tv Politics and Public Policy Today CSPAN August 7, 2015 1:00pm-3:01pm EDT
you all know as amended in the irairaq arms proliferation act, all impose u.s. sanctions on individuals and entities. i would also say the u.n. security council resolution that was recently passed does not let a ran's ballistic missile program off the hook. the current prohibitions on supply of ballistic missile-related items technology and assistance, will remain in place. under this prohibition, states are still required to present transfers to iran of ballistic missile related items. from their territory or by their nationals. they're still required to prevent provision to iran of technology technical assistance and other related services. they're still required to prevent transfer of other ballistic missile items that might pass through their territory. they're still required -- i could go on. there are about ten things that it still continues to require states around the world to do. quite frankly would we have liked them to go on forever in the u.n. security council
resolution? of course. but we have kept them on far longer than iran, russia or china wanted them to stay on. we have kept them on article 41, chapter 7, which means they are enforceable. more importantly, we have other u.n. security council resolutions and other tools unilaterally to make sure that where arms are concerned and where missiles are concerned, we can keep moving forward in every way we need to. >> thank you. >> senator toomey? >> thank you, mr. chairman. i thank the witnesses for appearing today. i want to go back to the issue that was raised by senator corker. ambassador sherman, the iran nuclear review act of 2015 is abundantly clear, i think, that congress is supposed to receive all the documentation, all the agreement, all the annexes, all the related materials. it says right in the beginning referring to the transmission of agreements the presidential transmit to the appropriate congressional committees and leadership the agreement as
defined in subsection h-1 shgs including all related materials. subsection h-1 specifies that this agreement includes, and i quote the last part of this, any additional materials related thereto, including annexes apen diss implementing materials, documents and guidance technical or other understandings, and any related agreements. i think it's clear that's meant to be completely all encompassing. yet we discover that there's a secret side agreement between the iaea and iran which presumably contemplates the previous military dimensions of iranian activities, which strikes many of us as a very, very important information to have to evaluate whether or not future activities is in violation of this agreement or not. senator corker asked why you haven't given us the document and if i understood correctly,
you said it's because we don't have the documents. my question is, knowing this statute, the intent of this statute and the letter of this law, why didn't you insist that this essential to enforcement document be disclosed? >> senator, thank you very much for your question. as you point out, we don't have the document and the united states senate has every single document that the united states government has. secondly, the reason we did not insist is because we want to protect u.s. confidentiality. this is a safeguards protocol. the iaea protects our confidential understandings and our confidential arrangements between the united states and the iaea. now, i know you will say this is a different situation, and i grant you that this is an international understanding to try to stop iran from having a nuclear weapon, and that is a
different circumstance. so in the development of where the iaea was going, they did come to us for technical expertise expertise, as they came to every other member of the p5+1. and in a classified briefing this afternoon i will share with you everything i know about this. >> so, let me -- >> i'm also very grateful that the director general on his own cognizance is meeting with the senate foreign relations committee in an informal setting which is extremely unusual because every other country sort of wonders why he is. >> did i understand you to say to senator corker that you personally did not see the final document? >> no. what i said is that i was shown documents that i believe to be the final documents, but whether, in fact there are any further discussions -- you know what this is about, senator are the modalities the technical modalities that the iaea uses. and -- and i will share with you this afternoon in a classified setting every single thing i know about that.
and i think it will give you great confidence that the iaea is doing what it needs to do. >> i look forward to that, but frankly, it is still extremely disappointing to me. we're being asked to vote to affirm an agreement that seems to me the enforcement of which depends in no small part on a very important document, that not only are we not allowed to see, it's not clear to me that you read the final document or anyone else in our government, and you don't have it in your possession. >> i have seen the document, as i said. as we were going through the technical discussions with the iaea. but what is important here, senator, ultimately what we are talking about here is the credibility of the international atomic energy agency, whether, in fact, we believe that they are credible, independent vr verification organization, which it is. they have done a suburb job on the joint plan of action which is the interim step. all of those reports, because we
have had to report to congress on the compliance under the jpoa, have come up here. they have done a very fine job, and i have trust and confidence in their ability to do a fine job on the joint comprehensive plan of action. >> i'm glad you do, but i think that's a document that we ought to have before us. let me ask a separate question here. paragraph 36 of the jcpoa grants to either party the opportunity to walk away from this agreement. anybody can raise an objection about what the other side is doing, and then after an adjudication process that seems to me to last about 35 days, if this objection is not resolved to the satisfaction of the complaining participant, then the complaining participant can simply walk away, either side. so iran, for any reason that iran deems to be sufficient, can walk away from this agreement. of course that would be after they have their $50 or $100 billion, whatever the figure is.
here's my concern. i'm concerned that this dynamic creates a very -- this fact creates a very dangerous dynamic, one in which the administration will have a very hard time enforcing anything other than a massive violation. you know former secretary of state schultz and kissinger wrote a widely read piece some time ago where they suggested that most likely if a violation occurs, it wouldn't be a clear-cut event but, rather the gradual accumulation of ambiguous evasions. let's say we start to discover the gradual accumulation of ambiguous evasions, which strikes me as extraordinarily plausible. if we were to take any measures at all, any enforcement mechanism of any kind iran could invoke paragraph 36, decide that this is unable, and they're walking away. since this administration has told us so many times so
forcefully that the alternative to this is war and so we have to have this agreement, and we had to make all of these concessions after concessions after concessions to get this agreement, why should we believe that in the face of the accumulation of these small but accumulating evasions that the administration is going to risk iran walking away from the table because, i suspect, that's pretty likely that that would be their threat? >> senator, i appreciate that you believe that iran will have gotten enormous sanctions relief and they will be sitting in the driver's seat. but you seem to forget the other half of the equation. iran will have reduced their centrifuges by two-thirds. they will have eliminated 98% of their stockpile. they will have made the iraq reactor inoperable. they will have allowed inspectors in their country to have 24/7 access to their facilities. they will have -- >> you mean 24-day access.
>> no. for the declared facilities, iraq, fordo and natons, the iaea has 24/7 aspect every day of the week, 365 days of the year. >> the military sites? >> the military sites if the iaea believes there is justification for them going to a site, the additional protocol allows them to give 24 hours' notice to get into that site. if the country, in this case iran, says, well, actually we think you should go to this site or we think you should have this document, under the additional protocol, they're allowed to suggest an alternative. however, under the additional protocol, that debate about what the iaea can do can go on for quite some time. so what this agreement did, different than any other arms control agreement ever negotiated, we put a clock on that debate. we said that if the iaea, under
the additional protocol, wants to go to a site, it has to have access to that site. we said you can debate with iran for two weeks. at the end of those two weeks, the joint commission which is made up of all of us, looks at that. if we believe on day one of the seven days we have to consider this situation that they ought to give access -- if five out of eight of us believe the iaea should get access and we believe we will always have the europe and the european high representative with us iran has three days to provide access. it can be as short as 18 days. as secretary moniz has testified again and again and again, nuclear material cannot be cleansed away. it will be found if it is there. so quite frankly, senator, what we have negotiated in this agreement is absolutely unprecedented access whenever the iaea believes that it has a suspicious site that it needs access to.
>> senator, would it be permissible to address the snapback aspect of your question? >> at the discretion of the chairman. >> senator reid, you're next. >> i will ask for a response very quickly. >> i wanted to speak to one of the premise behind your question on snapback. first, i absolutely agree that the more likely scenario we see is small breach, is a testing. is sticking a toe across the line. what we need to do then is obviously hit iran in a proportionate way and show them those breaches have consequences, otherwise we're just asking for larger breaches. we have to be very serious about that. we've been very clear with our partners that we're going to be very serious about that. but there's a premise that i've heard circulating that after the
initial sanctions relief, iran can somehow immunize itself to further pressure and therefore it won't care about snapback. that's simply not the case. iran's foreign reserves can't be put in a vault or mattress in the form of gold or bills. if so, they're not liquid and not usable. what iran needs is what every country needs which is to have them in major financial centers, usable for imports, usable to boost their currency the whole host of things that foreign countries do with their foreign reserves. that means they're going to have to keep them in foreign jurisdictions where they're subject to snapback. if anything, the more iran begins to benefit from a deal, the more vulnerable they are to this pressure. we need to be very serious and i agree with your question in that respect, but the consequences to iran will remain very serious, very severe throughout this agreement. >> senator reid, go ahead. >> thank you very much. within my allotted time, secretary szubin, you've
testified that you don't expect iran to stop funding hezbollah and other proxies, so what will you do to combat this activity? >> unfortunately, i do expect to continue to see iran funding hezbollah and their other violent proxies, and it's extremely troubling. it's, frankly, what i've devoted the bulk of my career to combatting. i've been working 13 years on the terror financing portfolio because of how serious a threat i believe that to be. we have a lot of tools at our disposal here. frankly, one of the most powerful is one that congress has given us. which is that when we sanction iranian terrorist supporters, our designation is amplified internationally. what i mean by that is when we name a hezbollah financeier, money launderer any bank worldwide, not just american banks, any bank worldwide that
facilitates transactions for that designated entity faces very severe sanctions from the u.s., sanctions that no bank wants to face. thanks to those congressional sanctions, our sanctions against iran's proxies carry this international weight, and those designated entities become pariahs worldwide. we need to do more and it's incumbent on us to do more to be able to identify the money launderers facilitators and then to muster the coalition of countries who care about this to cut it off, to shut it down. >> thank you. let me just go to a very critical point here. if the sanction regime is in place today, if we reject this arrangement, this deal some have argued, well, it won't make a difference, the sanctions will stay in place. we can keep it in place. you've been working on these sanctions for ten years. how would our partners react if we said -- if we walked away
from the deal? >> from my perspective, and i would certainly defer to ambassador sherman on the diplomatic perspective but from a sanctions perspective we have tremendous clout, tremendous influence as the united states as the world's most powerful economy when it comes to our moral sway when it comes to our sanctions and economic sway. i do not underestimate that. i've had the privilege to be a part of exercising that clout for the last ten years, and i've seen firsthand how effective it can be. but as i mentioned in my opening statement, it is not all-powerful. we don't simply get to dictate to other countries especially major economies, what their foreign policy will be. we need to harness shared concerns. when it comes to iran, we have a shared concern. four u.n. security council resolutions have called out iran's nuclear program as being a threat. and so when we went to china, when we went to india south korea, japan to say, you need to work with us, we have these
very powerful sanctions in place, we don't want to use them, but you agree with us that iran's nuclear program is a threat. they said, yes we do agree with you, it's a threat. we said well, here's the way to address it. we've got a diplomatic path forward. join us and let's test it. let's see if we can use our sanctions leverage to obtain the nuclear concessions we all need from iran. they worked with us. and it succeeded. it succeeded i think, to a remarkable extent. in the event we walk away, it's a very different and much bleaker scenario. the international consensus as ambassador sherman described is behind this deal. 90 countries come out and endorse this deal. we would be alone walking away from it. and in that event going and asking them to take very costly economic sacrifices, in the hope of a future, much better, much tougher deal, that i think they would doubt the feasibility of i think we would have very weak prospects for that. >> thank you. and, mr. chairman, i think i'll stop. >> senator scott? >> thank you, mr. chairman.
good morning to the witnesses. thank you for being here. i, like so many of us, are very concerned about this deal, not supportive of it whatsoever. the more i read of the deal, the less i like it. that doesn't include the parts that i do not know about, the iaea side agreements. ambassador, you've said a couple of conflicting things this morning from my perspective. sitting here, i can see your notebooks. i can't read what's in it. in the final deal from the iaea, have you seen it and read it? >> let me be very clear. i have seen the documents that the iaea and iran discussed to create the final arrangements for the modalities that underpin the road map, the road map document being a public document
that congress has a copy of. i was not allowed to keep any of the documents about the arrangements on the modalities that underpin the public road map that you have a copy of. however, i told the iaea that given our constitution, that if congress asked me to brief on the details that i understood, i would do so in a classified session. and i will do so this afternoon in the all senate classified session. i will give you all of the details of which i am aware. >> so have you read the final agreement? >> it's not an agreement. it is a set of arrangements that are -- >> have you read it? >> i have. >> question for you, secretary. you stated earlier that the regime, iranian regime, continues to fund terrorism and bad behavior. at the same time, we're concerned that, at least those
of us who have comment on the fact that we're concerned, that the more money the iranian regime has, the more they will fund terrorist activity. in spite of the fact that they have a crumbling economy, they have infrastructure needs, they have needs to repair their ability to sell more oil, yet in spite of all of that, they're still funding terrorism. it seems like to me that you would agree with national security advisor susan rice when she said that we should expect that some portion of the money from the sanctions relief will go to the iranian military and could potentially be used, as you said will be used, to fund more bad behavior and terrorist behavior in the region in spite of the state of their economy. >> thank you, senator. i do agree with the premise of your question. i agree with the statement that you quote from former national security advisor rice. we've seen iran fund terrorism before the sanctions, through the period, the toughest period of the sanctions.
i expect we'll continue to see that. the question is, what do we do about it? it's my office's responsibility along with our colleagues in the interagency, the intelligence community, to ramp up our efforts, to be able to go after those funding streams. the alternative, though, that i think is put out there doesn't make sense to me strategically. which is that we don't enter into a nuclear agreement. we don't give them back their money, in other words, we don't do this exchange of securing a nuclear commitment in exchange for sanctions relief, and then, what? so we'll continue to combat iran's support for terrorism as we've been doing but we will have the prospect of iran two to three months away from breakout. to me, when you're talking about a state sponsor of terrorism, that's a terrifying prospect. we need to address the nuclear threat and then to the terrorism aspect.
i think that's the strategic way to do this. >> so strategically speaking, according to the agreement, five years from the start of the agreement, they'll have more access to weapons. eight years they'll have access to ballistic missiles and they'll be able to move forward on advanced research on nuclear technology. then we know for certain at the end the tenth year we're looking at a breakout phase. so the reality of the agreement, the reality is that we will, with certainty, be able to mark on a calendar when the iranians will have an opportunity for a nuclear weapon? >> no. as ambassador sherman has said repeatedly, at no point, at no future date, no 25 years, not 50 years, does iran have the ability to pursue a nuclear weapon. in fact, the agreement locks in the contrary. the agreement has varying durations with respect to iran's enrichment limits and those are strictest in the first 10 and 15 years and then are reduced. but at no point does iran have the right to pursue or obtain a nuclear weapon.
>> well, we'll have to respectfully disagree. i think it's in paragraph 25 of the agreement it seems to suggest that there is -- there will be an effort make to preempt state laws and states who have otherwise passed laws that prohibit companies from investing in iran. how is this not a violation of states' rights, and how do you read paragraph 25 of the agreement? >> thank you senator. there's nothing, to my knowledge, about preemption in the comprehensive joint plan of action. all the jcpoa says that we will make sure that state authorities who have enacted legislation, disinvestment legislation are informed of the developments, which i think are pretty key to be aware of when it comes to the iran nuclear deal. and that we'll encourage them to take those into account as they consider their divestment laws. >> how will you encourage them?
>> simply by setting forth what this deal is, what it is not. some of those divestment laws were predicated on the nuclear case. and for any state authority looking at divestment laws based on iran's nuclear program you would have to take into account the developments -- the historic developments that we're talking about today. >> thank you. >> senator schumer? >> i want to thank you, chairman shelby, ranking member brown. and i want to thank undersecretary sherman, acting undersecretary szubin. undersecretary sherman, i've appreciated through this process your thousandsfulness, intelligence, your candor, your availability in our past meetings i thank you for many years of laudable service to our country. and acting undersecretary szubin, thank you for being here as well. i look forward to help remove "acting" from your title so we can have you officially at the helm for the daunting challenges our country faces not only in
iran but around the world. now, i've read and reread the agreement. i've had many meetings with people on both sides of the issue, several classified briefings, more meetings to come this week. i'm carefully analyzing the proposed deal because its implications are profound and far reaching. i've had many questions answered. i've not yet reached a conclusion. this is one of the most important votes i've had to take, any of us will have to take, in our legislative career, as senator brown mentioned. i owe it to my constituents to make an informed decision. i won't let party, pressure, politics interfere with doing what i think is right. i want to judge the deal on the merits and the merits alone, and in that spirit i want to ask you questions today. one of the questions i have is this, to both of you. where will iran be ten years from now? now, i know you'll say no matter what they are, you have a very good agreement. but i'm interested in where iran will be.
some say, well, look at the people of iran. they tend to be secular. they have economic needs. they will push iran in a direction that is more moderate, more welcoming to the world, et cetera. some say we've had that population for a long time, and this dictatorship of totalitarian, evil dictatorship of mullah has barely shuddered, even with one transition of power. so, let me ask you how you see these two elements competing. i want your judgment because this is only a judgment question, but i think a very important one, as to where iran will be ten years from now. i'd ask you each to answer that question in your respective spheres. >> thank you, senator schumer, and i thank all members for the
enormous diligence of looking at this deal and trying to ask and answer incredibly difficult questions. the united states senate has been united behind democratic and republican presidents for war, and i appreciate that perhaps we can come united together behind peace. where iran will be in the future, i don't know, senator. i really don't. i don't think anyone does. our intelligence community can give and i think probably has given you an assessment of what they believe, but quite frankly, it is a very complicated situation. the people who turn out on the streets tend to be the young people who are desperate not only for a better life and a stronger real and a job, but they want to end their isolation. we live in a technologically connected world. no matter what the iranian regime does, indeed, they get on the internet. they see twitter.
they use all of the devices all of our kids use, and they know what's going on in the world and they want to be part of it. i thank the united states senate for their support for programs which have helped break through the internet so they can get on. and at the same time we have a regime led by clerics, who have been around for a very long time, have very conservative views, more than conservative, radical, are part of the revolution of 1979 and have not let go of that history. the depth of mistrust between us is profound. i do not believe there will be some magic transformation as a result of this deal. for me this deal is about one thing and one thing only and that is making sure that this regime, which does do a lot of terrible things in the region and to its own people, will not have a nuclear weapon that could further terrorize the world and the region. i am hopeful because i'm a hopeful person that a
transformation will take place in ten years, but it may not. so we have to use every tool we have on all of the activities of concern that we have and work with israel, work with the region to stop those activities, to make sure that those young people have a future at all. >> do you have anything to add, mr. szubin? >> i don't. >> okay. she's a very hard act to follow. >> that's right. >> okay. let me ask you a question. it relates to what senator corker talked about. that is the retroactivity or the grandfathering of contracts. i want to give you a hypothetical. a country, not the united states, its major oil company, maybe government owned, maybe not, signs a ten-year contract with iran immediately after sanctions are lifted because iran has complied with the long list in the agreement, okay?
and then we go -- snapback. we find a major violation. we go forward on snapback. it is now year four of that contract. i understand that grandfathering will not affect one, two and three. the profit they have made in those three years they keep. is the contract terminated in year four for the next six years, or does the contract continue? this is an important question, as senator corker said, it's not the most important question, but we need a yes or no answer. there was a "new york times" article where people had different views and they asked the u.s. government spokesman and they refused to give an answer, so that made me worried. so that's why i'm glad you're here to clarify. what happens in year four, five, six and seven? is that contract terminated? >> i want to be very clear and i also want to be very careful with my words to make sure i'm
exactly answering the question. sanctions don't terminate a contract. they don't have the authority to anull a contract between parties. what sanctions do, what u.s. sanctions do in that circumstance that you're describing, is they say any future transactions, whether it's future investment by the foreign oil company, future derivation of profits or future -- >> the purchase of oil. >> right. is sanctionable. that's what the sanctions do right now. that's what they've been doing -- >> you'll have to explain what that means to me in laymen's terms. >> what that means -- >> so i am total and it's my fourth year, and i'm due to send iran $1 billion for oil. which i want. can i still send that oil? that's allowed? >> no. what it means -- >> what does it mean it's sanctionable?
what happens -- is it your view the sanctions are severe enough that totale will terminate the contract and risk being sued by iran? give me -- what does sanctionable mean in that situation? >> let me spell it out. it's exactly what the circumstances are right now and what the circumstances have been when we put these tough sanctions into place. there were a lot of pre-existing contracts that were ten-year, 20-year contracts and we put ndaa and sosata into place. what companies saw is that they faced the threat of these powerful u.s. sanctions -- >> in other words, totale would not be able to do business in the united states if it continued in year four, for instance, is that right? >> there's all sorts of -- >> answer that question. would totale be able to do business in the united states in year four if they continue the contract? >> totale could face a menu of choices under the iran -- a menu of penalties under iran sanctions act, which could include being cut off from the u.s. market. so there's this menu of tough -- >> what does could include mean? i'm sorry.
i want to nail this down. >> the iran sanctions act has a menu of options. >> who has the ability to determine which on the menu is chosen? is that the u.s. government unilaterally? >> if i may, i was in the private sector for a decade. at the time when these sanctions came into place and totale had to make a decision at that point about whether to leave, the risks were too high for them. same for siemens, who actually to be perfectly frank was a client of mine at the time. they had to leave. they had to unwind those investments. they had to see if there was a force majeure that would allow them to come out, but the risks were too high. >> that's what i'm trying -- >> the risks are they don't have access to u.s. secondary markets. they don't have corresponding banking relationships. their shipping is at risk. >> who determines -- mr. szubin, you said could, you didn't say will. who determines the could? >> the selection of the penalties with respect to the totale in your hypothetical is done at the state department.
the penalties imposed on the bank -- >> solely unilaterally by the u.s. government? >> yes. >> that's right. >> that's good. okay. >> and the only -- >> the next -- >> the only reason i was putting in the caveat at the top about the contract is that of course if a contract is signed between a european country and iran, the contract isn't invalidated by u.s. sanctions. what our sanctions -- >> no. totale, just to use an example, would have to make a decision does it risk the suit by the iranians because they're violating their contract, given the heaviness of our sanctions. >> that's exactly right. we saw how that played out -- >> i appreciate the answer and i think you've answered. now, next question. so that is our interpretation, what you just gave, of what grandfathering means. i think secretary -- what's your title? >> yes. >> secretary? undersecretary --
>> whatever. >> ambassador sherman. you're undersecretary. you're good by me, whatever your name is. >> likewise, senator. >> a british ambassador said britain agreed with that interpretation. do we have that in writing somewhere that britain, france, germany and the eu agree with that intepgs since they're members of the group of eight? >> we do not have a letter to that. ly talk with them about that possibility. i want to tell this committee though, i had extensive discussions the 27 days i was in vienna towards the end of this with every single one of our partners, quite extensive, because they all had these concerns and we were extremely explicit. the explicitness is the following, which adam said and i will repeat. we said there is no validity to a snapback provision if there's any form of grandfathering. then it renders snapback meaningless and we will not
agree to a deal, the united states of america will not agree to a deal, where there is not a real snapback provision. that is what we insisted upon and that is what we got. >> the snapback has lots of other aspects to it, i understand. i just want to ask you, do russia and china, do we have any indication that they agree with this interpretation of grandfather? >> yes, we had very, very explicit discussions with them. there is language in the document that talks about prior contracts, but if you read that language very carefully, you will see there is no grandfathering whatsoever. >> okay. and -- okay. just one other point i want to make. i suppose if it's a major contract to them, they could just ask that snapback not be put in effect or they could pull out of the deal, but who knows what. that's just speculation. >> snapback cannot be stopped by any one country, it cannot. >> but they can -- lets say it's a huge contract of real importance to the soviet -- to
russia. they could say you go forward with snapback which you have the unilateral power to do, we're pulling out. they could. who knows if they would, but they could. >> they could. >> thank you, mr. chairman. >> senator? >> thank you, mr. chairman. i'd like to address my first questions to you, mr. szubin. with regard to sanctions, at this point the jcpoa has been approved -- submitted to the security council and approved by the security council of the united nations, correct? what impact does that approval have on the sanctions regimes, both the u.n. sanctions regimes and the sanctions of the united states? >> it has no impact on the sanctions of the united states whatsoever. with respect to the u.n. sanctions regimes, as i understand it, the endorsement by the u.n. security council sets out a timetable right in line with what ambassador sherman was describing where iranian performance, when verified, will lead to the
lifting of u.n. sanctions. >> and that would be all of the u.n. sanctions on iran? >> no. what it would mean -- at implementation day, when iran has taken initial steps and key nuclear steps would mean that the economic sanctions would be relieved. the sanctions on their arms trade, the sanctions on their acquisition of ballistic missile technology remain in place for many years to come under the u.n. >> in your opening statement you made some point about the fact that it would be very hard right now for the united states to back out of the agreement that it has reached and then reimpose a sanctions regime. correct? >> senator, what i was referring to was if congress were to strike down the deal, would we as the united states be able to unilaterally coerce international pressure to be able to secure a much better agreement. i wasn't talking there about snapback. the key distinction between
those two is obviously iran is in breach in the second. iran is defying the international community in the second, and i think we have very good leverage in that case. >> that's the question i wanted to ask. because if it's not possible for us to go back and reimplement an effective sanctions regime now, what about snapback? i understand that snapback is based on an iranian violation of the agreement, but what about that makes you think that now that the sanctions have been essentially put into the process of being removed, what makes you think that the snapback will work? >> that's a question i've spent the better part of two years working on. i appreciate it very much, senator. one of the reasons that you hear us talking about lifting vice terminating sanctions is for that exact reason, to ensure that these authorities remain in place, that the structure of the u.n. sanctions resolutions is still on the books, that the eu sanctions are still on the
books, and that the u.s. sanctions are still on the books so that they're howeverer erhovering in suspension and we make clear not just symbolically but legally that we're in a position to restore that pressure. >> you believe that the fact that we have five other nations agreeing that a violation of the agreement would require a snapback of sanctions means that they would immediately join us if we said that there's a violation of the agreement? >> obviously if we're talking about a scenario in the future of a violation, the key question would be, what is the violation, how material is it, but in the event where we, the united states, view it as a significant breach, we've retained the authority to do so unilaterally, including at the united nations, even if the other members of the security council aren't with us. >> you believe that in that case, that we could effectively cause the other nations to reimplement sanctions? >> in the event of a serious breach, i do. what you're talking about then
is the scenario we were facing in 2012 where iran seemed to be on the path towards a nuclear weapons capability, and we won international agreement to impose very tough sanctions, to cut off contracts, to pull out of investments. all of those costly steps were taken because the world, frankly, does not want iran to have that capability. that's not a u.s.-only priority. >> what i'm getting here though, is that you're talking about an extremely serious violation that would cause the other nations of the world to believe that iran was, in fact, developing or had developed a nuclear weapon? >> yes, senator. >> we have to get to that level of proof of a violation before we can see an effective reimplementation of sanctions? >> no. i think what i'm saying is that we'll obviously want to respond in a proportional way. it's not in our strategic interest to respond to a small breach with scrapping the agreement and trying to put all of the sanctions back into place. i don't think that would have the success that we had over the last few years.
i don't think it would be in our interest to see this agreement scrapped. if we see a small breach it's in our interest to see iran cure and come back into full compliance in a way that we can verify. >> thank you. mr. chairman, my time is up. thank you. >> thank you. senator menendez. >> thank you, mr. chairman. let me thank you both for your service. regardless of my questions, i certainly appreciate your service. madam secretary, this agreement or war, is that the choice? a simple yes or no. >> i don't think it's a simple yes or no. do i -- >> so if you had -- if you can't give me a simple yes or no to it's either this agreement or war, and since i don't have the unlimited time, so if you had not struck agreement with iran, would we be at war with iran? >> i believe that the chances that we would be down the road to war would go up exponentially. >> you're saying compared to
other witnesses who have served on the administration in the past, who support the agreement before the senate foreign relations committee and have been asked the same question, they have unequivocally easily said, no it's not just this or war. >> i just said to you it's not binary, senator. >> further down the path, a year from now, two years from now, three years from now? >> i don't think any of us can predict the future in that way. what i will say -- >> that's the problem. >> what i will -- >> the secretary of state has come before various members of the senate and said it's either this or war. >> yes, because -- >> that is a binary statement. >> and the reason, senator is because sanctions have never gotten rid of their nuclear program. it's only brought them to the table, and so if -- >> but that hasn't created war either. >> if we walk away from this deal iran will begin marching forward with their program further, as they have done over the years, and the president of the united states has said he will not allow them to obtain a nuclear weapon. >> i think there's real doubt
i think there is real doubt including if you were to get an intelligence briefing, i think there's real doubt that iran believes that a credible military threat of force is on the table. >> i don't agree with that at all. >> on page 26 of the agreement, it says the united states will make its best efforts in good faith to sustain the agreement and to prevent interference with the realization of a full benefit by iran of the sanctions lifting specified in annex two, which is basically for the most part the u.s. sanctions. the u.s. administration acting consistent with the respective roles of the president and the congress will refrain from reintroducing, reintroducing, or reimposing the sanctions specified in annex two applied under the joint comprehensive plan of action. i tried to get this from the treasury secretary, and he didn't give me an answer. so do we -- the iran sanctions
act that i was one of the authors of, expires next year. do we have the right to reauthorize those sanctions now or at any given time? yes or no? >> i believe, senator, that it doesn't expire until the end of next year and it's premature to have that discussion. >> okay. so, here we go again. we either have the right or we do not have the right. having a question of prematurely discussing something doesn't answer the question. >> we -- >> do you -- do you understand the agreement that we have the right or we don't have the right? >> we said in this document that it recognizes the constitution of the united states. the united states congress has the right to do whatever it wants to do within its authority. so in that case you do have the right. what we are saying is we would urge that it's premature to make that decision. >> well f you're going to snap back, you've got to snap back to something. if the iran sanctions act. which
this administration on various occasions has credited as one of the significant elements of getting iran to the negotiating table. if they don't exist after next year there's nothing to snap back to in that context. >> we believe there's a way forward in that regard, senator. >> well, let me just read to you what your partner in this deal said in a letter to the security council, dated july 20th of 2015. the iranians said it is clearly spelled out in the joint comprehensive plan of action that both the european union and the united states will refrain from reintroducing or reimposing the sanctions and restrictive measures lifted under the joint comprehensive plan of action. it is understood that reintroduction or reimposition, including through extension of the sanctions and restrictive measures, will constitute significant nonperformance, which would relieve iran from its commitments, in part or in whole. so your partner in this regard
believes that, in fact, if we were to -- if congress were to go ahead and reauthorize, which i think most members believe that it's still to going to exist -- i think most members mr. chairman, believe that the iran sanctions act is still going to exist, as something -- with all the waivers that the president has as something that, in fact, will be reverted back to if the iranians violate it and it is a form of deterrence. so, either sanctions work or they don't. either they are a deterrent or they are not. if they are not, then the agreement is really based on the hope, over the course of 10 years or 13 as the president said in his npr interview, that in fact, there will be performance by the iranians, that they won't violate, and then with no sanctions in place, that, in fact, the only choice you have is a very limited
window in which you will have to act possibly militarily for the next president of the united states. mr. szubin, isn't it true that whenever we have imposed sanctions, we have given countries and companies and individuals sufficient notice for them to divest themselves of the sanctionable activity? >> no. what i would say, senator, is when we've imposed major sanctions that affect seccer toal or major investments, we've typically built in a winddown period, short winddown period. that could be 60 days, 90 days. >> it's often been six months, has it not? >> in some cases it's been six months, but that's typically longer. what we want -- >> if it's six months and you have a one-year breakout time, although david all bright, in testimony, a physicist, a former weapons inspector and head of the institute for science, said that they believe their
calculation of potential breakout time under one scenario is six to seven months. that's a heck of a lot less than one year. so the time period of potential reenactment of sanctions which the administration argues both ways, they won't get iran to do what we wanted them to do, at the same time you say this is our defense, it's snapback, it's either one or the other. i just don't see how, in fact, we have the wherewithal under this agreement. your partner says that, in fact, there's no way that they will respect that in terms of they'll be able to get out of the agreement, and we'll be back to point zero. when they choose to do that, which is why you are all reluctant to go ahead and acknowledge that there should be a reauthorization of the iran sanctions act, because then they may very well walk away. and if in fact, they're going to walk away simply by the existence of sanctions that don't go into effect unless there is a violation in the future you have to worry that what they're doing is buying for time.
and the last point that i want to make sometimes what is past is prologue. i just want to read some ex -- exerpts when i was pursuing the iran sanctions act when the then chairman of the senate foreign relations committee, now the secretary of state, was actually arguing against the sanctions. so, i guess, you know, in that respect things haven't changed. he went on to say that rather than motivating these countries to join us in increasing pressure on iran, they are most likely to resent our actions and resist following our lead. a consequence that would serve the iranians more than it harms them. and it could have the opposite effect than was intended and increase the iranian regime's revenue. then you recorded, secretary sherman, as, in fact, also buying into that point of view. if you look at the transcript of
the hearing, basically what it talks about is everything we've heard here, that we will break the coalition, that in fact we will be isolated, that in fact we will be alone, and that therefore, we will not have the will not have the consequences against iran. and the problem is when you cry wolf one too many times it really is problematic. and so based upon a history here which says, no, those sanctions should not be imposed because if we do we will lose the coalition. now listening to this agreement isn't accepted we will lose the coalition, unwilling to say the iran sanctions act should be reauthorized. i think every member believes is going to exist as a deterrent. that's hard to understand. and the final point i'd make mr. chairman, this iranian regime cares about two things, preserving the regime and the revolution. they're not going to enter into any agreement that doesn't preserve the regime and the
revolution. so they must think this is a good agreement for them ultimately to accomplish that goal. and that is worrisome. that is worrisome. so i understand the hope that the agreement implies and that they will perform. but when they don't perform i don't think we're going to be in a better position at that time. that's my concern. thank you, mr. chairman. >> senator sasse. >> thank you, mr. chairman. thank you both for being here. ambassador sherman i wonder if you can help me understand what you think the congress is actually voting on. does whether or not congress would kill the deal, does that matter in any way to the iranians? or are they already guaranteed all the benefits of what's been negotiated today? >> well of course they're not senator. the united states congress has the authority and the right under our constitution to -- and under the corker-cardin legislation to review this and vote a resolution of disapproval.
the president of the united states then has the right and the authority to exercise his veto if he wants. and i would expect that he would. and then the united states congress has the right to try to override that veto. that's how our system works. i would hope that the united states congress would not override that veto because i believe that the joint comprehensive plan of action is the most profound most far-reaching arms control agreement ever negotiated and that indeed will keep this country, israel our allies, safer. >> if congress overrode that veto, why would it matter to the iranians? what would they lose? >> they would lose an opportunity to have sanctions relief. they would lose the opportunity to end their isolation from the rest of the world. they would lose their opportunity to come into the community of nations. they may not care about that. and what i would expect if the united states congress overrides a presidential veto, which you would not expect to have happen
because i believe that this congress has united behind nktic and republican presidents for war and i would expect in the end they would unite behind a democratic president, or republican president, for peace. that's what this deal is about. ensuring iran does not get a nuclear weapon. >> i agree with you this shouldn't be a partisan issue but isn't it the case that the administration is arguing to undecided members that we've already lost the international community? so if the u.s. doesn't act, if we don't go forward with your deal, the iranians are going to get this relief any way. if not, isn't that an answer to senator menendez's question and frankly it's what the president and secretary kerry were saying three or four weeks before july 1st that it isn't a choice between this deal and war, but that there are other scenarios where sanctions can have an effect. you can't have it both ways. >> what kind of effect, how far reaching and whether that will stop their nuclear program.
is it true our unilateral sanctions could be put back in place and continue on? is it possible the rest of the world -- maybe not europe. europe may follow through because they are allies and partners of ours. but other parts of the world that have taken huge economic cost by stopping their import of iranian oil or huge cost by other ending of trade with iran would not pay attention to our unilateral, bilateral sanctions? yes, that is indeed the case. our sanctions regime would not be as effective as it would be. the international community has come together behind this deal. they'll not stay together behind our alone rejecting this deal if the united states congress overrides the veto. the united states will be in a weaker position not only on this but many other things we're trying to do internationally in the world. >> just to be clear, it is your position if the congress would
kill this deal, the u.s. sanctions regime could still have some significant effect? >> it would have some effect, i would suspect so, but not the effect it does today. and everyone has to remember that iran will then move forward with its program. that sanctions as devastating as they have been, and as i would say to senator menendez and hope it shows in the record that indeed this administration has enforced unilateral and multilateral sections more profoundly than any other administration each of which has tried to do a very good and credible job, but we have intensified that. that's what president obama set out to do was intensify that sanctions pressure so iran would come to the negotiating table to get the most profound and far reaching arms control agreement that's ever been negotiated. >> i appreciate your advocacy for the agreement. i think this was the yes or no question to the question senator menendez asked.
you don't believe it's war or this deal. you just outlined a third scenario. i think you just said, yes -- >> i didn't senator because the third scenario is even though our sanctions would have some bite iran would move forward with its nuclear program. because why wouldn't they? they wouldn't be getting the relief they wanted. they would keep marching forward with their program. and it would force us into a choice. were we going, too allow them to have nuclear weapon and president obama is resolute. and that leaves you heading down a road to war. >> you and i have had previous discussions and you know i appreciate the work you do and we have mutual affection for secretary zarate. i don't know if you've read his testimony today. i won't quote the whole length of it, but you said in your
opening statement the irgc receives no sanctions relief under this deal. is that correct? the secretary in his testimony in the second panel is going to outline much of what he calls their business empire that is driven by the irgc. most of those entities do receive sanctions relief under this deal. isn't your point meaningless that they don't receive sanctions relief since all the entities they get their money from do? >> no, senator. on this point and maybe it's the only one i'd respectfully beg to differ with former assistant secretary zarate. the business empire will remain under sanctions. the companies it controls will remain under sanctions and obviously its senior officers will remain under sanctions as well. and thanks to congress that will have international effect, meaning any international bank that does business with that. let me give a specific example. the largest construction engineering firm in iran, we've
designated for being owned or controlled by the irgc. it's a revenue source for the irgc. it's not coming off. not at five years, eight years, 15 years under this deal. any international bank that hosts accounts will face cutoff from the u.s. financial system. those are very tough aggressive sanctions and they remain in place. now there are companies who have done what i would call arms length transactions with the irgc over time that we've designated for conducting business for the irgc. we have companies like that due to receive relief. but the business empire remains intact. >> the irgc does not support this deal. that should tell you something. >> thank you, mr. chairman. >> thank you. senator markley. >> the irgc controls a lot of smuggling and benefits very handsomely from the sanctions in that regard. and that's one of the reasons they are opposed to this.
is that a correct impression? >> the irgc is engaged in a lot of nefarious activity within iran's economy as well and we've seen allegations, i think credible allegations that's they've engaged in profiteering off sanctioned goods, including cynically off of goods going to the health of the iranian people. >> i want to -- i want to turn to you and i submitted a series of questions to the administration. and response to one of the questions, the administration has responded, iran has committed indefinitely to not engage in specific activities that could contribute to the design of a nuclear weapon. in this context, does indefinitely mean the time period has not been established or perpetually? >> it means that under this agreement and under the nuclear nonproliferation treaty, iran is
prohibited from pursuing a nuclear weapon, obtaining, acquiring or developing one. ever. ever. >> so it really means perpetually? >> yes. >> under the npt, the additional protocol and modified code 3.1, does iran have the right to enrich up to weapons grade uranium after the expiration of the uranium enrichment camp? >> no, because if they indeed move to enriching, to what we would consider weapons grade, it will raise a red flag to the entire international community, to the iaea. there are very few circumstances where iran needs to for peaceful nuclear purposes enrich above 5%. one could argue for submarine fuel perhaps. but if they went to weapons grade it would raise instantaneous red flags and we'd see it as a major noncompliance. >> enrichment over 5% starts to essentially raise this red flag
with the exception of submarine fuel? >> there may be one or two other things. i'm not an expert. i could ask my physicist if there are any other instances but there are very few. >> what enrichment would the submarine fuel be at? >> i think it's 20? could be 20-some or higher dr. tinby says. >> that's a big distinction between 5 and 20. but are you basically saying that if the amount of fuel enriched didn't specifically meet the quantity profile of the nuclear submarines that that would be a red flag? essentially for most purposes it's 5%? >> it's 5% or less. >> okay. and in terms of after the -- >> the one other distinction i should make is for the tehran research reactor, which helps to make medical isotopes for cancer treatment in iran.
uses 20%, but this agreement says that we will provide fabricated fuel for that tehran research reactor over time, and we have put controls on that so that it cannot be used for other purposes. >> so what -- how much enriched uranium above 5% could iran store without creating a red flag? >> so two points acting undersecretary szubin reminds me for 15 years iran is not allowed under this agreement to enrich beyond 3.67%. so the concern you've raised only begins to raise those red flags after those 15 years. they are allowed for those many years to only have a stockpile of 300 kilograms. it is not enough to provide enough fissile material for a nuclear weapon. >> but after those 15 years they can have more than 300 kilograms. there's no particular limit at that point?
>> there is not a limit but, of course, we'd look at an ever-increasing stockpile and want to understand the reasons and uses of it. and one of the things that is very clear here because we have uranium accountancy for 25 years, they have to make a declaration to the iaea of their additional protocol, research and development over the long term that there will be many, many metrics for measuring what they are doing with their program for a very long time. >> because my time is expiring, my last question is when you look at snapback, that's kind of a sledgehammer approach. given the scale of violation, if there's -- is there a scalable response? >> yes, senator. we've reserved the right to snap back in whole or in part. that's a quote from the agreement. we can do that with unilateral sanctions.
we can do that with the u.n. sanctions. and the eu has reserved the similar right. whether it's putting back on a sector, a category of transactions all the way back to full snapback. >> thank you, mr. chairman. i have to note with some astonishment there was an eight-minute exchange between senator schumer and the witnesses between the meaning of the grandfather clause. i think we got some kind of answer out of it. but also know administration officials have said repeatedly that iran will exploit every ambiguity in the text of this agreement to their advantage. i can only imagine what they'll say about that clause should it come to pass. moving on, secretary sherman, there's a lot of commentary about access. access to iran's nuclear sites, their military sites throughout the jcpoa. secretary kerry, secretary moniz have talked about managed access. can you assure us this access
will be physical access? iaea inspectors will be physically walking into these sites and taking samples or installing equipment? >> i think that every situation is different, senator. and that the iaea has the capability, the expert knowledge to make sure that whatever they do can be technically authenticated. i can't go through every hypothetical situation. i know that director general amano will get asked these questions by your colleagues in senate foreign relations committee in this informal meeting. i would rely on his answers more than on mine. what i am assured of is that whatever they do in every circumstance, where they believe they need to have access, it will be technically authenticated and it will meet the standards that they must have and that they require for ensuring verification monitoring. >> the answer then is, no, we cannot ensure that iaea inspectors will physically and personally be present on every site.
>> you don't have to be physically present on every site in this technological world. our labs can walk you through those parameters as well. >> who will decide what is and what is not a military site? >> well, i think the better way to respond to your question is to say if the iaea believes it has justification to have access to a site, we have a process to ensure they get that access, whatever that site is military or nonmilitary. >> can iran deem its research militaries to be a research site? >> if they have justification to enter any site regardless of what it is, and the access agreement provides a process to ensure they'll get access. the united states of america would not have agreed to an agreement where access was not assured. if the iaea believed it had to have it. >> are you aware -- >> that's what we have. >> are you aware of any actions the government of iran has taken to sanitize any site? >> i'm not going to discuss
anything that's considered classified but there's an all-senate briefing this afternoon. the national intelligence manager will be there and we will be prepared to answer these questions. >> let's move to the side deals between the iaea and iran. you acknowledged to senator scott that you read the site agreements between the iaea and iran. did anyone else in the united states government read these site agreements? >> yes, some of our experts did as well as all of the p5+1. >> can you give me an estimate? >> handful. i'd have to stop and think. >> so you have said earlier to senator corker that we have to honor the confidentiality of these agreements between the iaea and iran -- >> it's the iaea and every country with which it does -- >> i'll come to that in a moment. but the fact that you have read them and other u.s. government officials have read them, doesn't that undermine the claim
of supposed confidentiality in these agreements? >> we were shown them in a confidential setting, and i will share with united states senate as i have done with house leadership chairs and rankings my confidential understanding. and we will hopefully keep them in a classified setting. >> how long are these documents? >> very short. >> like the road map itself? >> i'd have to stop and think back. it's very short. >> why are these documents classified? this is not a u.s. government document. it's not a covert action. it's not subject to sensitive collection methods of our intelligence community. iran knows what they agreed to. you know what's in it. why are these classified? >> so the reason is they are what are called safeguards confidential. >> yes. >> under the comprehensive safeguards agreement to which we are also a party, we have confidential safeguards, confidential documents and protocols with the iaea between
the united states and iaea as do all of the countries under the csa. the iaea has committed to keeping them confidential. and so, therefore, they are committed to keeping these protocols under csa confidential as well. >> yes, i'm aware that that is the statement you gave to senator corker. i assume you're not implying any kind of moral equivalent. >> absolutely not. i said to the senator that i understood this was a very different circumstance in the sense that we're trying to keep iran from obtaining a nuclear weapon and this was an international understanding that had been negotiated among six parties and iran. i understand this is different circumstances, which is why i believe the iaea at an expert level shared the protocol arrangements, understanding they
would be classified and i made clear to the iaea under our system, i would be required to share in a classified, confidential setting with members of the united states congress, what i had seen, and i will do so this afternoon. >> did you make clear to iran that u.s. law required congress to receive the text of all agreements to include agreements to which the united states was not a party? >> indeed our understanding of the corker/cardin legislation passed by the house and senate is we must give you every document that we have, and we have given you every document that we have. >> the legislation says all agreements. it doesn't matter whether the united states government has it in its possession -- >> it's difficult to give you something that we do not have. >> did you make that clear to iran and the iaea? >> iran and the iaea are well aware of our legislation. i can assure you they follow
what you do every single day. >> one final question. fascinating new interview today from secretary kerry and jeffrey goldberg says that if congress were to vote no on this it would be screwing the ayatollah. and then secretary kerry says if congress rejects the deal it would show iran quote, america is not going to negotiate in good faith. it didn't negotiate in good faith now. and that would be the ayatollah's point. surely you made clear to iran that congress had to vote on this deal before it could go forward and therefore they should not be operating under such a misperception. >> of course they knew congress was going to vote on this. everything was very public. everything that happens in our country is transparent, democratic and public and we're proud of that fact. >> are you concerned about congress screwing the ayatollah? >> i have not seen this interview. i'm not going to comment on it. what i will comment on is that secretary kerry, secretary moniz, myself, the negotiating
team who have been working diligently on this for over two years, having briefed the united states senate and congress countless times, hundreds of times quite frankly, did everything they could to ensure the safety and security of the united states. that's our solemn obligation, and that's what we did. >> thank you. >> senator warner. >> thank you, mr. chairman. and i want to start by simply saying i appreciate what you've been doing. i think many of us have concerns about components of the deal. many of us would like to monday morning quarterback, but i find it remarkable that some members seem to impugn that you are not there trying to do the best deal possible for the united states of america. and for long-term prospects of stability in the region. i may agree or not agree with what you negotiated, and i've
got more due diligence to do but i'd never question your actions. your dedication to both administrations working on this brings a lot of history and commitment and i believe that you want to make sure we follow up in particular on iranian actions to stabilizing actions in the region. i want to continue on something that was asked about what would happen if we don't act. there are some who have put forward a theory because -- that have said if the united states congress turns this agreement down, that iran would still -- it would still be in iran's best interest to go through to implementation date so that -- and take down their nuclear stockpiles, assemble parts of
their reactors so they could still obtain the $50 billion plus and in effect isolate america since the rest of the world would be aligned. do you want to comment on that theory that's being speculated on a lot? >> senator, obviously, it's always dangerous to speculate about how scenarios play out, especially highly complex international scenarios like the one you are describing. the point ambassador sherman made earlier is really important in this respect which is it isn't a black or white answer. the u.s. word to retain our sanctions because congress rejects the deal and then we'd implement the sanctions, we'd still see some international enforcement, whether it's on the oil side, reserve side. that enforcement would begin to erode in the scenario you're describing where iran goes through its commitments and to show they are the good actor complying with all their commitments.
the u.s. is the one who walked away. that's a scenario i very much hope doesn't occur. it would be terrible in terms of our sanctions, in terms of our credibility, when we exercise these authorities, these extraordinary authorities, we need to be able to do so in a way that's meaningful and where people know we're ready to act. i very much hope it doesn't come to that. but it certainly would be a situation of weakened leverage. it's not going to be zero or 100% but weakened leverage. could we turn weakened leverage into a much stronger deal? and my assessment is no. >> ambassador sherman, do you have any other comment? >> i couldn't agree more. my assessment would also be no, if we walk away, even if we retain some sanctions capability and we'd enforce our laws, the rest of the world will go in another direction and more importantly, iran will go in another direction and the president of the united states,
whether it's obama or the next president of the united states -- >> there's a premise. would they walk away immediately or go through to implementation. we don't know but it's -- >> i doubt very seriously if the united states sanctions remain in place iran will perceive that we have walked away from the deal and they no longer have to stick with it. >> two more questions. and i'll try to stay within my time. one is that -- one of the concerns we've had is the administration did say when congress put tougher sanctions in, move forward particularly on the swift notions using the swift system there was great reluctance from the administration about us taking that step. i think taking that step was effective and helpful. i wonder if we don't move forward, though, will we be prepared to move forward with
the severity of those same sanctions, particularly as we look at sanctioning bank of india, bank of korea, bank of japan? comments on that. i'd like to get one more question in, recognizing everyone has gone over time. >> it's a very stark scenario you're depicting. the constitution-- institutions you're talking about are some of the most significant and fundament institutions in the financial sector. whether it's swift, who is the leading messaging company, secure messaging company for banks worldwide. whether it's the largest commercial banks in korea, india, the central bank of japan, the prospect of us having to use our sanctions authorities against those entities is frightening. >> if we chose to reject that, that would be our policy. >> it would be threatening those institutions, unless they come along with the u.s. approach on this. >> let me get my last question in. one of the statements you made earlier, and i think the further
explanation on how you got to the 24 days i was surprised at first about that time. still have some concerns, but at least i have a little more clarification. one of the things you've said and it's an artful process with the not allowing other members, permanent council and u.n. to have a veto. we have a default veto. what assurance can we really have that our current eu partners and friends in the uk, for example, if they -- and germany if they engage in a major way with iran on a business basis going forward that they will stick with us. how do we get more comfort around that? thank you. >> the best comfort is the one that acting under secretary szubin gave which is in 2012 we were in the same circumstance where, in fact, europe had lots of business with iran. a lot of businesses in iran, and
they were very concerned about iran having a nuclear weapon and moving down that pathway. so they joined us in enforcement of our unilateral sanctions but put on their own sanctions and multilateral sanctions and in fact enforced them and companies like totale, siemans, pujot all had to leave. >> i'd like to hear more from our european allies on that. >> i would urge you to speak to them directly. i think you'll get the right answer you're look >> i'd like to yield to senator donnelly. >> i'd like to thank senator warren for her kindness on that. and thank you both for your hard work. in regards to parchin and the iaea agreement and moving forward, and this has been asked by others, but toipt try to clarify. moving ahead in parchin and
every other facility is it your understanding the iaea can get into every facility that if they choose to, that they can go in there physically themselves as opposed to having iran turn over materials? that they have physical access? >> i'd be happy to get into this in greater detail in a classified session. what i can tell you is that whatever the iaea believes it needs to do to have a technically authenticated result for whatever access they believe they need to have they will get it. >> if they believe they need to have physical access to a place, that will not be denied? >> as i said, whatever they believe they need for a technically authenticated process, they will get under the agreements we have negotiated
here, and i'll be glad to discuss this in greater and more explicit detail in a classified setting. >> that would be fine. we can talk this afternoon. but it sounds like a yes to me. is there reason to believe there's any other documents out there? >> no. if there are, i don't know about them. >> okay. have you asked the iaea if there are any other documents out there? >> i have not asked them explicitly, but i did see the director general when he arrived here yesterday. i asked him questions about where we were with various things, and i have no reason to believe there's any other document. >> have you asked the iranians who you've had these discussions with, do you have any other agreements with anybody else at this time that we don't know about? >> i have not asked that question explicitly but given the hours and hours we've spent together, i do not believe there are any other documents. >> i think that is a question whether worth asking.
mr. szubin, the alternative theory that's been put out there, one of the alternative scenarios is that the united states walks away and then we in effect go country by country saying make a choice economically. don't deal with iran or we'll sanction your -- in effect, we wouldn't deal with your economy. what is the likeliness of that kind of scenario having success? >> in the event of us walking away from this deal we'd be very much swimming against the tide because the cooperation we've obtained to date in going around the world just as you describe in saying we need to pressure iran was predicated on a diplomatic path.
so china, india, south korea could see here's a roadway to test iran to see if they're willing to make a deal. in this cob text we'd be walking away from that. >> i apologize because time is limited. so if we walk away, what is left in terms of strength of sanctions? some folks have said we still have significant impact on iran at that time. what is left as -- we have this in a we'll still have sanctions in place. what other global effects will take place? >> the u.s. would retain our unilateral sanctions. our primary embargo on iran remains in place. and that's true notwithstanding the deal either way. our embargo will remain in place. the eu has sanctions. with respect to iran's bad activity outside. terrorism, human rights. those sanctions would remain in place. the most severe economic sanctions we've spent time
talking about today and that congress helped to put in place affect things like iran's sale of crude oil, petro chemicals and the assets of the central bank of iran, the access to the international banking system. those are all built on the threat of u.s. sanctions with international acquiescence. and it's that acquiescence i fear we'd be risking. >> the alternative suggestion is that for countries who aren't willing to also continue their sanctions if we walk away that we go to them and say make a choice. how realistic is that? >> i think it would be a very tough conversation. and i think when you're going to a country like china or india and say we're going to dictate where you buy your oil from, which is what we've been doing for the last few years, they'll say with an eye on what? what is your prospect for getting a nuclear deal so we can lift these sanctions?
if they think our bar, having moved the goal posts, but that our bar is unrealistically high, then we'll have a very hard time securing that cooperation and that means our sanctions leverage will erode immediately. >> senator warren. >> thank you, mr. chairman and ambassador sherman and under secretary szubin for your work. i think everyone here understands that a nuclear armed iran threatened the united states, threatens israel and the entire world. the only question for congress is whether the nuclear agreement negotiated alongside other countries represents our best available option for preventing iran from acquiring a nuclear weapon. i want to see if we can pull some of these pieces together and evaluate the options. what happens if we go forward with this deal versus if we back out.
let's start with the tough sanctions imposed by the united states with the cooperation of other countries around the world such as uk france china russia, germany, the eu. if we reject this deal we need our international partners to continue the tough sanctions, refuse to trade with iran, block iran's access to the frozen assets in order to be effective. so ambassador sherman, if we walk away do you believe that all the other nations that have endorsed this deal are likely to continue working with us to impose strong sanctions against iran? >> no, because as acting under secretary szubin said, the reason they cooperated was because we were pursue ago diplomatic solution and they thought that was worth trying to accomplish. that has now been accomplished. so they believe it was worth taking the economic hits they all did to do that. if we walk away from what they
consider to be a good deal, 90 countries have spoken out in support of that deal, they will believe we've changed the equation. we have not operated in good faith and we are on our own. >> all right. let's look at what happens if we're on our own. if the united states attempts to continue sanctions on our own while other nations resume trade with iran, how effective will our sanctions likely be? >> they'll be less effective than they are today and when we negotiated this agreement. >> let's consider the roughly $50 billion of iran's money that's frozen and could be granted to iran if they comply with the deal. undersecretary sdubin let me ask, is most or even a significant part of this $50 billion held in the united states? >> no. >> so if we walk away, do you believe the other countries that
hold this money will continue to keep it out of iran's hands? >> i think we'll begin to see those funds be released if iran stays -- starts meeting its commitments under the deal. >> all right. but the question i ask, if we walk away from the deal, are you convinced that other countries that hold these funds are going to continue to withhold those funds from iran? >> i can't guarantee you that they will. >> let's talk next about iran's nuclear weapons ambitions. if we reject this deal and iran decides to build nuclear weapons, what would be iran's breakout time? how long do you estimate it would take iran to produce enough material for a nuclear weapon? >> the assessment today is two to three months. >> okay. if we accept this deal and iran complies, what would be their breakout time?
>> at least for ten years, one year. >> now let's next think about cheating. iran may sign the deal and try to develop a nuclear bomb anyway. ambassador sherman, will it be easier for us or harder for us to detect a secret iranian nuclear weapons program if we accept the deal or if we reject the deal? >> clearly if we accept the deal we'll have many more eyes on the iaea, not only we'll have access to the sites, but they'll also have surveillance over uranium the entire supply chain they'll have eyes on centrifuge production. they will have access to undeclared sites that is suspicious sites, if they believe there's a justification to get in. nearly all of that will disappear if there is no deal. >> all right. and i have just one more
question on this. let's talk about war. i don't think americans want to be dragged into another war in the middle east but let's face hard facts. if we reject this deal iran's breakout time will go down and that will increase the pressure to take military action very soon. i want to compare the effectiveness of these two options. a negotiated option versus military option. in the long term, which action is likely to be more effective at preventing iran from developing a nuclear bomb? accept the agreement and closely monitor iran's nuclear program or reject the agreement and if there's escalation, bomb iran. which is more likely to be effective? >> clearly a long-term negotiated solution which is what we have in the joint comprehensive plan of action. if we take military action, which the president of the united states will do if he has absolutely no choice, will only
set back their program, it's estimated, two to three years because iran has the know-how. they have mastered the entire fuel cycle to create fissile material for nuclear weapon. and so, therefore, although we could bomb away their facilities, they could reconstruct them. you cannot bomb away knowledge or sanction away knowledge. the only way to control it is a negotiated solution that is highly monitored. >> thank you. some have said they want a better deal, but that is not the choice that congress faces. the deal is the deal. and congress has two choices. accept it or reject it. no one can say for certain that this deal will prevent a nuclear armed iran and i won't say it. but no one has put a better more realistic alternative on the table. until i hear a better option, i intend to support this deal.
>> senator heitkamp. >> thank you, mr. chairman for your patience today. i think this is such an important issue. this committee has unique jurisdiction. you've let them get to the heart of what they want to examine and i want to personally thank you for that. there's a lot of attempt here to unbake the cake. and i've been product and i've been somebody who has been engaged in multiparty negotiations, including some of the large civil settlements that this country has seen. i know how difficult it is to unbake a cake and start saying this could be better or that could be better. i think senator warren just took us through the paces in terms of what the real options are. one thing that i don't believe has been talked a lot about is that the fact of lifting the sanctions regime will, in fact, build a bigger, betters more economically stable iran into the future.
as long as iran is on the terrorist list -- mr. secretary, you have so appropriately talked about the challenges they have economically today. if the sanctions regime is lifted and we look ten years into the future, iran will be a much more stable economic power. i don't think there's any doubt about it. so this might seem off topic for some people, but it's certainly on topic for me, which is the one thing that we could do that would provide competition against an iran that has the ability to market their oil into the market and the resulting economic growth as a result of marketing that oil is exporting american oil to compete with that iranian oil. it's very difficult in my state to explain why we should lift sanctions on iran when we're sanctioned in the united states
of america in terms our oil experts. i'd like to hear from the state department and department of treasury your response to that statement, especially looking into the future in ten years when we know that that competition could curtail that economic might of an enemy that's pretty powerful. >> i'm not the right treasury official to speak to the restrictions on sales of american oil -- >> but you do manage the sanctions. >> yes. >> and that is a big part of it. when you look at managing the sanctions, it's to look at how those have an impact on the viability of iran. you are, for me, the right guy to ask. no dodging. >> what i can say with respect to the sanctions is you're right. what's envisioned is to reveal some of the secondary pressure. not the u.s. sanctions against iran that are bilateral but the secondary pressure
internationally on iran's economy. if iran adheres to all of its commitments, iran can expect some economic recovery. i think it's going to be many, many years in the making before iran gets back to where it out to otherwise have been today. >> you do understand there's a lot of concern about an economically empowered iran and what that means for stability in the region. >> i understand it to my core. >> i don't have a lot of time so i would turn to you ambassador sherman. >> senator, i think neither adam nor myself can comment on u.s. domestic policy, though we do well understand how domestic policy has an impact. i'm sure the particular interest that you have, that we all have in american economic security and independence when it comes to oil and gas is something that is -- has to be resolved here. >> but there's been a lot
written about the ability to provide some kind of energy security into europe that could, in fact, be one of those soft powered measures. >> i understand that this might be above your pay grade or whatever it is, but i just want acknowledgment that american oil moving into international markets has the effect of curtailing the economic power of iran, the economic power of russia and a whole lot of people that are nation states that really are not friends of this country and this is an opportunity to give our allies a step forward and the energy security that may in fact, strengthen the sanctions regime and the effect that we have for snapback. >> energy security for our country, for the world and for that matter dealing with issues of climate and how we manage that will have a profound impact on the development of countries
and america's continuing to be the preeminent economy in the world. no question. >> thank you, mr. chairman. >> senator vitter. >> thank you, mr. chairman. thanks to both of you for being here and for your service. ms. sherman, i wanted to follow up on a really important issue that my colleague senator scott got into. and that is these two significant secret ie -- iaea agreements. they are certainly significant in terms of enforcing this agreement, are they not? >> i would say they are important arrangements on the modalities that the iaea will use, but i believe the public road map which you all have access to lays out what the iaea is requiring of iran in broad terms as one of the steps it must take in order to get any
sanctions relief along with other nuclear steps. although i agree that possible military dimensions are important, they are. the united states has already made its judgment about it. we're much more focused on where the program is today and where it is headed in the future, which is what the bulk of the joint comprehensive plan of action is about. >> you just said what's available to members of the senate and the public is laying things out in broad terms. aren't the real specifics of verification very significant in judging this agreement? >> of course. >> would you agree or not? >> of course they are. that's why at the all-senate briefing this afternoon i'll share in a classified session the details that i'm aware of the arrangements that have been made under safeguards, confidential protocols between iran and the iaea. >> and you've read those two secret agreements? >> i have read those two safeguards confidential
arrangements, yes. >> okay. when do i get to read them? >> you won't, sir, any more than any other country will get to read the safeguards confidential agreements between the united states and iaea. >> do you have a vote on this agreement? >> i do not, obviously. >> i have a vote on this. >> yes, sir. >> you don't think it's appropriate that i would get to read? you've read these agreements. i think that's appropriate. i'm not arguing with that. i have to vote on this agreement. you don't think it's appropriate that i would get to read it? >> as i said to the iaea and to all of my colleagues that i would have to share the arrangements in a classified session with the united states congress -- >> that's not my question. do you think it's appropriate that i don't get to read it when i have to vote on the matter? >> you'll have to make your own judgment about it. >> i'm asking your opinion. >> my opinion is it is in the united states national security
interest for there to be a comprehensive safeguards protocol and that those protocols remain confidential. that's in our national security interest. >> do you think it's appropriate that i as a sitting u.s. senator representing significant number of americans who has to vote on this do not get to read those agreements? >> i -- >> i'm not talking about putting them on the internet or handing out copies? >> i don't have those agreements to give to you. >> that was not my question. please answer my question. do you think it's appropriate that i don't get to read them? >> i think the system that's been put in place that maintains these as confidential agreements between the iaea and countries with which it operates is appropriate. >> and under that appropriate system you get to read it, although you don't have a vote. i don't get to read it, although i do have to vote. okay. let me move on.
president obama earlier said that, quote, in year 13, 14 and 15 they have systems that enrich uranium fairly rapidly and at that point the breakout times would have shrunk down to almost zero close quote. is that accurate? >> indeed what is accurate is that -- >> is that quote accurate? >> in those years it will not come down to zero, no. >> what will it come down to? >> we can discuss that in a classified session. >> his quote was almost down to zero. >> it is not almost down to zero. >> so he was wrong? >> for those years, it is not almost down to zero. it is literally, technically impossible for enrichment to go down to literally zero. it's just not possible. that's why even today it is two to three months. >> two to three months, okay. maybe it's something comparable to that.
in that context, do you think that other middle eastern countries will strongly consider developing nuclear weapons? >> i do not, and it is the intelligence community's assessment that they will not. >> and what -- to a layperson that makes no sense. to a layperson when you have a radical, dangerous regime which has the capability within months of having nuclear weapons, it is not credible that everybody's just going to sit on their hands. so explain to me why that judgment would be credible. >> first of all, to build a nuclear weapon you not only need fissile material which today the breakout time is two to three months. under this agreement it will be a year for at least ten years, so gives us plenty of time to understand what's going on and to act if we need to take action. you also have to weaponize that material and have a delivery system. and it is the assessment of our community that even if iran were
able to enrich highly enriched uranium and have fissile material for a bomb which it does not have today and would take some time to get that they would still be some -- maybe as much as a year or two away from getting a nuclear weapon, if, in fact, they had a program to weaponize and the delivery system to carry it. >> i'm not talking about today. i'm talking about, assuming they live under the agreement in the later years, those time frames considerably shorten. >> the fissile material time frames shorten. we'd have to ask the intelligence community. i'm not aware of a current weaponization program or a program that marries a bomb with a delivery system in iran. i expect they could do that should they make the decision to do that. your question was about other countries.
i believe other countries will not go there because it's expensive. very expensive. secondly, we'd know about it. they would find themselves under the intense sanctions iran has been under because some of the sanctions are partners or allies of ours and are trying to deal with aspects of state sponsorship of terrorism of iran, and they want to work with us to do that. we're working with them to do that. i believe there are any numbers of incentives and disincentives for those countries to choose not to move in the direction iran has moved in. >> thank you, mr. chairman. >> this has been a long hearing. an interesting hearing. i have a few observations. it's been brought up here, what's is and what is not in agreement is very important, is it not, mr. szubin? but if you don't have the
information, it's hard to discern what is in agreement. my question to both of you, we know the history of iran. we know what's at stake here. ambassador sherman, do you trust iran? >> of course not. >> okay. >> mr. szubin. >> no, sir. >> we're entering into an agreement of great importance with a country that we don't trust that we have reason to believe is going to cheat or do whatever they have to because they are determined they are in pursuit of nuclear weapons. and as you've said, they are close to it right now. is that correct? >> they are not close to it right now. they are at least a year, two years away from a nuclear weapon should they decide to pursue one. it's not apparent the supreme leader has made a decision to pursue a nuclear weapon. it's two to three months
breakout for fissile material, but, yes, under this agreement, that would change to a year. >> which is a big step. >> huge step. >> mr. szubin, do you trust iran to forego their terrorist activity and not spend any of this money they'd get, if we say $50 billion, on promoting terrorism and unrest all over the world? >> mr. chairman, i do not trust iran. i think we can be nearly certain that iran is going to continue to sponsor terrorism and groups like the quds force. it's incumbent on us to intensify our campaign against that. >> strange agreement. >> thank you both for your appearance before the committees. we have another panel. it's a long day. very important issues. i'll call them up. our witnesses for the second panel today include the
honorable juan zarate, senior adviser for the transnational threats project at the center for strategic and international studies. mr. martin gibowicz from the foundation of defense of democracies and dr. matthew levitt, director of the stein program on counterterrorism and intelligence at the washington institute for near east policy, and ambassador nicholas boys, professor of diplomacy and international relations that harvard's john f. kennedy school of government. we welcome all of you here to the banking committee. and all of your written testimony will be made part of the hearing record in its entirety. when we get seated, we will proceed.
mr. zarate? zarate. >> like karate but with a z. >> yes, sir i won't forget that. zarate. we will start with you, sir when you're ready. >> thank you, mr. chairman. ranking member brown, distinguished members of the committee, i'm honored to testify before you. to discuss sanctions implications of the iran nuclear agreement. i'm privileged to be testifying with my fellow panelists. i take this responsibility seriously given the gravity and implications of this agreement. i come with views borne from relevant experience dealing with iran from the treasury department and national security council. i know that's all involved, including adam szubin, who just testified, have been working incredibly hard toward a peaceful solution to the iranian nuclear problem. the financial and economic
restriction campaign has been a part of built methodically over the course of a decade thanks to the innovative work of ambassador burns helped bring iran to the table. in the words of president rowhani, the sanctions threaten to drive iran back into the stone age. these efforts have also been designed to constrain and isolate rogue iranian behavior that supports terrorism, the assad regime, proliferation, human rights abuses and protect the integrity of the u.s. and international financial systems. unfortunately the sanctions relief framework is flawed. the relief is too front-loaded and does not account for the increased risks stemming from iranian commercial and financial activity and ultimately constrains the u.s. government's ability to use effective financial power against iranian non-nuclear national security rinks. there are structural problems. the snapback is a blunt instrument. iranians maintain a hecklers
veto of sanctions. it unwinds sanctions too broadly. it may put the u.s. in the position of rehabilitating iran's the u.s. in the position of rehabilitating the economy. and it created an international process that subjects u.s. sanctions to review. based on the appellate process any action to which iran objects would be subject to review by the other parties, including iran china and russia. we've potentially converted the iranian sanctions into one in which the target had the right to challenge and an internet venue in which to do it. this is done in support of parties that do not like or want to see the use of u.s. pour and influence. it might drive a weblg between the u.s. and europe moving forward. and all of this will temper our aggressive moves against iran. mr. chairman, the spirit and
letter of the agreement may leverage our financial power in the future. with the start in the negotiation, what the iranians want most was the ability to do business again, unfettered and unplugged back into the global system. the regime has needed access to banking, shipping, insurance technologies and connectivity to global markets. that is what they lost over the last decade and that is what they gained and guaranteed in this deal. the u.s. will need to amplify measures against key elements of the iranian economy to deal with increased risks. it is not at all clear that this is well understood by all parties or even part of the strategy. and we have the ability to do so unilaterally if needed. the united states is shaping the efforts to enforce sanctions against iran since 2005. on the con triery the isolation by iran of their own actions has
increased over time. and there has been increasing risk aversion to doing business with iran because of the underlying conduct it engauges in as well well as the deep regard of the mule use and the regime to control the economy. the responsible private sector actors will not rush in immediately, waiting to understand how the sanctions will unwind, whether iran will adhere to the deal and their own risk. and the risks from iran are real and will increase from financing and proliferation to corruption and illicit financing. the risks will help keep legitimate actors away from the economy for some time. the private sector mr. chairman will be watching and listening to you and to congress which can effect the global environment and the reach of our financial power in the future. i think there are three critical principals for congress to demand related to this deal and to sanctions. congress should ensure there is clarity in implementation of the deal and in particular the
execution of any sanctions unwinding plan. it should ensure the u.s. maintains as much financial and economic power as possible. congress should mitigate the risks attendant to an enriched and emboldened reasonableeem in tehran. the u.s. could and should adopt an aggressive financial constriction campaign folk ugs on the revolutionary guard and the core elements of the regime that engage in proliferation and human rights abuses. there should be a recommitment to a np -- nonproliferation regime against iran. we can use section 311 of the patriot act. the global mag newski act could be used to target the holdings of the iranian regime and those involved in gross human rights violations on its behalf. these are some of the measures
that can be used to sanction a new iran framework. when president rowhani came back to the negotiating table, a western diplomat based in tehran shared with me that he thought we had won the war, using economic sanctions and financial pressure. but then he asked can you win the peace? i think and certainly hope we can still win the peace, but it will require using and leveraging the var same powers and authorities that helped brings the regime to the table. we must make sure the agreement has not inadvertently powered the regime in iran and taken one of america's most potent pours across the table. thank you. >> chairman, ranking member and on behalf of little is lit finance, thank you for vine viting me to taef with these three great experts. the iran nuclear deal is deeply flawed i will address two of the design defects. the sun sut clause and the
snapback. the sun set clause requires ballistic missions to disappear over a five to 15 year period. they must abide by a threshold nuclear power with the industrial size enrichment and earlier clandestine sneak out path way. icbms and an economy with pressure and it learned from wendy sherman that the iaea inspectors will not get physical access to all military sites. now as iran grows more powerful america's ability to use peace leverage is in a fatal flaw in the agreement that provides aun cha i call the nuclear snap back. the agreement notes that if sanctions are reimposed in whole or in part in response to nuclear noncompliance, iran will void the deal. and it contained a requirement for the u.s. and eu to do
nothing to interfere with the normization of trade and economic relations with iran. i call this the nuclear snapback because iran will use these provisions to threaten to walk away from the deal and engage in nuclear escalation. iran will target the europeans to intimidate them, not to imposition the sanctions on any grounds or risk nuclear aspiration or war. and this is likely to provoke disagreements between rauch and the european allies on the credibility and the seriousness of in fractions and.appropriate level of response and level of iranian retaliation. administration assumes that even if russia and china were to take iran's side in a dispute, washington could count on the votes of germany, france and britain and the eu representative. this 5-3 majority assumes not one will face in the nuclear
intimidation. while the uk can -- the europe will have a strong economic incentive not to join the u.s. in snapping bank sanctions as european companies invested billions in the iranian market, pressure not to reimpose shanks will grow. the same dynamics apply to none nuclear sanctions including terrorism. on july 20th, iran released a statement to the u.n. security council that it quote may reconsider the commitments under the agreement if new sanctions are imposed irrespective of whether shuch new sanctions are introduced on nuclear related or other grounds end of quote. iran may be able to use this nuclear snap back threat to provent washington from combatting iran's support for terrorism or human right as boozes. in face of iranian threats, would the europe agree to reimpose sanctions on the central bank of iran if it is financing terrorism. i'm doubtful, given the
deterrence of the snap back. if the u.s. cannot use appreciate to stop iran military force may become the only option. as a result. i fear this may make war with iran more likely and not leslie and when that war comes iran will be stronger and the consequences will be much more severe. but there is an alternative and it isn't war and not about killing the deal. it is about a better deal congress should require the administration to amend the agreements fatal fault laws especially the sunset clause. one key amendment, the restrictions, the access to heavy weaponry and missiles should maintain the veto until we determine the nuclear program is not a threat. one key amendment. the u.s. and europe should keep in place some key pars of the economic sanctions architecture so we don't need to snab back anything, that leverage is still in place. and now there is ample precedent to amebd the deal.
congress has required amendments to bilateral agreements including significant cold war arms agreements with the soviets at a time when mosque yow had thousands of nuclear missiles aimed at our cities. if congress rejected the deal, china and russia might return to some iranian business but they are likely to stay at the table to keep iran from getting nuclear weapons. europe is tehrans big economic prize. the key is to use diplomatic persuasion and sanctions to keep the europeans out of iran. few european banks will risk penalties or the act to transact in dollars. european energy companies will find the financial pathways into iran stymied. we'll never again have the kind of powerful sanctions leverage as we do today. we should use it to get key amendments to this deal. those amendments will lower the risk of a future war against a much more powerful and dangerous iran. thank you, mr. chairman.
>> chairman shelby, ranking member brown members of the committee, thank you for this opportunity to appear before you today to discuss the nuclear agreement with iran and the challenges it poses to the future viability of u.s. sanctions architecture. the administration is telling people privately that it interprets the deals sanctions provisions in a very aggressive way but not making that clear to the public or to congress or allies or the business or finance communities in particular for iran. unfortunately, if we don't articulate the business that doing business with iran comes with real business and reputational risks others will not perceive there being much risk at all and will rush head first into the lucrative iranian market. some say the deal enables it to do several unilateral things that will deny iran access to the financial system and the u.s. dollar and the u-turn transaction mechanism through which they have done oil