[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]



 
STATE SPONSORS OF TERRORISM: AN EXAMINATION OF IRAN'S GLOBAL TERRORISM 
                                NETWORK

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

                                HEARING

                               before the

                            SUBCOMMITTEE ON
                            COUNTERTERRORISM
                            AND INTELLIGENCE

                                 of the

                     COMMITTEE ON HOMELAND SECURITY
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 17, 2018

                               __________

                           Serial No. 115-59

                               __________

       Printed for the use of the Committee on Homeland Security
       
                                     


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                     

        Available via the World Wide Web: http://www.govinfo.gov

                               __________
                               
                     U.S. GOVERNMENT PUBLISHING OFFICE
                   
 30-897 PDF                 WASHINGTON : 2018                                     
                               
                               
                               
                               

                     COMMITTEE ON HOMELAND SECURITY

                   Michael T. McCaul, Texas, Chairman
Lamar Smith, Texas                   Bennie G. Thompson, Mississippi
Peter T. King, New York              Sheila Jackson Lee, Texas
Mike Rogers, Alabama                 James R. Langevin, Rhode Island
Lou Barletta, Pennsylvania           Cedric L. Richmond, Louisiana
Scott Perry, Pennsylvania            William R. Keating, Massachusetts
John Katko, New York                 Donald M. Payne, Jr., New Jersey
Will Hurd, Texas                     Filemon Vela, Texas
Martha McSally, Arizona              Bonnie Watson Coleman, New Jersey
John Ratcliffe, Texas                Kathleen M. Rice, New York
Daniel M. Donovan, Jr., New York     J. Luis Correa, California
Mike Gallagher, Wisconsin            Val Butler Demings, Florida
Clay Higgins, Louisiana              Nanette Diaz Barragan, California
John H. Rutherford, Florida
Thomas A. Garrett, Jr., Virginia
Brian K. Fitzpatrick, Pennsylvania
Ron Estes, Kansas
Don Bacon, Nebraska
                   Brendan P. Shields, Staff Director
                   Steven S. Giaier, General Counsel
                    Michael S. Twinchek, Chief Clerk
                  Hope Goins, Minority Staff Director
                                 ------                                

           SUBCOMMITTEE ON COUNTERTERRORISM AND INTELLIGENCE

                   Peter T. King, New York, Chairman
Lou Barletta, Pennsylvania           Kathleen M. Rice, New York
Scott Perry, Pennsylvania            Sheila Jackson Lee, Texas
Will Hurd, Texas                     William R. Keating, Massachusetts
Mike Gallagher, Wisconsin            Bennie G. Thompson, Mississippi 
Michael T. McCaul, Texas (ex             (ex officio)
    officio)
               Mandy Bowers, Subcommittee Staff Director
            Nicole Tisdale, Minority Staff Director/Counsel
            
            
                            C O N T E N T S

                              ----------                              
                                                                   Page

                               Statements

The Honorable Peter T. King, a Representative in Congress From 
  the State of New York, and Chairman, Subcommittee on 
  Counterterrorism and Intelligence:
  Oral Statement.................................................     1
  Prepared Statement.............................................     2
The Honorable Kathleen M. Rice, a Representative in Congress From 
  the State of New York, and Ranking Member, Subcommittee on 
  Counterterrorism and Intelligence:
  Oral Statement.................................................     3
  Prepared Statement.............................................     4
The Honorable Bennie G. Thompson, a Representative in Congress 
  From the State of Mississippi, and Ranking Member, Committee on 
  Homeland Security:
  Prepared Statement.............................................     5
The Honorable Lou Barletta, a Representative in Congress From the 
  State of Pennsylvania:
  Prepared Statement.............................................     5

                               Witnesses

Mr. Emanuele Ottolenghi, Senior Fellow, Foundation for Defense of 
  Democracies:
  Oral Statement.................................................     6
  Prepared Statement.............................................     8
Mr. Michael Pregent, Adjunct Fellow, The Hudson Institute:
  Oral Statement.................................................    35
  Prepared Statement.............................................    37
Mr. Nader Uskowi, Visiting Fellow, The Washington Institute for 
  Near East Policy:
  Oral Statement.................................................    40
  Prepared Statement.............................................    42
Mr. Brian Katulis, Senior Fellow, Center for American Progress:
  Oral Statement.................................................    49
  Prepared Statement.............................................    51

                             For the Record

Question For the Record From Honorable Barletta for Mr. Michael 
  Pregent........................................................    69


STATE SPONSORS OF TERRORISM: AN EXAMINATION OF IRAN'S GLOBAL TERRORISM 
                                NETWORK

                              ----------                              


                        Tuesday, April 17, 2018

             U.S. House of Representatives,
                    Committee on Homeland Security,
         Subcommittee on Counterterrorism and Intelligence,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:04 a.m., in 
room 1334, Longworth House Office Building, Hon. Peter T. King 
[Chairman of the Subcommittee] presiding.
    Present: Representatives King, Perry, Barletta, Hurd; Rice, 
and Keating.
    Mr. King. Good morning. The Committee on Homeland Security 
Subcommittee on Counterterrorism and Intelligence will come to 
order. The subcommittee is meeting today to hear testimony from 
an esteemed panel of experts on Iran's terrorism activities and 
proxy militias.
    I would like to welcome the Members of the subcommittee and 
express my appreciation to the witnesses for coming here today.
    Before I recognize myself for an opening statement, Mr. 
Barletta has a unanimous consent request.
    Mr. Barletta. Thank you. I ask unanimous consent to have my 
questions read into the record.
    Mr. King. Without objection, so ordered.
    Mr. Barletta. Thank you.
    Mr. King. The Iranian revolution, which started in 1979, 
has been disastrous for the region, for the world, and 
particularly a significant threat to the United States. Since 
1984 the government of Iran has been designated by the United 
States as a state sponsor of terrorism.
    Iranian external operations, including support for proxy 
terrorists and Shia militia groups have played a central role 
in supporting this designation. These groups have destabilized 
other countries, directly threatened Israel, undermined 
democracy, and escalated tensions through campaigns of terror.
    These militia groups pose a direct threat to the homeland 
and U.S. interests abroad. These threats include Shia militias 
in Iraq and Syria that complicate U.S. efforts in the battle 
space, as they have in the past had the potential of targeting 
U.S. troops; Iranian-backed Houthi rebels in Yemen that have, 
among other actions, fired missiles at Saudi Arabia and 
attacked U.S. vessels in the region; support by Iran for the 
Taliban, as well as Iran training, equipping, and incentivizing 
Afghan refugees to fight in Syria; and, of course, Iranian 
support for Hezbollah, which is active in the Middle East, 
Latin America, and here in the United States, where Hezbollah 
operatives have been arrested for activities conducted in our 
own country.
    Last summer two individuals were arrested, one in Michigan 
and one in New York City, for plotting attacks in New York, 
targeting U.S. military and law enforcement and, in Panama, 
targeting U.S. and Israeli embassies. Both individuals received 
significant weapons training from Hezbollah. We do not know 
when they were planning to carry out their attacks, but it is 
clear that Hezbollah has the will and the capability.
    We cannot take for granted the other Iran-backed Shia 
militia groups might have or develop the same intent and 
capabilities.
    This hearing presents an opportunity both to strengthen the 
homeland security of the United States and to protect our 
interests abroad, by examining the threats presented by the 
government of Iran's involvement in training, equipping, 
controlling, and deploying proxy terrorists and Shia militias 
outside of Iran's borders. We can begin to realize the steps 
the United States must take to counteract this aggression.
    It is also critical to conduct this examination in light of 
the Iranian nuclear deal, the joint comprehensive plan of 
action which resulted in fewer sanctions, access to world 
markets, and billions in funding for Iran. This increased 
flexibility will afford Iran the capital and resources to 
further support proxy terrorists and Shia militias, world-wide.
    While not the focus of this hearing, it is important to 
recognize the Department of Defense, in coordination with 
France and United Kingdom, carry out--carried out attacks on 
Friday against Syria in response to a chemical weapons attack 
that targeted innocent civilians, including women and children. 
Iran continues to prop up Bashar Al-Assad, and is complicit in 
this attack and the on-going atrocities perpetrated by this 
evil dictator.
    I look forward to hearing from our witnesses today and, 
drawing upon their expertise, to get a more complete 
understanding of Iran's external operations and capabilities. 
Through this understanding we can work to ensure that the 
failings of the Iranian revolution and the authoritarian 
theocracy installed are exposed and create greater awareness of 
the threat posed by Iranian Shia militias.
    [The statement of Chairman King follows:]
                  Statement of Chairman Peter T. King
                             April 17, 2018
    In 1979 a revolution swept through Iran. Unlike our own revolution 
that was motivated by liberty and independence, and the desire to 
spread these democratic values, the anti-Western ideology that drove 
Iran's revolt served to aggravate cultural and religious divides in the 
Middle East and world-wide. Instead of democratic governance, this 
struggle resulted in the installation of a retrograde authoritarian 
theocracy.
    Since 1984, the government of Iran has been designated by the 
United States as a state sponsor of terrorism. Iranian external 
operations, including support for proxy terrorists and Shia militia 
groups, have played a central role in supporting this designation. 
These groups have destabilized other countries, directly threatened 
Israel, undermined democracy, and escalated tensions through campaigns 
of terror.
    These militia groups pose a direct threat to the homeland and U.S. 
interests abroad. Threats include:
   Shia militias in Iraq and Syria that complicate United 
        States' efforts in the battlespace and, as they have in the 
        past, have the potential of targeting U.S. troops;
   Iranian-backed Houthi rebels in Yemen that have, among other 
        transgressions, fired missiles at Saudi Arabia and attacked 
        U.S. vessels in the region;
   support by Iran for the Taliban, as well as Iran training, 
        equipping, and incentivizing Afghan refugees to fight in Syria;
   and of course Iranian support for Hezbollah, which is active 
        in the Middle East, Latin America, and here in the United 
        States where Hezbollah operatives have been arrested for 
        activities conducted in our own country.
    Last summer, two individuals were arrested--one in Michigan and one 
in New York City--for plotting attacks in New York targeting U.S. 
military and law enforcement and in Panama targeting U.S. and Israeli 
Embassies. Both individuals received significant weapons training from 
Hezbollah. We do not know when they were planning to carry out their 
attacks but it is clear that Hezbollah has the will and capability. We 
cannot take for granted that other Iran-backed Shia militia groups 
might have or develop the same intent and capabilities.
    This hearing presents an opportunity to strengthen both the 
homeland security of the United States and to protect our interests 
abroad.
    By examining the threats presented by the government of Iran's 
involvement in training, equipping, controlling, and deploying proxy 
terrorists and Shia militias outside of Iran's borders, we can begin to 
realize the steps the United States must take to counteract this 
aggression. It is also critical to conduct this examination in light of 
the Iranian Nuclear Deal (Joint Comprehensive Plan of Action), which 
resulted in fewer sanctions, access to world markets, and billions in 
funding. This increased flexibility will afford Iran with the capital 
and resources to further support proxy terrorists and Shia militias 
world-wide.
    While not the focus of this hearing, it is important to recognize 
that the Department of Defense, in coordination with France and the 
United Kingdom, carried out airstrikes on Friday against Syria in 
response to chemical weapons attacks that targeted innocent civilians, 
including women and children. Iran continues to prop up Bashar al-Assad 
and is complicit in this attack and the on-going atrocities perpetrated 
by this evil dictator.
    I look forward to hearing from our witnesses and drawing upon their 
expertise to get a more complete understanding of Iran's external 
operations and capabilities. Through this understanding we can work to 
ensure that the failings of the Iranian revolution and the 
authoritarian theocracy it installed are exposed and create greater 
awareness of the threat posed by Iranian Shia militias.

    Mr. King. I now recognize Ranking Member Kathleen Rice for 
her opening statement.
    Miss Rice. Thank you, Mr. Chairman. Thank you for holding 
this important hearing today.
    Iran poses many threats to the security of the United 
States and to our interests, especially through funding and 
support for terrorist groups like Hezbollah and Hammas, groups 
that routinely attack and antagonize our allies in Israel.
    In Syria Iran supports a brutal dictator who has carried 
out unspeakable massacres against his own people. Together with 
Russia, Iran is partially responsible for the death of more 
than 400,000 Syrians, and the displacement of millions more.
    I look forward to hearing what our expert witnesses think 
about the Trump administration's approach to Iran, and 
particularly whether you are concerned that the administration 
is ceding too much influence in the Middle East to Iran.
    I have long been skeptical about Iran. I did not support 
the nuclear agreement for several different reasons: I didn't 
think they would follow the rules, and I thought they would lie 
and try to cheat and continue to sponsor terrorism and spread 
violence in the region.
    That said, I signed a letter to President Trump in October 
arguing that we cannot and should not withdraw from the 
agreement without ironclad evidence of Iranian violations, 
because doing so would actually embolden Iran, and leave the 
United States more and more isolated on the international 
stage.
    While I am still skeptical of the nuclear deal, my focus 
has been on fully enforcing it. To be clear, I have not seen 
evidence that the nuclear agreement has tied our hands in 
addressing Iran's support for terrorism.
    We can and should be doing more to hold Iran accountable 
for their support of terrorism, their ballistic missile 
program, their horrific violations of human rights, and all 
their efforts to spread violence and instability in the region. 
The nuclear deal doesn't prevent us from targeting those 
activities, and we should be doing more--we should be doing so 
more aggressively.
    Again, I want to thank the Chairman for holding this 
hearing, and I thank all of our witnesses--and thank all of our 
witnesses for coming to offer your expertise. I believe that 
effectively confronting and countering the threat from Iran is 
one of the most significant National security challenges before 
us today. So I hope this will be an honest, comprehensive, and 
on-going conversation.
    [The statement of Miss Rice follows:]
              Statement of Ranking Member Kathleen M. Rice
                             April 17, 2018
    Iran poses many threats to the security of the United States and to 
our interests, especially through funding and support for terrorist 
groups like Hezbollah and Hamas--groups that routinely attack and 
antagonize our allies in Israel.
    In Syria, Iran supports a brutal dictator who has carried out 
unspeakable massacres against his own people. Together with Russia, 
Iran is partially responsible for the death of more than 400,000 
Syrians--and the displacement of millions more.
    I look forward to hearing what our expert witnesses think about the 
Trump administration's approach to Iran--and particularly, whether you 
are concerned that the administration is ceding too much influence in 
the Middle East to Iran.
    I have long been skeptical about Iran. I did not support the 
nuclear agreement with Iran, for several different reasons. I didn't 
think they would follow the rules, and I thought they would lie and try 
to cheat and continue to sponsor terrorism and spread violence in the 
region.
    That said, I signed a letter to President Trump in October arguing 
that we cannot and should not withdraw from the agreement without 
ironclad evidence of Iranian violations--because doing so would 
actually embolden Iran and leave the United States more and more 
isolated on the international stage.
    I'm still skeptical of the nuclear deal--but my focus has been on 
fully enforcing it. To be clear, I have not seen evidence that the 
nuclear agreement has tied our hands in addressing Iran's support for 
terrorism.
    We can and should be doing more to hold Iran accountable for their 
support of terrorism, their ballistic missile program, their horrific 
violations of human rights, and all their efforts to spread violence 
and instability in the region. The nuclear deal doesn't prevent us from 
targeting those activities, and we should be doing so more 
aggressively.
    Again, I thank the Chairman for holding this hearing and I think 
all of our witnesses for coming to offer your expertise. I believe that 
effectively confronting and countering the threat from Iran is one of 
the most significant national security challenges before us today. So I 
hope this will be an honest, comprehensive, and on-going conversation.

    Miss Rice. With that, I yield back.
    Mr. King. I thank the Ranking Member for her statement. 
Other Members of the committee are reminded that opening 
statements may be submitted for the record.
    [The statements of Ranking Member Thompson and Honorable 
Barletta follow:]
             Statement of Ranking Member Bennie G. Thompson
                             April 17, 2018
    It is no secret that Iran continues to be a threat to our interests 
abroad, our international allies, and our National security policies in 
the homeland. Last Congress, I commented on the complexity of the ways 
that Iran's foreign policy decisions and global support for terror 
groups harm U.S. National security challenges. Moreover, today the 
threats that Iran poses to U.S. interests has only become more 
convoluted.
    As a committee, we must acknowledge that in order to have an honest 
conversation about the threat Iran poses, we cannot discuss the foreign 
policy issues related to Iran in a vacuum. Discussions about Iran must 
also include discussions about Russia. Iran's actions around the world, 
specifically in Syria, have increased instability in an already 
volatile region. Iran views Syria as a longtime ally and a strategic 
transit route to funnel weapons and other support for Hezbollah in 
neighboring Lebanon.
    Iranian-backed militants first entered the Syrian civil war in 2013 
as the de facto ground forces of the Syrian government and are 
currently protected by Russian air power. Iran, Russia, and its other 
allies are actively countering Syrian rebel groups and U.S.-led 
coalition members.
    Therefore, a productive dialog and debate about the concerns Iran 
presents to U.S. National security cannot happen without also 
addressing its close allies, Russia, and the Syrian Assad regime.
    In addition to discussing Iran and its expansive terrorist network, 
I expect that my colleagues and I will address the inadequate and 
inconsistent measures taken by the Trump administration to defend our 
homeland against Iranian threats.
    The recent chaotic announcement of a withdrawal of troops, 
potential termination of the ``Nuclear Deal,'' and the depletion of aid 
and diplomatic resources are short-sighted and dangerous policies that 
only embolden Iran.
    As communicated and if implemented, these ill-advised policies 
impede U.S. security abroad and at home. However, the need to protect 
innocent civilians is without question something we all here can agree 
upon.
    In light of that, the Trump administration's decision this past 
weekend to launch missile strikes against the Syrian government was 
arguably justifiable. Unfortunately, the administration still appears 
to be lacking a coherent strategy in Syria and the region--leaving U.S. 
interests at risk.
    Now more than ever, we need and deserve a President and 
administration that can put forward a cohesive strategy that aims to 
tackle the problems that remain between us and our Iranian 
counterparts, with broader vision of our goals in the Middle East 
region. Debate that relies on scare tactics and empty rhetoric will do 
little to produce meaningful results in a situation as complex as this.
                                 ______
                                 
                  Statement of Honorable Lou Barletta
    Good morning to you all and thank you for appearing before this 
committee today.
    Over the years, the Iranian regime has continued to grow 
increasingly radical, and today is the worlds' largest state sponsor of 
terror.
    The totalitarian regime ruling over the Iranian people with an iron 
fist has left the country in shambles, while money continues to be 
funneled to extremist groups around the world to inflict terror and 
death.
    Funding terror organizations such as Hezbollah and Hamas, while 
supporting dictators such as Syria's Buh-Shar Al-Assad, who just last 
week attacked his own people once again with chemical weapons, has left 
the Iranian regime's hands stained with the blood of innocent men, 
women, and children.
    While I am proud of the work we have done here in Congress, and I 
support President Trump's efforts to hold Iran's partners such as Al-
Assad accountable for their crimes, I remain extremely concerned about 
the development of a nuclear Iran.
    I continue to be staunchly opposed to the Obama administration's 
flawed Iran nuclear deal. This deal has done nothing but increase the 
possibility of a nuclear Iran, as the regime has continued to develop 
and test-fire ballistic missiles and finance terrorist proxies in the 
deal's aftermath.
    This deal essentially handed $150 billion back to the regime that 
chants ``Death to America'' in the streets of Tehran. Even worse, once 
the few key restraints in this deal expire, the regime will have the 
means and freedom to pursue nuclear weapons.
    There is still significant work to be done to deter the rogue 
Iranian regime and stabilize the region.
    I applaud the Iranian people who rose up in protest this past 
December to bring attention to the country's political corruption, 
violation of human rights, and Revolutionary Guard Corps' oppression. 
We must continue to work with our allies to support the Iranian people 
who want a better life.

    Mr. King. We are pleased to have with us today a very 
distinguished panel of witnesses on this vital topic. All the 
witnesses are reminded that their written testimony will be 
submitted for the record.
    Besides their outstanding qualifications, the witnesses 
also have in common they have difficult names to pronounce.
    [Laughter.]
    Mr. King. So if I don't pronounce them exactly and 
precisely, I blame that on the Ranking Member.
    Our first witness is Dr. Emanuele Ottolenghi. Did I get 
that right? OK.
    Dr. Ottolenghi, thank you very much.
    He is a senior fellow with the Foundation for the Defense 
of Democracy, where he also serves as an expert at the Center 
on Sanctions and Illicit Finance, focused on Hezbollah's Latin 
America illicit threat network. He is the author of ``The 
Pasdaran: Inside Iran's Islamic Revolutionary Guard's Corps,'' 
``Iran, the Looming Crisis,'' and ``Under a Mushroom Cloud: 
Europe, Iran, and the Bomb.''
    Prior to joining FDD, he led the Trans-Atlantic Institute 
in Brussels, obtained his Ph.D. at the Hebrew University of 
Jerusalem.
    Doctor, I thank you for being here today, and you are 
recognized for your testimony.

STATEMENT OF EMANUELE OTTOLENGHI, SENIOR FELLOW, FOUNDATION FOR 
                     DEFENSE OF DEMOCRACIES

    Mr. Ottolenghi. Thank you very much, Chairman King, Ranking 
Member Rice. Thank you for the opportunity to testify.
    Iran's proxy terror networks in Latin America are run by 
Tehran's wholly-owned Lebanese franchise, Hezbollah. These 
networks, Mr. Chairman, are equal part crime and terror. Where 
and when needed, they can provide logistical and financial 
support to operatives engaged in planning terror attacks, safe 
haven for fugitives, and a source of revenue and illicit 
procurement for both the Iranian regime and Hezbollah itself. 
Their presence in Latin America must be viewed as a forward-
operating base against America's interest in the region and the 
homeland itself.
    Just as importantly, Hezbollah's Latin American networks 
cooperate with local criminal syndicates, often with the 
assistance of local corrupt political elites. Cooperation 
includes laundering of drug money, arranging multi-ton 
shipments of cocaine to the United States and Europe, and 
directly distributing illicit substances to distant markets. 
Proceeds finance Hezbollah's arms procurement, its military 
adventurism on Iran's behalf, its hold on Lebanon's political 
system, its efforts both in Lebanon and overseas to keep Shia 
communities loyal to its cause and complicit in its endeavors, 
and much more.
    Reliance on criminal activities to generate revenue is 
integral to Hezbollah's modus operandi, and forms a substantial 
part of its operating budget. It enjoys the full support and 
oversight of its leadership. Court cases against Hezbollah 
operatives show that Hezbollah overseas networks are largely 
self-reliant, yet wholly integrated into a hierarchical 
structure that goes all the way to the top echelons of the 
terror group's leadership.
    Cases prosecuted by the Drug Enforcement Administration's 
Project Cassandra revealed the extent of involvement in 
planning and supervising operations by senior leadership, and 
the intertwined nature of commercial activities, illicit 
procurement, and terror operations.
    Project Cassandra named Abdallah Safieddine, Hezbollah's 
envoy to Tehran, as the head of the business affairs component 
of Hezbollah's external security operation--organization, the 
Department in charge of fundraising for illicit activities. 
Safieddine is the maternal cousin of Hezbollah's leader, Hassan 
Nasrallah. His brother is considered the next in line of 
succession. These are, in other words, not marginal figures in 
the movement. They are its core leadership.
    Project Cassandra also laid bare the staggering amounts of 
revenue generated by Hezbollah's role as money launderer for 
the cartels. Court cases revealed that Hezbollah takes anywhere 
between 15 and 20 percent commission for services provided to 
organized crime. It also takes payments in kind when it handles 
cocaine shipments, which it is then able to sell through its 
vast network of contacts with the underworld. It gets a $10,000 
fee per kilo of cocaine it lets through Beirut's international 
airport.
    Now, these are extraordinary figures. Just to give you an 
example, in 2011 the case of Lebanese--the Canadian Lebanese 
Bank and Hezbollah's facilitator, Ayman Joumaa. In that 
particular case, prosecuted here in the United States, the 
network was laundering $200 million per month for the cartels. 
A 20 percent commission for that is $480 million a year, and 
this is just one network.
    It should be the policy of the United States to 
aggressively go after these networks. Instead, Project 
Cassandra was shut down. The Trump administration ordered a 
review of Project Cassandra, and then established a task force 
at the Department of Justice to go after Hezbollah's terror 
finance networks. But that task force should be manned and 
resourced to revive U.S. efforts to inflict damage on 
Hezbollah's drug trafficking operations.
    Debate will continue over the circumstances surrounding the 
abrupt end of this decade-long project, something I do address 
in my written statement. But there is no disagreement about the 
fact that much of Hezbollah's operating budget is financed 
through drug proceeds and working with criminal syndicates. 
That should be enough to have Hezbollah designated as a trans-
national criminal organization. Legislation to bring about this 
outcome is awaiting Congressional approval. So is an enhanced 
version of the 2015 Hezbollah International Finance Prevention 
Act, which would strengthen U.S. powers to go after Hezbollah 
enablers.
    Project Cassandra showed how the combined arsenal of 
sanctions, prosecutions, asset seizures, and bank designations 
under section 311 of the Patriot Act can inflict irreparable 
damage to our adversaries. These tools should be revived. More 
resources should also be given to Treasury and law enforcement 
agencies, especially those deployed overseas to more 
effectively go after these operatives.
    Iran's terror proxy networks in Latin America are run by 
sophisticated operatives, and none of those I mention in my 
written testimony entered into, dispatched drugs to, or plotted 
terror attacks against the United States by coming into the 
country through the back door, as clandestine illegal migrants. 
They exploited weaknesses in immigration policy and airport 
security systems to travel to, reside in, or transaction 
through the United States. Much like in other jurisdictions, 
operatives who target the United States or use the United 
States as staging ground for trade-based and real estate-based 
money laundering come in through the front door with a 
legitimate passport and a credible business cover story.
    These weaknesses need the fix, as well. In my written 
statement I offer more suggestions, which I hope we will have 
time to address in our discussion.
    I thank you for inviting me, and I look forward to your 
questions.
    [The prepared statement of Mr. Ottolenghi follows:]
               Prepared Statement of Emanuele Ottolenghi
                             April 17, 2018
                              introduction
    Chairman King, Ranking Member Rice, thank you for the opportunity 
to testify on behalf of the Foundation for Defense of Democracies and 
its Center on Sanctions and Illicit Finance.
    Since its establishment, the Islamic Republic of Iran has viewed 
Latin America as a fertile ground for the export of its revolution. 
Tehran wants the Western Hemisphere to become a hotbed of anti-
Americanism and a forward operating base for Iran. To this end, over 
nearly four decades, Tehran has built a network of mosques and cultural 
centers across the region. It aggressively expanded its base of 
supporters and sympathizers by dispatching itinerant preachers, who 
have successfully converted and radicalized thousands of Latin 
Americans to Iran's version of Shi'a Islam. Iran has also helped 
Hezbollah establish itself as the dominant force among expatriate Shi'a 
Lebanese communities in the region. Hezbollah clerics and emissaries 
have taken control of their religious and communal institutions such as 
mosques, schools, cultural associations, and youth movements.
    Where and when needed, these networks can also be activated to 
provide logistical and financial support to operatives engaged in 
planning terror attacks, safe haven for fugitives, and a source of 
revenue and illicit procurement for both the Iranian regime and 
Hezbollah itself.
    In recent years, Hezbollah's Latin American networks have also 
increasingly cooperated with violent drug cartels and criminal 
syndicates, often with the assistance of local corrupt political 
elites. Cooperation includes laundering of drug money; arranging multi-
ton shipments of cocaine to the United States and Europe; and directly 
distributing and selling illicit substances to distant markets. 
Proceeds from these activities finance Hezbollah's arms procurement; 
its terror activities overseas; its hold on Lebanon's political system; 
and its efforts, both in Lebanon and overseas, to keep Shi'a 
communities loyal to its cause and complicit in its endeavors.
    This toxic crime-terror nexus is fueling both the rising threat of 
global jihadism and the collapse of law and order across Latin America 
that is helping drive drugs and people northward into the United 
States. It is sustaining Hezbollah's growing financial needs. It is 
helping Iran and Hezbollah consolidate a local constituency in multiple 
countries across Latin America. It is thus facilitating their efforts 
to build safe havens for terrorists and a continent-wide terror 
infrastructure that they could use to strike U.S. targets.
    It would be a mistake to view these networks as peripheral to 
Hezbollah or even connected to it only by virtue of their members' 
origins and the sympathy some of them may feel for Hezbollah and its 
cause. Equally, this is not solely a challenge for law enforcement 
agencies. Reliance on criminal activities to generate revenue is 
integral to Hezbollah's modus operandi and forms a substantial part of 
its operating budget. It enjoys the full support and oversight of its 
leadership. Nearly two decades of sanctions and law enforcement 
investigations that led to successful indictments, primarily from U.S. 
court cases prosecuting Hezbollah operatives involved in a variety of 
criminal activities, show that Hezbollah's networks are equal part 
crime and terror.
    Operatives dispatched to Latin America to run drug smuggling, gun 
running, and money-laundering activities often stem from the Business 
Affairs Component (BAC) of Hezbollah's External Security Organization 
(ESO), a unit inside the terror group also referred to as the Islamic 
Jihad Organization (IJO). Its members are trained for both terror 
operations and economic warfare and engage simultaneously in both 
activities. Their economic activities--which include trade-based money 
laundering and the laundering of illicit proceeds through real estate--
are in and of themselves a threat to the integrity of the U.S. 
financial system.
    Hezbollah facilitators use methods that are typical of trade-based 
money laundering techniques--such as over- and under-invoicing, 
misstating items of merchandise, their weight, and value--in order to 
move money across continents. They use U.S.-registered commercial 
vectors to transport their merchandise. In addition to smuggling drugs 
inside the United States and plotting attacks on U.S. targets inside 
the United States and overseas, Hezbollah's illicit finance networks 
often use U.S.-based front companies, launder money through U.S. banks, 
and invest in the U.S. real estate sector to support their terror 
finance schemes. They therefore constitute a threat to homeland 
security.
    This makes Hezbollah, its senior leadership, and its numerous 
operatives involved in running illicit drug trafficking and money-
laundering operations on a global scale, the perfect candidates for 
Kingpin and Transnational Crime Organization designations, in addition 
to the terrorism and terror finance designations already in place.
    Developing a strategy to combat this growing risk to the American 
homeland needs to be a U.S. policy priority. The United States cannot 
continue to combat a threat of such magnitude, without first 
recognizing the Hezbollah terror-crime nexus and then leveraging all 
its tools of statecraft in a combined, sustained, and coordinated 
fashion. My recommendations, discussed more at length at the end of 
this testimony, are:
   Update Existing Sanctions Against Hezbollah Terror Finance 
        Networks
   Target Enablers with Global Magnitsky and the Hezbollah 
        International Finance Prevention Act
   Sanction Hezbollah and Its Senior Leadership with 
        Transantional Criminal Organization and Kingpin Designations
   Impose 311 Designations on Financial Institutions Assisting 
        Hezbollah in Latin America
   Empower Law Enforcement to go After Hezbollah's Global 
        Financial Networks
   Provide Additional Resources to Intelligence and Law 
        Enforcement Agencies Deployed in Latin America
   Provide Additional Resources to Treasury
   Target Financial Holdings and Financial Institutions Used by 
        Hezbollah to Move Money to and from Latin America
   Build Local Capacity with Regional Allies
   Improve Controls at Ports of Shipment to and From Latin 
        America
    hezbollah's terror-crime network and the threat to the homeland
    A survey of cases prosecuted against Hezbollah operatives in the 
past two decades shows that the terror group remains a threat to the 
security of the U.S. homeland and the integrity of its financial 
system. Iran and Hezbollah sought to carry out high casualty attacks 
against U.S. targets multiple times. Additionally, they built networks 
they used to procure weapons, sell drugs, and conduct illicit financial 
activities inside the United States. These cases highlight a number of 
important elements we must consider when thinking about U.S. responses 
to Hezbollah's threat in the Western Hemisphere:
   Its networks are malleable and flexible--capable of engaging 
        in trade-based money laundering, sophisticated investment 
        schemes, ruthless violence, arms procurement, and social 
        services at the same time.
   By leveraging political support and familial ties among 
        expatriate communities, Hezbollah ensures provision of material 
        support and services to their operatives, thanks to the 
        complicity of local facilitators, many of whom, while not fully 
        enlisted inside Hezbollah, are loyal supporters.
   This type of local support structure ensures the operatives' 
        ability to obtain a second citizenship, gain access to cash, 
        have a plausible cover while plotting operations, enjoy 
        immunity from the law through influential connections to local 
        political elites and a well-greased corruption machine to buy 
        off customs, border authorities, police, judges and 
        prosecutors, prison guards, and politicians.
   As a result, operatives blend in; they nestle within 
        existing expatriate communities; they find spouses; and set up 
        seemingly legitimate businesses, acquiring permanent residency 
        and citizenship in the process--all attributes that are part of 
        their cover story.
   Hezbollah networks are not just operating to support 
        Hezbollah's activities but also to aid Iran's operational and 
        procurement needs--including helping to plot terror attacks, 
        procure weapons, and sell counterfeited passports and currency.
   Most importantly, Hezbollah overseas networks are largely 
        self-reliant yet wholly integrated in a hierarchical structure 
        that goes all the way to the top echelons of the terror group's 
        leadership.
    Nearly two decades of experience confronting Hezbollah through 
sanctions and prosecutions offer important lessons on best practices as 
well as mistakes that must now be rectified. Iran and Hezbollah made at 
least three documented attempts to support, plot, or conduct terror 
attacks on U.S. soil in recent years--these are discussed in the next 
section. Their Latin America networks, however, have mainly been 
dedicated to terror finance.
      hezbollah's and iran's attempts to target the united states
    Last year, U.S. law enforcement agencies captured two Hezbollah 
operatives. They stand accused of casing targets for possible future 
terror attacks. Samer El Debek and Ali Mohammad Kourani were both 
indicted in the Southern District of New York, in May of 2017.\1\ Both 
naturalized U.S. citizens, El Debek and Kourani were members of 
Hezbollah's ESO. Trained in the use of firearms, assault weapons, and 
explosives, they fulfilled multiple tasks on Hezbollah's behalf while 
in the United States. For example, in 2009, Kourani travelled to 
Guangzhou, China to procure ammonium nitrate-based First Aid ice packs, 
made by the same manufacturer of those later seized in connection with 
thwarted Hezbollah terror attacks in Thailand and Cyprus. El Debek's 
handlers dispatched him to Thailand that same year to dispose of 
ammonium nitrate--likely the load Kourani procured in Guangzhou--that 
was left behind in a safe house in Bangkok, which they believed was now 
compromised.
---------------------------------------------------------------------------
    \1\ Indictment, United States v. Samer El Debek, No. S(1) Cr. 04154 
(MAG), (S.D.N.Y. 2017). (Accessed via Pacer); Indictment, United States 
v. Ali Mohamad Kourani, No. S(7) Cr. 417 (AKH), (S.D.N.Y. 2017). 
(Accessed via Pacer)
---------------------------------------------------------------------------
    While they lived in the United States, both operatives travelled 
back to Lebanon to undergo extensive military training. El Debek was 
later dispatched to Panama to learn Spanish and conduct surveillance 
and information gathering on possible attack targets, which included 
the U.S. embassy and the embassy of Israel in Panama, and the Panama 
Canal. He entered and exited Panama through Colombia, where he stayed 
for 4 days--possibly to get instructions from local Hezbollah agents. 
El Debek also surveyed potential targets in the United States, 
including New York's John F. Kennedy and La Guardia airports and the 
U.S. Armed Forces Career Center in Queens, New York. Kourani was 
instructed to and sought to procure night-vision equipment and drone 
technology.\2\
---------------------------------------------------------------------------
    \2\ In a more recent, February 2018 indictment, two additional 
Hezbollah procurement agents based in South Africa were arrested and 
indicted for procuring drone technology on Hezbollah's behalf.; First 
Superseding Indictment, United States v. Usama Darwish Hamade and Samir 
Ahmed Berro, No. S(7) Cr. 237 (MJD--BRT) (D. Minn. 2015). (Accessed via 
Pacer)
---------------------------------------------------------------------------
    This is not the first time that U.S. law enforcement agencies 
uncover Iranian-backed conspiracies to target the United States, such 
as the failed 2007 plot to blow up the fuel tanks at New York's JFK.\3\ 
The plot's ringleader was Abdul Kadir, a Guyana politician-turned 
Islamic radical. Reports suggest that Kadir had connections to Iran. On 
the same year his plot was disrupted, Kadir had been in contact with 
the head of a pro-Iranian Islamic charity in Sao Paulo, Brazil, Sheikh 
Taleb al-Khazraji. Alberto Nisman, the slain Argentine prosecutor who 
investigated the 1994 bombing of AMIA, the Buenos Aires Jewish cultural 
center, named Kazraji in 2013 as an agent of the government of Iran in 
Brazil. Kadir, according to Nisman, had also been in contact with 
Mohsen Rabbani, the Iranian cleric who founded Iran's religious 
outreach program in Latin America by moving to Buenos Aires in 1982 to 
run a local Shi'a mosque. Rabbani eventually became the cultural 
attache of Iran's embassy in Buenos Aires, a few months before the 
bombing. Rabbani is wanted by Argentinian judicial authorities in 
conjunction with the bombing.\4\ Kadir is currently serving a life 
sentence in a U.S. prison.\5\
---------------------------------------------------------------------------
    \3\ The United States Attorney's Office for the Eastern District of 
New York, Press Release, ``Four Individuals Charged in Plot to Bomb 
John F. Kennedy International Airport,'' June 2, 2007. (https://
www.justice.gov/archive/usao/nye/pr/2007/2007jun02.html)
    \4\ ``Rabbani, Mohsen,'' INTERPOL, accessed April 12, 2018. 
(https://www.interpol.int/notice/search/wanted/2007-49960)
    \5\ Linette Lopez, ``Dead Argentine prosecutor was zeroing in on a 
terror threat to the entire Western Hemisphere,'' Business Insider, 
March 20, 2015. (http://www.businessinsider.in/Dead-Argentine-
prosecutor-was-zeroing-in-on-a-terror-threat-to-the-entire-Western-
Hemisphere/articleshow/46637922.cms)
---------------------------------------------------------------------------
    In 2011, Iran sought to strike again inside the United States. U.S. 
authorities thwarted a plot to blow up Cafe Milano, an upscale Italian 
restaurant in Washington, DC, and assassinate the Saudi Ambassador to 
the United States, when the Iranian operative in charge of organizing 
the attack sought the assistance of Mexican cartels.\6\ While the 
Ambassador was the target, the attack, had it succeeded, would have 
likely caused mass casualties. Mansour Arbabsiar, an Iranian-American 
resident of Texas who ran a used car dealership as his day job, spoke 
to a U.S. informant inside the cartel who promptly passed the 
information to his handlers and helped foil the attack. Arbabsiar was 
eventually sentenced, in 2013, to 25 years in prison.\7\
---------------------------------------------------------------------------
    \6\ Superseding Information, United States v. Mansour Arbabsiar, 
No. S(1) Cr. 897 (JFK), (S.D.N.Y. 2013). (https://
www.investigativeproject.org/documents/case_docs/2047.pdf)
    \7\ The United States Department of Justice, Press Release, 
``Mansour Arbabsiar Sentenced in New York City Federal Court to 25 
Years in Prison for Conspiring with Iranian Military Officials to 
Assassinate the Saudi Arabian ambassador to the United States,'' May 
30, 2013. (https://www.justice.gov/opa/pr/manssor-arbabsiar-sentenced-
new-york-city-federal-court-25-years-prison-conspiring-iranian)
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                         the crime-terror nexus
    The Arbabsiar case was highly suggestive of a link between Iranian 
and Iranian-backed terror networks and organized crime. U.S. 
authorities became aware of Arbabsiar's plot while the U.S. Drug 
Enforcement Administration (DEA) was investigating a complex drug-
trafficking and money-laundering scheme involving Hezbollah operatives, 
the Medellin drug cartel known as La Oficina del Envigado, the Mexican 
Zetas, used car businesses in the United States, a Lebanese bank, and 
numerous other businesses located in Latin America and West Africa. 
(The network's kingpin was Seyed Ayman Joumaa, about whom more later). 
In that context, his outreach to people he thought worked for the 
Mexican Zetas was consistent with what DEA was investigating.
    Eventually, DEA revealed the full extent of Hezbollah's terror-
crime nexus and its centrality to Hezbollah's organizational structure 
in 2016, when it announced multiple Hezbollah arrests across Europe in 
an operation, codenamed Operation Cedar, involving seven countries.\8\ 
According to a former U.S. official familiar with the case, the 
targeted ring involved shipments of cocaine to Europe, which were paid 
for in Euros, and were then transferred to the Middle East by couriers. 
Hezbollah made more than 20 million Euros a month selling its own 
cocaine in Europe. It also laundered tens of millions of Euros of 
cocaine proceeds on behalf of the cartels via the Black Market Peso 
Exchange, retaining a fee. During the arrests, authorities seized 
500,000 Euros in cash, luxury watches worth $9 million that Hezbollah 
couriers intended to transport to the Middle East for sales at inflated 
prices, and property worth millions.\9\
---------------------------------------------------------------------------
    \8\ United States Drug Enforcement Administration, Press Release, 
``DEA and European Authorities Uncover Massive Hizballah Drug and Money 
Laundering Scheme,'' February 1, 2016. (https://www.dea.gov/divisions/
hq/2016/hq020116.shtml)
    \9\ Information obtained from a former U.S. official familiar with 
the investigation. See also: David Asher, ``Attacking Hezbollah's 
Financial Network: Policy Options,'' Testimony before House Foreign 
Affairs Committee, June 8, 2017. (http://docs.house.gov/meetings/FA/
FA00/20170608/106094/HHRG-115-FA00-WState-AsherD-20170608.PDF)
---------------------------------------------------------------------------
    The raids led to the arrest of 15 individuals, including prominent 
Hezbollah facilitators Mohamad Noureddine and Hamdi Zaher El Dine. Four 
days later, Treasury sanctioned Noureddine and Zaher El Dine. Referring 
to the sanctioned duo, then-Acting Under Secretary for Terrorism and 
Financial Intelligence Adam J. Szubin said, ``Hezbollah needs 
individuals like Mohamad Noureddine and Hamdi Zaher El Dine to launder 
criminal proceeds for use in terrorism and political 
destabilization.''\10\ Treasury stopped short of explicitly identifying 
the two as Hezbollah members, but sanctioned them for providing 
material support to Adham Tabaja, whom Treasury sanctioned in 2015\11\ 
alongside his company Al-Inmaa Group for Tourism Works and its 
subsidiaries.
---------------------------------------------------------------------------
    \10\ U.S. Department of the Treasury, Press Release, ``Treasury 
Sanctions Key Hezbollah Money Laundering Network,'' January 28, 2016. 
(https://www.treasury.gov/press-center/press-releases/Pages/
jl0331.aspx)
    \11\ U.S. Department of the Treasury, Press Release, ``Treasury 
Sanctions Hezbollah Front Companies and Facilitators in Lebanon and 
Iraq,'' June 10, 2015. (https://www.treasury.gov/press-center/press-
releases/Pages/jl0069.aspx)
---------------------------------------------------------------------------
    DEA went further and identified a coherent, hierarchical structure 
inside Hezbollah that has been in charge of its illicit operations 
since as early as 2007. The DEA named it the BAC--an acronym for the 
Business Affairs Component of Hezbollah's ESO. As stated in the 
February 2016 DEA press release, announcing Operation Cedar's outcomes:

``This global network, referred to by law enforcement as the Lebanese 
Hezbollah External Security Organization Business Affairs Component 
(BAC), was founded by deceased Hezbollah Senior Leader Imad Mughniyah 
and currently operates under the control of Abdallah Safieddine and 
recent U.S.-designated Specially Designated Global Terrorist (SDGT) 
Adham Tabaja. Members of the Hezbollah BAC have established business 
relationships with South American drug cartels, such as La Oficina de 
Envigado, responsible for supplying large quantities of cocaine to the 
European and United States drug markets. Further, the Hezbollah BAC 
continues to launder significant drug proceeds as part of a trade-based 
money-laundering scheme known as the Black Market Peso Exchange.''\12\
---------------------------------------------------------------------------
    \12\ United States Drug Enforcement Administration, Press Release, 
``DEA and European Authorities Uncover Massive Hizballah Drug and Money 
Laundering Scheme,'' February 1, 2016. (https://www.dea.gov/divisions/
hq/2016/hq020116.shtml)

    On that occasion, DEA also revealed Project Cassandra, a decade-
long operation run through DEA's Special Operations Division, which 
sought to stop Hezbollah from trafficking drugs into the United States 
and Europe. A December 2017 investigation by Politico revealed that the 
Obama administration derailed the DEA's program to combat Hezbollah's 
growing collusion with the drug cartels, letting this nascent threat 
morph into a global menace.
    Most importantly, alongside Tabaja, DEA named Abdallah Safieddine 
as the head of the BAC. Safieddine is Hezbollah's personal envoy to 
Tehran and the maternal cousin of Hezbollah Secretary General Hassan 
Nasrallah. His brother Hashem Safieddine, a cleric who sits on 
Hezbollah's Shura Council, is considered to be Nasrallah's successor. 
Treasury named Safieddine in 2011, when it identified the Lebanese-
Canadian Bank as a ``primary money-laundering concern'' as part of a 
range of actions taken by U.S. Government agencies against the bank and 
the Seyed Ayman Joumaa network, which had been exposed for laundering 
drug proceeds for the Oficina del Envigado.\13\ According to Treasury, 
``Hizballah's Tehran-based envoy Abdallah Safieddine was involved in 
Iranian officials' access to LCB and key LCB managers.''\14\
---------------------------------------------------------------------------
    \13\ U.S. Department of the Treasury, Press Release, ``Treasury 
identifies Lebanese Canadian Bank SAL as a `Primary Money Laundering 
Concern,' '' February 10, 2011. (https://www.treasury.gov/press-center/
press-releases/Pages/tg1057.aspx)
    \14\ U.S. Department of the Treasury, Press Release, ``Treasury 
identifies Lebanese Canadian Bank SAL as a `Primary Money Laundering 
Concern,' '' February 10, 2011. (https://www.treasury.gov/press-center/
press-releases/Pages/tg1057.aspx)
---------------------------------------------------------------------------
    Though Treasury declined to sanction Safieddine in 2011, it 
implicated him in the largest Hezbollah drug-trafficking and money-
laundering scheme exposed to date, confirming a direct link between 
Hezbollah and Latin American cartels. Naming him, 5 years later, as the 
kingpin of Hezbollah's global criminal operations underscores the fact 
that these operations enjoy the full support and supervision of the 
highest ranks in the organizational structure.
    Cases implicating the BAC give a sense of the global footprint of 
Hezbollah's illicit activities and offer a glimpse into the size of 
these operations. They point to gaps and failures in the system that 
made U.S. actions less effective than they could have been. They also 
offer insights into possible next steps to improve the effectiveness of 
combined U.S. diplomatic, law enforcement, intelligence, and sanctions 
efforts to disrupt and dismantle Iran's proxy terror networks in Latin 
America. Following is a time line of Hezbollah court cases and 
designations since 2004, which expose the crime-terror nexus. The time 
line begins with the initial U.S. Department of Treasury designation of 
Hezbollah financiers in the Tri-Border Area of Argentina, Brazil, and 
Paraguay, or TBA. For readers' convenience, cases are listed by date of 
indictment or date of sanction.
2004-2006: Tri-Border Area Hezbollah Network Designations
    In one of its earliest actions against Hezbollah's overseas 
operations, the U.S. Treasury sanctioned a large Hezbollah illicit 
finance network operating out of the Tri-Border Area (TBA) of 
Argentina, Brazil, and Paraguay, in 2004 \15\ and then again in 
2006.\16\ Treasury cited their involvement in raising funds for 
Hezbollah, often through illicit finance and trade activities, as a key 
reason for sanctions. Treasury also indicated that Hezbollah's revenue-
generating activities in the TBA were not limited to trade-based money 
laundering but also included drug trafficking and trading counterfeit 
U.S. currency.
---------------------------------------------------------------------------
    \15\ U.S. Department of the Treasury, Press Release, ``Treasury 
Designates Islamic Extremist, Two Companies Supporting Hizballah in 
Tri-Border Area,'' June 10, 2004. (https://www.treasury.gov/press-
center/press-releases/Pages/js1720.aspx)
    \16\ U.S. Department of the Treasury, Press Release, ``Treasury 
Targets Hizballah Fundraising Network in the Triple Frontier of 
Argentina, Brazil, and Paraguay,'' December 6, 2006. (https://
www.treasury.gov/press-center/press-releases/Pages/hp190.aspx); U.S. 
Department of the Treasury, Press Release, ``Treasury Targets Hizballah 
Financial Network,'' December 9, 2010. (https://www.treasury.gov/press-
center/press-releases/Pages/tg997.aspx).
---------------------------------------------------------------------------
    Treasury designations in 2004 and 2006 went after members of the 
Barakat and the Abdallah families, both prominent clans inside the 
Hezbollah leadership structure and in the TBA. The Treasury 2004 press 
release announcing sanctions against Assad Ahmad Barakat stated that 
Barakat had ``close ties with Hezbollah's leadership,'' likely a 
reference to his brother Akram Barakat, Abdallah Safieddine's deputy in 
the BAC and a member of Hezbollah's Shura Council. That Hezbollah would 
dispatch such a senior figure to the TBA highlights the area's 
importance for the terror group.
    Unfortunately, after more than a decade, the lack of updating and 
expanding--let alone enforcing--these sanctions means that the original 
Hezbollah network is still largely intact and the TBA remains a hub of 
Hezbollah criminal activities.\17\ As the U.S. Department of State's 
Bureau of International Narcotics and Law Enforcement Affairs' 2018 
International Narcotics Control Strategy Report recently noted, 
``multi-billion dollar contraband trade occurs in the Tri-Border Area 
(TBA) . . . which is a base for counterfeiting, drug trafficking, and 
other smuggling offenses. Persons and businesses linked with the 
terrorist organization Hezbollah operate widely within the TBA.''\18\
---------------------------------------------------------------------------
    \17\ I have discussed this problem at length in my previous 
testimonies in June 2016, May and November 2017. See Emanuele 
Ottolenghi, ``The Enemy in our Backyard: Examining Terror Funding 
Streams from South America,'' Testimony before the House Committee on 
Financial Services, June 8, 2016. (https://financialservices.house.gov/
uploadedfiles/hhrg-114-ba00-wstate-eottolenghi-20160608.pdf); Emanuele 
Ottolenghi, ``Emerging External Influences in the Western Hemisphere,'' 
Testimony before the Senate Foreign Relations Committee, May 10, 2017. 
(https://www.foreign.senate.gov/imo/media/doc/
051017_Ottolenghi_Testimony.pdf); Emanuele Ottolenghi, ``Examining the 
Effectiveness of the Kingpin Designation Act in the Western 
Hemisphere,'' Testimony before the House Foreign Affairs Committee, 
November 8, 2017. (http://www.defenddemocracy.org/content/uploads/
documents/11-08-17_Ottolenghi_- Written_Testimony.pdf)
    \18\ U.S. Department of State, Bureau of International Narcotics 
and Law Enforcement Affairs, ``Annual International Narcotics Control 
Strategy Report Volume II--Money Laundering,'' March 2018, page 44. 
(https://www.state.gov/documents/organization/278760.pdf)
---------------------------------------------------------------------------
2007-8: Operation Titan--the Case of Chekry Mahmoud Harb
    Hezbollah's intimate connection to Latin American drug cartels 
became known by coincidence when, in 2007, Colombian wiretaps meant to 
monitor La Oficina del Envigado, the Medellin cartel later named by DEA 
as a key partner to Hezbollah, picked up Arabic conversations traceable 
back to a man named Chekry Mahmoud Harb. DEA brought in an Arabic 
language expert who suddenly realized Hezbollah was arranging multi-ton 
shipments of cocaine to the Middle East while working with the Medellin 
cartel.\19\ The cartel employed four other Lebanese nationals along 
with Harb, who reportedly worked for Abdallah Safieddine.\20\ This 
case, investigated and prosecuted as part of DEA's Operation Titan, 
eventually became one of the sources of contention between the DEA and 
its U.S. intelligence agency counterparts.\21\
---------------------------------------------------------------------------
    \19\ Chris Kraul and Sebastian Rotella, ``Drug probe finds 
Hezbollah link,'' LA Times, October 22, 2008. (http://
articles.latimes.com/2008/oct/22/world/fg-cocainering22)
    \20\ Jo Becker, ``Beirut Bank Seen as a Hub of Hezbollah's 
Financing,'' The New York Times, December 13, 2011. (https://
www.nytimes.com/2011/12/14/world/middleeast/beirut-bank-seen-as-a-hub-
of-hezbollahs-financing.html)
    \21\ See Josh Meyer, ``The secret backstory of how Obama let 
Hezbollah off the hook,'' Politico, December 20, 2017. (https://
www.politico.com/interactives/2017/obama-hezbollah-drug-trafficking-
investigation/). ``An early flash point was Operation Titan, the DEA 
initiative in Colombia. After its undercover agent was compromised, DEA 
and Colombian authorities scrambled to build cases against as many as 
130 traffickers, including a Colombian cartel leader and a suspected 
Safieddine associate named Chekry Harb, nicknamed El Taliban.''
---------------------------------------------------------------------------
    According to DEA officials quoted by Politico, ``the Justice 
Department rebuffed requests by task force agents, and some of its 
prosecutors, to add narcoterrorism charges to the drug and money-
laundering counts against Harb.''
    In 2012, Treasury eventually moved to designate the key Colombian 
figure in the network, alongside five Lebanese implicated (including 
Harb), and two businesses associated with Harb--a clothing company in 
Colombia and a clothing store in Guatemala.\22\ Nevertheless, much like 
with the indictment, which ultimately did not include any reference to 
Hezbollah, Treasury did mention Harb's links to the terror group.
---------------------------------------------------------------------------
    \22\ U.S. Department of the Treasury, Press Release, ``Treasury 
Targets Major Money Laundering Network Linked to Drug Trafficker Ayman 
Joumaa and a Key Hizballah Supporter in South America,'' June 27, 2012. 
(https://www.treasury.gov/press-center/press-releases/Pages/
tg1624.aspx)
---------------------------------------------------------------------------
    It was left to the media and the Colombian prosecutors to reveal 
the Hezbollah connection.\23\
---------------------------------------------------------------------------
    \23\ Chris Kraul and Sebastian Rotella, ``Drug probe finds 
Hezbollah link,'' LA Times, October 22, 2008. (http://
articles.latimes.com/2008/oct/22/world/fg-cocainering22)
---------------------------------------------------------------------------
2009: The Hassan Hodroj Case
    The 2009 indictment of Hassan Hodroj and nine other individuals 
linked to Hezbollah procurement networks sheds more light on 
Hezbollah's criminal activities, the extent of involvement in planning 
and supervising operations by senior leadership, and the intertwined 
nature of commercial activities, illicit procurement, and terror 
operations. Their base of operations was the Middle East, yet the case 
has an important Latin American connection--a key figure in the 
Hezbollah ring was Moussa Ali Hamdan, a Lebanese-U.S. dual national 
charged with trafficking counterfeited currency made in Iran. Hamdan 
was eventually apprehended in 2010 in Ciudad Del Este, in the 
Paraguayan sector of the TBA, and extradited to the United States to 
stand trial.
    The 10 indicted Hezbollah operatives and associates traded in 
counterfeit currency, fake passports, and counterfeited or stolen brand 
goods. Ominously, they also attempted to acquire 1,400 American made 
Colt M4 carbines. At the time, Hodroj was a member of Hezbollah's 
Political Council in charge of Palestinian affairs.\24\ The criminal 
complaint against Hodroj \25\ makes it abundantly clear that 
Hezbollah's senior leadership approved, coordinated, and benefited from 
these activities. It also reveals that as undercover U.S. agents 
negotiated arrangements for the weapons transfer, the operative 
involved called a very senior figure in Hezbollah's hierarchy--likely 
Abdallah Safieddine--to facilitate the deal.
---------------------------------------------------------------------------
    \24\ Spencer S. Hsu, ``Hezbollah official indicted on weapons 
charge,'' The Washington Post, November 25, 2009. (http://
www.washingtonpost.com/wp-dyn/content/article/2009/11/24/
AR2009112403448.html). Hezbollah is governed by the Shura Council, a 
nine-member committee headed by the Secretary General. Five of its 
members in turn head sub-councils, such as the Political Council, which 
are tasked with supervising specific policy and operational areas.
    \25\ ``Affidavit In Support of Application for Arrest and Seizure 
Warrants,'' Investigative Project, accessed April 10, 2018. (https://
www.investigativeproject.org/documents/case_docs/1988.pdf)
---------------------------------------------------------------------------
    It is reasonable to presume that investigators were hoping to go 
after Abdallah Safieddine eventually. Nevertheless, nearly a decade 
after Hodroj was indicted, Safieddine has yet to be named in any 
criminal proceeding against Hezbollah networks.
    The Hodroj case is very revealing, not only because of the rank of 
its principal suspect but for its already-mentioned link to Latin 
America. At the time of his arrest, the aforementioned Hamdan was 
hiding in the Panorama 2 building,\26\ a location of significance in 
organized crime and narcoterrorism investigations in Latin America.
---------------------------------------------------------------------------
    \26\ ``Paraguay: Capturan en Ciudad del Este a miembro del 
Hizbullah (Paraguay: Captured a member of Hezbollah in Ciudad Del 
Este),'' Hacer Latin American News (Paraguay), June 25, 2010. (http://
www.hacer.org/latam/paraguay-capturan-en-el-este-a-miembro-del-
hizbullah-abc-color/); The Federal Bureau of Investigation, Press 
Release, ``Alleged Supporter of Terrorist Group Extradited from 
Paraguay,'' February 25, 2011. (https://archives.fbi.gov/archives/
philadelphia/press-releases/2011/ph022511a.htm)
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    Panorama 2 is located on Avenida Carlos A. Lopez in the commercial 
center of Ciudad Del Este.\27\ The residential building is above 
Shopping Panorama, one of Ciudad Del Este's many shopping centers.\28\ 
The building serves both residential and commercial purposes. However, 
Edificio Panorama 2 has repeatedly been the stage for drug trafficking, 
organized crime, and Hezbollah cases. That includes not only Hamdan, 
but also Ali Khalil Merhi, originally implicated in the Argentine AMIA 
bombing, who was living in Edificio Panorama 2 with his wife when 
Paraguayan authorities arrested him in 2000.\29\ Panorama 2 was also 
the scene of the 2017 arrest of five Brazilians and two Paraguayans 
associated with the Primeiro Comando do Capital or PCC--Brazil's 
foremost criminal and drug cartel.\30\
---------------------------------------------------------------------------
    \27\ Edificio Panorama II, Facebook, accessed February 7, 2017. 
(https://www.facebook.com/Edificio-Panorama-II-439178936102452/)
    \28\ Edificio Panorama II, Facebook, May 17, 2016. (https://
www.facebook.com/439178936102452/photos/
a.1022271157793224.1073741825.439178936102452/114818720186- 8285/
?type=3&theater)
    \29\ ``Pirata mayor en Ciudad del Este (Major pirating in Ciudad 
Del Este),'' Pagina 12 (Argentina), accessed February 7, 2017. (https:/
/www.pagina12.com.ar/2000/00-02/00-02-27/pag04.htm); Anthony Faiola, 
``U.S. Terrorist Search Reaches Paraguay,'' Washington Post, October 
13, 2001. (https://www.washingtonpost.com/archive/politics/2001/10/13/
us-terrorist-search-reaches-paraguay/f69d9ed5-bee6-4b55-af81-
cbdd43025371/?utm_term=.cd9326230bb5)
    \30\ ``Detienen a la jefa administrativa del PCC en edificio de 
Ciudad del Este (PCC administrative head detained in Ciudad del Este 
building,'' ABC Color (Paraguay), May 3, 2017. (http://www.abc.com.py/
edicion-impresa/judiciales-y-policiales/detienen-a-la-jefa-
administrativa-del-pcc-en-edificio-de-ciudad-del-este-1589703.html)
---------------------------------------------------------------------------
    In 2014 the Brazilian daily O Globo exposed a connection between 
Hezbollah and the Primeiro Comando da Capital, or PCC.\31\ The Sao 
Paulo-based prison gang was established in 1992 and, along with the Rio 
de Janeiro-based Comando Vermelho (Red Command), is one of the primary 
exporters of cocaine through Brazil.\32\ According to the daily, 
Hezbollah asked the PCC to protect detainees of Lebanese origin inside 
the Brazilian penitentiary system. Hezbollah, for its part, is said to 
have helped the PCC gain access to international weapons smuggling 
channels and especially assisted in the sale of C4 explosives the PCC 
had stolen in Paraguay. The presumed currency of transaction between 
the two was cocaine and money laundering.
---------------------------------------------------------------------------
    \31\ Francisco Reali, ``Policia Federal aponta elo entre faccfao 
brasileira e Hezbollah (Federal Police link Brazilian faction and 
Hezbollah),'' O Globo (Brazil), November 9, 2014. (http://
oglobo.globo.com/brasil/policia-Federal-aponta-elo-entre-faccao-
brasileira-hezbollah-14512269)
    \32\ ``First Capital Command--PCC: Profile,'' Insight Crime, 
accessed June 4, 2016. (http://www.insightcrime.org/brazil-organized-
crime-news/first-capital-command-pcc-profile)
---------------------------------------------------------------------------
    Though over the years the owners of Panorama 2 may have repeatedly 
been landlords of PCC criminals, Hezbollah traffickers and financiers 
by unfortunate coincidence, a 2007 U.S. embassy cable leaked by the 
site Wikileaks, names them as one of five key players in the TBA 
involved in drug trafficking and other illicit activities.\33\
---------------------------------------------------------------------------
    \33\ ``Interagency Cooperation on Tri-Border Area,'' WikiLeaks 
Cable: 07ASUNCION688_a, August 20, 2007. (https://wikileaks.org/plusd/
cables/07ASUNCION688_a.html). ``Five extended families (Barakat, 
Zeiter, Jamil-Georges, Baalbaki, and Hijazi) in the TBA appear to be 
the major actors in drugs and other large-scale crimes, but the Embassy 
believes that the clear majority of the adult working population of the 
Lebanese community (of 40,000 persons total) in the TBA may be involved 
in some type of illicit activity (e.g., counterfeit goods).''
---------------------------------------------------------------------------
2009-2010: The Tajideen Brothers Case
    Treasury sanctioned the Tajideen brothers and their business 
network, operating mainly out of West Africa, in 2009 \34\ and then 
again in 2010.\35\ In its initial designation, Treasury specifically 
accused Kassem Tajideen of having contributed ``tens of millions of 
dollars'' to Hezbollah, including through the diamond trade. Tajideen 
was eventually arrested in March 2017 in Morocco and extradited to the 
United States, where he will stand trial. His initial indictment 
details $27 million in transactions with U.S.-based companies, where 
the corporate identity of Tajideen's business network was 
concealed.\36\
---------------------------------------------------------------------------
    \34\ U.S. Department of the Treasury, Press Release, ``Treasury 
Targets Hezbollah Financial Network,'' May 27, 2009. (https://
www.treasury.gov/press-center/press-releases/Pages/tg149.aspx)
    \35\ U.S. Department of the Treasury, Press Release, ``Treasury 
Targets Hizballah Financial Network,'' December 9, 2010. (https://
www.treasury.gov/press-center/press-releases/Pages/tg997.aspx)
    \36\ Indictment, United States of America v. Kassim Tajideen et 
al., No. 16-CV-64 (RBW) (D.D.C. filed March 7, 2017). (https://
www.justice.gov/opa/press-release/file/952071/download)
---------------------------------------------------------------------------
2011: Ayman Joumaa and the Lebanese-Canadian Bank Case
    In 2011, the Eastern District of Virginia indicted the 
aforementioned Ayman Joumaa.\37\ Joumaa worked with Hezbollah as the 
kingpin in one of many networks Hezbollah runs globally to sustain its 
financial needs. Joumaa is a Lebanese-Colombian dual national operating 
a global network of companies out of Latin America, West Africa, and 
Lebanon, laundering money for Mexican and Colombian cartels, to the 
tune of $200 million a month of drug proceeds.\38\ Joumaa worked with 
Hezbollah as the kingpin in one of many networks Hezbollah runs 
globally to sustain its financial needs.
---------------------------------------------------------------------------
    \37\ Indictment, United States of America v. Ayman Joumaa, No. 
1:11-CR-560 (TSE), (E.D.VA. November 23, 2011). (https://
www.investigativeproject.org/documents/case_docs/1856.pdf)
    \38\ U.S. Department of the Treasury, Press Release, ``Treasury 
Targets Major Lebanese-Based Drug Trafficking and Money Laundering 
Network,'' January 26, 2011. (https://www.treasury.gov/press-center/
press-releases/Pages/tg1035.aspx); U.S. Department of the Treasury, 
Press Release, ``U.S. Charges Alleged Lebanese Drug Kingpin with 
Laundering Drug Proceeds for Mexican and Colombian Drug Cartels,'' 
December 13, 2011. (https://www.justice.gov/archive/usao/vae/news/2011/
12/20111213joumaanr.html)
---------------------------------------------------------------------------
    The indictment was part of a larger strategy targeting Joumaa, the 
Lebanese-Canadian Bank, which his network used to launder money, and 
his companies. Measures taken included Treasury sanctions against 
Joumaa and his front companies,\39\ a Patriot Act Section 311 
designation of the bank as an entity of ``primary money-laundering 
concern,''\40\ and an asset seizure of bank funds.\41\
---------------------------------------------------------------------------
    \39\ Jo Becker, ``Beirut Bank Seen as a Hub of Hezbollah's 
Financing,'' The New York Times, December 13, 2011. (http://
www.nytimes.com/2011/12/14/world/middleeast/beirut-bank-seen-as-a-hub-
of-hezbollahs-financing.html). Joumaa's web of companies included U.S.-
based businesses and the Canadian-Lebanese Bank. The combined force of 
U.S. sanctions, prosecutions, and financial restrictions on the bank 
eventually crippled Joumaa's network. Joumaa was indicted in December 
2011 but remains at large.
    \40\ U.S. Department of the Treasury, Press Release, ``Fact Sheet: 
Overview of Section 311 of the USA Patriot Act,'' February 10, 2011. 
(https://www.treasury.gov/press-center/press-releases/Pages/
tg1056.aspx); U.S. Department of the Treasury, Press Release, 
``Treasury Identifies Lebanese Canadian Bank Sal as a `Primary Money 
Laundering Concern,' '' February 10, 2011. (https://www.treasury.gov/
press-center/press-releases/Pages/tg1057.aspx)
    \41\ Federal Bureau of Investigation, New York Field Office, Press 
Release, ``U.S. Government Seizes $150 Million in Connection with 
Hezbollah-Related Money Laundering Scheme,'' August 20, 2012. (https://
archives.fbi.gov/archives/newyork/press-releases/2012/u.s.-government-
seizes-150-million-in-connection-with-hizballah-related-money-
laundering-scheme)
---------------------------------------------------------------------------
    Investigators involved in the case are believed to have identified 
over 300 used car businesses used by the Joumaa network to buy cars and 
ship them to West Africa, where they could be sold for a hefty profit, 
thereby generating more revenue for Hezbollah while laundering the drug 
money from Colombia. Yet the Joumaa case ended up naming and folding 
only about 30 of those businesses, leaving the bulk of the money-
laundering structure intact and still able to function.\42\
---------------------------------------------------------------------------
    \42\ Josh Meyer, ``The secret backstory of how Obama let Hezbollah 
off the hook,'' Politico, December 18, 2017. (https://www.politico.com/
interactives/2017/obama-hezbollah-drug-trafficking-investigation/)
---------------------------------------------------------------------------
2014: Ali Fayad, Faouzi Jaber, and Khaled El Merebi
    Lebanese-Ukrainian national Ali Fayad, a Ukrainian-based arms 
trafficker and his two business associates, Lebanese national Khaled El 
Merebi and Ivory Coast national Fauzi Jaber, were indicted in 2014 for 
attempting to procure anti-aircraft missiles on behalf of the Colombian 
FARC. Jaber and Merebi were also indicted on drug trafficking charges. 
DEA undercover agents posed as arms experts for the FARC and negotiated 
the purchase of anti-aircraft missiles with Fayad, the ringleader. All 
three were arrested in Prague in a sting operation. Fayad and Merebi 
were released in early 2016 and swapped with five Czech nationals 
kidnapped in Lebanon the previous summer.\43\ Jaber alone was 
extradited to the United States, and eventually sentenced to 15 years 
in prison. It is not clear why he was left out of the swap, but it is 
possible that Hezbollah blamed him for the DEA sting of Fayad, since he 
was the one who introduced DEA undercover agents to Fayad.
---------------------------------------------------------------------------
    \43\ Robert Muller, ``Czechs release two Lebanese as missing Czechs 
return from Lebanon, US `shocked,' '' Reuters, February 4, 2016. 
(https://www.reuters.com/article/us-lebanon-czechs/czechs-release-two-
lebanese-as-missing-czechs-return-from-lebanon-u-s-shocked-idUSKCN0VD1- 
MU)
---------------------------------------------------------------------------
    The U.S. failure to extradite Fayad left DEA without access to a 
treasure trove of intelligence they could have gathered from 
interrogating him in the United States. Nevertheless, the case against 
Jaber was successfully prosecuted and the Hezbollah crime-terror nexus 
became more visible as a result.
2014: Muhammad Hamdar
    Tipped off by foreign intelligence, reportedly the Israeli 
Mossad,\44\ in October 2014, Peruvian authorities arrested a suspected 
Hezbollah member, Muhammad Ghaleb Hamdar.\45\ Hamdar entered Peru via 
Brazil the previous year, using a fraudulent passport from Sierra 
Leone. Within weeks, he married a dual Peruvian-U.S. national. He may 
have spent considerable time in Brazil, an important hub of Hezbollah 
activity in the region, during his time in Latin America. When he was 
arrested, Peruvian authorities found explosives in his garbage bin--a 
possible indication he had been tipped off at the last minute.
---------------------------------------------------------------------------
    \44\ Ariel Ben Solomon, ``Latest report on Mossad's `Hezbollah spy' 
says he gave up details of Burgas bombing,'' The Jerusalem Post, 
December 22, 2014. (http://www.jpost.com/Middle-East/Latest-report-on-
Mossads-Hezbollah-spy-says-he-gave-up-details-of-Burgas-bombing-385366)
    \45\ ``Presunto miembro de Hezbollah fue detenido en Surquillo 
(Alleged member of Hezbollah was detained in Surquillo),'' RPP Noticias 
(Peru), October 29, 2014. (http://rpp.pe/lima/actualidad/presunto-
miembro-de-hezbollah-fue-detenido-en-surquillo-noticia-737561)
---------------------------------------------------------------------------
    Despite the presence of explosives at his residence and hundreds of 
photos of high-value civilian targets on his phone, his trial did not 
lead to a conviction for terrorism. In April 2017, he was sentenced to 
6 years for falsifying his immigration papers.\46\ Nevertheless, the 
U.S. Department of Treasury identified him as a Hezbollah operative and 
sanctioned him in 2016.\47\ According to Matthew Levitt of the 
Washington Institute for Near East Policy, Hamdar's handler for 
operational planning was Salman al-Reda aka Salman Raouf Salman, the 
Lebanese-Colombian dual national and Hezbollah member who was the on-
the-ground coordinator for the 1994 terror attack on the AMIA building 
in Buenos Aires.\48\ Hamdar met al-Reda numerous times to plan the 
attack in Peru eventually foiled by his arrest.
---------------------------------------------------------------------------
    \46\ ``Absuelven a Libanes acusado de terrorismo detenido en 
Surquillo (Lebanese accused of terrorism detained in Surquillo is 
acquitted),'' El Comercio (Peru), April 21, 2017. (https://
elcomercio.pe/peru/absuelven-libanes-acusado-terrorismo-detenido-
surquillo-415800)
    \47\ U.S. Department of Treasury, Resource Center, ``Counter-
Terrorism Designations,'' October 20, 2016. (https://www.treasury.gov/
press-center/press-releases/Pages/jl0587.aspx). According to Treasury, 
``Hamdar, another member of Hezbollah's ESO, was arrested in Lima, Peru 
in October 2014 on suspicion of planning terrorist attacks in the 
country for Hezbollah. Upon investigation, Peruvian authorities 
discovered photographs of popular tourist restaurants and houses as 
well as traces of military grade explosives in Hamdar's apartment. 
Peruvian authorities also found TNT, gunpowder, and detonators in the 
outdoor trash can assigned to his unit upon investigation. Hamdar 
admitted to being a member of Hezbollah ESO and that he undertook all 
of his activities in Peru at ESO's direction.''
    \48\ Matthew Levitt, ``Hezbollah's Growing Threat Against U.S. 
National Security Interests in the Middle East'', The Washington 
Institute for Near East Policy, March 22, 2016. (https://
www.washingtoninstitute.org/uploads/Documents/testimony/
LevittTestimony20160322.pdf)
---------------------------------------------------------------------------
2015: Adham Tabaja
    As previously highlighted, Treasury sanctioned Tabaja in 2015, 
Lebanese businessman Kassem Hejeij, and Husayn Ali Faour of the 
ESO.\49\ Treasury sanctioned more associates of Tabaja and his company 
in February 2018.\50\
---------------------------------------------------------------------------
    \49\ U.S. Department of the Treasury, Press Release, ``Treasury 
Sanctions Hezbollah Front Companies and Facilitators in Lebanon and 
Iraq,'' June 10, 2015. (https://www.treasury.gov/press-center/press-
releases/Pages/jl0069.aspx)
    \50\ U.S. Department of the Treasury, Press Release, ``Treasury 
Targets Hezbollah Financial Network in Africa and the Middle East,'' 
February 2, 2018. (https://home.treasury.gov/news/press-releases/
sm0278)
---------------------------------------------------------------------------
2015: The Iman Kobeissi Case
    While many of the aforementioned cases involve arms procurement 
attempts, the Fayad case already shows how Hezbollah operatives in 
charge of technology procurement for Hezbollah's and Iran's military 
needs are also involved in criminal activities such as drug 
trafficking. Other cases targeted by Project Cassandra are highly 
suggestive of a Hezbollah terror-crime nexus. One in particular 
involves Iman Kobeissi, a Lebanese business executive with French 
nationality working for Hezbollah, whom U.S. undercover agents 
entrapped and arrested in 2015. The Kobeissi indictment reveals the 
extent of relations with criminal cartels and the role Hezbollah 
financiers play to facilitate procurement not only for their terror 
group, but for its sponsor, Iran, as well.\51\
---------------------------------------------------------------------------
    \51\ Given her access, it is likely that Iman Kobeissi is linked in 
some personal capacity to the highest echelons of the Hezbollah 
leadership.
---------------------------------------------------------------------------
    Kobeissi was indicted for laundering what she believed to be money 
from drug proceeds (she levied a 20 percent commission), for attempting 
to smuggle blood diamonds from Africa into the United States, and for 
trying to procure weapons and airplane parts for Hezbollah and Iran. 
According to court documents, during her encounters with undercover 
U.S. agents she boasted of having important Iranian leadership 
connections. She also mentioned Hezbollah ties with criminal groups in 
numerous African and European countries,\52\ further proof that 
Hezbollah works globally with crime syndicates, cooperating in illicit 
business ventures and offering money-laundering services, logistics, 
and transport.
---------------------------------------------------------------------------
    \52\ Complaint, United States v. Iman Kobeissi, No. S(1) Cr. 962 
(JO), (E.D.N.Y.). (Accessed via Pacer).
---------------------------------------------------------------------------
2016: Operation Cedar
    On January 24, 2016, the aforementioned Operation Cedar led to 
sweeping arrests against Hezbollah operatives across Europe. The 
arrests were followed by Treasury designations and, within days, a 
press release by DEA, drawing a direct line between the arrested 
Lebanese criminals and Hezbollah's senior leadership.
2016: The Ammar, Diab, & Mansour Case
    In September 2016, the DEA indicted three Hezbollah members--one, 
Hassan Mohsen Mansour, was arrested in Paris--who were laundering 
cocaine proceeds for Colombian cartels. The charges against one of 
them, Mohammad Ammar, who was extradited to Miami, involved moving half 
a million dollars of drug money to U.S. banks in order to launder it, 
but the cash value of their operation was much larger.\53\ Media 
coverage of the case mentioned a Hezbollah connection, yet the 
indictment remains sealed while one of the three suspects is a 
fugitive.
---------------------------------------------------------------------------
    \53\ David Ovalle, ``State: Hezbollah-linked group laundered drug 
money through Miami banks,'' The Miami Herald, October 11, 2016. 
(http://www.miamiherald.com/news/local/crime/article107366182.html)
---------------------------------------------------------------------------
2016-2017: The Ali Chamas Case
    In her conversations with undercover DEA agents, Kobeissi mentioned 
Puerto Rico as a point of departure for cocaine shipments. This 
suggests that Hezbollah's criminal networks operate inside the United 
States.\54\ A more recent case--that of Ali Issa Chamas,\55\ a 
suspected Hezbollah drug trafficker\56\ extradited from Paraguay to 
Miami in June 2017--confirms that Latin American drug traffickers, 
including those with suspected ties with Hezbollah, have a secure way 
to move cocaine through main U.S. ports and airports.
---------------------------------------------------------------------------
    \54\ Complaint, United States v. Iman Kobeissi, No. S(1) Cr. 962 
(JO), (E.D.N.Y.), Page 11. (Accessed via Pacer).
    \55\ Jay Weaver, ``Paraguayan man linked to Hezbollah faces drug 
charges in Miami,'' Miami Herald, June 26, 2017. (http://
www.miamiherald.com/news/local/crime/article158334659.html)
    \56\ ``Extraditaran a libanes por pertenecer al grupo terrorista 
Hezbollah (Lebanese Extradited for Participation in Hezbollah Terrorist 
Group),'' Paraguay.com (Paraguay), May 19, 2017. (http://
www.paraguay.com/nacionales/extraditaran-a-libanes-por-pertenecer-al-
grupo-terrorista-hezbollah-162907)
---------------------------------------------------------------------------
    In June 2017, U.S. authorities extradited Lebanese-Paraguayan 
national Ali Issa Chamas to Miami on charges of conspiring to ship 
cocaine to the United States. At the time of his arrest in Paraguay, 
Chamas was dispatching a shipment of 39 kilograms of cocaine to Turkey 
from the Guarani International Airport outside Ciudad Del Este in the 
TBA. Court documents\57\ show that Chamas was part of a larger network 
of drug traffickers, likely based in Colombia. Had he not been 
arrested, Chamas would have dispatched a test run of three kilos of 
cocaine to a business partner in Houston. Upon successful receipt of 
the test run, Chamas promised his partner that as many as 100 kilos of 
cocaine a month could be shipped, by air cargo, to the United States. 
He noted that ``it would take 4 to 5 days to Houston, 2 to 3 days to 
Miami, 4 days to Toronto, Canada,'' and indicated that air cargo was 
the method of transport.\58\
---------------------------------------------------------------------------
    \57\ United States of America's Factual Proffer for Defendant's 
Change of Plea, United States of America v. Ali Issa Chamas, No. 16-
20913-Williams (November 24, 2017). (https://ecf.flsd.uscourts.gov/
doc1/051118408644)
    \58\ United States of America's Factual Proffer for Defendant's 
Change of Plea, United States of America v. Ali Issa Chamas, No. 16-
20913-Williams (November 24, 2017). (https://ecf.flsd.uscourts.gov/
doc1/051118408644)
---------------------------------------------------------------------------
    Chamas' arrest eventually led to the detention, by Paraguayan 
authorities, of three of his associates. On February 4, 2017, two 
Turkish nationals were detained in their TBA apartment.\59\ There, 
police found a press, believed to serve the purpose of liquefying 
cocaine, and 65 large shampoo bottles, which investigators believe were 
meant to be used to carry the drugs.\60\ One of the two individuals 
arrested had photographs of cocaine powder and packaged cocaine in his 
mobile phone. On April 6, 2017, a fourth individual, also a Lebanese 
national, was detained in his Ciudad Del Este apartment, while in the 
company of two others. Media and police reports independently obtained 
from local sources indicate that Chamas and his associates are 
suspected of being part of the same trafficking network and to have 
ties to Hezbollah.\61\
---------------------------------------------------------------------------
    \59\ ``Senad detiene a dos turcos con cocaina liquida en CDE (Senad 
arrests two Turkish nationals with liquid cocaine in Ciudad Del 
Este),'' Ultima Hora (Paraguay), February 6, 2017. (http://
www.ultimahora.com/senad-detiene-dos-turcos-cocaina-liquida-cde-
n1060868.html)
    \60\ ``Caen dos narcotraficantes turcos (Turkish narcotraffickers 
arrested),'' ABC Color (Paraguay), February 6, 2017. (http://
www.abc.com.py/edicion-impresa/judiciales-y-policiales/caen-dos-
narcotraficantes-turcos-1562260.html)
    \61\ For more details, see my May 2017 Testimony: Emanuele 
Ottolenghi, ``Emerging External Influences in the Western Hemisphere,'' 
Testimony before Senate Foreign Relations Committee, May 10, 2017. 
(https://www.foreign.senate.gov/imo/media/doc/051017_Ottolenghi_Testi- 
mony.pdf); See also: ``Extraditaran a Libaes por partenecer al grupo 
terrorista Hezbollah (They will extradite Lebanese for belonging to the 
terrorist group Hezbollah),'' Paraguay Noticias (Paraguay), May 19, 
2017. (http://www.paraguay.com/nacionales/extraditaran-a-libanes-por-
pertenecer-al-grupo-terrorista-hezbollah-162907); Jay Weaver, 
``Paraguayan man linked to Hezbollah faces drug charges in Miami,'' The 
Miami Herald, June 26, 2017. (http://www.miamiherald.com/news/local/
crime/article158334659.html)
---------------------------------------------------------------------------
    Chamas' connection to Hezbollah, and that of his associates, 
remains disputed.\62\ But the U.S. Government thought otherwise:
---------------------------------------------------------------------------
    \62\ Defendant PSI Objections, United States vs. Ali Issa Chamas, 
No. 21 Cr. 20913 (KMW), (F.L.S.D. 2017). (Accessed via Pacer)

``The defendant has advised DEA agents that he was a global facilitator 
for Lebanese drug traffickers, that sending cocaine was easy, that he 
had done it many times from Sao Paulo, Brazil to Europe and Lebanon, 
and that he had sent too much cocaine to count.
``The defendant also admitted to agents that some of his family members 
were Hezbollah and that the Chamas clan was powerful and allied to 
Hezbollah. The defendant admitted to taking part in a shipment of 31 
kilograms of cocaine that was seized by law enforcement in April 2016 
at Beirut-Rafic Hariri International Airport in Lebanon, and that he 
and his associates paid $10,000 per kilogram to facilitate entry of the 
cocaine into Lebanon via the airport, knowing that the money was going 
to Hezbollah.''\63\
---------------------------------------------------------------------------
    \63\ United States' Objection to the PSR and Response in Opposition 
to Defendant's Objections to the Presentence Investigation Report, 
United States vs. Ali Issa Chamas, No. 16 Cr. 20913 (KMW), (F.L.S.D. 
2017). (Accessed via Pacer)

    By his own admission, then, Chamas paid a fee to Hezbollah to let 
cocaine into Lebanon, thereby providing material support to the terror 
organization.
    Chamas was eventually sentenced to 3\1/2\ years in prison on 
charges of attempting to ship 3 kilograms of cocaine into the United 
States, but no narcoterrorism charges were brought against him.\64\ His 
Houston-based associate, named in the proffer only as ``Kuku,'' is 
still at large.\65\ Two of Chamas' three associates, Turkish nationals 
Munir Ozturk and Eray Ucf, arrested in Paraguay in February 2017 
following leads discovered in Chamas' phone, escaped prison right 
before Christmas 2017,\66\ and remain at large. Evidence obtained from 
phones seized at the time of their arrests shows that they utilized 
social media platforms such as Facebook and Instagram to 
communicate.\68\ A fourth associate of Chamas, Akram Abd Ali Kachmar, 
was arrested in April 2017 and remains in jail in Paraguay.
---------------------------------------------------------------------------
    \64\ Judgment, United States vs. Ali Issa Chamas, No. 16 Cr. 20913 
(KMW), (F.L.S.D. 2017). (Accessed via Pacer)
    \65\ Factual Proffer, United States vs. Ali Issa Chamas, No. 16 Cr. 
20913 (KMW), (F.L.S.D. 2017). (Accessed via Pacer)
    \66\ ``Dos turcos vinculados al terrorismo se fugaron de la carcel 
de Misiones (Two Turks connected to terrorism fled from Misiones 
prison),'' ABC Color (Paraguay), December 24, 2017. (http://
www.abc.com.py/edicion-impresa/judiciales-y-policiales/dos-turcos-
vinculados-al-terror- ismo-se-fugaron-de-la-carcel-de-misiones-
1661295.html)
    \67\ The content of the phones and tablets seized during multiple 
raids by Paraguayan authorities was obtained from a local source.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Paraguay's Directorate General of Immigration's ID Card of Akram Abd 
Ali Kachmar \68\
---------------------------------------------------------------------------
    \68\ Information obtained from a local source.

    Kachmar worked as an immigration intermediary with Paraguay's 
ministry of immigration. Local sources say he may have facilitated 
between 500 and 1,000 applications for Paraguayan permanent residency 
for Lebanese nationals.\69\
---------------------------------------------------------------------------
    \69\ Information obtained from a local source.
---------------------------------------------------------------------------
    That citizenship in numerous countries in the Western Hemisphere 
can be easily obtained is beyond dispute, and it remains a problem 
highlighted in the 2016 State Department's annual report on terrorism. 
The report noted that Brazil's borders with Paraguay are porous and 
``irregular migration, especially by aliens from areas with a potential 
nexus to terrorism, is a growing problem, with Brazil often serving as 
a transit country.''\70\ As things stand, Hezbollah operatives' ability 
to obtain citizenship with relative speed and ease indicates that lax 
citizenship laws and citizenship-by-investment programs may constitute 
one of the main attractions to move and operate in this highly 
problematic area of the Southern Cone.
---------------------------------------------------------------------------
    \70\ U.S. Department of State, Bureau of Counterterrorism, 
``Country Reports on Terrorism,'' July 2017, page 281. (https://
www.state.gov/documents/organization/272488.pdf)
---------------------------------------------------------------------------
2017: Samer Ibrahim Atoui
    The case of Samer Ibrahim Atoui perfectly illustrates this 
problem.\71\
---------------------------------------------------------------------------
    \71\ For a more exhaustive discussion of Samer Ibrahim Atoui's 
background and role within Hezbollah, see: Emanuele Ottolenghi, 
``Mystery Martyr,'' The Weekly Standard, March 5, 2018. (https://
www.weeklystandard.com/the-mystery-martyr/article/2011702#.WpRWCt1QY-
Q.twitter)
---------------------------------------------------------------------------
    Samer Ibrahim Atoui was a senior Hezbollah commander, who died on 
October 2, 2017, in Eastern Syria,\72\ while driving with another 
senior Hezbollah Special Forces commander.\73\ Atoui may well have been 
a member of Hezbollah's BAC, responsible for its operations in the 
Southern Cone. Though he died thousands of miles away from Latin 
America, Atoui held both Brazilian and Paraguayan citizenships.
---------------------------------------------------------------------------
    \72\ Ziad El Shoufi, ``[NOT TRANSLATED] (Pictures: Khayyam deposed 
martyr Samer Ibrahim Atwi),'' Khiam Village Official Page, October 5, 
2017. (http://www.khiyam.com/news/article.php?articleID=25298)
    \73\ @QalaatAlMudiq, ``E. #Syria 2 #Hezbollah commanders killed on 
road T-3--#Humaymah in E. #Homs: Ashiq Abbas from Elite Force Radwan & 
Abu Ali Jawad. Airstrike Suspected.,'' Twitter, October 2, 2017. 
(https://twitter.com/QalaatAlMudiq/status/914821544362332160). Social 
media initially identified Atoui with his nom de guerre Abu Ali Jawad.
---------------------------------------------------------------------------
    Based on public records of his dual citizenship, Atoui spent at 
least 5 years in the TBA during the early 1990's. Based on evidence 
available on social media, including the fact that the Imam Khomeini 
mosque in Foz do Iguazu, on the Brazilian side of the TBA, commemorated 
him 4 days after his death,\74\ FDD's research revealed that he had 
close family ties in Latin America and maintained close relations with 
Hezbollah TBA Specially Designated Global Terrorists (SDGT) and other 
prominent members of the TBA-based Hezbollah network.\75\
---------------------------------------------------------------------------
    \74\ Mohamad Moha Ali, Facebook, October 6, 2017. (https://
www.facebook.com/
photo.php?fbid=227982131067500&set=ecnf.100015671443264&type=3&theater)
    \75\ Bassam Nader, Facebook, October 2, 2017. (https://
www.facebook.com/photo.php?fbid=- 
1711394692227524&set=a.561711337195871.1073741825.100000710303599&type=3
&theater).
---------------------------------------------------------------------------
    These ties confirm that the TBA remains a high priority for 
Hezbollah's funding operations. U.S. sanctions clearly failed to deter 
Hezbollah in the TBA. In fact, evidence of senior Hezbollah operatives 
focusing on the TBA and, even more so, relocating there permanently 
suggests that the opposite is true. U.S. sanctions have lost their edge 
and unless clear efforts are made to restore their credibility, their 
deterrent effect will be diminished.
                   the project cassandra controversy
    The long list of court cases and designations just mentioned 
constitutes the backdrop for the expose that Politico published last 
December.\76\ The Politico investigation charged that the Obama 
administration had gone soft on Hezbollah in order to facilitate 
nuclear negotiations with Iran, the main patron of Hezbollah. 
Specifically, the investigation found that the Obama DOJ deliberately 
undermined Project Cassandra.
---------------------------------------------------------------------------
    \76\ Josh Meyer, ``The secret backstory of how Obama let Hezbollah 
off the hook,'' Politico, December 18, 2017. (https://www.politico.com/
interactives/2017/obama-hezbollah-drug-trafficking-investigation/)
---------------------------------------------------------------------------
    While veterans of the Obama administration insist that Politico's 
reporting was downright false and politically motivated, the story 
spurred the Trump administration to broadcast signals that it was 
serious about pursuing Hezbollah. Indeed, days after Politico published 
its expose, Attorney General Jeff Sessions ordered a review of 
decisions made by the Obama Department of Justice,\77\ and, on January 
11, he announced the establishment of an interagency task force 
entrusted with combating Hezbollah's terrorism finance.\78\
---------------------------------------------------------------------------
    \77\ U.S. Department of Justice, Press Release, ``Attorney General 
Sessions Reiterates Support of DEA Efforts to Investigate Hezbollah's 
Drug Trafficking and Related Activities and Orders Review of Prior DEA 
Investigations,'' December 22, 2017. (https://www.justice.gov/opa/pr/
attorney-general-sessions-reiterates-support-dea-efforts-investigate-
hezbollah-s-drug)
    \78\ U.S. Department of Justice, Press Release, ``Attorney General 
Sessions Announces Hezbollah Financing and Narcoterrorism Team,'' 
January 11, 2018. (https://www.justice.gov/opa/pr/attorney-general-
sessions-announces-hezbollah-financing-and-narcoterrorism-team)
---------------------------------------------------------------------------
    The Washington Institute's Matthew Levitt recently published a 
lengthy essay seeking to assess the extent to which the Politico 
investigation was correct.\79\ Levitt seems to vindicate the Politico 
piece's central claim, according to which political considerations 
driven by the Iran deal became a strong disincentive against Project 
Cassandra cases. The breaking point, for Levitt, appears to be the 
already-mentioned Operation Cedar, and the press release that announced 
it. Referring to the already-mentioned DEA press release on February 2, 
2016, announcing the operation, Levitt writes:
---------------------------------------------------------------------------
    \79\ Matthew Levitt, ``In Search of Nuance in the Debate over 
Hezbollah's Criminal Enterprise and the U.S. Response,'' Lawfare, March 
20, 2018. (https://lawfare.s3-us-west-2.amazonaws.com/staging/2018/
FINAL_Levitt%20Paper.pdf)

``Originally, the plan was for a joint press release including Europol 
and several European countries as well as the DEA. Senior French 
officials later balked (and the rest of the Europeans quickly followed 
suit) because Iranian President Rouhani was in Paris at the time and 
French authorities were reportedly concerned their participation might 
undermine negotiations for Iran to purchase Airbus airplanes under 
nuclear-deal provisions expressly allowing such sales.''\80\
---------------------------------------------------------------------------
    \80\ Matthew Levitt, ``In Search of Nuance in the Debate over 
Hezbollah's Criminal Enterprise and the U.S. Response,'' Lawfare, March 
20, 2018, page 25. (https://lawfare.s3-us-west-2.amazonaws.com/staging/
2018/FINAL_Levitt%20Paper.pdf)

    Although Levitt does not substantiate this claim with any reference 
to publicly-available information, this episode is consistent with the 
accusations leveled at the Obama administration--namely that politics 
got in the way of law enforcement and, in the clash among agencies, 
governments, and their equities, law enforcement officials and their 
findings were swept aside or minimized.
    Levitt makes this abundantly clear elsewhere in his essay:

``For the DEA, this information was based on clear evidence collected 
through law enforcement investigations and therefore was nothing 
remarkable. But the intelligence community felt sandbagged. To its 
members, the press release was a runaround of the process of 
interagency intelligence consensus that, as far as they were concerned, 
was still a matter of fierce debate.''\81\
---------------------------------------------------------------------------
    \81\ Matthew Levitt, ``In Search of Nuance in the Debate over 
Hezbollah's Criminal Enterprise and the U.S. Response,'' Lawfare, March 
20, 2018, page 26. (https://lawfare.s3-us-west-2.amazonaws.com/staging/
2018/FINAL_Levitt%20Paper.pdf)

    It is not clear why this would still be ``a matter of fierce 
debate.'' After all, Treasury had just designated the members of the 
network taken down in Operation Cedar, linked them to Adham Tabaja, and 
labelled them as Hezbollah facilitators involved in crime for the sake 
of financing terrorism. Instead, as Levitt notes, ``Confusion persisted 
within the intelligence community as information underscoring the 
arrested individuals' Hezbollah bona fides became clear.'' Levitt seems 
to suggest that the pushback against DEA's Project Cassandra came 
precisely when the evidence of their 10-year odyssey to prove the 
Hezbollah crime-terror nexus finally produced the ultimate smoking gun.
    Levitt does seek to distance himself from the sweeping headlines of 
the Politico investigation, attributing problems and shortcomings 
highlighted in the Politico expose more to a lingering firewall between 
law-enforcement and intelligence agencies. That firewall is no doubt 
partly responsible for short-circuiting the ability, across Government 
agencies, to share information and leverage it against hybrid threat 
networks such as the ones Hezbollah established in Latin America. 
Nevertheless, his overall assessment is damning. To the intelligence 
community, the February 2016 press release drawing a thick line ``from 
Tabaja, Noureddine and the Business Affairs Component to the late 
Hezbollah terrorist mastermind, Imad Mughniyeh'' was a red line 
crossed, a ``runaround of the process of interagency intelligence 
consensus'' that ``rocked the boat'' and left the intelligence 
community feeling ``sandbagged.''\82\ ``Operation Cedar,'' he 
concludes, ``was a tremendous success, but the intelligence community 
and the many in the wider interagency became determined to shut down 
Project Cassandra, at least in its current form.''\83\
---------------------------------------------------------------------------
    \82\ Matthew Levitt, ``In Search of Nuance in the Debate over 
Hezbollah's Criminal Enterprise and the U.S. Response,'' Lawfare, March 
20, 2018, pages 25-26. (https://lawfare.s3-us-west-2.amazonaws.com/
staging/2018/FINAL_Levitt%20Paper.pdf)
    \83\ Matthew Levitt, ``In Search of Nuance in the Debate over 
Hezbollah's Criminal Enterprise and the U.S. Response,'' Lawfare, March 
20, 2018, page 26. (https://lawfare.s3-us-west-2.amazonaws.com/staging/
2018/FINAL_Levitt%20Paper.pdf)
---------------------------------------------------------------------------
    The U.S. apparatus of Government needs to recognize that terror 
finance targets engaged in illicit activities may facilitate, and when 
needed, become involved in, terror attacks. Treating these two 
phenomena as disjointed may not have been the result of political 
malice, but the consequences of not fixing this problem are that the 
United States is being less effective at pursuing key policy goals in 
the fight against terrorism.
    That is why a thorough review of Project Cassandra is crucial. As I 
wrote last January in an article \84\ co-authored with Derek Maltz, who 
for a decade headed the DEA's Special Operations Division and was thus 
privy to many of these cases, a serious review must seek answer to at 
least five questions.
---------------------------------------------------------------------------
    \84\ Derek Maltz and Emanuele Ottolenghi, ``It's Time for the 
Justice Department to Hold Hezbollah Accountable,'' Foreign Policy, 
January 19, 2018. (https://foreignpolicy.com/2018/01/19/its-time-for-
the-justice-department-to-hold-hezbollah-accountable/)
---------------------------------------------------------------------------
    Our first two questions concern botched extraditions that would 
have given U.S. investigators access to a treasure trove of 
information. First, no senior figure at the State Department, Justice 
Department, or the White House fought for the extradition of the 
Syrian-Venezuelan national and U.S.-designated drug kingpin Walid 
Makled Garcia.\85\ Why?
---------------------------------------------------------------------------
    \85\ U.S. Department of the Treasury, Press Release, ``Recent OFAC 
Actions,'' May 29, 2009. (https://www.treasury.gov/resource-center/
sanctions/OFAC-Enforcement/Pages/20090529.aspx)
---------------------------------------------------------------------------
    Though not himself a member of Hezbollah, Makled may have been the 
repository of privileged information about the Venezuela-Hezbollah 
relationship, as well as Venezuelan government corruption and 
cooperation with the drug cartels. Makled was arrested in 2010 in 
Colombia,\86\ a close ally of the United States. Yet President Obama 
declined to use his prestige, influence, and leverage to bring him to 
the United States,\87\ instead letting Makled be extradited to 
Venezuela in 2011,\88\ thereby putting the secrets he could have 
revealed out of the reach of U.S. law enforcement.
---------------------------------------------------------------------------
    \86\ ``Drug Trafficking Suspect Wanted by U.S. Is Arrested in 
Columbia,'' The New York Times, August 21, 2010. (http://
www.nytimes.com/2010/08/21/world/americas/21colombia.html)
    \87\ Jackson Diehl, ``Why isn't Obama fighting Colombia's dirty 
deal?,'' The Washington Post, August 10, 2011. (https://
www.washingtonpost.com/opinions/why-isnt-obama-fighting-colombias-
dirty-deal/2011/04/07/AFGdwrGD_story.html?utm_term=.edb5080d0c81)
    \88\ ``Accused drug kingpin extradited to Venezuela,'' CNN, May 9, 
2011. (http://www.CNN.com/2011/WORLD/americas/05/09/
venezuela.colombia.extradition/index.html)
---------------------------------------------------------------------------
    Second, why did the U.S. Government fail to extradite Ali Fayad 
from the Czech Republic? Recall that Fayad was arrested during a DEA 
sting that closely resembled the capture of arms dealer Viktor Bout, in 
2008, in Thailand. Bout--a Russian national who inspired Nicolas Cage's 
character in the 2005 film Lord of War and sold weapons to the Taliban, 
African warlords, and Hezbollah--had friends in high places in Moscow. 
Russia strenuously opposed his extradition \89\ and slammed his 
conviction.\90\
---------------------------------------------------------------------------
    \89\ Owen Matthews, ``Viktor Bout's Secrets Frighten the Kremlin,'' 
Newsweek, September 2, 2010. (http://www.newsweek.com/viktor-bouts-
secrets-frighten-kremlin-72249)
    \90\ ``Russia slams U.S. over sentence for arms dealer Viktor 
Bout,'' CNN, April 6, 2012. (http://www.CNN.com/2012/04/06/justice/
russia-us-viktor-bout-case/index.html)
---------------------------------------------------------------------------
    The Obama administration was willing to spend considerable 
political capital to extradite him for trial in the United States. Yet 
it declined to do so in July 2015, when Hezbollah engineered the 
kidnapping of five Czech nationals in Lebanon.\91\
---------------------------------------------------------------------------
    \91\ Nicholas Blanford, ``Five Czechs missing in Lebanon: Kidnapped 
for money or politics?,'' CSN Monitor, July 20, 2015. (https://
www.csmonitor.com/World/Middle-East/2015/0720/Five-Czechs-missing-in-
Lebanon-Kidnapped-for-money-or-politics)
---------------------------------------------------------------------------
    The third decision to review is the one that prevented charges from 
being brought against Abdullah Safieddine. Bringing drug trafficking 
charges against Hezbollah's most senior leaders, such as Safieddine, 
would lay bare the toxic ties linking Hezbollah and drug cartels across 
Latin America. While no country in Latin America recognizes Hezbollah 
as a terrorist organization, many feel pressure to take action against 
narcotraffickers. Public revelations of criminality and drug 
trafficking would also damage Hezbollah's supposed Islamic principles.
    Why, then, would the Justice Department not agree to bring charges 
against a top Hezbollah criminal? If the answer has to do with 
politics, rather than insufficient evidence, then the American public 
has a right to know.
    A fourth and related question to ask is why, when the Justice 
Department did bring charges against other Hezbollah operatives in drug 
trafficking cases, most of the indictments failed to identify the 
group. How can our law enforcement community fight an organization if 
we cannot even call it by its own name?
    The fifth question to ask about Project Cassandra concerns 
unfinished business from the Lebanese Canadian Bank case, which is 
deservedly known as one of the greatest successes in the history of 
prosecuting terrorist finance networks. Yet it was not an unmitigated 
success: Hezbollah leveraged 300 U.S.-based used car dealerships to 
launder the drug revenues by exporting vehicles to West Africa. But the 
actions taken against the bank's network affected only 30 businesses 
due to lack of interagency cooperation. Most of the remaining 270 
businesses are still operating. As the Iman Kobeissi case reveals, the 
West Africa used car money-laundering scheme is still running. Why has 
the Justice Department not pursued a network of criminal enterprises of 
which it is clearly aware?
    To date, the Trump administration has not yet provided an answer to 
these questions.
    As of spring of 2018, there are no concrete signs that the 
Department of Justice is ready to revive Project Cassandra. Attorney 
General Sessions appointed the acting assistant attorney general, John 
P. Cronan, to supervise the new task force. In a speech he delivered 
last week to the 35th International Drug Enforcement Conference, Cronan 
said, ``Our fight against drug cartels and transnational criminal 
organizations is the very definition of a fight that transcends 
borders.''\92\
---------------------------------------------------------------------------
    \92\ U.S. Department of Justice, Press Release, ``Acting Assistant 
Attorney General Jon P. Cronan Delivers Remarks at the 35th 
International Drug Enforcement Conference,'' April 10, 2018. (https://
www.justice.gov/opa/pr/acting-assistant-attorney-general-john-p-cronan-
delivers-remarks-international-drug)
---------------------------------------------------------------------------
    Boundaries, whether geographic or organizational, do not impede 
terrorists. They must not impede those who seek to fight them. 
Terrorism has frequently resorted to crime in the past to finance 
violence. Hezbollah has vehemently denied any involvement with criminal 
activities, but given the evidence, their denials are not serious. 
Besides, the terror-crime nexus is hardly unusual. Terrorist groups 
such as the Irish Republican Army and the Italian Red Brigades all 
engaged in criminal activities that included extortion, racketeering, 
and bank robberies.\93\ The Islamic State too has engaged in numerous 
nefarious criminal ventures, such as antiquities smuggling \94\ and 
organ trafficking,\95\ to sustain its Caliphate. Such activities 
require terror groups to interact with crime syndicates. Sometimes 
interaction develops into full-fledged partnerships.\96\ Fighting their 
sources of finance, even as these involve criminal activities, should 
be an integral part of the war on terror.
---------------------------------------------------------------------------
    \93\ Lizette Alvarez, ``Police Fear I.R.A. Is Turning Expertise to 
Organized Crime, The New York Times, January 19, 2005. (https://
www.nytimes.com/2005/01/19/world/europe/police-fear-ira-is-turning-
expertise-to-organized-crime.html)
    \94\ Callum Paton, ``ISIS Makes up to $100 Million a Year Smuggling 
Ancient Artifacts from Iraq and Syria,'' Newsweek, August 7, 2017. 
(http://www.newsweek.com/isis-makes-100-million-year-smuggling-ancient-
artifacts-iraq-and-syria-647524)
    \95\ Anne Sheckhard, ``ISIS Defector Reports on the Sale of Organs 
Harvested from ISIS-held `Slaves,' '' Huffington Post, December 6, 
2017. (https://www.huffingtonpost.com/anne-speckhard/isis-defector-
reports-on-sale-of-organs_b_8897708.html)
    \96\ ``Il Patto BR--Camorra (The BR--Camorra Pact),'' La Repubblica 
(Italy), June 9, 1987. (http://ricerca.repubblica.it/repubblica/
archivio/repubblica/1987/06/09/il-patto-br-camorra.- html)
---------------------------------------------------------------------------
    As Cronan concluded,

``Money is the lifeblood of any criminal organization, be it a pill 
mill, a transnational drug cartel, or a terrorist organization. Money 
is the very reason that criminal enterprises exist and persist. If we 
can map out, and stamp out, the financial networks through which the 
money is moving, we will go a long way in paralyzing these criminal 
organizations well before we have to endure, first-hand, the 
destructive effects of their poisons in our communities.''\97\
---------------------------------------------------------------------------
    \97\ U.S. Department of Justice, Press Release, ``Acting Assistant 
Attorney General Jon P. Cronan Delivers Remarks at the 35th 
International Drug Enforcement Conference,'' April 10, 2018. (https://
www.justice.gov/opa/pr/acting-assistant-attorney-general-john-p-cronan-
delivers-remarks-international-drug)

    Nevertheless, Cronan did not mention the word Hezbollah once in his 
remarks, though he focused on transnational organized crime, large-
scale international narcotics trafficking, and international money 
laundering, all activities linked to Hezbollah's Latin American 
operation that had been supposedly swept under the rug during the Obama 
administration.
    Chairman King, Ranking Member Rice, Members of the committee:
    From a policy perspective, it is important to ask:
   What is the goal of reviewing past conduct, if not learning 
        from past mistakes so that Government agencies can be more 
        effective?
   What should be the next steps in combating Hezbollah's 
        hybrid threat networks, specifically in Latin America?
    The most obvious lesson learned from the debate that followed the 
publication of Politico's investigation is that even its most fervent 
detractors did not dispute the underlying assumptions of Project 
Cassandra's former officials interviewed for the story, namely that 
Hezbollah's terror-crime nexus is significant, on-going, and central to 
the senior leadership's strategy of funding its terror activities. 
Hezbollah, in other words, acts as a global criminal syndicate in 
addition to being a terror organization currently involved in large-
scale atrocities in the Middle East.
    Learning from the successes and failures of nearly two decades of 
law enforcement, sanctions, economic warfare, intelligence gathering, 
and diplomacy can offer suggestions on how to move forward and more 
effectively combat Iran's and Hezbollah's networks in the Western 
Hemisphere.
                   what do we learn from these cases?
1. Iranian and Hezbollah Operatives Seek Dual Citizenship
    Iranian agents and Hezbollah's BAC and ESO operatives prize 
multiple passports, preferably from Western countries, to cross borders 
seamlessly, establish companies, and when necessary settle in multiple 
jurisdictions. Iranians involved in both acts of terrorism and 
sanctions evasion methodically seek passports of convenience to fly 
under the radar of anti-money laundering and terror finance monitoring 
mechanisms. I covered this subject extensively in a February 2016 
testimony before the House Committee on Oversight and Government 
Reform.\98\
---------------------------------------------------------------------------
    \98\ Emanuele Ottolenghi, ``The Role of Iranian Dual Nationals in 
Sanctions Evasion,'' Testimony before the House Committee on Oversight 
and Government Reform, February 10, 2016. (https://oversight.house.gov/
wp-content/uploads/2016/02/2016-02-10-Ottolenghi-Testimony-Bio.pdf)
---------------------------------------------------------------------------
    Much like Hezbollah, Iran has relied on Iranian expatriates to 
pursue a variety of nefarious projects. It has dispatched executives of 
government-owned companies abroad to acquire permanent residence and 
citizenship. It has also leveraged friendly relations and exploited 
citizenship-by-investment programs (CIP) to equip its agents with 
second passports. A non-Iranian passport generally draws less scrutiny 
at border crossings and makes it easier for a dual-passport holder to 
open foreign bank accounts, incorporate companies, and conduct 
financial operations overseas. The same is true for Lebanese citizens.
    A number of Iranians, for example, were granted citizenship by 
Bosnia and Herzegovina during the 1992-1995 civil war. According to 
Shaul Shay, the author of Islamic Terror and the Balkans, ``The 
Mujahidin fighters were either recognized as legal citizens following 
marriage to local women or were granted citizenship for their 
contribution to the Bosnian Muslim nation during the war.''\99\ These 
included officials from the Islamic Revolutionary Guard Corps, 
military, and intelligence.\100\
---------------------------------------------------------------------------
    \99\ Shaul Shay, Islamic Terror and the Balkans, (New Brunswick: 
Transactions Publishers, 2011), page 69.
    \100\ Iranian weapons supplies to Bosnia are well documented. Peter 
Andreas, ``The Clandestine Political Economy of War and Peace in 
Bosnia,'' Bosnian Security after Dayton: New Perspectives, Ed. Michael 
A. Innes, (Abingdon, UK: Routledge, 2006).
---------------------------------------------------------------------------
    Bosnian passports have provided Iranians with the ability to enter 
and exit a country bordering the European Union that has since applied 
for E.U. membership and has enjoyed an Association Agreement with it 
since 2008. Since 2010, Bosnian citizens with a biometric passport also 
enjoy visa-free travel within the European Union's Schengen Area.
    Venezuela offers another, more recent instance in which diplomatic 
ties and Iranian economic largesse provided access to second passports. 
For over a decade now, Venezuela has provided passports and other 
identity documents to non-Venezuelan nationals, including many from 
Middle Eastern countries. In a July 2006 testimony to the Subcommittee 
on International Terrorism and Non-Proliferation of the House Foreign 
Affairs Committee, Mr. Frank C. Urbancic, Jr., then-principal deputy 
coordinator at the State Department's Office of the Coordinator for 
Counterterrorism, said:

``Venezuelan travel and identification documents are extremely easy to 
obtain by persons not entitled to them, including non-Venezuelans. 
Passports and national ID cards are available for sale in the 
requester's identity, or another, if so desired. The systems and 
processes for issuing these documents are corrupted on various levels: 
Alien smuggling rings use confederates in the issuing entities to make 
documents available in large numbers to their clients; freelancers in 
those entities capitalize on lax or non-existent controls to sell 
documents for personal gain; forgers alter passports with child-like 
ease; and most worrisome, Venezuelan government officials direct the 
issuance of documents to ineligible individuals to advance political 
and foreign policy agendas.''\101\
---------------------------------------------------------------------------
    \101\ Frank Urbancic Jr., ``Prepared Statement'' for ``Venezuela 
Terrorism Hub of South America?'' Hearing before the Subcommittee on 
International Terrorism and Proliferation of the Committee on 
International Relations of the House of Representatives, July 13, 2006. 
(http://commdocs.house.gov/committees/intlrel/hfa28638.000/
hfa28638_0.HTM)

    Media reports confirm that these practices are on-going to the 
benefit of Iranian and Hezbollah agents. The Brazilian weekly La 
Veja\102\ reported in 2015 that Lebanese citizens belonging to Iran's 
Hezbollah proxy, as well as Iranian nationals, obtained Venezuelan 
passports at the Venezuelan embassy in Damascus. An exiled Venezuelan 
police officer formerly seconded to the Venezuelan embassy in Baghdad 
echoed these reports, claiming that numerous Middle Eastern nationals, 
mostly Shiite Muslims, obtained Venezuelan documents and birth 
certificates in exchange for cash during his time in Baghdad.\103\ His 
story formed the basis of a lengthy 2017 expose on CNN.\104\
---------------------------------------------------------------------------
    \102\ ``Venezuela sold non-existent air tickets for `aeroterror' 
flight,'' La Veja International, March 25, 2015. (http://
vejainternational.com/news/venezuela-sold-non-existent-air-tickets-for-
aeroterror-flight/)
    \103\ ``Diplomatico Venezolano Denuncio la Entrega de Documentos a 
Terroristas (Venezuelan diplomat denounced the delivery of documents to 
terrorists),'' Infobae (Argentina), November 24, 2015. (http://
www.infobae.com/2015/11/24/1772058-diplomatico-venezolano-denuncio-la-
entrega-documentos-terroristas)
    \104\ ``Pasaportes venezolanos en venta? (Venezuelan Passports for 
Sale?),'' CNN, accessed April 12, 2018. (https://www.CNN.com/videos/
spanish/2017/02/07/cnnee-conclusiones-pasaportes-en-la-sombra-uno.cnn); 
Scott Zamost, Drew Griffin, Kay Guerrero and Rafael Romo, ``Venezuela 
may have given passports to people with ties to terrorism,'' CNN, 
February 14, 2017. (https://www.cnn.com/2017/02/08/world/venezuela-
passports-investigation/index.html)
---------------------------------------------------------------------------
    Venezuelan passports have given their beneficiaries visa-free 
access to Mercosur and ALBA countries in Latin America and the 
Caribbean,\105\ placing them within easy reach of U.S. soil.
---------------------------------------------------------------------------
    \105\ The 11 member countries are Antigua and Barbuda, Bolivia, 
Cuba, Dominica, Ecuador, Grenada, Nicaragua, Saint Kitts and Nevis, 
Saint Lucia, Saint Vincent and the Grenadines, and Venezuela.
---------------------------------------------------------------------------
    Numerous Western Hemisphere countries provide foreign nationals 
with the opportunity to acquire citizenship through investment. Iranian 
nationals (among others) have exploited these schemes in the past. 
Passports applications are quick--usually with no residency 
requirements or even presence in the country. Five Caribbean countries 
currently offer such programs: St. Kitts and Nevis (the oldest and most 
popular program), Grenada, Dominica, Antigua, and Barbuda, and, since 
January 1, 2016, St. Lucia.
    In 2014, the U.S. Treasury's Financial Crimes Enforcement Network 
(FinCEN) issued an advisory ``to alert financial institutions that 
certain foreign individuals are abusing the Citizenship-by-Investment 
program sponsored by the Federation of St. Kitts and Nevis (SKN) to 
obtain SKN passports for the purpose of engaging in illicit financial 
activity.''\106\ The advisory made particular reference to Iranian 
nationals:
---------------------------------------------------------------------------
    \106\ U.S. Department of the Treasury, Financial Crimes Enforcement 
Network, ``Advisory: Abuse of the Citizenship-by-Investment Program 
Sponsored by the Federation of St. Kitts and Nevis,'' May 20, 2014. 
(https://www.fincen.gov/statutes_regs/guidance/html/FIN-2014-A004.html)

``[I]n 2013 the SKN government announced that all Iranian nationals 
were suspended from participating in the SKN Citizenship-by-Investment 
program. Despite this public assurance, FinCEN believes that Iranian 
nationals continue to obtain passports issued through the program. As a 
result of these lax controls, illicit actors, including individuals 
intending to use the secondary citizenship to evade sanctions, can 
obtain an SKN passport with relative ease.''\107\(Emphasis added)
---------------------------------------------------------------------------
    \107\ U.S. Department of Treasury, Financial Crimes Enforcement 
Network, ``Advisory: Abuse of the Citizenship-by-Investment Program 
Sponsored by the Federation of St. Kitts and Nevis,'' May 20, 2014. 
(https://www.fincen.gov/statutes_regs/guidance/html/FIN-2014-A004.html)

    A case involving three Iranians--Houshang Farsoudeh, Houshang 
Hosseinpour, and Pourya Nayebi--likely spurred the 2014 FinCen 
advisory. Treasury designated the trio on February 6, 2014, for 
facilitating ``deceptive transactions for or on behalf of persons 
subject to U.S. sanctions concerning Iran.''\108\ Although they have 
since benefited from sanctions relief from the Iran deal, in December 
2016 a criminal complaint named them as unindicted co-conspirators in a 
fraudulent scheme to launder $1.7 billion through South Korea and their 
companies in the Gulf and the Republic of Georgia in a case prosecuted 
in Anchorage, Alaska.\109\
---------------------------------------------------------------------------
    \108\ U.S. Department of the Treasury, Press Release, ``Treasury 
Targets Networks Linked to Iran,'' February 6, 2014. (https://
www.treasury.gov/press-center/press-releases/Pages/jl2287.aspx)
    \109\ Indictment, United States vs. Kenneth Zong, No. 2 CR 142 
(SLG--DMS) (USAO 2016). (Accessed via Pacer); see also: Zach Dorfman, 
``The Ayatollah's Billion-Dollar Alaskan Bag Man'' Politico Magazine, 
July 14, 2017. (https://www.politico.com/magazine/story/2017/07/14/
iran-money-laundering-kenneth-zong-215372)
---------------------------------------------------------------------------
    Just last month, on March 20, U.S. law enforcement agencies 
arrested Ali Sadr, another Iranian national with a St. Kitts and Nevis 
passport, on charges of evading Iran sanctions by laundering $115 
million from Venezuela through U.S. banks.\110\
---------------------------------------------------------------------------
    \110\ Indictment, United States vs. Ali Sadr Hashemi Nejad, No. 4 
CR 224 (IDD). (S.D.N.Y. 2018). (Accessed via Pacer)
---------------------------------------------------------------------------
    Second passports are also critical assets for Hezbollah BAC and ESO 
operatives. Every Hezbollah operative in the TBA that Treasury 
sanctioned in 2004 and 2006 is a dual national of Lebanon and 
Paraguay--in some cases, like the aforementioned Samer Atoui, they also 
held a Brazilian passport. Virtually every indicted Hezbollah operative 
and facilitator involved in terror plots, terror finance schemes, 
weapons and technology procurement, trade-based money laundering, and 
drug-trafficking on behalf of Hezbollah was a dual national of Lebanon 
and another country:
   Chekry Mohamad Harb, the suspected BAC operative working 
        under Abdallah Safieddine with Colombian cartels identified by 
        Operation Titan, is a dual Colombian-Lebanese national.
   Moussa Ali Hamdan, the ESO operative indicted alongside 
        Hassan Hodroj in 2009 and captured in the TBA in 2010, is a 
        dual Lebanese-U.S. national.
   Kassem Tajideen, sanctioned by Treasury in 2009 and arrested 
        in March 2017 for his material support of Hezbollah through his 
        companies, is a dual Belgian-Lebanese national.
   Sheikh Bilal Mohsen Wehbe, the cleric whom Treasury 
        sanctioned in 2010 as Hezbollah's chief representative in Latin 
        America,\111\ is a dual Brazilian-Lebanese national.
---------------------------------------------------------------------------
    \111\ U.S. Department of the Treasury, Press Release, ``Treasury 
Targets Hizballah Financial Network,'' December 9, 2010. (https://
www.treasury.gov/press-center/press-releases/Pages/tg997.aspx)
---------------------------------------------------------------------------
   Ayman Joumaa, indicted in 2011 for his role in the Lebanese-
        Canadian bank case, is a dual Colombian-Lebanese national.
   Hussein Atris, an ESO operative arrested in Thailand in 2012 
        in conjunction with a cache of 10,000 pounds of urea-based 
        fertilizer and 10 gallons of ammonium nitrate, is a dual 
        Swedish-Lebanese national.
   Mouhamad Hassan Mouhamad El Husseini, the ESO operative who 
        carried out the July 2012 terror attack in Burgas, Bulgaria, 
        where five Israeli tourists and their Bulgarian bus driver were 
        murdered, was a dual French-Lebanese national.
   Hossam Taleb Yaacoub, an ESO operative arrested in Cyprus in 
        2013 while conducting surveillance for terror targets against 
        Israeli tour buses, is a dual Swedish-Lebanese national.
   Ali Fayad, arrested in Prague in 2014 in a DEA sting 
        operation, is a dual Lebanese-Ukrainian national. His partner 
        Fauzi Jaber, who was subsequently extradited to the United 
        States in 2016, is an Ivorian-Lebanese dual national.
   Hussein Bassam Abdallah, another ESO operative also arrested 
        in Cyprus, in 2015, had 8.2 tons of ammonium nitrate stored in 
        First Aid ice packs in his rented apartment. He is a dual 
        Canadian-Lebanese national.
   Iman Kobeissi, the businesswoman arrested in Atlanta in 
        November 2015 while trying to arrange the sale of African blood 
        diamonds inside the United States, is a dual French-Lebanese 
        national.
   Ali Mohamad Kourani, indicted in May 2017 for giving 
        material support to Hezbollah and plotting terror attacks on 
        U.S. targets, is a dual Lebanese-U.S. national. In his 
        indictment, the role of a second passport becomes evident. One 
        of the first instructions he received from his Hezbollah 
        handler in Lebanon was ``to obtain U.S. citizenship and a U.S. 
        passport as soon as possible.''\112\
---------------------------------------------------------------------------
    \112\ Indictment, United States vs. Ali Kourani, No. 7 CR 417 (AKH) 
(S.D.N.Y. 2017). Page 12. (Accessed via Pacer)
---------------------------------------------------------------------------
    This pattern is impossible to ignore and needs to be taken into 
account for the purposes of border security and immigration policy. 
Simply put: Iran and Hezbollah rely on their nationals to fraudulently 
obtain U.S. permanent residency status or citizenship, and citizenship 
of other countries so that dual passport holders can enter Western 
jurisdictions for the purpose of carrying out acts of terrorism, terror 
finance, or criminal activities. As long as this threat persists, all 
dual nationals of Lebanon and Iran applying for citizenship, permanent 
residency, visas, or visa-free entries through Electronic System for 
Travel Authorization applications must be subjected to enhanced 
scrutiny. Restrictive measures introduced by the Obama administration 
in early 2016 already apply to Iranian dual nationals of visa-waiver 
program countries.
    These measures should apply to Lebanese dual nationals of visa-
waiver program countries as well. A thorough review of permanent 
residency and citizenship applications from nationals of Iran and 
Lebanon should also be undertaken. As long as Western Hemisphere 
countries harbor extensive Hezbollah and Iran hybrid threat networks 
run by dual nationals, none of these countries should be able to 
participate in the visa-waiver program to enter the United States.
    Finally, all the aforementioned cases highlight the level of 
sophistication Iranian and Hezbollah operatives have in both their 
training and the tools at their disposal. None of those mentioned 
entered into, dispatched drugs to, or plotted terror attacks against 
the United States by coming into the country through the backdoor as 
clandestine, illegal migrants. They exploited weaknesses in immigration 
policy and airport security systems to travel to, reside in, or 
transact through the United States. Much like in other jurisdictions, 
Hezbollah operatives who target the United States or use the United 
States as a staging ground for trade-based and real estate-based money-
laundering come in through the front door, with a legitimate passport 
and a credible business cover story.
2. Networks Are Global
    Another sign of sophistication: Especially when it comes to terror 
finance and trade-based money laundering, both Iranian and Hezbollah 
networks are global. Terror finance and terror plotting tend to overlap 
with the global map of expatriate communities and their commercial 
activities; networks intersect with communal and religious 
institutions, whose leaders are deeply involved not just with soft 
power outreach to both community members and proselytes, but also in 
supervising hard power activities such as counterintelligence and 
logistical support for terrorists.
    Both the Ayman Joumaa and Tajideen networks spanned several 
continents. Iman Kobeissi boasted of connections in numerous African 
and European countries. Trade-based money laundering in the TBA relies 
on front companies and shipments that originate in China and Florida, 
as I have discussed in previous testimonies in June 2016,\113\ May 
2017,\114\ and November 2017.\115\
---------------------------------------------------------------------------
    \113\ Emanuele Ottolenghi, ``The Enemy in our Backyard: Examining 
Terror Funding Streams from South America,'' Testimony before the House 
Committee on Financial Services, June 8, 2016. (https://
financialservices.house.gov/uploadedfiles/hhrg-114-ba00-wstate-
eottolenghi-20160608.pdf)
    \114\ Emanuele Ottolenghi, ``Emerging External Influences in the 
Western Hemisphere,'' Testimony before the Senate Foreign Relations 
Committee, May 10, 2017. (https://www.foreign.senate.gov/imo/media/doc/
051017_Ottolenghi_Testimony.pdf)
    \115\ Emanuele Ottolenghi, ``Examining the Effectiveness of the 
Kingpin Designation Act in the Western Hemisphere,'' Testimony before 
the House Foreign Affairs Committee, November 8, 2017. (http://
www.defenddemocracy.org/content/uploads/documents/11-08-17_Ottolenghi_- 
Written_Testimony.pdf)
---------------------------------------------------------------------------
    Fayad's associates met undercover DEA agents in Africa, where they 
had well-established connections they could leverage to run their drug-
trafficking operations.
    Kourani travelled to Guangzhou, China, in May 2009, likely to 
procure the ammonium nitrate-based First Aid packs later seized in both 
Thailand and Cyprus. Hezbollah has a growing commercial presence in 
Guangzhou, Shenzen, and Hong Kong, which serves the purpose of buying 
merchandise for trade-based money laundering scheme, and may have 
assisted Kourani in his shopping trip.
    The aforementioned Bilal Mohsen Wehbe, the cleric whom Treasury 
named as Hezbollah's representative to Latin America, has overseen 
Hezbollah's counterintelligence activity in the TBA.\116\
---------------------------------------------------------------------------
    \116\ U.S. Department of the Treasury, Press Release, ``Treasury 
Targets Hizballah Financial Network,'' December 9, 2010. (https://
www.treasury.gov/press-center/press-releases/Pages/tg997.aspx)
---------------------------------------------------------------------------
    Sheikh Ghassan Yousif Abdallah, a Lebanese cleric who lives in Foz 
do Iguassu, is the brother of U.S.-sanctioned Muhammad Yousif Abdallah, 
who also resides in Foz. Treasury designated Muhammad Abdallah in 2006 
and identified him as the owner and manager of the Galeria Page in 
Ciudad Del Este. At the time, Treasury viewed him as a senior Hezbollah 
leader in the TBA who hosted fundraisers for the terror group, 
personally carried money to Lebanon, met with Hezbollah's security 
division to coordinate Hezbollah activities in the TBA, and also 
engaged in a variety of financial crimes, including ``the import of 
contraband electronics, passport falsification, credit card fraud, and 
trafficking counterfeit U.S. dollars.''\117\
---------------------------------------------------------------------------
    \117\ U.S. Department of the Treasury, Press Release, ``Treasury 
Targets Hezbollah Fundraising Network in the Triple Frontier Region of 
Argentina, Brazil, and Paraguay'' December 6, 2006. (https://
www.treasury.gov/press-center/press-releases/Pages/hp190.aspx)
---------------------------------------------------------------------------
    Chilean government sources personally confirmed to me that, much 
like his brother, Ghassan Abdallah is linked to Hezbollah. He is active 
in Chile through the local Shi'a center in the capital Santiago,\118\ 
and once ran the Shi'a mosque in Ciudad Del Este,\119\ which his 
brother helped establish. Ghassan Abdallah is also associated with the 
Foz do Iguassu Imam Khomeini mosque and was one of a handful of Latin 
American-based Shi'a clerics to attend the Ahlul Bayt World Assembly 
international gathering in Qom in August 2007--an indication of his 
senior rank and closeness to the office of the supreme leader, under 
whose auspices the Assembly operates.\120\
---------------------------------------------------------------------------
    \118\ ``Sheij Ghassan Abdallah, ``Centro Cultura Islamica Chile: 
Corporacion de Cultura y Beneficencia Islamica (Chile), accessed June 
6, 2016. (http://islamchile.com/home/sheij-ghassan-abdallah/)
    \119\ Associacfao Religiosa Beneficiente Islamica no Brasil, 
``Quarto Encontro Internacional da Assembleia Mundial Ahlul Bait (A.S.) 
(Fourth Meeting of the International World Ahlul Bayt Assembly),'' 
August 18, 2007. (http://www.mesquitadobras.org.br/
not_vis.php?op=9&cod=10&pagina=28)
    \120\ Associacfao Religiosa Beneficiente Islamica no Brasil, 
``Quarto Encontro Internacional da Assembleia Mundial Ahlul Bait (A.S.) 
(Fourth Meeting of the International World Ahlul Bayt Assembly),'' 
August 18, 2007. (http://www.mesquitadobras.org.br/
not_vis.php?op=9&cod=10- &pagina=28)
---------------------------------------------------------------------------
    The United States is thus confronted by formidable enemies, who are 
ingenious and versatile in their craft. It needs to respond with 
ingenuity and versatility, overcoming obsolete conceptions and adapting 
to the hybrid nature of the threat it faces.
3. Hezbollah Has Deep Ties to Transnational Organized Crime
    Project Cassandra's main thrust was that Hezbollah is not just a 
terror organization. It is also a global criminal syndicate. 
Aforementioned cases make it abundantly clear. The Harb indictment and 
the subsequent Treasury designations of 2009 parsed over his Hezbollah 
connection, but his link to the Medellin cartels through his associate 
Francisco Antonio Florez Upegui is indisputable.\121\ Meanwhile, 
investigators involved in his case openly acknowledged the Hezbollah 
connection. The Los Angeles Times quoted Gladys Sanchez, lead 
investigator for the special prosecutor's office in Bogota, as saying, 
``The profits from the sales of drugs went to finance Hezbollah.''\122\ 
Harb was not the only instance where Hezbollah and Colombian cartels 
interfaced; the 2011 Joumaa indictment revealed that a Hezbollah 
network was laundering money for Colombian and Mexican drug 
cartels.\123\
---------------------------------------------------------------------------
    \121\ U.S. Department of the Treasury, Press Release, ``Treasury 
Designates Medellin Drug Lord Tied to Oficina de Enviagado Organized 
Crime Group,'' July 9, 2009. (https://www.treasury.gov/press-center/
press-releases/Pages/tg201.aspx)
    \122\ Chris Kraul and Sebastian Rotella, ``Drug probe finds 
Hezbollah link,'' Los Angeles Times, October 22, 2008. (http://
articles.latimes.com/2008/oct/22/world/fg-cocainering22)
    \123\ U.S. Department of the Treasury, Press Release, ``Treasury 
Targets Major Lebanese-Based Drug Trafficking and Money Laundering 
Network,'' January 26, 2011. (https://www.treasury.gov/press-center/
press-releases/Pages/tg1035.aspx); see also: U.S. Department of the 
Treasury, Press Release, ``U.S. Charges Alleged Lebanese Drug Kingpin 
with Laundering Drug Proceeds for Mexican and Colombian Drug Cartels,'' 
December 13, 2011. (https://www.justice.gov/archive/usao/vae/news/2011/
12/20111213joumaanr.html)
---------------------------------------------------------------------------
    Connections to organized crime go beyond Colombia. The 2014 O Globo 
aforementioned investigation exposed a link between Hezbollah and the 
PCC. The Ali Fayad and Iman Kobeissi cases both exposed connections to 
criminal organizations in Europe and Africa. The Chamas case exposed 
links to drug-trafficking rings in Turkey and, possibly, Iran.
    A more recent January 2017 Italian investigation into organized 
crime points to another possible Hezbollah connection to organized 
crime--with the `Ndrangheta, the southern Italian criminal syndicate 
from Calabria. Italian authorities arrested dozens of members of a 
network that intended to bring a record 8 tons of cocaine, hidden under 
bananas, from Colombia to the southern Italian port of Gioia 
Tauro.\124\ Local media highlighted the budding partnership between 
Colombian cartels and the Calabrese mob, but also mentioned a Lebanese 
national,\125\ whom the Italian prosecutor's indictment names as 
working for the Colombian side of the deal, though he permanently 
resides in Italy, specifically as the person in charge of transferring 
cocaine payments from the Calabrese mafia to the Colombians.\126\ The 
indictment also indicates that initial payments were made from Lebanon.
---------------------------------------------------------------------------
    \124\ ``Operazione Stammer contro traffico internazionale cocaina, 
a febbraio la requisitoria del pm (Operation Stammer against 
international traffic cocaine, in February the indictment of the pm),'' 
Il Lametino (Italy), December 4, 2017. (http://www.lametino.it/Cronaca/
operazione-stammer-contro-traffico-internazionale-cocaina-a-febbraio-
la-requisitoria-del-pm.html)
    \125\ ``Ecco chi tracciava le rotte della cocaina per la 
'ndrangheta (Meet those who traced cocaine routes for the 
'ndrangheta),'' Il Giorno (Italy), February 1, 2017. (https://
www.ilgiorno.it/monza-brianza/cronaca/ndragheta-cocaina-1.2861396)
    \126\ Procura della Repubblica di Catanzaro, Direzione Distrettuale 
Anti-Mafia, ``Fermo di indiziato di delitto del Pubblico Ministero, 
Procedimento Penale 9444/14 RG.N.R. mod. 21 ODA--operazione 
``Stammer''. Obtained from confidential source.
---------------------------------------------------------------------------
    Though a Hezbollah link is still unproven, it is unusual for a 
clan-based, tightly knit criminal syndicate such as the Calabrese mob 
to rely on outsiders, especially with their money. It is not unusual, 
on the other hand, for the Colombian cartels to rely on Hezbollah to 
launder their proceeds.\127\
---------------------------------------------------------------------------
    \127\ U.S. Department of the Treasury, Press Release, ``Treasury 
Designates A Medellin, Colombia-based Drug Money Laundering Network 
With Ties To La Oficina De Envigado And Ayman Saied Joumaa,'' July 1, 
2014. (https://www.treasury.gov/press-center/press-releases/Pages/
jl250.aspx)
---------------------------------------------------------------------------
    Another common element: The Lebanese national implicated in this 
case ran a used car import-export business in Italy. The Joumaa network 
leveraged used car businesses in the United States to generate profit 
through sales of cars to West Africa.\128\ Even after the Joumaa case, 
used cars remained an important part of Hezbollah's money-laundering 
schemes through West Africa. In an April 20, 2015, conversation 
recorded in her criminal complaint, Iman Kobeissi told U.S. undercover 
agents that a money-laundering associate based in Cotonou, Benin, 
``deals with the sale of thousands of vehicles in Benin and would be 
able to launder funds for a 15 percent commission rate.''\129\ The 
laundering scheme that the Ayman Joumaa and Canadian-Lebanese bank 
cases had supposedly stopped is still up and running.
---------------------------------------------------------------------------
    \128\ Jack Cloherty and Richard Esposito, ``Feds: Hezbollah Gets 
Into the Used Car Business,'' ABC News, February 11, 2011. (http://
abcnews.go.com/Blotter/hezbollah-car-business/story?id=12893001)
    \129\ Complaint, United States v. Iman Kobeissi, No. S(1) Cr. 962 
(JO), (E.D.N.Y.). Page 13 (Accessed via Pacer).
---------------------------------------------------------------------------
    That may again have to do less with political malice and more with 
a partial disconnect between law enforcement and intelligence sides of 
the state apparatus. The extensive connections discussed require the 
U.S. intelligence and law enforcement communities to redouble their 
efforts to cooperate more closely and work better in de-conflicting and 
intelligence sharing.
4. Hezbollah Network Is Equal Parts Terror and Crime
    An obvious point that emerges from court cases and sanctions 
designations against Hezbollah operatives is that Hezbollah networks 
are equal part terror and crime. The TBA Hezbollah operation is a 
perfect example of that--its designated members were cited for multiple 
activities that included trading in counterfeited goods, including 
passports and currency, money-laundering, and fundraising for 
Hezbollah. But they were also engaged in paramilitary activities, 
offered logistical support to the largest terror operation mounted by 
Hezbollah outside the Middle East, and gave safe haven to terror 
fugitives.
    That terror attack was the 1994 AMIA bombing. Its perpetrators 
relied on logistical support from Hezbollah's terror finance networks 
in the TBA. The close relationship between ESO agents and the terror 
financiers Hezbollah has permanently dispatched to Latin America was 
confirmed by Dib Hani Harb, one of the individuals indicted alongside 
Hassan Hodroj (and Moussa Ali Hamdan) in 2009. In April 2009, Harb, who 
is the son-in-law of Hassan Hodroj, told an undercover agent he met in 
Florida that Hezbollah maintains cells throughout the world. He cited 
the AMIA bombing as an example of the work of one of these cells.\130\ 
When his partner, Moussa Ali Hamdan, sought to elude capture after his 
activities had been exposed and he and his associates had been 
indicted, he found refuge among the Shi'a Lebanese in the TBA.
---------------------------------------------------------------------------
    \130\ Indictment, United States vs. Hassan Hodroj et al., No. 4 CR 
744 (LS) (E.D.P.A. 2009). (Accessed via Pacer).
---------------------------------------------------------------------------
    These cases, where terror planning and financial crimes overlap, 
are indeed not unique, as evidenced by Samer el Debek's aforementioned 
indictment. He was dispatched to inspect possible targets in Panama but 
also asked to familiarize himself with drone components that could be 
bought in the United States.
    The conclusion, for U.S. policymakers, as well as intelligence and 
law-enforcement agencies, should be that the barrier between 
counterterrorism and organized crime, which likely never existed in the 
minds of terrorists, must also come down in the way Government 
understands its adversaries, organizes itself, and shares information 
among its components to pursue and neutralize threats to National 
security.
5. Narcoterrorism and the Terror-Crime Nexus May Be Hezbollah's 
        Principal Source of Funding
    This conclusion is even more urgent when the volume of money 
generated by the crime-terror nexus is fully appraised.
    At the time when Treasury sanctioned Hezbollah's TBA networks in 
2004,\131\ and then again in 2006,\132\ it was estimated that revenue 
generated through trade-based money laundering and other illicit 
activities in the TBA yielded roughly $10 million for Hezbollah, out of 
an estimated budget of $100 million a year. A 2004 Naval War College 
study assessed that ``Hezbollah, whose annual operating budget is 
roughly one hundred million dollars, raises roughly a tenth of that in 
Paraguay.''\133\ A 2009 RAND study doubled the estimate of money raised 
mainly in the TBA to $20 million.\134\ Regardless of the accuracy of 
these estimates, Hezbollah's operating expenses have mushroomed since 
the early 2000's. Hezbollah's financial needs have grown significantly 
since then, mainly due to the damage suffered in its 2006 war with 
Israel and, since 2011, due to its deepening involvement in the Syrian 
civil war.\135\ Iran's funding has grown along with Hezbollah's needs, 
but the ebbs and flows of Iranian support,\136\ combined with pressure 
from U.S. measures that began hitting Hezbollah's finances in Lebanon 
in 2015, have meant that Hezbollah's reliance on alternative funding 
streams has become more critical to its operational needs. A September 
2017 assessment of Hezbollah finances published by two of my colleagues 
concluded that Hezbollah's overseas financial networks now contribute 
an estimated 20-30 percent of their overall operating budget, which my 
colleagues conservatively estimated to be around $1 billion a 
year.\137\
---------------------------------------------------------------------------
    \131\ U.S. Department of the Treasury, Press Release, ``Treasury 
Designates Islamic Extremist, Two Companies Supporting Hezbollah in 
Tri-Border Area,'' June 10, 2004. (https://www.treasury.gov/press-
center/press-releases/Pages/js1720.aspx)
    \132\ U.S. Department of the Treasury, Press Release, ``Treasury 
Targets Hizballah Fundraising Network in the Triple Frontier of 
Argentina, Brazil, and Paraguay,'' December 6, 2006. (https://
www.treasury.gov/press-center/press-releases/Pages/hp190.aspx)
    \133\ Paul D. Taylor, ``Latin American Security Challenges: A 
Collaborative Inquiry from North and South,'' Naval War College Newport 
Papers, accessed May 6, 2017. (https://www.usnwc.edu/Publications/
Naval-War-College-Press/-Newport-Papers/Documents/21- pdf.aspx)
    \134\ Gregory F. Treverton, Carl Matthies, Karla J. Cunningham, 
Jeremiah Goulka, Greg Ridgeway, and Anny Wong, ``Film Piracy, Organized 
Crime, and Terrorism,'' RAND Safety and Justice Program and the Global 
Risk and Security Center, 2009. (http://www.rand.org/content/dam/rand/
pubs/monographs/2009/RAND_MG742.pdf)
    \135\ Matthew Levitt, ``The Crackdown on Hezbollah's Financial 
Network,'' The Wall Street Journal, June 27, 2016. (https://
blogs.wsj.com/washwire/2016/01/27/the-crackdown-on-hezbollahs-
financing-network/)
    \136\ Oren Kessler and Rupert Sutton, ``Hezbollah threatened by 
Iran's Financial Woes,'' World Affairs Journal, June 3, 2014. (http://
www.worldaffairsjournal.org/article/hezbollah-threatened-
iran%E2%80%99s-financial-woes)
    \137\ Yaya J. Fanusie and Alex Entz, ``Hezbollah Financial 
Assessment,'' Foundation for Defense of Democracies, September 2017. 
(http://www.defenddemocracy.org/content/uploads/documents/
CSIF_TFBB_Hezbollah.pdf)
---------------------------------------------------------------------------
    In fact, it may be much more.
    In her conversations with undercover agents, Iman Kobeissi 
discussed the typical commission she would levy for helping criminals 
launder money. When undercover agents gave her cash to launder back 
into an account she believed to be controlled by narco-traffickers, she 
retained a 20 percent commission. When she mentioned a business 
associate involved in the used car business in Benin, she indicated he 
would levy a 15 percent commission.
    With those percentages, the size of Hezbollah's money-laundering 
operations become much more significant than they were when Treasury 
first targeted its TBA network in 2004. The Joumaa operation alone was 
moving $200 million a month--a 20 percent commission amounts to $480 
million a year. Chekry Harb, according to the Los Angeles Times, 
``washed hundreds of millions of dollars a year.'' Again, a 15-20 
percent commission would put Hezbollah's revenue just from this 
operation well above $100 million a year.
    In July 2016, Brazilian authorities arrested Fadi Hassan Nabha, a 
former Hezbollah Special Forces member wanted for drug trafficking. 
Brazil did not comment on his Hezbollah links, nor was he prosecuted 
under terrorism charges, since Brazil does not consider Hezbollah to be 
a terror group. Nevertheless, Nabha had a long history of drug 
trafficking--he was first arrested in 2003, in Sao Paulo, Brazil, in an 
operation where 42 kilos of cocaine were seized.\138\ Media reports 
quoting police sources said at the time of the arrest Nabha's group was 
moving between 400 kilos and one ton of cocaine per month, which he and 
his associates bought, on the Brazilian side of the TBA, at $2,000 per 
kilo and sold in Brazil for $4,500 or in Lebanon for $60,000--these are 
2003 prices.\139\
---------------------------------------------------------------------------
    \138\ ``Policia prende dois libaneses com 42 quilos de cocaina 
(Police apprehend two Lebanese with 42 kilos of Cocaine),'' Folha de S. 
Paulo (Brazil), January 23, 2003. (http://www1.folha.uol.com.br/folha/
cotidiano/ult95u67289.shtml)
    \139\ ``Denarc apreende cocaina de mafia libanesa (Denarc seizes 
cocaine from Lebanese mafia),'' Agencia Estado (Brazil), January 23, 
2003. (http://brasil.estadao.com.br/noticias/geral,denarc-apreende-
cocaina-da-mafia-libanesa,20030123p4658)
---------------------------------------------------------------------------
    Finally, the Chamas case indicated that Lebanese traffickers pay a 
$10,000 per kilo of cocaine transit fee to Hezbollah when shipments 
arrive to Beirut's Rafic Hariri International Airport.\140\
---------------------------------------------------------------------------
    \140\ Factual Proffer, United States vs. Ali Issa Chamas, No. 16 
Cr. 20913 (KMW), (F.L.S.D. 2017). (Accessed via Pacer)
---------------------------------------------------------------------------
    Taken together, these are staggering figures. They are the tip of 
the iceberg. After all, these are just a handful of operations that 
were thwarted. Besides, Hezbollah's ability to generate hundreds of 
millions a year, if not more, in revenue from the sale of cocaine alone 
does not take into account all the other criminal activities Hezbollah 
is involved in--which include the sale of contraband tobacco,\141\ the 
trade in captagon,\142\ blood diamonds,\143\ and illicit timber \144\ 
in Africa, among other things. These revenues help the terror group arm 
its fighters with increasingly sophisticated weapons in Syria's fields 
of battle; pay pensions to the families of the fallen; rebuild the 
country after every war with Israel; buy their influence in countries 
where political protection and corrupted officials help their networks 
operate; plot terror attacks abroad; and much more.
---------------------------------------------------------------------------
    \141\ A 2016 report published by Israel's ministry of health on 
tobacco issues in Israel States that, ``illicit trade of tobacco 
constitutes an important source of funding for Hezbollah.'' Israel 
Ministry of Health, ``[NOT TRANSLATED] 2015 (Report of the Minister of 
Health on Smoking in Israel),'' May 2016, Page 134.
    \142\ Boaz Ganor and Miri Halperin Wernli, ``Hezbollah and the 
Traffic in Counterfeit Captagon,'' Jerusalem Post (Israel), June 29, 
2015. (http://www.jpost.com/Opinion/Hezbollah-and-the-traffic-in-
counterfeit-Captagon-407513)
    \143\ U.S. Department of the Treasury, Press Release, ``Treasury 
Targets Hizballah Financial Network,'' May 27, 2009. (https://
www.treasury.gov/press-center/press-releases/Pages/tg149.aspx). 
According to Treasury, the businessman targeted in their designation, 
Kassim Tajideen, was arrested in Belgium in connection to ``fraud, 
money laundering and diamond smuggling.''
    \144\ ``US Consumers Buying Millions of Dollars-Worth of Luxury 
Timber Linked to Hezbollah Financiers, Global Witness Reveals,'' Global 
Witness, February 9, 2017. (https://www.globalwitness.org/en/press-
releases/us-consumers-buying-millions-dollars-worth-luxury-timber-
linked-hezbollah-financiers-global-witness-reveals/)
---------------------------------------------------------------------------
                     conclusion and recommendations
    Mr. Chairman, sanctions and designations alone cannot put an end to 
Hezbollah's financial operations in the Western Hemisphere. However, 
when combined with other tools, they can be very effective.
    With this in mind, the following are a number of policy 
recommendations to hit Hezbollah with the full arsenal of U.S. 
sanctions and law enforcement tools:
Update Existing Sanctions Against Hezbollah Terror Finance Networks
    While the U.S. Government has, over the years, developed remarkably 
sharp and effective tools to counteract Hezbollah's terror finance 
threat, using these tools in a manner that will outsmart Hezbollah and 
disrupt its cash flows to cause irreparable damage to the terror 
group's finances remains a challenge.
    Congress can help address this challenge by swiftly reconciling the 
House and Senate versions of the 2017 HIFPAA. This legislation combines 
and complements in one bill all existing tools from sanctions to 
designations and prosecutions. By passing HIFPAA, Congress will make 
the Kingpin Act and other existing tools more effective.
    Treasury also needs to update and expand existing sanctions against 
Hezbollah operatives in the TBA and other Latin American countries. 
Such sanctions need to be accompanied by vigorous and continuous 
enforcement, including periodic designations of new individuals and 
entities and successful prosecutions of cases. In previous testimonies, 
I highlighted how Hezbollah's TBA businesses may be using front 
companies in south Florida to launder money. These activities must be 
investigated and prosecuted. Facilitators must be punished with the 
full panoply of tools available to the U.S. Government--including visa 
bans against corrupt officials.
Target Enablers with Global Magnitsky and HIFPAA
    Mr. Chairman, another factor behind Hezbollah's success is its 
reliance on influence and access to local politicians, law enforcement, 
judges and prosecutors, airport security, and other officials in Latin 
American countries, to buy their silence and complicity. In my November 
2017 testimony before the Subcommittee on the Western Hemisphere of the 
House Foreign Affairs Committee, I mentioned the case of a possible 
corrupt official inside Paraguay's government who, in exchange for 
bribes, allegedly helped companies in the U.S. Treasury-sanctioned 
Galeria Page conceal their public records.
    The U.S. Government can use the Global Magnitsky Act of 2016 to 
punish this official, or any other foreign dignitary engaged in corrupt 
practices to the benefit of Hezbollah. HIFPAA would also be a very 
important tool in the arsenal of the United States to punish corruption 
and complicity through the provision of services with a variety of 
measures, including the denial or revocation of visas to the United 
States.
    HIFPAA also would reduce the threshold for designating individuals 
who may not conclusively be members of Hezbollah, yet are clearly 
facilitators and enablers of its activities. This measure would permit 
U.S. authorities to go after companies, financial institutions, 
accounting and legal firms, virtual office service providers, and 
others who enable Hezbollah's terror finance. For these actors, it will 
be more difficult to continue to operate outside the financial system 
once the United States slaps sanctions on them.
Sanction Hezbollah and Its Senior Leadership with TCO and Kingpin 
        Designations
    The United States designated Hezbollah as a terror organization in 
October 1997. However, its activities as a global criminal enterprise 
dealing in illicit drugs go mostly unrecognized. I strongly recommend 
that the U.S. administration designate Hezbollah as both a 
Transnational Criminal Organization (TCO) and a Global Kingpin. Both 
designations should not only target the terror group at the 
organizational level, but also extend to Hezbollah senior leadership 
involved in deciding, endorsing, religiously justifying, coordinating, 
and benefiting from, the traffic of illicit substances.
    These designations are especially important in countries that do 
not consider Hezbollah a terrorist organization, as is the case with 
all the countries in Latin America. Local governments reluctant to 
prosecute terror financiers may respond more positively to U.S. 
requests to arrest, prosecute, and extradite individuals implicated in 
drug trafficking and organized crime. The Hezbollah Kingpin Designation 
Act,\145\ currently under consideration in the House Foreign Affairs 
Committee, is a good place to start.
---------------------------------------------------------------------------
    \145\ Hezbollah Kingpin Designation Act, H.R. 5035, 115th Congress 
(2018). (https://www.Congress.gov/bill/115th-congress/house-bill/5035)
---------------------------------------------------------------------------
Impose 311 Designations on Financial Institutions Assisting Hezbollah 
        in Latin America
    The continuing business activities of individuals and entities 
sanctioned by the United States occur because local governments are 
either reluctant to implement U.S. sanctions or actively cooperate with 
the terrorists. The administration should demand that they either 
comply or face consequences. These should include imposing 311 
designations\146\ on financial institutions used by Hezbollah 
financiers to move their revenues, designating banking sectors of 
countries that facilitate Hezbollah's terror finance as zones of 
primary money-laundering concern, and working within international 
forums like the Financial Action Task Force to have such countries 
blacklisted.
---------------------------------------------------------------------------
    \146\ U.S. Department of the Treasury, Press Release, ``Fact Sheet: 
Overview of Section 311 of the USA PATRIOT Act,'' February 10, 2011. 
(https://www.treasury.gov/press-center/press-releases/Pages/
tg1056.aspx).
---------------------------------------------------------------------------
Empower Law Enforcement to go After Hezbollah's Global Financial 
        Networks
    Sanctions have had some salutary effect in affecting Hezbollah's 
financial operations. They have named and shamed individuals, 
companies, and organizations. They have cut-off terror entities from 
the U.S. financial system. They have nudged U.S. allies and the global 
financial system into compliance. Unfortunately, there remain too many 
countries in disagreement or disregard of U.S. policy. Hezbollah 
terrorists have found permissive havens for their activities in these 
jurisdictions where U.S. sanctions alone have limited reach.
    This is where law enforcement can complement existing sanctions. 
The cases I mentioned in my written statement all involve a balance of 
sanctions and prosecution. The combination of tools always works as a 
force multiplier with coordination among agencies and a shared goal of 
disrupting Hezbollah's cash flows drive policy.
    It is critical, then, that those involved in law enforcement have 
both the requisite leadership and resources to complete their mission. 
While heartened by last week's hearing on the nominee for assistant 
secretary of state for international narcotics and law enforcement 
affairs, the fact remains that too many critical positions remain 
unfulfilled or led by officials in an acting capacity. Chief among 
these is the DEA administrator post. In the midst of an opioid crisis 
and with cocaine from Latin America flooding over our borders, it 
should be of the highest priority for this administration to appoint a 
candidate with the vision and experience to pursue TCOs such as 
Hezbollah. Equally important, this individual should also have the 
skills to coordinate government agencies, navigate bureaucracy and 
build friendships and alliances internationally to be able to rely on 
foreign agencies' cooperation in running international investigations.
    Earlier this year, Attorney General Jeff Sessions announced the 
creation of the Hezbollah Financing and Narcoterrorism Team 
(HFNT)\147\, a group tasked with investigating the individuals and 
networks that provide support to Hezbollah. Congress should support 
this initiative and ensure it has sufficient human and financial 
resources to revive Project Cassandra. It should initiate hearings in 
order to hear about the Task Force's findings as well as its progress 
rebuilding the toolkit needed to successfully target Hezbollah's terror 
finance networks.
---------------------------------------------------------------------------
    \147\ U.S. Department of Justice, Press Release, ``Attorney General 
Sessions Announces Hezbollah Financing and Narcoterrorism Team,'' 
January 11, 2018. (https://www.justice.gov/opa/pr/attorney-general-
sessions-announces-hezbollah-financing-and-narcoterrorism-team)
---------------------------------------------------------------------------
Provide Additional Resources to Intelligence and Law Enforcement 
        Agencies
    Hezbollah hybrid threat networks also require the United States to 
commit additional resources at the operational level, to support law 
enforcement and intelligence efforts to overcome the challenge they 
pose. U.S. agents involved in gathering intelligence as well as 
evidence for cases need to be able to understand not only the language 
and culture of the countries where they are assigned, but also be well-
versed in the language, religion, and culture of their Iranian and 
Hezbollah adversaries. This means breaking old barriers and conceptions 
about regional command structure and area expertise that inform 
training and assignment of agents and diplomats to serve overseas. DEA 
outposts in Latin America, by now, should have fluent speakers of 
Arabic and Farsi seconded to their Spanish-speaking and Portuguese-
speaking colleagues.
Provide Additional Resources to Treasury
    Mr. Chairman, Treasury needs more resources. OFAC cannot work cases 
through the system without access to more resources that can enable the 
bureaucracy to work faster and cast its net wider.
    Hezbollah, Mr. Chairman, is a global threat. As John Feltman and 
Daniel Benjamin said in June 2010 joint testimony before the Senate 
Foreign Relations Committee's Subcommittee on Near Eastern and South 
and Central Asian Affairs:

``Hezbollah has . . . broadened its sources of financial support in 
recent years. Hezbollah is now heavily involved in a wide range of 
criminal activity, including the drug trade and smuggling. It also 
receives funds from both legitimate and illicit businesses that its 
members operate, from NGO's under its control, and from donations from 
its supporters throughout the world.''\148\
---------------------------------------------------------------------------
    \148\ ``Assessing the Strength of Hezbollah,'' Hearing before the 
Subcommittee on Near Eastern and South and Central Asian Affairs of the 
Senate Committee on Foreign Relations, June 8, 2010. (https://
www.gpo.gov/fdsys/pkg/CHRG-111shrg62141/pdf/CHRG-111shrg62141.pdf)

    Last month's omnibus package provided funding for the Treasury's 
Office of Terrorism and Financial Intelligence (TFI) at $141,788,000, a 
roughly $18 million increase from the 2017 enacted level. TFI plays an 
important role in combating terrorism finance and is crucial to U.S. 
efforts to maintain effective pressure on Iran. For fiscal year 2019, 
the White House requested $159 million for TFI as part of its budget 
request.\149\ Congress should support this increased level of funding 
as well as other efforts to strengthen TFI and other similar 
infrastructure within the Treasury Department.
---------------------------------------------------------------------------
    \149\ Executive Office of the President of the United States, 
Office of Management and Budget, ``An American Budget,'' February 19, 
2018. (https://www.whitehouse.gov/wp-content/uploads/2018/02/budget-
fy2019.pdf)
---------------------------------------------------------------------------
    There are also important steps in the diplomatic arena that the 
United States can take.
Target Financial Holdings and Financial Institutions Used by Hezbollah 
        to Move Money to and from Latin America
    U.S. counterterrorism and law enforcement operations against 
Iranian and Hezbollah networks need to rely on the help and cooperation 
of multiple foreign governments, in whose jurisdictions these networks 
operate. This requires coordinating investigations with foreign 
counterparts, intelligence sharing on a mutual basis, alongside the 
reliance on incentives and deterrents to ensure that help is rewarded 
and hindrance is punished. In this respect, the passing of HIFPAA 2017 
\150\ in a reconciled form is an important step forward as it allows 
the Executive branch to exact a price on those foreign facilitators--be 
they corrupt officials or conniving financial institutions--who are 
allowing Hezbollah networks to continue to operate inside their own 
countries.
---------------------------------------------------------------------------
    \150\ Hizballah International Financing Prevention Act of 2015, 
Pub. L. 114-102, Page 129 STAT 2205, codified as amended at 50 U.S.C  
1701. (https://www.Congress.gov/bill/114th-congress/house-bill/2297/
text); Hizballah International Financing Prevention Act of 2017, Pub 
114-102, Page 129 STAT 2205, codified as amended at 50 U.S.C  1701. 
(https://www.Congress.gov/bill/115th-congress/senate-bill/1595/text)
---------------------------------------------------------------------------
    The governments of Argentina, Brazil, and Paraguay are more 
receptive than at any time in the past 10 years to U.S. leadership in 
the fight against terror finance and terrorists' increasingly brazen 
cooperation with drug cartels and other criminal groups. The United 
States should therefore encourage authorities to be more proactive in 
combating terror finance. Washington should also pursue the same 
approach adopted by Treasury in the past of reaching out directly to 
financial institutions.
    Based on internal figures that a senior Paraguayan official shared 
with me, most of the cash flows out of that country go to the United 
States. Another Paraguayan senior official provided me evidence of 
dozens of examples of suspicious transactions involving suspect 
Hezbollah businesses. While I am not able to share these documents 
publicly due to on-going investigations, it is clear from those 
documents that illicit traffickers use the U.S. financial system to 
launder revenue through tools typical of trade-based money-laundering 
techniques. Banking officials I met during a recent trip to Asuncion 
expressed anxiety about flaws in their banking system and expressed a 
willingness to cooperate with U.S. authorities. Facing significant 
consequences for being on the wrong side of the U.S. Treasury goes a 
long way toward getting local banks to look at what is happening in 
their own backyard. The reward of continuing to conduct business with 
the United States may be leveraged to ensure a higher degree of 
transparency and information sharing on their part.
Build Local Capacity with Regional Allies
    Even if the United States were to find areas of cooperation with 
authorities abroad in combating terror finance, the efficacy of these 
efforts will rely in part on the capacity of our partners to undertake 
these operations. Paraguay, for example, needs its armed forces and 
drug-enforcement agency to build capacity to patrol border areas. The 
absence of monitoring capabilities through aerial radars in a region 
where drugs tend to move by small planes is a serious deficiency.
    One way the United States can help is to facilitate cross-border 
cooperation between custom and police authorities. Cooperation and 
resource sharing are necessary components to combating the threat of 
transnational organized crime and terrorism. A key area would be 
intelligence sharing. Terror finance networks thrive in border areas by 
exploiting weak coordination among governments to patrol their shared 
borders. The United States can facilitate this cooperation. One 
important step would be to revive the Regional Intelligence Center 
established in 2006 to combat transnational crime and corruption in the 
TBA.\151\
---------------------------------------------------------------------------
    \151\ Eric Green, ``U.S. `Pleased' by Creation of South American 
Intelligence Center,'' IIP Digital, August 24, 2006. (http://
iipdigital.usembassy.gov/st/english/article/2006/08/20060823- 
1715051xeneerg0.9045221.html)
---------------------------------------------------------------------------
Improve Controls at Ports of Shipment
    As outlined in my testimony, Paraguay's borders may be porous, 
pointing to significant deficiencies in border and custom controls for 
shipments into the country by air, land, or sea. Initiating more 
stringent controls and better monitoring of merchandise is desirable 
and possible. As noted, most problematic shipments by air reach the TBA 
from two points of departure--Miami International Airport and Dubai 
(via Dakar). Planes also return to those destinations with considerable 
cargo. The United States should immediately institute stricter controls 
over shipments to Ciudad Del Este leaving from Miami, and perform more 
effective and timely due diligence on companies shipping to the 
Paraguayan city. The same applies to cargo arriving in the TBA from 
Dubai via Dakar. Washington is investing considerable energy working 
with Gulf allies to fight Hezbollah's terror finance. Seeking greater 
scrutiny over merchandise and its recipients before the weekly cargo 
leaves Dubai would go a long way to filter illicit shipments and raise 
the costs for Hezbollah intermediaries in the TBA.
    Mr. Chairman, these are my recommendations. I thank you for the 
opportunity to testify and I look forward to your questions.

    Mr. King. Doctor, thank you very much for your testimony. 
Our second witness is Dr. Michael Pregent, an adjunct fellow at 
the Hudson Institute, where he serves as a senior Middle East 
analyst.
    Mr. Pregent has over 28 years of experience as an 
intelligence officer. He is an expert in Middle East and North 
Africa political and security issues. His writings have 
appeared in Foreign Affairs, the Wall Street Journal, CNN, and 
numerous other publications.
    Mr. Pregent, thank you for being here today, and you are 
recognized for your testimony.

   STATEMENT OF MICHAEL PREGENT, ADJUNCT FELLOW, THE HUDSON 
                           INSTITUTE

    Mr. Pregent. Thank you. Chairman King, Ranking Member Rice, 
on behalf of the Hudson Institute I am honored to testify 
before you today about Iran's global terrorism network.
    Like Secretary Mattis said in December 2017, everywhere you 
find turmoil in the Middle East, you will find Iran's hand 
behind it. Iran's destabilizing activities have accelerated 
under the protections of the JCPOA, the Iran Deal. We have seen 
increased lethal and financial aid to Hammas, Hezbollah, and 
the Houthis. As Representative Brad Sherman said, those are 
just the ones that begin with the letter H.
    Specific to the Houthis, the IRGC is providing an increased 
capability to fire precision rockets and missiles, a capability 
the Houthis would not have without IRGC Quds Force advisors on 
the ground.
    The IRGC has increased support to militias in Iraq that 
have killed Americans in the past and are now pledging to do 
the same again. IRGC now deploys these very same militias to 
prop up Assad in Syria and move against our Sunni, Christian, 
and Kurdish allies in Iraq.
    The IRGC has increased lethal aid to the Taliban in 
Afghanistan, and is behind forming internal sectarian divisions 
with our Sunni-Arab allies.
    The IRGC Quds Force is fomenting sectarian strife in the 
Shia enclaves of Saudi Arabia and Bahrain. Iran is increasing 
Hezbollah's capability to target Israel with more advanced and 
precision-guided rockets and missiles. These missiles are being 
developed in Syria under the protection of Syrian and Russian 
air defense networks.
    Iran is moving Afghan and Iraqi militias to Syria to shore 
up Assad and to retake areas cleared of ISIS.
    We are not going to be able to stop Iran's global terrorism 
network without getting Iraq right. I spent 5 years in Iraq 
working these issues, malign Iranian influence, and we are 
ignoring too much. In Iraq, where the United States has the 
most leverage, we are choosing not to use it.
    Qassem Soleimani used the Hezbollah model to create loyal 
proxies in Iraq, and the Badr model, Iran's premier proxy, to 
infiltrate the Iraqi Ministry of Interior and the Ministry of 
Defense. The Hezbollah model replaced ISIS with IRGC Quds Force 
militias throughout Iraq. The Badr model is now being used in 
Lebanon to co-op the Lebanese Armed Forces.
    The building of institutions to counter Iran's strategy is 
actually building institutions for Iran to co-opt, to 
infiltrate, and to saturate. Soleimani's proxies have access to 
U.S. funds and equipment in the Iraqi Ministry of Defense and 
Iraq's Ministry of Interior. Hezbollah is seeking the same 
access with the Lebanese Armed Forces.
    I would like to--I have a graphic I would like the Members 
to look at possibly here. It is Iran's land bridge.
    [Slide]
    Mr. Pregent. So faith is believing in something you can't 
see; denial is ignoring something you don't want to see. Call 
it Iran's land bridge, a permissive environment, or a fast pass 
to Syria. Whatever you want to call it, it exists. These 
militias answer to Qassem Soleimani, and this is how Iran has 
unfettered access across Iraq and into Syria.
    These militias are also set to win big in Iraq's May 12th 
elections, as the Fatah Party. So those units on that map 
belong to a political party that is set to win big in Iraq to 
control the MOD, the MOI, the Ministry of Transportation, Oil, 
and Finance, all places where we send money to.
    Fatah answers to Tehran, and they are demanding the 
immediate exit of U.S. forces from Iraq under the threat of 
violence.
    [Slide]
    Mr. Pregent. The second slide is very busy, and is busy for 
a reason. What I have done is I have overlaid the IRGC proxy 
forces over the existing Iraqi Security Forces in Iraq, the 
same Iraqi Security Forces we are told are supposed to be a 
bulwark against Iran. They are sharing the same battle space. 
The Iraqi Security Forces are facilitating Qassem Soleimani's 
proxies. These proxies brag that they can wear any uniform 
within the Iraqi Security Forces.
    As of now, no Iraqi Security Force unit will impede or 
engage the IRGC Quds Force militias in Iraq. It is hard to do 
when they brag they can wear any uniform in the Iraqi military. 
We have leverage here, and we need to use it now. That is 
basically covering those two slides. That is one of our biggest 
things that we are ignoring.
    How to fix all this. We can hurt Iran's global terrorism 
network by focusing on what fuels Iran's malign activities in 
Iraq, Syria, and the broader Middle East, by focusing on where 
the regime is hurting.
    The Iran protests. Iran's terror network is de-railing the 
Iranian economy. The Iranian people fault the regime for 
squandering the economic windfall from the JCPOA on ballistic 
missile tests, IRGC Quds Force adventurism in Yemen and 
Bahrain, propping up Assad, and increasing the capabilities of 
Iraqi militias and Lebanese Hezbollah, all at the expense of 
the Iranian people.
    They need the protections of the Iran deal, and sanctioning 
the Central Bank of Iran as well as the supreme leader's 
massive holding company, Setad, or EIKO, the Execution of Imam 
Khomeini's Order, will hurt the regime and curb its malign 
activities. You can also do this without killing the Iran Deal, 
something you mentioned earlier. Go after the CBI and go after 
the EIKO.
    Setad is worth $95 billion--was worth $95 billion in 2013. 
It is now estimated to be worth $190 billion in 2018. Both the 
CBI and Setad were de-listed under Annex II of the JCPOA.
    Reimposing sanctions on the CBI and Setad will severely 
impact Iran's ability to fund its terror network and purchase 
advance military equipment from Russia and China. The regime 
simply won't be able to afford sustaining its malign activities 
at the cost of the Iranian people, not when the price of an egg 
in Iran is the equivalent of paying $5 for an egg here, in the 
United States, or $60 for a dozen, all on a $6,000-per-year 
salary. This is Iran today. This is the regime today. It is 
overstretched and should be made vulnerable.
    Thank you for the opportunity to address this committee.
    [The prepared statement of Mr. Pregent follows:]
                 Prepared Statement of Michael Pregent
                             April 17, 2018
    Chairman King, Ranking Member Rice, and distinguished Members of 
the subcommittee on Counterterrorism and Intelligence, on behalf of the 
Hudson Institute, I am honored to testify before you today about Iran's 
Global Terrorism Network and what fuels it.
    I am a former intelligence officer with 28 years of experience 
working security issues in the Middle East and North Africa.
    My area of expertise focuses on the Iranian Revolutionary Guard 
Corps (IRGC) and its Quds (Jerusalem) Force (IRGC-QF) and their 
destabilizing activities across the Middle East. Like Secretary of 
Defense Mattis said in December 2017, ``Everywhere you find turmoil [in 
the Middle East], you find Iran's hand in it.''\1\
---------------------------------------------------------------------------
    \1\ Jim Garamone, ``Mattis: Iran Working to Destabilize Middle 
East'' defense.gov, December 16, 2017 (https://www.defense.gov/News/
Article/Article/1398540/mattis-iran-working-to-destabilize-middle-east/
)
---------------------------------------------------------------------------
    Iran's destabilizing activities have accelerated under the 
protections of the JCPOA--the Iran Deal. We've seen increased lethal 
and financial aid to Hamas, Hezbollah, and the Houthis, and as 
Representative Brad Sherman of California said in 2015, during the 
JCPOA debate, ``those are just the ones that begin with the letter 
H.''\2\
---------------------------------------------------------------------------
    \2\ William Booth, ``Iran's post-sanctions windfall may not benefit 
Hamas'', The Washington Post, August 31, 2015 (https://
www.washingtonpost.com/world/will-irans-post-sanctions-windfall-
benefit-hamas-maybe-not/2015/08/30/08d0c62c-481e-11e5-9f53-
d1e3ddfd0cda_story.html?- utm_term=.0e3cf2f7ba7e).
---------------------------------------------------------------------------
    Specific to the Houthis, the IRGC is providing an increased 
capability to fire precision rockets and missiles. Missiles recently 
fired by the Houthis at Riyadh and toward Mecca. A capability the 
Houthis would not have without IRGC-QF advisors on the ground.
    The IRGC has increased support to IRGC-QF militias in Iraq that 
have killed Americans in the past and pledge to do so again. The IRGC 
now deploys these very same militias to prop up Assad in Syria and move 
against our Kurdish allies in Iraq.
    The IRGC has increased lethal aid to the Taliban in Afghanistan, 
and is behind fomenting internal sectarian divisions with U.S. regional 
Arab allies.
    The IRGC-QF is fomenting sectarian strife in the Shia enclaves of 
Saudi Arabia and Bahrain. Bahrain is concerned about Shia Bahrainis--
around 200--who joined IRGC-QF militias in Iraq, and are now bringing 
explosively formed penetrator (EFP) and improvised explosives expertise 
back to Bahrain to target its security forces.
    Iran is increasing Hezbollah's capability to target Israel with 
more advanced and precision-guided rockets and missiles designed to 
take out Israeli command and control centers, Israeli Defense Forces 
(IDF) headquarters, and civilian population centers. These missiles are 
being developed in Syria under the protection of Syrian and Russian air 
defense networks.
    Iran is moving Afghan and Iraqi militias to Syria to shore up Assad 
and to retake areas cleared of ISIS. They are transporting and paying 
for Afghan and Iraqi Shia families to relocate to vacated Sunni areas 
south of Raqqa and Deir Ez-Zor in Syria.
    We're not going to be able to stop Iran's Global Terrorism Network 
without getting Iraq right--we are ignoring too much.
                                in iraq
    Qassem Soleimani used the Hezbollah model to create loyal IRGC-QF 
proxies in Iraq and the Badr model to infiltrate the Iraqi Ministry of 
Interior and Ministry of Defense. The Hezbollah model replaced ISIS 
with IRGC-QF militias throughout Iraq, and the Badr model is now being 
used in Lebanon to co-opt the Lebanese Armed Forces (LAF).
    The ``building institutions to counter Iran'' strategy we hear from 
academics, diplomats, and National security officials, is actually 
building institutions for Iran to co-opt, to infiltrate, and to 
saturate. IRGC-QF proxies have access to U.S. funds and equipment in 
the Iraqi MOD and MOI and Hezbollah has access to the same with the 
LAF.
    Faith is believing in something you can't see--Denial is Ignoring 
something you don't want to see. Call it Iran's Land-bridge, a 
Permissive Environment, or a FASTPASS to Syria--whatever you want to 
call it--it exists.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Those colored units also form a political party, The Fatah Party. 
Fatah is positioned to win big in Iraq's elections on 12 May. Fatah 
answers to Tehran and they are demanding the immediate exit of U.S. 
forces from Iraq under the threat of violence. If the Fatah Party 
fields a prime minister, the United States must end the U.S. Train and 
Equip Program and trigger sanctions on Iraq's economic sectors where 
the IRGC is already playing--with the goal of making Iraq itself a 
``shell company'' for the Iranian regime.
    This graphic challenges prevailing narratives in DC.
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

    It's a busy slide and a crowded one at that--but what it depicts is 
shared battle-space with IRGC-QF proxies--shared ownership of 
territory. A permissive environment for Qassem Soleimani and his 
lieutenants.
    As of now, no Iraqi Security Force (ISF) units will impede or 
engage IRGC-QF militias in Iraq. Today, IRGC-QF militias outnumber U.S. 
advisors 20:1, and they are now in the Iraqi Security Forces and they 
want primacy.
    The IRGC-QF militias are now officially in the Iraqi Security 
Forces (ISF) and have access to U.S. Funds and Equipment. The IRGC-QF, 
through its proxies, are hijacking the U.S. Train and Equip Program. 
The Peshmerga are no longer in the ISF. There are no Sunni Arab 
brigades, battalions, or companies left in the ISF. Iran's IRGC-QF has 
effectively co-opted the MOD and MOI through its premier IRGC-QF proxy 
BADR--giving IRGC-QF militias primacy.
    Again, Iran's IRGC-QF militias moved against our Kurdish allies in 
Iraq using US M1A1 Abrams tanks a mere 60 hours after the President 
designated the IRGC a terrorist entity. The tanks used were not 
captured on the battlefield--they were provided by the Iraqi Security 
Forces.
    We can hurt Assad and Iran's Global Terrorism Network by focusing 
on what fuels Iran's malign activities in Syria and the broader Middle 
East.
   the iran protests. iran's terror network is derailing the iranian 
                                economy.
    The Iranian people fault the regime for squandering the economic 
windfall from the JCPOA on ballistic missile tests, IRGC-QF adventurism 
in Yemen and Bahrain, propping up Assad, and increasing the 
capabilities of Iraqi militias and Lebanese Hezbollah all at the 
expense of the Iranian people.
    Ending the protections of the Iran Deal and sanctioning the Central 
Bank of Iran (CBI) will hurt the IRGC's capability to sustain these 
activities. Iran's Global Terrorism Network accelerated its 
destabilizing activities after the JCPOA went into effect--fueled by 
upwards of $150 billion in unfrozen assets.
    Ending the protections of the Iran Deal and sanctioning the CBI as 
well as the Supreme Leader's massive holding company Setad or ``The 
Execution of Imam Khomeini's Order'' (EIKO) will hurt the regime and 
stem malign activities. Setad (Persian for headquarters) or EIKO was 
worth $95 billion in 2013 and is now estimated to be worth $190 billion 
in 2018.
    Both the CBI and Setad were delisted under Annex II of the JCPOA. 
Re-imposing sanctions on the CBI and Setad will severely impact Iran's 
ability to fund its terror network and purchase advanced military 
equipment from Russia and China. It will also make Russia and China 
subject to secondary sanctions for fueling Iran's activities.
    The regime simply won't be able to afford sustaining its malign 
activities. Not when the price of an egg in Iran--under the JCPOA--is 
the equivalent of paying $5 an egg in the United States, or $60 for a 
dozen eggs all on a $6,000 annual salary. This is Iran today.
    Thank you for the opportunity to address this committee.

    Mr. King. Thank you very much, Mr. Pregent, for your 
testimony.
    A third witness now is Mr. Nader Uskowi, Uskowi? Thank you. 
A visiting fellow at the Washington Institute.
    From 2013 to 2017 he served as a senior civilian policy 
advisor to U.S. CENTCOM, where he focused on U.S. objectives 
toward Iran and Shiite militias.
    Mr. Uskowi worked at the Department of Defense over a 
decade in various civilian and contractor positions, with a 
concentration on Iranian activities. He spent 4 years deployed 
to Afghanistan as a senior political advisor. He is currently 
writing a book on Iran's Quds Force.
    Mr. Uskowi, you are recognized for your testimony. Thank 
you for being here today.

  STATEMENT OF NADER USKOWI, VISITING FELLOW, THE WASHINGTON 
                 INSTITUTE FOR NEAR EAST POLICY

    Mr. Uskowi. Thank you, Chairman King, Ranking Member Rice, 
committee Members. I am grateful for this opportunity to 
testify about the threat posed by the--by Iranian Revolutionary 
Guards Quds Force and its world-wide network popularly known as 
Shia militias, but also referred to by senior IRGC officers as 
the Shia Liberation Army, SLA.
    The IRGC commander, General Soleimani, told us in 2016 that 
the Quds Force has recruited and organized over 200,000 
militant Shia youth across the Middle East. That is 200,000 
militant Shia youth across the Middle East. This is the force. 
This is the Shia militias, or the Shia Liberation Army, SLA.
    The all-Shia force is organized under direct command of 
General Soleimani, the commander of the Quds Force and are 
organized in brigades normally comprising of different 
nationalities. To name the major ones: The Lebanese Hezbollah 
brigades; the Iraqi Shia militia groups, a number of them, five 
or six major Iraqi Shia militia groups; the Afghan Fatemiyaoun 
Brigades; the Pakistani Zaynabiyoun Brigades; the Shia militant 
groups in Bahrain, in Kuwait, in eastern Saudi Arabia, and 
other parts of the Gulf; and partner with Yemeni Houthis. Also, 
the Quds Force operates a large network of non-combatant 
associates across the world in Latin America and in Europe, in 
Asia, and Africa.
    Aside from the--its own Shia Liberation Army, the Quds 
Force also works with other militant groups who are not Shia, 
like Hammas in Palestine and Taliban in Afghanistan for their 
anti-U.S., anti-Western programs and fights.
    Please note this is not a rag-tag rebel group. These guys 
are highly recruited, highly trained. The basic training goes 
anywhere between 20 days to 45 days inside Iranian camp, very 
intensive training. Then you have advanced trainings; the best 
prospects of this group will be sent back to Iran on a number 
of times. I have counted up to five times for some specific 
groups going back to Iran for advanced training and on tactics, 
on the way of war, on warfare tactics.
    They are, of course, trained on all kinds of weapons, 
including advanced weapons: IEDs, EFPs, rockets and, depending 
to the specialized needs of different groups, different arms 
are provided to them and they are trained on them, like tanks 
and personnel carrier--APCs, like in--with regard to Hezbollah, 
over 100,000 rockets that Hezbollah has, and not the Quds 
Forces in the process. They call it precision project under--
that is not Hezbollah, that is the----
    [Laughter.]
    Mr. Uskowi. Precision project that they are upgrading these 
rockets into missiles with the accuracy and with larger range, 
so they can target all targets within Israel.
    With the Houthis, they are giving them cruise missile, 
anti-ship cruise missile that they have used against our allies 
in--off Yemeni coast. They give them explosive boats to hit our 
allies' ships, and actually control the traffic in the Strait 
of Mandeb.
    So this is a well-trained, well-armed, well-equipped, and 
battle-tested--some of the Iraqi militias have experience in 
Iraq against--fighting against our forces during their bloody 
war, and most of other militias have extensive experiences in 
the Syrian civil war.
    This force is, I believe, a clear and present danger to 
the--to our forces in the region and those of our allies, and 
potentially a great threat to our--to the security of our 
homeland. Out of these 200,000 well-trained, well-armed 
militias, few of those are necessary--all it takes to pose a 
serious threat to our homeland.
    Let me close this. I have gone--in my written testimony I 
have gone through details of this. But let me say this, that I 
believe the Quds Force is the largest terrorist network in the 
world today. The Quds Force and its Shia militias is the 
largest terrorist network in the world today, and they have--as 
other witnesses said, they have the logistics and they have the 
businesses and the finances and the men, militias, and their 
arms to even outlast the Islamic Republic, if anything should 
happen to the regime in Tehran.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Uskowi follows:]
                   Preapred Statement of Nader Uskowi
                             April 17, 2018
    Chairman King, Ranking Member Rice, committee Members, I am 
grateful for this opportunity to speak with you today about the threat 
posed by the Iranian Revolutionary Guard-Quds Force and their world-
wide Shia militia network, the Shia Liberation Army (SLA).
    The U.S. State Department considers Iran the world's most active 
State sponsor of terrorism. Iran's direct mechanism for supporting and 
directing terrorist organizations like Lebanese Hezbollah, the Taliban, 
and countless anti-American Iraqi militias, is a shadowy 
extraterritorial unit called the Quds Force. Its army of 200,000 
organized, trained, armed, and motivated youth poses a significant 
threat to the American homeland and especially to U.S. forces stationed 
abroad. Furthermore, this threat is enduring and ideological, designed 
to outlast the Islamic Republic itself.
  the quds force and the development of the shia liberation army (sla)
    The Quds Force, the expeditionary force of Iran's Islamic 
Revolutionary Guard Corps (IRGC), has a broad and continuing mission to 
exercise command and control over all militant Shia organizations and 
groups affiliated with the Islamic Republic and operating outside the 
Iranian borders. The Quds Force, whose commander reports directly to 
Iran's Supreme Leader, has evolved into the headquarters of the Shia 
militancy in the Middle East.
    The Quds Force is the most lethal asymmetric fighting force in the 
Middle East today. The commander of the Islamic Revolutionary Guard 
Corps (IRGC) declared in 2016 that nearly 200,000 Shia youths from 
across the Middle East were organized and armed under the command of 
the Quds Force.

``The upside of the recent (conflicts) has been the mobilization of a 
force of nearly 200,000 armed youths in different countries in the 
region.''\1\
---------------------------------------------------------------------------
    \1\ Jafari, Mohammad Ali. (2016, January 12). The committed youths 
is one of the miracles and blessings of the Islamic Revolution (in 
Farsi). Fars News Agency.

    The Shia force, popularly known as the Shia militias, is also 
referred to as the ``Shia Liberation Army.''\2\ The SLA is not a ragtag 
militia force. Its members are recruited by Shia militant groups based 
on strict military and ideological profiles. The best prospects are 
sent to one of the Quds Force's military training camps inside Iran. 
Captured militants have reported that their basic training courses were 
from 20 to 45 days. They are then enrolled in advanced training courses 
on logistics and support, explosives, and advanced weapons skills. The 
more advanced courses cover Explosively Formed Penetrators (EFP), 
mortars and rockets, tactics and warfare, and sniper skills.\3\
---------------------------------------------------------------------------
    \2\ IRGC Gen. Ali Falaki was first to refer to the force as the 
``Shia Liberation Army.'' (2016, August 18). Fatemiyoun were the 
vanguards in battle for Syria (in Farsi.) Quds Online.
    \3\ Felter, Joseph & Fishman, Brian. (2008, October 13). Iranian 
Strategy in Iraq: Politics and ``Other Means.'' Combatting Terrorism 
Center at West Point. Occasional Paper Series.
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Arming the Militias
    A look at SLA's weaponry tells the story of how the militia groups 
evolved into the primary land forces of the Quds Force. During the 
2003-2011 Iraq War, the Quds Force led Iraqi militia group in a deadly 
campaign against the U.S. and Coalition forces in the country. The 
weapons used by the militia came from Iran. The deadliest at the time 
were the Improvised Explosive Device (IED), a relatively crude bomb and 
anti-armor weapon, and the Improvised Rocket Assisted Mortar (IRAM), a 
propane or fuel tank filled with explosives and propelled by a 107mm 
rocket booster. As the war progressed, they began to use the advanced 
Explosive Formed Penetrator (EFP), with a charge designed to penetrate 
armor.
    Since 2011, the Quds Force deployed Shia militia groups to the 
conflicts, civil wars, and insurgencies that erupted in the region. The 
SLA began to act as the primary land force for Quds Force's military 
campaigns. The major militia groups were supplied with tanks, armored 
personnel carrier (APC), artillery, UAV, anti-tank guided missile 
(ATGM), and man-portable air-defense system (MANPADS).
    Different groups are also armed with specialized weapons for their 
specific missions. Currently, the Quds Force is conducting a massive 
``precision project'' to upgrade tens of thousands of the Lebanese 
Hezbollah's rockets, making them more accurate and extending their 
range, for use against Israel. The Quds Force is also supplying the 
Yemeni Houthis with anti-ship cruise missiles and unmanned explosive 
boats for use against the U.S.-backed coalition naval forces off the 
Yemeni coast and in the Bab Al-Mandeb Strait, and is upgrading Houthi 
SCUD missiles as well as providing the Houthis with advanced Iranian 
ballistic missiles for use against targets in Saudi Arabia and the UAE.
Organizing the SLA
    The SLA-affiliated Shia militia groups are generally organized in 
independent brigades based on their nationality. Lebanese and Iraqi 
militant groups make up the core of the SLA. Quds Force's commander 
acts as the overall SLA commander, and along with the Quds Force senior 
officers, provide operational command and advise-and-assist functions 
across the SLA brigades. The Quds Force and its militias are active in 
all current conflicts in the region.
The Hezbollah
    Founded by the IRGC in 1982 as a resistance movement against the 
Israeli occupation of southern Lebanon, the military wing of Lebanese 
Hezbollah (LH) has evolved into the premier element of the SLA, 
deploying nearly 8,000 fighters into Syria under the Quds Force command 
to fight Assad's Sunni opposition. Hezbollah also assists the Quds 
Force in its program to advise, assist, and train other Shia militia 
groups, including the Yemeni Houthis. The Hezbollah also functions as 
the recruiter and trainer for the Quds Force in Arabic-speaking 
countries, including Iraq, Yemen, and the Gulf. A typical LH member 
wears insignia resembling the IRGC's and believes in the primacy of the 
velayat-e faghih religious doctrine, which translates in accepting 
Iran's Ayatollah Khamenei as their own supreme leaders.
    The Quds Force maintains a joint command-and-control structure with 
Hezbollah. The Quds Force commander, General Qasem Soleimani, 
frequently meets with the Hezbollah's leader, Hassan Nasrallah, and his 
senior aides. The Quds Force senior officers also participate in 
Hezbollah's decision-making process at its highest levels regarding all 
military and terrorist operations carried out by the organization, 
almost certainly as part of Quds Force's larger campaigns. This 
practice began in the first days of the founding of Hezbollah, with the 
1983 truck suicide bombings of the U.S. Marine and French barracks at 
Beirut International Airport, killing 241 U.S. and 58 French 
servicemen. Other terrorist attacks carried out by Hezbollah and its 
affiliates include the bombing of AMIA, the Jewish community center in 
Buenos Aires, that killed 85 people in 1994, and the 1996 truck bombing 
of the Khobar Towers in Saudi Arabia, that housed members of U.S. Air 
Force's 4404 Wing, carried out by the Saudi-wing of Hezbollah, killing 
19 U.S. servicemen.\4\
---------------------------------------------------------------------------
    \4\ Levitt, Matthew. (2015). Hezbollah: The Global Footprint of 
Lebanon's Party of God. Georgetown University Press
---------------------------------------------------------------------------
    Iran provides the bulk of Hezbollah's budget, estimated at $1 
billion a year. The Hezbollah Secretary General Hassan Nasrallah has 
said, ``Hezbollah's budget, its income, its expenses, everything it 
eats and drinks, its weapons and rockets, come from the Islamic 
Republic of Iran.''\5\
---------------------------------------------------------------------------
    \5\ Rafizadeh, Majid. (2016, June 25). In first, Hezbollah confirms 
all financial support comes from Iran. Al Arabiya English. You can also 
watch a BBC video report on Nasrallah's speech with Farsi translation 
here.
---------------------------------------------------------------------------
    The Quds Force provides advanced weaponry to the Hezbollah and is 
in the process of upgrading LH's nearly 100,000 rockets for better 
accuracy and longer range.\6\ Israel considers the weapons 
manufacturing plants and the Quds Force's delivery of advanced weapons 
to the Hezbollah as direct threats to its security. This is heightening 
tensions in an already conflict-ridden part of the region and is 
raising the risk of a devastating war between a terrorist group and a 
U.S. ally.
---------------------------------------------------------------------------
    \6\ Ibid.
---------------------------------------------------------------------------
Iraqi Militias
    The Badr Organization, Kata'ib Hezbollah (KH), and Asa'ib Ahl al-
Haq (AAH) form the core of the Quds Force militia groups in Iraq. Among 
the senior leadership of these groups, are long-time IRGC and Quds 
Force Iraqi operatives who fought on the side of Iran in Iran-Iraq War 
of 1980's and during the Quds Force campaign against the U.S. and 
coalition forces during the 2003-2011 Iraq War. Today, the Quds Force 
shares close links with an estimated 40 of the 67 largest militias in 
the Popular Mobilization Forces (PMF), which is now part of the Iraqi 
security apparatus.\7\ These Iraqi militias are battle-tested, having 
been deployed to Syria in support of Assad's regime and having fought 
against ISIS (Daesh) in Iraq. Some of the best leaders of major Iraqi 
militias are also helping assisting and training Shia militant groups 
in Bahrain and other parts of the Gulf. In the post-Daesh period, the 
PMF has focused its operations on Iraq-Syria border regions, enabling 
the establishment of a land corridor connecting Iran through Iraq and 
Syria to Lebanon and the Israeli front in the Golan Heights.
---------------------------------------------------------------------------
    \7\ Heras, Nicholas A. (2017, October). Iraq's Fifth Column: Iran's 
Proxy Network. Middle East Institute, Counterterrorism Series.
---------------------------------------------------------------------------
    Like Hezbollah, the PMF has evolved into a hybrid organization with 
political and military wings, controlling the county's security 
institutions and having significant presence in the parliament and the 
Executive branch.\8\
---------------------------------------------------------------------------
    \8\ Eisenstadt, Michael & Michael Knights. (2017, May 9). Mini-
Hizballahs, Revolutionary Guard Knock-Offs, and the Future of Iran's 
Proxies in Iraq. War On the Rocks.
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Afghan and Pakistani Militias
    In addition to Iraqi and Lebanese fighters, the SLA also 
incorporates Afghan and Pakistani Shia militants into its ranks. They 
form the Fatemiyoun and Zaynabiyoun brigades of the SLA respectively, 
and both have seen heavy combat in Syria. The Afghan fighters in 
particular are groomed by the Quds Force for a long-term support role.
    The Iranians have used financial aid and offers of Iranian 
residency to recruit Afghan Shias from the predominantly Hazara refugee 
community inside Iran.\9\ Each fighter deployed to Syria is paid a 
salary of $300-$500 a month, a promise of Iranian permanent residency 
for themselves and their immediate families, and payment to families of 
those killed or severely injured in combat.
---------------------------------------------------------------------------
    \9\ Zahid, Noor & Jedinia, Mehdi. (2016, January 29). Iran Sending 
Afghan Refugees to Fight in Syria. Voice of America. Different reports 
put the number of Afghan militias from 5,000 to 12,000. The figure of 
10,000 was my estimate based on interviews with experts in the field.
---------------------------------------------------------------------------
    At the height of their involvement in the Syrian civil war, the 
2015-2016 Battle of Aleppo, the Afghan division had nearly 10,000 Shia 
fighters. The Pakistani division was comprised of an estimated 2,000 
Shia militants. Some of those fighters were deployed on multiple 
occasions to the battlefronts. In post-civil war Syria, many of the 
Fatemiyoun and some Zaynabiyoun fighters are expected to be deployed to 
Syria-Iraq border region to keep the land corridor linking Iraq and 
Syria open, fulfilling a major Quds Force strategy in the two 
countries. Those fighters will be based in military camps and forward 
bases controlled by the Quds Force in Syria.
The Houthis
    The Quds Force regards the Shia-Zaydi Houthis as the main element 
of its Shia Liberation Army in the Arabian Peninsula. To have a well-
armed, battle-tested militant Shia force in the Saudi and Emirati 
backyards, and to have a degree of control over the all-important Bab 
al-Mandeb Strait, a pathway for international trade and a major choke 
point for oil transport, along with Iran's own Hormuz Strait, are two 
major factors in the Iranian calculus for regional hegemony. The Quds 
Force has supplied the Houthis with anti-ship cruise missiles, which 
they have used against Emirati and Saudi ships off the coast of Yemen.
    The Quds Force technicians have also upgraded the SCUD missiles 
than came under the Houthi control after they captured Sanaa. The 
missiles' accuracy and range have improved considerably. The Quds Force 
has also supplied the Houthis with some of its own ballistic missiles. 
The Houthis have used their upgraded missiles and those delivered to 
them by Iran against targets inside Saudi Arabia, including 
unsuccessful attacks against Riyadh International Airport and the Royal 
Palace.
The Gulf Militias
    In addition to the main core of its Shia Liberation Army, the Quds 
Force also supports a variety of Shia opposition parties across the 
region. In Bahrain, where the Shias constitute the majority of the 
population in a country ruled by Sunni royalty, the Quds Force sponsors 
militant Shia groups who have attacked government targets with arms and 
explosives transferred to the country by the Quds Force operatives and 
affiliates, including Iraqi Shia militia groups. The Bahraini security 
forces have in recent years intercepted a number of major shipments of 
arms and explosives, including a 2013 interception of a maritime 
shipment containing Iranian-made IEDs and grenades.\10\
---------------------------------------------------------------------------
    \10\ Levitt, Matthew. (2014, May 16). Iran and Bahrain: Crying 
Wolf, or Wolf at the Door. The Washington Institute for Near East 
Policy. PolicyWatch 2255.
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    For the Quds Force, the eastern provinces of Saudi Arabia, 
especially the Qatif province with a significant Shia population, form 
a target-rich environment. The Hezbollah's affiliate, Hezbollah al-
Hejaz (Saudi Hezbollah), have been involved in terrorist attacks on 
Saudi soil with the goal of destabilizing the Kingdom. In 1996, it 
targeted the Kobar Towers, killing 19 U.S. servicemen. The FBI 
investigation showed that the group detonated a 25,000-pound TNT bomb 
under ``direct orders from senior Iranian government leaders.'\11\
---------------------------------------------------------------------------
    \11\ Freeh, Louis J. (2006, June 23). Khobar Towers. The Wall 
Street Journal.
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                         the quds force at war
    The Quds Force and the SLA are involved militarily on three fronts: 
The western front--the conflicts in Syria and Iraq; the southern 
front--the conflict in Yemen; and the eastern front--the conflict in 
Afghanistan.
                           the western front
The Land Corridor
    Last year, the Quds Force-led forces completed the so-called land 
corridor, connecting Iran through Iraq to Syria, Lebanon, and the 
Israeli northern fronts. Securing this line of communication and 
logistics connects Iran-led forces in the western front to their supply 
base in Iran. The Quds Force can now move personnel and materiel, 
including weapons and military equipment, through the corridor. It 
simultaneously maintains its ``air bridge'' to Damascus International 
Airport and other Syrian airfields, but the land corridor facilitates 
the movement of heavy military equipment and guarantees the 
continuation of supply, even if the airfields are taken out if a major 
war breaks out in the area.
The Syrian Conflict
    In Syria, Iran's sought to protect the regime of Bashar al-Assad 
and defeat Sunni opposition forces. Nearly 8 years after the 2011 
uprisings, the Assad regime is increasingly dependent on Iran and is on 
a trajectory toward becoming a client state. The Quds Force deployed 
tens of thousands of Shia militias, fighters from Lebanon, Iraq, 
Afghanistan, and Pakistan, to the Syrian battlefields. Its Shia 
Liberation Army, augmented by elements of specialized forces deployed 
from Iran, conducted complex military campaigns on behalf of Assad. The 
fall of Aleppo in 2016, fought primarily between the Quds Force-led 
forces and the Sunni opposition, signaled the beginning of the final 
victory by the regime. The Iranians and their proxies paid heavy price 
in blood and treasure to make the Aleppo victory possible. But Iran and 
the Quds Force gained unprecedented influence over Bashar al-Assad 
himself, his extended family, his tribe, and above all the Alawi-Shia 
community that saw the Quds Force commander, General Soleimani, as 
their savior.
    The presence of Quds Force-led forces near the Israeli border is 
part of the Iranian strategy to exert maximum pressure on Israel. The 
Quds Force is basing its operations and its foreign militia forces in 
dedicated parts of major Syrian military bases. It was from such a 
base, the T4 Airfield near Palmyra from which an Iranian UAV flew over 
the Israeli territory in February in an Intelligence, Surveillance, and 
Reconnaissance mission. The violation of the Israeli airspace, a first 
for Iran, was met by an Israeli retaliatory attack on the UAV and the 
Iranian installations at T4 Airfield. This month, the Israeli Air Force 
aircraft attacked Iran's UAV operations center at the base, destroying 
the building and killing seven Iranian personnel, including an IRGC 
colonel. Israel considers permanent basing of the Quds Force-led forces 
on the Syrian soil as an existential threat.
    With projects like establishing permanent bases and building 
manufacturing plants to upgrade Hezbollah rockets in Syria, and 
continuing its delivery of weapons to Hezbollah through Syrian 
territory, Iran is on a trajectory of a major direct military conflict 
with Israel in Syria.
The Iraqi Conflict
    Iran has always maintained close relations with the Shia community 
in Iraq. When the U.S.-led coalition forces toppled Saddam Hussein's 
regime in 2003, the Quds Force senior officers crossed the porous 
border into a chaotic Iraq and brought along a large contingent of 
Iraqi exiles who had fought alongside the IRGC against their own 
country's military during the Iran-Iraq War of 1980's. They recruited 
the Shia youths, especially in Shia-majority southern Iraq, and staged 
a bloody war against American forces during the occupation years with 
the goal of establishing the Islamic Republic of Iraq, mimicking the 
Iranian experience. Most of American combat deaths in the years after 
the initial invasion came from Quds Force-controlled militia groups. 
When the U.S. forces left Iraq in 2011, the Quds Force-led Iraqi Shia 
militia forces were tens of thousands strong, well-armed, and battle 
tested. The Quds Force's Iraqi operatives were also in leading roles in 
the Shia-dominated government in Baghdad and in its newly reconstituted 
security forces. The road to establishing a full-fledged Islamic 
Republic of Iraq was clear.
    Then came the Arab Awakening. Iraqi Sunnis joined the movement and 
staged protests in predominantly Sunni regions of Iraq against the 
discrimination they had suffered in the hands of the Shia-dominated 
government in Baghdad. The Arab Spring soon spread to Syria, with the 
Sunni opposition protesting against the Alawi-Shia dominated government 
in Damascus. The Quds Force now had to fight Sunni opposition in both 
countries. It deployed a large number of Iraqi Shia militias across the 
border into Syria to join other Quds Force-led forces to help save 
Assad.
    In June 2014, ISIS forces crossed the border back into Iraq, joined 
by its fighters from Fallujah and Ramadi areas, and captured Mosul and 
staged their thunderous march along the now-famous land corridor to 
capture Baghdad and points south, coming as close as 19 miles to the 
Iranian border. The Quds Force mobilized all its forces in defense of 
Baghdad. The Quds Force-led Shia militias, along with Iraqi and Kurdish 
security forces, and U.S.-led coalition forces eventually rolled back 
ISIS advances and recaptured lost territories. The Shias saw the Quds 
Force and its Shia Liberation Army as the defenders of their Shia-led 
government, their capital Baghdad, and their Shia south--from Karbala 
and Najaf to Basra. The Iranians and their operatives cemented their 
position within the government and the country's security institutions. 
A full-fledged Islamic Republic of Iraq has not yet materialized, but 
Iraq increasingly looks and acts like a client State of Iran.
    Not only does a Quds Force-dominated Iraq undermine nearly 15 years 
of American stabilization and humanitarian efforts in the country, but 
it also means that U.S. forces will continue to face danger and be the 
target of the Quds Force, as they have been since the 2000's.
                           the southern front
The Arabian Peninsula
    In Yemen, the Quds Force is taking advantage of the civil war and 
the Saudi and Emirati military interventions to forge a close 
relationship with the Zaydi-Shia Houthis, who captured Sanaa, the 
capital, in the aftermath of the Arab Awakening upheavals that rocked 
the Middle East. The Houthis had always been close to the Iranians, 
with their leaders traveling to Tehran and Qom in the first days of the 
1979 Islamic Revolution to undergo political, theological, and military 
training. They brought back to Yemen a radical interpretation of Shia 
Islam. During long years of struggle against the Yemeni government, 
they received arms and financial support from the Iranians. Now 
countering the Saudi and Emirati-led forces, more than ever indebted to 
the Quds Force's support. When they captured Sanaa airport, Quds Force 
General Qasem Soleimani established an air bridge to the city, 
supplying the Houthis with advanced weaponries, including anti-ship 
cruise missiles and short- and medium-range ballistic missiles. Using 
these weapons, the Houthis were able to attack Saudi and Emirati ships 
with the anti-ship cruise missiles, and attack Riyadh International 
Airport and other targets inside the Kingdom with the ballistic 
missiles.
    By supplying advanced weaponries to the Houthis in the war against 
the Saudi-led coalition and the former Yemeni government, the Iranians 
are gaining strong support of the Zaydi-Shia community in Yemen, and 
also the Zaydi-Shia communities across the border in Saudi Arabia. The 
Quds Force in also on its way to flip its relations with Houthis from a 
long-time partner into a client organization, strategically located in 
the Arabian Peninsula, capable of causing trouble for Iran's nemesis, 
Saudi Arabia, and helping Iran to gain a degree of control over the Red 
Sea chokepoints.
The Bab el-Mandeb
    Bab el-Mandeb, or the Mandeb Strait, is a waterway off the coast of 
Yemen that connects the shipping route between the Mediterranean 
through the Suez Canal to the Arabian Sea and the Indian Ocean. More 
than 20,000 ships cross the 20-mile chokepoint annually. The Quds Force 
has trained and armed the Houthis, providing them with its most 
advanced anti-ship cruise missiles, explosive boats, and floating 
mines. Iran can already control the shipping through the Strait of 
Hormuz in the Persian Gulf, a major chokepoint for global oil 
transport. By gaining ability to control the Mandeb Strait as well, 
Iran could cripple the shipping in the Eastern Hemisphere.
                           the eastern front
Afghanistan
    In the very first days of the revolution in Iran, the Islamic 
Republic recruited and organized Afghan Hazara refugees in Iran to take 
part in popular rebellion against the Socialist government in Kabul and 
later against the Soviet invasion of Afghanistan. Those early recruits 
and their militia brigade were the predecessors of today's Fatemiyoun, 
the Quds Force-led Afghan brigade, which saw heavy combat during the 
civil war in Syria, some four decades later.
    In 2001, the Quds Force officers led the Afghan Shia militia units 
alongside Afghan Mujahedeen and U.S. and British Special Forces to 
fight the Taliban and liberate Herat and western Afghanistan. The post-
Taliban period, however, turned into a complicated political landscape 
for the Iranians, with the Taliban becoming the principle force 
fighting the U.S. and NATO forces. Iran's anti-U.S. instincts soon led 
the Quds Force into a tactical coalition with the Taliban. The Quds 
Force strategy became raising the cost of U.S. presence in Afghanistan, 
both in blood and treasure, through the Taliban.
    The depth of Iran's ties to the Taliban became public in 2016 when 
a U.S. drone struck a vehicle transporting the Taliban chief, Mullah 
Mansoor, from Iran to Pakistani Baluchistan.\12\ Mansoor was in Iran to 
manage tactical cooperation in their new offensive against the U.S.-
backed government. Later that year, three Quds Force officers were 
killed in a U.S. airstrike against Taliban positions in Farah province, 
on the Iranian border.
---------------------------------------------------------------------------
    \12\ Gall, Carolotta & Khapalwak, Ruhullah. (2017, August 9). 
Taliban Leader Feared Pakistan Before He Was Killed. The New York 
Times.
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    The Quds Force has organized more than 15,000 Afghan Shia militants 
under the Fatemiyoun Brigade and deployed the brigade to Syria to fight 
alongside pro-Assad forces against the Sunni opposition. They have seen 
heavy combat in Aleppo, Daraa, and Palmyra. The Afghan recruits receive 
a salary of about $500 a month and the promise of Iranian residency 
paperwork after a deployment to Syria.\13\ More than 600 Afghan 
militants have been killed in action in Syria.\14\
---------------------------------------------------------------------------
    \13\ Mashal, Mujib & Faizi, Fatima. (2017, November 11). Iran Send 
Them to Syria. Now afghan Fighters are a Worry at Home. The New York 
Times.
    \14\ Mashal, Mujib & Faizi, Fatima. (2017, November 11. Iran Send 
Them to Syria. Now afghan Fighters are a Worry at Home. The New York 
Times.
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    The Fatemiyoun fighters could at any time of Quds Force's choosing 
be deployed back to Afghanistan, especially in a post-Syria conflict. 
Such move would significantly increase Iran's influence in the country, 
and the militants could become a force inside Afghanistan, following 
the Iraqi PMF and Hezbollah model.
                   expansive logistics infrastructure
    The Quds Force has developed and expanded its logistic and 
operational infrastructure beyond Iran's conventional forces like the 
Army and IRGC. Inside Iran, it maintains logistics depots near major 
airports, moving personnel and cargo, including weapons and equipment 
into Iraq and Syria via military and commercial aircraft. It also moves 
a large amount of military cargo through border crossings on Iran's 
western border into Iraq. The Quds Force has also established a land 
corridor between Iraq and Syria by capturing territories west of 
Mosul.\15\ The corridor will allow the Quds Force to transfer arms and 
personnel through Iraq into Syria and Lebanon, all the way to the 
Israeli front and the Mediterranean.
---------------------------------------------------------------------------
    \15\ Indyk, Martin S. (2017, March 28). US strategy toward Iran. 
Brookings Institution. Testimony.
---------------------------------------------------------------------------
    The Quds Force maintains its own facilities in the region. In Iraq, 
it controls logistics depots and uses PMF-controlled military camps, 
which are also used for basic training venues for the newly-recruited 
Shia militants as well bases for its UAV operations.\16\ In Syria, the 
Quds Force maintains logistics areas at Damascus International Airport 
for deployment of foreign Shia fighters and weapons and equipment into 
the country.\17\ The Quds Force also uses Syrian air fields for its UAV 
operations in the country.
---------------------------------------------------------------------------
    \16\ Gordon, Michael R. (2014, June 24). Iran Secretly Sending 
Drones and Supplies Into Iraq, U.S. Officials Say. The New York Times.
    \17\ Simons, Jake Wallis. (2016, August 30). Inside `the 
Glasshouse': Iran `is running covert war in Syria costing billions from 
top secret spymaster HQ near Damascus airport.' Daily Mail.
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                   the volatile and turbulent region
    The situation in Middle East is highly unstable. Nearly a decade 
after the 2010-2011 Arab Awakening, failed political transitions and 
broken social contracts fuel continued unrest. Endemic state 
corruption, weak economic growth, poverty, and unemployment add to 
these woes. These issues have created an environment that is 
susceptible to radical ideologies and extremist organizations. 
Insurgencies, civil wars, and terrorist campaigns have in turn fueled 
sectarianism, with Shias and Sunnis vying for power and influence 
across the region.
    The militant Shias have formed a united bloc led by Iran's Quds 
Force, which now has years of experience and expertise in support of 
sectarian-political organizations across the Middle East. Its proxies 
and partners include the Twelver-Shia Lebanese Hezbollah; Twelver-Shia 
Iraqi militia groups; Zaydi-Shia Yemeni Houthis; and Afghan, Pakistani, 
and Bahraini Shia militants.
    Reacting to the changing situation in the region, especially in the 
volatile and turbulent post-Arab Awakening period, the Iran military is 
shifting its strategy to preemptive, as opposed to its long-standing 
strategy of deterrence. The Quds Force is the expeditionary army of the 
new strategy, supported by IRGC's ballistic and cruise missile force, 
the largest in Middle East. The Quds Force is involved in all current 
conflicts in the region, and the domestically-produced missiles are 
capable of hitting land and sea targets anywhere in the Middle East. 
Advances in development of UAVs, naval assets, radar and satellite 
navigation systems, and electronic warfare adds to Iran's growing 
military power. The mix of asymmetric and symmetric military 
capabilities is designed not only to deter foreign interventions 
against Iran that could threaten regime's existence, but also be used 
in preemptive and offensive operations in the near abroad, as witnessed 
in the Quds Force-led operations in Iraq, Syria, and Yemen.
                           sla in perspective
    The Iranians use the Shia Liberation Army as a key component of 
their regional project. In March 2017, the Iranian supreme leader, 
Ayatollah Ali Khamenei, said the ``far-reaching strategic depth of the 
Islamic Republic, particularly in (the Middle East), is of most 
significant progress in the last four decades.''\18\ The progress is 
particularly evident in terms of the Quds Force-led SLA military 
victories on the battlefields in Iraq and Syria, the Iranian dominance 
of the Iraqi and Lebanese politics, and its growing influence in 
Damascus and Sanaa. Together this amounts to dominance and influence in 
four Arab capitals. If there were ever a Shia crescent, 2017 and 2018 
have been its greatest years.
---------------------------------------------------------------------------
    \18\ Khamenei.ir. (2017, March 9). Tweet. Twitter.
---------------------------------------------------------------------------
    If the Shia Liberation Army is the manifestation of the Quds 
Force's military prowess in the region, its vast network of associates 
and supporters manifests its global reach. A large number of religious, 
cultural, or academic conferences that popped up in Tehran or other 
major Iranian cities in the past decade provided the Quds Force with a 
pool of individuals, influential in their communities, who could be 
recruited to support its operations outside Iran.
    The Quds Force network, with operators across the globe, controls 
dozens of front businesses, including air, sea, and ground 
transportation companies, banking and foreign exchange firms, and 
import/export entities across the Middle East. The Quds Force also uses 
its local presence to store large caches of arms in Shia enclaves 
across the region.
    The Quds Force's vast and ever-expanding logistics and operational 
network supports the Shia Liberation Army operations. With 200,000 
committed armed Shia youths across the Middle East, associates across 
the globe, a vast logistics network, and arms stored in different 
countries in the region, the Quds Force is organized to last for 
decades as the headquarters of the Shia militancy in the region, and if 
necessary to outlast the Islamic Republic.
    The Quds Force and its network will remain an enduring threat to 
the U.S. interests and personnel in the region. And its thousands of 
armed militants and their zealously anti-American ideology could become 
real threat to the security of the homeland, especially as the current 
conflicts in the region evolves.
    It is in our vital National interests to counter the Quds Force 
activities and expansion in the Middle East. As time goes on, our lack 
of action will only increase the threat to the United States, our 
forces stationed across the Middle East, and our regional allies.

    Mr. King. Are we under attack? I was going to----
    [Laughter.]
    Mr. King. OK. Thank you very much.
    The final witness is Mr. Brian Katulis. Did I get that 
right? A senior fellow with the Center for American Progress. 
He focuses on U.S. National security strategy and 
counterterrorism policy.
    Under the Clinton administration he worked at the National 
Security Council and in both the State Department and 
Department of Defense. His articles appeared in the New York 
Times, Washington Post, and Wall Street Journal, and he has 
published two books.
    Mr. Katulis, you are recognized for your testimony, and I 
appreciate you being here. Thank you.

STATEMENT OF BRIAN KATULIS, SENIOR FELLOW, CENTER FOR AMERICAN 
                            PROGRESS

    Mr. Katulis. Great. Thank you, Chairman King and Ranking 
Member Rice. I want to thank both of you and all of the Members 
of the committee for your leadership and everything you have 
done on this committee to keep Americans safe. The investments 
that have been made over the past 15 years or so in our 
National security infrastructure really has saved lives.
    My co-witnesses and my written testimony, I think, covers 
adequately the analysis of Iran and what motivates them and 
what they do. What I would like to focus the balance of my 
remarks here today is to try to answer the question that 
Ranking Member Rice raised, the assessment of the Trump 
administration thus far, and then hopefully some 
recommendations that would spark a conversation about what to 
do about this challenge.
    Because, fundamentally, Iran, I think, is motivated by a 
multiplicity of factors. It operates with a multi-faceted 
strategy. At this point I think the real gap in the U.S. 
approach has been to develop an equally multi-layered strategy 
that addresses how they project power in the region.
    First and foremost, I think the No. 1 thing that the United 
States should continue doing--and I want to highlight continue 
doing--is strengthen the intelligence and law enforcement 
cooperation, both within our agencies, but then I want to 
highlight with partners in the Middle East. Israel, Saudi 
Arabia, Jordan, Egypt, a number of our partners work every day 
to try to counter these terror networks, including those 
sponsored and supported by Iran. I highlight Hezbollah and its 
particular role in this--in these developments.
    But stressing the need and the urgency to continue this 
cooperation with our partners in the Middle East I think is 
essential, because we know more because of them. We know what 
Hezbollah and other terrorist groups are doing because of them. 
I think it is important to continue those investments.
    Fifteen months into the Trump administration--to your 
question, Ranking Member Rice--it is my assessment that the 
Trump administration has talked a good game, and has had strong 
rhetoric. But I would characterize its approach vis-a-vis Iran 
as one of passive appeasement. When you look at the multiple 
theaters of competition, and where I would hope the United 
States would seek to counter Iran's de-stabilizing influence, 
we simply have not shown up in a meaningful way. In my 
testimony--and I will highlight here ways that I think we could 
do that.
    But if you look at, for instance, recent events in Syria, 
notwithstanding the strike on Friday night, which I largely 
supported, we have, by and large, stood on the sidelines and 
let other actors--especially Iran and Russia--to gain a 
foothold inside of Syria. Our friends and allies know this. The 
week after President Trump gave a speech on Iran in October of 
last year I was in Israel. The reaction that I heard from 
Israeli top officials in the security establishment about that 
speech was, ``We like the tone, we like what the President is 
saying, but we see the gap between the rhetoric and the 
policies.''
    I think we can look at our friend and ally, Israel, and its 
actions inside of Syria just in recent weeks, and the threats 
it faces.
    In February, on February 10, the fact that an armed drone 
penetrated Israeli airspace--and this was a drone produced by 
Iran and operated by Iran. The strike that I think could have 
stronger impact in the strategic dynamics than the one that we 
took with the United Kingdom and France was the one that Israel 
felt necessary to conduct on the T4 base inside of Syria. They 
see threats, in large part, because, again, the United States 
has not yet responded beyond the rhetoric in actions on the 
ground.
    Michael and other witnesses talked about what Iran does in 
various theaters, including Iraq. Three of the key actions that 
I think are necessary, moving forward, which I highlight in my 
testimony to put us on a stronger footing is, No. 1, to 
maintain and then upgrade the partnerships that we have with 
security partners in the Middle East, from Israel to the GCC 
States, and to countries like Jordan. There are a number of 
things that we have talked about for years, essentially, since 
2015, when President Obama brought some of our partners to Camp 
David to talk about countering Iran's influence in the region. 
A lot of these actions are just in words and not yet manifested 
on the ground.
    There are things that we can do, diplomatically. Conflicts 
like Yemen and Syria, where we are not simply showing up in 
part because we don't have diplomats working these positions, 
or filling these positions. These sort of conflicts are 
exploited by Iran to expand its influence. Resolving those 
conflicts, in addition to the military moves we need to make in 
partnership with our allies, I think, is essential.
    Last, I would like to highlight, I think, the need in 
places like Iraq and Lebanon, two countries that will have 
elections in the next month, where the United States simply has 
not shown up for years. This is, I think, been a fact under the 
Obama administration and now under the Trump administration in 
the places where influence matters.
    The competition for power in places like Lebanon and Iraq 
takes place, yes, in the security arena, but also in politics 
and in strategic communications. Frankly, gutting and cutting 
the State Department and our capacities to actually compete 
with adversaries like Iran for the hearts and minds, and to 
boost our partners in those countries, is not an effective 
strategy.
    So, to close, again, I thank this committee for the 
opportunity to appear, and I thank them for the investments you 
have made in defending the homeland from terrorist networks 
supported by countries like Iran. But what we are lacking, and 
we have been lacking for more than a decade, is a coherent 
Middle East strategy that competes with adversaries like Iran.
    Thank you.
    [The prepared statement of Mr. Katulis follows:]
                  Prepared Statement of Brian Katulis
                             April 17, 2018
    Chairman King, Ranking Member Rice, and Members of the committee, 
thank you for this opportunity to appear before you today to discuss 
Iran's role in the Middle East and its support for terrorist networks 
such as Hezbollah.
    This testimony is structured around three main points:
    1. An assessment of Iran's role in the strategic environment of the 
        Middle East and South Asia;
    2. An analysis of the role Hezbollah plays in the Middle East in 
        Iran's efforts to project power and influence; and
    3. Recommendations for the next phase of U.S. policy to address the 
        challenges posed by Iran's terrorism network.
    My bottom line assessment is that the integrated work of U.S. 
intelligence, law enforcement, diplomatic and military agencies have 
kept Americans and the U.S. homeland safe in recent years from the 
threats posed by a wide range of terrorist networks, including those 
supported by Iran.
    But the lack of a cogent and integrated U.S. strategy for the 
Middle East hinders America's ability to confront Iran's support for 
terrorism. This lack of a clear regional strategy has allowed Iran and 
its partners to continue to destabilize the Middle East and undercut 
U.S. interests and allies.
    The remedy is to advance a more proactive strategy using the full 
spectrum of U.S. National security tools, including: Diplomacy, 
cooperation with partners on the military, intelligence, and law 
enforcement fronts, targeted U.S. military action, financial sanctions, 
and strategic communications. An integrated strategy to counter and 
compete adversaries like Iran and reassure allies will help enhance 
regional stability and make America safer.
 iran's role in the broader strategic landscape of the middle east and 
                               south asia
    The Middle East remains in a decades-long struggle for power and 
influence among key countries of the region, particularly Iran and 
Saudi Arabia. This competition between states has contributed to the 
weakening of the region's nation-state system. States such as Iraq, 
Syria, and Yemen have become arenas for this regional competition as 
governing authorities have broken down in internal struggles for power 
and legitimacy.
    The collapse of state structures has facilitated the growth in 
power and influence of a wide range of non-state terrorist networks 
with a regional reach. Quasi-state terrorist organizations such 
Hezbollah in Lebanon and the Islamic State have emerged as important 
actors in this environment. These groups have exploited the chaos 
created by sectarian conflict and civil war to deepen their roots in 
the fault lines of fractured societies. Some of these groups, including 
Hezbollah, have worked in concert with state actors like Iran to 
project power and shape events in other countries.
    For nearly 40 years since the Islamic revolution in 1979, Iran has 
worked to develop a wide-reaching global network of terrorist 
organizations, criminal networks, political partners, and proxies 
stretching from Afghanistan to West Africa and Latin America. This 
network has engaged in terrorism, supported militias, and fomented 
instability.
    Iran has funded and armed groups that have challenged state 
authority and advanced propaganda that has used religious symbolism and 
sectarian appeals in public communications. These media campaigns are 
aimed at shaping popular perceptions across the region and often seek 
to challenge the political legitimacy of neighboring countries.
    Iran works through three main organizations to project influence: 
The Islamic Revolutionary Guard Corps--Quds Force, or IRGC-QF; the 
Iranian Ministry of Intelligence and Security; and Lebanese Hezbollah. 
The U.S. State Department has identified the Quds Force as the 
``regime's primary mechanism for cultivating and supporting terrorists 
abroad,'' but all of these organizations have worked to expand Iran's 
influence in the region.
    Iran's primary strategic focus has been on its immediate 
environment in the Middle East and neighboring countries like 
Afghanistan. Its efforts have been under way for decades, but Iran's 
influence and reach expanded after the United States removed two of 
Iran's chief adversaries, the Taliban in Afghanistan and Saddam Hussein 
in Iraq. The 2003 Iraq war ended the U.S. policy of dual containment of 
Iran and Iraq and enabled a historic rise of Iran's influence. Since 
then, Iran stepped up its efforts to shape the regional environment 
with a multi-faceted strategy of support to political forces 
sympathetic to Iran in five key countries:
    Afghanistan.--In the immediate aftermath of the Afghanistan war in 
2001, Iran initially played a key role in helping the international 
community bring together different factions in Afghanistan in 
diplomatic and political discussions that led to the formation of the 
Afghan government. In recent years, Iran has provided covert support, 
including funds, weapons, and training, to insurgents opposed to the 
Afghan government. It has also reportedly recruited Afghans to serve in 
Shia militias currently fighting in Syria's civil war.
    Iran's Revolutionary Guards have benefited financially from the 
illicit drug trade flowing out of Afghanistan, the world's largest 
producer of opium. In addition, Afghan members of parliament and 
security officials say that Iranian intelligence operatives bribe 
Government officials and offer visits to Iran to receive medical care 
and conduct business. As the United States steps up its military 
engagement in Afghanistan, Iran could increase its efforts to undermine 
the Afghan government.
    Iraq.--Iraq remains a key center of gravity for Iran's engagement 
in the broader Middle East. In the more than 15 years since the 2003 
invasion, Iran has engaged in a multi-faceted effort to shape and 
influence the future of Iraq. Iran has cultivated strong political ties 
with key figures across all levels of Iraq's government, and it has 
also offered funding and weapons to militias operating in coordination 
with Iraqi security forces. In addition to political and security 
engagement, Iran has funded media outlets and campaigns inside of Iraq 
that portray Iran in a positive light. Iran has also increased its 
investments in efforts to deepen economic, cultural, and religious ties 
with Iraq.
    Iraq's national elections next month represent a key test of Iran's 
influence just as Iraq is seeking to bridge internal political 
divisions in the wake of the military defeat of the Islamic State.
    Syria.--Iran and Syria have been strategically aligned for decades; 
the bilateral relationship between the two countries has deepened in 
the 7 years since the start of Syria's civil war. Iran's intervention 
has been vital in sustaining the regime of Bashar Al-Assad with 
funding, weapons, troops, irregular militias, and propaganda support.
    Iran has used Syria's territory to establish military bases that 
have threatened U.S. interests and allies, including Israel. In 
February 2018, Israel intercepted an Iranian-armed and -operated drone 
that penetrated its airspace from Syria and responded with a number of 
targeted military strikes in Syrian territory against Iranian and 
Syrian targets.
    Yemen.--Iran has offered support to the Houthi movement battling 
the internationally recognized government in Yemen. Yemen's geographic 
location along the Bab El-Mandeb straits in the southeast of the Red 
Sea makes it a vital chokepoint for global commerce between the Horn of 
Africa and the Middle East. This location leads into the Suez Canal and 
the Mediterranean Sea south of Europe.
    In Yemen, Iran has an opportunity to support forces that have taken 
actions that have undermined the security of Iran's regional rival, 
Saudi Arabia. In January 2018, a United Nations panel of experts 
faulted Iran for violating an arms embargo on Yemen by failing to 
prevent Iranian-made missiles from falling into the hands of Houthis. A 
number of these missiles have been fired from Yemen into Saudi 
territory in recent months.
    Lebanon.--Iran has deep ties with Lebanon's Shia community, 
particularly Hezbollah, the Party of God. Iran has supported Hezbollah 
since its creation in 1982 and has used Hezbollah to advance its 
regional agenda and challenge its adversaries, including Israel and the 
United States. Iran has provided funding and arms to Hezbollah for 
decades, and in recent years it has supplied increasingly sophisticated 
missiles and rockets that target Israeli territory.
    The upcoming elections in Lebanon in May present another 
opportunity to test the reach and influence of Hezbollah inside 
Lebanon's political system, although most observers expect Hezbollah to 
maintain its strong influence.
   hezbollah's role in iran's efforts to project power and influence
    Hezbollah was founded with support from Iran in the early 1980's in 
reaction to Israel's military operations in Lebanon. Over the years, 
Hezbollah has supplemented Iran's support with additional streams of 
revenue from commercial enterprises and charitable networks with a 
global reach.
    In its early years, Hezbollah engaged in a range of terrorist 
attacks and acts of violence, including the 1983 bombings at the U.S. 
embassy and Marine barracks in Lebanon. Since then, Hezbollah has 
developed into the most powerful political force in Lebanon's deeply 
divided coalition government. It has also invested in a deep social and 
economic support network inside of the country.
    In the region, Hezbollah remains focused on its foundational goal 
of leading the resistance to what it sees as U.S. and Israeli 
imperialism. Hezbollah has built a network of tunnels, bunkers, and 
launch sites for missiles and rockets along Lebanon's southern border 
with Israel. Maintaining its capacity to threaten Israel remains a 
primary focus of Hezbollah, and eliminating Israel remains a primary 
goal of Hezbollah.
    In recent years, Hezbollah has expanded its area of operation 
across the Middle East in cooperation with Iran. As an Arab 
organization, Hezbollah has been able to transmit and echo the ideology 
of Iran with wider credibility among Arab audiences. It has become 
increasingly engaged in the civil wars in neighboring countries and 
proxy fights between Iran and Saudi Arabia, in three main arenas:
    Syria.--Hezbollah has played a pivotal role in fighting those 
opposed to the Assad regime and preventing the spread of the Islamic 
State from Syria into Lebanon. From 2011-2013, Hezbollah played a 
limited role in Syria's civil war, sending some forces to bolster the 
security of the Assad regime and defend religious sites revered by Shia 
Muslims. In 2013, Hezbollah substantially boosted its direct military 
engagement, working closely with Iran and Shia militias to turn the 
tide of Syria's conflict. Hezbollah played a prominent role in key 
battles inside of Syria, including Al-Qusayr in 2013, Zabadani in 2015, 
and Palmyra in 2016.
    Iraq.--Hezbollah has been engaged inside of Iraq since the 2003 
Iraq war, playing an advisory and coordination role with Iran-backed 
Shia militias. The rise of the Islamic State and its seizure of Mosul 
in 2014 motivated Hezbollah to step up its engagement inside of Iraq 
focusing on the threat posed by the Islamic State.
    Yemen.--Evidence has surfaced that Hezbollah has offered covert 
training and support to help the Houthi movement fighting the 
internationally recognized government of Yemen and the Saudi-led 
military coalition. Houthi fighters have received training at Hezbollah 
camps in Lebanon, and Houthi casualties of the Yemen war have been 
treated and even buried in Lebanon.
    Along with its broadening and deepening engagement in the Middle 
East, Hezbollah has maintained its global network to finance its 
operations and position itself to conduct possible terrorist attacks. 
Conducting attacks on the U.S. homeland does not appear to be a top 
priority for Hezbollah, particularly in recent years with the 
uncertainties in the Middle East dominating the movement's focus.
    Nevertheless, Hezbollah continues to cultivate a network for 
funding its overall operations and preparing for possible contingencies 
that could involve future attacks on American targets. Individuals and 
organizations connected to Hezbollah have funneled money from 
charitable organizations that raise funds in the United States to 
leaders in Lebanon. In addition, U.S. officials have uncovered evidence 
of Hezbollah-linked money laundering, smuggling, drug trafficking, and 
counterfeiting operations in the Western hemisphere, including in the 
United States.
    Hezbollah has never directly attacked the U.S. homeland, but there 
is some evidence of efforts to position sleeper cells to develop 
operational capabilities in America. In June 2017, an individual in New 
York was arrested and charged with casing John F. Kennedy Airport for a 
possible Hezbollah attack. Also in 2017, a Michigan man was arrested 
and charged with traveling to Panama to conduct surveillance against 
Israeli targets and the Panama Canal.
    These limited incidents demonstrate a possible effort by Hezbollah 
to prepare for contingencies in which the terrorist movement might want 
to conduct attacks against U.S. interests and even the U.S. homeland.
                    recommendations for u.s. policy
    Iran's strategy to project power and influence in the Middle East 
and beyond is motivated by a wide variety of factors--its ideology and 
worldview, its perceptions of threats and opportunities, and its own 
internal political debates. Its support for terrorist networks with a 
regional and global reach like Hezbollah is one critical component of a 
multi-layered strategy that has military, diplomatic, political, 
economic, and ideological elements.
    In order to meet the challenges posed by Iran, the United States 
needs a multi-faceted strategy on several fronts. For years, the United 
States has protected the U.S. homeland and American citizens from a 
wide range of terrorist threats. Where U.S. policy has been deficient 
across several administrations is in developing a clear and integrated 
strategy that impacts Iran's immediate environment in the Middle East.
    A more effective U.S. policy to address the challenges posed by 
Iran and its global terrorism network would operate on five key fronts:
    Strengthen intelligence and law enforcement cooperation inside U.S. 
agencies and with regional and global partners.--The United States has 
not suffered another devastating terrorist attack on its homeland since 
the 9/11 attack, and this is in large part due to the strong 
investments made in building the capacities and enhancing the 
coordination of America's intelligence and law enforcement agencies. 
Advancing their institutional capacities in an evolving threat 
environment is vital. Equally important is avoiding the unnecessary and 
counterproductive politicization of these agencies in America's 
domestic debate. This politicization can undermine the security of all 
Americans.
    U.S. security institutions' coordination with allies and partners 
in the Middle East on intelligence collection, terror finance, and 
targeted actions keeps Americans safe. The cooperation between the 
United States and its Middle East partners on counterterrorism 
financing is essential. The United States has put in place a number of 
sanctions and regulations targeting Hezbollah and Iran's material 
support for terrorism and related financial assets. These should 
continue to be strictly enforced.
    Defend and enhance military and security partnerships in the Middle 
East.--The United States has maintained a deep military footprint and a 
broad array of regional security partners. In addition to long-standing 
bilateral military and intelligence cooperation efforts across the 
region, the United States built an international coalition working to 
counter the Islamic State in 2014.
    All of these streams of conventional military support and 
cooperation should be synchronized and coordinated. Since 2015, the 
United States increased its efforts to coordinate with its partners in 
the Middle East on addressing the destabilizing role Iran and its 
regional partners such as Hezbollah play. In a series of meetings 
beginning at Camp David under President Obama in 2015, the United 
States has held a dialog with regional partners on joint mechanisms to 
deal with Iran's role in the region. The United States should continue 
to work with partners in the Gulf and key allies such as Israel and 
Jordan on a number of measures, including:
   Enforcing and implementing arms embargos aimed at reducing 
        the flow of weapons to conflicts such as Yemen and Syria;
   Enhancing joint efforts to defend against cyber attacks 
        sponsored by Iran and its partners;
   Developing greater coordination on ballistic missile defense 
        interoperability in the Middle East;
   Stepping up efforts to share information and interdict 
        illicit arms smuggling in maritime operations.
    Increase diplomatic efforts to resolve conflicts in Yemen and 
Syria.--Iran continues to play a destructive role in Yemen and Syria. 
At the same time, some of America's key regional partners have taken 
uncoordinated and unilateral actions that have also escalated conflicts 
and undermined the state system in the Middle East. Terrorist 
organization such as Hezbollah and state sponsors of terrorism like 
Iran tend to thrive in environments of conflict--the Syria conflict has 
enabled Iran and Hezbollah to punch far above their weight in the 
region.
    The United States should work closely with its regional allies and 
partners to link joint military and security operations with a more 
coordinated diplomatic effort to resolve conflicts on terms favorable 
to U.S. interests and values. This means investing in stepped-up 
diplomatic efforts to resolve the conflicts in Yemen and Syria and 
linking on-going security operations in those conflicts to efforts to 
advance de-escalation, deconfliction, and long-term conflict 
resolution.
    Increasing U.S. diplomacy on resolving these conflicts is hindered 
by the recent proposed budget cuts in U.S. foreign operation and 
several unfilled positions at the State Department including the 
assistant secretary of state for near eastern affairs and key 
ambassadorial positions in the Middle East.
    Compete with Iran in political engagement and strategic 
communications efforts to shape the political landscape in Iraq and 
Lebanon.--The United States should work with partners to compete in key 
countries where Iran and Hezbollah are key actors in the political 
landscape. This requires substantial investments in the State 
Department and other elements of U.S. power projection outside of the 
military. This political engagement should work to enhance the national 
sovereignty of these countries and support new coalitions that bridge 
old sectarian and ethnic divisions exploited by external actors such as 
Iran.
    Politics and the competition for power among different political 
factions remains a central front in the effort to address Iran's 
influence in the Middle East. Iran has seen its influence grow in 
places that are fragile and divided, and any U.S. engagement that 
further undermines national unity will likely backfire.
    These efforts should also include strategic communications and 
media efforts, such as bolstering the impact of U.S.-funded Voice of 
America and Middle East Broadcasting Networks aimed at increasing 
awareness and transparency about corruption and funding flows from 
external actors like Iraq.
    Maintain the Iran nuclear deal and ensure Iran's strict 
compliance.--At a time of wide-spread regional instability, the 2015 
Joint Comprehensive Plan of Action (JCPOA) nuclear agreement with Iran 
produces very important and tangible benefits for U.S. and 
international security. It has severely restricted Iran's ability to 
produce a nuclear weapon into the next decade. It has established an 
inspections regime that increases the international community's 
knowledge of Iran's nuclear program and enhances the ability to detect 
any possible move by Iran to start a new weapons program. The JCPOA's 
provisions should be strengthened over time, and doing so effectively 
requires a substantial investment in diplomacy with close U.S. partners 
in Europe and the Middle East
    If the United States withdraws from the deal, the net effect would 
increase security tensions in the region while unilaterally disarming 
the United States from a key tool that blocked Iran's path to a nuclear 
weapon for the coming years.
                               conclusion
    During the past 15 years, the United States has confronted 
terrorist networks overseas and prevented another major attack on the 
U.S. homeland. But the strategy it has implemented in the Middle East 
has not produced sustainable results and it has not yet effectively 
dealt with a range of endemic challenges in the region, including 
Iran's destabilizing role.
    To turn the tide, the United States needs to adopt a more 
comprehensive and integrated strategy that engages beyond military 
operations in diplomatic and political efforts in coordination with key 
partners in the Middle East.
    Currently, the United States risks ramping up military operations 
in a way that could contribute to the fragmentation of the Middle 
East's state system and open the space for the continued rise of non-
state actors. Without a broader regional strategy that links military 
approaches to diplomatic efforts in conflict resolution, tactical and 
operational shifts in U.S. military policy in the Middle East could 
make the region even more unstable.

    Mr. King. Thank you, Mr. Katulis. Thank all of you for your 
testimony.
    I just at the outset--not to start a debate, Mr. Katulis, 
because you made a lot of good points, but the fact is that 
Russia is a major problem in Syria. Basically, they were 
invited in by President Obama back in 2013. They had been 
ejected 40 years before that by Sadat from the Middle East. I 
think they had one tiny base in Syria. They were out of the 
Middle East all together. They were no longer a factor until 
the President invited them in when he failed to enforce the red 
line and he invited them in to get rid of the chemical weapons. 
Well, today we still have the chemical weapons and we have 
Russia, which I think adds to that.
    So I just put that on the record, and--but my first 
question would be I have been getting briefings now for 10, 12 
years on Hezbollah. The general theme was that Hezbollah is 
probably the most experienced and professional terrorist 
organization in the world, certainly much more than al-Qaeda, 
much more than ISIS.
    From a homeland security perspective, if we did have a 
conflict with Iran tomorrow, how much of a threat do we face 
here at home from Hezbollah? I know they have a number of 
people here in the country, but are they primarily fundraisers 
or could they be ordered to carry out terrorist activities?
    We will start and go across, Mr. Ottolenghi.
    Mr. Ottolenghi. Thank you for your question. I think it is 
an important point. The answer is absolutely we do face a 
threat.
    Their networks are present in the United States. As I 
pointed out, these networks are multi-tasking. The fact that a 
lot of their operatives may be currently involved in managing 
either illicit financial activities that are designed to raise 
funds for Hezbollah through commercial real estate and other 
endeavors----
    Mr. King. I just ask you--are cigarette sales involved in 
that?
    Mr. Ottolenghi. Well, there is a case from 2008 involving a 
scheme to exploit price differentials between high-tax and low-
tax States within the United States that was funding Hezbollah. 
There is definitely an involvement by Hezbollah in contraband 
of cigarettes in the Middle East. There is growing evidence in 
Latin America where the contraband of cigarettes is very, very 
significant, that the routes to move drugs, people involved in 
human--victims of human trafficking, and cigarettes are pretty 
much the same routes. The criminal networks involved are the 
same networks.
    So it is likely--although I haven't seen the smoking gun 
yet--that Hezbollah may be involved in laundering money for the 
illicit cigarette traffic, as well.
    Mr. King. Mr. Pregent.
    Mr. Pregent. What I would say about this is I look at 
indicators of what Hezbollah is going to do, based on recent 
actions. If you look at the recent actions in Syria, Israel--if 
you believe the reports, they have been able to conduct attacks 
not only against the IRGC Quds Force, but also Hezbollah 
without a response. Normally the calculus that constrains U.S. 
actions in Iran or against Hezbollah is, what will Hezbollah do 
to Israel? We haven't seen that, at least in these strikes in 
Syria that you mention, and direct engagement with Hezbollah.
    As far as the United States goes, I look at it more as a, 
what can Hezbollah do from a high-profile attack perspective? 
What would they most likely be able to do? They are as good or 
better at explosive devices than ISIS is. They are better at 
assassinations, you know, developing assassination cells. They 
are better at targeting, they are better at looking at things. 
They are also good at outsourcing these attacks to Sunni groups 
to be able to do these things.
    So Hezbollah is smart. Iran is smart, they keep a distance 
from Hezbollah by saying it was Hezbollah that did it, and they 
did it without our guidance. Hezbollah can do the same thing 
with, you know, foreign fighters that are sympathetic to ISIS.
    I mean the one thing about Omar Mateen that, as an 
intelligence officer, bothered me is the FBI dropped him 
because Omar Mateen didn't know the difference between 
Hezbollah and ISIS. He didn't know that Hezbollah was a Shia 
terrorist group and ISIS was a Sunni one. Because of that, the 
FBI dropped him because they deemed he was too dumb to be a 
terrorist. Well, this is exactly who Hezbollah is looking for, 
people like this, who simply want to join a cause to do 
something to hurt America.
    The best part about Hezbollah's operations and the worst 
thing for us is they are very good at keeping their 
communications secure, keeping their operational security 
secure. Again, from a high-profile attack perspective, they 
would be good at improvised explosive devices or something like 
that. But again, we have not seen Hezbollah react to strikes in 
Syria, and I believe Iran wants to hold that capability for 
something bigger than a strike against a specific site in 
Syria. Thank you.
    Mr. King. Mr. Uskowi.
    Mr. Uskowi. Sir, Hezbollah and other members of the Quds 
Force-led militia groups pose immediate danger to us in the 
Middle East, to our forces, to our forces stationed in Iraq, in 
Afghanistan, and in Syria.
    That is what it--it is worrisome, and it could--if any--if 
the--if, let's say, any kind of a conflict breaks out in the 
region involving Iran--for example, the trajectory of the Iran-
Israel relations inside Syria is going in--seems to be it is 
inevitable that we are going to have an armed conflict between 
Iran and Israel inside Syria. If those things happen, our 
forces are in danger of being attacked by the Quds Force 
militias, including Hezbollah.
    The homeland also, when we are talking about 200,000 
militants, 50- or 60,000 of them have gone in different times 
deployed inside Syria and have seen--and are battle-tested 
inside Syria. It doesn't take many of them to penetrate this 
country and be a major threat. Yes, I do think they can impose 
major threat to our homeland.
    Mr. King. Mr. Katulis.
    Mr. Katulis. The two incidents, the arrests that you cited 
in Michigan and New York I think offer evidence that there is 
at least a motivation and a potential for sleeper cells, and 
placing sleeper cells. The other witnesses, I think, rightly 
noted the United States is used as a fundraising base for the 
group Hezbollah.
    It is my assessment that that--those sleeper cells--
potential is there, but that movement's center of gravity and 
its focus is largely in the region. It actually has helped 
quite a lot in Syria turn the tide in alliance with the Assad 
regime and Iran and Russia, as well, and it--we see evidence 
also of its involvement with Iraqi Shiite militias, and then 
more recently in providing some sort of training capacities in 
the war in Yemen.
    So I think it is more regionally focused, but the way I 
assess its strategy as a movement is trying to prepare for 
possible contingencies.
    You are certainly correct in the remark that you made about 
President Obama and the red line. I would say, going forward, 
that a real challenge is how do we craft U.S. policy in such a 
way to impose costs on our adversaries. That is where I think 
the talk that we heard--at least this weekend--of additional 
sanctions on Russia for its activities in Syria and supporting 
Syria were encouraging. But now, as we see from the 
administration, it is not clear if they are moving in that 
direction.
    Mr. King. So we end up on the same page.
    Ranking Member.
    Miss Rice. Thank you, Mr. Chairman. So I am just going to 
ask three questions and then put it to the panel to address.
    So I wanted to say that this is not a political--we have 
had a failure in Syria under both administrations. The Trump 
administration has no comprehensive policy as to what we are 
going to do in Syria, and there were legitimate criticisms 
about how Obama handled that, as well. So let's just take the 
politics out of this and say, as a country, we have failed, not 
just from a National security interest, but also a humanitarian 
interest, for sure.
    So the effect of Nikki Haley coming out and saying 
sanctions are going to be--additional sanctions are going to be 
imposed very soon against Russia, and the President saying 
absolutely not because he saw the reaction, what effect will 
that have on the bad actors there? Or not just Russia, but 
obviously Iran, as well, No. 1.
    No. 2, we currently don't have a Secretary of State or a 
Senate-confirmed assistant secretary of state for near eastern 
affairs. The Trump administration has actually also failed to 
even nominate people to be ambassadors for many of our key 
allies in the Middle East, including Jordan, Egypt, Saudi 
Arabia, Turkey, the UAE, and Qatar. So how is it possible to--
for the United States to conduct comprehensive foreign policy 
in the region without these critical diplomatic positions, No. 
2.
    No. 3, what is the effect of this, the Trump 
administration's freezing of $200 million in the 
counterterrorism and stabilization assistance money? It seems 
to me that that is just going in the wrong direction.
    So just opening it up to the panel, those three areas.
    Mr. Katulis. Sorry. On the last one, that was for the Syria 
reconstruction? The freezing?
    Miss Rice. Yes.
    Mr. Katulis. I just wanted to clarify, because they have 
frozen a lot of different pockets from time to time.
    Miss Rice. Well, I mean, I think it is--throughout the 
entire Middle East is the proposed----
    Mr. Katulis. Region.
    Miss Rice [continuing]. Overall cuts.
    Mr. Katulis. Right.
    Miss Rice. But certainly in Syria, where it is needed most 
desperately right now.
    Mr. Katulis. Yes. If I could begin, I fully agree with your 
overall statement. I don't think we need to be partisan when it 
comes to Syria or Iran. In fact, it weakens us and hampers our 
ability, actually, to develop a more effective strategy.
    I think the statements by Ambassador Haley--and that is not 
the only example; you see multiple statements by the President 
himself or other administration officials just on the Syria 
front that contradict each other--it sends a signal of a lack 
of resolve and a lack of focus. Our allies in the region, 
whether it is Israel or Saudi Arabia or others that we are 
trying to work with, they see that. Our adversaries see it, as 
well. I think our adversaries have exploited those gaps, and 
they will continue to do so.
    I think the second point about the State Department, no 
Secretary of State and other positions, I see that as something 
that is both a challenge peculiar to this administration that 
has seemed to want to unilaterally disarm itself on some of the 
key tools of U.S. power, but it is also a function of what I 
have seen across several administrations, starting with the 
George W. Bush administration, of a militarized approach to the 
Middle East, of the downgrading of diplomacy.
    That is where, in my written testimony, I highlighted, I 
think, the essential need and the role that diplomats play in 
trying to stitch together strategies to try to advance conflict 
resolution. Again, mind you, with strategies that link our 
military operations to some sort of hope for an end in sight, 
we have this overly militarized approach.
    Then, frankly, the freezing of these funds, again, sends a 
signal to the region at a time when I think we are trying to 
get others in the region to pull their weight that we are not 
willing to even show up any more. I actually think it is a good 
idea to try to work with our partners in the Gulf that have a 
lot of resources to put more funding into refugees and 
humanitarian assistance.
    But I think if you are looking at it from Riyadh or Abu 
Dhabi, and you see that move, you are going to basically say, 
``OK, if you are not in America, then why should we?'' I think 
it is, again, an abdication. It signals an abdication of 
leadership and retreat.
    Mr. Uskowi. I also do agree that our policy in Syria, or 
lack of policy in Syria, it is very much in evidence than when 
we see the positioning of the Iranian forces on the Israeli 
border in Syria.
    They have been able to build the land bridge which connects 
the Iranian forces in Syria to the supply base in--back to Iran 
through Iraq and Syria, Lebanon, and very close to Israeli 
front forces in Golan.
    In November I was in Golan. Even with a small binocular you 
could see a formation of Lebanese Hezbollah and Iranian Quds 
Force and IRGC forces just across the Israeli front formation. 
So that shows that--how we have failed in Syria that allowed 
Iran to have such a domineering position and such a threat to 
our greatest ally in the region, Israel.
    The--on sanctions, I do believe that the sanctions can play 
a major role if they are part of a larger policy toward Iran. 
The European Union's European allies' rejection of putting 
sanctions on non-JCPOA items like ballistic missiles and Iran 
regional activities is incomprehensible, and we have to pursue 
those lines because Iran is the country that, more than anybody 
else, has told us, has told everybody, that JCPOA has nothing 
to do with the ballistic missile program.
    As a matter of fact, the day after they signed JCPOA they 
tested two ballistic missiles, the very same day after JCPOA 
signing they tested two ballistic missiles. So if they believe 
it has nothing to do with ballistic missiles, why should 
anybody else doubt that it does is not part of that. So is the 
regional activities.
    So we have to put pressure on our allies, in Europe 
especially, to go over for those sanctions, because they can 
play a major role, not in--they are not into themselves, but 
they can play a major role within a cohesive policy toward Iran 
and in the region.
    The--I cannot agree with you more that we need to fill in 
all the diplomatic positions. A colleague of mine at the 
Washington Institute has been nominated for the assistant 
secretary of state for near east. Hopefully he will be 
confirmed soon. But we do need to fill in all those positions, 
because they are sorely needed. Yes, ma'am.
    Mr. Pregent. I will be brief. With regard to Russian 
sanctions, so we saw the President take action in Syria that 
actually embarrassed Russia, Tehran, and Damascus the day after 
the strikes--would be asking why--what is Russia doing here if 
they are not here to defend these types of activities? Then 
Nikki Haley comes out with a strong message on Russian 
sanctions.
    We need to align our strategic communications to our 
allies. The allies need to know that when they are hearing the 
U.N. Ambassador say something, or Secretary of State, or 
Secretary of Defense, that it is coordinated, that it is a 
strategic communication that is synched, and it is not.
    When you have a speech like the President gave on October 
13, where he designated the IRGC and its entirety as a 
terrorist organization for supporting Qassem Soleimani's Quds 
Force, 60 hours later Qassem Soleimani rolled in against a 
Kurdish ally in northern Iraq with U.S. M-1 A-1 Abrams tanks, 
and he did that 60 hours after the President gave his speech 
de-certifying the Iran deal, and designating the IRGC. So there 
is strong rhetoric, like Brian said, and then there is no 
actions. In the case of Syria, there was actions without the 
sanctions.
    So the strategic communications are off, and our allies are 
listening. But more importantly, our enemies are listening.
    With regards to the freezing of the funds, we have 
intelligence gaps. Our intelligence officers are not on the 
ground in Iraq and Syria. We are relying on atmospheric 
reporting. But some of the best intelligence out there is what 
State Department officials bring back from their meetings, from 
their engagements, from the consulates. Nothing better than 
reading an 8-page paper from a meeting. I wish they made them, 
you know, shorter, but it is always a good breakout of what is 
actually going on on the ground. Especially with our existing 
intelligence gaps today, they can be filled, in a lot of these 
cases, with diplomatic postings.
    I will just leave it at that.
    Mr. Ottolenghi. I would like to just add a couple of points 
to what my colleagues just said.
    The first point is that even if the Trump administration 
had come out in favor of the JCPOA and had pledged to uphold 
it, the arsenal of non-nuclear sanctions that the U.S. 
Government has would still allow a very vigorous policy to push 
back against Iran and its nefarious activities.
    We were told during the debate on the nuclear deal in 2015 
by the Obama administration that this was just about the 
nuclear issue, and that all of the other outstanding issues, 
from terrorism to human rights to the war in Syria to missiles, 
would still be the object of very vigorous pressure.
    Now, I think that when we look at how the administration 
has handled this file since January 2017, there is some good 
and some bad. Let me give you an example.
    The Trump administration has designated 174 entities, 
Iranian entities, under a variety of authorities--WMD, 
missiles, proliferation, and terrorism. But it has not touched 
one single financial institution in Iran as of yet. Now, none 
of these entities involved in procurement for the missile 
program is buying their advanced technology by sending 
suitcases of cash to their suppliers in Asia and Europe. They 
are using the financial system. So here is an example where the 
Trump administration's rhetoric and practice are mismatched.
    The other example is the issue of aviation and the 
contracts that have been signed under the JCPOA to supply 
commercial aircraft to Iran. Iran continues to use commercial 
aircraft to move personnel, military personnel, and weaponry to 
Syria. Just a couple of weeks ago Reuters actually had an 
incredibly interesting and revealing expose of how an--a Syrian 
airline that is under U.S. sanctions is actually ferrying 
Russian mercenaries from Russia into Syria. So commercial 
aviation sector is an issue, and the Trump administration has 
not delivered the kind of compelling intelligence and evidence 
to actually review those deals.
    Now, the Trump administration took only a handful of days, 
if not weeks, to find the evidence that Korean--North Korean 
ships and Chinese ships who are transferring crude oil in 
violation of sanctions by showing satellite imagery. In 2012, 
Treasury, to back up its designations of Iranian airlines, 
similarly produced that satellite imagery evidence pretty 
quickly.
    So again, my question--this is really a question--is this a 
failure of imagination or lack of strategy, or benign neglect, 
or the willingness--the unwillingness to take action?
    Last, but not least, on the issue of humanitarian aid, we 
should first recognize--and this should be an integral part of 
U.S. policy--that what the Assad regime is doing in Syria is, 
put very simply and bluntly, ethnic cleansing of the--you know, 
the ethnic groups that are not aligned and not loyal enough to 
the regime. They are using this as leverage on neighboring 
countries and also Western allies.
    The refugee crisis has upended the European political 
order, has created enormous amount of leverage to the rising 
authoritarianism of Erdogan vis-a-vis Europe. These are all 
crises that require more than just providing humanitarian aid. 
They require a comprehensive strategy to push back against a 
tyrant who is, frankly, a war criminal running Syria, and the 
allies of that tyrant who are backing his heinous policies.
    Thank you.
    Miss Rice. Thank you, Mr. Chairman.
    Mr. King. Before I recognize Mr. Perry I just wanted to put 
it on the record for myself that I do believe that Ambassador 
Haley's sanctions she proposed should definitely be 
implemented, and also it is a mistake to say we are going to be 
pulling troops out of Syria.
    With that I yield to Mr. Perry.
    Mr. Perry. Thank you, Mr. Chairman.
    Mr. Katulis, I don't have a question for you, but I do have 
a couple of comments. I was--I am going to say actually stunned 
by your--what I view as unilateral and myopic view of the two 
administrations. While I think there is fair criticism to go 
around, that you would characterize the current administration 
as passive appeasement versus what I would characterize as 
active appeasement, if not aggressive collaboration over the 
last 8 years while this President has been in office for 16, 17 
months now, it just seems completely and wholly lopsided.
    He has got a lot to do, and a lot of what he has to do, 
this current administration, this current President has been 
caused by the previous administration. As the Chairman has 
indicated, administrations prior to keeping Russia out of the 
Middle East for decades and decades was all washed away in one 
fell swoop, and now we are struggling our--to find our way out 
of this in the midst of crises all around the globe.
    I guess that while I find that I think that there are 
plenty, like I said, criticism to go around between the 
rhetoric and the actions, I would remind everybody that there 
are plenty I think that agree with your viewpoint that have 
been highly critical of the President's recent actions in 
Syria, and some on my side, so to speak, that would be highly 
and are highly critical.
    But your characterization of a lack of resolve or a lack of 
focus--let me tell you what. There might have been a lack of 
resolve and a lack of focus in the last administration, and 
there might be some in the current administration, but there is 
no lack of getting someone's attention when rounds are 
impacting in your country around your cities. None of that 
happened under the last administration. While it might be--
while there might be shortcomings, and it might fall short 
under the current administration, at least it is damn well 
something.
    Let's move on here. Mr. Pregent--is that how you pronounce 
your name, sir? Tell me--I am frustrated, irritated, and a bit 
angered that the taxpayers' dollars are headed toward the Quds 
Force and the IRGC because of what Iran has done and what we 
have in fact, in some ways, helped facilitate.
    What would be the implications or the impact of us, the 
United States, stopping that funding all together, or diverting 
it to the Kurds, so to speak? What would be the impact for the 
Iraqi Government? What would be the impact with our 
relationship with that government and with Turkey?
    Then, what would be the impact, generally speaking, from a 
strategic and tactical standpoint on the ground in Iraq?
    Mr. Pregent. Thanks for the question. Stopping the U.S. 
train-and-equip program would give the United States leverage 
the day after we did that, leverage with Baghdad. We cannot let 
Baghdad keep incubating these existential threats to the world, 
such as al-Qaeda and ISIS.
    The U.S. train-and-equip program now is being hijacked by 
the IRGC Quds Force. Not by the Hash'd al-Shaabi or the Shia 
militias, but through the Badr Corps, who is in control of the 
MOD and the MOI. But now--and this is something that is 
shocking to me--we have actually integrated IRGC Quds Force 
militias into the Iraqi military, meaning they now are official 
legitimate units in the Iraqi military with access to U.S. 
funds and equipment.
    We should get--we would get leverage day one if we ended 
the U.S. train-and-equip program, moved it to Erbil, built a 
Sunni Arab and Sunni Kurdish force to not only go after the 
remnants of ISIS and the future iteration of ISIS, but also to 
curb Iranian influence in Iraq. It is something we should do.
    We cannot continue to ignore what is happening, because we 
are simply handing this country over to Iran, where, when 10-
year-old Americans have to go back in 10 years to fight the 
next iteration of ISIS, they will not be invited in like we are 
now. We will be in a serious situation where we are the 
uninvited guests in a conflict because these areas, the 
northern Middle East, keep incubating these existential 
threats. It won't only be a Sunni terrorist group, it will also 
be these Shia groups as they develop Hezbollah-like 
capabilities.
    The--Turkey needs to be reminded it is a NATO ally. I think 
a lot of our problems in the northern Middle East is our 
acquiescence, in some cases, to what Erdogan wants to do in 
northern Syria, and also with his ability to go into northern 
Iraq without being invited in by Baghdad to do things. We 
should remind Turkey they are a NATO ally, address Turkey's 
legitimate concerns. But again, the biggest problem with Iraq 
is we have levers. We have levers. May 12 we risk losing that 
leverage if Fatah wins.
    The one thing I would say, because it is a contrarian 
position. Everybody says Prime Minister Abadi is our guy in 
Baghdad. Well, Soleimani says the same thing. Everything Qassem 
Soleimani has been able to do in Iraq has been--he has been 
able to do under Prime Minister Abadi. Qassem Soleimani has 
been quoted as saying, ``Abadi gives us the United States.'' I 
prefer that one of these IRGC Quds Force candidates actually 
wins the premiership, so we can actually unmask Iraq for what 
it really is.
    It is becoming an Iranian client state. It is becoming that 
because we are denying this exists. This map here, this is--
this exists. I have worked for Secretary Mattis. I have worked 
for him at CENTCOM, when he said he went to bed at night 
thinking about three things: Iran, Iran, and Iran. Secretary 
Mattis, as of December 17, says this doesn't exist. The land 
bridge doesn't exist, Iran does not have unfettered access 
across Iraq and into Syria. They do, because these Iraqi 
militias who have answered directly to Qassem Soleimani are in 
Damascus, have stepped into Jordan, are starting to threaten 
Israel, and they are using Iraq to do so.
    The Iraqi Security Forces are not there to stop it. They 
have been built by the IRGC Quds Force to facilitate it. That 
is my biggest issue as a veteran of this war and a veteran of 
the intelligence community that focused primarily on Iranian 
influence in Iraq.
    Mr. Perry. Mr. Pregent, the only thing I would disagree 
with in your statement is the word ``becoming.''
    With that, Mr. Chairman, my time has expired. I yield.
    Mr. King. Thank you, Mr. Perry. My preference is that we 
withdraw from the nuclear agreement, but I understand also the 
points that Mr. Katulis is making.
    So if the other three witnesses could comment on that--then 
Mr. Katulis, obviously, I will come back to you also--as to 
what are the pluses and minuses, and what would happen if we 
withdraw from the agreement?
    Mr. Pregent. Right. Well, we have actually crafted a plan 
for the day after, based on best case and worst-case scenarios 
for the administration. These--this strategy has been sent to 
the National Security Council, Department of Defense, and 
Department of State.
    I argue that the day after we withdraw from the JCPOA, we 
have leverage once again. I would only say this. Everything 
that Iran has done to further destabilize the Middle East and 
northern Middle East has been done under the protections of the 
JCPOA.
    If all parties abide by the JCPOA, Iran still becomes North 
Korea in 10 years. With the JCPOA in place, Iran is 6 months 
away from a nuclear weapon. With the JCPOA with us walking out 
of it, Iran is 6 months away from a nuclear weapon. The JCPOA 
insulates the regime. It allows it to become an economic power, 
a conventional military power, it continues to do--improve its 
ballistic missile capability. At the end of the sunset clause 
put a nuclear weapon on top of one of those ballistic missiles, 
whether it can range Israel or whether it is an 
intercontinental ballistic missile, to be able to gain leverage 
with the United States.
    If we don't do something now, we will be facing a more 
aggressive and more empowered Iran that not only has the IRGC 
Quds Force, but also has a conventional military that can 
threaten its Sunni regional allies.
    If we walk away, we have leverage the next day. If we 
simply put sanctions--and even if we don't walk away, if we put 
sanctions on the Central Bank of Iran, if we put sanctions on 
the EIKO, just like my colleagues have said, we have not gone 
after the regime's financial institutions. Walking away from 
the Iran Deal immediately gives this administration leverage, 
in my opinion, based on what Iran has been able to do under the 
protections of the JCPOA.
    One final point. Europe hasn't invested heavily in Iran 
under the JCPOA. Why would they, when we walked away? They are 
worried about secondary U.S. sanctions, they are worried about 
picking a $400 billion that is shrinking over a $19 billion 
economy.
    The United States will not be isolated. Iran is not worth 
it to our European allies. Walking away from the Iran Deal and 
sanctioning key parts of Iran's financial infrastructure will 
also give us leverage with Russia and China, as they engage. We 
can also use secondary sanctions against Russia and China, as 
well. Thank you.
    Mr. Ottolenghi. In my perspective and opinion on the whole 
issue of the Iran--the quest for nuclear capability by the 
regime in Tehran, I think the two policies, or the two events 
that would ultimately prevent that scenario from materializing 
are, A, a military strike; or B, a regime change.
    Now, neither are necessarily policies that the United 
States and its Western allies want to pursue. But everything in 
between is containment, is trying to contain Iran from reaching 
a nuclear weapons capability. That is what the JCPOA is, it is 
an imperfect tool to try and contain Iran.
    Now, if the JCPOA is buying the United States and its 
allies time to pursue the other two options: To develop a 
credible military option and, on the other hand, to engage in 
policies that can undermine the regime domestically, then that 
time is welcome. If the JCPOA is to collapse, I would prefer to 
see a collapse caused by the Iranians, where the Iranians are 
blamed, and not where the United States is blamed, because the 
consequences of the United States taking the blame, I think, 
put the United States in a more disadvantageous position than 
the other way around.
    But I think that the bottom line here is this. The United 
States has time to build a strategy with its allies to deny 
Iran the economic benefits that are inherent in the JCPOA. By 
and large, by the way, Iran has not greatly benefited from the 
JCPOA until now. All you got to see--got to do is look at their 
economy.
    When I was debating the sanctions policy with European 
interlocutors prior to moving to the United States about a 
decade ago, the standard line you would get from foreign 
ministries in Europe was that the, you know, sanctions would 
only contribute 20, 30 percent to Iranian economic dysfunction 
because the biggest threat to Iranian economy is the regime 
itself, is the way they run their own economies, the lack of 
transparencies, the corruption, is the penetration of the 
economy by the deep state, by the IRGC, by the religious 
foundations linked to the supreme leader, and so on. It is the 
lack of rule of law, it is the lack of transparency, all things 
which we can actually enhance and make more unbearable to the 
Iranian economy through sanctions, which are possible outside 
of the limited sphere of nuclear sanctions, as the JCPOA said.
    So my suggestion would be to actually devise a strategy 
which keeps the JCPOA in place for now, but denies the 
benefits, economic benefits, to Iran in such a way that either 
the regime collapses and therefore there are strategic 
perspective changes, or the Iranians themselves walk away from 
the agreement.
    Mr. King. Mr. Uskowi.
    Mr. Uskowi. Mr. Chairman, the JCPOA is like any other arms 
control agreement. It needs to be revised and looked at as the 
time goes on, because the situation changes.
    The Iranians did not live up to their expectation that they 
are going to hold the testing and the allotment of the 
ballistic missiles after the JCPOA signatures. So definitely 
this treaty needs to be revisited and elements of the ballistic 
missiles should be added to that.
    Sunset clause is also the other part of--very flawed part 
of this agreement.
    Now, can we do that through the--through our European 
allies to revise this JCPOA or come to some agreement in 
addition of JCPOA on ballistic missiles and on Iran regional 
activities. I am not sure, with what happened yesterday at the 
European Union. If we walk off the JCPOA, however, I see a 
danger. The danger is not just because Iran is going to claim 
to be the victim here. The danger is on us, is that we are 
going to equate exiting JCPOA as our tough stand, as our tough 
line against Iran. That is not going to cut it.
    If we really want to counter Iran, it is not just through 
JCPOA. The main thing is Iran's regional activities. The main 
thing is Iran's presence in Syria, the immediate and--danger 
that Iran is presenting to our Israeli allies in Syria. If we 
cannot stop that, if we cannot stop the Iraqi Shia militias 
inside Iraq, as my colleague here mentioned, those are the 
elements that we have to counter Iran. Is not just about JCPOA. 
The danger would be that we use that JCPOA, we think that we 
have done our work, and we have countered Iran. No, we have a 
lot of work above and beyond JCPOA.
    Mr. King. Mr. Katulis.
    Mr. Katulis. I agree with the urgency of the moment on the 
region. I think if the United States pulls out of the JCPOA, 
which is a deal that should be strengthened, and strengthened 
over time, but if we pull out it would be yet another example 
of the Trump administration's passive appeasement. It would 
essentially unilaterally disarm us from a key tool that has 
given us good intelligence, good insight on what Iran has been 
doing.
    The two factors that I would worry about is the distraction 
already of, I think, trying to rush some sort of fix to the 
JCPOA. Because, as some of my colleagues have mentioned, we 
have time. It would further distract us from this absence of a 
regional--creating a coherent regional strategy to counter Iran 
and the region.
    The second would be the timing of this, if it happens this 
spring, while we are also trying to secure a deal in another 
theater with North Korea, which is a very urgent issue right 
now. I think it would undermine further our diplomatic 
credibility on maintaining these deals if we are blamed for 
blowing up the deal, and not Iran.
    So I think, again, the move is one of these--what I have 
seen in this administration, the suggestion of it, one that is 
rhetorical and saying--the assertion that it would give us more 
leverage. But this is where I actually--I understand what my 
friend Michael has said, but I respectfully disagree. I 
actually think it would tend to isolate the United States, and 
could further inflame the Middle East and set off a regional 
arms war.
    Mr. King. Thank you.
    Ranking Member. No?
    Mr. Keating.
    Mr. Keating. Thank you, Mr. Chairman.
    I am just curious what your views are. You know, Iran and 
Russia, they have similar goals, in terms of Syria. Yet do you 
see any areas where there could be fissures or any kind of 
stress points that might occur between Tehran and Moscow as a 
result--in my own view--and it is my own, that Moscow can't be 
pleased with Syria and their actions, much as they are 
steadfast, as much as they are loyal.
    The actions do--and I think will create greater conflicts, 
greater problems for Moscow, going forward, with the current 
leader, at least. But do you see any of these points of stress 
that might occur between those two powers?
    Mr. Pregent. Yes, I do. I do, Congressman. I actually was 
approached after one of my panels by somebody from the Russian 
Federation, and I suggested we meet at Trump Hotel, just to 
make it, you know, a good meeting environment. I wrote down all 
the notes for my counterintelligence brief in the future, and I 
have actually met with somebody from the embassy who was a 
military attache and he was talking about Syria.
    I asked him, I says, ``Oh, why are these Iranian militias 
moving on to U.S. special operations mission in Al-Tanf? What 
is with Wagner moving on U.S. forces?'' In both cases, they 
were to test U.S. resolve. The United States responded, and 
Russia sat on its hands.
    I would argue that last year we missed out on an 
opportunity to exploit those schisms and fissures that happened 
after the 59 cruise missile attack. Russia didn't launch one 
missile to stop it. Again, Russia didn't launch one missile to 
stop this last attack. Damascus and Tehran a year ago were 
wondering what Russia was doing in Syria, if not to stop the 
United States from doing things like this.
    This attack embarrassed Putin, but we are not very good at 
exploding the day after. We are not good at identifying these 
schisms and fissures and putting out our own disinformation. 
You know, we should not go out of our way to say we didn't 
coordinate with the Russians on this strike in Syria. We should 
say absolutely we coordinated with the Russians, and they 
allowed us to do this.
    We said we--what is the word we used? Basically, dividing 
the battle space, made everybody aware of where we were 
operating. I know we should absolutely take advantage of these 
fissures. Russia has said, and they--what is that? Yes, yes, 
deconflict, deconflict the battle space. Russia has said that 
they are not very impressed with the Iranian militias. They are 
not very impressed with the Shia militias.
    It is the same thing that happened in Iraq. Shia militias, 
when they first moved on Tikrit, before the United States 
joined the air campaign against ISIS, could not dislodge 1,000 
ISIS fighters. They lost upwards of 8,000 men. The ISIS 
campaign has taught us that the only way ISIS loses terrain is 
with an effective battle of--force on the ground and U.S. air 
power.
    Russia is not impressed with the Iranian militias in 
Afghanistan, and there are a lot of places where we can 
actually conquer and divide. We are just not good at it, and we 
should be, because it is fairly easy----
    Mr. Keating. But what is Tehran's view with the--of the 
Kurds along those lines? I mean----
    Mr. Pregent. Well, it is interesting, because they moved on 
the Kurdish ally in Iraq, with U.S. tanks after the President 
designated the IRGC as a terrorist group, and yet they sent 
militias to Afrin to protect the YPG west of the Euphrates. 
Erdogan hit them. Erdogan struck Shia militias and Quds Force 
advisors. Iran didn't do anything, and neither did Russia.
    Israel has actually conducted a number of strikes, if you 
believe the reports, to show us how easy it is to do. Because 
again, Russian air defense assets in Syria are there to protect 
Russian bases. They are not there to protect Assad. But now 
they are talking about moving S-300's into Syria in order for 
Assad to develop a better capability. Now that is something we 
should stop. We should prevent the Assad regime from getting 
those 300's, because we are trying to prevent Iran from doing 
it.
    Now, one of the fixes is Iraq is trying to purchase S-
400's. This is not for Iraq's air defense. This is for an 
integrated air defense system that the Russians and the 
Iranians can use. Underneath all of this is a pact between 
Moscow, Tehran, Baghdad, and Damascus to form a defense pact, 
and no one is talking about this. This defense pact exits the 
United States.
    The biggest issue here is Baghdad, Tehran, and Damascus are 
wondering why Russia didn't do anything. The more we say that 
we coordinated, or deconflicted battle space with the Russians, 
the more those divisions are open for us to do something. 
Again, we are not very good at it. We should be.
    Mr. Keating. Thank you very much.
    Mr. Pregent. Thank you.
    Mr. Keating. I yield back.
    Mr. Uskowi. Congressman, on the question of Russia, I 
believe Iran's strategy in Syria is to wait out patiently for 
the U.S. forces to get out, because they believe as soon as the 
U.S. forces gets out of Syria, Russians will draw down on their 
involvement in Syria and keep it only to their naval and 
probably air force base there for long-term.
    So, their really long-term strategy in Syria is totally 
different than Russia. Iranians want to stay in Syria for long-
term. They want the United States to pull out, Russia to draw 
down the forces in Syria. When they do that, the plan is to 
make Syria like Iraq, to another, really, client state, this 
time on the border of Israel, the dream of the Islamic 
revolution, to have forces on the borders of Israel.
    On the Kurds, especially in Syria, they are doing the same 
thing. They are waiting for the United States to get out so 
they can contain the Kurdish forces. Of knowing the Kurds in 
Syria when I was at CENTCOM, they were the only--really, the 
only real fighters in all of--in that--that were on our side. 
Losing them as an ally is the biggest mistake that we can do. 
Iranians are waiting for that.
    Thank you.
    Mr. King. Mr. Katulis.
    Mr. Katulis. If I could add one point where I think there 
is a gap between Iran and Russia--and I think it is important 
analytically--is that their relations with some of our Gulf 
partners, Saudi Arabia and the UAE in particular, are quite 
different. Saudi Arabia and the UAE view Iran as their biggest 
enemy and adversary in the region. They also have cultivated 
good ties with Moscow and Russia.
    So if I were in the Trump administration--and I credit the 
Trump administration with some good things in what they have 
done in the Middle East. In the first year it tried to reduce 
the trust and confidence gap with some of our close partners, 
like Saudi Arabia, like Israel, and things like this.
    Given what we know about these Gulf countries' concerns 
about Iran, why not try to leverage our relationship with them 
to try to split Moscow's activities with Iran? I don't think 
they will get very far. Moscow has invested deeply in some of 
these relationships in Syria and Iraq and other places.
    But my main point is that statecraft is not simply about 
the military assets and what we can put into place. It is also 
how we can use the relationships and confidence that we have 
built with some of our key partners to isolate some of these 
countries like Russia, which I think the net effect of their 
disastrous incursion into Syria has been to make the states 
weaker, and also exacerbate the terrorist threat, region-wide.
    Mr. Keating. Thank you. Thank you very much.
    Mr. King. Thank you, Mr. Keating. I want to thank the 
witnesses for their valuable testimony. I was just telling the 
Ranking Member I have no particular questions now.
    Having said that, we can do it--there is probably--for 2 or 
3 weeks nonstop. I mean it is just incredible wealth of 
knowledge from all of you, and I want to thank you for that 
very much.
    Anyway, the Members of the subcommittee may have some 
additional questions for the witnesses, and we will ask you to 
respond to those in writing. Mr. Barletta's question will be 
included for the record.
    [The information follows:]
Question For the Record From Honorable Barletta for Mr. Michael Pregent
    Question. For years, we in Congress have worked to cripple the 
Iranian regime. Yet, they are still able to contribute close to $16 
billion in funding for terrorist organizations annually. Mr. Pregent, 
how has the Iran deal allowed the Iranian regime to continue to sponsor 
world-wide terror, and is Iran close to developing a nuclear arsenal?

    Mr. King. Pursuant to committee rule VII(D), the hearing 
record will be held open for 7 days.
    I hate to end such an informative meeting on such a 
technical statement here. But anyway, without objection, the 
subcommittee stands adjourned.
    [Whereupon, at 11:26 a.m. the subcommittee was adjourned.]