Testimony of Jacob Lew: Iran Nuclear Agreement Review
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None of this is to say that we view the sanctions relief Iran will receive if it complies with the JCPOA with indifference. As the agency with primary responsibility for sanctions against Iran over the last three decades, we are keenly aware of its nefarious activities in the region and have invested years in devising and implementing sanctions to frustrate its objectives.
That said, in gauging the impact of lifting these restrictions, we should be measured and realistic. These funds represent the bulk of Iran’s foreign reserves — they are the country’s long-term savings, not its annual budgetary allowance, and as a matter of financial management, Iran cannot simply spend them. Of the portion that Iran spends, we assess that Iran will use the vast majority to attempt to redress its stark economic needs. President Rouhani was elected on a platform of economic revitalization and faces a political imperative to meet those unfulfilled promises. Iran’s needs are vast — President Rouhani faces well over half a trillion dollars in pressing investment requirements and government obligations. And Iran’s economy continues to suffer from immense challenges — including perennial budget deficits, rampant corruption, and one of the worst business environments in the world. Put simply, Iran is in a massive hole from which it will take years to climb out.
In any event, we will aggressively target any attempts by Iran to use funds gained from sanctions relief to support militant proxies, including by continuing to enhance our cooperation with Israel and our partners in the Gulf.
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The UN Security Council and our partners around the world agreed to impose costly sanctions against Iran for one reason — to put a stop to its illicit nuclear program. If we changed our terms now and insisted that these countries continue to impose those sanctions on Iran, despite the availability of a diplomatic solution to its nuclear program, they would balk. And we would be left with neither a nuclear deal nor effective sanctions. It is unrealistic to think that additional sanctions pressure would force Iran to totally capitulate — and impractical to believe that we could marshal a global coalition of partners to impose such pressure, after turning down a deal that our partners believe is a good one.
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As noted above, Iran’s malign activities continue to present a real danger to U.S. interests and our allies in the region, beyond the nuclear file. I have heard some argue that, until Iran ceases these activities, sanctions relief is premature, and that funds that Iran recovers could be diverted to these malign activities. I understand the concern well — no one wants to see the world’s foremost sponsor of terrorism receive any respite from sanctions. But it is Iran’s relationships with terrorist groups that make it so essential for us to deprive it of any possibility of obtaining a nuclear weapon. The combination of those two threats would raise the specter of what national security experts have termed the ultimate nightmare. If we cannot solve both concerns at once, we need to address them in turn. The JCPOA will address the danger of Iran’s nuclear program — lowering the overall threat posture and freeing us and our allies to check Iran’s regional activities more aggressively, while keeping our sanctions on support for terrorist activity in place. By contrast, walking away from this deal and seeking to extend sanctions would leave the world’s leading sponsor of terrorism with a short and decreasing nuclear breakout time.
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The United States will also maintain powerful sanctions targeting Iran’s support for terrorist groups such as Hizballah and its sponsors in Iran’s Islamic Revolutionary Guard Corps–Quds Force; its destabilizing support to the Houthis in Yemen; its backing of Assad’s brutal regime; its missile program; and its human rights abuses at home. Just this week, Treasury sanctioned several Hizballah leaders, building on designations last month that targeted the group’s front companies and facilitators. We will not be providing any sanctions relief to any of these lines of activity and will not be delisting from sanctions the IRGC, the Quds Force, or any of their subsidiaries or senior officials.
I also want to emphasize that secondary sanctions imposed by Congress will continue to attach to these designations, providing additional deterrence internationally. For example, a foreign bank that conducts or facilitates a significant financial transaction with Iran’s Mahan Air or Bank Saderat will risk losing its access to the U.S. financial system. These sanctions will continue to be in place and enforced; they are not covered by the JCPOA.