Terrorism, Missiles and Corruption: The Risks of Economic Engagement with Iran

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Chairman Royce, Ranking Member Engel, and distinguished members of the House Committee on Foreign Affairs, I am honored to be with you today to discuss the risks of economic engagement with Iran, particularly in light of its ongoing support for terrorism, ballistic missile activities, and illicit financing and corruption. As implementation of the Joint Comprehensive Plan of Action (JCPOA) unfolds, this is an important moment for the United States to examine Iranian activity around the globe soberly and determine how best to proceed with the agreement and against the Iranian threat.

When the JCPOA was being debated, I expressed deep concerns and reservations about the structure, demands, and effects of the nuclear deal on U.S. interests, especially in anticipation of increased Iranian belligerence and adventurism. In detailed testimony before both the Senate Foreign Relations Committee and the Senate Banking Committee last year, I explained that the JCPOA was fundamentally flawed, in part because it would empower and enrich the regime and ultimately constrain our ability to use the most effective financial and economic tools of isolation to counter dangerous Iranian behavior.

With strategic patience, Iran can march toward a weaponized program with greater capabilities, breakout capacity, and more economic resources, resilience, and connectivity to the global oil markets and commercial system. Even if Iran complies with all elements of this deal, Tehran will end up with an unfettered opportunity to break out and weaponize its nuclear program, overtly or covertly, along with an ability to arm itself and its allies more openly and aggressively. The end state of the agreement takes us far afield from the declared goal of successive administrations at the start of negotiations.

The structure, processes, and nature of this agreement give Iran the benefit of the doubt that it is pursuing a peaceful program, when the onus should remain with Iran throughout to prove the peaceful nature of its program, as constructed in the prior, relevant UN Security Council Resolutions (UNSCRs).

Ultimately, what we negotiated and promised was reintegration of Iran into the global economic system. The JCPOA sacrifices the ability of the United States to use its financial and economic power and influence to isolate and attack dangerous and problematic Iranian activity – beyond the nuclear program. Beyond simple sanctions relief, we negotiated away one of our most important tools of statecraft – the very financial and economic coercion that helped bring the Iranian regime to the table. Though “non-nuclear” sanctions were supposedly off the table, the spirit and letter of the agreement neuters U.S. ability to leverage one of its most powerful tools – its ability to exclude rogue Iranian actors and activities from the global financial and commercial system.

As I explained last year, promising Iranian reintegration into the global system was not possible unless we were willing to defang our sanctions regime and ignore Iranian behavior; rehabilitate the perception of the Iranian regime ourselves; and take the most effective tools of financial isolation off the table.

This is a critical point as Iran continues the range of dangerous activities that have been the subject of sanctions and international opprobrium. In the wake of the JCPOA implementation, these activities have included the following:

1. Iran has conducted repeated ballistic missile tests in violation of UN sanctions, including reports from this week that one was launched as recently as April 20, 2016, and promises further launches. A missile launch in March also coincided with Vice President Biden’s visit to Israel.

2. Qassem Soleimani, the head of the Iranian Revolutionary Guard Corps’ (IRGC) Qods Force, traveled twice to Moscow in contravention of international travel bans to coordinate military cooperation with the Russian government, to include the delivery of the S-300 system to Iran and defense of the Assad regime in Syria.

3. Iran remains the leading state sponsor of terror and has continued its direct support to terrorist proxies throughout the region, to include Hizballah’s activities in Lebanon and Syria, as well as Iraqi Shi’ite militias who have been responsible for the deaths of hundreds of Americans and are now deployed in Syria to fight for the Assad regime. This has included support intended to destabilize governments allied with the United States, with Gulf states uncovering and interdicting arms shipments for apparent use in those countries. In recent months, international naval forces have interdicted Iranian arms shipments likely headed to Houthi rebels in Yemen.

4. Iran has deployed troops – regular and from the IRGC – to Syria to fight for and defend the Assad regime, with reports of thousands on the ground. Qassem Soleimani continues to appear at key battlefronts throughout Syria, and the Iranians help funnel Iraqi, Afghani, and Pakistani Shi’ite militias into the battlefield.

5. Iran has continued to engage in human rights abuses and the restriction of democratic norms. In the run up to recent parliamentary elections, Iran disqualified thousands of individuals from running1 and continues to hold the leaders of the Green Movement under house arrest.

6. Iran detained two Iranian-American citizens, a father and son, in October 2015 and February 2016, and continues to hold them. In addition, Robert Levinson remains missing after disappearing on Kish Island on March 9, 2007.

7. On January 12, 2016, Iranian naval forces arrested American sailors at gunpoint, broadcasting the video of their detention, and subsequently mocking the sailors through a reenactment at a rally commemorating the anniversary of the Iranian Revolution. The Iranians detained the American sailors days before the implementation of the JCPOA, and hours before the President’s State of the Union address.

Much of this activity is not a surprise, but it cannot be dismissed as simply the bad behavior of a recalcitrant IRGC or extremists within the Iranian system. In the Iranian system, these actions are blessed, designed to promote the interests of the regime, and calculated to test the will of the West.

Importantly, the nature of the regime, its control of the economy, and its willingness to use the financial system to pursue all its goals internally and externally has not changed. The Iranian system is corrupt, lacks transparency at all levels, and is centrally controlled by the regime. This – along with the uncertainty of how the JCPOA will unfold – ultimately creates enormous risk for legitimate international actors and companies considering doing business in or with Iran. This explains why there has not been a wave of Western businesses investing aggressively or operating directly in Iran. It further explains why the Iranian leadership continues to complain that the United States has not satisfied its side of the bargain.