[Senate Hearing 114-7]
[From the U.S. Government Publishing Office]



                                                          S. Hrg. 114-7

 
       PERSPECTIVES ON THE STRATEGIC NECESSITY OF IRAN SANCTIONS

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

                                HEARING

                               before the

                              COMMITTEE ON
                   BANKING,HOUSING,AND URBAN AFFAIRS
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                                   ON

   EXAMINING THE ROLE AND IMPACT THAT ECONOMIC SANCTIONS HAVE HAD ON 
                     IRAN'S ILLEGAL NUCLEAR PROGRAM

                               __________

                            JANUARY 27, 2015

                               __________

  Printed for the use of the Committee on Banking, Housing, and Urban Affairs
                                


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            COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                  RICHARD C. SHELBY, Alabama, Chairman

MICHAEL CRAPO, Idaho                 SHERROD BROWN, Ohio
BOB CORKER, Tennessee                JACK REED, Rhode Island
DAVID VITTER, Louisiana              CHARLES E. SCHUMER, New York
PATRICK J. TOOMEY, Pennsylvania      ROBERT MENENDEZ, New Jersey
MARK KIRK, Illinois                  JON TESTER, Montana
DEAN HELLER, Nevada                  MARK R. WARNER, Virginia
TIM SCOTT, South Carolina            JEFF MERKLEY, Oregon
BEN SASSE, Nebraska                  ELIZABETH WARREN, Massachusetts
TOM COTTON, Arkansas                 HEIDI HEITKAMP, North Dakota
MIKE ROUNDS, South Dakota            JOE DONNELLY, Indiana
JERRY MORAN, Kansas

           William D. Duhnke III, Staff Director and Counsel

                 Mark Powden, Democratic Staff Director

                    Dana Wade, Deputy Staff Director

                    Jelena McWilliams, Chief Counsel

                       Beth Zorc, Senior Counsel

      John O'Hara, Senior Counsel, International/Terrorist Finance

       Christopher Ford, Senior Counsel, National Security Policy

            Laura Swanson, Democratic Deputy Staff Director

                Graham Steele, Democratic Chief Counsel

               Colin McGinnis, Democratic Policy Director

                       Dawn Ratliff, Chief Clerk

                      Troy Cornell, Hearing Clerk

                      Shelvin Simmons, IT Director

                          Jim Crowell, Editor

                                  (ii)
                                  


                            C O N T E N T S

                              ----------                              

                       TUESDAY, JANUARY 27, 2015

                                                                   Page

Opening statement of Chairman Shelby.............................     1

Opening statements, comments, or prepared statements of:
    Senator Brown................................................     3
    Senator Menendez.............................................     5
    Senator Corker...............................................     6
    Senator Tester...............................................     8
    Senator Toomey...............................................     8
    Senator Merkley..............................................    10
    Senator Heller...............................................    10
    Senator Warren...............................................    11
    Senator Sasse................................................    11
        Prepared statement.......................................    64
    Senator Heitkamp.............................................    12
    Senator Cotton...............................................    12
    Senator Donnelly.............................................    12
    Senator Rounds...............................................    14
        Prepared statement.......................................    65
    Senator Reed.................................................    14
    Senator Scott................................................    15
    Senator Crapo................................................    15
    Senator Schumer..............................................    16
    Senator Kirk.................................................
        Prepared statement.......................................    64

                               WITNESSES

Antony Blinken, Deputy Secretary of State, Department of State...    18
    Prepared statement...........................................    66
    Responses to written questions of:
        Senator Shelby...........................................   110
        Senator Brown............................................   112
        Senator Kirk.............................................   114
        Senator Tester...........................................   116
David S. Cohen, Under Secretary for Terrorism and Financial 
  Intelligence, Department of the Treasury.......................    21
    Prepared statement...........................................    69
Patrick Clawson, Ph.D., Director of Research, Washington 
  Institute for Near East Studies................................    51
    Prepared statement...........................................    74
Mark Dubowitz, Executive Director, Foundation for Defense of 
  Democracies....................................................    52
    Prepared statement...........................................    79

              Additional Material Supplied for the Record

Remarks by President Obama and Prime Minister Cameron in Joint 
  Press Conference on January 16, 2015...........................   118
Washington Post article, ``Give diplomacy with Iran a chance,'' 
  by Laurent Fabius, Philip Hammond, Frank-Walter Steinmeier, and 
  Federica Mogherini.............................................   130

                                 (iii)


       PERSPECTIVES ON THE STRATEGIC NECESSITY OF IRAN SANCTIONS

                              ----------                              


                       TUESDAY, JANUARY 27, 2015

                                       U.S. Senate,
          Committee on Banking, Housing, and Urban Affairs,
                                                    Washington, DC.
    The Committee met at 10:01 a.m., in room SD-538, Dirksen 
Senate Office Building, Hon. Richard Shelby, Chairman of the 
Committee, presiding.

        OPENING STATEMENT OF CHAIRMAN RICHARD C. SHELBY

    Chairman Shelby. The Committee will come to order. We will 
not have demonstrations in the Committee. We would have to 
clear the room if there are demonstrations in the Committee.
    First this morning, I would like to welcome the new Members 
to the Senate Banking Committee: Senator Tim Scott, Senator Ben 
Sasse, Senator Tom Cotton, Senator Mike Rounds, and Senator Joe 
Donnelly. I look forward to working with them and also my 
distinguished colleague, the Ranking Member, Senator Brown from 
Ohio.
    I hope that this is the first of many meetings of the 
Banking Committee. If history is any guide, it will be. While 
we may express differences in opinion from time to time, I 
expect that we can reach common ground on several issues this 
Congress.
    We will begin today's hearing with an opening statement by 
me and the Ranking Member. I will then turn to our Members for 
any brief remarks that they may have before we hear from our 
witnesses.
    Members will be recognized by the Chair in order of 
seniority for those present at the gavel and in order of 
arrival thereafter. Each Member will be allotted 5 minutes for 
as many rounds as time permits.
    As soon as a quorum is present--and we are getting close to 
it--I will pause briefly to approve--we hope to approve the 
Committee's budget, the Committee's rules, jurisdiction, and 
Subcommittee membership. But today we will hear from our 
witnesses on the role that economic sanctions have had on 
Iran's illegal nuclear program.
    Iran has long been a serious threat to U.S. national 
security interests. It is the world's foremost sponsor of 
terrorism; it supports radical regimes; it destabilizes its 
neighbors; and it continues to pose a threat to our ally, 
Israel.
    Further evidence of Iran as a destabilizing force in the 
region is the recent ousting of the Government of Yemen. Many 
reports credit Iran as a major backer of the rebels in that 
uprising.
    Since the mid-1980s, Iran has been pursuing capabilities 
that would enable it to build nuclear weapons. As as a result, 
the United States has led efforts to impose strong and 
progressively more stringent sanctions against Iran under both 
Democrat and Republican administrations.
    Over the past few decades, a bipartisan consensus has 
emerged that tough sanctions are essential in order to persuade 
Iran to moderate its reckless behavior. Consequently, sanctions 
have succeeded where diplomatic efforts have repeatedly failed 
to bring Iran to the negotiating table.
    After many rounds of talks, it is not at all clear that the 
existing sanctions regime will produce a viable nuclear deal 
that will protect U.S. national security interests. I think it 
is worth repeating that, without the pressure of tough 
sanctions, Iran would not have been engaged in any talks in the 
first place.
    Our common goal now, I believe, is to ensure that these 
talks produce an acceptable outcome and that Iran's leaders 
understand that such an outcome is in their best interest as 
well. So far, it is not clear to me that they believe this. One 
indication is that the Iranian regime continues to insist on a 
deal that would keep its nuclear capability largely intact. 
Such a result would be dangerous because it would allow Iran to 
remain within reach of producing nuclear weapons.
    I am also concerned that the weakening of sanctions or even 
the perception of this may be insufficient to keep Iran at the 
table. The Administration has argued that Iran, a country with 
a history of defiance and deception, will negotiate a mutually 
acceptable agreement without the certainty that harsh sanctions 
will take effect if it does not. I respectfully disagree with 
the Administration on this.
    I believe that the repercussions of Iran's failure to reach 
an agreement by midyear should be clearly defined by statute. 
The President and other officials have said that Congress 
should not interfere, that a deal is close, that the situation 
is delicate, and that an attempt to legislate any additional 
sanctions may give Iran an excuse to walk away from the 
negotiating table.
    It has been my experience that if a party is negotiating in 
good faith and with the intent to reach an agreement, they will 
seek common ground, but not an excuse to walk away. If Iran is 
looking for a way out, I believe that they never intended to 
ever reach an agreement in the first place. The fact that the 
current negotiation has already been extended twice is further 
evidence of their recalcitrance.
    There is now a growing bipartisan consensus that not only 
does Congress have a role to play in ensuring that Iran does 
not back away, but it also has a responsibility in this regard. 
It is clear that sanctions brought Iran to the negotiating 
table, and the threat of future sanctions represents Iran's 
only incentive to successfully conclude an agreement. I look 
forward to hearing the perspectives of our witnesses today on 
this critical issue.
    And now I turn to the Ranking Member of the Committee, 
Senator Brown.
    Senator Brown. Mr. Chairman, could I ask if we are going to 
do the Committee business now? Should we do that now?
    Chairman Shelby. Do you want to go ahead and do it?
    Senator Brown. Sure.
    Chairman Shelby. We have a quorum?
    Senator Brown. We have a quorum.
    Chairman Shelby. We will do it. It is a good idea. Thank 
you.
    Senator Brown. OK. Thank you.
    [Whereupon, at 10:07 a.m., the Committee proceeded to other 
business and reconvened at 10:09 a.m.]
    Chairman Shelby. Senator Brown.

               STATEMENT OF SENATOR SHERROD BROWN

    Senator Brown. Thank you, Mr. Chairman. I appreciate your 
willingness to delay this hearing from last week and the markup 
also by a week from the original notice dates. Historically, 
even in a Senate where bipartisanship might be lacking, this 
Committee has operated with bipartisan comity, particularly on 
the issue of sanctions. We have proceeded with regular order, 
carefully assessed policy options in the past, and usually 
taken months to craft tough, targeted sanctions, focusing their 
effect on Iran's leaders while minimizing harm and unintended 
consequences for our Nation and for our allies.
    But in a departure from past practice, this hearing 
originally was not noticed in a timely way under the rules of 
the Senate. I appreciate the willingness of Deputy Secretary 
Blinken and Treasury Under Secretary Cohen to testify today. 
They were originally given too little notice, and I hope we can 
avoid that in the future.
    Notwithstanding the Senate rules that guarantee witnesses 
chosen by the minority as a matter of right, our initial 
request to seat Administration witnesses was refused. In fact, 
the Administration is generally not considered to be minority 
witnesses. They should not be. All of us should want to hear 
from those at the center of these negotiations regardless of 
who sits in the Oval Office.
    Since we have a number of new Members, it is important to 
note that this Committee has not heard directly from the 
Administration on Iran since December 2013. Former Chairman 
Johnson withheld action on further negotiations while nuclear 
negotiations were ongoing--for further legislation while 
nuclear negotiations were ongoing and arranged periodic 
classified briefings for all of us instead.
    People have different views on these issues. The process 
should involve not just an oversight hearing like today's, but 
also a set of hearings on the legislation that we will mark up 
as well.
    If this Committee is serious about oversight and serious 
about policymaking, we should delay a markup until we get a 
full sense of the likely consequences of this very important 
action. We should consider the implications of other 
legislative proposals which may come before other relevant 
committees, like those being developed by Senator Feinstein, 
by, jointly, Senators Paul and Boxer; by our distinguished 
colleague on this Committee, Senator Corker; and their 
relationship to new sanctions legislation. Some might be 
helpful, some might not be helpful. Instead, it looks like this 
sanctions bill will be hustled through this Committee with no 
actual legislative hearings, even though Members likely have 
questions about its provisions and, frankly, are uncertain 
about what congressional action might mean for the 
negotiations.
    The President said new sanctions legislation would 
dramatically undermine the negotiations and our relations with 
negotiating partners and erode international support for 
multilateral sanctions. He said he will veto the bill. Our 
negotiating partners have expressed strong opposition.
    Mr. Chairman, I ask consent that statements by the 
President Obama and Prime Minister Cameron and the recent 
Washington Post op-ed from the EU foreign ministers and the EU 
high representatives, I ask unanimous consent that those be 
placed in the record, Mr. Chairman.
    Chairman Shelby. Without objection.
    Senator Brown. Thank you, Mr. Chairman.
    The Committee should hear all arguments on all sides. They 
should probe them. We should test them against our own 
knowledge and experience on these issues. If Congress acts to 
force the President's hand in the next few months by overriding 
his veto, and if doing so contributes to the collapse of 
negotiations and our heading down the path toward a military 
confrontation, Congress, beginning with each one of us, will be 
held responsible.
    This Committee bears an unusually grave and historic 
responsibility to assess the full consequences of acting now. 
We should be especially careful to ensure a thorough process. 
We have the time to do so since no new sanctions would be 
applied for 6 months. In the meantime, existing sanctions will 
continue to bite, and to bite hard.
    I have supported the search for a diplomatic solution. Some 
predicted that JPOA would unravel the sanctions regime. It has 
not. Others worried Iran would not comply or would benefit 
unduly from sanctions relief or from new trade deals. None of 
that, as our two Administration witnesses will affirm today, 
none of that has proven true.
    There have been situations where we and Iran disagreed 
about whether certain things were allowed under the JPOA. They 
were litigated and they were resolved by Iran ceasing that 
activity.
    I am not naive about the likelihood of a deal with Iran. I 
know that the President has set those odds roughly at 50-50. 
But I think we must allow the President to test these 
proposals.
    I urge the Chairman to step back and adopt the process 
usually used in this Committee under Chairmen of both parties, 
undertake additional hearings, delay a markup and further 
action to see if a nuclear deal can, in fact, be reached by the 
deadline. Ultimately, while some of us might differ on tactic, 
it is clear we share the same goal: to ensure that Iran does 
not achieve a nuclear weapon, to do that diplomatically, if 
possible, while recognizing that other alternatives remain on 
the table.
    A longer, more orderly process will ensure that we are 
fully informed of the potential consequences of our actions so 
that no one looks back with regret that we rushed another 
critical national security decision through Congress without 
fully understanding its implications. Mr. Chairman, history is 
an unkind judge of policymakers who make that mistake.
    Thank you.
    Chairman Shelby. Senator Menendez.

              STATEMENT OF SENATOR ROBERT MENENDEZ

    Senator Menendez. Well, thank you, Mr. Chairman. For years, 
Congress has played a significant role in authorizing nuclear 
sanctions on Iran, and I am proud to have taken the lead role 
in what has been a bipartisan effort to pass a series of 
sanctions that more than anything else has been responsible for 
Iran's decision to enter negotiations on its nuclear program.
    Now, the legislation that Senator Kirk and I have drafted 
would signal to the Iranian regime that there will be more 
consequences if they choose not to reach a final deal. This 
morning, however, many of my Democratic colleagues and I have 
sent a letter to the President telling him that we will not 
support passage of the Kirk-Menendez on the Senate floor until 
after March 24th and only if there is no political framework 
agreement because, as the letter states, we remain hopeful that 
diplomacy will succeed in reversing Iran's ability to develop a 
nuclear weapon capability in accordance with the timeline that 
the P5+1 and Iran negotiating teams have set for themselves, 
which is March 24, 2015, for a political framework agreement.
    But we also say in this letter that we remain deeply 
skeptical that Iran is committed to making the concessions 
required to demonstrate to the world that its nuclear program 
is exclusively peaceful by March 24th.
    The fact is that negotiators are now in their 18th month of 
talking, and senior Administration officials continue to 
forecast the chance of reaching an agreement at less than 50-
50. In the interim, Iran has breached the Joint Plan of Action 
at least once and made a mockery of it a second time by trying 
to illicitly procure parts for the Arak reactor in violation of 
U.N. Security Council resolutions. Iran is procrastinating 
because the longer the negotiations last, the further the P5+1 
moves in their direction.
    We have slowly shifted positions during the last 18 months 
after dismantling Iran's nuclear infrastructure--the Arak 
reactor, the Fordow enrichment facility, Iran's 19,000 
centrifuges--to allow Iran to keep all those elements in some 
form while we settle for alarm bells that will tell us only 
when it is too late, when Iran has breached. And without 
prospective sanctions that are ready to be implemented, our 
only option may very well be what some of my friends are 
worried about: either a military one or accepting Iran as a 
nuclear weapons state. Neither are desirable.
    At the same time, Iran has stonewalled the IAEA's access to 
key sites where weaponization activities took place. They are 
looking for and seem likely to get an agreement that kicks this 
most serious issue down the road, to be addressed at a later 
date, after a deal is signed.
    I cannot begin to understand how we would build an 
inspection and verification regime or how long the agreement 
must last until we know how far they have come toward building 
a nuclear weapon.
    Finally, I want to make a few points clear about the 
substance of the Kirk-Menendez bill. As drafted, it would not 
violate the Joint Plan of Action. The Joint Plan of Action 
limits the imposition of new sanctions during the talks, and 
our bill would not impose sanctions until 1 month after the 
final deadline runs out at the end of June.
    We also provide the President with additional flexibility 
through monthly waivers if he believes that they may be on the 
verge of a deal and it is in the national security interest to 
do so. Only after 2 years of failed negotiations would the 
legislation trigger additional sanctions. In my view, we need 
Iran to understand that there are consequences if they fail to 
reach a comprehensive agreement, and the consequences are 
closing loopholes in existing sanctions and expanding sectoral 
sanctions.
    At the end of the day, Iran must make up its mind about 
what is more important: its nuclear weapons program or the 
welfare of its people. Until now, Iran has not been motivated 
to make such a decision. In my view, a strong, bipartisan bill 
that outlines the consequences of failure could be the 
motivator that Iranian leaders need to make the hard decisions.
    And, Mr. Chairman, I would just say, as someone who voted 
against the war in Iraq when many of my colleagues who now seem 
to be doves voted for it--which was a monumental mistake, in my 
view--and as someone who has worked hard to create the 
opportunity so that we do not have the only option of being a 
military attack or accepting a nuclear-armed Iran, what I do 
not want to see and what I will not submit to is having the 
aspirations that we had in North Korea, which ended up not 
turning into the aspirations we desired, but turning into North 
Korea being a nuclear weapons state, for which we are paying 
enormously today. And that is a test of history and judgment 
that those who supported that at that time I think will come to 
regret as well, should come to regret as well. And that is why 
I for one do not want to see it happen a second time.
    Chairman Shelby. Senator Corker.

                STATEMENT OF SENATOR BOB CORKER

    Senator Corker. Thank you, Mr. Chairman, and I look forward 
to your leadership and Senator Brown's, and I am one Senator 
who would say that I am perfectly happy with the two of you 
only giving opening comments. And while I love listening to my 
colleagues, I like listening to witnesses more.
    I will say that, on the other hand, I appreciate what 
Senator Menendez has just said, and I want to thank him and 
Senator Kirk for their outstanding leadership on sanctions. 
There is no question that our Nation and the P5 together would 
not be where we are today had the two of you not led in putting 
in place a sanctions regime that most of us here have been 
involved in. I want to thank you for that. And so there is no 
question to me that we would not be at the table today had that 
not occurred.
    I, too, want to welcome the new Members. I have found this 
to be one of the most outstanding committees in the U.S. 
Senate, and I want to welcome everyone here.
    I will say to Mr. Donnelly, when I first got here, I, too, 
sat in the cameraman's lap.
    [Laughter.]
    Senator Corker. And I will say that I think my service 
during that time was better than it is today. So he is a nice 
guy, and I know you will get to know him well.
    [Laughter.]
    Senator Corker. So thank you.
    I think that some of the things that Senator Menendez has 
laid out really do bear tremendous scrutiny, and I know we are 
going to have some classified briefings to get into more depth. 
I know that David Cohen has done a very good job in putting in 
place the regime we have. But the fact, if you just looked at 
the practical needs for a country like Iran, with one nuclear 
reactor--and this is where we began. What are the practical 
needs of a country like this? Most scientists would say maximum 
500 centrifuges. Maximum.
    So here we are, we are negotiating at a point we all know 
that is way beyond that. What is the purpose of a country like 
Iran having more than 500 centrifuges? Why would they be 
putting their citizens through the havoc that they are putting 
them through at this point?
    We are not focused heavily enough, in my opinion, on the 
research and development. We keep talking about Arrow 1's and 
Arrow 2's, and people make fun of the little bomb, if you will, 
that Bibi Netanyahu showed at the United Nations, talking about 
the 20 percent, because we are shipping much or reducing it to 
non-usable materials. But the fact is they have Arrow 6's and 
above that can go from 0 to 90 percent passing the 20 percent 
market like that. And yet we are not focused on that in the 
appropriate way.
    Again, I would just associate myself with the comments of 
Senator Menendez. The previous military dimensions of what Iran 
has done is incredibly important for us to know prior to any 
agreement being reached. We need to know what their scientists 
were able to develop prior to 2003.
    Now, Mr. Chairman, I will say this: We have done best when 
we were united. This is an issue that I know the Chairman has 
to feel this way. I will wait until Schumer finishes his phone 
call.
    This issue is an issue that we need to address in a 
bipartisan way. The last thing we need to do is pass a bill out 
of the U.S. Senate that is not veto-proof. So I want to say to 
my colleagues on both sides of the aisle, I think we are all 
searching for the right way for the Senate and for Congress to 
weigh in. And, again, I appreciate the efforts of my 
colleagues.
    The President just left India. One of my first votes here 
was on the 123 Agreement with India that was done under 
President Bush. We have voted as a Congress on twenty-seven 123 
Agreements, which is a civil agreement with another country 
relative to nuclear weapons or civil nuclear activity. And yet 
the Administration is telling us today that they do not want us 
to weigh in on this agreement.
    So, Mr. Chairman, in closing, I hope that we will find a 
bipartisan way for this Congress to responsibly weigh in in a 
manner that assures that if there is a deal with Iran, it is a 
deal that will stand the test of time; that it is a deal that 
will ensure that not in the near future will they achieve 
nuclear capabilities.
    Thank you for the time.
    Chairman Shelby. Thank you.
    Senator Tester.

                STATEMENT OF SENATOR JON TESTER

    Senator Tester. Thank you, Mr. Chairman, and I look forward 
to your leadership as well as Ranking Member Brown's leadership 
on this Committee. And I want to welcome the new Members, also. 
This is a very, very good Committee.
    I think we are in an interesting situation with the Chair 
and Vice Chair not only this Committee but of Foreign Affairs 
on this Committee. I think it allows us to glean some 
information that may be very, very handy while we talk about 
how we are going to deal with Iran into the future.
    I would just say this: You know, Iran has been a bad actor. 
That is not breaking news. We all know that. But the bottom 
line for me is that if we have an opportunity to make them more 
predictable in the Middle East without nuclear weapons, I think 
that is a risk that we need to take. Knowing full well that 
they have not acted appropriately in the past, I think we ought 
to give them the opportunity to act appropriately. In the 
meantime, verify, verify, verify. And I think that is 
critically important as we move forward in these negotiations.
    I also want to thank Senator Menendez for his leadership. I 
want to thank him for his statement today. I think that what I 
heard you say is let the negotiation process work through the 
24th of March and then come back and get the Administration in 
here and either say enough is enough or, if successes are 
happening, move forward.
    So I would just say that I want to thank the Chairman, 
Ranking Member Brown. It is a little new regime now that I have 
not been accustomed to, nor anybody else that was elected since 
2006. But by the same token, I think there is an opportunity 
here to work in a bipartisan way to move things forward in a 
way that works for this country and for the world.
    And so, with that, thank you, Mr. Chairman.
    Chairman Shelby. Senator Toomey.

             STATEMENT OF SENATOR PATRICK J. TOOMEY

    Senator Toomey. Thank you, Mr. Chairman. I appreciate your 
having this hearing today. I think it is extremely important. I 
appreciate the Administration witnesses.
    We all do agree, as Senator Tester mentioned, that Iran is 
certainly among, if not the most dangerous regime in the world. 
The question is: What should we do about it?
    I am going to suggest three things that I want to hear more 
about and three things that I recommend, Mr. Chairman.
    First, I think we do need to pass a sanction bill that 
should be at least as strong as the Nuclear Weapon Free Iran 
Act of 2014, the Kirk-Menendez bill.
    I also think we should make it clear to the President that 
he should seek to preclude any uranium enrichment capability by 
Iran in a final agreement that is reached.
    And I think that any such agreement negotiated between the 
Administration and the Iranians should be put to Congress for a 
vote before it becomes operational, and let me touch briefly on 
why.
    First of all, I think additional sanctions are necessary. 
The whole purpose of sanctions is to raise the cost of 
acquiring nuclear weapons to an unacceptably high level for the 
Iranian regime. The whole point is to make the cost exceed the 
perceived benefit. It seems to me that sanctions were making 
some progress in that direction. They certainly were having a 
huge adverse impact on the Iranian economy. Arguably, the 
sanctions brought Iran to the negotiating table, but then we 
recently eased those sanctions, in my view, without 
commensurate concessions from the Iranians. And now Iran has 
allowed the second deadline to pass without an agreement. Their 
nuclear program continues. Their economy has begun to recover. 
So, in my view, prospective, tough, conditional sanctions 
should be implemented if Iran for the third time chooses to 
obfuscate and delay rather than to reach an agreement, and Iran 
should know now that that is what is coming.
    Second, the American people will not be saved from a 
nuclear Iran if Iran retains the capacity to continue to enrich 
uranium. If all Iran wanted was the ability to generate 
electricity, they do not need any enrichment capability for 
that. The fact is you can buy enriched uranium. The Iranians 
have a contract with Russia to do exactly that. There are 18 
countries around the world that have peaceful nuclear energy 
programs without any active enrichment capability. They 
purchase their uranium.
    Frankly, the only reason I can think of that Iran would 
insist on retaining enrichment capability in an agreement is if 
it wants to retain the ability to eventually produce weapons-
grade uranium. And let us remember, any meaningful enrichment 
capability can quickly be adapted to a weapons-grade 
capability. So I think American security depends significantly 
on ending uranium enrichment capability.
    Finally, Mr. Chairman, congressional approval of any 
agreement is going to make the agreement more durable. The 
Obama administration--if an agreement is reached, it is going 
to happen with only 18 months left in this Administration. Our 
national security interest in preventing Iran from having 
nuclear weapons will extend far beyond the remainder of this 
Administration's term. So Congress should vote on the 
agreement, just as the Senate would ratify any important 
treaty, and the Iranian people need to know that they are 
negotiating with the American people and have the broad support 
of Congress rather than just the President.
    So I think Congress should act now; pass a strong sanctions 
bill that would go into effect prospectively and conditionally; 
make it clear to the President that he should seek to 
completely eliminate Iran's enrichment capability; and require 
that any agreement negotiated come before Congress.
    And let me just close with this, Mr. Chairman. I understand 
the Obama administration has threatened to veto any bill that 
would do what I have just described, even calling for 
prospective and conditional tightening of sanctions. The 
President argued in the State of the Union that new sanctions 
passed by this Congress at this moment in time will all but 
guarantee that diplomacy fails.
    Well, there is a problem with this analysis, in my view, 
and that is, if the Iranians are serious about a deal, they 
would not walk away from the negotiations over conditional, 
prospective sanctions that they have the power to avoid and 
that do not violate the JPOA. In fact, they would be motivated, 
not deterred, by conditional sanctions.
    And I think we have to ask ourselves, if they are serious 
about reaching an agreement, why aren't they a little bit 
concerned about driving us away from the negotiating table? But 
rather than showing good faith and any kind of restraint, 
instead Iran has violated the Joint Plan of Action, and they 
are now rampaging through the Middle East; continuing their 
indirect control of Lebanon; propping up Assad while he 
massacres several hundred thousand of his own people; exerting 
ever more power in Syria and Iraq; and last week, through 
proxies, overthrowing a government that was supportive and 
cooperative with the United States in Yemen.
    So, Mr. Chairman, I think this is overdue. I am very 
grateful that you are having this hearing. I look forward to 
the testimony of both panels, and I think Congress needs to 
act.
    Chairman Shelby. Senator Merkley.

               STATEMENT OF SENATOR JEFF MERKLEY

    Senator Merkley. Thank you very much, Mr. Chairman, and I 
think everyone here on this panel has the goal of preventing 
Iran from having a nuclear weapon. Not only does it represent a 
direct threat, but it represents what could be the start of a 
nuclear arms race. We see so much in many international 
conflicts in the Middle East, the Shiite and the Sunni history 
and mistrust and enmity that drives so much of the conflict, 
and certainly a Shiite bomb might well drive a Sunni bomb, et 
cetera. The last thing we want is for Iran to have a nuclear 
weapon.
    That is why we are here, to listen to your testimony and to 
gain insight. I certainly want to understand better how the 
actions by the Congress may strengthen the negotiating hand of 
the United States or damage it, certainly both directly and in 
terms of the strength of the collective alliance necessary to 
make a sanctions regime effective. Diplomacy is certainly an 
art. Those of you who have been deeply engaged certainly have 
insights to share with us, and I look forward to hearing them.
    Chairman Shelby. Senator Heller.

                STATEMENT OF SENATOR DEAN HELLER

    Senator Heller. Mr. Chairman, thank you, and to the Ranking 
Member, for holding this hearing today. If I may add to what 
Senator Corker said to my friend across, Mr. Donnelly, as the 
latest Member on this Committee to have sat in your seat, get 
to know the cameraman well. There will be times he will feel 
like your only friend.
    Senator Donnelly. We are already going to a ball game.
    [Laughter.]
    Senator Heller. Mr. Chairman, in assessing the nuclear 
agreement with Iran, my assessment is this: I cannot imagine a 
higher risk versus reward scenario than this agreement. 
Crippling sanctions brought Iran to the negotiating table in 
the first place, and by suspending these sanctions, I am very 
concerned that the United States has deteriorated the leverage 
that congressional action has provided this Administration.
    That is why today is so important. We need to understand 
what impact these sanctions are having on Iran and whether it 
is bringing them closer to producing a nuclear weapon. 
Furthermore, it has always been the policy of the United States 
through resolution after resolution, passed with unanimous, 
nearly unanimous support by Congress, that Iran should not have 
the ability to enrich uranium, even for peaceful purposes. Yet 
the interim agreement has effectively codified Iran's right to 
enrich uranium, all in the hopes that Iran will keep its 
promises to allow international inspections and cease 
enrichment activities.
    A nuclear Iran is not in the best interest of the Middle 
East or Israel, and I am concerned that this deal has created 
security risks and uncertainty, not only for the United States 
but also for our regional allies.
    I am glad this Committee is holding this hearing. I hope it 
will move forward with legislation that will hold Iran 
accountable as the negotiations continue and allow for proper 
congressional oversight.
    And with that, Mr. Chairman, I thank you and look forward 
to hearing from our witnesses.
    Chairman Shelby. Thank you.
    Senator Warren.

             STATEMENT OF SENATOR ELIZABETH WARREN

    Senator Warren. Thank you, Mr. Chairman, and I am looking 
forward to working with you and with my good friend, the 
Ranking Member, Senator Brown.
    You know, we all share a common goal, and that is to 
prevent Iran from developing nuclear weapons. At this moment, I 
believe our ongoing negotiations with Iran are our best hope 
for achieving that goal and should be our first priority, since 
undermining those negotiations risks escalation and risks the 
possibility of war.
    I am looking forward to hearing from our witnesses today 
about whether the proposed new sanctions legislation will be 
helpful or harmful to that goal. And with that, I yield the 
rest of my time.
    Chairman Shelby. Senator Sasse.

                 STATEMENT OF SENATOR BEN SASSE

    Senator Sasse. Thank you, Mr. Chairman. Thank you for the 
welcome. And, Ranking Member Brown, I look forward to working 
with and learning from you and all of my new colleagues. Mr. 
Chairman, thank you for your leadership in beginning with this 
important strategic issue, and in the interest of getting to 
our distinguished witnesses, I ask that my prepared remarks be 
made a part of the record.
    Chairman Shelby. Without objection, it is so ordered.
    Senator Sasse. Thank you.
    Chairman Shelby. Senator Heitkamp.

              STATEMENT OF SENATOR HEIDI HEITKAMP

    Senator Heitkamp. Thank you, Mr. Chairman, and I can assure 
Senator Corker and Senator Donnelly, the worst seat in the 
house is where now my friend Jerry Moran sits. Enjoy the backs 
of the heads of the witnesses and not being able to read their 
placards, because focusing is always a good thing over there.
    But I only want to add one thought, and I think Senator 
Corker is really the only person who has talked about this. A 
divided Congress is not in the best interest of our national 
interest, especially when we are talking about something that 
is the most significant challenge that we have to our national 
security and the security of the world today. And so it is 
critically important that we listen. It is critically important 
that we pay attention to a path forward that can truly unite 
this country in a very critical common cause.
    And so I look forward to the witnesses. I look forward to 
another 2 years of serving on this Committee. I will assure 
you, as someone who was new last year, this truly is one of the 
best Committees in the entire U.S. Senate, and I welcome all 
the new Members.
    Chairman Shelby. Thank you.
    Senator Cotton?

                STATEMENT OF SENATOR TOM COTTON

    Senator Cotton. Well, I did not have a statement prepared, 
but since you called on me, I will thank you, Mr. Chairman, and 
the Ranking Member. I am looking forward to serving on the 
Committee.
    I know that several Members--the Obama administration has 
expressed concern that any prospective, conditional sanctions 
could cause Iran to walk away from the table, could minimize 
the cooperation we have received. Iran, however, is responsible 
for killing and maiming hundreds if not thousands of our troops 
in Iraq and Afghanistan. As those who served there know, they 
remain the number one sponsor of state terrorism. According to 
the State Department, they continue to prop up the Assad 
regime. They control the Iraqi Shiite militias. And just in the 
last couple weeks, an Iranian-aligned Shiite militant group has 
taken over the capital of Yemen. An Iranian general has been 
discovered working with Hezbollah on the outskirts of the Golan 
Heights to strike Israel. Fortunately, he was discovered by an 
Israeli missile.
    Iran has reached a defense pact with Russia, and Alberto 
Nisman, the prosecutor who is investigating the 1994 bombing of 
the Jewish community center in Buenos Aires, largely attributed 
to Iran and Hezbollah, has mysteriously turned up dead.
    So I have to ask: Is this the cooperation that our 
forbearance has achieved us? Can America afford any more 
cooperation from Iran?
    I yield back.
    Chairman Shelby. Thank you.
    Senator Donnelly, you are not last today.

               STATEMENT OF SENATOR JOE DONNELLY

    Senator Donnelly. Thank you, Mr. Chairman. It is an honor 
to be on this Committee. I appreciate your hard work and 
Ranking Member Brown's, and I want to thank Senator Corker and 
Senator Menendez for your leadership on this issue as well.
    I am new to this Committee, but from my seat on the Armed 
Services Committee, I believe the prospect of a nuclear-armed 
Iran is one of the most serious threats to our national 
security interests. I am looking forward to working with my 
Republican colleague, Senator Sessions, to address this threat 
and other proliferation concerns as we lead the Strategic 
Forces Subcommittee this year. And I appreciate the seriousness 
with which we shall debate this issue in this Committee.
    While there are honest differences in how to achieve our 
goals, I think it is important to recognize that there is a 
strong consensus about the importance of nuclear 
nonproliferation. The necessity of ending Iran's nuclear 
weapons program is at the top of that list.
    The unanimity of support on this issue has fostered a 
strong, united effort bringing together not only our European 
partners but also Russia and China. We share a belief that not 
only is the threat of a nuclear-armed Iran too great to 
tolerate, but that Iran's nuclear program could set off an arms 
race in the Middle East.
    Senator Corker and I heard that just last week when we were 
traveling over there. And that would deliver a severe blow to 
global nonproliferation efforts and making the world a more 
dangerous place.
    There is also a strong consensus we should make every 
effort to decisively end Iran's nuclear weapons program through 
diplomatic means. While we often tout the strength of our 
military as the greatest fighting force the world has ever 
known, we were also the global leader in driving diplomatic 
solutions. Like many of my colleagues here today, I have spoken 
with leaders across the world and heard them say that they need 
our support, often saying if the United States does not lead 
the way, no one will.
    As with our military, we have many tools in our diplomatic 
toolbox, from international aid to bilateral and multilateral 
agreements to sanctions. We are here today to examine those 
tools and we can best use them to solve one of the single 
greatest threats to U.S. and global security.
    Through my years in Congress, I have long supported 
sanctions on Iran, and the benefit of hindsight has only 
reaffirmed my commitment to these sanctions. There is no 
question the strong international sanctions regime, built 
through legislation passed by Congress, brought Iran to the 
negotiating table. I pray these talks succeed.
    It is for that reason that I support legislation to 
strengthen sanctions should the Iranians fail to reach an 
agreement by the deadline the White House has set. The 
legislation this Committee will mark up on Thursday supports 
that aim. It would impose new sanctions only if these talks 
fail.
    By introducing this legislation now, we are sending a clear 
message that the time has come for Iran to stop playing games. 
However, while I strongly support this legislation, I also 
firmly believe we must give the P5+1 talks a chance to succeed. 
This effort is far too serious to become a political football 
and the consequences are far too great.
    Some have expressed serious concerns about passing this 
legislation prior to the March 24th deadline in the talks. Our 
first panel today will undoubtedly reiterate the 
Administration's warnings on what could happen if we act 
prematurely, and I take those concerns seriously. I cannot 
support any action that would needlessly undermine the chances 
for success in this endeavor.
    As such, while I intend to cosponsor the legislation, I 
believe the Senate should wait until after the March 24th 
deadline in the talks to consider this bill on the floor. If 
after that deadline passes Iran fails to reach an agreement on 
a political framework that addresses the parameters of a 
comprehensive nuclear agreement, we should move this forward 
decisively. This deadline is a critical test of Iran's 
intentions. And while I am realistic about Tehran's willingness 
to play fair, I will give them until March 24th to prove 
themselves to us and to the world.
    Thank you, Mr. Chairman.
    Chairman Shelby. Senator Rounds.

                STATEMENT OF SENATOR MIKE ROUNDS

    Senator Rounds. Thank you, Mr. Chairman and Ranking Member 
Brown. I look forward to participating in these hearings. I 
also look forward to hearing the testimony from our witnesses 
today. Therefore, I have an opening statement that I would 
like, with your permission, to have submitted for the record, 
and I will yield the rest of my time back.
    Chairman Shelby. Thank you. Without objection.
    Chairman Shelby. Senator Reed.

                 STATEMENT OF SENATOR JACK REED

    Senator Reed. Thank you very much, Mr. Chairman, and I am 
at this point convinced that it is not the right time to pursue 
new sanctions legislation, and doing so could diminish our 
security, not enhance our security.
    In the past, Congress has led the charge for more 
aggressive and expansive sanctions, indeed in front of many 
Administrations. And the Obama administration's aggressive 
implementation of the sanctions regime, together with the 
international coalition, the P5+1, have brought Iran to the 
negotiating table and led to the Joint Plan of Action. While it 
is not a long-term solution, we have seen tangible effects that 
the Joint Plan is having some effect.
    Since its implementation in January 2014, the Iranians have 
taken steps to halt, and in some cases roll back, aspects of 
their nuclear program, particularly on three possible paths to 
a bomb: enough 20 percent enriched uranium for one bomb, the 
installation of next-generation centrifuges, combined with the 
growing stockpile of 3.5 percent enriched uranium, and fudging 
and advancing the plutonium track at the Arak reactor.
    Moving forward with new, unilateral U.S. sanctions at this 
time risks undermining the negotiations and could jeopardize 
chances to secure additional gains through a comprehensive 
agreement. If negotiations are taken off the table, then the 
course of action before us will be even more challenging, of 
higher risk, and potentially without our international 
partners.
    Moving forward with sanctions gives one of the most onerous 
and brutal regimes in the world the ability to walk away and 
attempt to avoid blame. Doing so could also drive a wedge 
between the United States and our international allies, and 
this international coalition is as important as unilateral 
American sanctions.
    Earlier this month, British Prime Minister David Cameron 
stated that further sanctions, in his words, ``could fracture 
the international unity that there has been which has been so 
valuable in preventing a united front to Iran.'' This view has 
been echoed by top-level P5+1 officials, calling on Congress to 
give negotiations a chance and hold off on sanctions.
    It makes little sense to decide now what we will do if 
negotiations are not successful. We should give these 
negotiations a chance and wait to see if a comprehensive 
agreement can be reached. With an agreement, Congress can make 
a thoughtful determination on the merits and act quickly and 
decisively to respond with a much higher probability of 
international support. Without an agreement, Congress must and 
will act. It is at that point, not now, that we should move 
decisively.
    To be clear, given the nature of the Government of Iran, 
any agreement reached between the P5+1 and Iran must meet 
rigorous standards. But such a peaceful resolution to Iran's 
nuclear program will not be possible if we do not allow the 
negotiations to proceed to conclusion, and pursuing additional 
sanction legislation now would harm our best chance to achieve 
our objective of preventing a nuclear-armed Iran.
    Thank you very much, Mr. Chairman.
    Chairman Shelby. Senator Scott.

                 STATEMENT OF SENATOR TIM SCOTT

    Senator Scott. Thank you, Mr. Chairman, and I look forward 
to working with you and other Committee Members on this 
Committee. I think that we have heard so many opening comments 
today that I am going to submit mine for the record. I look 
forward to hearing the testimony from our witnesses.
    Chairman Shelby. Thank you.
    Senator Crapo.

                STATEMENT OF SENATOR MIKE CRAPO

    Senator Crapo. Thank you, Mr. Chairman. I, too, look 
forward to working with you and Ranking Member Brown on the 
Committee. As a number of Members have said, this is one of the 
most critical Committees in the Congress, and as you can see 
from the significance of today's issue, this Committee handles 
issues that are critical to our Nation, not only with regard to 
our national security but with regard to our economic strength, 
our growth of our economy, and protection of and development of 
jobs in this country.
    So I welcome our new Members as well. This is an exciting 
Committee with a multitude of critical issues that we will need 
to work forward on. And I want to follow up on comments that 
Senator Corker and some of the others have made about the 
importance that we develop consensus in this Committee to move 
forward. This Committee has a record and a history of moving 
forward on the kinds of incredibly important issues that we 
deal with on a consensus basis, and it is my hope that we will 
be able to continue to develop that path forward. It is what 
will help us to bring solutions to this country.
    I do also have a lot of the same concerns that have been 
expressed by others here that I will not reiterate at this 
point. There are a number of questions I have in addition to 
the issue of whether we should pursue sanctions legislation 
right now, and I am one who believes we should move forward 
decisively on new sanctions legislation now. But I also want to 
hear from the Administration about what the negotiations are 
yielding. I realize that not a lot can be discussed in a 
nonclassified environment with regard to that, but the fact is 
that the substance of the agreement that we are negotiating is 
as critical as the question of timing on new sanctions 
legislation. And because of that, I also want to raise the 
importance of the fact that whatever the new agreement is that 
is reached, if one is reached, it should be submitted to 
Congress for a vote and an approval in Congress. And I am very 
concerned about the fact that there is some indication that 
there will not be an opportunity for Congress to weigh in on 
this agreement once it is reached, if we are able to get to a 
point where an agreement is achieved.
    So, Mr. Chairman, again, I will withhold any further 
comments until we get to another situation in which we have the 
ability to question and even in a confidential meeting ask 
stronger and different questions. But I thank you for having 
this hearing and look forward to the future hearings and 
actions we will take on this issue.
    Chairman Shelby. Senator Schumer.

            STATEMENT OF SENATOR CHARLES E. SCHUMER

    Senator Schumer. Thank you, Mr. Chairman. And first I want 
to congratulate you on Chairman and Senator Brown on Ranking 
Member. I look forward to working with you, Mr. Chairman, and 
certainly look forward to working with Sherrod under your 
leadership. I would just have the record show that Shelby, 
Brown, and Schumer are often in the gym at 7:30 a.m., and who 
knows what can happen when we are on those bikes huffing and 
puffing away.
    As many know, I have been a long supporter of strong 
sanctions to prevent Iran from achieving their desired goal of 
obtaining nuclear weapons. The leaders of Iran would have 
continued expanding their nuclear weapon capability, but 
sanctions made them think twice about it. The bottom line is 
very simple. It is sanctions, tough sanctions, not the goodness 
of the hearts of the Iranian leaders, that brought Iran to the 
negotiating table.
    We in Congress passed important legislation that put strong 
pressure on Iran. Senator Menendez and Senator Kirk deserve 
tremendous recognition for leading the charge, as they are 
doing now.
    Sanctions work best when they are multilateral, and getting 
the P5+1 and other countries like India and South Korea to be 
part of the sanctions regime helped make the sanctions all the 
more effective. And in this regard, I want to give a shout-out 
to President Obama and his Administration and the gentlemen at 
this table. All of you deserve tremendous recognition.
    I have to say that critics of the President do not give him 
enough credit that he deserves for effectively lining up the 
nations behind the sanctions regime which brought them to the 
table in the first place.
    Having said that, I believe the only way Iran will 
voluntarily stop their march to nuclear weapons is if they know 
tougher and tougher sanctions will be enacted if they fail to 
come to a strong agreement that prohibits them from obtaining 
nuclear weapons. That is why I support the Kirk-Menendez 
legislation, a bill that would increase sanctions on Iran if 
they are unwilling to come to a deal by the Administration's 
extension deadline of June 30th. It is almost irrefutable logic 
that if sanctions brought Iran to the table, additional and 
tougher sanctions are more likely to cause the Iranians to give 
in, and give in more quickly, to reach a final deal that will 
prevent Iran from becoming a nuclear threshold state.
    There are a hierarchy of outcomes here. The worst possible 
outcome the world, the United States, and Israel face is a 
nuclear Iran. That would be devastating. Make no mistake about 
it. A nuclear Iran will lead to a nuclear arms race in the 
Middle East, the most volatile region in the world. The chance 
of an actual nuclear war occurring--and that would poison the 
whole globe, even if it occurred in one portion of the globe--
is much greater, unfortunately, if Iran has a nuclear weapon.
    But once we all agree that a nuclear Iran is unacceptable, 
I think everyone agrees it would be better to come to that 
result with a strong negotiated agreement rather than by 
America or Israel, or both, having to take military action. So 
if you had to rank the hierarchies of solutions in order of 
desirability, the worst, a nuclear Iran; next, having to use 
the military option; the best, a negotiated agreement that is 
strong and tough enough and prevents Iran from being a nuclear 
threshold state.
    The President has said that he needs a little more time to 
come to this conclusion. Mr. Blinken in his testimony states 
the Administration's goal is to conclude the major elements of 
a deal by March.
    Since a strong, negotiated agreement is the best solution, 
a solution that I hope we can come to, I, along with a group of 
my colleagues, many of whom are sponsors of the original 
Menendez-Kirk legislation, are releasing a letter that states 
we will not vote for the bill on the floor of the Senate until 
then. If by March 24th the Iranians have not come to an 
agreement, the letter states we will vote for the bill on the 
floor of the Senate at that time.
    Barring significant changes to the bill, I intend to vote 
for Kirk-Menendez in the Committee on Thursday so that a bill 
can be ready to go if the Iranians are incapable of 
demonstrating their real seriousness by March 24th.
    And let me just say one word about a proposed settlement, 
which I know Senator Corker--even though I was on the phone, I 
still heard what you had to say.
    [Laughter.]
    Senator Corker. I enjoyed listening to your conversation 
while I was----
    Senator Schumer. About a proposed settlement. There are 
numerous vital elements of a successful negotiated agreement, 
but one of the most important, the agreement must contain 
stronger language that allows inspections anywhere, anytime, 
unannounced. This is the only way to ensure that Iran complies 
with the agreement since I and most of us have little faith in 
the Iranian leadership.
    Thank you, Mr. Chairman.
    Chairman Shelby. Thank you.
    Senator Moran?
    Senator Moran. Mr. Chairman, thank you very much. I will 
forgo an opening statement and yield back my time.
    Chairman Shelby. Thank you.
    On our first panel today, the witnesses are the Honorable 
Antony Blinken, Deputy Secretary of State, United States 
Department of State; and the Honorable David Cohen, Under 
Secretary for Terrorism and Financial Intelligence, United 
States Department of the Treasury.
    Gentlemen, we welcome you both. Mr. Blinken, both your 
written and oral testimony will be made part of the record. You 
may proceed as you wish, Mr. Secretary.

    STATEMENT OF ANTONY BLINKEN, DEPUTY SECRETARY OF STATE, 
                      DEPARTMENT OF STATE

    Mr. Blinken. Thank you very much, Mr. Chairman.
    Chairman Shelby, Ranking Member Brown, and Members of the 
Committee, it is very good to be with you today to discuss 
where we are with our negotiations with Iran to verifiably 
ensure that its nuclear program will be for exclusively 
peaceful purposes going forward.
    Our core goals for these negotiations are clear and they 
are consistent: Any agreement must effectively cutoff the four 
pathways Iran could take to obtain enough fissile material for 
a nuclear weapon--two uranium pathways through its activities 
at Natanz and Fordow; a plutonium pathway, through the Arak 
heavy water reactor; and a potential covert pathway. Any 
agreement must require stringent access, monitoring, and 
transparency measures to maximize the international community's 
ability to detect quickly any attempt by Iran to break out 
overtly or covertly from an agreement. Any agreement must give 
us confidence that, should Iran choose to break its 
commitments, it would take at least 1 year for it to produce 
enough fissile material to make a bomb. And any agreement must 
deal with the PMD issue, missiles capable of mating a nuclear 
weapon to a missile, and R&D.
    In exchange, the international community would provide Iran 
with phased sanctions relief tied to verifiable actions on its 
part. Such relief would be structured so that sanctions could 
be quickly reimposed if Iran were to violate its commitments.
    As we speak, negotiations continue among the P5+1 and Iran. 
They have been substantive; they have been serious. We have 
made progress on some of the key issues that separate us, but 
real gaps remain.
    Overall, however, we assess that we still have a credible 
chance of reaching a deal that is in the best interest of the 
United States as well as that of our allies and partners around 
the world. Our goal is to conclude the major elements of the 
deal by the end of March and then to complete the technical 
details by June.
    We believe we are negotiating from a position of strength. 
In the past, Iran could use the cover of talks to buy time and 
advance its programs. Thanks to the interim agreement we 
reached, the so-called Joint Plan of Action, or JPOA, Iran's 
program was frozen in many respects, rolled back in some, and 
international inspectors were given unique access to learn more 
about the program during the pendency of the interim agreement. 
Before the JPOA, Iran had about 200 kilograms of 20 percent 
enriched uranium in a form that could be quickly enriched to 
weapons-grade levels. It produced much of that material at the 
Fordow facility, buried deep underground. Today Iran has no 20 
percent enriched uranium. Zero. None. It has diluted or 
converted every ounce, suspended all uranium enrichment above 5 
percent, and removed the connections at Fordow that allowed 
them to produce 20 percent enriched uranium in the first place.
    Before the JPOA, Iran was making progress on the Arak 
reactor, which, if it had become operational, and together with 
a reprocessing facility, would have provided Iran with a 
plutonium path to a nuclear weapon. Once fueled, the Arak 
facility would be challenging to deal with militarily. Today 
Arak is frozen in place. No new components, no testing, no 
fuel.
    Before the JPOA, Iran had installed roughly 19,000 
centrifuges, the vast bulk at the Natanz facility. Today 9,000 
of those centrifuges are not operational. Iran has installed no 
new centrifuges, including next-generation models, and Iran's 
stockpile of 4 percent low-enriched uranium is capped at pre-
JPOA levels.
    And before the JPOA, inspectors had limited access to 
Iran's nuclear facilities. Today the JPOA has enabled 
inspectors' daily access to its enrichment facilities and a far 
deeper understanding of its program--its centrifuge production, 
its mines, its mills, and other facilities important to the 
program. And the IAEA has repeatedly reported that Iran has 
lived up to its commitments under the interim agreement.
    Just as we asked Iran to uphold its commitments under the 
interim agreement, we have lived up to our commitments to 
provide it with limited relief. But as my colleague will make 
clear, that relief is dwarfed by the vast amounts denied to 
Iran under the existing sanctions regime, which remains in 
force. Indeed, under JPOA and throughout its existence, 
sanctions pressure on Iran has increased, not decreased.
    This Committee is now considering legislation to impose 
additional sanctions on Iran should negotiations fail. And I 
know, the Administration knows that the intent of this 
legislation is to further increase pressure on Iran and, in so 
doing, to strengthen the hand of our negotiators to reach a 
comprehensive resolution. So while we appreciate the intent of 
this effort, it is our considered judgment and strongly held 
view that new sanctions at this time are unnecessary and, far 
from enhancing the prospects for negotiations, risk fatally 
undermining our diplomacy, making a deal less likely, and 
unraveling the sanctions regime so many in this body have 
worked so hard to establish.
    The new sanctions are unnecessary because, as I noted a 
moment ago and Under Secretary Cohen will elaborate on, Iran 
already is under acute pressure from the application of the 
existing sanctions regime. In recent months, that pressure has 
only grown stronger with the dramatic drop in oil prices. 
Should Iran refuse a reasonable agreement or cheat on its 
current commitments under the interim agreement, the Senate 
could impose additional sanctions in a matter of hours, 
matching or going beyond what the House has already passed. The 
Administration would strongly support such action. Iran is well 
aware that an even sharper Sword of Damocles hangs over its 
head. It needs no further motivation.
    So new sanctions are not necessary, in our judgment, but 
they pose a real risk. They pose a risk, as we have talked 
about before, that Iran could use them as an excuse to walk 
away, citing a violation of the interim agreement. Even if the 
sanctions and trigger legislation are not a technical 
violation, they could be perceived as such and used by Iran as 
an excuse both to walk away or indeed to divide our partners 
from us.
    The trigger legislation is what is on the table right now 
before us. I appreciate very much the comments that Senator 
Menendez made a short while ago about a letter that he sent the 
Administration, which I have not had a chance to read. I heard 
Senator Schumer describe it as well. But we appreciate the 
recognition that our negotiators could use some additional time 
and space to pursue the diplomatic option in the absence of 
this legislation being passed.
    Let me just very quickly cite the concerns that we have 
even with trigger legislation, were it to be passed during 
these negotiations.
    First, as I noted, this could give Iran an excuse to walk 
away from the negotiating table, violate the interim agreement, 
and pursue its nuclear program full tilt. Instead of keeping 
its uranium enrichment under 5 percent, as it has since the 
JPOA was signed, it could start enriching again at 20 percent 
or even higher. It could rebuild its stockpile of low-enriched 
uranium, going beyond pre-JPOA levels. It could stop the 
suspension of the work on the Arak reactor. And it could 
eliminate the access that inspectors have.
    Second, even if it doesn't walk away or even if it promptly 
returns to the table, the process could, in fact, empower 
hardliners to press the negotiators to adopt much more 
stringent positions at the negotiations and make a conclusion 
of the negotiations much more difficult, if not impossible, 
using terms that we could not accept. We sometimes have a 
tendency to see Iran as a monolith, a country devoid of 
politics. In fact, the politics are intense. There are 
different camps, and in the event there was a dispute over 
whether new sanctions had been imposed by the United States, 
the hardliners could user that to press the negotiators to take 
positions that would make an agreement very, very difficult, if 
not impossible to reach.
    Finally, as has been noted--and this is most important, 
because ultimately what Iran thinks is much less important than 
what our international partners think. Our international 
partners believe that the United States, if it is perceived as 
acting prematurely through additional nuclear-related sanctions 
legislation in the absence of a provocation or a violation by 
Iran, their willingness to enforce the existing sanctions 
regime, much less add additional sanctions in the event of the 
failure of the negotiations, that is likely to be diluted. 
Their support, as has been noted, is critical. Without it, the 
sanctions regime would dramatically atrophy.
    Up until now, we have kept many of these countries on 
board, including countries for whom sanctions are clearly 
against their self-interest, their economic interest. We have 
kept them on board because they believe we are serious about 
trying to conclude a diplomatic resolution of Iran's nuclear 
program. If they lose that conviction, the United States, not 
Iran, risks being isolated, the sanctions regime would 
collapse, and Iran could turn everything it turned off under 
the JPOA with no consequence. In other words, we would lose 
everything we have achieved over the last decade in turning the 
tables on Iran, isolating Iran not the United States.
    We can debate whether any or all of these things would 
happen, but it is the judgment of those I believe are best 
placed to know--the diplomatic professionals and other 
negotiators who have been at the table with the Iranians, with 
our partners for months and indeed for years, that is their 
conclusion. They believe the risks are real, serious, and as I 
said at the outset, unnecessary. That is their best judgment. 
So why run these risks and jeopardize the prospects for a deal 
that will either come together or not in the next couple of 
months. Why not be patient, especially with the program frozen 
under the interim agreement? There is nothing to be gained and, 
in our judgment, lots to be lost by acting precipitously.
    And, finally, as I noted, this is not just our view. This 
is the view of our closest partners. You heard Prime Minister 
Cameron a week ago. Some of you may have read the piece written 
by the foreign ministers of the United Kingdom, France, and 
Germany, and let me conclude with that. They wrote: 
``Introducing new hurdles at this critical stage of the 
negotiations, including through additional nuclear-related 
sanctions legislation on Iran, would jeopardize our efforts at 
a critical juncture. While many Iranians know how much they 
stand to gain by overcoming isolation and engaging with the 
world, there are also those in Tehran who oppose any nuclear 
deal. We should not give them new arguments. New sanctions at 
this moment might also fracture the international coalition 
that has made sanctions so effective so far. Rather than 
strengthening our negotiating position, new sanctions 
legislation at this point would set us back.''
    Thank you, Mr. Chairman.
    Chairman Shelby. Secretary Cohen.

STATEMENT OF DAVID S. COHEN, UNDER SECRETARY FOR TERRORISM AND 
       FINANCIAL INTELLIGENCE, DEPARTMENT OF THE TREASURY

    Mr. Cohen. Good morning, Chairman Shelby, Ranking Member 
Brown, and distinguished Members of the Committee. Thank you 
for the invitation to appear before you today.
    As this may be my last opportunity to appear before this 
Committee before I take on other duties, I want to begin by 
expressing my appreciation to you, Chairman Shelby, Ranking 
Member Brown, and to all Members of this Committee for the 
courtesy that you have shown me over the last several years.
    There is no higher national security priority than ensuring 
Iran does not acquire a nuclear weapon, and President Obama has 
made clear that we will do everything in our power to prevent 
that from happening.
    For us at Treasury, that has meant working within the 
Administration, with Congress, and with international partners 
to impose the most powerful sanctions in history. And in many 
respects, the sanctions have worked exactly as designed. They 
have driven Iran to the negotiating table because Iran's 
leaders know that relief from sanctions can come only in 
exchange for taking steps that will guarantee that Iran cannot 
produce a nuclear weapon.
    As we sit here today, no one knows whether the negotiations 
ultimately will yield a comprehensive deal. But we, like you, 
are dedicated to testing fully the diplomatic path. As we do 
so, Iran's economy remains subject to intense pressure from 
sanctions.
    Under the Joint Plan of Action, which has been in effect 
for a little over a year now, Iran halted progress on its 
nuclear program, rolled it back in key respects, and allowed 
unprecedented inspections of its enrichment facilities. In 
exchange, Iran received limited and reversible relief from some 
nuclear-related sanctions.
    Importantly, the JPOA left in place the full architecture 
of our financial, banking, oil, and trade sanctions, our 
terrorism and human rights sanctions, and our domestic embargo. 
This means that Iran is still cutoff from the international 
financial system. It is unable to export even half the oil it 
was exporting in 2012, and it is barred by sanctions from 
freely accessing most of its oil revenues and foreign reserves.
    These sanctions are not just words on the books. We 
vigorously enforce them. Since the signing of the JPOA, we have 
designated nearly 100 Iran-related targets and imposed over 
$350 million in penalties for sanctions evasion. Put simply, 
Iran still is not open for business, and its economy remains in 
a deep hole. Let me cite just a few metrics.
    In 2014 alone, our sanctions deprived Iran of over $40 
billion in oil revenues. That is well over twice the total 
estimated value to Iran of the JPOA sanctions relief. 
Altogether, since 2012, our oil sanctions have cost Iran more 
than $200 billion in lost exports and oil proceeds it cannot 
access.
    Iran's currency, the rial, has depreciated by 16 percent 
just since the signing of the JPOA and 56 percent since January 
2012. And Iran's economy today is 15 to 20 percent smaller than 
it would have been had it remained on its pre-2012 growth 
trajectory.
    Because of the scope and intensity of the sanctions Iran 
currently is subject to, and because of the economic pressure 
those sanctions continue to apply, Iran is negotiating with its 
back against the wall. Accordingly, we see no compelling reason 
to impose new sanctions now even on a delayed trigger. Indeed, 
we think new sanctions legislation is more likely to be 
counterproductive than helpful in the negotiations.
    Today Iran's nuclear program is frozen in its economy, and 
thus, its negotiating team remain under enormous pressure 
because we have been able to hold together the international 
sanctions coalition. Enacting new sanctions now threatens to 
unravel this.
    If Congress enacts new sanctions now and the negotiations 
ultimately prove unsuccessful, our international partners may 
blame us, not Iran, for the breakdown in the talks. If that 
happens, overall support for the sanctions regime would then 
decline, making it more difficult to maintain and more 
difficult to intensify sanctions pressure. And if a breakdown 
in talks led to the demise of the JPOA, we would lose the 
additional insight into Iran's nuclear program and the 
restrictions on development that the JPOA has given us.
    Make no mistake: This Administration understands and 
embraces the power of sanctions. Sanctions are a key component 
of many of our most important national security initiatives. We 
are not sanctions doubters. But neither do we believe that 
layering on additional sanctions is always the right move. 
Sanctions are one tool in our toolkit, alongside diplomacy, 
military action, and the myriad other ways that we project 
power.
    If diplomacy does not succeed, the President said that he 
``will be the first one to come to Congress and say we need to 
tighten the screws.'' But in our view, now is the time to give 
diplomacy every chance to succeed, not to create a new 
sanctions tool.
    Thank you, and I look forward to addressing your questions.
    Chairman Shelby. Thank you.
    Secretary Blinken, many observers have questioned Iran's 
willingness to negotiate in good faith. Even President Obama 
assesses the chances of a final nuclear deal at about 50 
percent. Do you foresee today any circumstances under which the 
Administration would once again extend the negotiations?
    Mr. Blinken. Thank you, Mr. Chairman. As I noted, our goal 
and intent is to try and include the outlines of an agreement, 
the key elements, by the end of March and then to take the time 
to June, if we get there, to fill in the technical details. 
That is what we are focused on. That is what we are driving 
toward.
    As I sit here today, I cannot absolutely rule out that we 
would look for additional time. For example, if we get to June 
and we have the core elements of a deal in place and we are 
working on the technical details and it turns out that we need 
a little bit more time to dot all the I's and cross all the 
T's, we may come and seek it.
    Similarly, even in March, were we to get to a point where 
virtually all the elements of a deal had been worked out but we 
were short on one chapter, we might want a little bit more time 
in that initial period to do that. And I should remind you as 
well that the way this is structured, the actual deadline is 
June. We set ourselves the obligation of trying to reach the 
elements, the broad elements of a deal, by March.
    So a long way of saying our focus and intent is getting the 
elements of a deal done by March and everything concluded by 
June, but I do not want to arbitrarily say today that we could 
not under any circumstances come back and seek a little bit 
more time. It really depends on exactly where we would be.
    Chairman Shelby. Would you concede that protracted 
negotiations are in Iran's favor, that is, if their goal, as we 
believe, is to obtain nuclear weapons?
    Mr. Blinken. Actually, Mr. Chairman, I think what has 
happened over the life of the interim agreement is that this 
has worked very much in our favor. Again, in the past, we have 
had talks with Iran where it has been able to advance its 
program while it was talking. In this case, we have frozen the 
program in critical respects, we have rolled it back in some, 
and we have gotten more inspections access than we have ever 
had, and with very limited relief, and as my colleague just 
laid out, that relief has been dwarfed by the sanctions 
pressure that remains on Iran.
    So actually throughout this period, I think this has 
benefited us, not them.
    Chairman Shelby. But you just brought it up, and you said 
that you have effectively frozen the program. Nonetheless, Iran 
continues to produce low-enriched uranium and reportedly to 
work on more advanced centrifuges. We have seen this before. As 
President Rouhani has admitted, during the last so-called 
suspension of Iran's program, some 10 years ago, Iran 
established a technological foundation for rapid subsequent 
progress. What evidence do you have today that Iran is not once 
again using the cover of international negotiations--that is, 
protracted negotiations--to advance its nuclear program? 
Because we hear the opposite.
    Mr. Blinken. Mr. Chairman, on the question of the 
stockpile, under the interim agreement its low-enriched uranium 
stockpile is capped at the level it reached before the 
agreement went into effect. So that stockpile has not grown, 
and indeed, the under 2 percent that it had, which it had a 
fairly vast quantity of, that also has been significantly 
diluted.
    In terms of the research and development and advanced 
centrifuges, you are absolutely right that no doubt Iran is 
seeking in various ways to continue to perfect other 
centrifuges. But under the agreement, it cannot do the critical 
kind of testing that is necessary for it to actually make 
advances. It cannot run gas through new centrifuges. The R&D is 
capped at where it was before the agreement went into effect.
    So are they tinkering with centrifuges and trying to build 
them someplace? Almost certainly. Are they able to do the kind 
of testing, running gas through them, that would materially 
advance them? Are they able to connect them together in a way 
that would demonstrate that they work? No.
    Chairman Shelby. But that is a little more than tinkering, 
what they are doing, I believe. According to the International 
Atomic Energy Agency, Iran produced more than 500 additional 
kilograms of low-enriched uranium--that is a 7-percent increase 
in its holdings--between September and November of this past 
year alone. That is a 7-percent increase in only 3 months.
    Assuming that Iran continues its uranium production at this 
same pace and we reach no nuclear agreement, how much stronger 
will Iran's nuclear capabilities be at the end of the Obama 
administration, say 2 years hence, compared to when the 
President assumed office?
    Mr. Blinken. Mr. Chairman, under the agreement, again, the 
low-enriched uranium stockpile is capped at a level at the end 
of the agreement that it was at before the agreement. Whether 
there are variations during the----
    Chairman Shelby. It might be capped. I am going to use that 
word pretty liberally there, that term. But they continue to 
pursue their goal, do they not, the best they can, anyway they 
can?
    Mr. Blinken. As long as it is consistent with the 
agreement. If it is inconsistent with the agreement and indeed 
the IAEA continues to report on a regular basis that it has 
lived up to its obligations under the agreement, it has not 
done that.
    Chairman Shelby. OK. Secretary Cohen, I will get to you 
because time is limited here. Last August, your office at 
Treasury and the State Department designated additional Iranian 
Government entities, and I will quote, ``for activities that 
have materially contributed to or posed a risk of materially 
contributing to weapons of mass destruction and for efforts to 
support the development of nuclear weapons.'' Doesn't that mean 
that the Iranian Government is still trying to develop nuclear 
weapons even as we speak?
    Mr. Cohen. Well, Mr. Chairman, we did apply sanctions last 
August----
    Chairman Shelby. I know.
    Mr. Cohen.----as we have applied sanctions throughout the 
course of this Joint Plan of Action period, and obviously 
before as well. We do so against those entities that we see are 
violating our sanctions or seeking to violate our sanctions.
    There is no question that, as Deputy Secretary Blinken 
said, the Iranians remain interested in their nuclear program. 
These negotiations are designed to ensure going forward that 
Iran cannot produce a nuclear weapon. And in the meantime, we 
maintain our sanctions for the specific purpose of ensuring 
that we can disrupt every effort the Iranians may make to 
advance their program in the meantime.
    Chairman Shelby. Secretary Cohen, why should we, and you--
of course, you are a big part of the Government--have any 
confidence in a negotiating partner such as Iran that continues 
to cheat, not just in terms of evading sanctions but by what a 
lot of us believe or have reason to know they continue to work 
on developing nuclear weapons?
    Mr. Cohen. Well, Mr. Chairman, I think the short answer is 
none of us should have confidence that Iran is going to live up 
to its current obligations or its future obligations. That is 
why the emphasis that many Senators have made here on 
verification is something that we are also very interested in. 
Deputy Secretary Blinken can speak to this at greater length, 
but I think we understand that, today and going forward, 
verification is critical.
    Chairman Shelby. Secretary Blinken, this last here from me, 
I am concerned that Iran, which is designated by the State 
Department as the world's leading sponsor of terrorism for so 
many years, continues to derail negotiations based on its so-
called right to develop nuclear technology. I can hope that the 
U.S. negotiators are resisting Iranian efforts to claim this 
``inalienable right'' because it was gravely undermine the 
proliferation regime, which we fought so hard to maintain.
    Mr. Blinken. We agree with you, Mr. Chairman.
    Chairman Shelby. Can you confirm that it is the United 
States' position, the State Department's position here, that 
Iran enjoys no such right under either Article 4 of the Nuclear 
Nonproliferation Treaty or under any other provision or 
principle of law?
    Mr. Blinken. Yes, Mr. Chairman. We agree with you. It does 
not have a right to enrich.
    Chairman Shelby. OK. Senator Brown.
    Senator Brown. Thank you, Mr. Chairman.
    Mr. Cohen, you spoke of the difficulty of holding together 
our coalition. Mr. Blinken, you mentioned the potential of 
fracturing international unity and the challenge of keeping the 
other five nations on board.
    Secretary Blinken, as you know, Prime Minister Cameron at 
the White House urged Congress not to move forward on new 
sanctions, including trigger sanctions taking effect later, now 
arguing it would undermine the P5+1 process. Talk through, if 
you would, especially as you emphasized, the sacrifice 
economically--I think something important to understand--that 
our five partners in this have sacrificed economically by being 
part of this coalition. Talk through what their views of this 
are, give examples how you think our allies might react in 
light of those comments.
    Mr. Blinken. Thank you, Senator. I think we have heard them 
address this very clearly. You alluded to Prime Minister 
Cameron. I quoted from an op-ed piece that the foreign 
ministers of France, the United Kingdom, and Germany wrote 
together, making clear their concerns about additional 
sanctions at this time during the midst of these negotiations 
that are reaching a critical juncture.
    The concern is that any such legislation, even trigger 
legislation, could be used and perceived as a violation, even 
if technically it is not, of the interim agreement and the 
obligation we undertook not to impose new sanctions while we 
were negotiating. That starts to sow doubt and confusion. It 
may send a message that we are not serious about reaching an 
agreement, and it is that seriousness that has helped hold this 
coalition together.
    The reason so many countries have been with us, in no small 
measure thanks to the painstaking diplomacy that we have done 
to hold them with us, is because they believe we are serious 
about trying to reach a diplomatic resolution of this problem.
    The moment they doubt that and lose faith in that, then the 
economic incentives many of them have not to abide by the 
sanctions regime may start to gain greater force, and they will 
say, ``This is not going anywhere. We may as well start to cut 
deals. This is going to fall apart.''
    Now, maybe our core allies do not do that, although even 
some of our core allies I think would be very tempted. But keep 
in mind, one of the most important aspects of this--and Under 
Secretary Cohen can address this--are the oil sanctions and the 
fact that we have capped, and indeed reduced, the purchases of 
oil made by critical countries that are not part of the P5+1. 
They would like to buy more oil. Depending on where prices go, 
that can also be a big influence. They, too, will start to feel 
the pressure not to abide by the commitments they made and the 
pressure on Iran will be released.
    The other aspect is this: You know, the idea that we under 
those conditions would be able to impose additional sanctions 
on Iran I think would be incredibly difficult. I am even more 
worried--and Under Secretary Cohen may want to address this--
about our ability to sustain the existing regime if we wind up 
in a situation where there is a dispute among us about whether 
we violated our commitments or not under the agreement.
    But the bottom line is this: If we thought it was necessary 
or indeed helpful to have it, to have these additional 
sanctions during the pendency of the negotiations, we would be 
the first to welcome it. But in our judgment, it does not give 
us anything that we do not already have. And so why run the 
risk, even if we cannot prove this is what would happen, even 
if it is not 100 percent, there is a real risk, and the people 
who are closest to it believe that the risk is serious. Why do 
it when we do not need it?
    Senator Brown. So your concern, Secretary, is if we were to 
do sanctions now with a trigger, our allies, part evidenced by 
the op-ed by the three countries and the EU Commissioner, EU 
Minister, would--that we would have more difficulty holding 
them and I assume China and Russia together to keep the 
sanctions as effective as they have been in making progress 
during the JPOA?
    Mr. Blinken. That is correct. I think the great strength of 
our position is the unity we have, that we forged with our 
partners in the P5 and indeed with other countries that are 
applying the sanctions regime. The strength of these sanctions 
goes in the first instance to what has been passed by Congress. 
That has been vitally important. But it is magnified 
exponentially by the fact that we have countries around the 
world who are implementing them. When that goes away, a lot of 
what we have achieved, a lot of what you have achieved in this 
room and in this body, will be diluted.
    Senator Brown. Mr. Cohen, the President expressed concern 
last week that if Congress acts, in his words, prematurely on 
sanctions, it would potentially hand Iran a PR victory. It 
could lead other countries now cooperating with us, along the 
lines of Mr. Blinken's comments, to reduce their commitment to 
international sanctions.
    Based on your experience building these sanctions 
painstakingly over the years, how difficult would it be to 
maintain them under these circumstances with our allies, what 
we do and what they do?
    Mr. Cohen. Senator, I think it would be difficult. I think 
there is a risk, as Secretary Blinken said, that we would lose 
some of the voluntary cooperation, and I would just cite one 
example here.
    In 2011, the U.N. Security Council passed a resolution, 
1929, that called on member states to exercise vigilance over 
Iran's banking activities, and there are several paragraphs in 
that resolution that did not demand anything from member 
states, but called on them to exercise vigilance.
    We have used that language, and we have used the very real 
sense that we are serious about a diplomatic resolution to get 
countries around the world, not just within the P5+1 but 
others--in Asia, India, Turkey, others--to apply really serious 
vigilance regarding Iran's banking activities. That has had an 
enormous impact.
    If these countries begin to think that we are not serious 
about a diplomatic resolution, they can, consistent with their 
obligations under the United Nations Security Council 
resolution, be less vigilant, less active in how they look at 
Iran banking activity. That will have an impact on the 
sanctions regime. That will have an impact on economic activity 
in Iran, and it will all be to our detriment.
    Senator Brown. And does that have a broader effect on our 
diplomatic efforts in the region and our standing in the world?
    Mr. Cohen. I would think so. I think it would--and, again, 
Deputy Secretary Blinken can speak to this, but I think if our 
partners and others around the world begin to doubt that we are 
serious about a diplomatic resolution here, I think it redounds 
to our detriment in many respects.
    Senator Brown. Let me ask one more question. Thank you for 
your forbearance.
    We have all talked about the role of Congress--certainly 
Senator Corker has sort of led the charge on that, and Senator 
Menendez has--on what we do with sanctions and what we do at 
the conclusion of the agreement, if there is an agreement that 
is acceptable. Talk to us about constructive things Congress 
can do in anticipation of an agreement to make sure that 
inspectors' verification, bolstering sanctions, investigations, 
all of those kinds of things where we play a role in enforcing, 
making sure this agreement is enforceable, that the inspections 
are what they need to be, as both Senator Schumer and Senator 
Menendez said. Either of you.
    Mr. Blinken. Senator, first I would say that Congress has 
played a critical and indeed lead role getting us to where we 
are. It plays a critical and lead role now with the knowledge 
that Iran has that Congress can act with further sanctions if 
Iran walks away or reneges on its agreement. And, critically, 
Congress has to play a central role, if we get to an agreement, 
to make sure that Iran lives up to its commitments, because 
what we are thinking about doing should we reach an agreement 
is not to end sanctions immediately but to suspend them, and 
then test the proposition, test whether Iran meets a series of 
steps that it will have to agree to in the final agreement, and 
only at that point, over some significant period of time, would 
sanctions actually be lifted, which Congress would have to do 
since Congress imposed them. That is the most critical role, 
and I think it is really the enforcement regime that would be 
built into any final agreement with a snap-back provision so 
that suspended sanctions could be reimplemented very quickly 
should Iran renege on its commitments.
    Now, as to other elements going forward, one of the things 
that we have been doing and we will continue to do is to be in 
very close contact with you in a classified setting about where 
we are on the details of these negotiations. But it is very 
difficult to isolate one particular element and say this is 
what we have to have on X, Y, or Z, because all of these pieces 
have to fit together. And so I think being able to describe the 
totality of where we are in a closed setting I think will help 
you see where we are trying to get to.
    Senator Brown. In closing, Mr. Chairman, so the 
Administration is committing to us that there will be a 
significant, important role of Congress throughout this process 
even if we--if we have an agreement as significant and 
important as you hope we get to.
    Mr. Blinken. That is correct.
    Senator Brown. OK.
    Chairman Shelby. Senator Corker.
    Senator Corker. Well, I look forward to finding out more 
about that role during this questioning and answering.
    One of the reasons I like coming to hearings like this is 
to read the tea leaves and see where people are, and it is 
evident with our strongest Democratic leader on sanctions 
saying that he is not willing to vote on his bill until after 
March 24th, that if we want to speak with one voice and show 
strength to Iran, it is likely that we are not going to vote on 
the Senate floor on sanctions until after March 24th.
    Mr. Blinken, I would just ask you, do you have a problem 
with that?
    Senator Blinken. Senator, I think that what I heard Senator 
Menendez say and then Senator Schumer say--not having seen the 
letter, I would not want to comment on it in detail, but on the 
basis of what I heard, I think it recognizes that our 
negotiators could use the time and space effectively, not 
having legislation pass before the end of March. I think the 
commitment to do that is something that we would see very 
favorably and would answer a big part of the problem that we 
had with the idea of the legislation, even trigger legislation, 
being passed now before the end of March.
    Senator Corker. And I think that, you know, you know we 
have concerns about the limited access that we have to what 
Iran is doing. The JPOA allowed them to continue research and 
development. We know that they, during these negotiations, 
pumped UF6 gas into an IR5 centrifuge. We know that. We caught 
them doing that.
    I have heard our negotiators tell us that Zarif could pass 
a lie detector test--Zarif, their negotiator, could pass a lie 
detector test, that they were never involved in any previous 
military dimensions because of the way Iran works, things are 
separated. So that somehow gives our negotiators confidence, 
and what it does for us is give us great concerns.
    Dr. Clawson's testimony is going to state in just a minute 
that they have already passed a budget with lower petroleum 
prices, and they are willing to live with that. So I know that 
we have inflicted some pain, but the fact is they are willing 
to live with that pain because this program is so important to 
them.
    So we have concerns. As a matter of fact, as Joe Donnelly 
mentioned, we were in the Middle East last week, and the 
concerns are that Iran is here and the United States and its 
friends have been here, and during the negotiations most of the 
movement has been in the direction of Iran, and that is what 
everyone is concerned about.
    Your boss, Secretary Kerry, has been before us and told us 
that this has to pass muster with Congress, a final deal. 
Sanctions is about pushing toward a deal, but we would like for 
it to pass muster. You just said in testimony here with Senator 
Brown just a minute ago that it should pass muster. And the way 
we pass muster around here is we vote. We do not sit around and 
shoot the breeze at lunch. We vote.
    So what I have been pushing for--and I think numbers of 
people have alluded to it--and others have been pushing for is 
that if there is a final deal, we vote. Do you support that 
notion?
    Mr. Blinken. Senator, as I mentioned earlier, we believe 
Congress will have to vote at the end of any deal to eliminate 
the sanctions that would be part of any----
    Senator Corker. OK. Let me--since we have had this round 
before in Foreign Relations, I am going to say to the other 
Members what they wish to do is suspend, suspend for a long 
time, like probably beyond the time the President is here. What 
that means is the whole regime falls apart. If you suspend for 
that long, it is over.
    What we would like to do is vote. As Senator Kaine 
mentioned last week, if we are going to have to vote eventually 
on a final lifting of negotiations--of sanctions, and since we 
know Iran is perfectly happy with the suspension because they 
know the whole regime will fall apart once you suspend it, 
would it not be better if we just voted on the front end so 
that we could say yes or no on the front end? I do not know why 
you would object to that if, in fact, we have to vote a year 
and a half from now, 2 years from now, anyway?
    Mr. Blinken. Senator, I think there are a few issues at 
play. One is an issue, as we discussed last week in the Foreign 
Relations Committee, of the classic executive-legislative 
prerogatives. So any executive branch, Republican, Democrat, 
whoever is running it, will want to hold on to the prerogative 
of being able to negotiate nonlegally binding accords such as 
this one, as many Administrations have, and not have it voted 
up or down by Congress. That is one issue which we would have 
to address.
    But substantively, to your point, because I think it is 
critical, you know, if Congress had been asked to vote on the 
interim agreement within a month or so of its conclusion, I 
suspect that many Members who today agree that that agreement 
has produced real results and has advanced our security might 
in the first instance, because of the criticism the agreement 
received, have voted it down, and then we would be in a 
materially worse off place.
    So we think that, first, being able to test any agreement 
that we reach to make sure that Iran is meeting its commitments 
and doing so over an extended period of time before eliminating 
the final leverage, the critical leverage that comes with 
actually terminating sanctions, we think that would be a 
critical component built into the agreement. But I think Under 
Secretary Cohen can address the question that you raise, 
because it is an important question, about would the regime 
under suspension in effect fall apart.
    Mr. Cohen. I think it is instructive to look at what 
happened to the sanctions regime during the Joint Plan of 
Action, where we suspended some sanctions and continued to 
enforce the sanctions that remained in place. That is 
essentially the same model that is being conceived if there 
were to be a comprehensive agreement here.
    The sanctions did not fall apart. It did not deteriorate, 
the architecture did not collapse. And I think there are 
important reasons for that, most of which I would rather go 
into in closed session.
    Senator Corker. Let us do that because I am out of time.
    Mr. Cohen. OK. But I think the critical point is with 
suspension of sanctions, with future termination, for all the 
reasons that Secretary Blinken said, it is important for the 
negotiations and for the deal. I think it is also important 
that this Committee not think that upon suspension the entire 
sanctions architecture collapses. That has not been our 
experience, and I think we have reason to believe that that 
will not happen.
    Senator Corker. I would just respectfully say in closing 
that if it is perceived by the world that we have reached a 
deal that this Administration and the P5+1 have agreed is 
satisfactory, you will not hold, the sanctions regime will not 
hold. It will be a totally different dynamic where all of a 
sudden Iran is no longer a rogue state but they have now 
reached a final agreement with the P5+1.
    So I would respectfully say that we do need to vote on any 
final deal. We vote on civil deals. And I would say actually 
since it appears we may be voting on sanctions immediately 
after March 24th, maybe that is a place holder for Congress to 
even weigh in on whether they think, if a deal is reached, it 
is satisfactory or not. But I appreciate your testimony.
    Chairman Shelby. Senator Menendez.
    Senator Menendez. Well, thank you, Mr. Chairman.
    Look, for 20 years, when I was in the House of 
Representatives, I had been working on the issue of Iran when 
people were not paying attention. And no one wants the 
President to succeed more on achieving an agreement than I do. 
However, it is not just any agreement. It has to be an 
agreement that significantly moves Iran in a different 
direction.
    Now, Secretary Blinken, for the purposes of our colleagues 
here who do not sit on the Senate Foreign Relations Committee, 
last week under testimony you said, in response to my 
questions, that, look, this is no longer about dismantling 
Iran's nuclear infrastructure; this is about getting at best, 
or maybe better, a 1-year alarm bell. Is that a fair statement?
    Mr. Blinken. Yes, Senator. The critical test is whether we 
reach an agreement that makes sure that it would take them at 
least 1 year to produce enough fissile material for one nuclear 
weapon.
    Senator Menendez. So we get an alarm bell, but we do not 
dismantle Iran's illicit nuclear infrastructure. And I say 
``illicit'' not just by U.S. standards but by international 
standards of Security Council resolutions.
    So let me just say, you spent a lot of time on perceptions, 
and last week I made a statement that I think was not taken in 
full context. The context is the more that I hear these 
arguments, the more concerned I am that we feed into the 
narrative there that Iran is the victim when Iran has original 
sin here by having an illicit nuclear program.
    But let me talk to you about perceptions. You talked 
about--you spent all of your testimony talking about Iran's 
perceptions. Well, let me tell you what some of us perceive 
here in the United States of America.
    Number one is you see that the Iranians have a way to cheat 
and technically they are not in the Joint Plan of Action. So 
they cheated, and we, the United States, complained to the U.N. 
Security Council about violations of Iran trying to buy 
technology--for what? For the Arak nuclear reactor.
    They cheated when they fueled one of their centrifuges. 
They cheated when you, Mr. Cohen, last week in testimony said 
that, among the 100 times that you have sanctioned different 
entities, some of those times Iran was complicit with those who 
you sanctioned. So they are cheating in the midst of our 
negotiations.
    Now, in addition to that--we talk about the Congress 
forbearing--well, right now in Tehran there is legislation 
pending to deploy centrifuges that can enrich uranium more 
efficiently than ever to increase the production of a form of 
nuclear fuel that is just shy--just shy--of bomb-grade 
material.
    The Ayatollah has been talking about a resistance economy, 
and last week, the person whom we have got a lot of faith in, 
the Iranian Foreign Minister, Zarif, said at the World Economic 
Forum that the global drop in the price of oil makes Iran less 
likely to agree to concessions on their nuclear program. Less 
likely to agree to concessions.
    So I do not know about you, but all of that put together, 
and so much more, says to me my perception here in the United 
States of America is that your aspirations, which I share, but 
I have mine dosed in a lot of reality because I do not want 
another North Korea.
    Now, what you are really telling us, when I hear your 
worries about what the Iranian perception is that, in fact, 
they are unlikely to make a deal, because if I, the Ayatollah, 
who is going to make this ultimate decision, think that a deal 
is good for me and my regime to stay in place, I am going to 
make it regardless of what the noise or the action is over 
here, especially action that would not take place until after 
June when you are supposed to have a deal fully consummated. 
Now, that is not going to stop me from making a deal that I 
otherwise want to make. It is just counterintuitive.
    So, look, I think you need to be looking at what Iran is 
doing right now, and I will just close by saying, you know, 
Iran can cheat, but we do not worry about that in the context 
of, you know, unsettling the Joint Plan of Action because 
technically it is not within it. But it is great if you can 
cheat outside of the Joint Plan of Action and get away with it. 
I am sure if we heard from the Saudis, the Emiratis, the 
Israelis, and others that they would have a different view than 
the Ambassadors that you have mentioned. I know that we have 
heard many times before the Senate Foreign Relations Committee 
when I was a member and when I chaired it, and even most 
recently, that, in fact, the world will come to an end, do not 
have sanctions, you are just going to split our coalition, you 
are going to drive the Iranians. And now the Administration 
heralds it as the singular reason why, in fact, the Iranians 
are finally coming to a negotiation.
    And just about every sanction that we have passed 
legislatively has needed 6 months to ultimately be invoked, 
and, of course, more time to feel a consequence. There have 
been one or two that were done more quickly, but 
overwhelmingly, they needed 6 months. So the time to implement 
any sanctions, assuming a deal does not work, is going to take 
a lead time of 6 months. Well, testimony before the Senate 
Foreign Relations Committee indicates that the Iranian ability 
to pass the nuclear threshold is well below the 6 months, so 
those sanctions are inconsequential. And that is why some of us 
feel that the prospective nature of something that would not 
affect a deal that the Ayatollah wants to make is a guarantee 
that if they do not make it, we do not have the only option 
being, my God, they are going to cross the threshold. We either 
have to have a military strike or accept a nuclear-armed Iran. 
And that is not a choice that we want to have.
    Thank you.
    Senator Corker. [Presiding.] Senator Vitter.
    Mr. Blinken. Could I just briefly address the Senator's 
comments?
    Senator Corker. Sure.
    Mr. Blinken. Very quickly, because I think----
    Senator Menendez. Mr. Chairman, if he does, I want to be 
able to respond.
    Mr. Blinken. I will be very brief, because I think you 
raise some important points, Senator.
    First, in terms of what we are concerned about, we are most 
concerned about what our partners think, not what Iran thinks. 
That is what we are most focused on in terms of the possibility 
of additional legislation now.
    In terms of what Iran thinks, though, here is what our 
assessment is. I mentioned earlier that we sometimes have a 
tendency, all of us, to look at Iran as if it is some kind of 
monolith devoid of politics, when, in fact, the politics are 
incredibly intense. There are different groups. There are 
different camps. There are lots of people who do not want an 
agreement under any terms. And there are some people who would 
like to try to get an agreement not because they like us, not 
because they want to be nice to the United States, but because 
they think it is in their self-interest. They think that 
everything that we have achieved in putting this enormous 
pressure on them is something that they need to move beyond if 
the country is going to progress. They are more pragmatic, even 
if they are not nice guys.
    In thinking about how some of these things play in Iran, 
the reason we think about that at all is because we want to 
make sure that those who are in favor of trying pragmatically 
to reach an agreement that meets our needs and interests, that 
they are reinforced, and that those who are against an 
agreement under any circumstances are not reinforced. That is 
why this question also matters in terms of Iran, not because we 
care in a sense about what they think, but because we see how 
this evolves. We do not want the hands of the hard hardliners 
to be reinforced in this process, making a deal less likely.
    In terms of cheating, you are absolutely right that, first 
of all, there have been instances where we believe they were 
violating the interim agreement. We took it to the mechanism 
that was put in place to litigate these things, and when that 
happened, Iran stopped what it was doing. For example, on the 
IR5s, there was a difference of opinion. We carried the day.
    You are exactly right that outside of the interim agreement 
they are doing things in terms of procurement that we obviously 
oppose, which is exactly why during the agreement we have 
sanctioned more than 40 persons and entities who are trying to 
procure for the Iranian program. So we have been very vigilant 
about that.
    Thank you.
    Chairman Shelby. [Presiding.] Senator Vitter?
    Senator Vitter. Thank you, Mr. Chairman.
    Mr. Secretary, Secretary Blinken, the State Department 
still considers Iran the world's leading state sponsor of 
terrorism, correct?
    Mr. Blinken. If not the leading, certainly one of the 
leading.
    Senator Vitter. I think it is the leading, according to the 
State Department. That has not changed throughout this process, 
has it?
    Mr. Blinken. Right, correct.
    Senator Vitter. You would not expect it to change even if 
there were positive results of this negotiation from your point 
of view, would you?
    Mr. Blinken. I think that is unlikely.
    Senator Vitter. Let me go back to one of Senator Menendez's 
main points. Right now the goal of the Administration in this 
negotiation has essentially been dumbed down to a year warning 
flag, not dismantling the capability, not taking that away, but 
a year warning flag. Is that fair to say?
    Mr. Blinken. I would dispute the characterization of being 
``dumbed down.'' We have been----
    Senator Vitter. At the start of this process, that was not 
the goal, was it?
    Mr. Blinken. The goal was to do two things. The goal was to 
make sure that the pathways that Iran has to a bomb--a 
plutonium path, a uranium path, and a covert path--were 
effectively cutoff. And to do that--and we have been at this 
for quite a while--we determined that making sure under any 
agreement that it would take them at least 1 year to produce 
enough fissile material for one bomb would answer that need. 
And it is worth pointing out two things.
    One, I think most experts believe that the idea that any 
country thinking about doing so would actually break out for 
one bomb's worth of material is pretty unlikely. They would 
tend to want to accumulate four or five bombs' worth. We have 
been very conservative about that, and that is very important.
    Second, as you know, the fissile material is not the only 
piece of this. Actually having a weapon, weaponization, is 
critical, and then having the means to deliver it. The reason 
the fissile material piece is what we have been focused on is 
it is the most visible thing. It is the thing that we can see, 
that we can verify, and that is the best way to give us the 
assurance we need that Iran would not pose a threat with a 
nuclear program.
    Senator Vitter. Mr. Secretary, in fact, at the very 
beginning of this process and this concept of negotiation, did 
the Administration talk about dismantling the capability, not 
having a year warning flag? In fact--take the words ``dumbed 
down'' out of it. In fact, has not that even aspirational goal 
moved enormously?
    Mr. Blinken. Senator, we can discuss in a different setting 
some of the details of where we are. I think what is critical 
is all of these pieces have to fit together, and you cannot 
judge one of these elements in isolation. So, for example, at 
different stages of negotiations, we may have been looking to 
do one thing in a particular area. That may change as we do 
something else in another area. Let me give you a concrete 
example just to be illustrative without getting into any 
detail.
    The question of the number of centrifuges that Iran might 
retain in an agreement is an important one because it goes to 
its ability to produce enough fissile material for a bomb in a 
certain period of time. But it is not the only element. The 
type of centrifuge, the configuration of the centrifuges, the 
stockpile--all of those things together----
    Senator Vitter. I understand what----
    Mr. Blinken. So that is why you have to--I think you have 
to----
    Senator Vitter. My time is being eaten up, so let me expand 
and move on. Who on our side in terms of the U.S. Government is 
going to make the judgment and the calculation about whether we 
have a year warning flag?
    Mr. Blinken. We have extraordinary expertise in this 
Government--scientists, engineers who work for the intelligence 
community, who work for the Energy Department, who work for the 
State Department----
    Senator Vitter. And I will be the first to acknowledge that 
extraordinary expertise, but let me just ask you: Has that type 
of extraordinary expertise, including in the intelligence 
community, ever been wrong about these sorts of timetables 
before?
    Mr. Blinken. I imagine that there have been----
    Senator Vitter. Well, you do not have to imagine. There is 
a historical record. Have they been wrong about these types of 
timetables before?
    Mr. Blinken. I would say that one of the things that we 
have done with the time that we have had during these 
negotiations is to bear--at least in my judgment and my 
experience; I cannot speak to others' experience--in my 
experience, to bear down in an extraordinary way on the science 
and the technologies. But it is not just us. Our partners are 
critical parts of this, their scientists, their experts, not 
just the P5+1. We have an active, vigorous exchange with 
Israel, for example, their scientists, their intelligence 
community, all of us together.
    Senator Vitter. Let me just give you my conclusion, which 
is that all of these folks are very smart and very capable, and 
yet given the technical issues involved and given the lack of 
information involved, it is not like we have full access to 
everything we want. Our intelligence community and others have 
been wildly wrong before in similar judgments. So I think that 
is the historical record. I just want to point that out.
    A final question. There are recently foreign press reports 
about Iran's continuing effort to buy S-300 missiles from 
Russia, which are air defense missiles, and how that is--after 
it was essentially dead and in the deep freeze because of the 
sanctions regime, that effort is now fully underway again.
    Where do you think that is? And is it not moving forward to 
some extent because Russia and others see this sanctions regime 
going away?
    Mr. Blinken. Senator, this is something that we are 
extraordinarily vigilant about. We have seen over the past 
couple of years various reports of different kinds of deals, 
including the one you cited, including oil deals involving 
Russia. I think if anything is motivating Russia right now to 
be looking at some of these things--and I should say we have--
to our knowledge, this has not gone forward, has not been 
finalized, is not happening as we speak. I think what is 
motivating them, if anything, is the difference that they have 
with us over Ukraine and the extraordinary pressure that we 
have imposed on them over their actions in Ukraine. I think 
they are looking for other places to do business and other 
places to show that they are unhappy with us. But we have not 
seen this before. I don't know. Under Secretary Cohen may have 
more on that.
    Senator Vitter. Thank you. Thank you, Mr. Chairman.
    Chairman Shelby. Senator Merkley.
    Senator Merkley. Thank you, Mr. Chair.
    Deputy Secretary Blinken, at what point do the extensions 
become counterproductive in that they essentially undermine any 
compulsion for the Iranian negotiators to reach an agreement?
    Mr. Blinken. I would say that, to date at least, precisely 
because we were able with the interim agreement to freeze the 
program in key respects, to roll it back in some others, and to 
get these enhanced inspections and access, that it has 
manifestly been a good thing for our security and the security 
of our partners going forward. And in exchange, as you heard 
earlier, the limited amount of relief that they have secured 
has been dwarfed by the remaining--almost the totality of the 
sanctions regime.
    So I think further extensions, were there to be any--and, 
again, that is not at all our focus, our intent. We are trying 
to drive this to a final agreement on the key elements by the 
end of March and then work on the technical details between the 
end of March and June. That is what we are focused on. I think 
it would--answering your question would depend entirely, or 
mostly at least, on the terms of any such extensions. If it got 
to the point where Iran was getting more and more in terms of 
relief under any kind of extension, I think you would have to 
answer the--you know, that question might be answered 
differently.
    So it really depends on the details, but our focus now is 
not extending anything. It is trying to bring this to a 
conclusion and making a determination, if we are not able to do 
that, that this process will have to come to an end because 
Iran is not serious about reaching an agreement.
    The $64,000 question is whether Iran can say yes to an 
agreement that protects our security interests and those of our 
partners. That is the answer we are still looking for.
    Senator Merkley. Can you picture a scenario a few months 
from now in which the United States concludes that it has not 
made progress, it is not going to make progress, that it 
essentially ends the negotiations, and holds the coalition 
together?
    Mr. Blinken. Yes, I can, and I think if during these 
negotiations it is demonstrated not just to us but to our 
partners who are negotiating and then our partners beyond the 
negotiations that Iran is simply unwilling or unable to make an 
agreement, then under those circumstances I believe that we 
will be in a position not only to sustain the existing 
sanctions regime, but to impose additional sanctions, including 
the sanctions being contemplated in Congress. But that is why 
it is so critical that we retain the high ground, that we do 
not create any excuses for the Iranians to divide and conquer, 
as they have done in the past, that we remain united as a 
group, as a coalition, that Iran remains the country isolated 
by the international community over its nuclear program, and 
that the United States does not get into a dispute with its 
partners over whether we have somehow violated our own 
commitments in terms of imposing new sanctions.
    Senator Merkley. You noted that there are many different 
elements inside Iran, and one of those is the IRGC, and I 
believe that at least a portion of the IRGC has benefited by 
controlling smuggling during the sanctions regime. What degree 
does that situation create a force within Iran that is 
influential in trying to block any deal from ever being 
completed?
    Mr. Cohen. Senator, you are exactly right. I think the IRGC 
has tried to take advantage of the existing sanctions and their 
control over important aspects of the Iranian economy to 
benefit themselves. Frankly, that is one of the reasons why it 
would be beneficial to reach a comprehensive agreement with 
Iran, because it would ultimately impair the IRGC's 
stranglehold on certain aspects of the economy.
    In terms of whether they are a blocking mechanism within 
Iran on reaching a deal, I would echo what Secretary Blinken 
said, which is there are politics in Iran, and I think our 
sense is the IRGC tends to be on the side of those who are less 
inclined toward a nuclear deal. But I think it is a complex 
question, and I think the last thing we want to do is to give 
fuel to the IRGC and their allies within Iran to undermine the 
prospects of reaching an ultimate arrangement here.
    Senator Merkley. Thank you very much.
    Chairman Shelby. Senator Toomey.
    Senator Toomey. Thank you, Mr. Chairman.
    Secretary Blinken, I think you have already addressed this 
somewhat, but I want to be very clear. So, objectively 
speaking, would the prospective, contingent, trigger-based 
sanctions of the type of the Kirk-Menendez legislation, would 
passage of that and the President signing it into law, would 
that be a violation of the JPOA?
    Mr. Blinken. I think we would have to look very carefully 
at exactly how the final product was written and passed. So, 
for example, if a final product actually imposed additional 
sanctions, but then they were, in effect, suspended and then 
applied, that would be----
    Senator Toomey. OK. I do not want to get too deep into 
hypotheticals that nobody has considered, right? I mean, what 
we are talking about is sanctions that would go into effect if 
and only if the Iranians choose to ensure there is no deal at 
that point in time. My understanding is that would not be a 
violation of the JPOA.
    Mr. Blinken. Again, I do think it depends on exactly how it 
is written if you are talking about a technical--but, again, it 
is not the question--the question really goes to how would this 
be perceived, how would it be seen, would it cause divisions 
among us and our partners?
    Senator Toomey. Let me address this, because this goes to 
the point that Senator Menendez was making, and I share his 
concerns very much, and maybe I can put it in a different way.
    So if the United States were to take this measure, which 
objectively is not a violation of the JPOA, and the Iranians 
decide nevertheless they are going to walk away from the table, 
that would strongly suggest to some of us that they do not want 
an agreement and they are looking for an excuse.
    And so one of the things that concerns me is what I 
perceive to be an apparent asymmetry in motivation here. We are 
supposed to avoid even offending Iranian sensibilities with 
legislation that is not even a violation of our agreement. 
Meanwhile, they blatantly violate the agreement, and they 
continue their rampaged through the Middle East. They continue 
to support Hezbollah, prop up Assad, expand their footprint in 
Syria and Iraq, last weekend knock over a friendly government 
in Yemen, and we are not supposed to draw any inferences from 
their behavior, their willingness to defend us?
    So my concern is when you look at their behavior, you look 
at this apparent asymmetry and motivation, and then you look at 
the fact that we have moved the goalpost toward them--you know, 
we started off talking about eliminating enrichment capability. 
Now we are talking about just enough so that there is a 1-year 
heads up. It makes some of us worry about what kind of deal we 
are going to end up with. And I think that is a big part of the 
concern.
    Mr. Blinken. Senator, I think you are exactly right that 
there are some in Iran who do not want an agreement, and the 
last thing that we want to do in the course of these 
negotiations is to strengthen their hand and weaken the hand of 
those who are looking to get an agreement, again, not because 
they like us or want to be nice to us, but because they have 
determined it is in Iran's self-interest.
    And so in the event there was a dispute over whether new 
sanctions had been imposed or not or we had violated our 
obligations under the interim agreement, those in Iran who do 
not want an agreement would say, ``See, we told you. You cannot 
trust the United States. Walk away.'' Or, ``See, we told you. 
You have to drive for harder terms at the table, terms that''--
--
    Senator Toomey. I get all that, but----
    Mr. Blinken. That is the danger.
    Senator Toomey. Like any society, there are complexities, 
and there are competing interests, and there are differences of 
opinions. But in this one, unusually, the final power is 
concentrated in one individual who really at the end of the day 
probably gets to make this call.
    Let me ask you another question if I could. I think if I 
remember correctly, you stated that it is your view and it is 
the view of the State Department that Iran has no right to 
enrich uranium. Isn't it also true that they have no need? 
Isn't it also true that if all they want is peaceful ability to 
generate electricity, they can purchase all the uranium that 
they need for that purpose?
    Mr. Blinken. Yes. We have said to them repeatedly almost 
exactly that, which is, if you want to have a civil program, 
you can certainly purchase that on the market.
    Senator Toomey. Right.
    Mr. Blinken. You are right about that. Here is what they 
say--and I am not saying that they are right or that we have--
just so you know what they claim. And, by the way, it is also 
highly suspicious that a country that is so bountiful in oil 
resources would want this type of nuclear program.
    Senator Toomey. Absolutely.
    Mr. Blinken. That certainly feeds our deep suspicion and 
lack of confidence. So I think you are right about that.
    Here is what they say: They claim that they do want to have 
a civil nuclear energy program so that they can devote oil to 
exports--that is one argument that they make--and remain energy 
self-sufficient.
    They also claim that they are preparing for post-carbon 
days.
    And, finally, in terms of getting it from other countries, 
they claim that in the past, when they have done such 
arrangements, the commitments that other countries have made 
were not kept.
    Those are the kinds of arguments we hear. But it is 
precisely because we are highly suspicious of their 
motivations, it is precisely because we know they had a program 
to weaponize at least until 2003, which we believe now ended 
then, it is precisely because of all of that that any agreement 
we reach has to give us the confident we need to make sure 
that, as a practical matter, it will be useful for peaceful 
purposes.
    Senator Toomey. My time has run out, so I will stop. But it 
is precisely for those reasons that I think that it is vitally 
important that they not have the ability to enrich, the last 
point being that, as I know you are very well aware, the 
capability of enrichment, even at relatively low levels, is a 
short step from the capability to enrich to a weapons-grade 
level. And that is what I am concerned about.
    Thank you, Mr. Chairman.
    Chairman Shelby. Senator Warren.
    Senator Warren. Thank you, Mr. Chairman.
    As I mentioned earlier, we are all committed to a common 
goal: prevent Iran from developing a nuclear weapon. Right now, 
I believe our ongoing negotiations with Iran are the best hope 
for achieving that goal, and they should be our first priority, 
since undermining those negotiations risks escalation and risks 
the possibility of war.
    Now, Congress would gladly give our negotiators more 
leverage in these talks, but the President has repeatedly 
stated that if Iran violates the interim deal or if the talks 
fall apart, he will immediately call for new sanctions. And we 
know that would be ready to add more immediately.
    So, Deputy Secretary Blinken, I just want to be clear on 
this point. If Congress passes another sanctions bill now 
during ongoing negotiations, will that give our negotiators any 
new leverage?
    Mr. Blinken. In our judgment, no.
    Senator Warren. Thank you. I agree, and I just do not see 
the upside to passing a bill now. So let us talk about the 
downside.
    Deputy Secretary, let us be clear on this one. Would 
passing a sanctions bill now strengthen or weaken hardliners 
inside the Iranian Government who are hoping to blow up the 
negotiations?
    Mr. Blinken. We would be concerned that the passage of new 
sanctions now would reinforce the hand of hardliners and weaken 
the hand of more pragmatic elements who are trying to get to an 
agreement.
    Senator Warren. Thank you.
    We also need to consider the impact of a sanctions bill on 
our international partners, as you have mentioned earlier. Two 
experts and former Treasury officials wrote in the New York 
Times that it was the cooperation of our partners all around 
the world ``rather than the severity of American sanctions 
alone that delivered results'' in the negotiations with Iran.
    But just recently, the foreign ministers of France, 
Britain, Germany, and the European Union all wrote that the new 
American sanctions ``might also fracture the international 
coalition that has made sanctions so effective so far.''
    So, Under Secretary, if Congress passed new sanctions 
legislation now, how would that affect the willingness of our 
international partners to hang together to enforce the current 
sanctions?
    Mr. Cohen. Well, I think that what the foreign ministers 
said in that piece is a real concern, that their willingness to 
hang with us, to voluntarily work with us to impose sanctions, 
could be compromised. And it is a risk that is not worth taking 
since it does not provide us additional leverage at the 
negotiating table.
    Senator Warren. All right. And, last, if diplomacy fails, 
we will have to move to other options, because all of us agree 
that an Iran nuclear weapon is unacceptable. So let us talk 
about what happens if the negotiations fail.
    If the United States had passed new sanctions legislation 
before that happened, would it be easier or harder for us to 
maintain an international coalition to work together to keep 
Iran from getting a nuclear weapon?
    Mr. Blinken. In our judgment, it could well be harder. It 
would certainly run the risk of muddying the waters and 
creating confusion among the coalition, and, in effect, we 
would end up arguing amongst ourselves instead of keeping the 
focus on Iran.
    Senator Warren. All right. So thank you.
    We have every reason to be skeptical about the Iranian 
Government, and I think that has been made clear today. But our 
number one goal is to prevent a nuclear-armed Iran. If new 
legislation gives us no extra leverage and it increases the 
risk that the negotiations will blow up and it makes it harder 
for us to hold together an international coalition to keep Iran 
from getting a nuclear weapon, then I just cannot support it.
    Thank you, Mr. Chairman.
    Chairman Shelby. Thank you.
    Senator Cotton--Senator Sasse. I am sorry.
    Senator Sasse. Tom is taller, but he is also younger.
    Chairman Shelby. But you were first.
    Senator Sasse. Thank you, Mr. Chairman.
    Secretary Blinken, could you help us understand the 
evolution of the Administration's position on sanctions going 
back to 2011, please?
    Mr. Blinken. Actually, I am happy to do that. I think Under 
Secretary Cohen could do that as well. If it is all right, 
maybe I will let him address that.
    Senator Sasse. Sure.
    Mr. Cohen. This Administration has been strongly supportive 
of sanctions going back to 2011 and, frankly, back to the 
beginning of this Administration. We have worked closely with 
Congress throughout. We have worked on our own to intensify the 
sanctions. I think it is actually important to set the record 
straight on this.
    If you look at the legislation that has been enacted over 
this Administration, beginning with CISADA in 2011--this was 
the legislation that said to banks around the world you can do 
business with the United States or you can do business with 
Iran, but you cannot do both. That was legislation that the 
Administration worked very closely with Congress in devising 
and enacting.
    The oil provisions that required those who were purchasing 
oil from Iran to reduce significantly the amount of oil that 
they were purchasing or face being cutoff from the United 
States' financial system, again, we worked closely--after an 
initial version of that provision was adopted, we worked very 
closely with Members of this Committee and with leadership to 
include provisions in that legislation that would enhance our 
ability to hold together the international coalition.
    And then, finally, I think what has been one of the most 
powerful sanctions that Congress legislated, which was the 
sanction that required when a country buys oil from Iran, that 
it goes into restricted accounts and can only be used for 
bilateral trade and that money cannot be moved around the 
world, that was a provision that this Administration came up 
with and provided to Congress to enact.
    So we have been foursquare behind intensifying sanctions 
legislatively. We have adopted more than a dozen executive 
orders. We have imposed sanctions on dozens and dozens and 
dozens of individuals and entities who have been involved in 
sanctions violation. So the evolution of our sanctions pressure 
has been to intensify, intensify, intensify, to drive Iran to 
the negotiating table. That worked. It got them there because 
it had the effect on their economy.
    What we are seeing now is that just because some is good 
does not mean that more is better. We got them to the 
negotiating table. They are there. They are negotiating in a 
substantive way. The idea right now is to see if we can close 
this deal and not to try and think we can force them to cry 
``Uncle'' through additional sanctions.
    Senator Sasse. But isn't it also the case, as Senator 
Menendez mentioned, there have been multiple times when the 
Administration has made an argument much akin to what we are 
hearing from you today. Subsequently, when the sky did not fall 
because of certain sanctions that the Administration did not 
request, you have later agreed that they were useful in driving 
the Iranians to the negotiating table.
    Mr. Cohen. And I think what is critical to bear in mind is 
that what we have done is we have worked with Congress in these 
sanctions to ensure that as the sanctions are enacted and as 
they are applied, we do it in a way to hold together the 
international coalition. There is a risk that I think is one 
that this Congress has been attentive to, needs to be attentive 
to, that we fracture the international coalition. It is not 
worth it to pass a piece of legislation that on its face looks 
like it will intensify sanctions if, in fact, it fractures the 
coalition. And so we have worked very closely with Congress in 
devising the sanctions and then in implementing the sanctions 
to hold together the coalition.
    Senator Sasse. And I have appreciated both of your 
testimony today about the reality of internal politics in Iran 
and the way that pragmatists may suffer in the face of these 
sanctions. I think you have made an argument there, but in the 
interest of time, I will not pursue the question I would like 
to ask about why our allies would not also be able to see that 
conditional, prospective sanctions are being used apparently as 
an excuse rather than as a reality.
    But just to pivot in my last minute, could you explain to 
the American people how--in your testimony, Secretary Blinken, 
at the beginning, you said that you want to see the Iranians 
limited to exclusively peaceful purposes. How do you reconcile 
that with the exchange you had with Senator Toomey?
    Mr. Blinken. Thank you, Senator. This gets down to a 
fundamental question, which is, does any program that Iran has 
at the end of this--at the end of any agreement, does it allow 
it as a practical matter to break out to get enough material 
for a nuclear weapon or to try and develop it covertly? And 
what we are working to do in this Administration is to cutoff 
every single one of those pathways as a practical matter.
    In absolute terms, if they are enriching, does that mean 
that they could not enrich enough to get a weapon? Well, they 
could start to do that. But provided you have the access and 
the monitoring and the transparency to see it and then provided 
you have the time to do something about it, either impose 
additional sanctions to stop them or, if necessary, take 
military action, then as a practical matter their program will 
have to be for peaceful purposes, because if they try to do 
otherwise, they will be stopped. That is the test. So any 
agreement has to pass exactly that test.
    Senator Sasse. It just does not seem to be the same as a 
dismantling goal, which is where we began.
    Mr. Blinken. Yes, so, you know, we talk about enrichment 
and why do they need to enrich, why should we allow them. There 
is no right to enrich. We have been very clear about that. But 
as a practical matter, should they be left with any enrichment? 
And the problem is this: They have mastered the fuel cycle, 
whether we like it or not. We cannot bomb that away. We cannot 
sanction that away. We cannot argue that away. They have that 
knowledge.
    The real question is not whether they have any enrichment 
capacity. The real question is whether it is so limited, so 
constrained, so confined, so transparent, that as a practical 
matter they cannot develop enough fissile material for a bomb 
without us having the time to see it and to do something about 
it. That is the practical test.
    Now, in an ideal world, would we want them to have zero 
enrichment? Sure. Is that something they will ever agree to? I 
think the answer is probably not. And, second, our partners are 
unlikely to stick around in terms of implementing the sanctions 
regime if that has to be the bottom-line test.
    So we are focused on what is achievable in a way that 
materially answers our security concerns and those of our 
partners. That is what we are focused on.
    Senator Sasse. Thanks for the time.
    Chairman Shelby. Thank you, Senator Sasse.
    Senator Heitkamp?
    Senator Heitkamp. Thank you, Mr. Chairman.
    I have kind of three areas, and I do not want to be too 
argumentative, so I just want maybe a yes and no in following 
up on Senator Corker's discussion with you. Just taking 
yourself out of this for just a moment and just looking at 
process, tell me what kind of agreement you think is stronger 
and maybe more permanent, an agreement that is agreed to by the 
President of the United States with a divided Congress, or an 
agreement that has been approved by the President of the United 
States with the majority of Congress approving that agreement.
    Mr. Blinken. The latter.
    Senator Heitkamp. Correct. You have spent a lot of time 
talking about the fragility or the internal politics of Iran, 
and I think I could make a pretty good argument that that tells 
me that the current sanctions need to be increased, because if 
you do not have a coalition around--if it is so fragile that 
simply a discussion or sanctions as Senator Menendez outlined, 
which would not take effect for a longer period of time, could, 
in fact, blow up the deal, then perhaps there is not enough 
political will within Iran to actually do a deal and a 
sustainable deal. And, so, my question is, as you are talking 
about this, what is the Iranian process for approval of an 
agreement?
    Mr. Blinken. It is not entirely clear whether, for example, 
their Majlis, their parliament, whether it would, and in what 
fashion or at what point it might have a say. But, here is the 
bottom line, and this was alluded to earlier, I think, by 
Senator Toomey. The Supreme Leader remains the first among 
equals. At the end of the day, he is the critical person in 
terms of blessing or rejecting a deal. But, he is not alone and 
he is susceptible to different groups that are pressuring him 
in different ways, some folks who do not want an agreement 
under any circumstances, others who believe it is necessary in 
order to help get Iran out from under the burden of sanctions 
and to help the country progress.
    There is a huge fight going on in Iran over exactly that. 
We see it every single day. Foreign Minister Zarif was called 
before their parliament because he took a walk with Secretary 
Kerry. So, there are folks who are trying desperately to make 
sure nothing happens, so----
    Senator Heitkamp. But to get back----
    Mr. Blinken.----the point being that the process----
    Senator Heitkamp. I get what you are saying, Deputy 
Secretary, but would that not argue that this is 
extraordinarily difficult negotiations, because negotiations 
when people can exploit divisions on either side----
    Mr. Blinken. Absolutely.
    Senator Heitkamp.----make it extraordinarily difficult----
    Mr. Blinken. Absolutely.
    Senator Heitkamp.----and there has not been--you could 
argue there has not been enough economic pressure for the 
Ayatollah or for Iran writ large, not just the government and 
the government you are negotiating with, to basically make a 
firm commitment to resolving this issue in this process. And, I 
will just leave it up----
    Mr. Blinken. I would say that they actually made a 
commitment--I am sorry, Senator--they have made an agreement 
under the interim agreement to take certain----
    Senator Heitkamp. Who made an agreement?
    Mr. Blinken. The government of Iran.
    Senator Heitkamp. Yes.
    Mr. Blinken. And, they made an agreement and they have kept 
to it. Now, on the--they have tried outside of the agreement, 
as has been alluded to, every single day to do all sorts of 
things to advance their program. We remain very vigilant. But, 
in terms of the agreement that they reached and they were able 
to reach as a government, the IEA has concluded on a regular 
basis that they have made good on those commitments.
    So, while we come into this with tremendous skepticism and 
certainly no faith in their good faith, the test is whether the 
agreement is tight enough, strong enough, transparent enough 
that if they try to get around it in some fashion, we will know 
it, we will see it, we will do something about it, and their 
knowledge of that will hold them to the agreement.
    Senator Heitkamp. But, logically, the problem that at least 
I am having here is that it seems like we are talking about two 
different arguments. One is they are committed to this process, 
ready to go, and we could not possibly do anything here because 
it would upset that commitment. So, how strong is the 
commitment when we are looking at pretty modest, in my opinion, 
as we look forward, modest increases in sanctions?
    And, so, I want to get with, with Secretary Cohen, I want 
to get to another point, which is the oil sanctions. Can you 
just tell me--and correct me if I am wrong--the oil sanctions 
are based on per barrel amounts and not dollar amounts, or is 
it the other way around?
    Mr. Cohen. It is per barrel amounts, yes.
    Senator Heitkamp. It is per barrel amounts?
    Mr. Cohen. Well----
    Senator Heitkamp. Be careful.
    Mr. Cohen.----what we have--what the sanctions require is 
that importers significantly reduce the amount of oil they are 
importing from Iran. It is volume, not dollars.
    Senator Heitkamp. OK. That is an important point, because 
if it were dollars, obviously, in a low dollar environment, 
Iran would not only be happy to have a dollar commitment, 
because they could move into markets that they had not had 
already, or low dollar value of oil.
    Can you explain to me your judgment on what low oil prices 
have done to the oil sanctions, and I will leave it at that 
because I am out of time.
    Mr. Cohen. The drop in the price of oil, the 50 percent 
drop in about the last 6 months, has had a significant impact 
on Iran's budget process. They have--the way they budget is 
based on how much oil they are selling and what they think the 
value of that oil is. It is immediately brought into, by a 
formula into their budgeting process. They have been forced 
over the last several months to shrink their budget, restrict 
their spending, increase taxes, not allocate funds to their, 
essentially, their rainy day fund, because the drop in oil 
price has reduced the amount that they are able to have in 
their budget.
    So, it has, in effect, imposed another sanction on the 
Iranians. We calculate it to be worth about $11 billion in lost 
revenue to Iran during the course of this 7-month period of the 
extension, from June--from November to June.
    Senator Heitkamp. Thank you, Mr. Chairman.
    Chairman Shelby. Senator Cotton.
    Senator Cotton. Mr. Blinken, 15 months ago, Secretary Kerry 
said that we could reach a deal with Iran in 3 to 6 months. 
What has happened?
    Mr. Blinken. I think, Senator, what has happened is that we 
have had, as you know, these very intense negotiations, 
multiple rounds of negotiations. In the course of those 
negotiations--this is incredibly, as you know, incredibly 
complex, and what has happened in the course of those 
negotiations is that on a number of issues, Iran has actually 
moved and gotten closer to where they need to be in order for 
us to make an agreement. In other areas, we have not seen 
sufficient movement. Our judgment has been that this has 
progressed enough, that they have demonstrated enough 
seriousness of purpose to warrant continuing it. Meanwhile----
    Senator Cotton. All right. So, what was----
    Mr. Blinken.----the program was frozen.
    Senator Cotton. Secretary Kerry obviously miscalculated 
when he said 15 months ago that we could reach a deal in 3 to 6 
months. What was the main miscalculation?
    Mr. Blinken. I do not think, Senator, there was a 
miscalculation. I think what we built in, as you know, to the 
interim agreement was the possibility of extending it, and the 
extension would be based on a determination that we made that 
we had made enough progress, we could see the possibility of 
getting to ``yes,'' but we simply needed more time to do that 
and to test the proposition. That is exactly where we are now.
    Senator Cotton. Do you expect that you will reach an 
agreement by March 24?
    Mr. Blinken. I think the President said it was--how did he 
put it--less than 50-50.
    Senator Cotton. If you do not reach an agreement by March 
24, will you walk away from the negotiations?
    Mr. Blinken. I think it depends entirely on exactly the 
details of where we are. So, as I said earlier, for example, if 
we conclude by March 24, the end of March, that we have not 
reached an agreement on the basic elements of a deal and that 
Iran is simply incapable or unwilling to get there, then, yes, 
I think we will have to conclude that this process needs to 
come to an end. If, on the other hand, we see that we have 
agreement on virtually all the elements but not every single 
one, then we may take some more time. And, indeed, remember, we 
have until June under the extension to see if we can get to 
yes. So, I think it really depends on the details.
    Senator Cotton. I mean, what possible action or lack of 
action by Iran could at this point cause the U.S. Government to 
walk away from these negotiations?
    Mr. Blinken. I think two things, Senator. First, if there 
were gross violations of the interim agreement, that would be a 
serious cause.
    Second, if we come to the conclusion, based on these 
intensive ongoing negotiations--literally, as we sit here, they 
are ongoing--that they are simply not going to get to yes, that 
they cannot do it or they will not do it, that would cause us 
to say this process has come----
    Senator Cotton. Was Iran's announcement that it is 
proceeding with two nuclear reactors a violation of the JPOA?
    Mr. Blinken. No. These are--as you know, it has a light-
water reactor at Bushehr. It is allowed to have light-water 
reactors, which are proliferation resistant. There is no 
violation under the interim agreement or under the U.N. 
Security Council resolution for doing that.
    Senator Cotton. I mean, would you consider that a 
provocative, unhelpful act in the middle of sensitive 
negotiations?
    Mr. Blinken. Oh, sure. I think these kinds of 
announcements, absolutely, are trying to----
    Senator Cotton. Would you consider the proceedings against 
Jason Rezaian, the Washington Post reporter being held, an 
ongoing--or, during the middle of these ongoing negotiations, a 
provocative act?
    Mr. Blinken. Absolutely. Senator, the Americans who are 
detained illegally, erroneously, wrongly by Iran need to be 
released irrespective of these negotiations----
    Senator Cotton. Would you----
    Mr. Blinken.----whether they succeed or fail, including 
Jason Rezaian.
    Senator Cotton.----consider the presence of a senior IRGC 
general with Hezbollah in Quneitra Province on the edge of the 
Golan Heights a provocative act?
    Mr. Blinken. Oh, absolutely. I mean, as you know and as 
others have said, Iran does things every single day in many 
parts of the region, and indeed beyond, that are highly 
objectionable to us and to most of our partners and that go to 
our security, which is exactly why, even as we have been 
working on this deal, we have been extraordinarily vigilant in 
cracking down on their efforts to procure for their weapons of 
mass destruction program, cracking down on their support for 
terrorism, building up the capacity of our allies and partners 
in the region to defend themselves against Iranian aggression. 
Absolutely.
    Senator Cotton. So, why is it that Iran can initially 
undertake needlessly provocative acts toward the United States 
and our partners, yet we are supposed to just simply look the 
other way while this Congress, considering legislation that 
clearly would not violate the JPOA, is supposed to consider the 
delicate sensibilities of so-called moderates in Tehran?
    Mr. Blinken. What we try to do, Senator, is, in effect, 
wall off the nuclear negotiations and try and see if we can 
reach an agreement, because if we do--if we do, and again, as 
you said earlier----
    Senator Cotton. Well, I just----
    Mr. Blinken. No, let me just emphasize this point, if I 
could. If we do, and if we, as a practical matter, eliminate 
their ability to develop a nuclear weapon, that is actually, 
over time, going to make it a little bit less likely that the 
kinds of provocative actions that you rightly cite, they 
continue to take, because they will not have the cover of that 
program to do it. So, we believe that even in these other 
areas, there is a chance that an agreement makes us better off 
than we are today----
    Senator Cotton. Right----
    Mr. Blinken.----but the point----
    Senator Cotton. I know that we have tried to wall off the 
nuclear negotiations. Iran has not. Ayatollah Khamenei has not. 
Kasseem Zamani [phonetic] has not.
    Mr. Blinken. We have not been sitting idly by. We continue 
to enforce vigorously the sanctions in all of these different 
areas, including the ones that are not part of the interim 
agreement. We continue to reinforce----
    Senator Cotton. But, in the meantime, Iran now controls or 
has dominant influence in five capitals in the Middle East.
    Mr. Blinken. So, I think, you know, I would be happy to 
have this discussion about where Iran is or where it is not, 
but here is the thing. The people who are engaged in trying to 
negotiate this agreement, who, again, are not friendly to us, 
it is not that they like us, it is just that they are more 
pragmatic about where Iran needs to go if it is going to have a 
successful future----
    Senator Cotton. But why would they stop----
    Mr. Blinken. Our goal is to----
    Senator Cotton.----if they are getting everything in slow 
motion that they would like in an end deal anyway?
    Mr. Blinken. Because they have, as we discussed, they have 
internal politics that are incredibly challenging. And, 
anything that we do that reinforces the hands of those who 
absolutely do not want to deal under any circumstances is going 
to weaken their hand and make it less likely that we get to an 
agreement that advances our own national security interests.
    Senator Cotton. My time has expired, Mr. Chairman.
    Chairman Shelby. Senator Donnelly.
    Senator Donnelly. Thank you, Mr. Chairman, and I thank the 
witnesses.
    You know, I am hopeful we can get to a good deal, but the 
question is, what is a good deal for the United States? So, 
when we look at what is our goal in negotiation, is our goal 
the 1-year break-out time you mentioned, or is it the practical 
needs for Iran to have a domestic energy program.
    Mr. Blinken. Thank you, Senator. The way we have thought 
about this consistently from the start is that Iran has 
basically four ways it can get to enough fissile material for a 
nuclear weapon. It can do that through a uranium enrichment 
program, which it has at Natanz and Fordow. Fordow is 
particularly challenging. That is the site that is buried, and 
that is where they were producing, before we stopped them, 20 
percent. And, you will remember, for example, when Prime 
Minister Netanyahu came before the United Nations a couple 
years ago and he held up a picture of a bomb that was being 
filled to a red line.
    Senator Donnelly. Right.
    Mr. Blinken. That was the 20 percent. We stopped that. We 
have eliminated that stockpile. Any agreement has to deal with 
that definitively.
    You have to also deal with the pathway at Natanz, which is 
not 20 percent, but a larger and larger number of centrifuges 
and a bigger nuclear stockpile.
    Senator Donnelly. But, will----
    Mr. Blinken. And, then, Iraq--excuse me, the plutonium 
process is another pathway, and the COBER [phonetic] is 
another. The test of any deal is whether, as a practical 
matter, we have been able to cutoff those pathways and give 
ourselves enough time if they try and get back on them----
    Senator Donnelly. Well, let me get back to my definition of 
practical needs to run a domestic energy program. How many 
centrifuges do they need to do that?
    Mr. Blinken. It depends entirely on the size of their 
domestic program. They could make an argument that if they 
wanted to have an expansive civil nuclear power program, which, 
again, we think they do not need----
    Senator Donnelly. Well, what is your view of how many 
centrifuges are needed to run a domestic energy program for 
Iran?
    Mr. Blinken. It depends on the size of the program.
    Senator Donnelly. So, you are not going to give me an 
answer as to what you think?
    Mr. Blinken. No. I think, again, what is critical is--the 
centrifuges are a critical component of their ability to enrich 
uranium in a certain period of time that would be a real 
problem for us, that would get below that 1-year threshold I 
talked about. But, the other elements that are critical are the 
types of centrifuges, the configuration of the centrifuges, the 
amount of the stockpile. You have to put all of those elements 
together----
    Senator Donnelly. No, I understand there are many elements 
to this.
    Mr. Blinken.----and depending on that----
    Senator Donnelly. But, there is also is it a 1-year 
breakout or is it a domestic energy program, and when I was in 
the Middle East last week seeing some of our Arab friends, they 
said, look, the only thing that we want, we expect out of this, 
is just enough to meet practical needs. They did not talk about 
a 1-year breakout. They talked about practical needs. And, in 
their mind, they talked about a number of centrifuges in the 
hundreds. Is that the kind of parameters that we are talking 
about now?
    Mr. Blinken. I would be happy, Senator, in a----
    Senator Donnelly. In a closed session? OK.
    Mr. Blinken. Happy to do that.
    Senator Donnelly. Well, let me ask you, in addition to 
that, that around the edges, Iran--the reports are that they 
continue to keep moving forward and that as we look at this, as 
time goes on, month after month after month, they continue to 
keep working around the edges. And, you know, it has been asked 
by others here, also, by the end of June, we will have been at 
this a year and a half. We want to succeed and we want to 
succeed in a way that our partners and friends, not only the 
P5+1, but our friends in the Middle East look at and say, it 
makes sense. So, is that, as you look at it--and this is 
following up on Senator Merkley's question--the end of the 
line, or--and I know you keep saying, hey, if we find a couple 
things, we can keep going. Is there an end to this?
    Mr. Blinken. Yes, I think there is an end to it. If we make 
a determination that they are, as I said, unwilling or unable 
to get to an agreement that meets the national security needs 
of the United States and our partners, then there is clearly 
going to be an end to the process. And, as I said, our goal is 
to see if we can reach an understanding on the basic elements 
of a deal by the end of March. I think we will have a pretty 
good picture by then about whether they are actually able to 
get to ``yes.'' That really is the big question. We have seen 
enough movement, enough progress, enough seriousness of purpose 
to warrant continuing, especially because the core pathways to 
a bomb have been--to enough fissile material for a bomb--have, 
in effect, been frozen under the interim agreement.
    Senator Donnelly. Let me ask one more question, because I 
am almost out of time, and it is this. Following up on Senator 
Cotton's comments in regards to Iranian soldiers in the Golan 
Heights, one action after another after another, and that is 
what is so concerning to our friends in the Middle East, is to 
see almost them being surrounded in this process. And, so, we 
see that throughout these negotiations. And yet, on the other 
side, we are told, look, if we talk about potential sanctions 
at some future point, they will be highly offended and walk 
away. These are grown-ups, as well. Why are we so afraid of--it 
seems to me if you want an excuse, you can find an excuse. If 
you want a deal, you can make a deal. And, we are still at the 
table plugging away, despite seeing one event after another. It 
seems to me what we are simply saying is we will basically do 
anything to not provide them with any excuse.
    Mr. Blinken. I would say, Senator, just two things, very 
quickly. First of all--and I appreciate very much the trip that 
you took with some of your colleagues--the security of our 
partners is paramount to us, so that is exactly why, when Iran 
has been acting out and acting aggressively----
    Senator Donnelly. And, not to interrupt you----
    Mr. Blinken. Please.
    Senator Donnelly.----but just to say, and they are 
extraordinarily concerned.
    Mr. Blinken. Well, one of the things that we have done over 
the duration of this Administration is to significantly 
increase their own capacity to deal with aggression from Iran. 
One of the things that is, as you probably heard when you were 
there, that we have done is we have significantly, for example, 
enhanced ballistic missile defense cooperation, including 
through a Gulf-wide cooperative system. We have designated the 
Gulf Cooperation Council as eligible for foreign military 
sales. They can buy weapons as an entity. We have, as you know, 
significant weapons sales to them. And, of course, we have a 
sustained program of consultations, security dialogs, planning, 
exercises. All of that goes to reinforcing their security. But, 
at the end of the day, all of this comes down to, I think, the 
question, as compared to what?
    Senator Donnelly. Right.
    Mr. Blinken. So, that is really what we have to--I think, 
the question we have to answer. Now, if we could sustain in 
perpetuity, under any circumstances, the most draconian 
sanctions regime that we have been able to implement, that is 
an important element. But, the question we have to ask 
ourselves is, can we sustain it, and what would go into 
sustaining it or not sustaining it? Is military action the best 
alternative if we cannot sustain it? That is another question. 
So, none of these things, and this agreement, if we are to 
reach it, you cannot see it in isolation. You have to ask 
yourself, compared to what, and then you rightly have to ask, 
what is the substance of the agreement.
    Senator Donnelly. And, I know my time is up, Mr. Chairman. 
I just want to make one other comment, which is this, and I am 
sure you realize that if this agreement does not hit something 
close to practical needs, you may well have a regional arms 
race on your hands in the Middle East.
    Mr. Blinken. You know, Senator, I think where we would 
certainly have an arms race is if Iran gets a nuclear weapon, 
which is exactly--one of the reasons we are fundamentally 
determined that that not happen. But, I have to say, I do not 
think anyone is going to emulate what Iran has done and say 
that, oh, if they are allowed, for example, to have some 
limited, very constrained enrichment, we should get it, too, 
because Iran has just gone through and continues to go through 
isolation, economic pressure, pariah status, and any agreement 
that we would reach with them would have to have such far-
reaching and intrusive access, inspection, and monitoring that 
no other country is subject to or would be subject to that I 
certainly do not think it would set a model for anyone to spark 
an arms race.
    Senator Donnelly. Well, I simply pass on to you 
conversations that occur.
    Mr. Blinken. I appreciate that. Thank you.
    Chairman Shelby. Thank you, Senator Donnelly.
    A couple of observations here. It seems to me, and I hope I 
am wrong, that the Administration seems to be chasing this 
deal, in other words, wanting a deal perhaps more than Iran 
wants a deal. We do not know that. Perhaps you cannot answer 
that.
    And, what begs the question around here, and we hear it all 
the time, is the Administration, is the Obama administration's 
policy at this point to slow down the ability of Iran to obtain 
nuclear weapons, or, on the other hand, is it to eliminate 
Iran's ability to have nuclear weapons? I think there are two 
different questions here. And, the phrase is batted around a 
lot by this Administration and others that it is unacceptable--
whatever that means--for Iran to have nuclear weapons, yet they 
are headed down that road to build nuclear weapons, maybe 
slowly, as Senator Cotton says, or protracted, as I use the 
word.
    But, I think we have to realize, for the most part, that 
whether or not Iran obtains nuclear weapons, and they were to 
be in a position to use them could be an existential question 
for our ally Israel.
    So, we cannot answer all those questions today, but I 
appreciate the panel today. I hope that we are able to work 
together. But, I hope that you will not just chase a deal that 
we know from history is not smart. Thank you.
    Mr. Blinken. Thank you very much, Mr. Chairman.
    Chairman Shelby. Thank you both.
    Mr. Blinken. I just want to reassure you, we are not 
chasing any deals. In fact, if we had been chasing a deal, we 
could have taken a deal months ago. It is precisely because we 
have been very clear that no deal is far preferable to a bad 
deal, we are not going to take one. So, I just want to reassure 
you on that point.
    Chairman Shelby. I think if you get a bad deal, you are 
going to have a real volcanic eruption from the Congress, and I 
think the people at the State Department know that.
    Mr. Blinken. Thank you, sir.
    Chairman Shelby. I hope so. Thank you.
    I want to call up our second panel. They have been very 
patient today. On the second panel today's witnesses are Dr. 
Mark Dubowitz, Director, Center on Sanctions and Illicit 
Finance, Foundation for the Defense of Democracies, and Dr. 
Patrick Clawson, Director of Research, the Washington Institute 
for Near East Policy.
    Gentlemen, you have been, as I said, very patient here 
today. You have heard a lot of this testimony. You have heard a 
lot of questions and other observations from me and other 
Members of the Senate Banking Committee. Your written testimony 
will be made part of this hearing record, which is very 
important, and I wish you would sum up what you want to say, 
although we have lost a lot of Members from the Committee, as 
quickly as possible. Make your points. Thank you.
    Which one of you want to go first? Mr. Clawson? OK.

  STATEMENT OF PATRICK CLAWSON, Ph.D., DIRECTOR OF RESEARCH, 
           WASHINGTON INSTITUTE FOR NEAR EAST STUDIES

    Mr. Clawson. Thank you very much, Mr. Chairman. Thank you 
very much for submitting my statement in the record.
    Over time, Iran adapts to any level of sanctions, and the 
Iranian authorities have repeatedly persuaded themselves that 
the United States is sanctioned out. There is nothing more we 
can do. And, so, continuously adopting new sanctions is the 
best way that sanctions can affect Iran's leaders to resolve a 
nuclear impasse.
    As Senator Corker referred to, I explained in my statement 
that Iran's new budget shows that the authorities have decided 
that their Plan A is that there will not be a deal, and they 
have come up with a budget which fits that situation, and they 
have taken a lot of very tough measures. In the last few years, 
Iranian government employees have seen their real salaries 
reduced by more than 30 percent and the government proposes 
slashing it even more this next year.
    But, they are preparing themselves to take steps that go 
much further than anything that the International Monetary Fund 
has proposed, that the Greeks take in their situation, and we 
know that the Greeks did not like it, but the Iranian leaders 
have decided that this is a political necessity for them. And, 
so, they are, in fact, going to take the steps that will adjust 
to a $40 per barrel oil, and I will outline what some of those 
are.
    I mean, for instance, by reducing the value of their 
currency, the Rial, relative to the dollar, they will generate 
more local currency from each dollar of oil sold, and that 
would make a big difference. And, as we heard Under Secretary 
Cohen say, they can suspend their payments into the rainy day 
fund, the National Development Fund of Iran, and that will get 
them down pretty much to where they need for $40 a barrel oil--
--
    Chairman Shelby. Is time on their side?
    Mr. Clawson. They think that we do not have any--there is 
nothing more that we can do, and so long as they think there is 
nothing more that we can do, they think that time, in fact, is 
going to be on their side. And, the genius of the Obama 
administration in its early years----
    Chairman Shelby. Is the question what we could do or what 
we will do?
    Mr. Clawson. Fair enough. But, in the early years of the 
Obama administration, there were constantly additional measures 
being introduced all the time, and so we were able to persuade 
the Iranian leaders that if you think it is bad now, just wait. 
It is going to get worse and worse and worse. And, when we have 
been on this now more than a year where we have not really done 
that much more, the Iranian leaders think we have reached as 
far as we can go and that they have adjusted to what we have 
done, including they think that we conspired with the Saudis to 
reduce the price of oil. They think we have thrown everything 
we can at them. And, so, they do not think that we can do more.
    And, under these circumstances, the Supreme Leader 
Ayatollah Khamenei, his attitude is he does not care that much 
about the suffering of the Iranian people anyway and he thinks 
it is not so bad if Iran is reducing its reliance on oil and 
going toward a resistance economy. So, we have got a real 
problem trying to impress him with our actions, and I think the 
only way we can do it is if we show that we can continue to 
make things worse for Iran.
    And, so----
    Chairman Shelby. Is that how you really bring him to the 
table?
    Mr. Clawson. We have to show that we can make things worse 
for them economically, politically, militarily, in a variety of 
ways. My colleague, Dennis Ross, had a piece yesterday saying 
we ought to be pressuring them politically on issues like those 
that Senator Cotton was raising about their presence on the 
Golan and about their activities in Syria and their activities 
in Iraq. We have to find various ways to press them. Here, 
today, we are talking about sanctions. There are other means to 
press them, too.
    I think it is great, for instance, that the price of oil 
has declined. I think we should take credit for that, even if 
we do not deserve it. If I can get credit for the sun rising in 
the east, I will be happy to take it. So, I would like to be 
able to say to the Iranians, it is bad today. It is going to 
get worse tomorrow. That is the best way to impress them 
politically.
    Chairman Shelby. Thank you.
    Mr. Dubowitz.

STATEMENT OF MARK DUBOWITZ, EXECUTIVE DIRECTOR, FOUNDATION FOR 
                     DEFENSE OF DEMOCRACIES

    Mr. Dubowitz. Chairman Shelby, Ranking Member Brown, 
Members of the Committee, thank you very much for asking me to 
testify.
    I first want to honor my good friend, Alberto Nisman, who 
courageously led a decade-long investigation of Iranian terror 
networks throughout Latin America and the United States and 
revealed how the Supreme Leader uses terrorism as an instrument 
of foreign policy. As we negotiate a comprehensive nuclear deal 
with Iran, we would be remiss if we did not heed the lessons 
from Alberto's exhaustive work and ask questions about whether 
Tehran's negotiating tactics are simply aimed at expanding 
Iranian power.
    The regime's use of terror in Iraq, Syria, Yemen, Lebanon, 
Gaza, Golan, and elsewhere has strengthened its regional 
dominance. Facing insufficient push-back from the Obama 
administration, this Iranian offensive has increased the 
Supreme Leader's nuclear negotiating leverage. Nuclear 
negotiations are entering the sixth year for the United States 
and the 12th year for the Europeans, yet Western leverage has 
diminished as the Administration has lowered its nuclear 
demands to accommodate Iranian red lines and provided a 
financial lifeline, which stabilized Iran's economy and reduced 
the regime's fears of an economic crisis, and that is the key 
point, reduce the regime's fears of economic collapse.
    Now, as we heard, Congress has imposed many of the most 
impactful sanctions over the objections of the Administration. 
The White House raised many of the same arguments against those 
Congressional sanctions as we heard today. Let me briefly 
respond to their arguments against deadline-triggered 
sanctions.
    First of all, the JPOA has not halted Iran's nuclear 
program. Glenn Kessler of the Washington Post actually gave the 
President ``three Pinocchios'' for his State of the Union 
Address where he made such a claim. Following a strategy 
pursued by then-chief nuclear negotiator Hassan Rouhani between 
2003 and 2005, Tehran has masterfully suspended only reversible 
aspects of the program that it has not perfected while 
retaining the freedom to work on aspects it has not yet 
mastered. These include the military dimensions of Iran's 
program, the development of long-range ballistic missiles 
capable of carrying a nuclear warhead, the testing of advanced 
centrifuges, and the accumulation of more nuclear material 
easily reversible from oxide form. Again, those stockpiles are 
accumulating. It is not correct to say they are diminishing.
    Number two, the JPOA does not prohibit passage of sanctions 
to be imposed after the expiration of the deadline in the 
agreement. We have heard testimony to that effect. The 
President's hands are not tied. He has got multiple 30-day 
waivers that he can use.
    Number three, the Iranian threat to walk away from the 
negotiations if deadline-triggered sanctions are imposed is, in 
fact, counter-historical. Despite escalating sanctions, Iran 
has remained at or returned to the negotiating table over the 
past decade using talks to legitimize its nuclear weapons 
program and to avoid a U.S.-led financial and trade embargo. 
Indeed, if Tehran terminated the talks, such a move could 
trigger a complete embargo that could cripple its economy and 
put the regime's survival in question. This is something that 
Congress should contemplate. An Iranian walk-away would also 
raise questions about a future deal's durability. And, any 
acquiescence to this threat now would hand Iran effective veto 
power over the actions of American lawmakers or the next U.S. 
President.
    Number four, we are a superpower, and as a superpower, the 
United States has escalation dominance through economic, 
military, cyber, and covert action means to respond to an 
Iranian attempt to restart and expand its nuclear program. Now, 
Iran knows this and has historically escalated its nuclear 
activities cautiously and incrementally so as not to invite a 
military response or to trigger crippling sanctions.
    Number five, the introduction of deadline-triggered 
sanctions may increase tensions in the P5+1, but it will not do 
material damage to the international coalition. Do we really 
believe that the international coalition is as fragile as Under 
Secretary Cohen and Deputy Secretary Blinken have suggested? 
The Administration did assess correctly that Moscow would not 
leave the P5+1 talks despite Ukraine-related sanctions. So, I 
ask you, would Vladimir Putin now leave the talks over 
deadline-triggered sanctions on Iran when he did not after 
Washington imposed sanctions on his own country? Russia, China, 
and the Europeans are concerned about a nuclear armed Iran, and 
they see the negotiations as a way to protect their own 
interests.
    Number six, deadline-triggered sanctions will undercut, not 
empower, the hard-liners in Iran. Thanks to the JPOA, Iranian 
hard-liners no longer fear the collapse of their economy, and 
they have financially benefited from sanctions relief. They 
preserved essential elements of their military-nuclear program 
and the freedom to advance those parts that they have not 
mastered. They are on the march regionally. The goal of 
deadline-triggered sanctions is to convince these hard-liners 
that continued nuclear intransigence will be met with massive 
and escalating pressure.
    Number seven, new sanctions are needed despite the fall in 
oil prices. Between 2010 and 2013, Iran experienced a 
sanctions-induced shock to its economy. It has lived for 2 
years without full access to its overseas oil revenues. This, 
in fact, has blunted the impact of falling oil prices. It is 
the de-escalation of sanctions pressure that has enabled a 
modest economic recovery, projected to continue despite these 
lower oil prices.
    And, finally, increased economic pressure on Iran will 
diminish the chances of war. As the Administration 
acknowledges, sanctions are the reason Iran is negotiating, but 
Iran today can advance its nuclear program in critical areas. 
It can build greater economic resiliency and extend its 
regional dominance. Without enhanced pressure now, a future 
U.S. President actually may be left with insufficient economic 
leverage to respond to Iranian nuclear intransigence and may be 
forced to resort to military action.
    In conclusion, deadline-triggered sanctions strengthen U.S. 
negotiating leverage and actually may increase the likelihood 
of peaceful nuclear compromise.
    Thank you for inviting me to testify.
    Chairman Shelby. I have a few questions, and I will try to 
be brief, but both of you are well into this subject.
    Dr. Clawson, would you support new sanctions that would 
take effect only if no final nuclear agreement is reached, or 
what is your view here?
    Mr. Clawson. My great concern is that the talks will be 
extended indefinitely and that----
    Chairman Shelby. Protracted talks sometimes lead nowhere, 
do they?
    Mr. Clawson. Well, one of the subjects that we cover at my 
Institute is the Israeli-Palestinian talks, which are now 
entering more than 20 years, and some people might think they 
have not been so productive in the recent years, but nobody 
wants to call them off. And, I, frankly, do not think anyone is 
going to want to call off the nuclear negotiations with Iran, 
so I suspect----
    Chairman Shelby. Is that a----
    Mr. Clawson.----they will go on forever.
    Chairman Shelby.----these protracted talks, just on and on, 
kind of be a figment of our imagination?
    Mr. Clawson. It is a feature of the Middle East.
    Chairman Shelby. OK. And, sometimes, maybe it is real, not 
just our imagination.
    Dr. Clawson, you have spoken about Iran's adaptation to the 
existing sanctions regime, both of you have. If we are basing 
our negotiating leverage on existing sanctions, which are not 
as effective, as we all know, as they used to be, is it not 
likely that an acceptable agreement will be harder to reach 
unless we leverage new sanctions as an incentive? In other 
words, Iran has got to have a reason to stay at the table, no?
    Mr. Clawson. Absolutely, sir. We need to find some way to 
get more leverage, and I listened to the distinguished 
administrative spokesmen earlier. They were saying, ``We have 
got lots of leverage.'' Well, if we have got lots of leverage, 
why do we not have a deal?
    Chairman Shelby. Mm-hmm.
    Mr. Clawson. And, I would think that the more leverage we 
have, the better deal we could get, and so we need to find more 
ways for leverage. If they do not think that sanctions are the 
right way to get leverage, I would be interested in hearing 
what proposals they have for how to get more leverage in these 
discussions.
    Chairman Shelby. Mr. Dubowitz, the bill this Committee is 
considering now would only impose additional sanctions if no 
deal is reached by the current deadline. Even then, the bill 
would still permit the President to use as many consecutive 30-
day waivers as he likes to delay sanctions. That is my reading 
of the bill. Some argue that this is a problem because the 
waiver requires certification that Iran is not cheating on its 
obligations on the Joint Plan of Action.
    My question: If the Obama administration thinks this 
certification is too onerous in the proposed bill, does that 
not mean it expects Iran to cheat? In other words, I would 
assume they would cheat. They have cheated in the past. If so, 
how can Congress have any confidence in a final agreement, I 
guess is my bottom line.
    Mr. Dubowitz. So, Chairman Shelby, that is exactly right. I 
mean, Iran has been cheating on its nuclear program for 
decades. So, the assumption that Iran is going to stop cheating 
is, I think, in the area of fantasy. The problem is that when 
Iran cheats, they cheat incrementally. The sum total of their 
incremental cheating is always egregious, but they are very 
legalistic about how they interpret agreements. They exploit 
ambiguities and loopholes. And, they cheat incrementally, and 
they have done that through the life of the JPOA, and cheating 
with them becomes in the eye of the beholder.
    And, it is often the case that when you negotiate an 
agreement, you become the biggest defender of the agreement 
that you negotiated and you do not want that agreement 
undercut, despite evidence that suggests it is being violated, 
and I think we have seen evidence of that during the JPOA 
process.
    I would say one more thing, and I just want to echo what 
Dr. Clawson said. I think the Administration's Plan B is to 
perpetually roll over the JPOA until the end of the Obama 
administration. I think that is one of the major reasons that 
they do not like the sanctions bill, because this sanctions 
bill says deadlines are deadlines, and I believe that the 
Administration assumes that if they do not get an agreement by 
June of this year, then they will make the argument and lay the 
predicate to continue rolling over the JPOA agreement. It is 
echoed by Administration officials, including the President, 
who say that JPOA has halted or frozen Iran's nuclear program.
    Well, if that were true, then it would be a great 
agreement. The problem is, it is not true, and I think it is 
worth----
    Chairman Shelby. And we all know it, too, do we not?
    Mr. Dubowitz. Well, again, I would--worth underscoring 
Glenn Kessler, of the Fact Checker blog at the Washington Post, 
gave it ``three Pinocchios'' because that is a grossly 
misleading statement for a program that continues to advance in 
areas that the Iranians have not mastered and perfected.
    Chairman Shelby. The U.S. nuclear cooperation agreements 
with friendly nations, like those under the Atomic Energy Act, 
require consultation periods of up to 90 continuous session 
days of Congress. Some argue that a period of even 30 
continuous days for Congress to evaluate a nuclear deal with 
Iran is pretty long. If longer delays are routine for the 
nuclear cooperation agreements with friendly governments, 
should Congress ask for a much shorter period for a nuclear 
deal with a rogue proliferator like Iran? In other words, we 
are not dealing with the British or the French or some of our 
other allies. Looking at Iran's history, what are your thoughts 
here?
    Mr. Dubowitz. Well, again, I was struck by Senator Corker's 
statement that Congress has played a role in 27 nuclear 123 
Agreements, many of those with allies.
    Chairman Shelby. Mm-hmm.
    Mr. Dubowitz. And, again, if Congress has played a role in 
nuclear agreements with allies, if we have had a 90-day period 
to consider these agreements on the Hill with respect to 
nuclear agreements, peaceful nuclear agreements with allies, I 
find it quite remarkable that there are some who are claiming 
that a nuclear agreement with a leading state sponsor of 
terrorism, that continues to--that has killed thousands of 
Americans, that has engaged in nuclear mendacity, and that is a 
repressive regime, that that agreement, A, should not get a 
fair hearing on the Hill, a vote, and B, that agreement should 
not at least sit for 30 legislative days so that Congress can 
actually do a serious consideration of the merits of that deal.
    Chairman Shelby. Who wants a deal here the most, us, the 
United States and our allies, or Iran, at the moment? What are 
your feelings, Dr. Clawson?
    Mr. Clawson. We certainly have effectively persuaded the 
Iranian leaders that we want the deal more than they do, and 
that, as a result----
    Chairman Shelby. So, in a sense, we are chasing the deal, 
are we not?
    Mr. Clawson. Sir, and that is one of the main reasons we 
are not catching the deal----
    Chairman Shelby. Mm-hmm.
    Mr. Clawson.----is because the Iranian leaders keep 
thinking that they are going to get better and better terms 
from us, and so, therefore, I mean, why agree to something if 
you just wait another 6 months and get something additional? 
So, Iran's leaders--one of the biggest barriers to reaching a 
deal is that Iran's leaders think we want a deal so badly that 
all they have to do is wait and we will agree to more 
concessions.
    Chairman Shelby. Do you agree with that, sir?
    Mr. Dubowitz. I do. I mean, the blizzard of economic 
statistics that you heard today, I think it actually obfuscates 
one major point, and that is that Iran a year and a half ago 
was on the verge of economic collapse as a result of the 
escalation of sanctions. As the result of a decision to de-
escalate the sanctions, and to provide direct sanctions relief, 
the Iranian economy that was on its back is now on its knees, 
and is getting up to its feet. Now, it may be getting up to its 
feet more slowly as a result of the drop in oil prices, but the 
economy has stabilized. GDP is still projected to be positive. 
The inflation rate has dropped in half.
    And, so, that is the real way to assess sanctions and 
sanctions relief: Is the Iranian economy on the verge of 
collapse today? It is not. The Supreme Leader has now a 
stabilizing economy with moderate, albeit fragile, growth. And, 
he and the hard-liners and the Revolutionary Guards are not 
feeling a threat to their economy and a threat to the survival 
of the regime. Without that kind of threat, why would they 
negotiate? Why would they compromise? And, as Patrick said, why 
would they agree to a deal now and give up the prospect of 
future concessions when they see a track record of the 
Administration lowering its nuclear demands as time goes on?
    Chairman Shelby. Senator Sasse.
    Senator Sasse. Thank you, Mr. Chairman. Thank you both for 
being here.
    You heard the Administration lay out their argument about 
internal Iranian politics and how alleged moderates or 
pragmatists would be weakened by the passage of even 
conditional prospective sanctions. You obviously disagree with 
that. Could you respond by explaining in a little more detail 
your view of internal Iranian politics.
    Mr. Clawson. Well, Iran's Supreme Leader is quite a clever 
politician, and so the approach he has taken to these 
negotiations and to past nuclear agreements has been to say, 
``Well, I do not approve of them, I do not like them, but I am 
not going to stand in the way.'' And, that puts him in a 
position where, if the deal turns out to work out pretty well, 
he can claim credit. He did not stand in the way. But, on the 
other hand, if things do not work out well, he can say, ``Well, 
I told you it was not going to work.'' And Khamenei, he has a 
long history of undercutting new Iranian presidents. The last 
three presidents, he has only allowed to have about 2 years 
before he started centralizing power into his own hands and 
stopped them with their own initiatives.
    So, I, frankly, think it is going to be very hard for 
President Rouhani to be able to keep these negotiations going 
very much longer on his side after this summer, and he is going 
to feel the criticism from the Supreme Leader harder and 
harder. So, I wish the Obama administration luck in their 
strategy of playing out these talks for the next 2 years. I am 
not sure that is going to work. I do not think the Supreme 
Leader is going to cooperate. But, in many ways, what the 
Supreme Leader does is use these different factions as a way to 
help him be able to claim credit no matter what happens and to 
avoid blame no matter what happens.
    Senator Sasse. So, to be a little too blunt, I share your 
pessimistic view, but I think what I heard, and I just want to 
make sure I hear it correctly, we are negotiating with a party 
that does not actually have the power to conclude any kind of 
deal that we would actually want.
    Mr. Clawson. It is a clear way of negotiating, is to send 
forward somebody who clearly wants a deal, but you are not sure 
he is going to actually be able to implement it. And, indeed, 
Senator, it gets worse, because what Khomeini did the last time 
there was a nuclear deal--back in 2003--was, he let the deal go 
ahead, waited until Iran had gotten a lot of the benefits, the 
sanctions momentum had fallen apart, and then he walked away 
from the deal. So, Khamenei could allow the deal to go into 
effect, then wait 2 years and announce that the West has not 
delivered what it has promised and so Iran is going to tear it 
all up. And, it will be really hard for us to reconstruct the 
sanctions regime if we have dismantled it over that 2-year 
period.
    Senator Sasse. Right. Mr. Dubowitz.
    Mr. Dubowitz. Well, I agree with that, and I would go 
further. I mean, I think Mohammad Zarif, who is the chief 
nuclear negotiator and the Iranian Foreign Minister, has 
created a, almost a Zarif distortion field, where when you are 
in his field, you actually believe that Zarif represents the 
Iranian regime. And, Zarif is a very good negotiator. So, even 
if he is committed to a nuclear deal, he has used the threat of 
blackmail, because he is the one who has said, ``I will walk 
away from the table,'' in order to handcuff us, in order for us 
to be in a position where we are not willing to ratchet up the 
pressure.
    And, I would say that my assessment of the interfactional 
disputes within Iran, I would say that there are three camps. 
There is the Rouhani-Zarif camp, who may be pragmatic, who may 
want a nuclear weapon but have a different strategy to achieve 
it, a much more tactical, incremental strategy of creating the 
right political climate to get what they want. I think there 
are the hard-liners who do not want a nuclear deal under any 
circumstances.
    And, then I think there is a middle group, who want a deal 
on their terms, on Iran's terms, and are prepared to wait to 
get those terms. And, I think that these deadline-triggered 
sanctions are designed to put pressure on that middle group, 
that middle group, and put them to a choice between compromise 
or economic collapse, and I think that is what we have to aim 
at. We have to stop talking about only two groups, the 
pragmatists and the hard-liners. There is a third group and 
they are hard-liners in the sense that they want a deal on 
Iranian terms, but they are also pragmatic in the sense that if 
we are willing to precipitate an economic collapse that 
challenges their political survival, we may be able to break 
their nuclear will.
    Senator Sasse. That was helpful. And, do you believe the 
Administration's view that our coalition is so fragile that 
regardless of what is actually happening in internal Iranian 
politics, they will be able to use it as an excuse and our 
allies will have also believed the U.S. precipitated this 
outcome?
    Mr. Dubowitz. I am very concerned to hear that from the 
Administration, because if our coalition is so fragile right 
now, then I am very concerned about what our coalition will 
look like after a deal, when Iran starts cheating on an 
agreement and countries have already started going back into 
Iran and sinking billions of dollars into that economy, because 
at that point, we will be hearing the same argument. The 
Iranians have violated the agreement, but we cannot call them 
on that violation because the reality is we are not going to be 
able to meaningfully snap back the sanctions.
    You heard from Deputy Secretary Blinken this notion that we 
will snap back sanctions. We can legally snap back sanctions 
very easily by reimposing them in law. But, practically 
speaking, once you have changed the market dynamic, once you 
have gotten companies more willing to go back into Iran, once 
domestic lobbies in European capitals and elsewhere are 
lobbying against snap-backs or against reimposing sanctions, 
that international coalition becomes much more difficult to 
keep together.
    So, if it is really that fragile before an agreement, I am 
very concerned about what that coalition will look like after 
agreement. My sense is that it is not that fragile. The 
Europeans will hold with us. The Russians have held with us, 
despite imposing sanctions on their own country. And, the 
Chinese are there because they want--they do not want to see a 
nuclear armed Iran and they do not want to see the impact that 
will have on oil prices and on their energy dependent economy.
    Senator Sasse. My time has expired. Thank you, Mr. 
Chairman.
    Chairman Shelby. Senator Cotton.
    Senator Cotton. During the first panel, I asked Deputy 
Secretary Blinken under what conditions the United States might 
walk away from the negotiations, be it in March or June, and he 
gave a rather abstract, high level answer. Can either of you 
envision circumstances in which the U.S. Government will walk 
away from these negotiations?
    Mr. Clawson. In a word, no. I think the history of the 
Israeli-Palestinian negotiations illustrates what happens when 
these kinds of negotiations hit a brick wall, which is to say 
everybody says, well, that proves why we have to just climb 
harder to get over that wall.
    And, by the way, sir, if, in fact, somebody walked away 
from the negotiations, arguably, that would be the basis for 
progress, because sometimes the best negotiations have happened 
when the negotiations have been suspended, because it is a lot 
easier, in fact, for the two sides to have those quiet side 
talks without the glare of international publicity and it is 
quiet side talks where the most progress has taken place.
    Senator Cotton. Yes. We conduct diplomacy to protect our 
interests, not we have an interest in our diplomacy.
    Mr. Clawson. Look, the--one of the interests that we have 
is, of course, appearing reasonable to the rest of the world. 
And, arguably, one of the reasons we would continue the 
diplomacy with Iran is not because we thought there was a 
snowball's chance in hell of reaching an agreement, but because 
we wanted to look reasonable to the rest of the world, and that 
would be a powerful argument made inside the Administration.
    Senator Cotton. Mr. Dubowitz.
    Mr. Dubowitz. Well, I think the Iranian negotiating 
strategy all along has been to turn the interim agreement into 
the final agreement. I think that that has been their strategy 
all along. I think it is a strategy that they employed between 
2003 and 2005, which, again, is to make temporary concessions 
on reversible aspects of their program that they have perfected 
and mastered in exchange for time to work on those elements of 
the nuclear program that they have not mastered.
    So, today, we believe they have not mastered the 
development of long-range ballistic missiles capable of 
carrying a warhead. We believe that they have not mastered the 
other military dimensions of the program. We believe they have 
not mastered the operation of advanced centrifuges capable of 
enriching uranium to weapons grade much more quickly, and, 
therefore, requiring smaller numbers, thereby facilitating a 
clandestine breakout. These are areas that we believe they have 
not mastered, which, by the way, happen to be the exact areas 
that are not adequately covered by the JPOA, or not even 
covered by the JPOA in some cases.
    So, those are the elements of the program they continue to 
move along that are not covered by the JPOA. And, in return, 
they did not get small, direct, reversible sanctions relief. 
What they got was an economy that is no longer collapsing, that 
is now stabilizing, and is projected to grow. So, from Iran's 
perspective, they have walked out of this interim agreement 
getting exactly what they want. Now, if they can turn the 
interim agreement into the final agreement, then they have 
exactly what they want, because then they can get a bomb and a 
growing economy and regional dominance altogether.
    Senator Cotton. So, hard to imagine our Government walking 
away. Another argument that we have heard is imposing even 
conditional prospective sanctions at some point in the future 
would be misperceived by Iran. Does Ayatollah Khamenei and his 
key counselors have such an unsophisticated understanding of 
American law that they cannot understand the difference between 
immediate and prospective conditional sanctions?
    Mr. Clawson. Unfortunately, they have an extraordinarily 
poor understanding of American society and they have repeatedly 
miscalculated what we would do. And, so, I would assume 
ignorance on their part when it comes to American procedures 
and how the American system is working, I mean, these 
breathtakingly stupid statements that they will make on a 
regular basis and sincerely believe about American motivations 
and American actions.
    Senator Cotton. Mr. Dubowitz.
    Mr. Dubowitz. Again, it is hard to know exactly what they 
understand. I think Zarif and Rouhani understand the 
difference. They understand the difference between deadline-
triggered sanctions and sanctions that we are going to drop on 
you right today. So, I think that it is an important 
distinction. It is important for our Administration to make it 
very clear to the Iranians and to our allies that this is not a 
violation of the JPOA. And, I think, again, it is important for 
our Administration to make it very clear that we have a strong 
and vibrant international coalition that can withstand 
prospective sanctions.
    And, I think the Administration's arguments are helping 
Iran. I understand the temptation the Administration has to use 
these arguments because it disagrees with the approach that is 
taken by Congress. But, in making these arguments, these 
arguments run the risk of backfiring on the Administration, 
being used against the Administration by the Iranians today or 
at a later stage, and I think it is undercutting our 
negotiating leverage and it is making it less likely that we 
are going to see a comprehensive agreement.
    Senator Cotton. Well----
    Mr. Clawson. If I may add to that just very quickly, you 
saw that the Administration witnesses were much more quick to 
explain why the Iranians think the way they do than it is to 
put forward the American arguments as to why they are wrong.
    Senator Cotton. Yes.
    Mr. Clawson. And, so, what we have seen repeatedly is the 
Administration to say, ``oh, the Iranians might think this,'' 
instead of saying, ``the Iranians might wrongly think this.'' 
So, rather than ``they incorrectly perceive this,'' they say, 
``the Iranians might think this.''
    Senator Cotton. Well, given that, would it be fair to say 
that perhaps the Administration opposes conditional prospective 
sanctions, not because they fear Iran does not want a deadline, 
but because they do not want a deadline?
    Mr. Clawson. I think the Administration does not want a 
deadline.
    Senator Cotton. Mr. Dubowitz.
    Mr. Dubowitz. Absolutely. I mean, if your goal--if your 
Plan B--knowing what they know now, I think the Administration, 
if they were to take a really hard, honest look at these 
negotiations, has probably assessed that they are not going to 
get a full comprehensive agreement. So, if they are looking at 
a Plan B, I think their Plan B today is, well, at least we can 
just perpetually roll over the interim agreement, and we can do 
it for 2 years and then this will be the next Administration's 
problem. I think with that in mind, they do not want a piece of 
legislation with deadline-triggered sanctions, which in any way 
would block that rollover.
    Now, again, the rollover--and, why do I think this? Because 
the President of the United States in his State of the Union 
Address said the interim agreement halted Iran's nuclear 
program. Well, if that is true, if it did halt the program, 
then we should all want a rollover of the interim agreement. 
But, if we--as I have said and others have said, this has not 
been a halted program. It has been a program that essentially 
has provided the Iranians with the opportunity to move down 
multiple pathways, particularly the military nuclear pathways 
of the program that they have not mastered, in exchange for 
temporary reversible concessions on technical elements that 
they have mastered. Then, I think that we do not want the 
interim agreement to become the final agreement and I hope the 
Administration does not, either.
    Senator Cotton. Thank you both for your time and efforts.
    Chairman Shelby. One last observation, perhaps a question. 
I know your time is valuable and it is getting late. March 24, 
you know, you have heard that date bandied around here, the 
Administration is saying to Congress, do not do anything until 
then. You will upset the negotiations and so forth. What is 
your judgment--and I am sure you do not know for sure--of the 
prospects for us reaching a strong agreement, a good one, with 
Iran, where they would forsake nuclear weapons, basically, by 
March 24?
    Mr. Clawson. Iran is not going to forsake the pursuit of 
nuclear weapons capability.
    Chairman Shelby. Yes.
    Mr. Clawson. They might agree to park it for a while----
    Chairman Shelby. OK.
    Mr. Clawson.----and let it wait for a period of time. But, 
they are not going to forsake it. That is not going to happen.
    Chairman Shelby. It is just a slow walk, is it not?
    Mr. Clawson. Well, if there is an agreement before March 
24, then I suspect both sides will pretend it is a big 
agreement when, actually, it is going to be a very tiny one. 
And, so, we may pretend to reach an agreement, but we are not 
going to reach a real agreement.
    Chairman Shelby. Do you agree with that, Mr. Dubowitz?
    Mr. Dubowitz. Well, I do agree with that assessment. I 
mean, I think the only way we get a deal by March 24, with the 
technical details to be worked out by June, is if the 
Administration continues to lower its nuclear demands. I think 
if the Administration does, we will see a deal. But, we have 
effectively gone from a previous position of dismantle and 
disclose, right, dismantle the program and disclose the 
possible military dimensions of Iran's program, to where we are 
today, which is disconnect, defer, and discuss.
    Chairman Shelby. So, if this Administration ultimately 
wants a deal more than Iran, it is not going to be a good deal.
    Mr. Dubowitz. Well, I think, by definition. I mean, I hope 
that is not the case. I hope the Administration continues----
    Chairman Shelby. I do, too.
    Mr. Dubowitz.----to hold the line. But, I feel the 
Administration--they deserve some credit. They have come up 
with lots of creative proposals to try and accommodate Ali 
Khamenei's red lines. But, the problem is that Ali Khamenei, he 
is keeping to his red lines. He is not moving those red lines. 
In fact, he is demanding that those red lines, in fact, be even 
brighter in escalating the capacity of the program. And, the 
Administration has tried to figure out a technical way to 
accommodate those red lines. But, again, at some point, we 
exhaust our creativity. We have to acknowledge that there is no 
zone of possible agreement with the Supreme Leader of Iran.
    Mr. Clawson. Sir, it is even worse. So long as we keep 
saying that that is the only rug we want and it is a beautiful 
rug and it is a magnificent rug and we have really got to have 
that rug, the more the price goes up.
    Chairman Shelby. And, they know we want that rug, right?
    Mr. Clawson. We keep telling them they want that rug.
    Mr. Dubowitz. Well, it is worse than that----
    Mr. Clawson. The price goes up, and so we will not reach a 
deal.
    Mr. Dubowitz. Right. It is worse than we tell them that we 
want the----
    Chairman Shelby. We had better stay out of the bazaar, had 
we not? Thank you very much.
    Mr. Clawson. Thank you.
    Mr. Dubowitz. Thank you.
    Chairman Shelby. The Committee is adjourned. [Whereupon, at 
1:17 p.m., the hearing was adjourned.]
    [Prepared statements, responses to written questions, and 
additional material supplied for the record follow:]
                PREPARED STATEMENT OF SENATOR MARK KIRK
    With Iran's nuclear threat continuing to grow with each passing 
day, I am grateful that the Senate Banking Committee today is holding a 
hearing to examine the effects of sanctions relief on Iran's economy, 
to assess the state of nuclear negotiations with Iran, and to hear 
views from the Administration and experts on the strategic necessity of 
additional Iran sanctions. Chairman Shelby, I thank you for your 
leadership, and for your willingness to prioritize this important 
issue.
    Time is not on our side when it comes to stopping the clock on 
Iran's nuclear bomb. In April of last year, Secretary of State John 
Kerry warned the Senate that Iran is technically ``two months'' away 
from a nuclear breakout. Yet, on July 18, 2014, the Administration 
decided to extend nuclear negotiations for another 4 months. Moreover, 
on November 24, 2014, the Administration granted Iran's nuclear program 
yet another extension, this time for 7 months.
    While the Administration has now set a deadline of June 30, 2015, 
for a final nuclear deal with Iran, it's far from certain that Iran 
will sign a comprehensive agreement before July, let alone agree to a 
``good deal'' that can dismantle the Iranian terror state's nuclear 
bomb-making capabilities and can ensure that our children never witness 
an Iranian-sparked nuclear war in the Middle East.
    What is clear, however, is that Iran's economy continues to benefit 
significantly from the interim nuclear deal's package of sanctions 
relief. On December 10, 2013, days after the Administration first 
announced the interim nuclear deal with Iran, Under Secretary of the 
Treasury for Terrorism and Financial Intelligence David S. Cohen wrote 
in the Wall Street Journal that ``the relief package in this interim 
deal is economically insignificant to Iran.'' Cohen added: ``Iran will 
be even deeper in the hole 6 months from now, when the deal expires, 
than it is today.''
    But more than 12 months after Under Secretary Cohen wrote those 
words, we see now that Iran is far from being ``deeper in the hole.'' 
On December 24, 2014, Iranian President Hassan Rouhani bragged publicly 
that Iran's economy had benefited greatly from the interim deal's 
sanctions relief package. ``The country's economic growth was minus 6.8 
percent 2 years ago, but the statistics issued by the Central Bank last 
night showed a 4-percent positive growth during the 6 months of the 
current [Iranian] year,'' Rouhani said in a speech. ``We have now 
finally managed to reduce the 40 percent inflation down to 17 
percent.''
    Even if Rouhani is exaggerating Iran's 4-percent growth rate over 
the last 6 months, it's obvious that Iran's economy is growing rapidly. 
In fact, the International Monetary Fund (IMF) is projecting that 
Iran's economy will grow by 2.2 percent in 2015. In the United States, 
we would call a 2.2 percent growth rate a ``recovery'' and 4-percent 
growth over the last 6 months an ``economic boom.''
    It is precisely because the interim deal's sanctions relief package 
is economically significant to Iran that we are no closer to a ``good 
deal.'' It is obvious that, without the threat of significant pressure 
and significant consequences, Iranian Supreme Leader Ali Khamenei will 
not make any significant concessions to decisively end Iran's nuclear 
threat.
    Mindful of President Obama's own admonition that ``no deal is 
better than a bad deal'' with Iran, Senator Bob Menendez and I are 
therefore working to introduce very soon bipartisan legislation that 
will lay down, as a Sense of Congress, parameters for what constitutes 
a ``good deal'' with Iran, impose a series of crippling sanctions 
measures if Iran fails to agree to a comprehensive agreement by June 
30, 2015, and create the time and space for Congress to review any new 
agreement with Iran and ensure that we have a ``good deal.''
    Even the President conceded in the 2014 State of the Union that 
sanctions laws passed by the U.S. Congress with bipartisan veto-proof 
majorities forced Iran back to the negotiating table. It's time for 
Congress to act once again.
    I look forward to working with Senator Menendez, Chairman Shelby, 
and other Members of this Committee to build a bipartisan veto-proof 
majority to enact the Kirk-Menendez Iran legislation to decisively end 
Iran's nuclear threat once and for all.
                                 ______
                                 
                PREPARED STATEMENT OF SENATOR BEN SASSE
    Thank you, Mr. Chairman, for calling this hearing and making the 
Strategic Necessity of Iran Sanctions your first priority as Chairman.
    I look forward to serving on this Committee and constructively 
addressing the many important issues within its jurisdiction.
    I believe timing is absolutely critical on the issue of Iran 
Sanctions in particular and my hope is that today's hearing will be a 
good first step toward improving the outlook for our ongoing 
negotiations with Iran and successfully pursing our interests in the 
region.
    I commend Senators Kirk and Menendez for their leadership on this 
issue and was pleased to add my support to their legislation.
    First, we must bear in mind that preventing Iran from developing a 
nuclear weapon is one of the many national security issues the United 
States faces when crafting policies on Iran.
    The regime supports terrorism and terrorist groups throughout the 
Middle East, promotes sectarian violence where doing so serves its 
interests, and brutally represses its own people.
    As my colleagues know, Iran was first placed on the list of state 
sponsors of terrorism 30 years ago last year and continues to provide 
training, weapons, and funding to terrorist groups throughout the 
Middle East.
    Second, the regime's radical theocratic ideology targets 
Christians, Jews, Baha'i and other religious minorities and subjects 
them to torture and death because of their religious beliefs.
    Deputy Secretary Blinken's submitted testimony appropriately 
mentions Saeed Abedina, an American pastor who remains in an Iranian 
prison, and there are many others who are similarly detained or 
missing.
    According to the United State Commission on International Religious 
Freedom's Annual Report 2014, the Iranian regime has arrested 400 
Christians since 2010. The Report further noted that as of February 
2014, at least 40 Christians were imprisoned, detained, or awaiting 
trial in Iran because of their religious beliefs and practices.
    I'm describing a regime that tortures and kills people because of 
their religion--inside its own borders--and if permitted, will 
systematically exercise the same intolerance--and worse--beyond them.
    With respect to economic sanctions and their relationship to 
ongoing negotiations with Iran, I think the issue that faces us is 
rather straightforward, and I'm going to be blunt:
    I'm deeply concerned that the U.S. leverage in the negotiations 
over Iran's nuclear weapons program is decreasing while the Iranian 
posture is growing stronger.
    Worse still is the impression that with the passage of time, and 
with each succeeding extension and missed deadline, the United States 
grows more willing to accept an agreement with terms that are corrosive 
to U.S. interests.
    Our job today, therefore--in this hearing, and moving forward with 
legislation--is to examine how Congress can change, for the better, the 
trajectory of the negotiations.
    I support strong sanctions because sanctions--in the case of Iran--
make diplomatic efforts effective, and Congress must do everything that 
it can to equip our negotiators with the tools necessary to maximize 
what is achievable through ongoing talks and forthcoming agreements.
    Economic sanctions are never the only tool, but they can be a very 
powerful motivator, as the history of negotiations with the Iranians 
demonstrates.
    Thank you, Mr. Chairman.
                                 ______
                                 
               PREPARED STATEMENT OF SENATOR MIKE ROUNDS
    Mr. Chairman, Ranking Member Brown, and distinguished Members of 
the panel. I welcome the opportunity to participate in this hearing.
    The history of sanctions on Iran is long and complicated and one in 
which this Committee has participated for two decades. As Governor of 
South Dakota in 2010, I joined our Legislature's efforts toward this 
end when I signed a Divestment bill directing our State's pension fund 
to divest itself from companies doing business in Iran. Yet, for too 
many years, the United States has been alone in the effort to try and 
end Iran's nuclear program. Only recently has the wider international 
community embraced the idea of enacting economic sanctions against Iran 
to do the same. While we are negotiating with Iran, we must be clear: 
Iran cannot be allowed to obtain nuclear weapons. This is unacceptable.
    In 2012 and 2013 however, the United States and our allies, the 
P5+1, offered Iran significant sanctions relief in exchange for 
Tehran's termination of limited specific nuclear-related activity and 
its commitment to transparency. After initially refusing to accept the 
offer, Iran accepted the November 2013 Joint Plan of Action. November 
24, 2014, the P5+1 granted another 7-month extension of the current 
talks with Iran providing them with an additional access to $700 
million a month in their sequestered oil revenues held in foreign 
accounts.
    Iran came to these negotiations with the P5+1 in large measure 
because U.S.-led sanctions were beginning to cripple the Iranian 
economy. Yet sanctions relief given to Iran as a result of these 
negotiations has reduced the pressure on them to negotiate in good 
faith. We have been lenient with Iran in these negotiations. More must 
be done.
    During the negotiations, Iran rejected the P5+1 offers and stuck to 
their hardline positions. ``The centrifuges are spinning and will never 
stop,'' Iranian President Hassan Rouhani said on state television after 
the extension was announced in November 2014.
    Iranian Foreign Minister Javad Zarif, the man with whom Secretary 
of State Kerry is negotiating said, ``I'm confident that any final deal 
will have a serious and not a token Iranian enrichment program coupled 
with removal of sanctions.''
    Despite comments like this, some will advocate easing the pressure 
on Iran to give it room to negotiate. I disagree. Iran's history of 
negotiations with the allies shows that when you give them an inch, 
they take a mile. Any sign of weakness on our part emboldens Iran.
    Iran will not negotiate in good faith until the United States and 
its allies make it clear through strong action that if they do not 
agree to suspend their program leading to nuclear weapons, punishing 
economic sanctions will be re-imposed. These sanctions should be 
prospective and come into effect only if Iran does not agree to a deal. 
Without renewed pressure, Iran is unlikely to modify its course. It 
will continue its efforts to circumvent sanctions, divide the 
international coalition and continue advancing its nuclear program.
    Furthermore, the President should have the power to conclude this 
agreement with Iran provided that a majority of the Senate and a 
majority of the House concurs with the agreement.
    I look forward to the work of this Committee on this and all the 
other issues that come before it and I am grateful for the opportunity 
to contribute.
    Thank you Mr. Chairman.
                                 ______
                                 
                  PREPARED STATEMENT OF ANTONY BLINKEN
             Deputy Secretary of State, Department of State
                            January 27, 2015
    Good morning, Chairman Shelby, Ranking Member Brown and Senators. I 
appreciate the opportunity to discuss with you the status of 
negotiations related to Iran's nuclear program.
    It is appropriate that we are gathered here today for what will be 
this Committee's first hearing this year and its first hearing under 
the new 114th Congress to discuss Iran's nuclear program. The challenge 
posed by Iran's nuclear program has long been one of our country's 
foremost national security priorities, and it has been a primary focus 
of both the Congress and the Administration. The international 
community shares our serious concerns about Iran's nuclear program. 
Together with our partners in the P5+1 and the EU we have been unified 
in pursuing a comprehensive solution that lays these concerns to rest--
consistent with the President's firm commitment to prevent Iran from 
acquiring a nuclear weapon.
    It was with that challenge in mind that Secretary Kerry and our 
lead negotiator Under Secretary Sherman traveled to Geneva earlier this 
month as part of our latest efforts to reach a long-term comprehensive 
plan of action with Iran that would verifiably ensure Iran's nuclear 
program will be exclusively peaceful going forward.
    Today I plan to update you on our goals for and the status of the 
negotiations. There are, of course, some details that I will not be 
able to discuss in an unclassified setting--the negotiations are 
ongoing and cannot be conducted in public. But I will give you as much 
detail as I can in this setting because we all understand the vital 
role Congress and this Committee play in shaping U.S. policy toward 
Iran. We remain committed to continue--and when necessary, to expand--
regular consultations. We all have the same goal--to make the world a 
safer place by resolving the international community's concerns with 
Iran's nuclear program.
    We continue to believe that the best way to do that is to negotiate 
a comprehensive plan of action that, when implemented, will ensure 
that, as a practical matter, Iran cannot acquire a nuclear weapon and 
that Iran's nuclear program is exclusively peaceful.
    Any comprehensive deal must effectively cutoff the four pathways 
Iran could take to obtain enough fissile material for a nuclear weapon: 
two uranium pathways, through its activities at Natanz and Fordow; a 
plutonium pathway, through the Arak heavy water reactor; and a 
potential covert pathway. It must include tight constraints and strict 
curbs on Iran's nuclear program. And finally, it must require robust 
monitoring and transparency measures to maximize the international 
community's ability to detect quickly any attempt by Iran to break out 
overtly or covertly.
    In exchange, the international community would provide Iran with 
phased sanctions relief tied to verifiable actions on its part. Such 
relief would be structured to be easily reversed so that sanctions 
could be quickly re-imposed if Iran were to violate its commitments.
    We never expected this to be an easy process, and so far those 
expectations have proved correct. It is also a process that cannot be 
rushed. After 35 years without diplomatic relations, and after more 
than 10 years of attempts to put a halt to Iran's proliferation of 
sensitive nuclear activities, we are now trying to see if we can work 
through a multitude of complicated issues in order for us and the 
international community to be assured of the exclusively peaceful 
nature of Iran's nuclear program.
    Our goal is to conclude the major elements of the deal by the end 
of March and then to complete the technical details by June.
    The most recent discussions were serious, useful, and businesslike. 
We have made progress on some issues but gaps remain on others. I, or 
our lead negotiator, Under Secretary of State Wendy Sherman, would be 
happy to provide further information in a classified setting.
    Overall, however, we assess that we still have a credible chance of 
reaching a deal that is in the best interest of America's security, as 
well as the security of our allies. If Iran's leaders choose not to 
move forward, we will work with Congress to increase pressure. But 
while we remain engaged in these negotiations, it is important to 
demonstrate to our partners as well as to Iran that Washington is 
united in support of a comprehensive solution that would ensure that 
Iran does not acquire a nuclear weapon, and that its nuclear program is 
exclusively peaceful. I know this is a goal we all share.
    The U.S. Congress has played a vital role in getting us to where we 
are today and will undoubtedly play an important role going forward. 
Sanctions were instrumental in bringing Iran to the table. But Iran's 
program continued until negotiations made the Joint Plan of Action 
(JPOA) possible. Sanctions did not stop the advance of Iran's nuclear 
program. Negotiations did, and it is in our interest not to deny 
ourselves the chance to achieve a long-term, comprehensive solution 
that would prevent Iran from acquiring a nuclear weapon.
    Let me talk about that progress we have achieved so far.
    Before the JPOA, despite an unprecedented sanctions regime, Iran's 
nuclear program was rushing toward larger enriched uranium stockpiles, 
greater enrichment capacity, the production of plutonium that could be 
used in a nuclear weapon, and ever shorter breakout time. Today, as the 
result of the constraints in the JPOA, Iran has halted progress on its 
nuclear program and it has rolled it back in key areas for the first 
time in a decade, and it has allowed us to have greater insight and 
visibility through more intrusive and more frequent inspections.
    Before the JPOA, Iran had about 200 kilograms of 20 percent 
enriched uranium in a form that could be quickly enriched into a 
weapons-grade level. It produced much of that material at the Fordow 
facility, buried deep underground. Today, Iran has no such 20 percent 
enriched uranium--zero, none. It has diluted or converted every ounce, 
suspended all uranium enrichment above 5 percent and removed the 
connections among centrifuges at Fordow that allowed them to produce 20 
percent enriched uranium.
    Before the JPOA, Iran was making progress on the Arak reactor, 
which, if it had become operational, and together with a reprocessing 
facility, would have provided Iran with a plutonium path to a nuclear 
weapon. Once fueled, the Arak facility would be challenging to deal 
with militarily. Today, Arak is frozen in place.
    Before the JPOA, Iran was enriching uranium with roughly 10,000 
centrifuges and had another roughly 9,000 installed centrifuges ready 
to bring into operation. The JPOA froze Iran's enrichment capacity and 
those 9,000 additional centrifuges are still not operating.
    Before the JPOA, inspectors had less frequent access to Iran's 
nuclear facilities. Today, the JPOA has enabled IAEA inspectors to have 
daily access to Iran's enrichment facilities and a far deeper 
understanding of Iran's nuclear program. They have been able to learn 
things about Iran's centrifuge production, uranium mines, and other 
facilities that are important to monitoring Iran's program going 
forward and to detecting any attempts to break out. And the IAEA has 
consistently reported that Iran has lived up to its commitments under 
the JPOA.
    Just as we have asked Iran to uphold its commitments under the 
JPOA, we have lived up to our commitment of providing Iran with limited 
relief--about $14 to $15 billion from the start of the JPOA through 
this June. But that relief is dwarfed by the vast amounts denied to 
Iran under the existing sanctions regime. For example, in 2014 alone, 
oil sanctions deprived Iran of more than $40 billion in oil revenue--
well over twice the estimated value of the relief under the JPOA. And 
what oil revenues Iran is allowed to generate go into heavily 
restricted accounts that now encumber more than $100 billion dollars. 
Virtually the entire sanctions architecture remains in place. Indeed, 
throughout the existence of the JPOA, sanctions pressure on Iran has 
not decreased--it has increased.
    Congress is now considering legislation to impose additional 
sanctions on Iran, to be triggered by the failure of negotiations. I 
know that the intent of this legislation is to further increase 
pressure on Iran and, in so doing, to strengthen the hand of our 
negotiators to reach a comprehensive settlement. While the 
Administration appreciates that intent, it is our considered judgment 
and strongly held view that new sanctions, at this time, are 
unnecessary and, far from enhancing the prospects for successful 
negotiations, risk fatally undermining our diplomacy and unraveling the 
sanctions regime so many in this body have worked so hard to establish.
    New sanctions are unnecessary because, as I noted a moment ago, 
Iran already is under acute pressure from the application of the 
existing sanctions regime. In recent months, that pressure has only 
grown stronger with the dramatic drop in oil prices.
    Should Iran refuse a reasonable deal or cheat on its current 
commitments under the JPOA, the Senate and House could impose 
additional measures in a matter of hours. The Administration would 
strongly support such action. Iran is well aware that an even sharper 
Sword of Damocles hangs over its head. It needs no further motivation.
    So new sanctions are not necessary. And their passage now would put 
at risk the possibility of getting a final deal over the next several 
months. Let me explain why.
    As part of the JPOA we also committed, within the bounds of our 
system, not to impose new nuclear-related sanctions while the JPOA is 
in effect. Absent a breach by Iran, any new sanctions enacted by 
Congress would be viewed by Iran and the international community as the 
United States breaking out of the understandings of the JPOA. This 
includes ``trigger'' legislation that would tie the actual 
implementation of new sanctions to the failure to reach a final 
arrangement. Even if such sanctions are not, arguably, a technical 
violation of the JPOA, we believe they would be perceived as such by 
Iran and many of our partners around the world. This could produce one 
of several serious unintended consequences that, far from enhancing 
America's security, would undermine it.
    First, the passage of new sanctions could provoke Iran to walk away 
from the negotiating table, violate the JPOA and start moving its 
nuclear program forward again. Instead of keeping its uranium 
enrichment at under 5 percent, as it has since the JPOA was signed, 
Iran could start enriching again at 20 percent, or even higher. Instead 
of capping its stockpile of roughly 4 percent low enriched uranium at 
pre-JPOA levels, Iran could grow it rapidly. Instead of suspending 
substantive work on the Arak heavy water reactor, Iran could restart 
its efforts to bring this reactor on line. Instead of providing 
unprecedented access to international inspectors at its nuclear 
facilities, it could curtail/reduce IAEA access, inhibiting our ability 
to detect a breakout attempt. Instead of limiting work on advanced 
centrifuges, it could resume its efforts to increase and significantly 
improve its nuclear capabilities in a relatively short timeframe.
    Second, even if Iran does not walk away or promptly returns to the 
table, its negotiators are likely to adopt more extreme positions in 
response, making a final deal even more difficult if not impossible to 
achieve.
    Third, if our international partners believe that the United States 
has acted prematurely by adding new sanctions now in the absence of a 
provocation or a violation by Iran--as most countries surely would--
their willingness to enforce the exiting sanctions regime or to add to 
it in the event negotiations fail will wane. Their support is crucial. 
Without it, the sanctions regime would be dramatically diluted. Up 
until now, we've kept other countries on board--despite it being 
against their economic interest--in large part because we've 
demonstrated we are serious about trying to reach a diplomatic 
solution. If they lose that conviction, the United States, not Iran, 
would be isolated, the sanctions regime would collapse and Iran could 
turn on everything it turned off under the JPOA without fear of 
effective, international sanctions pressure in response.
    We can debate whether any or all of these things would happen. What 
I can tell you today is that those who are best placed to know--the 
diplomatic professionals who have been leading these negotiations and 
dealing directly with the Iranians and our international partners for 
the past several years--believe that the risks are real, serious and 
totally unnecessary. That is their best judgment. Why run those risks 
and jeopardize the prospects for a deal that will either come 
together--or not--over the next 2 months? Why not be patient for a few 
more months to fully test diplomacy? There is nothing to be gained--and 
everything to be lost--by acting precipitously.
    That judgment is shared by our closest allies. Just 2 weeks ago, 
Prime Minister Cameron could not have been clearer: `` . . . It is the 
opinion of the United Kingdom that further sanctions or further threat 
of sanctions at this point won't actually help to bring the talks to a 
successful conclusion and they could fracture the international unity . 
. . which has been so valuable in presenting a united front to Iran.''
    So we must continue to work together. We have briefed Congress 
extensively and frequently on Iran talks over the past year. We have 
had, and will continue to have, extensive discussions with Congress 
about the status of the P5+1 negotiations. We will continue to keep 
Congress fully informed about these negotiations through a combination 
of open hearings and closed briefings. I look forward to continuing 
that conversation with all of you and your colleagues today, and in the 
remaining months.
    Before I finish, I want to emphasize that, even as we engage Iran 
on the nuclear issue and continue to apply pressure under the existing 
sanctions regime, we also continue to hold it accountable for its 
actions on other fronts. We continue to insist that Iran release Saeed 
Abedini, Amir Hekmati, and Jason Rezaian from detention so they can 
come home to their families. Likewise, we continue to call on Iran to 
work cooperatively with us so that we can find Robert Levinson and 
bring him home. This March will unfortunately mark 8 years since his 
disappearance on Iran's Kish Island. Secretary Kerry and Under 
Secretary Sherman have spoken to Iran about our concerns for the fate 
of these U.S. citizens as recently as last week, and will continue to 
do so until all of them are back home.
    We also continue to raise our voice in support of the talented and 
brave Iranian people, and support their desire for greater respect for 
universal human rights and the rule of law. We have spoken up clearly 
and consistently against human rights violations in Iran and have 
called on the Iranian government to guarantee the rights and freedoms 
of its citizens. We have done this in reports requested by this 
legislative body, such as the Human Rights Report, through statements 
on individual cases where our voice can support those inside Iran, and 
via international organizations, such as our work to support the 
mandate of the U.N. Special Rapporteur on human rights in Iran. We have 
also used our Virtual Embassy Tehran online platform to promote freedom 
of expression and respect for human rights, and our programming to 
support the rights of average citizens in Iran. Regardless of the 
outcome of ongoing nuclear negotiations with Iran, we will not relax 
our efforts to hold Iran accountable for its human rights violations.
    We will also continue to confront Iran's destabilizing activities, 
promotion of sectarian divisions, and support for nonstate actors and 
terrorists throughout the Middle East. Our positions on Palestinian 
terrorist groups, such as Hamas and the Palestinian Islamic Jihad, and 
Lebanese Hezbollah, for example, have in no way changed--and will not 
change. We have very clearly and consistently spoken out against these 
designated foreign terrorist organizations, as well as Iran's support 
for them. And we will continue to find ways to support those in the 
region who are working to counter the destabilizing actions of these 
groups--including building partner capacity--as we simultaneously 
reinforce the robust regional security architecture we've already 
built. Similarly, we have called out Iran for its support of the brutal 
regime of Bashar al-Asad in Syria. We hope that Iran soon recognizes 
that there is much more to be gained through constructive engagement in 
the region and promotion of inclusivity than through disruptive 
policies.
    The challenges posed by Iran are numerous and complicated. We have 
confronted them, and will continue to do so. On the challenge of Iran's 
nuclear program, we face a historic opportunity to resolve this concern 
through clear eyed, principled and disciplined diplomacy. We do not yet 
know if diplomacy will be successful--as the President has stated the 
chances are probably less than 50-50--but it is of the utmost 
importance that we give it every opportunity to succeed.
    Thank you.
                                 ______
                                 
                  PREPARED STATEMENT OF DAVID S. COHEN
        Under Secretary for Terrorism and Financial Intelligence
                       Department of the Treasury
                            January 27, 2015
    Good morning. Chairman Shelby, Ranking Member Brown, and 
distinguished Members of the Committee: Thank you for the invitation to 
appear before you to discuss the state of sanctions on Iran, and 
whether our efforts to achieve a diplomatic solution to one of the most 
difficult and enduring national security problems that we face--Iran's 
nuclear program--would be advanced if Congress were to enact new 
sanctions legislation at this time.
    I will focus my testimony today on the robust international 
sanctions regime that helped bring Iran to the negotiating table, the 
intense pressure that sanctions continue to place on the Iranian 
economy, and our continued vigorous enforcement of those sanctions over 
the course of the Joint Plan of Action (JPOA). And I will explain why 
new sanctions legislation now--even if implementation were delayed--
would more likely hinder, rather than advance, the prospects for a 
diplomatic solution that verifiably prevents Iran from obtaining a 
nuclear weapon.
    At the outset, let me reiterate that no issue is of greater concern 
or urgency to the United States, and no issue occupies more of the time 
and attention of my team at the Department of the Treasury, than 
ensuring that Iran does not acquire a nuclear weapon. Iran in 
possession of a nuclear weapon would directly threaten U.S. and 
international security, increase the risk of nuclear terrorism, 
undermine the global nonproliferation regime, and risk setting off an 
arms race in the Middle East. From the outset of his Administration, 
President Obama has made clear that we will do everything in our power 
to prevent Iran from obtaining a nuclear weapon.
    For us at Treasury, that has meant working within the 
Administration, with Congress, and with partners around the world to 
impose the most effective set of financial and economic sanctions in 
history. The sanctions have impeded Iran's ability to acquire material 
for its nuclear program, isolated it from the international financial 
system, drastically slashed its oil exports, deprived it of access to a 
sizable portion of its oil revenues and foreign reserves, and severely 
constrained its overall economy.
    In many respects, the global sanctions regime has achieved exactly 
what it was designed to do: encourage Iran to come to the negotiating 
table, not to posture, pontificate, and procrastinate, but to engage in 
serious diplomacy over its nuclear program. Iran is negotiating because 
it knows that relief from the sanctions can come only in exchange for 
taking concrete and verifiable steps that will guarantee that it cannot 
produce a nuclear weapon.
    As this Committee knows, those negotiations are ongoing. They began 
when we negotiated the JPOA, which was reached on November 2013. In 
November 2014, the P5+1 and Iran decided to extend the talks for 
another 7 months. We agreed to the extension because our negotiators 
have made meaningful progress, and because it takes time to conduct the 
highly technical deliberations necessary to get a comprehensive 
solution that will cutoff each of Iran's possible pathways to a nuclear 
weapon.
    We may ultimately reach a comprehensive solution; we may not. The 
President last week reiterated that the chances that we get a deal are 
probably less than 50 percent. But we, like you, are committed to 
testing fully the diplomatic path.
    That is why we have continued to maintain throughout the JPOA 
period the intense financial and economic pressure that brought Iran to 
the table in the first place. And that is also why we must give our 
negotiators the time and space they need to pursue the possibility of a 
comprehensive solution, without undercutting their efforts, fracturing 
the coalition, or, with the best of intentions, sending mixed signals 
about the interest of the United States in a diplomatic resolution.
The International Sanctions Regime Remains Robust and Vigorously 
        Enforced
    When Iran and the P5+1 concluded the JPOA in November 2013, Iran 
committed to halt progress on its nuclear program, roll it back in 
important respects, and provide unprecedented access to and inspections 
of its enrichment facilities. In exchange, Iran received limited, 
targeted, and reversible relief from some nuclear-related sanctions.
    Importantly, the JPOA left in place the full architecture of our 
financial, banking, oil, and trade sanctions; our sanctions focused on 
Iran's support for terrorism and its violation of human rights; and our 
own domestic embargo.
    I'd like briefly to review the breadth of that sanctions 
architecture--painstakingly designed by the Administration, Congress, 
and our international partners over many years--because it provides an 
important backdrop to any discussion of imposing additional sanctions. 
First, Iran remains subject to sweeping sanctions by the United States 
and our allies on its financial and banking sectors:

    Iran continues to be almost completely isolated from the 
        international financial system, with its most significant 
        private and state-owned banks, including its central bank, 
        subject to U.S. sanctions and cutoff from international payment 
        messaging systems.

    Any foreign bank that transacts with designated Iranian 
        banks--or with most other designated Iranian individuals or 
        entities--can lose access to the U.S. financial system. That 
        means losing the ability to facilitate transactions in the 
        dollar, a death penalty for any international bank.

    It remains sanctionable to provide physical U.S. dollar 
        banknotes to the Iranian government.

Second, our sanctions have targeted Iran's key economic engine, its 
energy sector:

    Our sanctions have drastically driven down Iran's oil 
        exports. In 2012, Iran was exporting approximately 2.5 million 
        barrels of oil a day to some 20 countries; today, it exports 
        only around 1.1 million barrels, and only to six countries. 
        Under the JPOA, moreover, Iran's six remaining oil customers 
        may not exceed their current purchase levels.

    Additionally, payment for oil purchased from Iran by these 
        six countries must be paid into accounts that can be used only 
        to facilitate humanitarian transactions or bilateral trade 
        between the importing country and Iran. With the exception of 
        funds released under the JPOA, this Iranian oil revenue can 
        neither be brought back to Iran nor transferred to third 
        countries. And because the accounts into which Iran receives 
        oil revenue already hold more funds than Iran spends on 
        bilateral or humanitarian trade, the effective value of those 
        oil sales to Iran is far less than 100 cents on the dollar.

    We also have broad authorities targeting the provision of 
        goods and services to the Iranian energy sector or investment 
        in that sector. Any entity that is itself part of Iran's energy 
        sector is subject to sanctions.

    Because Iran cannot access Western technology and services, 
        and because it has been forced to sharply cut its oil exports, 
        we have also seen a significant decline in its production of 
        oil. Independent experts report that Iran produced fewer than 
        2.8 million barrels a day in December, down from almost 3.6 
        million barrels a day in 2011.

Third, there are sanctions on other important sectors of the Iranian 
economy. We have broad tools that target Iran's petrochemical, 
insurance, ports, shipping, and shipbuilding sectors, as well as its 
trade in certain crucial metals and industrial materials.

Fourth, beyond these sector-focused sanctions, we have a range of other 
sanctions authorities that we use to intensify the pressure on the 
Iranian regime.

    It is sanctionable to act on behalf of the Government of 
        Iran, as well as to provide the Government of Iran or the 
        Iranian individuals and entities on OFAC's sanctions list with 
        financial, material, or technological support.

    Under our counter-terrorism, counter-proliferation, human 
        rights, and other Iran-related authorities, we have imposed 
        sanctions on more than 700 Iran-related individuals and 
        entities, almost 15 percent of which have been designated since 
        the signing of the JPOA. And importantly, anyone who conducts 
        business with these individuals or entities, or any other 
        designated Iranian entity, is at risk of being targeted for 
        sanctions.

Last but not least, broad limitations on U.S. trade with Iran remain in 
place, meaning that Iran continues to be shut out of the world's 
largest and most vibrant economy and remains unable to access the U.S. 
financial system.
    These sanctions are not just words on the books--we vigorously 
enforce them. Over the course of the JPOA, we have repeatedly 
reaffirmed the point, in word and deed, that Iran is not open for 
business.
    Since the signing of the JPOA, the United States has sanctioned 
nearly 100 individuals and entities that were helping Iran evade our 
sanctions, aiding Iranian nuclear and missile proliferation, supporting 
Iranian-sponsored terrorism, or carrying out Iran-related human rights 
abuses. Nine of those designations came less than a month ago, on 
December 30, including sanctions on six individuals and one entity that 
were working with the Iranian government to obtain U.S. dollars. We 
have also imposed more than $350 million in penalties on those who have 
violated the sanctions. These targeting and enforcement efforts will 
continue throughout the course of the JPOA extension.
    We have also engaged extensively with foreign governments and 
companies to make clear the limited scope of the JPOA's sanctions 
relief and our continued vigilance against any breaches of our 
sanctions. These outreach efforts, while quieter than enforcement 
actions, are equally critical to our efforts to pressure Iran.
    And as we sit here, members of my staff are poring over reams of 
financial intelligence searching for signs of sanctions evasion, 
working with banks and businesses to help them better comply with 
sanctions, and engaging directly with foreign governments, foreign 
regulators, foreign businesses, and individuals around the world to 
make certain that they understand the consequences of violating our 
sanctions. And although I will depart the Treasury Department in a few 
weeks, everyone should rest assured that vigorous enforcement of our 
sanctions will continue unabated.
    Through all of these efforts, we make it abundantly clear to Iran 
that its only hope for real relief from sanctions is to enter into a 
comprehensive arrangement that guarantees that it cannot produce a 
nuclear weapon.
The State of the Iranian Economy
    In light of the extensive sanctions that remain firmly in place and 
are being vigorously enforced, it should come as no surprise that the 
Iranian economy remains in a deep hole.
    When I testified before the Senate Foreign Relations Committee in 
July, I suggested three metrics by which to judge Iran's economic 
distress--its oil revenues, the value of its currency, and its foreign 
reserves. By all three measures, Iran continues to be worse off today 
than it was when it entered into the JPOA.
    Revenues: The overall health of the Iranian economy and the Iranian 
government's balance sheet depend heavily on oil revenues, and our 
sanctions have cut deeply into those revenues. As I noted earlier, our 
sanctions have caused Iran's oil exports to drop almost 60 percent, 
from approximately 2.5 million barrels per day in 2012 to approximately 
1.1 million today. Because of this dramatic decline in sales, in 2014 
alone our oil sanctions deprived Iran of over $40 billion, which is 
well over twice the total estimated value to Iran of the limited 
sanctions relief in the JPOA--and that is money Iran can never recover, 
because it represents sales that were not made. Altogether, since 2012, 
our oil sanctions have denied Iran access to more than $200 billion in 
lost exports and funds it cannot freely use.
    Furthermore, for the 7-month period of the JPOA extension, from 
December 2014 to June 2015, we estimate that Iran will be forced to 
endure another $15 billion in lost sales. Moreover, of the estimated 
$12 billion that Iran may continue to earn in oil revenue during this 
JPOA extension, our sanctions mean that Iran will only be able to 
access a limited amount of this revenue, since much of it will remain 
restricted in overseas accounts.
    Meanwhile, the current sustained decline in oil prices is, in the 
words of Iranian officials, imposing an additional set of sanctions on 
Iran. Over the past year, the average price of a barrel of oil has 
dropped by more than 50 percent; it is trading today at slightly under 
$50 per barrel. If oil prices remain at current levels, Iran will lose 
an additional $11 billion in oil revenue from what it was expecting to 
take in during this most recent 7-month extension of the JPOA.
    All of this is creating havoc with Iran's budget. For its current 
fiscal year (March 2014 to March 2015), Iran assumed that oil would 
sell for $100 per barrel. It has not, which has cut into its revenues 
for this year. And next year will be even bleaker.
    In December, President Rouhani proposed a budget for the coming 
fiscal year that assumed oil would sell for $72 per barrel and that 
included proposals to cancel subsidies, raise taxes, reduce 
contributions to its sovereign wealth fund, and scrap projects. But 
that draft budget already has proved overly optimistic, and just last 
week, the Iranian Finance and Economy Minister revealed that Iran is 
revising downward its budget because it is now assuming a price of $40 
per barrel. This will likely result in more spending cuts, fewer 
services, and higher taxes.
    Rial: Iran's currency, the rial, has depreciated by about 56 
percent since January 2012, including a decline of about 16 percent 
just since November 2013, when the JPOA was signed. This makes imported 
goods more expensive, disrupts plans for investment in Iran, causes the 
general inflation rate to rise, and hurts the Iranian economy by 
causing significant uncertainty about future prices.
    Reserves: The vast majority of Iran's approximately $100 billion in 
foreign currency reserves remain inaccessible or restricted by 
sanctions. Iran can use most of this money only to pay for permissible 
bilateral trade between the six remaining oil importing countries and 
Iran, as well as for humanitarian purposes. Without hard currency 
reserves, Iran is limited in its ability to intervene in its currency 
market to stabilize the rial, and it also becomes more difficult to 
conduct foreign trade.
    If you take a step back and look at Iran's broader economy, the 
picture is no less dismal. Despite some signs of an uptick in Iran's 
GDP, Iran's economy is performing far below its potential. Iran's GDP 
shrank by roughly 9 percent in the 2 years ending in March 2014, and 
its economy today is 15 to 20 percent smaller than what it would be had 
it remained on its pre-2012 growth trajectory. Moreover, at 17 percent, 
Iran's inflation rate is one of the highest in the world.
    The dire predictions we heard that the limited sanctions relief in 
the JPOA would lead to a collapse of the sanctions regime and reduce 
pressure on Iran clearly have not materialized. The sanctions structure 
has held up just fine. We estimate that the total value to Iran of the 
JPOA sanctions relief, which comes largely from enabling Iran to access 
some of its own restricted oil revenues held overseas, will add up to 
approximately $14 to $15 billion by June 2015. This relief pales in 
comparison to the significant revenues that Iran has forgone as a 
result of sanctions, and it cannot make up for Iran's systemic economic 
weaknesses and imbalances.
    Put simply, Iran's economy is significantly impaired, and it will 
remain that way as long as our sanctions are in place--and Iran's 
leaders know this. Thanks to cooperation on the international stage 
between the United States and its allies, and the joint work of 
Congress and this Administration, Iran is negotiating with its back 
against the wall. So long as we continue to maintain our current 
pressure on Iran--and we are committed to doing just that--its leaders 
have every incentive to come to a comprehensive solution and resolve 
this issue peacefully.
Additional Sanctions Legislation Now Is Unnecessary and Potentially 
        Harmful
    Because of the scope and intensity of the sanctions Iran currently 
is subject to, and because of the economic pressure those sanctions 
continue to apply, we believe that new sanctions are not needed at this 
time. To the contrary, new sanctions at this time--even with a delayed 
trigger--are more likely to undermine, rather than enhance, the chances 
of achieving a comprehensive solution, and are more likely to reduce, 
rather than increase, the chances of sustaining and increasing pressure 
on Iran if the negotiations fail.
    In our efforts to prevent Iran from obtaining a nuclear weapon, 
sanctions were never an end in themselves. Sanctions alone were never 
going to stop Iran from installing centrifuges or enriching uranium. 
Instead, sanctions always were intended principally as a means to 
persuade Iran to negotiate in earnest.
    And that has worked. We now have a situation in which Iran is 
engaged in a serious negotiation with the P5+1, while progress on its 
nuclear program is frozen, certain aspects of the program have been 
rolled back, and we have unprecedented insight into its nuclear 
activities. And, furthermore, its economy remains under enormous 
pressure, in large measure because we have been able to hold together 
the international coalition that has joined us in imposing crippling 
sanctions.
    Enacting additional sanctions legislation at this point threatens 
to unravel this situation. In our judgment--a judgment that is shared 
by our international partners--new sanctions legislation now is 
substantially more likely to impede progress at the negotiating table 
than to induce Iran to offer additional concessions.
    Moreover, if Congress enacts new sanctions now and the negotiations 
ultimately prove unsuccessful, our international partners may hold us, 
not Iran, responsible for the breakdown in the talks. While it is 
difficult to predict exactly what would then unfold, it is quite 
possible that some current members of the international sanctions 
coalition--whose companies are eager to resume business with Iran, but 
have been held off--would reevaluate their cooperation with us on 
pressuring Iran, making it more difficult to maintain existing 
pressure. If overall support for the sanctions regime declined, it also 
would make it more difficult to intensify sanctions pressure. Finally, 
if a breakdown in talks led to the demise of the JPOA, we would lose 
the additional insight into Iran's nuclear program and restrictions on 
development that the JPOA has given us.
    In our view, these risks make new sanctions legislation inadvisable 
at this moment. But even putting aside the risks, we see no compelling 
reason to impose new sanctions now, considering the extent to which 
Iran already faces substantial financial and economic pressure.
    This conclusion is reinforced, moreover, by the fact that this 
Congress and this Administration would move quickly to enact new 
sanctions if Iran were to walk away from the talks or if we concluded 
that a comprehensive deal was no longer within reach. As the President 
said just last Friday, ``if Iran ends up ultimately not being able to 
say yes, if they cannot provide us the kind of assurances that would 
lead [us] to conclude that they are not obtaining a nuclear weapon, 
then we're going to have to explore other options,'' including new 
sanctions legislation. As has been the case with prior sanctions 
legislation, that legislation could go into effect in a matter of days. 
The Iranians know this, just as they know that the President has 
``consistently said [that] we leave all options on the table.''
    Make no mistake: This Administration understands and embraces the 
power of sanctions. Sanctions are a key component of many of our most 
important national security initiatives, from our efforts to prevent 
Iran from obtaining a nuclear weapon to our efforts to degrade and 
ultimately destroy the Islamic State in Iraq and Levant. We are not 
sanctions doubters.
    But neither do we believe that layering on additional sanctions is 
always the right move. Sanctions are one tool in our toolkit, as is 
diplomacy, as is military action, as are the myriad other ways that we 
project U.S. power to advance our interests, protect our allies, and 
defend ourselves. If diplomacy does not succeed, as the President said, 
he ``will be the first one to come to Congress and say we need to 
tighten the screws.'' But in our view, now is the time to give 
diplomacy every chance to succeed, not to create a new sanctions tool.
Conclusion
    In closing, I want to assure this Committee that as we seek a 
comprehensive solution with Iran, the Treasury Department, like the 
rest of this Administration, is fully committed to maintaining intense 
financial and economic pressure on Iran. We have not, and we will not, 
let up one iota in our sanctions enforcement efforts, and we will 
continue to take action against anyone, anywhere, who violates or 
attempts to violate our sanctions.
    Thank you.
                                 ______
                                 
              PREPARED STATEMENT OF PATRICK CLAWSON, Ph.D.
                          Director of Research
             The Washington Institute for Near East Studies
                            January 27, 2015

              Iran Adapts to Sanctions in the Absence of New Measures

    Over time, Iran adapts to any level of sanctions. And Iranian 
authorities have repeatedly persuaded themselves that the United States 
is ``sanctioned out,'' i.e., that Washington cannot step up the 
pressure. Continuously adopting new measures is the best way sanctions 
can effectively move Iran's leaders to resolve the nuclear impasse.
Iran's Plan A is No Nuclear Deal
    Iran's new budget shows that the authorities see no urgent need for 
relief from the current sanctions. They correctly feel that they have 
learned to live with those sanctions. The 2015/16 budget submitted to 
the Majlis by President Hassan Rouhani is based on 1.3 million barrels 
a day in oil exports, only slightly above the average level in 2014--a 
rise which is consistent with the Joint Plan of Action as interpreted 
by the Administration, in that Iran expects to increase its exports of 
oil condensates which the Administration does not consider to be crude 
oil. Iran's proposed 2015/16 budget also does not assume any sharp 
pickup in economic activity, such as some have forecast would occur in 
the aftermath of a nuclear deal.
    Instead of assuming sanctions relief, the new budget proposes a 
range of painful measures to live with the existing situation, such as 
increased taxes and continuing erosion of both government salaries and 
the monthly payment to families introduced when subsidies were slashed 
in 2011. These will be painful measures, hitting hard at Iran's middle 
and lower classes. They would come on top of several years of 
impressive adjustments which go far beyond anything the International 
Monetary Fund has recommended to hard-hit countries like Greece. In 
effect, the 2015/16 budget continues the path of recent policy: do what 
is needed to reduce vulnerability to external pressure, even if that 
imposes great pain.
    And the budget-balancing measures are not paper solutions like 
those favored by former president Mahmoud Ahmadinejad. Instead, the 
Rouhani government has been implementing real steps to improve tax 
collection and has announced plans to increase tax rates. It has also 
been getting tougher about those (mostly industrial firms) not paying 
the higher electricity and natural gas rates adopted in 2012. Another 
sign that the budget is a serious document is that rather than 
unrealistically underestimating spending, the government has left room 
for priority expenditure increases, which in this case means 
dramatically higher spending for the military and intelligence 
apparatus.
    The budget made what seemed when it was proposed in early December 
the conservative assumption that the price of oil in April 2015 to 
March 2016 would average $72 per barrel oil. For 474 million barrels of 
oil exports (1.3 million barrels a day), that would generate $34 
billion. When the price of oil declines, that hits Iran's budget hard. 
That is true irrespective of sanctions which complicate Iran's access 
to its oil export earnings. Those sanctions impact how Iran manages its 
foreign exchange, which is an entirely different manner from budget 
revenue. When the National Iranian Oil Company (NIOC) sells oil abroad, 
it earns dollars which it then hands over to the Central Bank of Iran 
(CBI) in return for Iranian rials. The CBI faces the challenge of how 
to manage those dollars, that is, how to ensure that Iranians wishing 
to import goods have access to the dollars they need. Meanwhile, NIOC 
takes the rials provided by CBI and, as provided by law, deducts 14.5 
percent for its expenses, and hands the rest to the government. The 
government, by law, deposits 20 percent of the total export earnings in 
the National Development Fund of Iran (NDFI), directs 2 percent to the 
provinces, and uses 63.5 percent for the budget. Under that formula, 
the budget's share of 1.3 million barrels a day at $72 a barrel is 
$21.7 billion.
    Faced with the oil price decline, Iran is preparing to take 
additional measures. On January 15, Economic and Finance Minister Ali 
Tayeb Nia announced that a revised budget would be based on $40 per 
barrel oil--which is well below what the U.S. Department of Energy and 
most observers predict will be the average price in the period April 
2015-March 2016. Iran has many alternatives available for adjusting to 
such a price level. Besides reducing expenditures and raising taxes, 
the two most obvious are:
    Suspending payments into the NDFI. The NDFI is partly a rainy day 
fund, which was the explicit purpose of its predecessor, the now 
effectively defunct Oil Stabilization Fund (the NDFI is also partly a 
reserve fund for the post-oil future). If the government suspended 
payments into the NDFI, then in order to produce budget revenue of 
$21.7 billion, NIOC would have to sell only $26 billion in oil, which 
means an oil price of $55.
    Depreciating the currency, which would generate more Iranian rials 
for each dollar of oil exports. The Rouhani government has kept the 
dollar/rial rate more or less constant. That is inappropriate given 
that Iran's high inflation rate drives up costs for Iranian producers. 
A constant exchange rate makes domestic products more expensive 
relative to imports and makes exporting less attractive. A better 
policy would be to let the rial depreciate in line with inflation. The 
budget assumes a very modest decline in the exchange rate to IR28,500 
per dollar compared to IR26,500 now. At that level, the $21.7 billion 
in oil export revenue for the budget produces IR618 trillion.\1\ If 
instead the exchange rate declined to reflect the inflation of the last 
2 years, the rate would be at least IR40,000 per dollar. That would 
stimulate production in Iran, both for exports and to replace imports. 
It would also generate the IR618 trillion for the budget from $15.5 
billion, which would be the equivalent of an oil price of $52 per 
barrel if the government continues payments into the NDFI or $39 if it 
suspends those payments. In the likely situation that the oil price 
were higher than $52 (or $39), then the government would have room to 
increase spending a bit to accommodate the higher prices post-
depreciation.
---------------------------------------------------------------------------
    \1\ Among the many complications in analyzing Iran's budget, the 
oil and gas revenue figure it shows is partly from sales at home. So 
not all of the projected IR711 trillion comes from oil exports.
---------------------------------------------------------------------------
    In addition, the government could draw down the balance in the 
NDFI, though it is not clear how much remains in that account. Or it 
could simply borrow more at home (it claims the current budget is 
balanced, but that is by using creative accounting). Iran's government 
has much room to borrow. Iran's government debt is low. Rouhani's 
finance minister, in his complaints about what a terrible situation he 
inherited, has claimed that the government debt was run up to 25 
percent of GDP, which is probably an exaggeration, but even if true is 
only a third of the U.S. level. Vast sums sit in the various public 
pension plans, all of which have been and could be again drawn on to 
fund government programs (usually off-budget programs). And if that is 
not enough, Tehran can rely on the banking system--almost all 
government-owned--to carry out what is in reality government spending 
loans, much as the Ahmadinejad administration did with the massive Mehr 
social housing program.
    So Iran can finance its government despite sanctions and low oil 
prices. It can also generate the foreign exchange it needs to pay for 
imports, so long as it can access that foreign exchange. The last year 
for which we have solid numbers, thanks to the International Monetary 
Fund, is 2013/14. In that year, non-oil exports of goods and services 
generated $46 billion, when imports of goods and services were $73 
billion. That left a gap of $27 billion, while Iran's foreign exchange 
reserves at the start of the year were $104 billion. With modest oil 
exports, Iran was able to increase its reserves in 2013/14. Iran's 
statistics for what is happening in 2014/15 show that non-oil exports 
are up, imports are down, and reserves are up--all of which fits well 
with what we know about how Iran's economy is performing. So Iran has 
less and less need for oil export earnings to pay for imports. And if 
Iran can export 474 million barrels of oil even at a price as low as 
$40 per barrel, that would produce $19 billion, which--if available for 
Iran to use--would probably be close to enough to fill the gap between 
imports and non-oil exports. Or looked at another way, Iran's reserves 
are enough to fill that gap for about 5 years even without any oil 
exports, if Iran has access to those reserves.
    Of course, the foreign exchange problem Iran faces is that it has 
only limited access to its oil export proceeds and to its foreign 
exchange reserves, thanks to restrictions by the United States and its 
allies on Iran's access to international financial markets. Iran's 
excellent trade balance and substantial reserves show how the 
restrictions on its access to financial markets are the most effective 
pressure point on the Iranian economy. Those restrictions have remained 
effective only because new measures are continuously being taken--both 
enforcement steps aimed at new shadow entities and extension measures 
blocking channels Iran is using to evade restrictions on the usual 
paths for financial transactions. Iran has shown great creativity at 
evading financial restrictions. Standing still means falling behind: 
constantly taking new steps is the only way to keep up with Iran's 
latest evasions.
Resistance Economy?
    Convincing Supreme Leader Ali Khamenei to pay attention to 
sanctions is not easy. He does not care much about the economic well-
being of Iranians, especially when his closest supporters are doing 
well. That is part of the reason he has supported tough adjustment 
measures, despite the pain they inflict on the lower and middle 
classes. But he firmly believes that Iran would be better advised to 
adopt what he calls a ``resistance economy.''
    Khamenei's call for a ``resistance economy'' is mostly nonsense but 
partly good advice. The nonsense is that Iran should, or can, cut 
itself off from the world economy. The pursuit of self-sufficiency has 
led into one dead-end after another. High barriers to imports has 
protected inefficient Iranian producers, raising prices for consumers 
and creating opportunities for corruption by those who can use 
political ties to get imported goods at a fraction of the price at 
which those goods are selling on the local market. Those who benefits 
from the barriers to imports form an important, politically well-
connected group which are scared at the prospect of Iran opening up to 
the world. They fear that lessened political tensions with the West 
will mean a more open economy in which they will do poorly. Because of 
the political strength of this group, it is not easy to make sanctions 
painful enough to overcome hardline objections to resolving the nuclear 
impasse.
    The good advice in Khamenei's call for a ``resistance economy'' is 
his call for Iran to rely less on oil income. Iran is richly endowed 
with many resources, not least its talented and increasingly well-
educated work force. To a considerable extent, Iran used the last 
decade's oil windfall to expand its non-oil economy, including 
substantial export-oriented activities from iron mining to high-value 
fruit agriculture, petrochemicals, and light industry. Iran now has a 
better-rounded middle-income economy in which oil is important but by 
no means all-important, with oil's role dropping by the year. That is a 
sound economic policy for many reasons: it creates jobs, it makes the 
economy less vulnerable to oil price swings, it rewards productive 
economic activity instead of influence-peddling, and it makes Tehran 
less and less vulnerable to oil-centered economic sanctions. Of course, 
the transition has only gone part-way: government revenue and export 
earnings are still oil-intensive, and oil income still fuels breath-
taking corruption. But the Islamic Republic looks more and more like 
the Shah's economy: a vibrant non-oil economy with oil providing the 
lubrication for a corrupt government bent on regional domination.
    The ``resistance economy'' strategy--both the parts that hurts 
Iran's economic development and the parts that help it--reduces the 
impact sanctions have on the thinking of Iran's leaders. That fact 
should cause us to redouble our efforts, not to give up.
Ratchet Up the Pressure
    Sanctions are more likely to have impact, both on Iran's economy 
and more importantly on its political leadership if they continuously 
get tougher. We need to convince Iran's leaders that the longer the 
nuclear impasse persists, the worse the pain will be.
    Like many of us, Iran's leaders are naturally optimistic. 
Frequently, they have thought that the United States was ``sanctioned 
out,'' that there were no new measures that Washington could apply on 
Tehran. The early Obama administration well understood how constant 
tightening of sanctions sent a clear message that the nuclear impasse 
would get costlier and costlier. Their approach was to use three 
simultaneous avenues for tightening sanctions:
    First and foremost was tougher enforcement of the measures 
nominally in place. The Obama administration continued and intensified 
the Bush-era initiatives to vigorously pursue financial institutions 
which were ignoring U.S. sanctions regulations. The resulting billions 
of dollars in fines collected from banks has had a dramatic impact on 
the attitudes in the financial community, which have decided that 
transactions with Iran are not worth the risk.
    In addition, the Obama team pushed hard for allies to step up their 
sanctions on Iran, helped by the outrageous rhetoric from the 
Ahmadinejad administration. The careful incorporation into the 2010 
U.N. Security Council Resolution 1929, building on the 2008 Resolution 
1803, of language about ``exercising vigilance'' about a range of 
Iranian activities provided a way to present the complementary measures 
by allies, especially the European Union (EU), as being within the 
framework of Security Council actions, something important for many of 
those allies. The quiet support from many other governments to U.S. 
restrictions on financial transactions strongly influenced financial 
institutions to fall in line with those restrictions rather than to 
complain about U.S. perceived extraterritorial action.
    And new sanctions were adopted that built on and extended existing 
sanctions. Repeatedly, the Administration complained about new 
sanctions measures being considered by Congress only to proclaim, 
months after similar measures were enacted into law, that such steps 
had been important contributions to Iran's leaders' reconsideration of 
their previous stance.
    We can debate the relative contribution of each of these 
approaches. In any case, the end result was to shock Iran's leaders at 
our ability to turn up the heat, as well as to feed popular discontent 
with a hardline nuclear stance perceived correctly as standing in the 
way of Iran taking advantage of the many opportunities that greater 
integration into the world economy offers it.
    Our challenge now is to find a new mix of policies that will once 
again shock the Iranian leaders. A powerful assist to this end has come 
from an unexpected direction, namely, the ample supply conditions in 
world oil markets. To a person, Iranian leaders are convinced that the 
recent oil price decline has been a deliberate Saudi-American plot to 
harm the Islamic Republic. Saudi Oil Minister Naimi's several 
interviews proclaiming that oil prices may have to go much lower and 
stay there for a prolonged period, irrespective of the impact on Iran 
among others, is read as proof of the political motivations behind the 
price decline. Khamenei's extended January 24 remarks on how the oil 
price decline was an American-sponsored plot against the Islamic 
Republic drew his usual policy recommendation: ``blows will be met with 
blows.''
    The historical analogy which resonates with the current generation 
of Iranian leaders is the 1986 price collapse (when the Dubai spot 
crude price fell from $27.53 per barrel in 1985 to $13.10 in 1986 and 
stayed at about that level for years). The resulting loss of revenue 
was a central element in Iran's decision that it could not afford to 
pursue the war with Iraq, which had to be abandoned with little show 
for 150,000 Iranian dead. Iranian leaders have always thought that the 
Saudi decision to step up oil production from 3.6 million barrels per 
day in 1985 to 5.2 million in 1986, which was the main reason for the 
price collapse, was aimed at the Islamic Republic, as part of the 
multifaceted Saudi effort to stave off Iran's battlefield successes 
against Iraq.
    It is no secret that the Saudi leadership wants to see Iran pressed 
harder, both to resolve the nuclear impasse and to pull back from 
Iran's active role supporting Shia fighters in Syria, Iraq, and Yemen 
(and the Saudis would add, Bahrain). That fact and their reading of the 
1980s history only contributes to the Iranian leaders' conviction that 
the Saudis are doing what they would do were they in the Saudis' shoes, 
namely, driving oil prices lower to press Iran. We may doubt that this 
is an accurate reading, but both in public and in discussion with 
Tehran, the U.S. Government should hint that low oil prices are part of 
Washington's plan. Since people in the Middle East are often ready to 
see the United States as all-powerful, we should find ways to make that 
work to our advantage. If we can get credit for the sun rising in the 
east, take it.
    Just as the years of high oil income were a good time to shock Iran 
by showing the high price it paid for not being able to export much of 
its oil, now is a good time to shock Iran by showing that since the 
world economy does not need their oil, we are prepared to take tougher 
measures against Iran unless the nuclear impasse is resolved. The 
impact of the last rounds of sanctions has faded; a new round is needed 
to show that the United States is not ``sanctioned out.'' My intent 
today is not to address what should be the character of that new round 
of sanctions; my role instead is to point out why it is needed.
    Patrick Clawson is Director of Research at The Washington Institute 
for Near East Studies. He was formerly a senior economist at the 
International Monetary Fund and the World Bank. He is the author or 
editor of 30 monographs and books about Iran. He was the recipient of 
the Middle East Studies Association's Pourshariati Award for best book 
about Iran in 2014.


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  RESPONSE TO WRITTEN QUESTIONS OF SENATOR SHELBY FROM ANTONY 
                            BLINKEN

Q.1.a. In your testimony you declared that any deal with Iran 
must address not only centrifuge research and development and 
the possible military dimensions issues but also Iran's 
possession of ``missiles capable of mating a nuclear weapon to 
a missile.'' You also acknowledged that no agreement with Iran 
can be acceptable unless it constrains Iranian missile 
development and centrifuge research and development (R&D), and 
unless it resolves all questions about weaponization work. 
These three areas of concern, however, are unaddressed by the 
Joint Plan of Action (JPOA) and Iran apparently continues to 
work in all three areas, according to U.S. Government 
statements, including the imposition of penalties against 
Iranian entities in 2014 for weaponization-related procurement.
    How much progress has Iran made on these three fronts 
during the course of the JPOA so far?

A.1.a. The Joint Plan of Action (JPOA) has proven successful in 
halting the advance of Iran's nuclear program and rolling it 
back in key respects as we seek to achieve a long-term 
comprehensive solution which prevents Iran from acquiring a 
nuclear weapon and ensures that its nuclear program is 
exclusively peaceful. Iran has provided the International 
Atomic Energy Agency (IAEA) with enhanced transparency and 
intrusive monitoring of its nuclear program, and the IAEA has 
verified Iran's fulfillment of its nuclear-related commitments 
under the JPOA. While the JPOA begins to address some of our 
most urgent concerns regarding Iran's nuclear program, there 
are many issues Iran must address as part of a long-term 
comprehensive solution. We have been clear that a comprehensive 
solution must cutoff all of Iran's pathways to a nuclear weapon 
and such a deal will involve a variety of constraints and 
extensive monitoring measures to ensure the exclusively 
peaceful nature of Iran's nuclear program.

Q.1.b. What additional advances can Iran make if the JPOA is 
extended again on its present terms?

A.1.b. The JPOA has created time and space for the negotiation 
of a comprehensive solution that would prevent Iran from 
acquiring a nuclear weapon and ensures that its nuclear program 
is exclusively peaceful. Still, we won't go on negotiating 
forever, and it would be very difficult to extend these 
negotiations past the end of June, if we do not see the outline 
of a political framework agreement by the end of March. As the 
President has said, a further extension would not be useful if 
Iran has not agreed to the basic formulation and the bottom 
line that the world requires to have confidence that Iran is 
not pursuing a nuclear weapon.

Q.2.a.-b. You testified that Iran has ``tried outside of the 
agreement . . . every single day to do all sorts of things to 
advance their program.'' You also said that the United States 
works diligently at ``cracking down on their [Iranian] efforts 
to procure for their weapons of mass destruction program.'' As 
recently as last August, Departments of State and Treasury 
designated Iranian entities for WMD-related procurement.
    How can you reconcile the Administration's statement that 
Iran's nuclear weapons work stopped in 2003 with Iran's recent 
efforts to purchase equipment for nuclear weapons?
    How can you reconcile the 2007 U.S. National Intelligence 
Estimate on Iran declaration that in 2003 ``Tehran halted its 
nuclear weapons program'' with Iran's recent efforts to 
purchase equipment for nuclear weapons?

A.2.a.-b. Our diplomatic efforts thus far have proven 
successful in temporarily halting the advance of Iran's nuclear 
program and rolling it back in key respects as part of the 
Joint Plan of Action (JPOA). Iran's illicit procurement 
activities have not allowed it to circumvent the limits in 
place on its nuclear program under the JPOA. Nonetheless, we 
remain concerned about Iran's ongoing illicit procurement 
activities and continue to work with partners to stop shipments 
destined for Iran's nuclear program and ballistic missile 
program. Furthermore, we continue to impose sanctions against 
entities engaged in such activities and to press states to 
robustly enforce relevant United Nations Security Council 
(UNSC) sanctions.
    We know there are many more steps beyond those in the JPOA 
Iran needs to take to resolve the international community's 
concerns regarding its nuclear program, which is why we are 
working toward a comprehensive solution which will ensure that 
Iran cannot acquire a nuclear weapon and that Iran's nuclear 
program is exclusively peaceful. We can discuss Iran's 
procurement efforts in more detail in a classified setting, but 
Iran's procurement efforts do not contradict either the 
Administration's statements on the Iranian nuclear program nor 
the 2007 National Intelligence Estimate. We would refer you to 
the Office of the Director of National Intelligence for an 
assessment of Iran's nuclear capabilities and intentions.

Q.2.c. How can you assure the U.S. Congress that the 
Administration can negotiate a solid deal with Iran if Iran 
continues to prepare itself for nuclear weaponization even 
during the negotiations?

A.2.c. We have long said that any deal will not be based on 
trust. This is why we are seeking a durable and verifiable 
deal. We have also been clear that any deal must include 
initial suspension of sanctions--vice termination--so that we 
can quickly snap them back into place should Iran violate its 
commitments. A comprehensive deal would commit Iran to enhanced 
transparency and monitoring measures, including ratifying the 
IAEA Additional Protocol (AP), to verify the exclusively 
peaceful nature of its nuclear program and to quickly detect 
any attempts by Iran to break out. Implementing the AP would 
provide the IAEA with expanded access to sites and facilities 
in Iran and impose additional reporting requirements on Iran's 
nuclear program.
    How exactly the transparency and monitoring framework will 
look beyond the AP is still under negotiation. We continue to 
place a high priority on rigorous monitoring measures in order 
to detect any violation of a comprehensive deal promptly and 
retain an ability to snap sanctions back in place should 
violations occur. In addition, we are pressing Iran to fully 
cooperate with the IAEA to address all outstanding issues, 
particularly those that give rise to concerns regarding the 
possible military dimensions (PMD) of Iran's nuclear program. 
This includes providing access to facilities, individuals, and 
documents requested by the IAEA. We believe a comprehensive 
deal should facilitate the IAEA's investigation of PMD and 
ensure there are no ongoing weaponization activities. This is 
one of the issues we are working to address in the 
negotiations.

Q.3. The International Atomic Energy Agency (IAEA) admitted 
years ago that in order to have reasonable confidence about the 
absence of undeclared nuclear activities in Iran, the IAEA 
requires legal authorities that go beyond those of the IAEA 
Additional Protocol. Would you agree with the IAEA's conclusion 
that the Additional Protocol is inadequate, and if so, how?

A.3. International Atomic Energy Agency (IAEA) officials have 
stated repeatedly since the approval of the Model Additional 
Protocol (AP) in 1997 that APs are essential to ensure that the 
IAEA can detect undeclared nuclear activities in a state. That 
is why, without implementation of the AP, the IAEA does not 
provide a conclusion about the absence of such undeclared 
activities. The United States believes that the combination of 
an IAEA comprehensive safeguards agreement (CSA) and an AP has 
become the international standard for safeguards and 
verification under the Nuclear Non-Proliferation Treaty.
    A comprehensive deal would commit Iran to enhanced 
transparency and monitoring measures, including ratifying the 
AP, to verify the exclusively peaceful nature of its nuclear 
program and to quickly detect any attempts by Iran to break 
out. Implementing the AP would provide the IAEA with expanded 
access to sites and facilities in Iran and impose additional 
reporting requirements on Iran's nuclear program. However, 
given Iran's past behavior, we are seeking enhanced 
transparency and monitoring measures beyond the AP.
    How exactly the transparency and monitoring framework will 
look beyond the AP is still under negotiation. We continue to 
place a high priority on rigorous monitoring measures in order 
to detect any violation of a comprehensive deal promptly and 
retain an ability to snap sanctions back in place should 
violations occur. Our team continues to work toward a package 
that will best achieve our goals of preventing Iran from 
acquiring a nuclear weapon and ensuring that Iran's nuclear 
program is used for exclusively peaceful purposes.
                                ------                                


  RESPONSE TO WRITTEN QUESTIONS OF SENATOR BROWN FROM ANTONY 
                            BLINKEN

Q.1. Breakout time is the amount of time Iran would need to 
create enough weapons-grade uranium for a single nuclear 
weapon, if it failed to observe an agreement. While many 
overlook the fact that considerable additional time would be 
needed to actually fabricate a nuclear weapon, break-out 
capacity is widely accepted as the ``long pole in the tent'' of 
making a nuclear weapon. By focusing on breakout time the 
agreement would give the international community a year or more 
to react.
    Are you confident that any agreement to which the United 
States is a party will provide us and our allies sufficient 
time to respond, including militarily if necessary and a last 
resort, Iran makes an overt or covert breakout move toward a 
weapon?

A.1. A comprehensive deal would commit Iran to enhanced 
transparency and monitoring measures to verify the exclusively 
peaceful nature of its nuclear program and to quickly detect 
any attempts by Iran to break out. We continue to place a high 
priority on rigorous monitoring measures in order to detect 
violations promptly and retain an ability to snap sanctions 
back in place should violations occur.
    We are confident that the United States would have 
sufficient time to respond to an Iranian breakout effort, 
should Iran take a decision to do so. Should Iran take such a 
decision, the President has been clear that the United States 
will do what it must to prevent Iran from acquiring a nuclear 
weapon.

Q.2. The President noted recently that we have frozen Iran's 
nuclear program, rolled back stockpiles of material already 
accumulated, and been provided unprecedented insight into their 
activities. And he said that was not just our assessment, but 
the assessment of intelligence agencies worldwide, including in 
Israel.
    I know we'll hear about verification in greater detail in 
upcoming classified briefings, but can you describe generally 
how the United States is ensuring that Iran is complying with 
the terms of the Joint Plan of Action, and describe the 
different verification and monitoring roles, both now and under 
a comprehensive deal, played by the State Department, the U.S. 
intelligence community, the IAEA, and others?

A.2. As a result of the Joint Plan of Action (JPOA), Iran's 
nuclear program is more constrained and transparent than it has 
been in years. In particular, a significant benefit of the JPOA 
is that the International Atomic Energy Agency (IAEA) has 
obtained greater access into and information on Iran's nuclear 
program. The IAEA is playing the essential role in verifying 
Iran's fulfillment of its nuclear-related commitments under the 
JPOA, consistent with its ongoing monitoring and verification 
role in Iran pursuant to the Nuclear Non-Proliferation Treaty. 
The IAEA has confirmed that Iran is fulfilling its nuclear-
related commitments under the JPOA. We have complete confidence 
in the ability of the IAEA and its cadre of professional 
inspectors to continue in its enhanced verification role under 
the JPOA.
    A comprehensive deal would commit Iran to enhanced 
transparency and monitoring measures, including ratifying the 
IAEA Additional Protocol (AP), to verify the exclusively 
peaceful nature of its nuclear program and to quickly detect 
any attempts by Iran to break out. Implementing the AP would 
provide the IAEA with expanded access to sites and facilities 
in Iran and impose additional reporting requirements on Iran's 
nuclear program. How exactly the transparency and monitoring 
framework will look beyond the AP is still under negotiation. 
We continue to place a high priority on rigorous monitoring 
measures in order to detect any violation of a comprehensive 
deal promptly and retain an ability to snap sanctions back in 
place should violations occur.
    We would refer you to the Office of the Director of 
National Intelligence for a more detailed assessment of our 
capabilities to detect undeclared nuclear facilities in Iran 
and the Intelligence Community's prospective role in verifying 
a comprehensive deal.

Q.3. I know this debate is ultimately less about the details of 
this bill than about whether to pass a bill at all while 
negotiations are ongoing. Even so, the legislation we'll be 
considering this week requires that any new sanctions relief 
provided for in a final agreement could not be given by the 
United States for a period of at least 30 consecutive 
legislative days--which could, if a deal is finalized in late 
June, stretch for over 2 months, beyond mid-September. What do 
you see as the major risks of that approach, which would likely 
violate any long-term agreement, and how do you think our 
allies and Iran would react if such a temporary prohibition 
against new sanctions relief were in place?

A.3. Our ability to offer timely sanctions relief is critical 
to getting Iran to take the nuclear steps necessary to assure 
the international community that its nuclear program is 
exclusively peaceful (including through implementation of 
stringent transparency and verification measures). Legislation 
that would require an affirmative vote to approve a 
comprehensive deal would likely have a profoundly negative 
impact on the ongoing negotiations--emboldening Iranian hard-
liners, inviting a counter-productive response from the Iranian 
majiles. Such legislation would differentiate the U.S. position 
from our allies in the negotiations, and once again call into 
question our ability to negotiate this deal.
    Moreover, if congressional action is perceived as 
preventing us from implementing a deal, it will create 
divisions within the international community, putting at risk 
the very international cooperation that has been essential to 
our ability to pressure Iran. In addition, it would potentially 
make it difficult to secure international cooperation for 
additional sanctions in the future if Iran failed to make the 
necessary concessions in the negotiations or failed to comply 
with a comprehensive deal.
                                ------                                


   RESPONSE TO WRITTEN QUESTIONS OF SENATOR KIRK FROM ANTONY 
                            BLINKEN

Q.1. Under Secretary Cohen wrote in the Wall Street Journal in 
December 10, 2013, that ``the relief package in this interim 
deal is economically insignificant to Iran,'' adding: ``Iran 
will be even deeper in the hole 6 months from now, when the 
deal expires, than it is today.''
    Twelve months later, Iran is far from being ``deeper in the 
hole.'' On December 24, 2014, Iranian President Hassan Rouhani 
publicly announced that Iran's economy is benefiting greatly 
from the interim deal's sanctions relief package. ``The 
country's economic growth was minus 6.8 percent 2 years ago, 
but the statistics issued by the Central Bank last night showed 
a 4-percent positive growth during the 6 months of the current 
[Iranian] year,'' Rouhani said in a speech, adding: ``We have 
now finally managed to reduce the 40 percent inflation down to 
17 percent.''
    Even if Rouhani is exaggerating about Iran's 4-percent 
growth rate in the last 6 months, the International Monetary 
Fund is projecting that Iran's economy will grow by 2.2 percent 
in 2015.
    Do you still claim today that the interim deal's sanctions 
relief package is ``economically insignificant to Iran''? In 
the United States, we'd call Iran's 2.2 percent growth rate a 
``recovery'' and Iran's alleged 4 percent growth in the last 6 
months an ``economic boom.''

A.1. Contrary to some reports, Iran has not received 
significant economic benefit from the Joint Plan of Action 
(JPOA).
    The JPOA is structured so that the overwhelming majority of 
sanctions--including the key oil, banking, and financial 
sanctions architecture--remain firmly in place. As a result of 
our sanctions, exacerbated by the recent drop in oil prices, 
Iran's economy remains under intense and sustained pressure. 
Throughout the JPOA period, we have sanctioned almost 100 
entities and levied $350 million in civil penalties against 
companies for doing business with Iran in violation of our 
sanctions.
    The total value to Iran of the JPOA--which we estimate 
could be up to approximately $14 billion to $15 billion through 
June 2015--pales in comparison to the amount of revenue Iran 
has lost from the sanctions currently in place and years of GDP 
contraction.
    In 2014, our oil sanctions alone deprived Iran of over $40 
billion in oil revenue--at least four times the value of the 
JPOA during that period. The vast majority of Iran's 
approximately $100 billion in foreign exchange holdings still 
remain inaccessible or restricted by sanctions.
    While the Iranian economy grew at a rate of around 2 
percent between March and September 2014, this growth occurred 
after 2 years of painful GDP contraction. Iran's economy is 25 
percent smaller today than what it would have been had it 
remained on its pre-2011 growth trajectory, and low investment 
and investor wariness will limit a potential recovery.

Q.2. Is it the Administration's position that Iran's recent 
economic growth, driven in no small part by the interim deal's 
sanctions relief package, has actually strengthened, not 
weakened, our hand in negotiations--that it's actually made 
Iran's ultimate decider, Supreme Leader Ali Khamenei, more 
likely, not less, to make significant concessions to the West 
on eliminating Iran's uranium enrichment program, completely 
dismantling the Arak heavy water reactor that former 
Administration official Bob Einhorn dubbed ``plutonium-bomb 
factory,'' and on coming completely clean about the Iranian 
nuclear program's military dimensions?

A.2. The efforts of Congress and the Administration to impose 
stringent and comprehensive sanctions have imposed significant 
economic pain on Iran and have been critical in bringing Iran 
to the negotiating table.
    Our ability to provide relief from these economic sanctions 
is critical to providing Iran with an incentive to take the 
nuclear steps necessary to assure the international community 
that its nuclear program is exclusively peaceful.
    That said, we do not assess Iran's economic improvements 
during the last year were a result of the Joint Plan of Action. 
Despite nascent signs of improvement, brought about largely by 
improved economic management, Iran's economy will remain far 
below its potential in the coming year.
    The Joint Plan of Action is structured so that the 
overwhelming majority of sanctions--including the key oil, 
banking, and financial sanctions architecture--remain firmly in 
place. As a result of our sanctions, exacerbated by the recent 
drop in oil prices, Iran's economy remains under intense and 
sustained pressure.
    The total value to Iran of the JPOA--which we estimate 
could be up to approximately $14 billion to $15 billion through 
June 2015--cannot make up for Iran's systemic economic 
weaknesses and imbalances, which include lack of economic 
diversification, a suppressed manufacturing base, pervasive 
unemployment and underemployment, and approximately 16 percent 
inflation. The Administration is committed to ensuring that 
Iran remains under powerful economic pressure as we continue 
negotiations.

Q.3. When Secretary of State John Kerry announced a 7-month 
extension for the nuclear talks with Iran on November 24, 2014, 
he also announced a March 24, 2015, deadline for a ``political 
agreement'' with Iran.
    Will the ``political agreement'' with Iran due on March 24, 
2015, be a written agreement? I request that any answer you 
give begin with a ``yes'' or a ``no.''
A.3. The Administration is committed to sharing the details and 
technical documents related to a long-term comprehensive deal 
with Congress. If we successfully negotiate a framework by the 
end of March, and a final deal by the end of June, we expect a 
robust debate in Congress. We will aggressively seek public and 
congressional support for a deal if we reach one because we 
believe a good deal is far better than the alternatives 
available to the United States. Because we do not have a deal 
yet, it would be premature to speculate what form it would 
take.
                                ------                                


  RESPONSE TO WRITTEN QUESTIONS OF SENATOR TESTER FROM ANTONY 
                            BLINKEN

Q.1. Could you lay out the broader national security 
consequences of Congress passing new sanctions--even with a so-
called ``trigger''--beyond the P5+ 1 negotiations with Iran? 
What regional consequences would such legislation have on U.S. 
efforts to combat the Islamic State of Iraq and the Levant 
(ISIL) in the region, should it pass with a veto-proof 
majority? What further implications for the United States and 
our coalition partners in the region would the passage of such 
sanctions legislation have?

A.1. Any new sanctions--including trigger sanctions--would be 
inconsistent with our commitments under the Joint Plan of 
Action (JPOA). New sanctions could undermine our sanctions 
coalition, create tensions within the P5+ 1, and provoke Iran 
into walking away from the negotiating table while blaming the 
failure on us. Moreover, our ability to follow through on our 
commitments will have longstanding implications well beyond P5+ 
1 negotiations with Iran. If any Administration--Democrat or 
Republican--does not have the ability to conclude agreements 
that advance our national security interests, this will 
undermine our ability to implement all aspects of our foreign 
policy, including undermining our credibility with our partners 
in the region who are working with us to combat ISIL.

Q.2. What gives the Administration confidence that a political 
agreement between the P5+ 1 and Iran will be reached by the 
March 24 deadline? Are our P5+ 1 coalition partners equally 
confident that a political agreement can be reached by this 
deadline? What further obstacles remain in place?

A.2. We are seeking to outline the major elements of a deal by 
the end of March. We will use the remaining time until the end 
of the current extension period to complete the technical 
details. We have made incremental but real progress through 
intense diplomatic and technical work on the key issues that 
form the basis for a comprehensive deal. These negotiations 
have been serious and substantive, and we are working hard to 
find ways to resolve our concerns while maintaining the 
imperative that all pathways to a nuclear weapon must be 
cutoff. There may be multiple ways to accomplish that 
objective, but this principle is non-negotiable.
    If by the end of March we have not decided on the major 
elements and do not see a clear path forward, then we can 
revisit how to proceed. We cannot continue this process 
forever, and we will have all the same options we have today at 
the end of this process. We will not take a bad deal and if we 
conclude that Iran is unable to unwilling to take the necessary 
steps to resolve our concerns, we will walk away from these 
negotiations.

Q.3. In your estimation, what would a sturdy yet workable 
inspection and verification regime look like from the U.S. 
negotiator perspective? Do you envision U.S. inspectors taking 
part in this regime? Are you confident that a final agreement 
will permit inspectors unfettered and unrestricted access to 
sites in Fordow, Natanz, Arak, Isfahan, Bushehr, and Parchin? 
Do our coalition partners share this view?

A.3. A comprehensive deal must ensure that Iran is subject to 
significantly enhanced transparency and monitoring measures to 
verify the exclusively peaceful nature of its nuclear program 
and to quickly detect any attempts by Iran to break out. How 
exactly that framework will look is still under negotiation and 
our team continues to work toward a package that will best 
achieve our goals of preventing Iran from acquiring a nuclear 
weapon and ensuring that Iran's nuclear program is used for 
exclusively peaceful purposes. Regardless, the Administration 
is insisting on verification measures to help ensure that 
violations will be detected promptly. We continue to place a 
high priority on strict monitoring and verification measures in 
order to detect violations and retain an ability to snap 
sanctions back in place should violations occur.

              Additional Material Supplied for the Record
              
              
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