudan, because those are state 
sponsors of terrorism. By what logic does the administration 
then do a carve-out? What is this national security interest 
that justifies this waiver?
    Does the U.S. have a national security interest in 
supporting so-called legitimate business in Iran? This is the 
argument the administration makes. Legitimate business in Iran, 
the reality is, as your Treasury Department says, the 
Revolutionary Guard Corps is the most powerful economic actor. 
How does this justify going around the law that the President 
signed simply because the Iranian's protested this?
    Mr. Smith. Sir, I can say that with respect to the Iranian 
Revolutionary Guard Corps, secondary sanctions continue to 
attach. We continue to enforce those.
    With respect to the Visa Waiver Program, I would have to 
defer to my colleagues at the State Department.
    Chairman Royce. Well, let me expand, explain, Ambassador 
and Mr. Smith. What the administration should have told Iran is 
stop supporting terrorism and this won't be a problem. Because 
the way we wrote it is ``state sponsors of terrorism.'' But the 
problem we are having is that Iran has not changed its course. 
Iran is still supporting Hezbollah to the hilt, still saying 
they are going to transfer 100,000, 100,000 GPS guidance 
systems to help missiles and rockets held by Hezbollah--
provided by Iran, by the way--to better target cities inside 
Israel.
    But instead of doing that, instead of taking that stance, 
you created an exception, the administration created an 
exception. And, again, the President signed the law. It sounds 
harsh, but it sure looks as if the Supreme Leader effectively 
vetoed the bill that had been passed and signed.
    Ambassador Mull. Mr. Chairman, the administration supported 
the law, that legislation as it came through the Congress, to 
amend requirements for the Visa Waiver Program as a means of 
tightening the security of our borders, which is something very 
important to the administration.
    That law, the Congress included in that law a waiver 
provision to allow waivers for those cases that affected the 
national security of the United States. As a government, in 
implementing that law we have to develop what the criteria are 
for exercising what those waivers will be.
    And I can tell you that none of the criteria that we 
considered was how to promote greater business engagement with 
Iran. It was really aimed at making sure that those people who 
carry out important missions to our national security in Iran, 
whether it is the IAEA inspectors who need to get into Iran to 
verify that Iran is keeping its commitments, or to allow 
journalists to go in and report----
    Chairman Royce. That, that was not our objection. Our 
objection is that the administration turned the concept of a 
case by case waiver on its head. Under the law, the proper 
question is, why is it in the national security interests of 
the United States that this particular person be allowed to 
enter the United States without a visa?
    But you have boiled that down to, is this person involved 
in so-called legitimate business in Iran, at a time when the 
IRGC controls all the major businesses in Iran? A broad 
category that was expressly discussed and then rejected during 
the legislative process.
    We had this debate. We had this debate with the 
administration. We reached our consensus. This bill was signed 
into law and then the Iranians objected. They objected because 
they wanted more business with the IRGC and with these other 
entities controlled by the mullahs and controlled by the 
Iranian Revolutionary Guard Corps.
    I should go to Mr. Engel. My time has expired. But thank 
you very much, Ambassador and Mr. Smith.
    Mr. Engel. Thank you, Mr. Chairman.
    I think what you are hearing is the frustration that while 
we seem to be in many instances talking tough about Iran, in 
reality we are, our actions are far away from our rhetoric. And 
that is a worrisome thing. We want to make sure that Iran's 
feet are held to the fire. And we don't want loopholes to allow 
Iran to wiggle out of the thing, wiggle out of their 
obligations.
    Let me ask, Ambassador Mull, the administration said that 
on Implementation Day Iran would receive around $50 billion. 
And the government spokesman in Iran claimed $100 billion was 
released. Do we know exactly how much was released and where 
the money is going?
    Ambassador Mull. Our estimate really throughout this 
process has been that Iran had slightly upwards of $100 billion 
in frozen assets in international financial institutions around 
the world. Of that amount, a significant portion of it, our 
understanding is more than $50 billion, is already tied up and 
committed to other debts, to trade deals that had stalled 
because of those frozen assets. And that, in fact, those assets 
really available of that slightly upwards of $100 billion, 
about $50 billion would be available. That has remained our 
assessment throughout.
    Mr. Engel. Thank you.
    Mr. Smith, President Rouhani recently toured Europe. And in 
doing so, he is seeking to deepen economic ties, particularly 
it seems to me between Iran and Italy and Iran and France. He 
announced tens of billions of dollars in new economic ventures.
    Are we expecting that Europe will hold a hard line on the 
deal should Iran cheat, or I should say when Iran cheats? Do we 
expect Europe to enforce snap back sanctions if Iran cheats, 
when now it is becoming economically beneficial to have some of 
the European countries having these deals with Iran? How much 
can we count on them if and when Iran cheats--and I suspect 
that they will--that Europe will forego some of its ventures 
and slap economic sanctions on Iran?
    Mr. Smith. Sir, I fully expect that Europe is going to 
continue to remain a committed partner with us and our 
sanctions programs. We have to remember that Europe had many of 
these trade deals before 2010, before 2012, and yet Europe has 
gone along with us. They have already sacrificed many of those 
deals the first time around and cut those deals off in 
compliance with the coordination that we have done and the 
secondary sanctions that we have implemented in cooperation 
with this Congress.
    So I fully expect that Europe will continue to comply with 
the deal that we have struck.
    Mr. Engel. But the lifting of the arms embargo and the 
lifting of the sanction against--sanctions against Iran's 
ballistic missile program obviously could further destabilize 
the region. When the arms embargo expires, Iran will legally be 
able to ship weapons to Assad, to Hamas, to Hezbollah, and 
international interdiction efforts will suffer greatly. And 
after 8 years, countries will be able to sell Iran components 
for its ballistic missile program.
    It's galling, because during the entire negotiations we 
were told that the only thing that was being negotiated was not 
ballistic missile programs, just the nuclear question. And then 
suddenly we find this, this clause stuck in which allows and 
frees Iran from being banned from purchasing ballistic missiles 
in 8 years, and others in 5 years.
    So how will U.S. sanctions work to address this issue after 
5 years and after 8 years?
    Mr. Smith. I think part of the reason that you saw the 
difference in what the U.N. would allow after years was the way 
that we had all conceived of our sanctions. I think the U.N. 
had looked at those sanctions, and those sanctions were imposed 
at the U.N. and we got the U.N. consensus because those were 
viewed as nuclear-related sanctions. So they were viewed at the 
U.N. level as part of the nuclear-related file.
    But I will tell you that the U.S. sanctions, our secondary 
sanctions, continue with respect to the ballistic missile 
program. We have all of the major Iranian components related to 
the ballistic missile program on our SDN List. Secondary 
sanctions remain on those individuals and entities. Which means 
that any European or third country or other actor that deals 
with Iran and deals with those entities with respect to the 
ballistic missile program, even after 8 years, will still have 
to contend with our secondary sanctions.
    Mr. Engel. Let me, let me ask you my final question. What 
has the response been from our allies in the Middle East since 
Implementation Day? That would include Israel and the Sunni 
Arab countries. What is the administration doing to reach out 
to Israel and our Gulf allies, those who are obviously more 
closely affected by the Iran deal, to raise their comfort 
level?
    Ambassador Mull. Thank you, Ranking Member Engel. In my 
current capacity, since taking on this responsibility in 
September I have met several times with senior Israeli 
officials to hear their concerns. Secretary Kerry also 
maintains a regular dialog, not only with the Israeli 
leadership but also with our Gulf allies, on a regular basis to 
address their concerns.
    It is no secret that Israel was opposed to this deal. My 
impression since the deal came into force is that they want to 
work with us to make sure that it is implemented fully. That is 
a partnership and a relationship that I welcome.
    I intend to go to Israel in the next few weeks to continue 
that dialog. Secretary Kerry most recently was in Riyadh to 
meet with his counterparts from the GCC states to hear their 
concerns. They have been supportive of the deal as well, but 
they also want us to remain focused on Iran's destabilizing 
activity in the region. And, of course, we will be.
    Mr. Engel. Thank you, gentlemen.
    Thank you, Madam Chair.
    Ms. Ros-Lehtinen [presiding]. Thank you, Ranking Member 
Engel.
    In the 1990s previous CIA directors confirmed in 
Congressional testimony that North Korea was selling missiles 
and technology to Iran. In 2013 former State Department 
Official David Asher testified before our committee that a 
cooperation agreement signed in 2002 between North Korea and 
Iran was the ``keystone''--his phrase--for the North Korea 
designated nuclear reactor built by Iran proxy Syria, which was 
destroyed in 2007.
    And throughout the years there have been a litany of 
reports confirming Iran/North Korea collaboration on nuclear 
and ballistic missile technology, as well as the presence of 
Iranian and North Korean scientists and technicians at the test 
of these weapons in their respective countries. The United 
States has repeatedly sanctioned North Korean and Iranian 
entities for their collaboration on these issues.
    Reports now indicate that Iranian scientists were again 
present for North Korea's nuclear test in January. So I have 
several questions related to that.
    Ambassador Mull, what U.S. entities are tasked with 
monitoring Iranian/North Korean collaboration on nuclear and 
ballistic missile issues?
    And if Iran acquires nuclear technical knowledge from North 
Korea, and just the expertise, the know-how, the results of the 
nuclear test, not actual nuclear-related materials, would Iran 
be in violation of the JCPOA or any other sanctions against 
itself or North Korea?
    And, also, can you confirm if Iranian officials, 
scientists, or technicians were present in North Korea for its 
latest nuclear detonation on January 6th?
    And moving to another topic under the JCPOA's Annex 3, the 
civil nuclear cooperation, the U.S. and other P5+1 members are 
obligated to cooperate in helping Iran develop its civil 
nuclear program. Has the U.S. or any other P5+1 country begun 
any transfers to Iran as part of this annex? And what has been 
transferred? How do we reconcile some of these transfers with 
prohibitions under existing U.S. law?
    And, lastly, the U.S. no longer seems to care as much about 
Iran's human rights atrocities and its support for terrorism 
worldwide because the administration seems solely fixed on 
giving Iran a good report card on complying with the nuclear 
deal. If you could comment on that as well?
    Thank you, gentlemen.
    Ambassador Mull. Congresswoman, thank you very much for 
those very topical questions which I will be happy to address.
    You are right that through the years there have been 
connections with Iran with many other parties--North Korea but 
others as well--in developing the nuclear program that we find, 
have found to be such a great threat against our interests, 
interests of Israel and our other friends in the region.
    So that is the reason that we took on this deal, to limit 
the capacity for that program to pose a threat.
    Ms. Ros-Lehtinen. So which are the entities that are tasked 
with monitoring this? Which are they?
    Ambassador Mull. Yes. So I can assure you, there are few 
issues that get as much attention in the U.S. intelligence 
community, our diplomatic attention, our military attention 
than the nuclear threats from Iran, North Korea and elsewhere. 
We will remain very much engaged, in fact, I would say even 
more engaged now that we have very specific criteria by which 
to judge Iran's compliance with this agreement.
    Ms. Ros-Lehtinen. But can you confirm whether Iranian 
officials were present in North Korea?
    Ambassador Mull. I cannot.
    Ms. Ros-Lehtinen. Okay.
    Ambassador Mull. I will be happy to look into that.
    Ms. Ros-Lehtinen. And if, if they acquire--if Iran gets 
from North Korea not the actual materials but a lot of the 
expertise, would that be a violation under JCPOA?
    Ambassador Mull. The JCPOA spells out very specific 
measurable commitments that Iran must meet: The number of 
centrifuges, the number of enriched material that it has, the 
extent of its reactor program.
    Ms. Ros-Lehtinen. But if, if Iran gets know-how, advice, et 
cetera, results from tests but not material itself, is that a 
violation?
    Ambassador Mull. North Korea is not specifically mentioned 
in the agreement. However, in the agreement Iran committed to 
refraining from all research aimed at developing a nuclear 
weapon. If we had reason to believe they were not complying 
with that, we have all the full range of our previous----
    Ms. Ros-Lehtinen. And then just quickly, have we begun any 
transfers to Iran on this, the Annex, the 3rd Annex, the civil 
nuclear cooperation?
    Ambassador Mull. That annex does not require civil nuclear 
cooperation. It allows, as appropriate. The United States has 
not provided any material. However, we will be co-chairing a 
working group of the P5+1 that will review Iran's development 
of a new Arak reactor to make sure that it does not----
    Ms. Ros-Lehtinen. Mr. Smith, just one note. You are not 
overlooking the human rights record, you're not overlooking 
their support for terrorism throughout the region, throughout 
the world?
    Mr. Smith. No, ma'am. We continue to be very engaged in 
Iran's human rights abuses and its support for terrorism. We 
have already designated many of the principal actors in Iran, 
many of the principal entities that have engaged in human 
rights abuses. And we continue to follow the evidence.
    Ms. Ros-Lehtinen. Thank you, sir.
    Mr. Deutch of Florida.
    Mr. Deutch. Thank you very much, Madam Chairman.
    I want to touch on three, three different things. Thanks 
for being here. I want to talk about the $100 billion in frozen 
assets that are now available to Iran.
    I want to talk about the secondary sanctions, U.S. 
secondary sanctions on ballistic missiles, and sanctions under 
the deal.
    And, third, I want to talk about non-nuclear sanctions and 
in the 300 individuals and entities that were de-listed on 
Implementation Day.
    So, first, on the issue of the funds, Ambassador Mull, you 
explained that the $100 billion, that $50 billion is tied up 
elsewhere and then $50 billion is available. Whatever the 
ultimate numbers are, what are we doing to actually track that 
money as it is released, since any of that money that flows 
into the hands of those who are supporting terrorists would 
then trigger terrorist sanctions or human rights sanctions?
    Ambassador Mull. In this setting I can tell you that we 
monitor it very closely, without going into too many details, 
where those assets go as they are released. As General Clapper 
testified earlier, a few days ago, so far it seems that most of 
those funds are going into infrastructure, domestic 
infrastructure projects to the extent that they are able to 
monitor that.
    But we have not seen a substantial change in levels of 
support for terrorist actively. However, we remain very closely 
focused on that. And through the sanctions that we have 
remaining, a very strong toolkit of sanctions, we remain ready 
to take appropriate, exact appropriate penalties when required.
    Mr. Deutch. Good. I hope that--I appreciate that response 
and I hope that we have an opportunity to continue to engage in 
this discussion in this setting and in a classified setting.
    Secondly, on the issue of ballistic missiles, Mr. Smith, 
you talk about U.S. secondary sanctions applying even after 8 
years. I am less concerned now about what happens after 8 years 
than I am about what is happening right now. And right now Iran 
has violated U.N. Security Council resolutions by testing those 
ballistic missiles.
    We have imposed sanctions. And I commend the administration 
for doing so. But the JCPOA, the international component of the 
JCPOA is founded upon a Security Council resolution. What, if 
anything, can we expect the Security Council to do in response 
to the clear violations of existing Security Council 
resolutions and the JCPOA that Iran has engaged in by testing 
these missiles?
    Mr. Smith. So what I can tell you is that we still have 
most of the major economic actors in Iran that have engaged in 
ballistic missile testing and any of the work on that, we still 
have them on our secondary sanctions list.
    Mr. Deutch. No, I understand. The Security Council.
    Mr. Smith. In terms of the Security Council activity, I 
would probably defer to my State colleague.
    Ambassador Mull. And that is, will the Security Council 
remain focused on----
    Mr. Deutch. We took these tests to the Security Council, as 
I understand it. The Security Council looked at it. Then it 
goes to the Sanctions Committee.
    Where does it stand now? How likely is it that we are 
actually going to see sanctions on what is a clear violation of 
the U.N. Security Council resolution? And, if they don't 
sanction when there is a clear violation, what confidence can 
we have in their ability to carry out the terms of the JCPOA?
    Ambassador Mull. Well, the Security Council, of course, has 
a feature that was written into the founding treaty of the 
Security Council where permanent members of the Security 
Council have a veto. So, and we had raised in days after this 
test our strong belief, Ambassador Power condemned this launch 
as a violation of U.N. Security Council 1929, which we believe. 
The Sanctions Committee agreed with that assessment.
    Mr. Deutch. Okay.
    Ambassador Mull. The Security Council has not yet won the 
full agreement of all five permanent members to take 
appropriate actions. But I will tell you, Congressman, we don't 
counter the Iranian missile program just by relying on the 
Security Council. We have a broad range of tools that we can 
use for this.
    Mr. Deutch. Ambassador, no, no, I understand that. And I 
appreciate that. But it gets back to my main point here which 
is under the terms of the JCPOA there is--we wrapped all of 
these Security Council resolutions into a new Security Council 
resolution that specifically includes the ballistic missile 
section, which has now been violated. And, ultimately, we have 
been told throughout, including this morning, that our allies 
remain committed. Which this, I guess the question is, is that 
just simply our closest allies? Is it no longer the P5+1? That 
is a concern.
    But I only have a little time left. And I would just like 
to turn to my last issue which is, the companies that, the 300 
individuals and entities that were de-listed on Implementation 
Day, we have been told repeatedly that that list is being 
scrubbed, and that if any one of those individuals or entities 
should be sanctioned for violating either the terrorism--either 
because they export terrorism or because they violate human 
rights, that they would be sanctioned.
    Where are we on the review? Have you identified any who 
should be? And when will those sanctions be applied?
    Ambassador Mull. Congressman, we, actually even before we 
reached Implementation Day, although we have agreed to remove 
400 entities from the so-called SDN List because of their being 
put there for nuclear reasons, on Implementation Day while 
removing them for the nuclear reasons, we added 200 of those 
back onto our SDN List because of terrorism and other, other 
concerns.
    I can ask Mr. Smith to get into the details.
    Mr. Smith. So what I can say is that when we took the 400 
off, before we did that we did the comprehensive review of all 
of them to make sure that we were comfortable with removing 
them. But if we saw any support for terrorism, human rights 
abuses, ballistic missiles, we kept those entities on.
    Since that time we have continued to follow the evidence. 
If there is evidence of any kind of activity that would violate 
our sanctions that fall within the sanctions that remain, we 
will act against those actively.
    Mr. Deutch. I understand. But if I can just clarify. So are 
you say--because this is, I didn't know this. You are saying 
that of the 400 individuals and entities who were listed in the 
agreement, 200 of them are still being sanctioned for terrorism 
and human rights violations?
    Mr. Smith. No. I should clarify this. As we removed 400 
from the list because they were not related to terrorism, human 
rights abuses, ballistic missiles or others, 200 of those were 
marked by the Treasury Department before as Government of Iran 
or Iranian financial institution. We still in the United 
States, our U.S. persons are still obligated to block and do no 
transactions with anyone that is identified as the Government 
of Iran or the Iranian financial institution.
    So those 200 that we put on a separate list, just a list 
for U.S. persons to say these are Government of Iran or Iranian 
financial institutions, no terrorism, no human rights abuse.
    Mr. Deutch. Which I understand. I just want to know have 
you--where are you in scrubbing the list of other names? And 
when will you make a determination whether any of those other 
individuals or entities should be subject to sanctions for 
terrorism or human rights violations?
    Mr. Smith. So the plan that we continue to have is that we 
review all of the intel and all of the evidence that comes in. 
We don't look at every name that is on our--we have 5,000 names 
on our SDN List--we don't look at every name. We look at all of 
the intel that comes in to see, does that affect any name on 
our SDN List? Should we add a name for our SDN List?
    So we work with our IC partners and the rest of the U.S. 
Government to make sure we collect all the information, and if 
it is sanctionable conduct, whether or not you were removed 
from our list or you were never on our list, that is when we 
take action.
    Mr. Deutch. Has any action been taken?
    Mr. Smith. We have taken action. We took action the day 
after Implementation Day against a number of ballistic missile 
supporters. We continue to work. We designated an al-Qaeda-
related entity yesterday.
    We are continuing to work across the range of our sanctions 
programs.
    Mr. Smith of New Jersey [presiding]. The time of the 
gentleman has expired. The chair recognizes himself.
    My understanding is on the ballistic missile deal, they are 
relatively low-level people. Let me ask you with regard to 
the--and a simple yes or no would be very helpful--the Iran 
Sanctions Act expires, as you know, on December 31st of this 
year. Will the administration support legislation simply 
extending the Iran Sanctions Act so that nuclear-related 
sanctions it provides can be snapped back if Iran cheats?
    I know there has been some talk already that talk of that 
is premature. I absolutely disagree. We need to set this as 
just a straight reauthorization for it.
    Secondly, in terms of enriched uranium, exactly what can--
and, Ambassador Mull, this will be to you, of course--what can 
5,060 centrifuge machines actually produce? Does it constitute 
any threat whatsoever? And if they build more machines, how can 
we be sure that that has or has not happened?
    You have testified that Iran shipped almost all of its 
estimated uranium stockpile out of the country, leaving behind 
no more than 300 kilograms over 15 years in Iran. Could you 
tell us exactly where Iran's enriched uranium has been shipped? 
Who watches it? Who guards it? And is there any potential or 
any concern that it could be clandestinely returned to Iran?
    And, of course, I have raised this with Secretary Kerry in 
the past, are there concerns that North Korea could be 
providing such materials to Iran in a clandestine way?
    And, finally, on the human rights issue, and I am going to 
be chairing in my subcommittee another hearing on human rights 
issues in Iran, they are despicable. It is one of the worst 
violators of human rights in the entire world. The use of 
torture, the use of executions, there are very few parallels. 
North Korea comes to mind, and a few other countries. How many 
individuals have been designated? Has the top Justice in Iran 
been designated?
    And we yield for your answers.
    Mr. Smith. I will start with the last question on human 
rights abuses. We have continued to designate under human 
rights authority. But we designated all of the top actors in 
Iran almost from the beginning. And so if you go down the list 
on human rights, we have got the IRGC, we have got the Iranian 
Ministry of Intelligence and Security. We have got all of the 
major, the law enforcement forces, the Iranian Cyber Police, 
the Center to Investigate Organized Crime. All of the major 
actors in Iran that would have any involvement with human 
rights abuses, we have designated.
    The numbers are about 37 individuals and entities that have 
been designated because we went after all of the big, big 
actors.
    Mr. Smith of New Jersey. How many in the past year?
    Mr. Smith. None in the past year because we had already----
    Mr. Smith of New Jersey. I see.
    Mr. Smith [continuing]. We had already done the major 
actors before that time.
    Mr. Smith of New Jersey. And what is the consequence of 
such a designation in your terms?
    Mr. Smith. The assets are frozen in the United States. U.S. 
persons are prevented from dealing with them.
    But it also carries the secondary sanctions, so we can tell 
third country entities, you deal with these individuals or 
entities you----
    Mr. Smith of New Jersey. And the response of those third 
country entities?
    Mr. Smith. If Europe tries to deal with any of those that 
are designated human rights abusers, I mean I would say that 
Europe has many of those actors still remaining on its 
sanctions list, so we haven't see that conduct. But we would go 
to anyone and say, you will be cut off from the United States 
if you continue to deal with those actors.
    Mr. Smith of New Jersey. And you are ready to do that. Have 
you done that yet?
    Mr. Smith. We haven't seen that activity. Those 
organizations and individuals are not the ones that anyone is 
trying to deal with at this time.
    Mr. Smith of New Jersey. Ambassador Mull.
    Ambassador Mull. Sir, on your nuclear-related questions, 
the 5,060 centrifuges, IR-1 centrifuges that are permitted to 
operate, the operational part of the agreement isn't on what 
they produce, it is that Iran may not have more than 300 
kilograms at any time in the next 15 years of no more than 3.67 
percent relatively low enriched uranium. If Iran exceeds that 
amount, it will face a response from the Joint Commission which 
could feature being declared in violation of the agreement, and 
then appropriate snap-back sanctions that could take--that 
would be one of the consequences.
    Secondly, if Iran builds or employs more than 5,060 
centrifuges, they will also be subject to being declared in 
violation of the agreement. These enrichment facilities are 
under 24/7 monitoring by the IAEA, with cameras, with regular 
visits. And we have a good handle on whether or not they will 
be keeping those commitments.
    In terms of other covert support, because there is full-
time IAEA monitoring of the entire fuel cycle within Iran, it 
is impossible to introduce elements into that system without 
being detected by the system, by the IAEA. That applies to 
whether North Korea supplies material or anyone.
    The material that Iran shipped out, that 25,000 pounds of 
nuclear, enriched nuclear material, Russia took that under its 
control. We obviously have many differences over many years 
with Russia, but one of the features of our relationship is 
pretty close cooperation on protection of nuclear material. We 
do not have concerns that that material----
    Mr. Smith of New Jersey. Do we have any on site 
accountability? Can we go and verify ourselves or?
    Ambassador Mull. We cannot.
    Mr. Smith of New Jersey. We cannot. Who does?
    Ambassador Mull. Well, we--I mean Russia has tons of 
nuclear material and has for many years. Russia is responsible 
for maintaining access and controls.
    Mr. Smith of New Jersey. What town is it actually being--
where is the repository for it?
    Ambassador Mull. I'm sorry?
    Mr. Smith of New Jersey. Where has it been put?
    Ambassador Mull. It has not been fully, according to our 
information it has not yet been decided where exactly Russia 
will put this.
    Mr. Smith of New Jersey. Because if it has been shipped out 
it has gone somewhere. It's not----
    Ambassador Mull. It is still in the process of being 
delivered in its entirety.
    Mr. Smith of New Jersey. So it is not all shipped out yet?
    Ambassador Mull. It is all shipped out. It all left Iran on 
a ship.
    Mr. Smith of New Jersey. But where did it go? I mean it has 
to be somewhere.
    Ambassador Mull. It is on a Russian ship, in Russian 
custody, under Russian control.
    Mr. Smith of New Jersey. Actually on the ship right now?
    Ambassador Mull. I believe, if it has not arrived yet, it 
will very soon. And it will be kept within control of Russian 
facilities.
    Mr. Smith of New Jersey. But again, we are then trusting 
the Russians to say that they have it under their purview, that 
they are watching it? I mean they are so close to Iran, they 
have double-dealed us and especially the Middle East, the 
Syrians, I don't know why we would trust them. Could you tell 
us where it is going? I mean that is important. And then I 
will----
    Ambassador Mull. That is a Russian Government 
responsibility to decide where it goes. We do not have concerns 
about Russian custody of this material. What is important in 
this deal is will it go back to Iran? And I can guarantee there 
are sufficient controls in place that if one piece of dust of 
that material goes back into Iran we are going to be aware of 
it.
    Mr. Smith of New Jersey. But again, can the IAEA go to that 
ship and verify that it is there and follow it as it goes to 
its final resting place?
    Ambassador Mull. IAEA has different monitoring arrangements 
with each, each country in the world.
    Mr. Smith of New Jersey. I would not have confidence that--
I mean it is not even in a place, it is not in any city that 
you say. It is not in any, it is not somewhere in Russia that 
we could say there it is. We don't even know where it is.
    Ambassador Mull. The IAEA verified the loading of all of 
this material onto the----
    Mr. Smith of New Jersey. But loading and where does it end 
up is very important.
    Ambassador Mull. That is the Russian Government's 
responsibility to decide where it goes.
    Mr. Smith of New Jersey. That is a flaw, in my opinion.
    And the yes or no on the Iran Sanctions Act?
    Ambassador Mull. On the Iran Sanctions Act we are, you 
know, we remain ready to work with the committee to decide on 
when and if it should be properly reauthorized.
    Mr. Smith of New Jersey. I think it is our opinion, many of 
us, not everyone, is that if you want snap-back sanctions and 
you want to continue the accountability regimen you have got to 
have the Iran Sanctions Act. I don't know why it is not a 
simple yes. I think we are talking about straight 
reauthorization.
    Brad Sherman.
    Mr. Sherman. The entire country has been captivated by 
ISIS. The beheadings on YouTube provoked us all. But the Shiite 
extremist alliance based in Tehran is more dangerous and more 
evil. They have killed far more Americans, hundreds in the 
1980s in Lebanon, hundreds in Iraq and hundreds in Afghanistan, 
from Iranian-provided IEDs.
    This alliance of Iran, Assad, Hezbollah and the Houthi is 
racking up victories in the Middle East now. They are not just 
more evil because they kill more--they killed more Americans. 
They are responsible for the deaths of 200,000 Syrian 
civilians. The difference here is that Assad, supported by 
Iran, and by the money that Iran now has available, when ISIS 
kills 50 people they put it on YouTube, when Assad kills 100, 
kills thousands he has the good taste to deny it.
    Now, this nuclear deal was not supposed to be a ``get out 
of jail free card'' for everything that Iran does. We have our 
Section 301 and Section 302 of the Iran Threat Reduction Act 
that I worked with our former and present chairman on. You have 
only designated 70 entities under 301. But just as important, 
under 302 you have not sanctioned a single business that I can 
identify, for doing business with the Iran Revolutionary Guard 
Corps, an entity that puts new blood on its hands every day in 
Syria.
    Mr. Smith, what is the most prominent or well-known company 
that has been sanctioned for doing business under Section 302, 
for doing business with the Iran Revolutionary Guard Corps.
    Mr. Smith. Sir, I am sorry, I would have to get you that 
information.
    Mr. Sherman. I got the information: Zero point zero.
    Mr. Smith. We have done a significant amount of IRGC 
designations. IRGC is the----
    Mr. Sherman. Designations are nice. What about sanctions?
    Mr. Smith. Designations are sanctions, sir. Designations 
under this accord----
    Mr. Sherman. I am talking about secondary sanctions.
    Mr. Smith. So when we designate an IRGC, you have the IRGC 
label on our Web site then if we designate that you have that--
--
    Mr. Sherman. Okay, look, the IRGC isn't trying to do 
business in the United States. The IRGC is getting its supplies 
from companies in Europe. Which European companies have you 
sanctioned for doing business with the Iran Revolutionary Guard 
Corps.
    Mr. Smith. When we designate an IRGC and we put an IRGC 
tag, that carries secondary sanctions.
    Mr. Sherman. Have you imposed these secondary sanctions, 
Mr. Smith, or can you just--the filibustering is supposed to go 
over on the Senate side.
    Mr. Smith. The answer is if they carry secondary 
sanctions----
    Mr. Sherman. Have you designated, have you imposed a 
secondary sanction on any business in Europe?
    Mr. Smith. We do not have to because the European actors 
have moved away from that business.
    Mr. Sherman. And none of them are doing business with the 
IRGC?
    Mr. Smith. I have not seen evidence of European actors 
continuing to deal with the IRGC.
    Mr. Sherman. Okay. What about South Asian and East Asian 
actors?
    Mr. Smith. I haven't seen----
    Mr. Sherman. Nobody is doing it? Okay, because the Treasury 
Department has announced that the IRGC is this huge economic 
monolith. You have only designated 70; there are lot more 
fronts for you to designate. But you say it is this huge 
economic, and yet you can't find a single East Asian, South 
Asian or European company that is doing business with them.
    Let me move on to Air Mahan, another designated entity, the 
airline of choice for the Iran Revolutionary Guard Corps and 
for thugs going to Syria to kill people. They are flying Airbus 
aircraft into friendly countries in the Middle East and Europe. 
That, those Airbus aircraft have U.S. technology on it. What 
have we done to prevent those aircraft from being received in 
those friendly cities?
    Mr. Smith. A number of agencies of the U.S. Government, 
including Treasury, Commerce, State, and others, have been 
actively engaged to try to prevent Mahan Air from being able to 
fly.
    Mr. Sherman. Have we stopped anything or are we just 
sending letters?
    Mr. Smith. We have stopped.
    Mr. Sherman. Where have we stopped Mahan?
    Mr. Smith. I don't think I can say in this setting. But I--
--
    Mr. Sherman. Can you get that to me confidentially?
    Mr. Smith. Yes.
    Mr. Sherman. We haven't--let's face it, they are flying 
into an awful lot of European and Asian and Middle East 
friendly cities. Why haven't we nailed a single bank for doing 
business with Mahan? No secondary sanctions on any bank?
    Mr. Smith. We continue to try. We continue to do what we 
can to follow the----
    Mr. Sherman. But we can't find a single bank that is doing 
business with Mahan?
    Mr. Smith. If we find the evidence, then we will go after 
them.
    Mr. Sherman. Okay. But you have found zero evidence of 
any--I mean we are relying on the Executive Branch to enforce 
this deal because you are able to monitor what Iran does. And 
here is an example where you can't--you have got a major 
airline doing business in dozens of cities, and you can't find 
them doing business with a single bank.
    Ms. Ros-Lehtinen [presiding]. Thank you, Mr. Sherman. Thank 
you. Mr. Rohrabacher.
    Mr. Rohrabacher. Thank you very much.
    First of all, I would like to associate myself with the 
concerns about human rights that Congressman Smith outlined. 
And I, I would like to say that there are ways of approaching 
the human rights issue that will have an impact for today. 
There are other ways, other ways of approaching it that will 
have a major impact for the future as well.
    Let me just say that we have with us today folks in their 
yellow jackets who remind us. They are here as testimony to the 
fact that we have a brutal human rights abusing regime in 
Tehran. They are here to remind us that they have families and 
there are still people, whether it is in Camp Liberty or 
whether it is in Iran itself, who are being held and being 
tortured and being repressed by this Mullah government that has 
the destiny--they have the, how do they say, the blessings of 
God for these horrible crimes that they are committing against 
their own people, and have been doing so for decades now.
    If we are to have a nuclear-free Iran, and what we are 
really trying to do is trying to stop this--we recognize now 
the Shiite/Sunni split, and the last thing we want to see is a 
nuclear exchange between Sunni Muslims and Shiite Muslims. This 
is really almost a human--not just for our own national 
security--it is almost a humanitarian effort on our part to try 
to prevent that weapons system become part of that historic 
fight between these two factions of Islam.
    But let me just note that just the sanctions for human 
rights abuses is not enough. And I don't believe that we are 
doing it with the gusto or with the determination that we need 
to, although you know more about that than I do, what the 
potential use of this is. But that is one part of the human 
rights approach.
    The other approach is that we need to be supporting those 
people, we are not just punishing those people who are 
oppressing the population, but supporting those people in the 
population who want to bring about a more democratic Iran and 
want to, basically, sever the Mullahs from their iron grip that 
they have on Iranian society.
    Have we done anything, based on the fact that now we have 
had this rapprochement on the nuclear issue with the Iranian 
agreement, have we in any way stepped up support, direct 
support for any group within Iran that is trying to make a more 
democratic country?
    Ambassador Mull. Congressman, thanks for the question. I am 
afraid I will have to take that back for you. In my 
responsibilities day to day, my job is focused exclusively on 
making sure Iran meets all of its commitments, that it doesn't 
get to have a nuclear weapons capability.
    We remain gravely concerned about the human situation, 
human rights situation in Iran. I think there is probably not 
another country in the world who speaks up more often about our 
concern and takes action through the international community, 
through international organizations, as well as through our own 
laws and authorities.
    Mr. Rohrabacher. I am sorry, you folks wouldn't understand, 
wouldn't know if we had operations going on this part of the 
human rights issue, I mean challenging those people who are 
challenging human rights and versus helping those people, like 
the MEK and others, who are trying to overthrow this Mullah 
dictatorship and which would create a better situation for 
achieving all of our goals if we had a more democratic 
government there.
    Let me just say that that is, if we do not do that, if we 
do not help those people who are struggling to build a more 
democratic Iran, we are just postponing the time when Iran and 
the Mullahs will have a nuclear weapon. Because our treaty that 
we are talking about, how many years is it before it no longer 
applies? Is it a 15-year event?
    So instead of postponing, we don't need to postpone that 
time. We have already postponed it long enough. We need to 
eliminate that eventuality by making sure that we are 
supporting the democratic elements, like the MEK and others, 
and the Baluchs and the Azaris and others, and the Kurds in 
Iran, who want to live a more free society.
    So thank you very much, Madam Chairman.
    Ms. Ros-Lehtinen. Thank you very much, Mr. Rohrabacher.
    Mr. Connolly of Virginia.
    Mr. Connolly. Thank you, Madam Chairman.
    You know it is really, this is a fascinating hearing 
because it is supposed to be on the implementation of the Iran 
nuclear deal. And some of the most strident and loud critics of 
entering into that deal at all are now focused on airlines and 
Revolutionary Guard business activities and sanctions and 
closing up banks and rather than the actual elements of the 
nuclear agreement, which they were the first to say would never 
work. They would cheat. The metrics weren't good enough. This 
was enabling nuclear development by Iran.
    So, Ambassador Mull, I am going to ask some questions about 
the nuclear agreement and its compliance. So any evidence of 
Iran cheating so far?
    Ambassador Mull. So far, no. I can tell you, Congressman, 
that in the 6 months or so I have been working on this in the 
run-up to Implementation Day, whenever we detected that there 
might be a potential for moving away from the commitments we 
have engaged with our Iranian counterparts and they have 
addressed those concerns every single time.
    Mr. Connolly. Every single time. Okay.
    Ambassador Mull. Yes.
    Mr. Connolly. We are going to have to run through this real 
quickly because I want to try to understand.
    Let me see. One of the requirements of the agreement was to 
modify the Arak heavy water research reactor so that it could 
no longer produce weapons grade plutonium; is that correct?
    Ambassador Mull. Yes, that is correct.
    Mr. Connolly. And did they do that?
    Ambassador Mull. Yes.
    Mr. Connolly. What did they do to do that?
    Ambassador Mull. They removed the core of the reactor and 
filled it with concrete so it could not operate.
    Mr. Connolly. Is that reversible?
    Ambassador Mull. Not very easily, no.
    Mr. Connolly. Is it observable?
    Ambassador Mull. Yes, it was observed.
    Mr. Connolly. So they complied?
    Ambassador Mull. Yes.
    Mr. Connolly. Pretty big deal?
    Ambassador Mull. Yes.
    Mr. Connolly. All right. They had 19,000 estimated 
centrifuges. And they were required under the agreement to get 
down to 6,104; is that correct?
    Ambassador Mull. That is right, sir.
    Mr. Connolly. Did they do that?
    Ambassador Mull. Yes, sir, they did.
    Mr. Connolly. They did?
    Ambassador Mull. Yes.
    Mr. Connolly. And was that observable?
    Ambassador Mull. It was. It was verified by the IAEA.
    Mr. Connolly. Oh, my Lord. All right.
    They had full enrichment at Natanz and Fordow. What is the 
status there?
    Ambassador Mull. Natanz, enrichment at Natanz is 
proceeding, as allowed by the agreement. All enrichment 
operations at Fordow have been observably ceased.
    Mr. Connolly. And what was the enrichment level before the 
agreement?
    Ambassador Mull. The highest amount that they enriched to 
was 19.75 percent.
    Mr. Connolly. 19.75; and is that weapons grade?
    Ambassador Mull. No.
    Mr. Connolly. And but they are required to get down to 
3.67; is that correct?
    Ambassador Mull. Yes, sir.
    Mr. Connolly. So from 19 to less than 4?
    Ambassador Mull. Yes.
    Mr. Connolly. Did they do that?
    Ambassador Mull. Yes, sir.
    Mr. Connolly. Was that observable?
    Ambassador Mull. Yes, it was.
    Mr. Connolly. Can they quickly go back to 20 or 19?
    Ambassador Mull. Only by breaking elements of the 
agreement. And they would have to do so in places that are 
under the full-time observation of the IAEA.
    Mr. Connolly. Now did I understand you to say that their 
stockpile of enriched uranium was in excess of 25,000 
kilograms?
    Ambassador Mull. 25,000 pounds.
    Mr. Connolly. 25,000 pounds. And the agreement says they 
can have no more than 300 kilograms; is that correct?
    Ambassador Mull. Yes, sir.
    Mr. Connolly. From 25,000 pounds to 300 kilograms. Did they 
do that?
    Ambassador Mull. Yes, sir.
    Mr. Connolly. You are kidding?
    Ambassador Mull. No.
    Mr. Connolly. They complied again?
    Ambassador Mull. Yes.
    Mr. Connolly. And was that observable?
    Ambassador Mull. It was observed and documented by the 
IAEA.
    Mr. Connolly. Hmmm. Now, they also had to agree that 
centrifuge production in the uranium mines and mills would be 
subject to IAEA international inspection at any time; is that 
correct?
    Ambassador Mull. Yes, sir.
    Mr. Connolly. Have they complied with that?
    Ambassador Mull. Yes, sir.
    Mr. Connolly. Huh. So all those predictions of the end of 
the world, Armageddon, the fact is we are just enabling the 
nuclear development, it sounds to me, Ambassador Mull, that at 
least so far we are not dealing with a perfect state, we are 
not dealing with perfect behavior, there are lots of other 
things we object to vehemently, but with respect to this 
agreement so far they have, in fact, abided by it. Not cheated 
that we know of. We have a pretty vigorous inspection regime. 
We have metrics they have met. And it sounds to me like, 
despite predictions to the contrary notwithstanding, they are 
further away from a nuclear weapon today than they were before 
the agreement. Is that correct? Would that be a fair assessment 
from your point of view?
    Ambassador Mull. That is undeniably true.
    Mr. Connolly. Well, my Lord. So we can, you know, we can 
decide we want to pillory the administration in one of the most 
important nuclear agreements, in my opinion, in our lifetime. I 
happen to draw the opposite conclusion of the Prime Minister of 
Israel. The existential threat to Israel would have been 
denying this agreement.
    It is hard work to make an agreement. It is hard work to 
make it implemented. It is hard work to validate it. It is hard 
work to stick with it and oversee it. But so far it is working. 
And thank God it is.
    Ms. Ros-Lehtinen. And it is hard work to say that is 
enough, Mr. Connolly.
    And now we turn to Mr. Wilson.
    Mr. Wilson. Thank you, Madam Chair. And I really appreciate 
the extraordinary efforts of Chairman Ed Royce's leadership to 
expose the increasing threats to American families by the Iran 
deal. Additionally, I am really grateful this is a bipartisan 
concern. We have heard it from Ranking Member Engel, Mr. 
Deutch, Congressman Sherman.
    And Ambassador Smith, Mull and Mr. Smith, I believe your 
testimony today confirms American families are at greater risk 
than ever, that the terrorists are better financed than ever to 
achieve their goal of death to America and death to Israel. And 
in fact, Mr. Smith, you admitted that Iran is a state sponsor 
of terrorism. How could you not recognize that by releasing 
$100 billion to a state sponsor of terrorism that a significant 
amount of that money would be used to kill American families?
    Mr. Smith. Sir, I think we thought that a state sponsor of 
terrorism with a nuclear weapon was a far more dangerous threat 
to the international community, its neighbors, and to the 
United States. What I can say is that we put, through the 
efforts of our sanctions, Iran is in a $\1/2\-trillion hole. 
And what we released allows Iran to have about $50 billion, 
much of which it needs to stabilize its currency and to have 
any foreign trade whatsoever.
    Mr. Wilson. And American families are at risk. In fact, 
last month in Baghdad it was Iranian-backed terrorists that 
kidnaped four Americans. And so they are not stopping. And they 
may be kidnapping today.
    I have still not forgotten 283 U.S. Marines killed in 
Beirut by the Iranian regime. We should not forget that. I had 
two sons serve in Iraq. Every day they are at risk of IEDs 
provided by Iran. Dismissing this is incredible and putting 
American people at risk.
    And, Ambassador Mull, you indicate that Israel now supports 
the agreement. This is in direct contradiction to every bit of 
information that we have received from the Israelis themselves. 
And so yes or no, does Israel support this or not?
    Ambassador Mull. Congressman, as I said in my testimony, 
the Chief of Staff of the Israel Armed Forces has publicly said 
that the threat to Israel of a nuclear Iran has declined as a 
result of this agreement. Does that mean that the entire 
Israeli Government is happy with it? No. It is obvious they 
have had serious concerns about it. But at the same time----
    Mr. Wilson. Again, yes or no. But it is, hey, in a 
democracy you will have, thank God Israel is a democracy so you 
will have good people agree and disagree.
    And back again to the development of intercontinental 
ballistic missiles, Ambassador. There was virtually no response 
as Iran continues to do that. There is only one purpose for the 
ICBMs, as indicated by Congressman Engel, Congressman Deutch, 
and that is to develop a capability of nuclear weapons to 
strike America. Is there any other reason for ICBMs?
    Ambassador Mull. Well, that is one of the reasons that we 
undertook to rid Iran of the ability to attach nuclear payloads 
to those missiles. Missiles, ICBM missiles can be used without 
nuclear payloads; that is why they are still a threat to us and 
our allies and why we are working hard against them.
    Mr. Wilson. But, hey, but hey, the real use of an ICBM is 
to use with a nuclear capability, not to make some type of 
conventional attack. The American people are truly at risk. And 
for this to simultaneously occur is extraordinary to me, and 
there not be repercussions. And so over and over again we see 
the American people at risk.
    And then when you identify the IAEA inspections, is it not 
true there is not an American on the inspection team?
    Ambassador Mull. There are a number of Americans who work 
in the IAEA.
    Mr. Wilson. But not on this team itself?
    Ambassador Mull. Americans do not travel to Iran; that is 
correct.
    Mr. Wilson. No. And what you have really described, and the 
American people need to know this, no Americans, no Canadians. 
What you are really describing is self-verification by the 
Iranians of their own existence. And so I really am saddened by 
what I hear today. And to me it just confirms what Lieutenant 
General Michael Flynn, the former Director of the Defense 
Intelligence Agency said, ``That the Middle East policy is one 
of willful ignorance.'' And it is willful ignorance that I 
think is putting the American families at risk. And I hope you 
will change course.
    There has been over and over again requests for what has 
been done to enforce sanctions, to reinstate sanctions. I am 
really grateful to be working on legislation with Congressman 
Joe Kennedy--it is bipartisan--about zero tolerance for 
violations.
    I yield back my time.
    Ms. Ros-Lehtinen. Thank you, Mr. Wilson.
    Mr. Cicillline.
    Mr. Cicillline. Thank you, Madam Chair. Thanks for calling 
this event.
    I thank Ranking Member Engel for at the beginning of this 
hearing reminding us that this agreement has been approved and 
now we have the responsibility to be certain that it is being 
implemented properly and we prevent Iran from becoming a 
nuclear power. And I think when you think about it, as you 
said, Ambassador Mull, what the consequences would have been in 
our efforts to push back on Iran in a number of ways in the 
region because of their aggression and ongoing activity, it 
would be a very different scenario if we were required to push 
back on an Iran with nuclear capability and make, I think make 
a difficult situation even more dangerous.
    So I have three very specific questions. When the United 
States began negotiating with Iran, the breakout time was a few 
weeks to a few months, according to most experts. That plant I 
would say would have enough enriched uranium to build a nuclear 
weapon. How far is Iran from breakout now as a result of this 
implementation?
    Ambassador Mull. Sir, over the course of the last 3 months 
Iran has moved from breakout time of about 2 months to at least 
1 year.
    Mr. Cicillline. Okay. The International Atomic Energy 
Agency is being asked to do some significant work in terms of 
compliance with this agreement. And I actually wrote to the 
President about this, urging that we be certain that we provide 
additional resources to the IAEA to do this work.
    I know that the administration's proposal provides a modest 
increase. But I think the IAEA has already indicated that it is 
not sufficient. Could you speak to the importance of making 
certain that we, in a bipartisan way, allocate sufficient 
resources, recognizing we don't fund the entire operation but 
that we need to financially request of IAEA so they can do the 
work that we are asking them or requiring them to do?
    Ambassador Mull. Yes, sir. I am in regular contact with the 
Director General of the IAEA, Yukiya Amano, to affirm that he 
has sufficient resources for his agency to do a very important 
job that is vital, vital to our national security interests. 
And that he has assured me that in terms of the--its 
responsibilities for the nuclear program it is fully funded and 
has everything it needs for the rest of this year.
    Obviously, we will continue and we very much welcome the 
Congress' bipartisan support for making sure that the IAEA is 
fully funded.
    Mr. Cicillline. Well, and I think the request they made for 
Fiscal Year 2017 is an increase of $10.6 million. So I don't 
think that is reflected in the administration request, but I 
think many of us are very concerned and want to be certain that 
they have the resources that they need.
    And, finally, I know there has been a lot of discussion 
about the snap-back provisions and non-compliance by Iran, for 
obviously the behavior of this country and its leaders give us 
lots of reason to expect there will be some non-compliance. And 
what I am interested in knowing is what work the administration 
has done to deal with violations of this agreement?
    While some people have argued if there is even the 
slightest unintentional violation, the deal is off, that would 
obviously result in the deal which will prevent Iran from being 
a nuclear power from being abandoned, which doesn't give us the 
result we want, to allow Iran to pursue its nuclear ambitions. 
So there has to have been some conversation on what is the 
administration's position about minor violations of the 
agreement. Have we developed a grade of what those kinds of 
things were? Have we communicated those to our European allies? 
I know there is some discussion of zero tolerance if there is 
anything, the deal is completely abandoned.
    I would just like to know your thoughts on that, what the 
administration is considering and how we should think about 
sending a very clear message to the Iranians that any violation 
of this comes with a punishment and a consequence, even if it 
doesn't ultimately mean we reject the entire deal?
    Ambassador Mull. Yes, sir. I can tell you that the JCPOA 
allows quite a broad range of potential responses to violations 
or contradictions to the agreement that range from a partial 
reimposition of sanctions to full imposition of not only 
bilateral sanctions, but those from the European Union and the 
U.N. Security Council.
    I am not sure that it would be helpful for me to speculate 
here in terms of what each individual violation or 
contradiction to the agreement would provoke because we think 
that uncertainty of response is something that is a diplomatic 
asset to us as we go forward. But I can tell you that, 
generally speaking, the gold standard for us in deciding how to 
respond it the breakout time that we talked about a few moments 
ago, that if Iran's breakout time diminishes below a year, we 
would consider that to be a very serious violation and work 
with our allies to have the appropriate response.
    Mr. Cicillline. And, of course, communicating to the 
Iranians that it is the position of the United States that any 
violation will be addressed and punished in an appropriate way.
    Ambassador Mull. Yes, sir.
    Mr. Cicillline. There is no, you know, death by a thousand 
small cuts.
    Ambassador Mull. Yes. Yes, sir. And I can assure you we are 
in daily contact with IAEA on their evaluation of the situation 
in terms of Iran's compliance.
    Ms. Ros-Lehtinen. Thank you, Mr. Cicilline.
    Mr. Cicillline. I yield back my time.
    Ms. Ros-Lehtinen. Mr. Duncan is recognized.
    Mr. Duncan. Thank you, Madam Chair.
    First off, let me say that I hope history is right and 
sides with Mr. Connolly's comments more than history did with 
Neville Chamberlain's comments. And we will see. I hope that 
Iran continues to comply. I hope that they don't have a nuclear 
weapon because the consequences are dire.
    I want to talk about the Visa Waiver Program law that was 
passed as part of the Omnibus in 2015, December, as it relates 
to the JCPOA. And I specifically want to point to negotiations 
that went on from November 30th through the passage of the 
Omnibus.
    These were negotiations between the White House, State 
Department, Homeland Security, and Members of the House and 
Senate. During--on November 30th, DHS asked for certain waivers 
for people to travel to Iran and Iraq in the post-March 2011 
forward time frame. And the negotiations went on for quite some 
time. On November the 1st--excuse me, December the 1st, 
December the 1st, December the 2nd, December the 3rd an 
agreement is finally reached. On December the 3rd the White 
House notifies the Homeland Security Committee via email that 
they support the negotiated text that does not allow visa 
waivers for specific groups or categories. Okay? That is 
December 3rd.
    December 3rd at 10:37 in the morning, White House notifies 
CHS, Committee on Homeland Security staff, that the State 
Department has no further edits to that text. Okay? President 
signed H.R. 2029 into law, which included the Visa Waiver 
Program language.
    December the 19th Secretary Kerry sends a letter to the 
Iranian Foreign Minister stating that the U.S. will implement 
the requirements of this law so as not to interfere with the 
legitimate business interests of Iran. He ought to be talking 
about the legitimate business interests and the national 
security interests of the nation of the United States of 
America, but that is what he said.
    Then on January the 21st Homeland Security announced 
implementation plans for the Visa Waiver Program enhancements 
with five broad categories of waivers, including category 
exemptions that were rejected, specifically rejected during the 
negotiations by Congress through December the 2nd.
    Are you familiar, sir, Ambassador, with the Visa Waiver 
recommendation paper memo, white paper issued by the State 
Department?
    Ambassador Mull. I have seen many papers that were involved 
in discussion of deciding what the administration's policy 
would be in implementing case by case waivers. I----
    Mr. Duncan. Well let me, let me, I will remind the 
committee and you that during the negotiations the Congress and 
the administration, including the State Department said they 
agreed with the text and the negotiated text through the 
passage of the Omnibus. And then shortly thereafter they issued 
this white paper which talks about, it actually references a 
second white paper called a legal paper within this document. I 
have no idea what that is and we don't have our hands on that 
yet.
    But in this paper it specifically comes up with a rationale 
for circumventing the will of Congress, as well outlined during 
the negotiations, during the Omnibus and during the Visa Waiver 
Program law, signed by the President. Before the ink is even 
dry on that bill, they are issuing a white paper on how to 
circumvent that with rationale.
    I think it points to actually negotiating in bad faith in 
December before an Omnibus if the State Department feels like 
they are going to go around the will of Congress, to go around 
these negotiations and actually allow the issue of waivers, 
visa waivers for people that have traveled to Iran from 
European countries.
    To the simple point that part of it says this is one of the 
questions they are going to ask, Madam Chairman, for someone 
traveling on business purposes. Simple question: Was your 
travel to Iraq--and this was the Iraq portion but I think it 
applies to Iran as well--after March 1st, 2011? If yes, was the 
travel exclusively for business purposes?
    It is a pretty benign question to be asking. I mean there 
is not a lot of opportunity for delving into what the business 
was related to, who they were talking with. And going back to 
Mr. Sherman's comments, as the negotiation--I mean the 
conversation with Mr. Smith went on a minute ago about contact 
with IRGC. We are talking about European businesses, not 
American businesses, European businesses and business men and 
women that are traveling to Iran, who may have contact with 
Iran Revolutionary Guard, Quds Force, whoever, possibly come 
back to their home country in Europe and apply for travel to 
the United States under the Visa Waiver Program. And according 
to the State Department, they are going to be given a waiver.
    That goes against the will of the Congress, sir. We are 
going to delve into this more, Madam Chairman. I wanted to say, 
Mr. Chairman, I wanted to say all this on the record. And I 
would ask that this document be submitted for the record for my 
colleagues on both sides of the aisle to delve into this a 
little further.
    And with that I yield back.
    Chairman Royce [presiding]. Without objection.
    We go now to Lois Frankel from Florida.
    Ms. Frankel. Thank you, Mr. Chair. Thank you, Ranking 
Member for this hearing. And thank you, gentlemen, for being 
here.
    I have two sort of, I think they are sort of related 
questions. First has to do with the snapping back the 
sanctions. You know, we have read about a lot of economic 
activity now with Iran, with other countries. So my first 
question is, realistically, let us say we look 2 years ahead 
from now or 3 years ahead from now and we had to do a snap-
back, what is the prospect of actually, actually getting back 
to where we were before we lifted the sanctions?
    That is the first question.
    Second question I have is that, you know, we hear talk of 
people--I am not going to get political--but there have been 
Presidential candidates who have said, Well, if I get elected I 
am going to immediately rip up the deal. And I would like to 
know what you think the implications of that, of that would be?
    Those are my two questions. Thank you.
    Ambassador Mull. Thank you very much, Congresswoman.
    In terms of a snap-back, if we get to a situation in which 
Iran is not complying with the agreement and we decide to snap 
back those sanctions, reimposing the secondary sanctions, as my 
colleague Mr. Smith mentioned earlier, we have been down this 
road before where our European or other partners have an 
economic relationship with Iran, companies from those countries 
do. But for whatever reason we decided to penalize and to force 
those countries and companies to make the choice: Either you do 
business with Iran or you do business with us.
    Every single time they choose to do business with us 
because it is a more profitable relationship. So I have no 
doubt that if we decided to snap back sanctions, that we would 
be effective in achieving that.
    In terms of various interests, as some candidates have 
said, that they might rip up the deal on a first day in office 
of a new presidency, I would only say that I would advise 
whoever the new President and his or her team would be upon 
taking office, that to think very carefully about destroying a 
deal if Iran has continued to comply, which has reduced its 
breakout time, extended it from one, 1 or 2 months, to over a 
year. Iran has drastically shrunk the amount of enriched 
nuclear material that could lead to a bomb.
    I am not, I am not sure I see what the benefit to U.S. 
interests would be in freeing Iran from those commitments that 
have made our interests much safer.
    Ms. Frankel. Mr. Smith, did you want to answer?
    Mr. Smith. I would just agree with what Ambassador Mull 
said with respect to sanctions snap-back. The world knows what 
we can do with our secondary sanctions, and I think they will 
follow.
    We are all very trained in what the secondary sanctions can 
accomplish. And they know the force of U.S. law in this area.
    Ms. Frankel. But I guess would it be safe, though, to--I 
don't know if the word ``safe'' is correct--but I would assume 
that even if you put the sanctions back in place immediately, 
you are still not going to--it is still going to take a while 
for Iran to actually feel the same impact that they felt before 
they went to the table.
    Mr. Smith. It may take some time before Iran feels 
sanctions if they come back on. But we should remember where we 
are today. Iran is in a $\1/2\-trillion hole because of the 
sanctions that we have imposed over the course of time. Now 
they are facing a drop in oil prices just as the sanctions 
relief is coming into play.
    What we are talking about is them getting about $50 
billion, much of which they need desperately to prop up their 
currency, to be able to do any foreign trade. So when you look 
at the $50 billion that is relieved that they are getting 
versus the $\1/2\-trillion they have, I think it is going to be 
a very long time before Iran gets out from under the sanctions 
burden that we have imposed.
    Ms. Frankel. Thank you.
    I yield back, Mr. Chair.
    Chairman Royce. We go now to Mr. Perry of Pennsylvania.
    Mr. Perry. Thank you, Mr. Chairman. Thank you, gentlemen 
for being here.
    I will tell you that I appreciated the very direct 
questioning of Mr. Connolly and the very direct answers on very 
specific items. But I would also tell you that in my view, Iran 
has played long ball and we have played--we have been myopic. 
And while this, I think it has been early to talk about 
cheating on some of the specifics, but I do think in time that 
they will get there.
    And but I just see them as consolidating their gains in 
Syria and Yemen and Iraq, and then using their ballistic 
technology, completing that testing in that program over a 
series of years to the point where when they are ready to be 
nuclear there will be very little that we can do with it. And 
that is the long ball and that is the long goal. I see Iran as 
the regional hegemon.
    But in that, within that context let me ask you, 
Ambassador, a question here. The procurement channel in the 
United Nations Security Council 2231 allow for nuclear articles 
and dual-use articles to be provided to Iran from foreign 
suppliers through a dedicated procurement channel. However, 
some of the materials on dual-use list that can be supplied 
through the dedicated procurement channel are critical for 
Iran's ballistic missile program, such as carbon fiber. I know 
you are aware.
    So this is a simple yes or no question: Would Iran's 
acquisition of carbon fiber outside of the dedicated 
procurement channel so in here described be a violation of the 
agreement and/or the U.N. Security Council resolution?
    Ambassador Mull. Congressman Perry, I am sorry I can't give 
a yes or no answer because each case would be dependent on what 
exactly the intended use of any such materials through that 
channel would be.
    The United States has a veto in the procurement channel. 
And so any time that we believe that an item is going to 
improve Iran's ballistic missile program or is going to be 
delivered in a way that is not subject to appropriate end use 
monitoring, I can't imagine the circumstances in which the 
United States would agree to a case like that.
    Mr. Perry. Let me make sure I understand your answer. You 
said it would be episodic; right? It depends on the, because of 
the dual-use proposition. But then you kind of said, I think, 
that the United States, understanding and recognizing that, 
wouldn't be amenable to their procurement of that. Is that? Did 
I characterize that correctly or not?
    Ambassador Mull. Well, again, we would examine what is the 
good that they are seeking to procure, what is the stated 
purpose of its use, will it be monitored in a way that we are 
satisfied that it won't be used in a way to harm our interests 
across whatever.
    Mr. Perry. I mean you know that they can't domestically 
produce carbon fiber; right?
    Ambassador Mull. As of now, yes.
    Mr. Perry. And you know it is critical for their ballistic 
missile program, I am sure.
    And it is regulated through the procurement channel. So how 
would it not be monitored if it is regulated through the 
procurement? How would its use not be monitored?
    Ambassador Mull. Well, according to the terms of 
implementation of the procurement channel, any country that 
wants to sell any material that is subject to controls of the 
procurement channel, as part of their applying for permission 
to proceed with the transaction they must explain how they are 
planning to monitor the end, the end use.
    I would also add that we have a number of other tools 
outside of the procurement channel such as the missile 
technology control regime that we will continue to----
    Mr. Perry. I don't mean to interrupt but I have a limited 
amount of time.
    Ambassador Mull. Yes.
    Mr. Perry. So Rouhani has already stated that it is their 
intention to expand their ballistic missile program and that 
they will have to gain access to carbon fiber elsewhere, and it 
will not go through the procurement channel. Are you familiar 
with that, that he said that?
    Ambassador Mull. I am familiar in broad terms with what he 
said about how he plans to develop the missile program, yes.
    Mr. Perry. So if or when they do buy outside the 
procurement channel, which then there is no--because it is 
outside you don't know what they are using it for and there is 
no inspection paradigm or verification paradigm associated with 
that, would the administration consider that a violation of the 
agreement and the Security Council resolution?
    Ambassador Mull. So, Congressman, the, I mean what is 
subject to the control of the procurement channel is a very 
specific list of nuclear suppliers with annexes of potential 
dual-use material and other essentially controlled nuclear-
related items.
    Mr. Perry. Including carbon fiber?
    Ambassador Mull. Well, it depends. It depends what exactly 
is the use.
    Mr. Perry. What does it depend on?
    Ambassador Mull. What it would be----
    Mr. Perry. They are going to go outside the procurement 
channel, as stated by Rouhani.
    Ambassador Mull. Sir, I can assure you that we will use 
every technique at our, and every tool at our disposal----
    Mr. Perry. Including considering it a violation----
    Ambassador Mull [continuing]. Whether it is----
    Mr. Perry. Including considering it a violation? Yes or no?
    Ambassador Mull. Well, a violation would be if Iran 
procures something on the nuclear suppliers' group list of 
annexes outside of the procurement channel.
    Mr. Perry. Including carbon fiber. So the answer would be 
``yes.''
    With your indulgence, Mr. Chairman.
    Ambassador Mull. Yes. Yes, sir, carbon fiber.
    Mr. Perry. Okay, thank you. I appreciate your time.
    Mr. Chairman, I yield.
    Chairman Royce. Thank you, Mr. Perry.
    We now go to Mr. Alan Lowenthal of California.
    Mr. Lowenthal. Thank you, Mr. Chair. And thank you, 
Ambassador Mull and Mr. Smith for being so forthright in 
answering questions.
    I want to follow up on some of the questions that Mr. 
Connolly has addressed. And I think this is really to you, 
Ambassador Mull. And you have already, I think, described to us 
about the removal of the core of the plutonium reactor. You 
have already described to us about the shutting down of the 
thousands of centrifuges, the shipping out of the country of 
its highly enriched uranium in exchange for lower level nuclear 
fuel for its nuclear power plants. I am going to follow up on 
these questions.
    And I am curious about the extraction of that highly 
enriched uranium stockpile. If you can tell us how that was 
done; it was sent out of the country? Where it was taken? What 
steps we are taking to ensure that it is a permanent transfer 
and that the Iranian regime will not be able to get its hands 
on that or other highly enriched uranium in the future?
    Ambassador Mull. Yes, sir. Thank you, Congressman 
Lowenthal.
    Iran agreed that it would remove virtually all of its 
enriched nuclear material.
    Mr. Lowenthal. Right.
    Ambassador Mull. To keep that obligation, what it decided 
to do was to negotiate with Russia the transfer of that 
material out of Iran on a Russian ship into Russian custody, 
without any claim of title to that information. So it has 
surrendered this material to Russia.
    Russia has committed to responsibly safeguard it within the 
side, within its entire nuclear program that it has there, a 
long history obviously, of maintaining and safeguarding nuclear 
materials.
    Mr. Lowenthal. Are we able to know, is there some way that 
we can follow up on that? Or will we be monitoring and where 
the Russ--both the Russians and Iranians are, so that that 
enriched plutonium does never return back to Iran?
    Ambassador Mull. Yes, sir. I mean we worked with the IAEA 
through this agreement to make sure that any possible entry 
point of nuclear material like that back into Iran could only 
take place under the observation and monitoring of the IAEA. So 
if there were some development by which someone tried to do 
that, we would be aware of it, and we would consider that a 
violation.
    Mr. Lowenthal. And approximately how much was delivered to 
Russia?
    Ambassador Mull. About 25,000 pounds of enriched uranium 
material.
    Mr. Lowenthal. And what could 25,000 pounds of enriched 
uranium do? How much, how much would it take to--of that to 
develop nuclear weapons?
    Ambassador Mull. None of that material. The highest grade 
of enrichment of that material that was removed was at 19.75 
percent. Nuclear weapons material, weapons grade uranium really 
has to be at the 90 percent level or higher, highly enriched 
uranium.
    Mr. Lowenthal. I am going to follow up. You know, a lot of 
us voted, and I was proud to support the agreement, but we had 
concerns about the implementation. So that is why we are so 
glad that the two of you are here today. And we are concerned, 
as some of these questions have been raised, about Iran's other 
non-nuclear trouble making, the security of Israel in the 
region. These are all concerns. The Congress wants to stay 
abreast of the compliance and any violations.
    You know, in the letter in August to my colleagues from New 
York, Congressmember--to New York Congressmember Mr. Nadler, 
the President allayed many of these concerns and he detailed 
his plan, which included committing a highly qualified senior 
official with Ambassador rank to monitor them. That is really 
your position now that has come up.
    What I am interested in is in your role do you have all the 
proper access and information that you are going to need? Are 
there any things that you are going to need to regularly 
report? And how often can we expect those kinds of interactions 
with you to follow up on this?
    Ambassador Mull. Yes, sir. I am at your disposal and at the 
disposal of any Member of Congress to come down here any time 
and answer any questions or concerns that you have. I feel 
extraordinarily well supported by the entire administration. I 
have regular, rich, frequent interactions with various 
representatives of our intelligence community. I have access 
regularly to Secretary Kerry, other senior officials in the 
White House, who are very much focused on the implementation of 
this deal.
    So I feel very well supported. And I am, and my team and I 
are----
    Mr. Lowenthal. So you understand this is just a first, we 
have just begun this process, and that you are--will be very 
much agreeable to be coming back to the committee to reporting 
on a regular, because I think it is critically important that 
we stay in touch.
    Ambassador Mull. Yes. Absolutely, sir, I think this is a 
vitally important part of my job because you may raise 
questions that I haven't thought of. And this is about the 
interests of all of our country. So I very much want to be a 
good partner for the committee.
    Mr. Lowenthal. Well, I will be calling upon you.
    Ambassador Mull. I look forward to it.
    Mr. Lowenthal. Thank you. And I yield back.
    Chairman Royce. Thank you, Mr. Lowenthal.
    Now we go to Mr. Mark Meadows from North Carolina.
    Mr. Meadows. Thank you, Mr. Chairman.
    Mr. Smith, let me come to you with regards you are talking 
about this trillion-dollar hole, that the sanctions have had 
great effect. So let me just maybe narrow our focus a bit as it 
relates to Hezbollah and the financing of Hezbollah.
    I guess I know that you implemented some of these sanctions 
in January, the announcement of the sanctions. But my question, 
I guess, goes really to the heart of the matter and it is with 
regards to Iran and are they financing Hezbollah in your 
professional opinion?
    Mr. Smith. I think we have seen Iran support Hezbollah over 
time, yes.
    Mr. Meadows. Are they today?
    Mr. Smith. I haven't seen the latest figure. But I would--
--
    Mr. Meadows. Well, within the last 6 months wouldn't you 
agree----
    Mr. Smith. We have seen Iran continue to support Hezbollah.
    Mr. Meadows. So at what point would you consider putting 
sanctions on Iran, whether it is through the executive order 
that is in place or through the new law that the President just 
signed into law in December, at what point will you consider 
putting sanctions on Iran for supporting Hezbollah?
    Mr. Smith. So Iran is already under a government blocking 
from here. We----
    Mr. Meadows. I am talking about, listen, I understand it. I 
am talking about the additional tools that you have, at what 
point will you implement additional sanctions as it relates to 
Hezbollah and the financing that comes from Iran?
    Mr. Smith. I will have to look at the evidence in the 
future and see where it takes us. That is what we do, we follow 
the evidence, and when we see evidence we continue to develop 
targets to add them to our list.
    Mr. Meadows. Well, but your testimony is is that the last 
intelligence you had was that they are financing Hezbollah. 
Let's be intellectually honest. I think we both know that they 
are. Is it not true that the greatest benefactor of Iran's 
support, or the greatest benefactor for Hezbollah is Iran?
    Mr. Smith. That is a statistic that I am not sure that I 
have. I don't want to go beyond what I can tell you.
    Mr. Meadows. Can you give it to this committee and to the 
chairman?
    Mr. Smith. I think we could get that to you in perhaps 
another setting, a classified setting.
    Mr. Meadows. All right. So then under your professional 
opinion, who might be a greater financier of Hezbollah other 
than perhaps their illegal drug activities? What other state 
sponsor could be greater than Iran?
    Mr. Smith. Sir, I have already acknowledged that I think 
that Iran has continued to do so. I just, I don't want to go 
beyond my answer.
    Mr. Meadows. The American people see pictures of sailors on 
an anniversary today and they are offended. I am offended. And 
if we have tools in place that can address it and you are not 
using them, would you not believe that that is being 
irresponsible?
    Mr. Smith. Sir, we are continuing to use our tools. We are 
continuing to designate. Virtually every month, every week we 
are adding additional designations of terrorists. We did so 
yesterday. I think we will continue to do so in the very near 
future to oppose terrorism.
    Mr. Meadows. But the big black hole here, Mr. Smith, is 
Iran. We are going all around it. We have got over 100 
individuals--and I agree with you, I have been following the 
numbers--we are addressing it. But somehow Iran is getting a 
free pass. And that is concerning to the American people.
    Mr. Smith. I would disagree with you about Iran getting a 
free pass. There are a number of agencies of the Government of 
Iran that continue to be designated by the United States for 
their support to terrorism, a number of significant individuals 
that continue to be designated of the Government of Iran for 
their support to terrorism. And those carry secondary sanctions 
consequences.
    Mr. Meadows. Ambassador Mull, let me come to you and follow 
up on a question that actually came up yesterday. Some of your 
colleagues behind you were there in a hearing at OGR as it 
related to the Visa Waiver Program. Mr. Duncan of South 
Carolina mentioned that. Under what, since you are responsible 
for making sure that this JCPOA stays in place, was there 
language in there that would allow Iran to actually participate 
in our Visa Waiver Program, either directly or indirectly? 
Because they are participating indirectly now. Was there 
language in there that would suggest that they should enjoy 
those benefits?
    Ambassador Mull. Language in the, I am sorry, in the 
legislation or in the----
    Mr. Meadows. Well, we know there was in our language.
    Ambassador Mull. Not in the legislation, sir.
    Mr. Meadows. In the joint agreement. Because Secretary 
Kerry came out and----
    Ambassador Mull. Yes. Yes.
    Mr. Meadows [continuing]. Very quickly said that we are 
going to expand it to business-related activities----
    Ambassador Mull. Right.
    Mr. Meadows [continuing]. Which was not----
    Ambassador Mull. Yes. So, Congressman, thank you very much 
for the opportunity. I would like to address, I think this is a 
critical misunderstanding that I really welcome the opportunity 
to clarify.
    The JCPOA, in that agreement all of the parties agreed that 
they would not attempt to block legitimate business activity in 
Iran. When this legislation was passed, the Iranians 
immediately complained to me, to Secretary Kerry, accusing us 
of violating the JCPOA through this legislation.
    That is decidedly not the case. We explained to them that 
this legislation was not aimed at disrupting Iran's business 
activity, it was aimed at protecting America's borders. And it 
was in that context that Secretary Kerry in fact defended the 
legislation responding to this untrue charge that the Iranians 
had leveled.
    Mr. Meadows. I yield back. Thank you, Mr. Chairman.
    Chairman Royce. Okay, we are going to go with Mr. William 
Keating of Massachusetts.
    Mr. Keating. Thank you, Mr. Chairman. I want to thank our 
witnesses for being here today and thank you for your direct 
answers to questions.
    There is one area I just have left because we have covered 
so much ground as a committee here this morning, and that is, 
those are the issues for violations outside the JCPOA that we 
were told during the whole process will be vigorously, you 
know, pursued. We talked about some of the areas this morning 
where that would be relevant, including support of terrorism, 
regional destabilization, human rights abuses, and ballistic 
missile programs.
    And we do know that Iran tested a precision-guided 
ballistic missile capable of delivering a nuclear warhead, in 
violation of U.N. agreements. We are aware that the U.S. 
sanctioned 11 individuals and entities responsible for 
supporting these kind of activities.
    Now, my question is this in terms of your oversight, in 
terms of our ability as a committee to work with you and 
communicate in monitoring this. And I know you can't be very 
specific on this because of your leverage is sanctions in the 
future.
    But in these sanctions outside the JCPOA, can you just shed 
a little light on how you work administratively with other 
agencies of our Government? Can you just shed some light on the 
process where you are determining what you give for sanctions 
at a certain level, what factors are going to result in your 
reviewing that and changing those sanctions, maybe escalating 
them, whether it is continued violations, whether it is 
continuing--How, how do you arrive at that?
    How is that, how do you function administratively in 
reviewing those, setting those, so that we have a better sense 
going forward on these very important sanctions that are 
outside the agreement?
    Mr. Smith. Thank you, sir. I think that is a very important 
question. I am happy to try to shed some light on it.
    As I sit here today, we have teams of analysts at the 
Treasury Department who are pouring through the intelligence 
and other information that we have from a variety of sources. 
The intelligence community, from the Defense Department, from 
all of the agencies of the U.S. Government, they look at the 
classified and unclassified information that is available and 
they focus on the different sanctions programs that we have.
    So I have a team that is working on terrorism, Hezbollah 
sanctions, ISIL sanctions, everything in the terrorism realm, 
whether it is Iran-related or not Iran-related, we follow the 
intel.
    We also have teams working on our Syria sanctions, 
including any support to Syria, as well as anything dealing 
with Yemen, destabilizing activities in the region, and also 
teams that focus on the ballistic missile program. We gather 
the evidence to see if we see anything that fits within the 
sanctions program. And then, if we do, we start to develop a 
case on it. We talk to the rest of the interagency so everybody 
is on board so they know what we are doing.
    We don't want to, for example, interrupt a sensitive 
intelligence operation. We don't want to interfere with a law 
enforcement operation. So we make sure that what we do we 
communicate very well, so that when we roll out we are able to 
roll out in the smartest, most effective way.
    So basically we start form scratch developing the intel, 
building cases, working with the team so that we can roll out 
successive sanctions against the greatest threats for our 
national security and foreign policy.
    Mr. Keating. Yes. And in that process, what triggers 
reevaluating things? Without getting into detail, because I 
don't want to undercut the leverage you have, but I mean what 
are the things that are important that you are looking at and 
you say, you know, they are not reacting to these sanctions, we 
are going to have to leverage this up? What kind of things are 
you looking at?
    Mr. Smith. I think we, we continue to look at our 
experience across all of our sanctions programs. We have a good 
idea of what is impactful. And that is why when we wanted to 
have an impact on Iran in many of these other sanctions 
programs, for ballistic missiles there are major entities that 
do the ballistic missile program: SHIG, and SBIG, and MODAFL, 
and all of the big names in Iran that are associated with the 
ballistic missile program, we hit those. And then we go after 
anyone outside of Iran that we see supporting that program.
    So that is why last month we went after a UAE- and China-
based network that we saw that was supporting that program. So, 
again, we follow the evidence to see what is going to have an 
impact. And the evidence sometimes will suggest different 
impacts for different programs. And so we try to get the 
networks that are most critical to those bad activities.
    Mr. Keating. So it is a dynamic situation, it is not, you 
know, something which, that is incremental. Here we go, we are 
going to impose this now. Let's see, it is continually being 
evaluated; is that correct?
    Mr. Smith. Those under sanctions know how to try to 
circumvent them. And so we have to continue to evolve.
    Mr. Keating. Well, thank you. That will help us as we go 
forward. Because this committee is certainly going to be 
concerned on these other violations going forward and how the 
U.S. reacts. And this will help give us our ability to perform 
the oversight function more properly.
    So thank you very much. I yield back.
    Chairman Royce. Thank you very much, Mr. Keating.
    We go to Ted Yoho of Florida.
    Mr. Yoho. Thank you, Mr. Chairman. Gentlemen, I appreciate 
you being here.
    In your opinion, I think we already know the question or 
answer to this, Hezbollah they are, we could assume they are a 
terrorist organization that carries out proxy work for Iran? 
Agreed?
    Mr. Smith. Yes.
    Mr. Yoho. With Iran offering to put GPS technology on 
100,000 missiles, would we assume that is for peaceful purposes 
or terrorist purposes?
    Mr. Smith. I will just say Iran's development of its 
ballistic missile program is something that remains under 
sanction by the U.S. Government, and we continue to go after 
it.
    Mr. Yoho. Okay, good.
    So if they are supporting Hezbollah and giving this kind of 
technology to over 100,000 missiles, we can assume that is 
probably not for good reasons; right? I mean----
    Mr. Smith. I am going to continue to follow the evidence. 
And----
    Mr. Yoho. Well, the evidence points that it is going there. 
And, you know, if it walks like a duck, quacks like a duck, it 
is a duck. This is, this is not a good thing.
    And that brings me to the opening remarks of the chairman. 
President Obama in the Rose Garden pledged to remain vigilant 
and respond to Iran's continued sponsorship of terrorism, its 
support for proxies who destabilize the Middle East, and 
threats against American friends and allies.
    Iran's destabilizing activity has continued in the wake of 
the nuclear deal. Is that not breaching the JCPOA?
    Ambassador Mull. Sir, the JCPOA is exclusively focused on 
Iran's nuclear program.
    Mr. Yoho. I want to take you to measure 28 of the JCPOA 
which clearly states that ``Iran and the E3/EU+3 will commit to 
implementing the JCPOA in good faith.''
    If they are doing terrorist activity, is that in good 
faith?
    Ambassador Mull. Terrorism is outside the scope of the 
JCPOA.
    Mr. Yoho. What about the development of ballistic missiles 
and the firing of those, are they outside of that?
    Ambassador Mull. Yes, sir.
    Mr. Yoho. What about breaching U.N. Security Resolutions 
1929 or 2231, are they outside of the JCPOA agreement?
    Ambassador Mull. Yes, sir. We deal with those problems in 
other avenues.
    Mr. Yoho. All right. But also, ``in good faith,'' that is a 
part of the JCPOA. In good faith and constructive atmosphere, 
based on mutual respect, and refraining from any action 
inconsistent with the letter, spirit, intent of the JCPOA that 
would undermine its successful implementation.
    I mean we can argue which side of arming Hezbollah with 
100,000 GPS-guided missiles, or firing medium range ballistic 
missiles as they did on November 22nd, I think it was, or 
November 20th, and then again on October 10th, which was before 
the agreement went into place.
    The point I want to bring out here, it is pretty clear the 
intention of Iran is not to play, you know, abide by the JCPOA. 
What they are doing, they are taunting. And for the 
administration to release sanctions, I have a letter here that 
we wrote that has over 100 U.S. representatives that asked the 
President to hold off on sanctions. This was sent December 17th 
of 2015 by over 100 members of this body, Republicans and 
Democrats, that asked the President to look into this before we 
moved further. And there was no response from the President.
    And I think this is a travesty to our negotiating. And I 
think it has weakened us. As we negotiate, I would only hope 
that our Government as we negotiate is from a position of 
strength that makes our country stronger.
    Do you feel that this has made our country stronger, this 
negotiation, and what we have seen the actions of Iran do with 
the firing of these missiles, the firing of the missiles real 
close to our Navy destroyer, the way they apprehended our 
military personnel. And they make fun of them on the world 
scene. I mean do you think that has made our country stronger?
    Ambassador Mull. No. That activity was outrageous. I am 
disgusted by those things.
    Mr. Yoho. Okay. All right. So it has not made our country 
stronger.
    Do you think the Iran nuclear deal has made Iran stronger?
    Ambassador Mull. I believe it has constrained Iran's 
ability to develop a nuclear weapon and has made us safer as a 
result.
    Mr. Yoho. What about bringing up their money? You know, Mr. 
Smith, you were talking about the $50 million or the 500, $\1/
2\ trillion they are in debt. If a country is a $\1/2\ trillion 
in debt and they are screaming for economic release and relief, 
would you think a country that is in that dire straits and 
suffering that bad would be funding terrorist activity?
    Mr. Smith. Iran had continued to fund terrorist activities 
during the course of the sanctions programs----
    Mr. Yoho. So how bad were they suffering? You know, I heard 
that through the JCPOA agreement and I didn't buy it. I didn't 
buy it then and I don't buy it now. And I hope what Mr. Duncan 
said does not come to fruition. It will either be a Neville 
Chamberlain moment or we can look back and say, you know what, 
that was a Ronald Reagan moment. And I hope it goes the right 
way.
    I yield back. Thank you.
    Chairman Royce. Thank you very much, Mr. Yoho.
    We now go to Grace Meng of New York.
    Ms. Meng. Thank you, Mr. Chairman. And thank you to 
Ambassador Mull and Mr. Smith for being here and all your hard 
work.
    Since the JCPOA went into effect, Iran's hardliners have 
taken pains to consolidate their economic and political power 
and to sideline would-be reformists who are more amenable to a 
rapprochement with the West. It was hoped that the openings 
created by the JCPOA would engender Iranian moderation but, 
instead, extremists have reaped the benefits while tightening 
their grip and escalating their malign behavior.
    Does the U.S. have a strategy to combat the retrenchment we 
see on the part of Khomeini, his allies, and the IRGC?
    I will just go through all my questions in the interest of 
time.
    How have Iran's terrorist activities been affected by the 
JCPOA? I know that you mentioned that it was outside the scope 
of the deal, but what do you know about if their support for 
terrorism has increased or decreased?
    Does the U.S. have an estimate of the amount of funding 
that Iran provides to groups like Hezbollah? How are the funds 
being transferred?
    And if we see an Iranian bank transfer of funds for the 
benefit of groups like Hezbollah, will the U.S. immediately 
sanction that bank?
    And if we are to go beyond sanctions, is the administration 
pursuing any actions beyond sanctions to confront any of Iran's 
problematic behavior in the region? And, if so, what are these 
actions?
    Ambassador Mull. Thank you very much, Congresswoman. In 
terms of the impact of the JCPOA in the internal Iranian 
political situation, you are right, many people have expressed 
various views and hopes and aspirations and the impact that it 
would have. But the principal reason for the administration to 
pursue this has really been to diminish Iran's ability to build 
a nuclear weapon. And in that so far we have exceeded 
demonstrably by increasing Iran's breakout time to at least a 
year.
    So it wouldn't be appropriate for me to speculate. We are 
not really implementing this deal to have a political impact on 
Iran. It is all about protecting us from a nuclear Iran. And as 
I said, in that we have succeeded.
    In terms of penalizing Iran's destabilizing activity in the 
region, we have a rich set of tools that we can use. And we, as 
Mr. Smith has been describing, and I will let him address in 
more detail, we have shown a readiness to do that. We have 
penalized, most recently on January 17th, Iran's missile, 
ballistic missile program. In the past few weeks we have 
continued to sanction Hezbollah activities and people linked to 
Hezbollah. And we will continue to do that at this point.
    Mr. Smith. I would just add and say, Congresswoman, I don't 
have the exact amount that Iran uses to fund terrorism. We can 
go back and see. I think the intelligence community probably 
has the best number working with the Treasury Department. But 
that would be more of a classified figure that we would have to 
provide in a different setting.
    In terms of sanctioning Iranian banks for bad behavior in 
support of terrorism, we have done it. We have sanctioned Bank 
Saderat in the past for its support for terrorism. We will 
continue to follow the evidence of support for terrorism, 
ballistic missile support, destabilizing activities. And we 
will develop packages and targets when we see the evidence.
    Ms. Meng. And finally, but can we tell if the support for 
terrorist activities and groups have increased or decreased and 
the amounts?
    Ambassador Mull. Again, Congresswoman, I think Mr. Smith is 
right that I think we would be happy to go into more detail in 
a different setting. But I do note that General Clapper 
recently testified in the past few days that he has not seen an 
appreciable change in Iranian level of support since the 
implementation of this deal.
    Ms. Meng. Okay.
    Ambassador Mull. Support for terrorism.
    Ms. Meng. Thank you. I yield back.
    Chairman Royce. Thank you, Congresswoman Grace Meng.
    Ambassador, Ranking Member Engel and I both mentioned 
Iran's horrible behavior in the neighborhood. And that includes 
Iranian-backed forces that threaten those at Camp Ashraf. The 
committee raised this with Ambassador McGurk yesterday.
    And I pass these concerns on to you. These individuals need 
protection. The U.S. Government needs to guarantee that 
protection. And we have seen what has happened of late in terms 
of loss of human life there at the camp. So I would, I would 
convey to you what I conveyed to him yesterday, to the 
Ambassador yesterday, which is this needs to be a priority.
    We appreciate the time of both of you as witnesses here 
today before the committee. You heard the deep concerns that 
many of our members have about Iran policy and how it is being 
carried out. So I know that you will want to continue to be in 
touch with members of this committee as we move forward.
    And at this time we will adjourn the hearing. Thank you 
again for your appearance.
    [Whereupon, at 12:15 p.m., the committee was adjourned.]

                                     

                                     

                            A P P E N D I X

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         Material Submitted for the Record
         
         
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   Material submitted for the record by the Honorable Jeff Duncan, a 
      Representative in Congress from the State of South Carolina

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