[House Report 105-375]
[From the U.S. Government Publishing Office]



105th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 1st Session                                                    105-375
_______________________________________________________________________


 
            IRAN MISSILE PROLIFERATION SANCTIONS ACT OF 1997

                                _______
                                

November 4, 1997.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

_______________________________________________________________________


 Mr. Gilman, from the Committee on International Relations, submitted 
                             the following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 2709]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on International Relations, to whom was 
referred the bill (H.R. 2709) to impose certain sanctions on 
foreign persons who transfer items contributing to Iran's 
efforts to acquire, develop, or produce ballistic missiles, 
having considered the same, report favorably thereon with an 
amendment and recommend that the bill as amended do pass.
  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Iran Missile Proliferation Sanctions 
Act of 1997''.

SEC. 2. REPORTS ON MISSILE PROLIFERATION TO IRAN.

    (a) Reports.--Except as provided in subsection (c), the President 
shall, at the times specified in subsection (b), submit to the 
Committee on International Relations of the House of Representatives 
and the Committee on Foreign Relations of the Senate a report 
identifying every foreign person with respect to whom there is credible 
information indicating that that person, on or after August 8, 1995--
          (1)(A) transferred items on the MTCR Annex, or items that the 
        United States proposes for addition to the MTCR Annex, that 
        contributed to Iran's efforts to acquire, develop, or produce 
        ballistic missiles, or
          (B) provided technical assistance or facilities which the 
        President deems to be of concern because of their direct 
        contribution to Iran's efforts to acquire, develop, or produce 
        ballistic missiles; or
          (2)(A) attempted to transfer items on the MTCR Annex, or 
        items that the United States proposes for addition to the MTCR 
        Annex, that would have contributed to Iran's efforts to 
        acquire, develop, or produce ballistic missiles, or
          (B) attempted to provide technical assistance or facilities 
        which the President deems to be of concern because of their 
        direct contribution to Iran's efforts to acquire, develop, or 
        produce ballistic missiles.
  (b) Timing of Reports.--The reports under subsection (a) shall be 
submitted not later than 30 days after the date of the enactment of 
this Act, not later than 180 days after such date of enactment, not 
later than 1 year after such date of enactment, and not later than the 
end of each 1-year period thereafter.
  (c) Exceptions for Persons Previously Identified, Sanctioned, or 
Subject of Waiver.--Any foreign person who--
          (1) was identified in a previous report submitted under 
        subsection (a) on account of a particular transfer, 
        transaction, or attempt,
          (2) has engaged in a transfer or transaction that was the 
        basis for the imposition of sanctions with respect to that 
        person under section 73 of the Arms Export Control Act or 
        section 1604 of the Iran-Iraq Arms Non-Proliferation Act of 
        1992, or
          (3) may have engaged in a transfer or transaction, or made an 
        attempt, that was the subject of a waiver under section 4,
is not required to be identified on account of that same transfer, 
transaction, or attempt in any report submitted thereafter under this 
section.

SEC. 3. IMPOSITION OF SANCTIONS.

  (a) Requirement To Impose Sanctions.--
          (1) Requirement to impose sanctions.--The sanctions described 
        in subsection (b) shall be imposed on--
                  (A) any foreign person identified under subsection 
                (a)(1) of section 2 in a report submitted under that 
                section, and
                  (B) any foreign person identified under subsection 
                (a)(2) of section 2 in a report submitted under that 
                section, if that person has been identified in that 
                report or a previous report as having made at least 1 
                other attempt described in subsection (a)(2) of that 
                section.
          (2) Effective date of sanctions.--The sanctions shall be 
        effective--
                  (A) 30 days after the report triggering the sanction 
                is submitted, if the report is submitted on or before 
                the date required by section 2(b);
                  (B) 30 days after the date required by section 2(b) 
                for submitting the report, if the report triggering the 
                sanction is submitted within 30 days after that date; 
                and
                  (C) on the date that the report triggering the 
                sanction is submitted, if that report is submitted more 
                than 30 days after the date required by section 2(b).
  (b) Description of Sanctions.--The sanctions referred to in 
subsection (a) that are to be imposed on a foreign person described in 
that subsection are the following:
          (1) Arms export sanction.--For a period of not less than 2 
        years, the United States Government shall not sell to that 
        person any item on the United States Munitions List as in 
        effect on August 8, 1995, and shall terminate sales to that 
        person of any defense articles, defense services, or design and 
        construction services under the Arms Export Control Act.
          (2) Dual use sanction.--For a period of not less than 2 
        years, the authorities of section 6 of the Export 
        Administration Act of 1979 shall be used to prohibit the export 
        to that person of any goods or technology on the control list 
        established under section 5(c)(1) of that Act.
          (3) United states assistance.--For a period of not less than 
        2 years, the United States Government shall not provide any 
        assistance in the form of grants, loans, credits, guarantees, 
        or otherwise, to that person.

SEC. 4. WAIVER ON BASIS OF ADDITIONAL INFORMATION.

  (a) In General.--The President may waive the imposition of any 
sanction that would otherwise be required under section 3 on any 
foreign person 15 days after the President determines and reports to 
the Committee on International Relations of the House of 
Representatives and the Committee on Foreign Relations of the Senate 
that, on the basis of information provided by that person, or otherwise 
obtained by the President, the President is persuaded that the person 
did not, on or after August 8, 1995--
          (1)(A) transfer items on the MTCR Annex, or items that the 
        United States proposes for addition to the MTCR Annex, that 
        contributed to Iran's efforts to acquire, develop, or produce 
        ballistic missiles, or
          (B) provide technical assistance or facilities which the 
        President deems to be of concern because of their direct 
        contribution to Iran's efforts to acquire, develop, or produce 
        ballistic missiles; or
          (2) attempt on more than one occasion--
                  (A) to transfer items on the MTCR Annex, or items 
                that the United States proposes for addition to the 
                MTCR Annex, that would have contributed to Iran's 
                efforts to acquire, develop, or produce ballistic 
                missiles, or
                  (B) to provide technical assistance or facilities 
                described in paragraph (1)(B).
  (b) Written Justification.--The determination and report of the 
President under subsection (a) shall include a written justification 
describing in detail--
          (1) the credible information indicating that the person--
                  (A) transferred items described in section 
                2(a)(1)(A), or provided technical assistance or 
                facilities described in section 2(a)(1)(B); or
                  (B) attempted to transfer items described in section 
                2(a)(1)(A), or attempted to provide technical 
                assistance or facilities described in section 
                2(a)(1)(B);
          (2) the additional information which persuaded the President 
        that the person did not--
                  (A) transfer items described in section 2(a)(1)(A), 
                or provide technical assistance or facilities described 
                in section 2(a)(1)(B); or
                  (B) attempt to transfer items described in section 
                2(a)(1)(A), or attempt to provide technical assistance 
                or facilities described in section 2(a)(1)(B); and
          (3) the analysis of the information supporting the 
        President's conclusion.
  (c) Submission in Classified Form.--When the President considers it 
appropriate, the determination and report of the President under 
subsection (a) and the written justification under subsection (b), or 
appropriate parts thereof, may be submitted in classified form.

SEC. 5. WAIVER ON BASIS OF NATIONAL SECURITY.

  (a) In General.--The President may waive the imposition of any 
sanction that would otherwise be required under section 3 on any 
foreign person 15 days after the President determines and reports to 
the Committee on International Relations of the House of 
Representatives and the Committee on Foreign Relations of the Senate 
that such waiver is essential to the national security of the United 
States.
  (b) Written Justification.--The determination and report of the 
President under subsection (a) shall include a written justification 
describing in detail the facts and circumstances supporting the 
President's conclusion.
  (c) Submission in Classified Form.--When the President considers it 
appropriate, the written justification under subsection (b), or 
appropriate parts thereof, may be submitted in classified form.

SEC. 6. ADDITIONAL INFORMATION REGARDING ACTIONS BY GOVERNMENT OF 
                    PRIMARY JURISDICTION.

  As part of each report submitted under section 2, the President shall 
include the following information with respect to each foreign person 
identified in that report:
          (1) A statement regarding whether the government of primary 
        jurisdiction over that person was aware of the activities that 
        were the basis for the identification of that person in the 
        report.
          (2) If the government of primary jurisdiction was not aware 
        of the activities that were the basis for the identification of 
        that person in the report, an explanation of the reasons why 
        the United States Government did not inform that government of 
        those activities.
          (3) If the government of primary jurisdiction was aware of 
        the activities that were the basis for the identification of 
        that person in the report, a description of the efforts, if 
        any, undertaken by that government to prevent those activities, 
        and an assessment of the effectiveness of those efforts, 
        including an explanation of why those efforts failed.
          (4) If the government of primary jurisdiction was aware of 
        the activities that were the basis for the identification of 
        that person in the report and failed to undertake effective 
        efforts to prevent those activities, a description of any 
        sanctions that have been imposed on that government by the 
        United States Government because of such failure.

SEC. 7. PURCHASE OF WEAPONS TECHNOLOGY.

  (a) Sense of the Congress.--It is the sense of the Congress that the 
President should exercise the authority granted to him under section 
504 of the Freedom for Russia and Emerging Eurasian Democracies and 
Open Markets Support Act of 1992 (22 U.S.C. 5854)--
          (1) to prevent the transfer of weapons-related material and 
        delivery systems to Iran through the purchase, barter, or other 
        acquisition of such material and delivery systems; and
          (2) to prevent the transfer to Iran of scientific and 
        technical expertise with respect to such weapons-related 
        material and delivery systems.
  (b) Availability of Amounts.--Amounts hereafter made available to 
carry out chapter 11 of part I of the Foreign Assistance Act of 1961 
(22 U.S.C. 2295 et seq.; relating to assistance for the independent 
states of the former Soviet Union) may be used to carry out subsection 
(a).

SEC. 8. DEFINITIONS.

  For the purposes of this Act--
          (1) the terms ``foreign person'' and ``person'' mean--
                  (A) a natural person that is an alien;
                  (B) a corporation, business association, partnership, 
                society, trust, or any other nongovernmental entity, 
                organization, or group, that is organized under the 
                laws of a foreign country or has its principal place of 
                business in a foreign country;
                  (C) any foreign governmental entity operating as a 
                business enterprise; and
                  (D) any successor or subsidiary of any entity 
                described in subparagraph (B) or (C);
          (2) the term ``government of primary jurisdiction'' means--
                  (A) in the case of a natural person, the foreign 
                government of the country of which the person is a 
                citizen or national;
                  (B) in the case of an entity described in 
                subparagraph (B) of paragraph (1), the foreign 
                government of the country in which the entity has its 
                principal place of business, or the foreign government 
                under whose laws that entity is organized; and
                  (C) in the case of a foreign governmental entity 
                described in subparagraph (C) of paragraph (1), the 
                foreign government of which that entity is a part; and
          (3) the term ``MTCR Annex'' has the meaning given that term 
        in section 11B(c)(4) of the Export Administration Act of 1979 
        (50 U.S.C. 2410b(c)(4)).

                         Background and Purpose

    H.R. 2709, the Iran Missile Proliferation Sanctions Act of 
1997, is intended to provide additional leverage to the 
Administration to address ongoing assistance by Russian 
institutes, research facilities, and other business entities 
for Iran's medium and long range missile program by closing 
loopholes in existing sanctions laws that have been used in the 
past to avoid sanctioning firms that have transferred missile 
goods or technology to Iran.
    The Committee believes that one of our most important 
national security objectives in the area of non-proliferation 
is to prevent Iran from obtaining and in some instances, from 
improving, its weapons of mass destruction capabilities. Most 
critical, in the short-term, is the prospect of Iran enhancing 
its ballistic missile capability. Iranian acquisition of 
ballistic missiles with a range of 1,300 kilometers or more 
poses an unacceptable threat to American forces in the Middle 
East as well as to our allies throughout the Persian Gulf 
region.
    The Committee notes that Russian entities have already 
provided Iran with missile components and critical know-how and 
technological support. The question facing the Administration 
and the Congress is whether we can halt further assistance. 
Time is short and the U.S. has but a few months to prevent Iran 
from achieving a significant advance in its missile program.
    The Committee notes that, according to open sources, early 
this year U.S. and Israeli intelligence reports revealed a 
technology transfer between Russia and Iran involving 
construction of a delivery system for the Russian SS-4 and 
Iranian Shahab-3 and Shahab-4 long-range missiles. Successive 
reports detailed contracts signed between numerous Russian 
entities and Iran's Defense Industries Organization (DIO) to 
help produce liquid-fueled ballistic missiles, a wind tunnel 
for missile development and related technologies.
    The Committee notes, again according to open sources, the 
following entities have been involved in missile technology 
transfers to Iran:
          Defense Industries Organization (DIO), an Iranian 
        agency charged with development, production and 
        procurement of military technology;
          Shahid Hemmat Industrial Group (SHIG), part of the 
        DIO responsible for development and production of 
        ballistic missiles and related technology;
          Inor, a Russian scientific and production center 
        implicated in transfer to SHIG of materials used in 
        missile construction;
          Russian Central Aerohydrodynamic Institute, 
        implicated in collaboration with SHIG on wind tunnel 
        construction;
          Russian State Corporation for Export and Import on 
        Armament and Military Equipment (Rosvoorouzhenie);
          Bauman Institute, a leading Russian scientific 
        research center;
          NPO Trud, a Russian rocket motor manufacturer;
          Polyus, a leading Russian developer of laser 
        technology; and
          Russian Space Agency, headed by Yuri Koptev.
    The Committee believes that an incremental approach to this 
issue or reliance on friendly persuasion does not appear to be 
achieving any demonstrable results. Dialogue cannot substitute 
for more forceful and immediate action, including the 
imposition of sanctions on those entities engaging in missile 
cooperation with Iran.
    At present, the Administration appears unable or unwilling 
to sanction the Russian entities that are providing essential 
missile components and technical assistance to extend the range 
of Iran's Scud missiles to 1,300 kilometers.
    The Committee fully supports the ongoing discussions 
between the U.S. and the Russian government and believes we 
must continue talking at the highest levels to put an immediate 
end to this assistance. However, we see no meaningful prospects 
for enforcement action by the Russian government at the local 
and regional level that would turn non-proliferation rhetoric 
into reality.
    With Russia's cash-strapped technical institutes and 
research facilities eager to sell to Iranian weapons 
purchasers, Russia's effective adherence to the obligations of 
the Missile Technology Control Regime (MTCR) is open to serious 
question. In testimony before the full Committee in early 
October, a State Department official all but acknowledged that 
there is little likelihood the Administration will impose 
sanctions on these entities before the Iranian missile program 
becomes fully operational.
    It is clear that the Congress has a fundamental 
disagreement with the Administration over the utility of 
sanctions legislation. The Committee makes two points in that 
regard:
    First, with respect to concerns about the Congress imposing 
unilateral sanctions, the Committee notes that the Congress 
will not hesitate to take such action when an Administration's 
policy is demonstrably ineffective in protecting America's 
vital interests.
    Furthermore, the imposition of these sanctions would be 
used to bring Russia, a member of the Missile Technology 
Control Regime (MTCR), back into conformity with its norms and 
standards.
    Second, the Committee believes that the Administration will 
continue to see legislation of this type until it can make a 
credible case to the Congress that current non-proliferation 
sanctions laws are being implemented vigorously.
    In short, the Committee is not satisfied that the 
Administration has made it absolutely clear to Russia that 
halting missile cooperation with Iran is vital to our interests 
and that U.S. assistance, particularly in the area of space 
cooperation, may be jeopardized if such cooperation does not 
end immediately.
    The bill requires the President to submit a report to 
Congress 30 days after the date of enactment, and periodically 
thereafter, identifying those entities where there is credible 
evidence they have transferred key missile components or 
technology to Iran. Thirty days after this report is required 
to be submitted, three sanctions (denying munitions licenses, 
dual use licenses and U.S. foreign assistance to these 
entities) would be imposed for a period of at least two years 
on the entities identified in the report.
    It gives the Administration ample flexibility in the final 
determination to impose these sanctions but it closes the 
loopholes in existing sanctions laws that have been used to 
avoid sanctioning firms that have transferred key missile 
components to Iran.
    In the 1980s the world stood by as Saddam Hussein built up 
his arsenal of weapons of mass destruction that we have yet to 
fully identify and destroy. The Committee strongly believes 
that the U.S. cannot afford to do the same with Iran as it uses 
its petrodollars to purchase weapons systems that will threaten 
its neighbors and endanger our forces throughout the Persian 
Gulf Region.

                            committee action

    On September 25, 1997, the full Committee held a closed 
briefing with Dr. Gordon Oehler, Director of the Non-
Proliferation Center at the Central Intelligence Agency. On 
October 23, 1997, the full Committee held a second closed 
briefing with Ambassador Frank Wisner, Special Presidential 
Envoy, Department of State, Mr. John McLaughlin, Deputy 
Director for Intelligence, Central Intelligence Agency, and 
other officials.
    On October 9, 1997, the full Committee marked up related 
legislation, H. Con. Res. 121, a concurrent resolution 
expressing the sense of the Congress regarding proliferation of 
missile technology from Russia to Iran. During the full 
Committee debate on the measure, testimony was taken from 
Congresswoman Jane Harman, the sponsor of the resolution, and 
several State Department witnesses including Mr. Michael 
Klosson, a Deputy Assistant Secretary of State for Legislative 
Affairs, Mr. James P. Timbie, Senior Advisor to the Under 
Secretary of State for Arms Control and International Security 
Affairs, and Ms. Robin Frank, Legal Affairs, Department of 
State.
    After concluding consideration of the resolution, the 
Committee adopted the resolution and agreed to a motion to 
consider the resolution under suspension of the rules by voice 
vote, a quorum being present.
    On October 24, 1997, the full Committee marked up H.R. 
2709. During the full Committee debate, testimony was taken 
from two State Department officials, Mr. Michael Klosson, a 
Deputy Assistant Secretary of State for Legislative Affairs, 
and Mr. Robert J. Einhorn, a Deputy Assistant Secretary of 
State for Politico-Military Affairs.
    The full Committee considered the bill as original text for 
the purpose of amendment and took the following preliminary 
action, all by voice vote: Adopting the Ackerman amendment, 
expressing the sense of the Congress that the President should 
use the authority of section 504 of the FREEDOM Act and 
authorizing funds made available under that Act for such 
purpose. Adopting the Berman amendment, limiting goods and 
technology or technical assistance and facilities transferred 
to Iran's ballistic missile program to those items on the 
Missile Technology Control Regime (MTCR) Annex.
    After concluding consideration of the bill, the full 
Committee ordered the bill reported to the House by voice vote, 
a quorum being present.

                             rollcall votes

    Clause 2(l)(2)(B) of rule XI of the Rules of the House of 
Representatives requires the Committee to list the recorded 
votes on the motion to report legislation and amendments 
thereto. No roll-call votes were held on the motion to report 
the legislation or on amendments to the legislation.

                      committee oversight findings

    In compliance with clause 2(l)(3)(A) of rule XI of the 
Rules of the House of Representatives, the Committee reports 
the findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

         Committee on Government Reform and Oversight Findings

    No findings or recommendations of the Committee on 
Government Reform and Oversight were received as referred to in 
clause 2(l)(3)(D) of rule XI of the Rules of the House of 
Representatives.

               New Budget Authority and Tax Expenditures

    The Committee adopts the cost estimate of the Congressional 
Budget Office, set out below, as its submission of any required 
information on new budget authority, new spending authority, 
new credit authority, or an increase or decrease in the 
national debt required by clause 2(l)(3)(B) of rule XI of the 
Rules of the House of Representatives.

                       federal mandates statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      advisory committee statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                applicability to the legislative branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

                   constitutional authority statement

    In compliance with clause 2(l)(4) of rule XI of the Rules 
of the House of Representatives, the Committee cites the 
following specific powers granted to the Congress in the 
Constitution as authority for enactment of H.R. 2709 as 
reported by the Committee: Article I, section 8, clause 3 
(relating to the regulation of commerce with foreign nations 
and among the several states); and Article I, section 8, clause 
18 (relating to making all laws necessary and proper for 
carrying into execution powers vested by the Constitution in 
the government of the United States).

               congressional budget office cost estimate

    In compliance with clause 2(l)(3)(C) of rule XI of the 
Rules of the House of Representatives, the Committee sets forth 
with respect to H.R. 2709 as reported by the Committee the 
following estimate and comparison prepared by the Director of 
the Congressional Budget Office under section 403 of the Budget 
Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, November 4, 1997.
Hon. Benjamin A. Gilman,
Chairman, Committee on International Relations,
U.S. House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2709, the Iran 
Missile Proliferation Sanctions Act of 1997.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Joseph C. 
Whitehill.
            Sincerely,
                                         June E. O'Neill, Director.
    Enclosure.

               congressional budget office cost estimate

H.R. 2709--Iran Missile Proliferation Sanctions Act of 1997

    H.R. 2709 would require the President to report to the 
Congress and to impose sanctions upon foreign persons who have 
contributed to Iran's efforts to acquire, develop, or produce 
ballistic missiles. Persons identified in the report would be 
ineligible for export licenses for arms or controlled goods and 
technology, and for foreign aid. In addition, section 7 of the 
bill would authorize the use of appropriated funds to acquire 
weapons-related material, delivery systems, or technology to 
prevent their transfer to Iran.
    Based on information from the Department of State (DOS), 
CBO estimates that the additional reporting requirements would 
cost less than $500,000 annually, assuming appropriation of the 
necessary funds. CBO estimates that section 7 of the bill would 
have no budgetary impact because current law already allows DOS 
to take the measures authorized by that section and enactment 
of H.R. 2709 would not increase spending on such activities. 
Because the bill would not affect direct spending or receipts, 
pay-as-you-go procedures would not apply.
    The Unfunded Mandates Reform Act of 1995 (UMRA) excludes 
from application of that act legislative provisions that are 
necessary for the national security. CBO has determined that 
the provisions of H.R. 2709 either fit within this exclusion or 
do not contain private-sector or intergovernmental mandates as 
defined by UMRA.
    The estimate was prepared by Joseph C. Whitehill. The 
estimate was approved by Robert A. Sunshine, Deputy Assistant 
Director for Budget Analysis.

                      Section-by-Section Analysis

                         section 1. short title

    Provides that the Act may be cited as the ``Iran Missile 
Proliferation Sanctions Act of 1997''.

          section 2. reports on missile proliferation to iran

    Requires the President to submit periodic reports on 
missile proliferation to Iran to the Committee on International 
Relations of the House of Representatives and the Committee on 
Foreign Relations of the Senate. Such reports are required to 
be submitted not later than 30 days after the date of 
enactment, not later than 180 days after the date of enactment, 
not later that one year after the date of enactment, and not 
later than the end of each one-year period thereafter.
    Each such report must identify every foreign person with 
respect to whom there is credible information that that person, 
on or after August 8, 1995--
          (1) transferred items on the MTCR Annex, or items 
        that the United States proposes for addition to the 
        MTCR Annex, that contributed to Iran's efforts to 
        acquire, develop or produce ballistic missiles;
          (2) provided technical assistance or facilities which 
        the President deems to be of concern to the United 
        States because of their direct contribution to Iran's 
        efforts to acquire, develop or produce ballistic 
        missiles;
          (3) attempted to transfer items on the MTCR Annex, or 
        items that the United States proposes for addition to 
        the MTCR Annex, that would have contributed to Iran's 
        efforts to acquire, develop or produce ballistic 
        missiles; or
          (4) attempted to provide technical assistance or 
        facilities which the President deems to be of concern 
        to the United States because of their direct 
        contribution to Iran's efforts to acquire, develop or 
        produce ballistic missiles.
    The Committee included technical assistance or facilities 
that the President ``deems to be of concern to the United 
States'' in order to make clear that range of transfers or 
attempted transfers subject to this legislation is not limited 
to technical assistance, facilities, and other items listed on 
the MTCR Annex.
    The only foreign persons otherwise required to be 
identified in a report under this sectionwho need not be so 
identified are any foreign persons who--
          (1) were identified in a previous report submitted 
        under this section;
          (2) were sanctioned previously under section 73 of 
        the Arms Export Control Act or section 1604 of the 
        Iran-Iraq Arms Non-Proliferation Act of 1992; or
          (3) were not necessarily identified in a previous 
        report submitted under this section but were the 
        subject of a waiver on the basis of additional 
        information exercised pursuant to section 4 of this 
        Act.
    The exception to the requirement to identify foreign 
persons otherwise required to be identified under this section 
extends only to the same transfer, transaction, or attempt that 
gave rise to the exception. Credible information regarding any 
additional transfer, transaction, or attempt by that same 
foreign person gives rise to a new and separate requirement to 
identify that foreign person in a report under this section, 
which is overcome only if that additional transfer, 
transaction, or attempt falls into one of the exceptions 
categories.
    The ``credible information'' requirement of this section is 
intended to be a very low evidentiary standard. For purposes of 
this Act, ``credible information'' is information that is 
sufficiently believable as to raise a serious question in the 
mind of a reasonable person as to whether a foreign person may 
have transferred or attempted to transfer missile goods, 
technology, technical assistance, or facilities of the type 
described in subsection (a) of this section. ``Credible 
information'' is information that, by itself, may not be 
sufficient to permit a reasonable person to conclude with 
confidence that a foreign person has transferred or attempted 
to transfer missile goods, technology, technical assistance, or 
facilities subject to this Act.
    The Committee adopts this very low evidentiary standard 
because of its dissatisfaction with the way the evidentiary 
standard contained in other counter-proliferation laws has been 
applied. These laws, including the missile technology 
proliferation sanctions of section 73 of the Arms Export 
Control Act and the Iran-Iraq Arms Non-Proliferation Act, 
essentially contain a ``preponderance of the evidence'' 
standard. Under these laws, sanctions for proscribed transfers 
need not be imposed until the President determines that such a 
transfer in fact occurred. In practice, however, the Executive 
branch generally has delayed imposing sanctions until all doubt 
about whether a transfer occurred has been erased. In effect, 
the Executive branch has elevated the evidentiary standard of 
these laws to a requirement of ``proof beyond a reasonable 
doubt.'' The Committee believes that this practice has 
undermined the effectiveness of our non-proliferation laws by 
blunting their intended deterrent effect. Accordingly, in order 
to ensure the effectiveness of this Act, the Committee has 
adopted a lower evidentiary standard.

                   Section 3. Imposition of Sanctions

    Sanctions are required to be imposed on any foreign person 
who has been identified in a report under section 2 as having--
          (1) transferred items on the MTCR Annex, or items 
        that the United States proposes for addition to the 
        MTCR Annex, that contributed to Iran's efforts to 
        acquire, develop or produce ballistic missiles; or
          (2) provided technical assistance or facilities which 
        the President deems to be of concern to the United 
        States because of their direct contribution to Iran's 
        efforts to acquire, develop or produce ballistic 
        missiles.
    In addition, sanctions are required to be imposed on any 
foreign person who, on the basis of information contained in 
one or more reports under section 2, has been identified as 
having on more than one occasion--
          (1) attempted to transfer items on the MTCR Annex, or 
        items that the United States proposes for addition to 
        the MTCR Annex, that would have contributed to Iran's 
        efforts to acquire, develop or produce ballistic 
        missiles; or
          (2) attempted to provide technical assistance or 
        facilities which the President deems to be of concern 
        to the United States because of their direct 
        contribution to Iran's efforts to acquire, develop or 
        produce ballistic missiles.
    Three sanctions must be imposed for a period of not less 
than two years on any foreign person required to be sanctioned 
under this Act. These sanctions are to take effect 30 days 
after the report identifying the foreign person was submitted 
or required to be submitted. The sanctions are--
          (1) prohibition of sales to that foreign person of 
        items on the United States Munitions List as in effect 
        on August 8, 1995, and termination of sales of defense 
        articles, defense services, and design and construction 
        services under the Arms Export Control Act;
          (2) prohibition of exports to that foreign person of 
        dual use items listed on the control list established 
        under section 5(c)(1) of the Export Administration Act 
        of 1979; and
          (3) prohibition on the provision to that foreign 
        person of United States assistance in the form of 
        grants, loans, credits, guarantees, or otherwise.

          Section 4. Waiver on Basis of Additional Information

    The President may waive the imposition of any sanction 
otherwise required to be imposed under section 3 if, on the 
basis of additional information provided by the foreign person 
in question or otherwise available to the President, the 
President determines and reports that he is persuaded that the 
foreign person did not carry out the act that would be the 
basis for imposition of sanctions pursuant to section 3.
    The President's determination and report must be submitted 
to the Committee on International Relations of the House of 
Representatives and the Committee on Foreign Relations of the 
Senate at least 15 days before the waiver takes effect. The 
determination and report mustbe accompanied by a written 
justification describing in detail, among other matters, the credible 
information that otherwise would give rise to the requirement to impose 
sanctions, the additional information which persuaded the President 
that the credible information was misleading or incorrect, and the 
President's analysis of the information. The President's determination, 
report, and written justification may, to the extent considered 
appropriate by the President, be submitted in classified form.
    The President is not required to wait until after a foreign 
person has been identified in a periodic report pursuant to 
section 2 before exercising the waiver provided by this 
section. This fact, along with the President's ability to 
exercise the waiver in classified form and the provision of 
section 2 exempting foreign persons subject to a waiver under 
this section from the requirement that they be identified in a 
report under that section, means that the President need not 
apply sections 2 and 3 with respect to foreign persons that he 
finds to be innocent of wrongdoing.
    It is the Committee's expectation that the President will 
utilize these provisions of the Act to develop a process for 
judging the guilt or innocence of foreign persons about whom 
there emerges credible information suggesting that they may 
have transferred or attempted to transfer missile goods, 
technology, technical assistance, or facilities subject to the 
Act. This process should begin as soon as credible information 
suggesting that there may have been such a transfer or 
attempted transfer is obtained. As part of this process, the 
Executive branch should seek to obtain additional information 
from all sources. The President will then evaluate all relevant 
information and decide whether the evidence taken as a whole 
supports a determination by the President that no transfer or 
attempted transfer occurred. Only if the President is unable to 
conclude by a preponderance of the evidence that no transfer or 
attempted transfer occurred will sanctions actually be imposed.

            Section 5. Waiver on Basis of National Security

    The President may waive the imposition of any sanction 
otherwise required to be imposed under section 3 if the 
President determines and reports that such waiver is essential 
to the national security of the United States.
    The President's determination and report must be submitted 
to the Committee on International Relations of the House of 
Representatives and the Committee on Foreign Relations of the 
Senate at least 15 days before the waiver takes effect. The 
determination and report must be accompanied by a written 
justification describing in detail the facts and circumstances 
supporting the President's conclusion. The written 
justification accompanying the determination and report may, to 
the extent considered appropriate by the President, be 
submitted in classified form.
    The Committee anticipates that, in virtually every case in 
which the waiver provided by this section is exercised, the 
national security justification for the waiver will be related 
to the Act's objective of preventing the proliferation of 
missile technology to Iran. Thus, in a typical case, the 
President might report that he has obtained reliable and 
credible assurances that the foreign person in question will 
refrain from future missile transfers to Iran, but only if the 
sanctions otherwise required to be imposed by this Act are 
suspended or not imposed.

 Section 6. Additional Information Regarding Actions by Government of 
                          Primary Jurisdiction

    As part of each report submitted under section 2, the 
President is required to provide additional information with 
respect to each foreign person identified in that report. This 
additional information relates to the knowledge and actions, or 
lack thereof, of the government of primary jurisdiction over 
that foreign person with respect to the activities that were 
the basis for the identification of that foreign person in the 
report. If the government of primary jurisdiction had knowledge 
of the activities and failed to undertake effective efforts to 
prevent them, the President is required to describe the 
sanctions that have been imposed on that government by the 
United States because of such failure.

               Section 7. Purchase of Weapons Technology

    Expresses the sense of Congress that the President should 
use his authority under section 504 of the Freedom for Russia 
and Emerging Eurasian Democracies and Open Markets Support Act 
of 1992 to prevent the transfer to Iran of weapons-related 
material, delivery systems, and related scientific and 
technical expertise through purchase, barter, or other 
acquisition of such items. Amounts hereafter made available to 
carry out chapter 11 of the Foreign Assistance Act of 1961 may 
be used to carry out this section.

                         Section 8. Definitions

    Provides definitions of the terms ``foreign person'', 
``person'', ``government of primary jurisdiction'', and ``MTCR 
Annex'' for purposes of this Act.

ADDITIONAL VIEWS ON H.R. 2709, THE IRAN MISSILE PROLIFERATION SANCTIONS 
                              ACT OF 1997

    The Chairman of the Committee deserves commendation for his 
efforts to focus attention on the issue of missile technology 
transfers to Iran. This issue is of grave importance to peace 
and stability in the Middle East, the security of key U.S. 
partners and allies--including Israel and Turkey--and the 
security of U.S. forces stationed in the Gulf region.
    We believe that Congress and the Executive branch share the 
same policy goal: to stop the transfer of missile technology to 
Iran. The question before us is the most effective way to 
achieve that shared goal.
    It is our belief that achievement of this goal requires the 
President to initiate a high-level diplomatic effort with those 
countries that provide missile technology to Iran. The role of 
Congress should be to strengthen the President's hand in his 
negotiations with Russia, or any other government, to stop such 
transfers. Legislation can play a helpful role in support of 
diplomacy, but such legislation needs to be shaped through 
careful consultation with the Executive branch.
    Missile technology transfers to Iran have become a 
contentious issue between the Committee and the Executive 
branch, in part because the consultation process has been weak. 
The Committee has had difficulty in getting detailed, timely 
information from the Executive branch on this issue. The 
Committee requested in early September an opportunity to meet 
with Ambassador Wisner, the President's envoy who is conducting 
negotiations with Russia on this topic. The Committee benefited 
greatly from its meeting with Ambassador Wisner, but he was not 
available until the day before the Committee's mark-up of H.R. 
2709.
    Members of the Committee also seek to meet with the Vice 
President on this issue. Because of his involvement in the 
Gore-Chernomyrdin Commission, the vice President is the senior 
official most knowledgeable about the question of U.S. policy 
on Russian missile transfers to Iran. We believe that many of 
the Committee members' questions--particularly with regard to 
how high a priority the United States attaches to a resolution 
of this issue--can be best addressed by the Vice President, and 
we look forward to the earliest possible meeting with him. We 
believe that, through the involvement of the vice President, 
many of the problem areas identified by the Executive branch 
with H.R. 2709 can be addressed.
    In her letter of October 24, 1997 to the Ranking Democratic 
Member, the Secretary of State commented on a draft of the Iran 
Missile Proliferation Act of 1997 as follows: ``If presented to 
the President in its current form, the Secretary of State and 
the President's National Security Advisor would recommend that 
he veto this bill.''

                          changes to the bill

    Prior to and during mark-up, a number of improvements in 
H.R. 2709 took place:
          We commend the Chairman for adding a waiver to 
        sanctions that would be imposed by this bill. That 
        waiver allows the President to waive sanctions if he 
        determines and reports to Congress that such waiver is 
        ``essential to the national security of the United 
        States.''
          The Committee adopted Mr. Berman's excellent 
        amendment, limiting the scope of sanctioned activities 
        to those involving the transfer or attempted transfer 
        of Missile Technology Control Regime (MTCR) annex items 
        or related items; or technical assistance or facilities 
        that contribute directly to Iran's missile programs;
          The Committee adopted Mr. Ackerman's excellent 
        amendment, expressing the sense of Congress that the 
        President should exercise existing authorities and 
        available funds to prevent the transfer of weapons-
        related material and delivery systems to Iran through 
        the purchase, barter or other acquisition of such 
        material and delivery systems. In relative terms, 
        because the amount of funds involved in Iran's 
        purchases of missile technology are not large, Mr. 
        Ackerman and other members of the Committee expressed 
        the view that an approach other than sanctions may be a 
        more useful way to achieve U.S. policy goals.

                            problems remain

    Still, it is clear that several problems with H.R. 2709 
remain:
          The bill establishes too low a threshold for the 
        imposition of sanctions. The bill allows little 
        flexibility for the Executive to exercise judgment in 
        evaluating the vast amount of information it receives 
        about missile transfers to Iran. It is required to 
        report, and impose sanctions, based on ``credible 
        information'' about transfers or attempted transfers of 
        goods or technology that contribute to Iran's missile 
        program. Credible information is not a defined term, 
        and is subject to the broadest interpretation. One 
        report, or one phone call, could initiate a requirement 
        to report and impose sanctions.
          The bill does not allow enough time between the 
        requirement to report and the requirement to sanction. 
        Sanctions would have to be imposed no later than 30 
        days after the date of the required report. In many 
        cases, sanctions could be imposed erroneously, 
        needlessly damaging U.S. credibility with other 
        governments in our efforts to prevent Iran from 
        obtaining missile technology.
          The bill has no requirement that actions subject to 
        sanction be taken ``knowingly.'' Sanctions would be 
        imposed on entities unaware that items are going to 
        Iran or will be used in missiles. Such a provision is 
        fundamentally unfair and will undermine U.S. 
        credibility and the willingness of foreign entities to 
        cooperate with the United States.
          The bill's waiver provision, while a step forward, 
        could be improved further.
          The bill retroactive in its application.
          The bill applies sanctions on the U.S. subsidiaries 
        of foreign firms that are sanctioned.
          The bill's reporting requirements, even if 
        interpreted not to require the public release of 
        sensitive information, could dissuade foreign 
        governments or persons from cooperating with the United 
        States to prevent Iran from obtaining missile 
        technology.

    Not each of us agree with every problem in the list as 
outlined above. But each of us believe that the bill needs 
substantial improvement.
    Even at this late date, we do not have a full understanding 
of the bill's impact if it were enacted into law. For this 
reason, we believe that further consultation with the Executive 
branch is necessary.
    Through such consultation, and through further work by the 
Committee, we believe that this bill can be improved so that it 
will strengthen, not undermine, the President's ability to 
achieve the goals all of us share--to stop Iran's missile 
program.

                                   Lee H. Hamilton.
                                   Sam Gejdenson.
                                   Bob Clement.
                                   Tom Lantos.
                                   Gary L. Ackerman.
                                   Eni F.H. Faleomavaega.
                                   Pat Danner.
                                   Howard L. Berman.