Hearing of the Senate Finance Committee-Iran Nuclear Sanctions

Statement

Hearing of the Senate Finance Committee-Iran Nuclear Sanctions

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SEN. CHUCK GRASSLEY (R-IA): Thank you, Mr. Chairman.

This is a very important hearing because of the threat that Iran poses to the rest of the world -- particularly being armed with nuclear weapons, this is a reason for us to address this issue. Iran also is a leading state sponsor of terrorism, supporting groups Hezbollah and Hamas. The president of Iran has vowed to destroy Israel. It is working to enrich uranium for purposes of developing nuclear weapons. It continues to pursue missile arsenals to deliver weapons. Iran should not be allowed to develop and possess nuclear weapons. The international community has been clear in opposing Iran's efforts.

This is a multilateral approach to Iran -- not just the United States' approach to Iran. The United Nations Security Council has passed three separate resolutions demanding that Iran suspend all uranium enrichment. Yet, Iran continues to defy the international community. A nuclear Iran poses a serious threat to peace in the region, to our allies, and -- if not right today, eventually -- our own national security.

The Iran Counterproliferation Act of 2007 is another important tool then for the United States to use to put even more pressure on the Iranian regime to abandon its quest for nuclear weapons. The bill has strong bipartisan support. I'm glad that we're taking a serious look at this legislation. While I agree with most of the bill -- maybe I'd better say the overwhelming part of it -- I don't yet support all the trade provisions as they're currently drafted, but we're working to see what we can do to change those.

For instance, I'm not comfortable with the way that the bill links sanctions to the extension of preferential trade treatment and the process of accession to the WTO. I want to ensure that we end up with a strong, targeted bill that is fully consistent with general policy interests in promoting and enforcing the rule of law in international trade.

So we're engaging -- through my staff and Senator Smith's staff -- on these issues, and I want to thank Senator Smith for his willingness to address some of our concerns. That's assuming we can get together. I look forward to continuing to work with him then.

I hope that the Iranian regime and the Iranian people will see that their interests are not served by the pursuit of nuclear weapons. I look forward to working with my colleagues on efforts to continue to apply political and economic pressure on the Iranian regime. Its leaders must understand that their quest for nuclear weapons will not be tolerated and a measure like the Iran Counterproliferation Act is a strong signal for our position on that issue.

Thank you then, Mr. Chairman.

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SEN. GRASSLEY: Mr. Chairman, before my five minutes start, Senator Kyl, I was going to give him some of my time, but then he got a call. He had to go meet with other people, so he won't be here. He wanted me to apologize to the panel, and he is going to submit some questions for answer in writing. He's our Republican leader -- he's our Republican leader, so he's got a bigger agenda.

SEN. BAUCUS: One of them. One of the leaders.

SEN. GRASSLEY: Yeah, that's right. Yeah. Our assistant leader.

I'm going to start with Mr. Gordon and a little bit different approach than the discussion we just had on Russia but somewhat close to it.

Mr. Gordon, you testified that we should avoid provoking division in the international community through unilateral sanctions. On the other hand, Russia and China appear to be opposed to applying significant pressure on Iran. If we're forced to choose, which is more important, effective sanctions or keeping Russia and China on board?

MR. GORDON: Thank you, Senator.

I guess I would say I don't think that is the choice. I think we can do two things at the same time. We can and do impose a whole range of unilateral sanctions on Iran. We haven't traded with Iran for almost 30 years, we don't talk to Iran, we don't invest in Iran, and we can pursue -- we have frozen the assets of Iranian banks and individuals and we can continue to do all of those things and in many cases we should. We would like more Russian and Chinese cooperation, no doubt.

The choice can come in the context of secondary sanctions when we make relations with those countries conditional on what they do towards Iran, and that's the context in which I think it can be problematic when we do things that will cost us their cooperation. And the basic principle again is, if we are honest with ourselves, our own unilateral sanctions have a very limited impact. I mean, the reality of the modern world is there are a lot of other countries out there with money and banks and who buy oil, and that's why it's so important -- as much as possible -- to get countries like Russia and China on board.

You know, to the extent our sanctions are designed to limit funds to Iran in order to put pressure on Iran, we cannot buy oil from Iran -- we don't. We cannot invest in Iranian energy development -- we don't. But, especially given the current price of oil -- around $100 per barrel -- Iran is making more than $70 billion more per year from oil exports than it was eight years ago. So we shouldn't -- we need to understand that what we can do alone as a country is going to have a very limited impact.

And in that sense, it is in many cases more important to have broad and weak sanctions than very narrow and strong sanctions. And that's why I think it's important, as much as possible, to get Russia and China on board. And I think it has helped. Having U.N. Security Council resolutions is useful not only in sort of putting the diplomatic squeeze on Iran but with other countries. It's a lot easier to persuade the Europeans and the Japanese and the Indians that they should not deal with Iranian banks when Russia and China have agreed at the Security Council that no one should deal with Iranian banks.

SEN. GRASSLEY: Ms. Pletka, you testified that the sanctions in effect today have done a better job than previous regimes in targeting leadership elements and sources of income without imposing a heavy burden on the Iranian people. Others have asserted that the sanctions have led the Iranian public to question whether nuclear ambitions of the regime are worth the economic cost. Question: Do any of the sanctions provisions in our bill run the risk of hurting the Iranian public and thereby causing nationalist backlash?

Ms. PLETKA: It's a difficult question to answer, Senator, for the simple reason that Iran has become, under President Ahmadinejad, so much more of a statist and state-run economy. Where there were businesses in private hands under previous government, things have been drastically centralized. And so, on the one hand, you can say that sanctions have an impact on the government because so much is in fact controlled by the government. The other side of that argument is because so much is controlled by the government, it has a significant impact on the Iranian people.

I think that there's no doubt that all sanctions have an impact on a population. If I had to look at where sanctions had an impact right now, I would say in terms of their ability to procure consumer goods from Europe -- luxury imports. Those kinds of things in Iran have gone up in price. But there should be no doubt that when you weigh the cost of sanctions on the Iranian people versus the costs of immense economic mismanagement on the part of the regime, that certainly has a heavier burden.

The only comment I would make about the specific provisions of the bill in terms of the Iranian people is the note that Bill Reinsch made, which is that if in fact -- and I didn't pick up the provision that he mentioned -- if in fact, obviously there is a question on medical devices, then clearly the United States is not interested, up to a reasonable point, understanding that lots of medical devices are in fact dual use and that if the Iranians are seeking to exploit that loophole in order to get technology for their nuclear program or their missile program, we do need to be particularly vigilant.

SEN. GRASSLEY: Mr. Chairman, I'm going to submit the rest of my questions for answering in writing because I can't stay for a second round.

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