[House Hearing, 111 Congress]
[From the U.S. Government Printing Office]


 
       IRAN: RECENT DEVELOPMENTS AND IMPLICATIONS FOR U.S. POLICY

=======================================================================


                                HEARING

                               BEFORE THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 22, 2009

                               __________

                           Serial No. 111-31

                               __________

        Printed for the use of the Committee on Foreign Affairs


 Available via the World Wide Web: http://www.foreignaffairs.house.gov/

                                 ______



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                      COMMITTEE ON FOREIGN AFFAIRS

                 HOWARD L. BERMAN, California, Chairman
GARY L. ACKERMAN, New York           ILEANA ROS-LEHTINEN, Florida
ENI F.H. FALEOMAVAEGA, American      CHRISTOPHER H. SMITH, New Jersey
    Samoa                            DAN BURTON, Indiana
DONALD M. PAYNE, New Jersey          ELTON GALLEGLY, California
BRAD SHERMAN, California             DANA ROHRABACHER, California
ROBERT WEXLER, Florida               DONALD A. MANZULLO, Illinois
ELIOT L. ENGEL, New York             EDWARD R. ROYCE, California
BILL DELAHUNT, Massachusetts         RON PAUL, Texas
GREGORY W. MEEKS, New York           JEFF FLAKE, Arizona
DIANE E. WATSON, California          MIKE PENCE, Indiana
RUSS CARNAHAN, Missouri              JOE WILSON, South Carolina
ALBIO SIRES, New Jersey              JOHN BOOZMAN, Arkansas
GERALD E. CONNOLLY, Virginia         J. GRESHAM BARRETT, South Carolina
MICHAEL E. McMAHON, New York         CONNIE MACK, Florida
JOHN S. TANNER, Tennessee            JEFF FORTENBERRY, Nebraska
GENE GREEN, Texas                    MICHAEL T. McCAUL, Texas
LYNN WOOLSEY, California             TED POE, Texas
SHEILA JACKSON LEE, Texas            BOB INGLIS, South Carolina
BARBARA LEE, California              GUS BILIRAKIS, Florida
SHELLEY BERKLEY, Nevada
JOSEPH CROWLEY, New York
MIKE ROSS, Arkansas
BRAD MILLER, North Carolina
DAVID SCOTT, Georgia
JIM COSTA, California
KEITH ELLISON, Minnesota
GABRIELLE GIFFORDS, Arizona
RON KLEIN, Florida
                   Richard J. Kessler, Staff Director
           Yleem Poblete, Republican Staff Director
            David S. Abramowitz, Chief Counsel deg.
                Kristin Wells, Deputy Chief Counsel deg.
        Alan Makovsky, Senior Professional Staff Member
       David Fite, Senior Professional Staff Member deg.
   Pearl Alice Marsh, Senior Professional Staff Member deg.
     David Killion, Senior Professional Staff Member deg.
        James Ritchotte, Professional Staff Member deg.
         Michael Beard, Professional Staff Member deg.
         Amanda Sloat, Professional Staff Member deg.
         Peter Quilter, Professional Staff Member deg.
                Daniel Silverberg, Counsel deg.
     Brent Woolfork, Junior Professional Staff Member deg.
    Shanna Winters, Senior Policy Advisor and Counsel deg.
      Laura Rush, Professional Staff Member/Security Officer deg.
        Genell Brown, Senior Staff Associate/Hearing Coordinator


                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

Patrick Clawson, Ph.D., Deputy Director for Research, The 
  Washington Institute for Near East Policy......................     8
Abbas Milani, Ph.D., Co-Director, Iran Democracy Project, Hoover 
  Institution, Director, Iranian Studies, Stanford University....    17
Michael Rubin, Ph.D., Resident Scholar, The American Enterprise 
  Institute, Senior Lecturer, Naval Postgraduate School..........    24
Suzanne Maloney, Ph.D., Senior Fellow, Saban Center for Middle 
  East Policy, The Brookings Institution.........................    32
Mr. Karim Sadjadpour, Associate, Middle East Program, Carnegie 
  Endowment for International Peace..............................    43
Orde F. Kittrie, J.D., Professor of Law, Arizona State 
  University, Co-Director, Iran Energy Project, Foundation for 
  Defense of Democracies.........................................    51

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Patrick Clawson, Ph.D.: Prepared statement.......................    11
Abbas Milani, Ph.D.: Prepared statement..........................    20
Michael Rubin, Ph.D.: Prepared statement.........................    28
Suzanne Maloney, Ph.D.: Prepared statement.......................    36
Mr. Karim Sadjadpour: Prepared statement.........................    46
Orde F. Kittrie, J.D.: Prepared statement........................    53
The Honorable Howard L. Berman, a Representative in Congress from 
  the State of California, and Chairman, Committee on Foreign 
  Affairs: Letter from the Iranian American Bar Association dated 
  July 22, 2009..................................................   106
The Honorable Keith Ellison, a Representative in Congress from 
  the State of Minnesota: Op-ed by Trita Parsi, Ph.D.............   110

                                APPENDIX

Hearing notice...................................................   114
Hearing minutes..................................................   115
The Honorable Howard L. Berman: Prepared statement...............   117
The Honorable Gerald E. Connolly, a Representative in Congress 
  from the State of Virginia: Prepared statement.................   119
The Honorable Michael E. McMahon, a Representative in Congress 
  from the State of New York: Prepared statement.................   121
The Honorable Sheila Jackson Lee, a Representative in Congress 
  from the State of Texas: Prepared statement....................   122
The Honorable Ron Klein, a Representative in Congress from the 
  State of Florida: Prepared statement...........................   125


       IRAN: RECENT DEVELOPMENTS AND IMPLICATIONS FOR U.S. POLICY

                              ----------                              


                        WEDNESDAY, JULY 22, 2009

                  House of Representatives,
                              Committee on Foreign Affairs,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:10 a.m. in 
room 2172, Rayburn House Office Building, Hon. Howard L. Berman 
(chairman of the committee) presiding.
    Chairman Berman. The committee will come to order. I 
believe the ranking member will be joining us in just a moment. 
But before I begin my opening statement, I want to make mention 
several procedural issues.
    In the context of all of our hearings, we request that the 
audience members do not hold up or wave signs, make gestures to 
attract attention, stand up and protest, stand up and shout or 
yell your views, or otherwise disrupt the hearing. And we will 
ask the Capitol Police to remove anyone from the room who 
violates this policy. It is the policy of the Capitol Police to 
arrest anyone ejected from a hearing room.
    After the ranking member and I make our opening remarks, 
the chairman and ranking member of the Middle East and South 
Asia Subcommittee will have an opportunity to make 3-minute 
statements. I would strongly encourage other members to submit 
their statements for the record or make any comments they may 
have during their time for questioning, which will be extended 
for this hearing only.
    Because we have such a large panel, I would ask all the 
witnesses to summarize their statements in 5-7 minutes. Your 
entire written statements will be made a part of the record.
    Finally, the ranking member and I have agreed that all 
members will be given 7 minutes to question the witnesses. This 
means that both the questions and answers must be completed 
within 7 minutes, and we will enforce that time limit strictly. 
It is not the intention of the chair to break for lunch. We are 
going to plow right through until we are done and now I will 
yield myself time for the opening statement.
    No, I am not bringing food, either.
    On June 12th, Iranians went to the polls in what was 
expected to be a close Presidential election. But instead of a 
down-to-the-wire contest, the Iranian Government almost 
immediately declared that the incumbent had been reelected in a 
landslide. This hearing takes place in the wake of 6 weeks of 
post-election turmoil and uncertainty, the most significant 
internal upheaval since the 1979 revolution. Hundreds of 
thousands of courageous Iranians have taken to the street in 
defiance of the regime to protest the election results.
    The regime responded brutally to these peaceful 
demonstrators. By the government's own admission, at least 20 
protestors were killed and some 500 are in prison awaiting 
trial. Most human rights groups say the actual numbers are much 
higher, with some putting the number killed well into the 
hundreds.
    Iran also barred its domestic and foreign press from 
covering the demonstration; shut down cell-phone coverage and 
the Internet for long periods of time to limit communication 
among the dissidents; arrested foreign journalists; and, in 
total disregard of international law, broke into the British 
Embassy to arrest local hires.
    The people of Iran should know that the over 1 million 
Iranians living in America and hundreds of millions of other 
Americans stand in awe of their courage to stand up for free 
election. Have no doubt, the American people stand with you.
    Post-June 12 events in Iran raise many questions. Has the 
regime, as many have said, now lost much, if not all, of its 
legitimacy? Is the clerical elite now irrevocably divided? Has 
the Iranian Revolutionary Guard Corps become the dominant force 
in the country? If so, what are the implications of these 
developments? Should we expect further turmoil? Is the regime's 
survival in question? And, most important, what are the 
implications for United States and international efforts to 
prevent Iran from developing a nuclear weapons capability?
    The facts on the ground are deeply disturbing. Iran has 
made significant progress on its nuclear program, far exceeding 
expectations of the recent past. According to the International 
Atomic Energy Agency, Iran has now installed more than 7,000 
centrifuges, and has produced enough low-enriched uranium to 
fuel a nuclear explosive device, were that low-enriched uranium 
to be transformed into highly-enriched uranium.
    And some would point out that this describes only Iran's 
overt programs; in many quarters, the suspicion lurks that Iran 
also has a covert program that is even further along.
    The nuclear issue is urgent and it is of such overriding 
importance to America's national security--and to regional 
stability--that we can't afford to drop the ball. Whatever our 
feelings about the authoritarian regime in Tehran, that regime 
continues to hold the reins of power, and for now, I believe 
President Obama is correct in continuing to pursue a policy of 
engagement.
    Why? Because our previous policy of seeking to isolate the 
regime simply did not work. Nothing we have done has slowed 
Iran's drive to acquire a nuclear weapons capability. And only 
by making a good-faith effort to engage Iran can we build the 
support we need from the international community to impose the 
crippling sanctions necessary should engagement fail.
    But while it is important to pursue engagement, it is also 
critical that these efforts be time-limited and that the 
administration be prepared to try a different approach if Iran 
is not cooperating.
    As I understand it, that is exactly the administration's 
policy. The President recently said that Iran's willingness to 
engage will be reevaluated in early fall after the September 
24-25 G-20 meeting in Pittsburgh. He has also said that 
``[w]e're not going to create a situation in which talks become 
an excuse for inaction while Iran proceeds'' on its nuclear 
efforts. In short, if I can paraphrase the President, we should 
not allow Iran to run out the clock.
    I agree with the President's timetable. If by autumn the 
Iranians are not responsive to United States efforts to engage 
them, it likely will be time to move on, hopefully in close 
coordination with our allies in other key countries.
    That is also my approach regarding H.R. 2194, the Iran 
Refined Petroleum Sanctions Act, which I introduced with the 
ranking member in April, and which is now co-sponsored by well 
over half the Members of the House. My bill would impose 
sanctions on companies that are involved in exporting refined 
petroleum products to Iran or in helping Iran to increase or 
maintain its existing domestic refining capacity.
    This legislation would force companies in the energy sector 
to choose between doing business with Iran or doing business 
with the United States. The Iranian economy is heavily 
dependent on imports of refined petroleum, so this 
legislation--if it becomes law--would significantly increase 
economic pressure on Iran and hopefully persuade the regime to 
change its current course.
    When I introduced H.R. 2194, I said that I did not intend 
to immediately move it through the legislative process. I 
wanted--and still want--to give the administration's efforts to 
engage Iran every possible chance to succeed, within a 
reasonable time frame. I view the bill as a ``sword of 
Damocles'' over the Iranians--a clear hint of what will happen 
if they do not engage seriously and move rapidly to suspend 
their uranium enrichment program, as required by numerous U.N. 
Security Council resolutions. If engagement doesn't work, then 
I am prepared to mark up the bill in committee early this fall.
    Thus far, Iran has not been responsive--not on the 
bilateral front, and not even on the multilateral front. Last 
month, Iran cancelled its attendance at the G-8 Ministerial in 
Trieste, Italy. It has refused to set a date for the next P5+1 
meeting. It is now late July--close enough to the 
administration's time-limit, and to my own, that Iran should be 
able to hear the clock ticking.
    I am now pleased to turn to my ranking member, the 
gentlelady from Florida, Ileana Ros-Lehtinen for any opening 
remarks she might want to make.
    Ms. Ros-Lehtinen. Thank you so much, Mr. Chairman.
    Thank you for holding this hearing on Iranian internal 
political and economic developments and the implication for 
United States policy. We have an impressive group of witnesses, 
and I look forward to receiving their input.
    Mr. Chairman, I had hoped, however, that since this is the 
first full committee hearing on Iran we have held this year, 
and in light of your statement during the June 10th floor 
debate on the Foreign Relations Authorization Bill, that the 
committee would have hearings in July on how multilateral 
sanctions and the engagement process, the diplomatic process, 
has worked, that we would have heard from administration 
witnesses, and I hope that that will happen.
    I respectfully request a follow-up hearing with senior 
administration officials on this topic. As I mentioned in the 
hearing earlier this month on the proposed U.S.-UAE Civil 
Nuclear Cooperation Agreement, I am an equal opportunity 
worrier. Last July, in a hearing before this committee, I 
criticized the Bush administration's endorsement of an expanded 
incentive package under the P5+1, stating it granted undue 
legitimacy and leverage to the regime in Tehran, and the only 
thing we have to show for this approach is that Iran is now 2 
years closer to nuclear capabilities.
    And my remarks, sadly, are as true today as they were then. 
Just in the 7 years since Iran's illegal nuclear program was 
uncovered, the United States position has gone from imitating 
the successful Libya model and calling for a complete, 
permanent, verifiable dismantlement of Iran's nuclear program; 
to calling for the cessation of enrichment reprocessing to 
temporary suspension, to the current United States position, 
whereby the U.S. has accepted a so-called Iranian civilian 
nuclear program, is pursuing direct engagement with the Iranian 
regime, and is now engaged in a proliferation of nuclear 
cooperation agreements with other countries in the Middle East.
    Secretary Clinton stated earlier today that the U.S. would 
upgrade the defense capabilities of, and extend a defense 
umbrella over, United States allies in the Persian Gulf. This 
was met with much concern and skepticism in Israel, where Dan 
Meridor, the Minister of Intelligence and Atomic Energy, told 
Army Radio, ``I was not thrilled to hear this American 
statement that they will protect their allies with a nuclear 
umbrella, as if they have already come to terms with a nuclear 
Iran.''
    I would ask our witnesses today for their views on this 
U.S. approach, whether it signals an acceptance by the United 
States of a nuclear Iran, and how this impacts sanctions 
efforts and other efforts. Please comment.
    Turning to recent developments inside Iran and how these 
could affect the regimes' and our strategic calculations, the 
so-called supreme leader must now resort to manipulating 
elections and using force against unarmed demonstrators to 
preserve the regime's hold on power. Regime authorities have 
detained independent-minded individuals, repressed 
organizations under the guise of protecting the regime against 
what it labels as internal enemies, saboteurs, even 
revolutionaries.
    A process that has gone largely unnoticed outside of Iran 
is the rise of the Iranian Revolutionary Guard Corps or IRGC. 
The rule of the mullahs has been significantly replaced by the 
Iranian Revolutionary Guard Corps, a quasi-military 
organization which has become the predominant power in that 
country. The IRGC controls large swaths of the economy and 
society. It uses its police and military forces to ensure 
obedience. It even has a dominant role in Iran's nuclear 
weapons and ballistic missile capabilities.
    And it is only in this context that we can fully understand 
what is now taking place in Iran following the sham elections 
of June 12. In addition to providing us their analysis of 
Iran's internal developments, I would appreciate it if our 
witnesses would address how these are affecting the regime's 
influence outside of the country and how we can capitalize on 
any political and economic vulnerabilities.
    For decades, Iran has spread unrest around the world, 
directly and through its proxies, such as Hamas and Hezbollah. 
Tehran has also facilitated attacks on United States forces in 
Iraq and in Afghanistan. The regime continues to pursue long-
range missiles and seeks to enhance its chemical and biological 
weapons capabilities.
    The most salient issue is Iran's nuclear weapons program. 
Admiral Mike Mullen, the chairman of the Joint Chiefs of Staff, 
recently said, ``The clock has continued to tick on Iran's 
development of nuclear capabilities, and our time to stop them 
is running out.'' Ahmadinejad has declared many times that 
negotiations regarding Iran's nuclear program are dead. He 
reiterated that position on May 25th of this year and again 
last month. It is time for our policy to be based on facts and 
not on hope.
    It is long past time that we apply a badly needed sense of 
urgency to our policy toward the Iranian regime. It is time for 
us to fully realize that a regime that tortures, oppresses, and 
violently suppresses dissent, that only has disdain for its 
people, is not a regime that the U.S. should be legitimizing.
    I look forward to receiving the testimony of our witnesses 
today, listening to your recommendations on what the United 
States can do to support the people of Iran while undermining 
the ability of the regime to threaten its people, the region, 
and global peace and security.
    Thank you, as always, Mr. Chairman, for this hearing and 
the ability to ask great questions to our wonderful witnesses.
    Thank you.
    Chairman Berman. Thank you.
    And I am very pleased to recognize the chairman of the 
Middle East and South Asia Subcommittee, the gentleman from New 
York, Mr. Ackerman.
    Mr. Ackerman. Thank you.
    Mr. Chairman, I don't think it is a secret that I have been 
a very active advocate of sanctions in Iran. For many years, I 
have thought it essential to force Iran to pay a price, some 
price, any price, for its regional subversion, its state 
sponsorship of terrorism and, most of all, its nuclear 
proliferation. In this last regard, however, I feel it may 
already be too late for sanctions.
    In April of last year, I warned that our thinking about the 
Iranian nuclear problem needed to change. I suggested then that 
``Options that years ago would have seemed reckless have now 
become essential leverage if we are going to be successful in 
peacefully getting Iran to back down. With Iranian 
proliferation on the horizon, what is feckless is in fact 
reckless.'' That is what I said a year ago.
    As have many others, I supported the administration's 
efforts to engage Iran. In my travels through the Middle East 
and here in Washington, I have asked Israelis and numerous Arab 
leaders if they supported the President's approach to engage 
Iran. Every single intelligence chief, Minister, King, Prince, 
President, head of state, responded exactly the same way; 
America's engagement is long overdue and absolutely essential. 
And then when I ask them if they thought it would work, to a 
man, they said, absolutely not. I don't think they are wrong 
either.
    Recent events in Iran are instructive. But confronted by a 
challenge, Iran's rule is responded like any other pack of 
thugs with regime-sponsored violence and other disregard for 
human life. And it should be noted, the concerns and views of 
the rest of the world matter to them not in the slightest. In 
short, with their backs against the wall, Iran's rulers didn't 
care who or how many got hurt.
    Unfortunately, these events don't bode well for the 
administration's effort; whether or not bilateral discussions 
are going on right now or not, I don't know. But either way, I, 
frankly, have little hope that Iran's rulers will give up their 
nuclear ambitions in any case.
    What we have seen of late strongly suggests that Iran's 
rulers would gladly break the country in half in order to 
preserve their grip on power, and even given what has happened 
in Iraq and what has not happened in North Korea, I suspect 
Iran's thugocracy sees nuclear arms as their ultimate insurance 
policy.
    All of this is to say that we need to start thinking again, 
not just about sanctions and not just about what constitutes 
so-called crippling sanctions, but whether there is any level 
of economic sanctions sufficient to compel a change in Iran's 
nuclear program. And as we consider this question vis-a-vis 
Iran, I would suggest we think seriously about the decade of 
truly comprehensive sanctions on Iraq, which ultimately failed 
to resolve concerns about weapons of mass destruction that 
didn't even exist. Does anyone think that the Ayatollah 
Khomeini is a nicer guy than Saddam Hussein?
    This is reality; Iran is marching swiftly toward either a 
bomb or either a latent nuclear capability. This development is 
deeply destabilizing in an already deeply unstable region. 
Successful proliferation by Iran will most likely destroy the 
NPT and the international law against norm against nuclear 
proliferation. If left unaddressed by the United States and the 
rest of the international community, as seems to be the case 
right now, Israel will have to either live under Iranian 
nuclear sword or act preemptively themselves.
    In April of last year, I concluded by saying, I am not 
calling for another war; I want to prevent one. But we may have 
to go right up to the brink to be considered serious and 
credible----
    Chairman Berman. The time for the gentleman has expired.
    Mr. Ackerman. To make nuclear weapons unacceptable.
    Chairman Berman. The gentleman from Indiana, the ranking 
member of the Subcommittee on the Middle East and South Asia, 
Mr. Burton, is recognized for 3 minutes.
    Mr. Burton. Thank you.
    Mr. Chairman, I have been one of your strong supporters of 
2194, and I can't for the life of me figure out why we are 
waiting month after month to bring that bill to the floor. It 
has 260 co-sponsors. Everybody understands the threat that Iran 
opposes, and we are sitting here talking.
    They have been developing a nuclear weapons program, as I 
understand it from staff, for almost two decades. They haven't 
made any allusions about stopping or creating any illusions 
about stopping that nuclear program. They are not going to 
stop.
    And unless we start imposing sanctions, real sanctions 
right now, like your bill would do, give the President the 
authority, we are giving him the authority to do it; let's do 
it. I mean, he has tried to reach out to them. He has said that 
he is willing to talk and all that other stuff. It ain't 
working, and it is not going to work.
    They have, as you just said, 7,000 centrifuges right now. 
They are developing a nuclear capability. And I know B.B. 
Netanyahu. And I know that he is a man that doesn't want to 
have a conflict over there. But I don't believe he or the 
Government of Israel is going to sit back if they have 
intelligence information and wait for them to complete a 
nuclear weapons program or a delivery system.
    We are messing around by waiting and not imposing sanctions 
today. Every day that we wait, we are risking a major conflict 
over there. Now, from the United States' standpoint, we are 
getting what 30, 35 percent of our energy from that part of the 
world right now. We don't need a conflagration that might 
involve nuclear weaponry. I mean, it would be horrible.
    And so, you know, the people over there, obviously, the 
people over there are good people. They like America for the 
most part, the people over there. It is not the people; it is 
the government. And we need to start putting pressure on that 
government post haste, and we haven't been doing it.
    If we start putting the hammer to them, if we give the 
President the authority and he starts getting our allies to 
stop them from getting refined oil back in their country, that 
will put extreme pressure on that government, because the 
people over there are already upset because of these elections. 
And there is a very good chance that the people of Iran would 
make some move to overthrow that government and bring in a real 
democratic government that they could live with.
    But for us to keep--I mean, I don't know how many hearings 
I have been to. I have been on this committee now for 27 years. 
I don't know how many hearings I have been to where we were 
talking about how we can work with Iran or how we want to work 
with Iran; we want to open up a dialogue. It isn't going to 
work. The one thing about North Korea, you know they are going 
to lie. Iran doesn't have to lie. They keep telling us they are 
not going to pay any attention to us, and they go right ahead. 
We need to impose sanctions now, not later.
    Chairman Berman. The time of the gentleman has expired.
    We have an excellent group of witnesses, some focused on 
the economic issues and some focused on the political issues in 
terms of the issues raised up until now and in Iran.
    I am going to introduce them in the order that they will be 
asked to testify.
    First is a familiar face to this committee, Patrick 
Clawson, deputy director of research at the Washington 
Institute for Near East Policy. He previously spent 5 years at 
the National Defense University's Institute for National 
Strategic Studies, and 4 years at the IMF, the World Bank and 
the Foreign Policy Research Institute. He is the author or 
editor of over 25 books, including, ``The Last Resort: 
Consequences of Preventa deg.tive Military Action 
against Iran,'' published in 2008. And he has interesting ideas 
about how to take credit for the sun rising in the east.
    Abbas Milani is the co-director of the Iran Democracy 
Project at the Hoover Institution. He is also the Hamid and 
Christina Moghadam director of Iranian studies at the Stanford 
University. He has previously taught at the University of 
California at Berkley.
    Michael Rubin is resident scholar at the American 
Enterprise Institute and a senior lecturer at the Naval Post-
Graduate School's Center for Civil Relations. He previously 
served as the editor of Middle East Quarterly and is a staff 
advisor on Iran and Iraq at the U.S. Department of Defense. He 
is the author of numerous books, including the forthcoming, 
``Talking to the Enemy: The Promise and Perils of Engagement.''
    Suzanne Maloney is a senior fellow at the Saban Center for 
Middle East Policy at the Brookings Institution. She previously 
served on the State Department Policy Planning Staff, and as 
director of the 2004 Council on Foreign Relations Task Force on 
U.S. Policy towards deg. Iran. She has published 
widely on Iran and her forthcoming book from Cambridge 
University Press will analyze Iran's political economy.
    Karim Sadjadpour is an associate at the Carnegie Endowment 
for International Peace. He was previously the chief Iran 
analyst at the International Crisis Group. He is a frequent 
media contributor for organizations such as the BBC, CNN, and 
the New York Times. He has lectured at Harvard, Princeton and 
Stanford Universities.
    Orde Kittrie is a professor of law at Arizona State 
University and a visiting scholar at the John Hopkins School of 
Advanced International Studies. He is also a senior fellow at 
the Foundation for the Defense of Democracies, where he co-
directs the Iran Energy Project. He previously served 11 years 
in the State Department where he worked on trade and nuclear 
issues.
    This is our excellent panel.
    And Patrick, why don't you start it off?

   STATEMENT OF PATRICK CLAWSON, PH.D., DEPUTY DIRECTOR FOR 
    RESEARCH, THE WASHINGTON INSTITUTE FOR NEAR EAST POLICY

    Mr. Clawson. Mr. Chairman, honorable members, thank you for 
the privilege of permitting me to testify today. I have 
prepared a statement that I would like to submit for the 
record.
    Chairman Berman. All statements will be included in the 
record.
    Mr. Clawson. Thank you, Mr. Chairman.
    Let me put on my economist hat to address the state of 
Iran's economy and its vulnerability to foreign economic 
pressure.
    First a word about Iran's overall economic situation. There 
is no country in the Middle East that has suffered more from 
the oil curse than Iran. Iran had spectacular economic growth 
when its oil income was modest. Indeed that oil revenue fueled 
the growth.
    But after the 1973 oil price rises, Iran became addicted to 
oil while the rest of the economy suffered. That was true under 
the Shah and has gotten worse under the Islamic Republic.
    For years, the different political factions in Iran have 
all agreed that the economy was in bad shape and that drastic 
steps were needed, but no one has been willing to tackle the 
entrenched interests, and so, therefore, the country's economy 
has suffered.
    The problem with the oil curse has been on full display in 
the last decade. Since 2000, oil prices have been on the rise. 
From 2000 to 2003, the average price was 50 percent higher than 
it had been in the 1990s. And from 2004 to 2008, things got 
even better for Tehran; each year the oil price rose 30 
percent.
    With this windfall, Iran's economy has grown at 6 percent a 
year on average, which is faster than that of the United States 
or other industrial countries. However, it is a lot slower than 
the double-digit growth which should have been possible with 
this windfall. And Iranians have been profoundly unhappy about 
their country's economic performance because they realize what 
a missed opportunity the last few years have been.
    The oil windfall has been misused by President Ahmadinejad. 
He has taken that money and used it to engage in populous 
policies designed to secure short-term popularity at the 
expense of long-term growth. The budget for grants and 
subsidies went from $11 billion when Ahmadinejad took office to 
$25 billion this year. An equivalent increase in the United 
States would be if we spent an extra $550 billion a year on 
grants and subsidies. And that is just the explicit subsidies 
in the budget.
    There is also an implicit subsidy which comes from pricing 
oil and natural gas well below world market rates. The former 
central bank governor of Iran estimates those implicit 
subsidies at $45 billion a year; while the IMF estimates them 
at $85 billion a year. Even at the lower figure, the equivalent 
for the United States would be a $2.1 trillion subsidy.
    While this oil windfall has been largely wasted, it has had 
a substantial foreign policy impact. The additional oil income 
swamped the impact of increased foreign economic pressure. Iran 
could easily afford the higher price on its imports that came 
because of our sanctions operations. After all, Iran's imports 
tripled in the last 5 years. Given such a spectacular increase 
in the availability of foreign goods, it was hard to make the 
case that foreign sanctions were holding back growth.
    In short, the last few years have been a particularly 
difficult time for foreign economic pressure to have much 
impact on Iran.
    But the prospect for the next few years is entirely 
different. Oil revenues are declining instead of rising, and 
that is going to pose serious problems for Iran funding its 
imports and paying for its government budget. If oil prices 
stay at their current level, Iran's export earnings will be 
down $20 billion from last year.
    Now, at first, Iran could use its ample foreign exchange 
reserves to make up for the shortfall, but those reserves are 
going to run out, certainly within 3 years, and if oil prices 
fall, they will run out even faster.
    Then there is the government budget problem. The government 
spending has been increasing at a brisk pace under Ahmadinejad. 
At present oil prices, Iran will run a considerable budget 
deficit. And furthermore, Iran is not in a position to finance 
that deficit by borrowing from domestic banks because 
Ahmadinejad has ordered the banks to lend money for 
politically-favored but uneconomical projects. So the banks are 
in poor shape.
    In sum, the current situation in which Iran's economy is 
likely to do poorly in the next few years is a perfect moment 
for the international community to impose additional sanctions 
on Iran. No longer can Iran afford to offset the impact of 
those sanctions with a flood of higher oil income. On the 
contrary, the sanctions will come at a time of looming economic 
hardship, and there is excellent reason to expect that Iranian 
public opinion will blame the economic problems on the 
hardliners' isolation of Iran from the international community. 
In other words, we are in the position of being able to take 
credit for that which is going to happen anyway. And in 
politics, if you can get credit for making the sun rise in the 
East, take it.
    Foreign pressure will not cause Iran's economy to collapse, 
nor should that be our goal. But such pressure may well be able 
to contribute to what is becoming an intense debate inside Iran 
about the wisdom of a confrontational and isolationist policy 
toward the international community. That debate offers the best 
prospect for a fruitful resolution of a nuclear impasse, 
because those who want Iran to join the world are not willing 
to pay a high price for a nuclear program which they 
increasingly see as part of the Ahmadinejad agenda, not as part 
of a national project.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Clawson 
follows:]Patrick Clawson deg.













    Chairman Berman. Thank you very much, Dr. Clawson.
    And now, Dr. Milani.

 STATEMENT OF ABBAS MILANI, PH.D., CO-DIRECTOR, IRAN DEMOCRACY 
    PROJECT, HOOVER INSTITUTION, DIRECTOR, IRANIAN STUDIES, 
                      STANFORD UNIVERSITY

    Mr. Milani. Good morning, Mr. Chairman.
    Thank you to the ranking member and the rest of the 
committee.
    Let me begin by saying that the last time I talked to this 
committee, Congressman Lantos held the gavel, and he embodied 
for me in his life and vision the best of America as the City 
on the Hill. I am humbled by his memory and would like to 
remind us of his service.
    I, too, have prepared a statement that I would like to 
submit to you, but I will try to make my presentation as much a 
direct answer to some of your questions as a summary of the 
statement, if I may.
    I think Iran is in a purgatory today. I think it is in a 
state of flux unlike anything that it has experienced in its 30 
years. I can say with some certainty that I think it is the 
most serious crisis this regime has faced, the most serious 
political crisis this regime has faced.
    The problem is that neither of the two sides that are now 
facing off seem to have the power to dislodge the other or 
control the other.
    We are in what political scientists call a condition ripe 
for the rise of a kind of a Napoleon. That Napoleon might have 
already risen. The Revolutionary Guards, as you have indicated, 
have now become a virtual state within the state and run much 
of the economy, all of the military literally. They have their 
own intelligence agencies. They have their own prison. They 
have their own points of entry. They bring in counterfeit 
commodities that are estimated to gain them $15 billion, $16 
billion a year alone on that account.
    So they, along with Khamenei and Ahmadinejad, this 
triumvirate I think organized already a coup in Iran. I think 
Iran, for all practical purposes, can no longer be called a 
republic, but Islamic government, an Islamic government run by 
this triumvirate.
    I think the days of Mr. Khamenei as Velayat-e Fagih. 
Velayat-e Fagih is a theological concept that indicates that 
the words of one man are the words of the divine and must end 
all debate, must end all tension within the regime. And up to 
now, Khamenei's words were in fact allegedly divine. They did 
in fact end all crises, but now, for 20 days, he has gone out 
of his way to try to make this election stick, and he has not 
succeeded.
    Last Friday's prayer by Rafsanjani was a direct challenge 
to Mr. Khamenei, was a direct challenge to everything he has 
said since the election. So what will happen in the next few 
weeks will tell us who will actually rule Iran in the next few 
years.
    I am not at all convinced that the triumvirate's coup 
attempt has succeeded. They have the upper hand because they 
have the military, because they have the goons, because they 
have the ability to pay this machinery of oppression. But look 
at the tape of Ahmadinejad's last visit to the city of Mashhad. 
Look at the few number of people who they succeeded to bring in 
the city of Mashhad, that was supposed to be one the 
strongholds, and compare that to the number of people, the 
millions, who came out for Rafsanjani.
    So I think part of the problem for the Obama administration 
is that this situation is in a flux, and we still do not know 
who shall emerge victorious in this battle.
    There are three major contradictions in Iran today. I think 
we need to be aware of them. The most important one is between 
the people and the regime. The people have shown now clearly, 
categorically, that they do not want this regime. Millions came 
into the streets, took life and limb in hand, and declared 
death to their dictator. There is no clear alternative of where 
they want to take the regime except that they want it to be 
more democratic.
    And their contradiction with this regime is fundamental and 
structural. This regime cannot solve the problem of the Iranian 
society. It cannot solve it because 1 million people join the 
labor force every year. Unemployment is double digits. For the 
youth, that is three-fifths of the society, unemployment is 
estimated to be between 25-40 percent. A disproportionate 
number of the educated entering the labor force are college-
educated women.
    Another problem with the regime also related to women. 
Women have been relentless in fighting this regime and fighting 
the misogynist laws that occasionally exist in Islam against 
women. Women have not given up an inch, and they have continued 
to fight. And many of the social networks that they have 
created were in fact the networks that were used by the 
demonstrators after June 12th.
    The economy is a major problem for the regime. As Professor 
Clawson has suggested Ahmadinejad had his hand on $200 billion. 
Much of it is unaccounted for; $36 billion of it is simply 
unaccounted for. Where the rest has gone is very little clarity 
about this. We know he has spread some of it in the smaller 
cities and the countryside building roads, but that comes 
nowhere close to the total amount that he has squandered.
    We know he has given away $5 billion last year alone to 
regime proxies around the world. This is the figure that was 
suggested inside Iran from reliable sources with figures. How 
much to Syria? How much to Hezbollah? How much to Hamas? How 
much to Latin America? As we speak, Israel's Foreign Minister 
is traveling to Latin America to counter Iran's influence, not 
in the Middle East but in Latin America. All of this was 
possible because of the oil windfall, because of the oil curse. 
I think the tide is now beginning to turn for the regime. And I 
think the people, because of this contradiction, are 
irreconcilably opposed to the status quo.
    The second contradiction, and again in its depth and 
severity unlike anything the regime has ever experienced, is 
between elements of the regime itself. Karubi, Rafsanjani, 
Moussavi, Khatami, name only the four. These have been the head 
of one of the three branches of Iranian Government for a total 
of 34 years, longer than the regime has existed. Now they are 
in clear opposition to with Khamenei. Now they are part of the 
coalition for reform. They are not all of the same opinion, but 
they are all of the opinion that Khamenei has overreached, and 
that the election must go. That is an incredible moment of 
crisis.
    There is a third----
    Chairman Berman. Dr. Milani, this is fascinating, but I 
think, if you could just bring it to a conclusion, there will 
be ample time for more hearing of your thoughts during the 
question-and-answer period.
    Mr. Milani. Okay, in terms of----
    Chairman Berman. Just finish it up.
    Mr. Milani. I think on the question of engagement, my 
suggestion is that there must be engagement, but we must be 
very careful when this engagement begins. We must wait for the 
dust to settle in Iran to realize who wins this. Before we 
engage with someone, we need to know who that someone is. But 
engagement, I think there is, as you suggest, no other 
alternative but engagement as the first next step.
    [The prepared statement of Mr. Milani 
follows:]Abbas Milani deg.











    Chairman Berman. Dr. Rubin.

   STATEMENT OF MICHAEL RUBIN, PH.D., RESIDENT SCHOLAR, THE 
     AMERICAN ENTERPRISE INSTITUTE, SENIOR LECTURER, NAVAL 
                      POSTGRADUATE SCHOOL

    Mr. Rubin. Mr. Chairman, Ranking Member Ros-Lehtinen, 
honorable members, thank you for this opportunity to testify.
    On July 15th, Secretary of State Clinton spoke of 
engagement in the course of a broader foreign policy address. 
About the Islamic Republic, Clinton said, we know that refusing 
to deal with the Islamic Republic has not succeeded in altering 
the Iranian march toward a nuclear weapon, reducing Iranian 
support for terror, or improving Iran's treatment of its 
citizens.
    Secretary Clinton is correct to note the challenges the 
Islamic Republic poses but is incorrect to blame her 
predecessors rather than the Islamic Republic itself for the 
failure of diplomacy. It is a myth that the United States has 
not engaged Iran. Every administration since Jimmy Carter's has 
engaged the Islamic Republic.
    In each case, it was not lack of good will on Washington's 
part but rather the regime leader's disinterest which lead to 
failure. Ironically, the most hardline U.S. administration 
toward Iran was Bill Clinton's, at least in its early years.
    National Security Council official Martin Indyk made dual 
containment the central pillar of U.S. strategy. As Iranian 
sponsorship of terrorism and its pursuit of nuclear technology 
accelerated, the Clinton administration ratcheted up sanctions, 
issuing two executive orders in 1995, the prohibiting 
transactions that would lead to the development of Iranian 
petroleum resources; and then, second, imposing a ban on United 
States trade with and investment in Iran.
    Then, in 1996, Congress passed the Iran-Libya Sanctions 
Act, which empowered the United States to act against private 
companies investing in Iran.
    Many U.S. policymakers, however, were unhappy with 
containment. There seems to be little justification for the 
treatment the United States currently affords Iran because of 
its nuclear program, former National Security Advisor 
Brzezinski and Scowcroft argued, suggesting an end to 
unilateral sanctions and proffering of incentives, such as 
greater commercial exchange.
    Iranian President Mohammad Khatami's election, however, 
lead the Clinton administration to renew its efforts at 
dialogue. Clinton jumped at the chance to bring Iran in from 
the cold. He ordered withdrawn and destroyed the FBI's report 
detailing the Islamic Revolutionary Guard Corp's involvement in 
the Khobar Towers bombing.
    Within weeks, Secretary of State Albright sent a letter to 
Khatami expressing Washington's desire for government-to-
government dialogue.
    The initiative foundered after the Iranian Government 
refused to move forward with any dialogue so long as U.S. 
sanctions and trade bans remained in place. While former 
National Security Advisor Scowcroft criticized the Clinton 
administration for obstinacy, Clinton's caution was prudent. 
Years later Abdollah Ramezanzadeh, the Khatami Government 
spokesman, acknowledged Tehran's lack of sincerity explaining, 
``We had one overt policy, which was one of the negotiation and 
confidence-building, and a covert policy, which was 
continuation of the activities.''
    Still Clinton remained persistent in pursuit of dialogue. 
After Albright spoke to the American Islamic Congress in 2000--
sorry, the American Iranian Council in 2000, the Islamic 
Republic's ambassador at the United Nations said that Iran 
would be ``prepared to adopt proportionate and positive 
measures in return.''
    While his response made headlines, a year later, Iranian 
authorities had not offered any discernible measures. Khatami 
explained that the United States had simply not offered enough 
for Albright's initiative to merit any response.
    Ultimately, Albright's unilateral concessions backfired. 
Foreign Minister Kamal Kharrazi responded to Albright's 
``confessions'' of past U.S. malfeasance by demanding 
reparations. On July 16th, 2000, the Iranian Government tested 
a Shihab-3 missile, a deliberate attempt to undercut 
accelerating Arab-Israeli peace talks. Supreme Leader Khamenei 
poured cold water on any optimism when, in a July 27th 
statement, he urged that any negotiations, let alone 
rapprochement, with Washington would be ``an insult and treason 
to the Iranian people,'' a position which he retains.
    Despite the demonization of George W Bush, Bush was more 
open to diplomacy with the Islamic Republic than any other 
President since Carter. In 2001 and 2002, United States and 
Iranian diplomats met to discuss Afghanistan, and the next year 
Iranian U.N. Ambassador met senior United States officials 
Zalmay Khalilzad and Ryan Crocker in Geneva.
    Some say Bush missed a grand bargain opportunity in 2003, 
but as even pro-engagement officials, like former Deputy 
Secretary of State Richard Armitage, acknowledge, this is more 
a myth that resulted from wrongly a  deg.ascribing 
Iranian authorship to an attention-seeking Swiss diplomat's 
personal initiative.
    Many advocates of engagement say that its previous failure 
can be ascribed to the failure to provide adequate incentive or 
to truly embrace the strategy. Here the European Union provides 
insight as it long pursued engagement unencumbered by 
meaningful coercion.
    Beginning in 1992, the European Union undertook a policy of 
critical dialogue. Critical engagement did not lead to any 
noticeable improvement in Iran's human rights conditions, which 
indeed worsened during the course of the dialogue. Persecution 
of religious minorities like Bha'is increased and censorship 
remained heavy-handed. Between 1992 and 1996, the Iranian 
Government refused to allow a U.N. Special Representative on 
Human Rights in Iran to visit the country. Between 1995 and 
1996, the height of the dialogue, Iranian use of the death 
penalty doubled.
    Engagement has also failed to alter Iranian support for 
terrorism or proliferation activities, issues which more 
directly impact United States national security. The 2007 
National Intelligence Estimate indicated that the Islamic 
Republic maintained a covert military nuclear program until 
2003. That is throughout Khatami's Dialogue of Civilizations. 
IAEA reports from the period suggest a deliberate counter 
effort that spanned many years to conceal material, facilities, 
and activities that were required to have been declared under 
the safeguard agreements.
    Earlier this summer, Hassan Rowhani, Iran's former nuclear 
negotiator, acknowledged to an Iranian interviewer that the 
Iranian leadership's previous suspension of uranium enrichment 
at the behest of European negotiators was more tactical than a 
true concession. We did not accept suspension and construction 
of centrifuges and continued the effort, she said; we needed a 
greater number.
    Despite finding in 2003 that Iran had been developing a 
uranium centrifuge enrichment program for 18 years, German 
Foreign Minister Joschka Fischer corralled European Union 
authorities to urge giving the Islam Republic another chance so 
as not to diminish leverage.
    Too often, and this is my fear with the Obama 
administration, the desire to preserve leverage to wield in 
future diplomacy becomes a chief argument against ever 
utilizing or pursuing punitive measures based on an adversary's 
actions. In a diplomatic calculation, ensuring continuation of 
talks supersedes reality.
    Of course, diplomacy is the strategy of first resort. It 
always has been. Unfortunately, it does not always succeed. 
Engagement has shown itself no magic formula for three reasons, 
and I offer these in conclusion.
    First, it takes two to tango, what Carter, Bush the elder, 
Reagan, and Bush the younger learned, but their domestic 
critics have not, is that the impediment to engagement lies not 
in Washington, but in Tehran. When Under Secretary of State 
William Burns sat down with his Iranian counterpart in Geneva 
in July 2008, Mohammad Ja'afi Assadi, commander of the Iranian 
Republican Guard Corps ground forces, quipped that Washington's 
desperation showed that ``America has no other choice but to 
leave the Middle East region beaten and humiliated.''
    For diplomacy to be effective, the target government must 
empower its diplomats to negotiate over contested issues and 
then abide by agreements reached. Unfortunately, Iranian 
diplomats hold no sway over Iran's nuclear program or terror 
sponsorship. These are the purview of the Islamic Revolutionary 
Guard Corps and the Office of the Supreme Leader.
    And lastly, the Obama administration appears intent to 
sequence policies. Comprehensive strategies, however, have not 
only diplomatic but also informational, military, and economic 
components. Absent any effort to lay the groundwork for either 
containment or deterrence, both military strategies, Washington 
is signaling to its allies that the U.S. commitment to protect 
them is empty.
    Arab states and Iran's neighbors----
    Chairman Berman. Doctor, we do have to----
    Mr. Rubin. Okay, I will.
    Appear more concerned than Congress that neither Obama nor 
Clinton have articulated by what metric the administration will 
judge success. This is of paramount importance to prevent 
Iranian officials from simply running down the clock.
    [The prepared statement of Mr. Rubin 
follows:]Michael Rubin deg.











    Chairman Berman. Thank you very much.
    Dr. Maloney.

   STATEMENT OF SUZANNE MALONEY, PH.D., SENIOR FELLOW, SABAN 
    CENTER FOR MIDDLE EAST POLICY, THE BROOKINGS INSTITUTION

    Ms. Maloney. Thank you and good morning.
    Mr. Chairman and members of the Committee on Foreign 
Affairs, thank you very much for giving me the opportunity to 
comment on the past 6 weeks of upheaval in Iran and the 
consequences of the these developments for the United States 
and our policy options toward Tehran.
    In the aftermath of events that have challenged all that we 
thought we knew about Iran, it is particularly valuable for the 
committee to address this issue and to engage in a serious 
reassessment of the most effective means for Washington to 
influence Tehran's policies and its future course.
    The Islamic Republic has entered a new and ultimately 
unpredictable phase of its perpetually gripping history. Iran 
and the regime are now forced to contend with an almost 
unprecedented array of internal challenges that are both 
complex and interconnected.
    The outrage over the electoral manipulation has spawned a 
genuine if still embryonic opposition movement, perhaps for the 
first time since the mid-1980s in Iran, that boasts at least a 
symbolic leadership and a compelling popular mandate.
    The other profound consequence for the Iranian regime, as 
some of the previous panelists have suggested, is the cleavage 
within the political elite. There has always been factional 
bickering within Iran, but we have never seen anything at this 
level. And we have never seen the direct assault on the 
authority of the Office of the Supreme Leader.
    In doing so, the crucial component of the Iran's elite has 
begun to separate itself from the regime to promote the 
opposing agenda of a nascent mass-based movement. This is 
highly significant.
    There are at least three potential directions that Iran's 
volatile course may yet take. Khamenei's power grab may yet 
herald the arrival of an increasingly despotic Iranian regime, 
unconstrained by the niceties of limited electoral institutions 
or any pretense of popular legitimacy.
    We can see in Iran's past some precedent for this. In the 
mid-1980s, the Iranian regime ferociously defended the system 
and the newly established theocracy against internal threats, 
both real and perceived. We may well see a reprise of that 
history.
    There are at least two alternatives scenarios that would 
seem more encouraging in the short term. The first would entail 
some negotiation of a modus vivendi among Iran's hardliners and 
the quartet of moderate leaders that others have referred to. 
This could look anything like a super-empowered reform movement 
in which you saw a kinder, gentler Islamic Republic, or a 
complete capitulation by the reformist leaders to become a sort 
of loyalist opposition along the lines of the Iranian freedom 
movement, which existed for well over a decade after the 
Islamic Revolution.
    The third potential scenario at present seems out of reach 
but remains the most dramatic threat to the Iranian regime. 
Given time and further catalysts, the elite defections and 
popular resentment might yet morph into something more 
powerful, and Iran might experience the genesis of a serious 
sustained opposition movement dedicated to ousting the current 
regime.
    Among the most important factors influencing Iran's future 
trajectory and the tools available to the international 
community are those related to the Iranian economy. As Dr. 
Clawson suggested, Iranians must contend with double-digit 
inflation; power shortages; a tumbling stock market; stubbornly 
high unemployment rates, particularly among the large, young 
population; increasing dependence on volatile resource 
revenues; and perhaps most ominously for the leadership, a 
rising tide of indignation among its people.
    Ironically, of course, Ahmadinejad was elected on the basis 
of a campaign back in 2005 that focused on the economic 
grievances of Iranians. And yet he governed on the basis of 
ideology. And as a result, the President himself bears much 
direct responsibility for the current state of Iran's economic 
affairs. His heavy-handed interference with monetary policy and 
free-wheeling spending contributed to spiraling inflation 
rates. His provocative foreign policy and reprehensible 
rhetoric has done more to dissuade potential investors than any 
United States or United Nations sanctions. His disdain for the 
technocracy and his somewhat quixotic economic notions have 
undermined much of the progress that was made in previous years 
to liberalize the Iranian economy and address its underlying 
distortions. And he spends like a drunken sailor, as Dr. 
Clawson has suggested.
    The senselessness of these policies provoked a firestorm of 
criticism through his last several years in office. Notably, 
the critiques were not limited just to his factional 
adversaries. Much of the disquiet voiced about the economic 
police of the Ahmadinejad regime has emerged from sources 
ideologically inclined to support the President and his patron, 
the supreme leader, including traditional conservatives with 
longstanding links to the bazaar and the centers of clerical 
learning.
    As both Dr. Clawson and Dr. Milani suggest, what had 
particularly galled many Iranians was the opportunity lost in 
the past few years. Iran's oil revenues during Ahmadinejad's 
first term exceeded 8 years of income earned during both the 
Khatami and the Rafsanjani presidencies. Nearly 40 percent of 
Iran's oil earnings over the past 30 years came during the past 
4 years. And no one knows, as both Dr. Milani and Dr. Clawson 
have suggested, where much of the  deg.this money has 
gone.
    The unrest of the past 6 weeks will only aggravate Iran's 
economic dilemmas and put durable solutions to the perpetual 
problems of uncontrollable subsidies, unaccountable spending, 
that much further out of reach. The crisis will persuade more 
Iranians who have the means and/or ability to leave the 
country. Even in advance of any multilateral sanctions, 
political risks and the increasingly unpalatable nature of the 
new power structure will dissuade investors and reduce the 
competitiveness of the Iranian economy.
    The events since June 12th have changed Iran in a profound 
and an irreversible fashion. It would be fruitless, even 
counterproductive, to proceed as if this were not the case. The 
United States must adjust both its assumptions about Iran and 
its approach to dealing with our concerns about Iranian 
policies.
    But the turmoil in Iran has not altered our core interests 
vis-a-vis Iran, nor has it manifestly strengthened the case for 
alternatives to the Obama administration's stated policy of 
diplomacy.
    As a result, I remain a supporter of the American strategy 
of engaging Iran. The United States is going to have to deal 
with an increasingly paranoid and dogmatic Iranian regime, one 
that is preoccupied with a low-level popular insurgency and 
schism among its leadership.
    Still, the Obama administration's interest in engagement 
was never predicated on the palatability of the Iranian 
leadership but on the urgency of the world's concerns and the 
less promising prospects of the array of policy alternatives.
    How do we draw thuggish theocracy to the bargaining table? 
The hurdles are not insurmountable. The context for the 
successful 1980 to 1981 diplomacy that lead to the release of 
the American hostages was at least as challenging of that of 
today. At that time, you also had a situation in which most of 
the moderates had been forced out of the Iranian Government, 
and the people who we were sitting across the bargaining table 
from were from a particularly hardline group of people whose 
authority, credibility, and ultimate goals were very much 
obscure.
    A successful agreement entailed months of work and many 
false starts, but a variety of tools, including secret 
diplomacy, the involvement of a third-party mediator as a 
guarantor for the eventual agreement, helped facilitate an 
outcome. Perhaps a critical factor in the success of the 
hostage negotiations was Iran's desperate need for economic and 
diplomatic options after the Iraqi invasion.
    In a similar respect, any U.S. effort to negotiate with 
Tehran will benefit from the identification of 
counterincentives that can similarly focus the minds of Iranian 
leaders and expedite the path of negotiators. This is the 
proper role for coordination with U.S. allies on an 
intensification of sanctions should engagement fail. And here 
we should focus our efforts on Beijing.
    We shouldn't presume too much with respect to the efficacy 
of sanctions. There are no silver bullets, and sanctions, in 
fact, haven't proven successful in the past in reversing 
Iranian policies. But they work best when they alter the 
perceptions, timing, and utility of swaying a critical 
constituency, and this is where our efforts should be focused.
    Finally, to conclude, let me just say that we are facing a 
situation of intense fluidity in Iran, and we should always be 
applying a test of the ``island of stability'' sort of rhetoric 
that was used by the Carter administration in the run up to the 
Iranian Revolution. We don't know simply whom we are going to 
be dealing with in a year's time in Iran.
    Thank you.
    [The prepared statement of Ms. Maloney 
follows:]Suzanne Maloney deg.


















    Chairman Berman. Thank you.
    Karim.

   STATEMENT OF MR. KARIM SADJADPOUR, ASSOCIATE, MIDDLE EAST 
      PROGRAM, CARNEGIE ENDOWMENT FOR INTERNATIONAL PEACE

    Mr. Sadjadpour. Thank you.
    Mr. Chairman, it is an honor to be here with you today.
    It took us 30 years, took the United States 30 years to 
finally prepare ourselves to recognize the legitimacy of the 
Iranian regime just when the Iranian regime has lost its 
legitimacy, and this is truly the dilemma the Obama 
administration faces dealing with a disgraced regime which 
presents urgent foreign policy charges, while at the same time 
not betraying this incredibly courageous population.
    I would like to make a few points about the domestic 
implications for Iran and also a few points about the 
implications for United States foreign policy.
    In my mind, there have been two important casualties of the 
last 6 weeks. The first is the moniker of the Islamic Republic 
of Iran. Iran has ceded any claims, any pretensions of being a 
republic. In my opinion, Iran has now become a cartel of 
hardline Revolutionary Guardsmen and hardline clergymen, who 
have made, as Abbas said, tremendous amounts of money the last 
few years and are unwilling to cede power. They describe 
themselves as so-called principle-ists, but in reality their 
real principles are power and greed.
    The other important casualty from the last 5 weeks has been 
the loss of legitimacy of the Supreme Leader Ayatollah 
Khamenei. For the last two decades, he had carefully cultivated 
this image of a magnanimous godfather who stays above the fray. 
But those days of Khamenei wielding power without 
accountability are now over. He has tied himself firmly with 
the fate of President Ahmadinejad, and it is unprecedented to 
have hundreds of thousands of people taking to the streets now 
chanting, ``Marg bar Khamenei,'' death to Khamenei.
    A word about the population. According to Mohammad Bagher 
Ghalibaf, who is the mayor of Tehran, himself a former senior 
Revolutionary Guard commander, 3 million people took to the 
streets in Tehran at the height of the protests. And I can tell 
you from talking to people throughout Iran, and just viewing 
the images, that these demonstrators have truly encompassed an 
incredibly wide swath of Iranian society. They transcended age, 
religiosity, gender, geographic location. The scale of the 
demonstrations has certainly decreased the last few weeks 
because the regime does repression very well, and they are able 
to prevent large amounts of people from congregating in one 
area, but the nightly protest chants of ``Allahu Akbar,'' God 
is great, reminiscent of the 1979 Iran revolution, in order to 
keep the momentum going, have continued unabated.
    Now a word about the opposition. The bulk of the leadership 
of the opposition and their brain trust is now either in 
prison, under house arrest, or unable to freely communicate. So 
you have this tremendous popular outrage, but you don't have 
the leadership which is able to tap into this tremendous 
popular outrage and channel it politically. That is the dilemma 
both the demonstrators and the opposition currently face.
    A word, however, about the costs of this repression for the 
regime, both the political costs and the financial costs. As 
Abbas mentioned, we have seen unprecedented fissures in Iran. 
It would be unheard of that a pillar of the 1979 revolution, 
Hashemi Rafsanjani, has come out now in the opposition 
implicitly questioning the legitimacy of the Supreme Leader. 
Former President Mohammad Khatami, who received 24 million 
votes not long ago, has called for a referendum. So truly at 
the level of the political elite, there is unprecedented 
fissures.
    I think what we should focus on and what would truly be 
devastating for Khamenei and Ahmadinejad would be fissures 
amongst the regime's security forces, namely the Revolutionary 
Guards. So far we haven't seen that, but the Revolutionary 
Guards are a very large entity, 120,000 men. And whereas the 
senior commanders are hand-picked by Khamenei, and they are 
going to likely remain loyal to him, the rank and file, both 
empirically and anecdotally, we have seen, are much more 
representative of Iranian society at large.
    Also a word about the financial costs of this repression. 
It cost a lot of money to have a state of martial law, to have 
overflowing prisons, to have communication blackouts, and to 
prevent Iranians from viewing satellite broadcasts from abroad. 
It is estimated that for the regime to jam the satellite 
broadcasts from Voice of America Persian Language Service and 
BBC Persian, it cost them several thousand dollars per minute. 
Multiply that over a 5-week period, and we see that the regime 
is truly bleeding tens of millions of dollars just to retain 
this level of repression.
    Now a brief word on the implications for U.S. policy. I 
would first say that I believe President Obama's overtures have 
played a role in accentuating the deep internal divisions 
within Iran. A couple months ago I encountered a fairly senior 
conservative, pragmatic official, Iranian official, in the 
Middle East, who remarked to me that there is a lot of pressure 
now on hard-liners in Tehran to justify their enmity toward the 
United States. What he said to me, to paraphrase, is that if 
Iran can't make nice with Barack Hussein Obama, who is 
preaching mutual respect on a weekly basis, and sending us 
noerooz greetings, it is pretty obvious the problem lies in 
Tehran and not Washington. And I think the cleavages we have 
seen in the last 6 weeks, the Obama administration's initial 
overtures, I think, had played a role in that.
    I do believe, however, that it is time to reassess U.S. 
policy postelection, and what I would argue is that we should 
not be thinking or talking about engagement yet. Just as we 
didn't want to intervene in Iran's internal affairs after the 
election by forcefully coming out in favor of the opposition, I 
think by prematurely engaging before the dust has settled in 
Tehran, we may implicitly endorse these election results, 
demoralize the opposition, and unwittingly tip the balance in 
favor of the hard-liners, namely Khamenei and Ahmadinejad. So I 
don't say renounce engagement, but let us hold off until the 
dust settles.
    I believe--yeah. Okay. Just one last point, and that is 
that we shouldn't underestimate the magnitude of this moment. 
Iran is the only country in the Middle East in which if you 
hear about popular protests, it doesn't give you indigestion. 
You hear about popular protests in Saudi Arabia, Egypt, and 
Jordan, it is not a hopeful sign. And Iran certainly, as we 
have seen, these young people are agitating for greater 
political voice, greater economic freedoms, greater social 
freedoms. And they may not achieve this within the next weeks 
or months or even years, but we should appreciate the magnitude 
of what has transpired the last few weeks, and we should 
certainly try to pursue policies which don't deter this moment 
and do not alter its trajectory.
    [The prepared statement of Mr. Sadjadpour 
follows:]Karim Sadjadpour deg.











    Chairman Berman. Thank you very much.
    And now our final witness, Professor Kittrie.

 STATEMENT OF ORDE F. KITTRIE, J.D., PROFESSOR OF LAW, ARIZONA 
STATE UNIVERSITY, CO-DIRECTOR, IRAN ENERGY PROJECT, FOUNDATION 
                   FOR DEFENSE OF DEMOCRACIES

    Mr. Kittrie. Chairman Berman, Ranking Member Ros-Lehtinen, 
distinguished members of the committee, thank you for the 
opportunity to speak with you today. I have been asked to focus 
on how to use sanctions to leverage the economic vulnerability 
to which Dr. Clawson and others referred.
    Disappointingly, the Obama administration's outstretched 
hand has thus far been met with a clenched Iranian fist. Until 
now that outstretched American hand has been accompanied by the 
maintenance of existing sanctions. Congressional sanctions 
bills have, as the chair said, served as a kind of sword of 
Damocles, hanging high over the head of the Iranian regime. Yet 
Iran's nuclear power has raced forward, and Iran's leadership 
has continued to insist there are no incentives that could 
induce it to halt or even meaningfully limit its nuclear 
program.
    It has become increasingly clear if the Iran regime is 
going to be peacefully persuaded to halt its illegal nuclear 
program, we will first need to change its cost-benefit 
calculus. In light of this and the regime's brutal measures to 
crush the postelection protests, it is time both to increase 
the weight of the sword of Damocles hanging over the Iranian 
regime's head and to begin lowering the sword.
    In a moment I will suggest some ways in which the sanctions 
threat to Iran can be increased and made more imminent, but 
first a threshold question: Can strong sanctions really 
contribute to stopping an illicit nuclear weapons program? The 
answer is yes. For example, strong U.N. Security Council 
sanctions were a pivotal factor in inducing Libya's Government 
to allow British and American Government experts to enter Libya 
and completely dismantle its WMD infrastructure by April 2004. 
As the ranking member said, that should be our goal with regard 
to Iran.
    In addition, it was discovered in the wake of the United 
States occupation of Iraq, too late unfortunately, that strong 
U.N. Security Council sanctions had helped destroy Iraq's 
nuclear weapons program and prevent Saddam Hussein from 
restarting it between the Gulf War in 1991 and the coalition 
occupation of Iraq in 2003. However, the sanctions imposed on 
Iran by the international community thus far are much weaker 
than the sanctions that helped stop the Libyan and Iraqi 
nuclear weapons program. The Security Council's Iran sanctions 
are still far to weak to, A, persuade Iran's leadership that 
the benefits of proceeding with its nuclear program are 
outweighed by the sanctions costs of proceeding with it; to, B, 
meaningfully contain Iran's nuclear program; or, C, deter other 
countries that are watching from someday following Iran's lead. 
That is unfortunate, because Iran's heavy dependence on foreign 
trade leaves it potentially highly vulnerable to strong 
economic sanctions.
    The following are some ways in which Congress could both 
increase and make more imminent the sanctions to Iran. Number 
one, I urge the committee to do what it takes to position the 
Iran Refined Petroleum Sanctions Act for immediate enactment if 
no significant progress is made by the time of the G-20 summit 
meeting. If I understood correctly, the chair just announced 
for the first time that he sees early fall as a time frame for 
an IRPSA markup, and I commend him for that sharpening of his 
timeline.
    Number two, Congress can and should in the meantime 
continue its smaller steps to squeeze Iran's suppliers of 
refined petroleum and other strategic goods. Steps such as 
encouraging the executive branch and governments at the State 
and local level to use their own discretion and market power to 
put Iran's key suppliers to a business choice between the 
United States governmental and Iranian markets.
    Number three, while IRPSA is an excellent bill, a cut-off 
of Iran's refined petroleum supplies may not be sufficient to 
convince the Iranian regime that the benefits of its nuclear 
program are outweighed by the sanctions costs of proceeding 
with the program.
    There are a number of provisions in other Iran sanctions 
bills that I urge be passed alongside IRPSA. I list them all in 
my written statement. These additional provisions include, and 
I will highlight just a few, first, provisions that would cut 
off most remaining direct United States trade with Iran. 
According to recent reports by the Associated Press and other 
sources, the United States had $685 million in exports to Iran 
in 2008. That is an 80-fold increase over the $8 million in 
United States exports to Iran in 2001. An 80-fold increase. It 
will be harder for the United States to convince Europe to put 
stronger sanctions on Iran if the United States does not itself 
stop trading directly with Iran. President Clinton had in 1995 
banned essentially all U.S. trade with Iran; however, the U.S. 
had in 1999 and 2000, in a gesture to the relatively moderate 
Khatami, eased the trade ban. The United States should reclose 
these exceptions to direct trade with Iran.
    Another step, another provision, that should be added or 
passed alongside, provisions such as those in H.R. 1327 that 
would encourage and facilitate State and local divestment from 
companies doing business with Iran; and finally, provisions 
such as those in the ranking member's H.R. 1208 that would 
strongly discourage and reduce the transshipment of sensitive 
goods to Iran through third countries.
    In conclusion, the United States' considerable leverage of 
Iran's suppliers of refined petroleum and other strategic goods 
may mean that aggressive unilateral sanctions could have a 
dispositive impact on Iran's economy and thus its nuclear 
program. In the face of persistent Russian, Chinese, and 
European reluctance to impose strong sanctions on Iran, 
creative and aggressive U.S. unilateral sanctions may turn out 
to be our last best hope for peacefully convincing Iran that 
the cost of its nuclear program is too high.
    Thank you.
    [The prepared statement of Mr. Kittrie 
follows:]Orde Kittrie deg.





















    Chairman Berman. Well, thank you all very much. Very 
interesting, provocative testimony.
    I will yield myself 7 minutes, our new, once only time 
limit for this question-and-answer process. I am going to focus 
just first on the political issue. A few of you spent some time 
talking about--one of you referred to it, I think Dr. Milani--
as sort of a purgatory, an uncertainty. Dr. Maloney and Karim 
Sadjadpour spoke about how this thing might play out. But let 
me try and push you.
    You are experts, so you are supposed to predict when you 
don't know. Is the near-term existence--I mean, I took it at 
least some of you were approaching the point of saying the 
near-term existence of the regime is in question. And is the 
opposition movement more about restoring the legitimacy and 
integrity of the regime or about a regime change? A few of you 
who want to take that up could start with that.
    Mr. Milani. I think the opposition, in my mind, is divided 
in two groups. Some, like Rafsanjani, are more moderate. 
Rafsanjani, I think, wants a more refined version of the status 
quo. Moussavi and the rest of them, although they have not 
articulated it, I think want a return--some of them have 
implicitly said they want a return to the first draft of the 
Constitution. People forget the first draft of the Islamic 
Constitution did not have the concept of velayat-e fagih, where 
one spiritual ruler has absolute sway. The first draft of the 
Constitution was, in fact, a republican draft. Only when 
Khomeini realized that the opposition is weak, only when he 
realized that the crisis, the American hostage crisis, and the 
war with Iraq has created for him a situation did they ram 
through the Parliament, the constituent assembly, this 
provision of the law.
    I think that concept is now dead because Rafsanjani's words 
are no longer accepted. And many of the top clerics in Iran--
shi'ism has a very strong, peculiar structure. There are 
ayatollahs, and there are lower figures, hojjatoleslams. The 
ayatollahs have almost universally, with the exception of two, 
spoken against the status quo, spoken against the suppression; 
have considered it a sin to beat on innocent people. One old 
ayatollah, Mr. Montazeri, has basically issued a fatwa that 
says Mr. Khamenei no longer has the virtue, the capacity to 
hold the position that he has.
    So the crisis, I think, is a very serious crisis for the 
regime as we know it, but whether a democratic alternative will 
come out of it as we understand democracy is unknown.
    Chairman Berman. Anyone else want to come in on this?
    Mr. Sadjadpour. I would say in general that preelection 
this was a referendum on Ahmadinejad. Postelection, I think 
this is a referendum in many ways on Ayatollah Khamenei 
himself. And in general terms, Abbas is right that the 
opposition, I think, casts a very wide net. There is a 
diversity of opinions. But I would say broadly speaking, they 
want to see the disempowerment of the unelected institutions in 
Iran, namely the institution of the Supreme Leader and the 
Guardian Council, and the empowerment of the elected 
institutions, namely the institution of the Presidency and the 
Parliament.
    Ms. Maloney. I think that gets to the nature of your 
question, the near-term continuation of the regime, what kind 
of regime will it be? Clearly the de facto opposition leaders, 
the four political leaders, Rafsanjani, Khatami, Moussavi, and 
Karubi, who are the kind of nominal leaders of what we are 
calling an opposition, are not people who are looking to move 
beyond the system. They are looking for some substantial 
greater, or lesser in some cases, modification of the system, 
much as Khatami sought to do when he was President. What he has 
talked about is not dissimilar from what he tried to do in 
terms of limiting the Office of the Supreme Leader and 
elevating and empowering the elected offices of the Iranian 
system.
    What the population wants, I think, is still unclear. The 
protesters, in the aftermath of the election, tried very hard 
to make it clear that they were not, in fact, challenging the 
system. They focused their grievances on the election itself. 
But once you begin to attack the Office of the Supreme Leader, 
once you begin to say, ``Marg bar Khamenei,'' or, ``Ahmen 
eraft,'' reprising one of the famous lines in the newspaper in 
1979 about the Shah, I think you begin to raise questions about 
the longevity of the system. They are not short-term questions, 
though.
    Mr. Clawson. If I may just quickly add, those who stormed 
the Bastille were loyal subjects of the King. I don't think 
that is how the French Revolution turned out. These things have 
a dynamic, and if Khamenei goes because of protests, expect 
further change.
    Chairman Berman. And that is a nice segue into the question 
of what does that change mean for the United States? What 
changes in tone or policy might follow on? A couple of 
questions that are very important from my point of view: What 
does it mean in the context of a uranium enrichment program? 
What does it mean in terms of the continued financial support 
for terrorist organizations? Is it foregone that those policies 
continue, or is what Dr. Clawson hinted at, the potential of 
greater change, in the offing?
    Mr. Milani. You know, when the confrontation between Israel 
and Gaza occurred, Iran did virtually nothing, virtually said 
nothing. And I think that was a reflection of the fact that 
they were economically straddled. They no longer had the $1 
billion to give to Hezbollah to give out as insurance for 
rebuilding the houses.
    But when we think about sanctions, unless the sanctions are 
crippling, the sanctions have also a positive point for the 
regime. The regime has used the sanction as an excuse to cover 
its economic incompetence. It keeps blaming the United States 
for these problems. Unless we can come up with the kind of a 
sanction that will do to Iran what the international sanctions 
did to South Africa, and I would be all for that, a half-baked 
sanction that gives the regime the excuse to offer as an 
alternative this explanation for why there isn't energy in the 
street, why there are no lights at night I think would 
politically help the regime.
    Chairman Berman. So in the context of our earlier metaphor, 
the regime also tries to claim why the sun rises in the East, 
and it is the fault--okay. I am happy to recognize my ranking 
member, Ms. Ros-Lehtinen.
    Ms. Ros-Lehtinen. Thank you so much, Mr. Chairman.
    Questions for Dr. Rubin and Dr. Kittrie: Earlier this week 
Secretary Clinton stated that ``we want Iran to calculate what 
I think is a fair assessment, that if the United States extends 
a defense umbrella over the region, if we do even more to 
develop the military capacity of those allies in the gulf, it 
is unlikely that Iran will be any stronger or safer.'' 
Secretary Clinton also said that North Korea must agree to 
irreversible denuclearization before returning to multilateral 
disarmament talks.
    How can we account for such a contradictory position, given 
the President's June 4th statement that he said Iran should 
have the right to access peaceful nuclear power if it complies 
with its responsibilities under the Nuclear Nonproliferation 
Treaty? Why would the administration now demand full 
denuclearization of North Korea, yet not do so for Iran nor 
Syria? Do you believe that this, in fact, is the 
administration's acceptance of a nuclear Iran?
    I will ramble on here, and then whatever time you have got 
left. The GAO recently reported that the International Atomic 
Energy Agency has provided Iran and other state sponsors of 
terrorism millions of dollars in nuclear assistance over the 
past decade. The GAO recommended that Congress consider 
restricting the U.S. contribution to the IAEA for its technical 
cooperation program. I have introduced legislation to do just 
that. I would like your comments on whether this would put 
significant pressure on the Iranian regime.
    Thank you, Mr. Chairman. And thank you to the witnesses.
    Mr. Rubin. I will start, if I may, very briefly.
    The contradictory statements that come out of the 
administration on proliferation undercut our policies across 
the board. And anyone that looks at the North Korean press or 
the Iranian press will certainly see reference to the other in 
those cases.
    With regard to the broader problems, we see Iran's nuclear 
breakout as an untenable issue, untenable for U.S. national 
security. The problem is that other regional states, most 
specifically Israel, see it as an existential threat, and 
unless we are seen to have credibility in that our diplomacy is 
going to advance to the point where Iran will not become a 
nuclear weapons-capable power, then we risk Israel making a 
calculation based upon its own interests, which could plunge 
the region into chaos.
    Ms. Ros-Lehtinen. Thank you.
    Mr. Kittrie. Thank you.
    The U.N. Security Council, in Resolution 1737 of December 
2006, explicitly ordered Iran to, without further delay, 
suspend proliferation-sensitive nuclear activities, including 
all enrichment-related and reprocessing activities, and work on 
all heavy-water-related projects. The IAEA--not the Obama 
administration, not the Bush administration, the IAEA--has 
explicitly stated, including in its June 2009 report, that Iran 
has not abided by those legally binding orders of the Security 
Council.
    I am troubled by the administration's implication that 
perhaps something less than the U.N. Security Council 
resolutions would be acceptable. The NPT regime is at stake, 
and I think we need to do whatever it takes from a sanctions 
perspective to make sure that Iran abides by those legally 
binding U.N. Security Council resolutions.
    Ms. Ros-Lehtinen. Thank you.
    And I just have 3 minutes left. Can a regime that now 
defines itself and its domestic legitimacy by its nuclear 
weapons program be convinced to effectively discard that 
program?
    Mr. Rubin. I am not sure that it can be without some robust 
coercion. One of the things which I chafe at when I hear the 
media is the description of Iran's nuclear program. What we are 
actually talking about when it comes to a potential nuclear 
weapons program is the command and control of the Office of the 
Supreme Leader and Islamic Revolutionary Guard Corps. As Karim 
alluded to in his testimony, while we talk a great deal about 
the political spectrum, hard-liners, reformers and so on, when 
it comes to the IRGC, that tends to be a black box when it 
comes to the political factions therein. We simply don't know a 
lot about what is going on inside the IRGC, and that should 
scare us to death, considering it is not the Iranian people or 
the protesters in the street that are going to have any say in 
this program, it is going to be the Islamic Revolutionary Guard 
Corps and the Office of the Supreme Leader.
    Should change come, Iranians are, of course, fiercely 
nationalistic. But our problem, and the International Atomic 
Energy Agency's problem, has been Iranian noncompliance with 
nuclear safeguard agreements. It would be a lot easier to 
verify Iran's intentions should there be much more significant 
change across the board in Iranian society.
    It should also lastly be noted that the Iranian people are 
far more moderate than the Iranian Government is, and 
therefore, if the Iranian Government were to somehow become 
much more accountable to its people, that would also have a 
moderating effect on the issues not only of nuclear intentions, 
but also of state support for terrorism.
    Mr. Kittrie. Your question is a good one, and as it 
happens, there are some very interesting precedents, both the 
Iraq and Libya precedents, where these dictators gave up their 
nuclear programs under pressure, and indeed, there are also a 
number of instances of where countries have given up actual 
nuclear arsenals, including Kazakhstan, Belarus, Ukraine, and 
South Africa. All had actual nuclear arsenals that they gave 
up. So if we play our cards right, I think there is reason for 
optimism.
    Ms. Ros-Lehtinen. Thank you so much.
    Thank you, Mr. Chairman.
    Thank you to the witnesses.
    Chairman Berman. Thank you.
    I wish Iraq had told us they had given it up.
    The gentleman from New York, Mr. Ackerman.
    Mr. Ackerman. Thank you, Mr. Chairman.
    Engagement. I think I have seen the movie before. I would 
concede that I saw it in a different theater, but that doesn't 
disqualify me from thinking that I suspect that I can remember 
how it ends. If there is a chance that we could have engagement 
with Iran, with whom right now would we negotiate?
    I ask that question fervently believing that despite the 
fact that there may be some confusion over who comes out on 
top, I would be shocked if I thought any of you would suggest 
that they have stopped their nuclear weapons program while that 
dynamic is happening.
    Who would you talk to if you were the President and made a 
phone call? Or would you not talk to anybody until some of the 
dust settles, and it becomes clearer with that clock ticking 
within the alligator?
    Mr. Clawson. Personally, I would wait for their phone call. 
I think that the ball is in their court----
    Mr. Ackerman. Okay.
    Mr. Clawson [continuing]. And that we shouldn't rush, and 
that we have shown the world that we are interested in 
engaging, and that----
    Mr. Ackerman. So you would allow them to continue to 
develop their nuclear weapons program with the Israeli clock 
ticking at the same time?
    Mr. Clawson. I wouldn't be in any great rush to engage with 
them.
    Mr. Ackerman. Okay. Dr. Maloney?
    Ms. Maloney. I think that is the reality. I am sorry, 
Maloney and Milani, we often find ourselves conflated here, but 
I think that is where the administration is at this point. 
There have been a number of gestures that were made earlier in 
the year. The administration is prepared for a response and, I 
think rightfully so, is going to play out this clock.
    Mr. Ackerman. Okay. Dr. Milani?
    Mr. Milani. You know, my sense is that the two clocks, the 
nuclear clock and the democratic clock, are interlinked. This 
regime cannot be relied on to abide by its words. Even if it 
promises to stop its nuclear program, a regime that----
    Mr. Ackerman. You have seen the movie, too.
    Mr. Milani. I have seen the movie. But I would say that 
engaging with them creatively and wisely helps the democratic 
clock. We will not have a resolution of the nuclear program 
unless we have a democratic regime in Iran. Every policy, in my 
view, that tries to stop the nuclear program must have the 
democratic clock.
    Mr. Ackerman. Okay. Dr. Sadjadpour?
    Mr. Sadjadpour. I am not a doctor yet, but, you know, I 
think there is a policy which reconciles these two goals of 
preventing Iran's--or deterring Iran's nuclear ambitions, while 
at the same time helping to facilitate the conditions for the 
Iranian people.
    But I would simply agree with what Patrick Clawson said, 
that the Obama administration has made tremendous efforts to 
reach out to Tehran. The dust hasn't settled in Tehran, so we 
shouldn't reach out yet.
    Mr. Ackerman. Okay. We are 0 for 4 on negotiating.
    Dr. Rubin?
    Mr. Rubin. If the Supreme Leader and the IRGC aren't 
prepared to talk on nuclear and terrorism issues, we need to 
consider what our plan Bs, Cs and----
    Mr. Ackerman. 0 for 5.
    Professor Kittrie.
    Mr. Kittrie. The offer of dialogue is----
    Mr. Ackerman. Press your button.
    Mr. Kittrie. The offer of dialogue is on the table. I don't 
think we should just sit back and wait. I think we should be 
squeezing the Iranians as time goes on in the ways I described.
    Mr. Ackerman. 0 for 5\1/2\.
    In order for us to have any effect on the process of 
stopping a nuclear program, we have often talked about big 
carrots and big sticks, which I think the administration has 
referred to previously, and certainly the chairman has 
advocated in the past. The question is really the big sticks, 
which we have not implemented whatsoever. Should we be right 
now, as quickly as we can, ratcheting up critical sanctions in 
which we get as many international players involved?
    Mr. Clawson. Mr. Chairman, as big a problem as the stick 
has been that Khamenei thinks our carrot is poisoned. He thinks 
that, in fact, our objective is to overthrow his regime through 
a velvet revolution. And so, therefore, he is completely 
unconvinced that doing a deal on the nuclear issue is going to 
bring him any benefit whatsoever.
    Mr. Ackerman. If there were big sticks in effect, if we 
indeed were able to realize a rapid implementation of sanctions 
that had a more crushing impact on their economy, does not that 
help us?
    Mr. Clawson. Our problem is he thinks we are going to keep 
up those sanctions until he goes. He thinks that our real 
objective is to get rid of him and to get rid of his system. So 
he thinks that the nuclear issue is just their latest ruse that 
we are using for our goal of a velvet revolution.
    Mr. Ackerman. My question is, don't economic sanctions help 
the people in the street?
    Ms. Maloney. Iran is a rational actor. The regime makes 
cost-benefit calculations. It has reversed policy on very 
critical issues, including the decision to end the war after 
Khomeini inveighed against that for years.
    Mr. Ackerman. Who would make that decision now? With 
everything going on, who would make that decision now? Is there 
anybody able to make that decision?
    Ms. Maloney. The Supreme Leader, deg. Ayatollah 
Khamenei.
    Mr. Milani. I don't think Khamenei is no longer in a 
position to make that decision. I think a clique of the 
Revolutionary Guards are as much in charge of Iran's foreign 
policy as Khamenei is, and I think without their say, that 
won't happen. Again, I think you have to remember there is 
something very unusual about the Iranian people. They are the 
only pro-American Muslim society. We need to keep that in mind.
    Mr. Ackerman. Yes.
    Mr. Sadjadpour?
    Mr. Sadjadpour. I think the most devastating blow to the 
Iranian economy would be a precipitous decline in oil prices. A 
$1 decline in oil price is about $900 million lost annual 
revenue for Iran. And a country which can most effectively 
bring oil prices down in the near term is Saudi Arabia.
    Mr. Rubin. If we are interested in diplomacy, coercion 
amplifies diplomacy.
    Chairman Berman. The time of the gentleman has expired, and 
the gentleman from Indiana, Mr. Burton, is recognized.
    Mr. Burton. You know, Mr. Chairman, it seems to me there is 
three avenues to solve the problem. One is a dialogue, and we 
have tried that, and it hasn't worked. That kind of thing was 
tried with Libya, and it didn't work. And then Ronald Reagan 
bombed the hell out of Libya, and that changed everything 
pretty quick. And when the Israelis decided to knock out the 
nuclear development program in 1982, and they were criticized 
for it, that changed the attitude of Iraq a little bit, 
although Saddam Hussein was still a lunatic.
    It seems to me that if we don't impose sanctions 
immediately, really strong sanctions, nothing is going to 
change over there. And I would like to give you an example. 
Most of you are too young to remember, but after the Treaty of 
Versailles in World War I, the Germans weren't supposed to have 
over 100,000 people in their military so they would never be a 
threat to Europe anymore. Instead, a man named Adolf Hitler 
used 100,000 people to train a multimillion-man army. And 
because we wanted to make sure there was peace in the world, 
and we were involved in trade, Rolls Royce engines were being 
sold to the Luftwaffe in Germany, and he built up the biggest 
military machine in history. And instead of trying to put 
economic pressure on Adolf Hitler, we tried to negotiate with 
him. We tried to talk to him. We didn't put any sanctions on 
him. And in 1938, Lord Chamberlain went to Munich, came back 
with a piece of paper saying, ``Peace in our time,'' gave away 
the Sudetenland, and 60 million people died.
    You know, we are in the atomic age. We are in the nuclear 
age now. If we don't deal with this now, we could see what 
happened in World War II to be child's play. There could be 
millions and billions of people killed in a nuclear 
conflagration, not to mention the economic problems that would 
arise after you have a war in the Middle East, where so much of 
our energy comes from. So we have to do something now.
    I mean, all this talk is great, and I really appreciate the 
intellectual approaches that you are talking about and how we 
ought to be talking to them and working with them. We have been 
trying. We tried, and we tried, and we tried, and it hasn't 
worked. And so it seems to me the next thing we do is we use 
the hammer, and that is a sanction. We take the chairman's 
legislation, and any other legislation we can come up with, get 
it passed, get our allies to work with us as much as possible, 
put a freeze on all their assets in the United States, hammer 
these guys really hard right now; and then if that doesn't 
work, and they continue with all these development programs, 
these centrifuges and everything else they are doing over 
there, then something is going to have to be done to stop them, 
because they want to destroy Israel, and they have said that we 
are not their best friend, and they don't much care about doing 
something like that to America. This is a world threat in my 
opinion. Just one voice up here, but I think a lot of my 
colleagues share this view.
    I think it is extremely important that all sanctions be put 
in place as quickly as possible. Let them know we mean 
business, and let them know that the next stage is going to be 
something that they are not going to want to have happen. It 
worked with Libya, and I think it would work there as well. We 
don't want to hurt those people. The people in Iran are good 
people. They like America. They dress like Americans in many 
cases. They try to live like Americans. But those guys in 
charge over there need to get the message, and these sanctions 
are the way to get the message to them, and they need to know 
what is going to happen next.
    Now, Israel is threatened. A nuclear weapons program that 
develops a nuclear capability with a delivery system threatens 
the very existence of a very small country called Israel. And 
they have nuclear weapons. Unless we do something and do it 
relatively quickly, in my opinion, we are going to see a real 
threat of a conflagration over there that nobody wants.
    And I hope you will just take what I have said to heart. I 
know you have differences of opinion. I know some of you have a 
much more pacifistic approach, a much more reasonable approach. 
But if you look at history and see what has happened in the 
past, you know that there is a real correlation between the way 
we treated what happened in World War II and what is happening 
right now. You have to let them know you mean business. You 
have to impose those sanctions, and they have to know what is 
coming next if they don't deal with it.
    And I yield back.
    Mr. Clawson. Sir, if I may say that as you indicated, the 
prospects for diplomacy are poor. Frankly, so are the prospects 
of resolving this problems deg. through sanctions.
    Mr. Burton. How do you know that? How do you know that? How 
do you know if we put the hammer on them as far as the bill 
that the chairman is talking about and the President would 
utilize, how do you know if we froze all their assets here in 
the United States, how do you know if we didn't get our allies 
to do some of this that it wouldn't work? To say that it won't 
work, the people are out on the streets right now because of 
the election. You think if the cost of everything goes up, and 
the unemployment rate goes through the ceiling that they are 
not going to want to do something about it?
    Mr. Clawson. Mr. Khamenei doesn't care much about the 
economy.
    Mr. Burton. Well, he will if they are out there in the 
streets after him with guns and knives and everything else. And 
that is what is happening. That is what happens when the people 
feel the pressure from sanctions that are severe. And we can do 
it. Their assets are here. Their production of oil, their need 
for oil and gasoline. This idea--I am about out of time. But 
this idea that you can negotiate with a tyrant who sends people 
into the surrounding countries to blow themselves up because 
they are going to go to Valhalla or someplace, I mean, he 
doesn't--he is a power-hungry man, and the only thing he 
understands, like any bully in a school yard or a world 
theater, is strength. And the first fist you give him is 
sanctions that are so severe that everybody feels it in that 
country, and then I think you will see a lot of uprising in the 
people. And then if that doesn't work, you have to do something 
else.
    Chairman Berman. Would the gentleman yield?
    Mr. Milani. Congressman, the United States negotiated with 
Hitler. The United States negotiated with Stalin. The United 
States, President Nixon unilaterally began negotiations with 
Mao Zedong that was personally responsible for the death of 30 
million people and 10 million people during the Cultural 
Revolution. The fact that these are despots and dictators does 
not mean that we should not negotiate with them. It means we 
should not allow them to be dictators.
    A unilateral United States sanction helps Rafsanjani, 
Khamenei, and the regime, and it will because there is China 
out there. There is Russia out there. There is Venezuela out 
there. These guys have created an international brotherhood of 
despotism. You are not working in isolation. Germany, the 
United States ally, just sold $700 million of the most 
sophisticated equipment for censoring people and beating up 
people. Well, stop those, and you will stop the regime.
    Chairman Berman. The time of the gentleman who was around 
for the signing of the Treaty of Versailles has expired.
    Mr. Delahunt.
    Mr. Delahunt. Thank you, Mr. Chairman. I don't know how you 
follow that, the Versailles Treaty. When was the Versailles 
Treaty tried?
    I guess, Mr. Milani, you know, I understand the hammer. I 
guess let me pose this question again to the panel, but let me 
start with Dr. Milani, because I think I agree with what he was 
going to say. The issue is, from where I see it, if we use the 
hammer, is there a likelihood that the nationalist impulse 
among the Iranian people will rally and support the current 
government?
    Mr. Milani. I think if the Iranian people feel like the 
nation is under assault, if there is a military strike, I would 
be extremely surprised if people don't rally around the regime. 
That is why I think a military option in this current situation 
is the only thing that will save this tyrannical triumvirate 
that has seized power.
    Mr. Delahunt. But I am going to the tough sanctions, the 
kind of sanctions that were being described by my friend from 
Indiana.
    Mr. Milani. I think Patrick Clawson is right, Khamenei does 
not want to negotiate. To start negotiating with the United 
States is the end of his regime. We have to make him an offer 
he can't refuse.
    Mr. Delahunt. What is that offer?
    Mr. Milani. The offer is we are willing to sit and talk 
with you unconditionally on every issue, human rights, 
nuclear----
    Mr. Delahunt. The so-called grand bargain.
    Mr. Milani. Not a grand bargain. In fact, I have argued in 
my paper that the grand bargain is a good bargain for the 
regime. The regime says, give me security, I will make a 
promise that I won't make the bomb. If you buy that, I have a 
bridge in San Francisco to sell you. This is a regime that lies 
to its own people; it is going to lie to you.
    That is not good enough. Talk with them the way Ronald 
Reagan talked to the Soviet Union. He talked about nuclear in 
the morning; he talked about human rights in the afternoon. 
Shultz is sitting a few doors from my office, and he mastered 
the process of negotiating with murderous, tyrannical regimes. 
The U.S. knows how to do this. The U.S. has successfully done 
this. This is not a superpower. These are--as he said, this is 
thugs, this is the Soprano family ruling a country. And it is 
not that difficult to talk to the Sopranos, but you can't do it 
through empty threats, and you can't do it through threats that 
they can bypass when they have China and Russia.
    Mr. Delahunt. In other words, you can't do it by way of 
unilateral sanctions. It has to be multilateral sanctions to be 
effective to get their attention.
    Dr. Maloney?
    Ms. Maloney. I would just add that I think this is one of 
the problems with the Refined Petroleum Sanctions Act, which is 
that, one, you will conceivably split the people from the 
regime. Iran can withstand a cut-off of refined products. The 
people who will suffer are those without access. There is an 
inordinate amount of smuggling that goes on in this part of the 
world, and the regime and those with access to power will 
probably have plenty of gasoline. It is the kids in the street, 
it is the people who earn their living driving a taxi cab in 
their off hours who will suffer, and they may not blame the 
regime, they may well blame us. But the larger problem is this 
issue of unilateral versus multilateral.
    Mr. Delahunt. Is that the core of the problem that we have?
    Ms. Maloney. Absolutely. And I think this is where we have 
a potential opportunity here, because we typically--our 
diplomacy is focused on Russia first and then dealing with 
China secondarily as a country that will follow Russia's lead 
on this particular set of issues. They have very different 
interests at stake. The Chinese depend upon energy sources from 
the gulf. This is why they are so interested in Iran. They are 
investing in Iran for the long term. They are signing a lot of 
deals. They are not actually putting a lot of money into the 
country. And this is because they are trying to secure a place.
    What they need to understand is that Iran is in a period of 
flux, and that as they seek to secure a long-term position in 
Iran, they need to be doing so with an eye to the fact that the 
structure of power is changing and is likely to change further. 
We can have that kind of a conversation. We may well be able to 
begin to get the Chinese to appreciate the power and utility of 
sanctions, and that would have much more influence on the 
regime's outlook and the regime's decision making than 
sanctions that are largely targeted toward the population.
    Mr. Delahunt. Mr. Clawson?
    Mr. Clawson. So far I see no evidence whatsoever that the 
public opinion in Iran has blamed the economic problems of the 
country on sanctions. Quite the contrary, the blame has been on 
the regime for its hard-line policies that isolate Iran from 
the rest of the world. And so we are in the exact obverse 
situation we are in in Cuba, where the regime has been 
successful in blaming its problems on sanctions. In Iran, by 
the contrary, problems----
    Mr. Delahunt. Has the Iranian Government made the effort to 
ascribe their economic woes to the existing sanctions?
    Mr. Clawson. Not very much, and when it does, it usually 
blows back in their own face, because the response from the 
populace is, then why are you adopting these stupid policies 
that are isolating us from the world? It is the same regime 
which cuts off the Internet which cuts Iran off economically 
from the rest of the world. The people of Iran blame the hard-
line government for cutting Iran off economically, socially, 
culturally from the rest of the world. That is the big issue in 
Iran. Do you want to be part of the world, or don't you? And we 
are on the side of the angels.
    Mr. Delahunt. Let me--my time is running out. If a tough 
sanctions legislation as proposed by the chairman should come 
out of the committee, would you recommend that the sanctions be 
mandatory, or should discretion be vested in the executive in 
terms of their application so to allow for, if you will, a more 
agile response?
    Mr. Clawson. One has to have confidence in an 
administration when one provides it with that kind of 
authority, because there is a long history of administrations--
--
    Mr. Delahunt. That is neither a yes nor a no.
    Mr. Clawson. I have modest confidence in the 
administration, so my answer is yes.
    Mr. Delahunt. Okay. So it is a kind of yes.
    Ms. Maloney. Unless you are prepared to sanction China, you 
have to provide some sort of waiver authority to the 
administration.
    Mr. Delahunt. Okay. Dr. Milani, yes or no, please.
    Mr. Milani. I don't think unilateral sanctions work.
    Mr. Delahunt. You don't think they work, so you are a no.
    Sir? Karim?
    Chairman Berman. I think----
    Mr. Sadjadpour. I will say one word.
    Chairman Berman. One word.
    Mr. Sadjadpour. We should defer to the opposition 
themselves instead of trying to decide for them here from 
Washington.
    Chairman Berman. The time of the gentleman has expired.
    Mr. Rohrabacher, your choice, 2 minutes now or 7 minutes 
when we come back?
    Mr. Rohrabacher. How about 5 minutes now?
    Chairman Berman. You will do it without me.
    Mr. Rohrabacher. That is fine. Let us just go very quickly.
    Number one, this has been a great panel. And let me 
associate myself with Dr. Rubin. We will not--dialogue means 
nothing unless there is force behind it, especially with 
tyrants and gangsters, which we are dealing with. For the 
record, the United States needs to act rather than just talk. 
And even in terms of what we are saying has been wrong in the 
last 12 months. We actually--what we have been saying portrays 
us as weak. Apologizing to a tyrant, apologizing to people who 
murder their own people is not taken as something that, oh, 
that must be sincere; now we can negotiate honestly with this 
person because he has apologized.
    I would hope that this administration breaks out of this 
psychological mind-set that it has got in terms of America as 
the cause of all the problems of the world, and the suffering 
can be drawn back to some mistake America made 30 or 40 years 
ago. Let me note that we did not overthrow communism, we did 
not defeat communism without a major conflagration by simply 
using words.
    And I certainly appreciate the witness who suggested that 
Ronald Reagan knew how to talk to the Soviet Union, because he 
not only talked, he acted. And that is the basis of my question 
here. We can do more than just sanctions. It sounds like to me 
that what we have been presented, well, we have economic 
sanctions, or we talk to them, or we just don't engage. Well, 
what about the other option that has been very successful with 
the Orange Revolution in Ukraine and other revolutions, and 
especially the overthrow of Soviet communism, in that we should 
have covert support for those elements within a dictatorship, 
in this case Iran, so that they will have the material well-
being and the where-for-all to take on that government 
themselves? Could an operation of covert support work in Iran? 
And just very quickly down--first Mr. Rubin, yes, sir.
    Mr. Rubin. Well, with regard to President Reagan, one 
opportunity we missed with Iran was in December 2005, when we 
missed a Lech Walesa Gdansk moment, when for the first time in 
the Islamic Republic, an independent trade union formed among 
Iranian bus drivers. If we are going to make the Iranian 
Government more accountable to its people, we should 
certainly--and we can most certainly join with the Europeans in 
this--voice a great deal more support for independent trade 
unions in Iran like we did in Poland.
    Mr. Rohrabacher. Let us note this.
    Chairman Berman. Dana, I am going to----
    Mr. Rohrabacher. Can I come back?
    Chairman Berman. You absolutely can come back. And when we 
come back, I do want--I am going to use the chairman's 
prerogative to explain what I think is a slight 
misunderstanding of my idea of the strategy of my legislation. 
And--but after Ms. Woolsey, who is going to take the chair, 
because she would rather talk to you than make the first of the 
series of five that we are now on.
    We will recess probably for about 25 or 30 minutes. Talk 
among yourselves. But we intend to come back and finish this, 
and we very much appreciate your indulging our little problem 
we have with votes on the House floor.
    Ms. Woolsey.
    Ms. Woolsey [presiding]. I thank you. We are going to have 
one more question. That is my question, because I can't come 
back.
    Thank you, panel. You have been so interesting. I couldn't 
believe it was 7 minutes for each of you. You were wonderful.
    We talked about pro-American Islamic society. So anybody 
can answer this, but this is a huge--I have got a couple really 
big questions. I am going to ask them both, and then you can 
answer as you want, and then I will go vote.
    Are the young people, are the women that are part of the 
resistance part of this pro-American Islamic society, or is it 
just my generation and not your generation? Dr. Maloney, those 
of us--and, Dr. Clawson, those of us that have been around a 
long time, is it only people like us? That is one question.
    The other question is--and I was very concerned about this 
when I was, you know, supporting in my heart the opposition and 
cheering them along, but when it gets to modifying the system 
as being the core reason for the opposition at this point, how 
will that change the uranium enrichment program? Will it be 
that different?
    So those are my two questions.
    Mr. Milani. What was the second question?
    Ms. Woolsey. I can't hear you.
    The second one was about the modification of the system 
being the goal, and how will that change the uranium enrichment 
program and their cause?
    Mr. Clawson. If I may address the second question. As Karim 
Sadjadpour has often said, everybody in Iran wants a nuclear 
program so long as it doesn't have a cost. But it does have a 
cost, and if the cost of the nuclear program is isolation from 
the world, that is not a cost which those in the protest 
movement are prepared to see their government pay. And so if 
this protest movement is successful, there is excellent 
prospects that we can resolve the nuclear impasse, because the 
debate in Iran is not should we have a nuclear program or not, 
the debate in Iran is should we connect with the outside world. 
Khamenei's answer is no. And the protest movement's answer is 
yes. If the price of connecting with the outside world is 
compromising on the nuclear program, those in the protest 
movement would say pay that price.
    Ms. Woolsey. All right. That gives me hope.
    Dr. Maloney?
    Dr. Milani.
    Mr. Milani. On the question of enrichment, we have actually 
an empirical answer to your question. There is a poll. Almost 
90 percent of the Iranian people in that poll conducted by an 
American group----
    Ms. Woolsey. That we trust so much.
    Mr. Milani [continuing]. That we trust--in the poll almost 
90 percent of the people said that Iran should provide adequate 
guarantees to the United States and the rest of the world that 
its nuclear program is peaceful, and then continue the program 
in cooperation with the West. In other words, 90 percent of the 
people don't want this confrontational path that the regime has 
taken. And I think a disproportionate number of the Iranian 
youth and women, the women's movement are also pro-West, 
prodemocracy, pro-United States.
    Ms. Woolsey. Okay. Dr. Maloney?
    Ms. Maloney. I will answer the first question for the most 
part because I don't disagree with what Patrick has said or, 
frankly, what Abbas has just said. But in terms of the views of 
women and youth, I spent a little bit of time in Iran, not 
recently. Karim has spent more time and more recently. None of 
us were there during the protests, but I will tell you that the 
general sentiments of the Iranian people as expressed to 
Americans who visit is almost uniformly positive. Whether you 
are at the Ministry of Islamic Guidance, or whether you are 
simply walking down the street, you become something of a rock 
star if you are an American. And I think that sentiment has 
continued. It doesn't always correspond to similarly positive 
feelings toward the U.S. Government or toward U.S. policies. 
But there is a general appreciation for American culture, 
American history, a respect for American ideals, and a hunger 
that is widespread and infects the Basij as well as the pro-
Western youth as much.
    Ms. Woolsey. People to people they like us still.
    Ms. Maloney. Exactly.
    Ms. Woolsey. Okay. Mr. Sadjadpour?
    Mr. Sadjadpour. I would group together the two questions by 
saying that I think the vast majority of not only the Iranian 
population, but also the Iranian political elite behind closed 
doors recognize that this ``death to America'' culture of 1979 
is absolutely bankrupt today. And it has really brought nothing 
but economic malaise and political and social repression. And I 
think that includes the reform movement, the opposition as 
well. And I think that a changed orientation toward the United 
States and toward the Middle East peace process would result if 
this opposition movement ever came to office. And I think it 
would also change the orientation of the nuclear disposition as 
well.
    Ms. Woolsey. Okay. Thank you.
    Dr. Rubin?
    Mr. Rubin. I tend to agree, but with the cautionary note 
that ultimately it is the guys with the guns that control 
things. The Iranian people aren't the impediment. And then the 
dialogue-to-dialogue exchanges, we still don't get to the main 
issues of concern to U.S. national security, which is what is 
going on within the Islamic Revolutionary Guard Corps, which 
certainly is not as pro-American as ordinary Iranian people.
    Ms. Woolsey. Professor.
    Mr. Kittrie. Your excellent question about the Iranian 
people, I think, goes to the issue of what would be their 
response to enhanced U.S. sanctions? There was an implication 
by a number of the panelists that, in fact, enhanced U.S. 
sanctions might lead the Iranian people to blame the United 
States, be a ``rally around the flag'' kind of effect for the 
regime.
    I disagree. From what I have seen, I think you can look at 
the example of Under Secretary Levy's sanctions that have had a 
significant impact, and the Iranian people are blaming the 
regime for their economic problems. If you look specifically at 
IRPSA, the Iran Refined Petroleum Sanctions Act, you know, what 
happened in 2007 when the Iranian regime had to ration fuel, 
people rose up against the regime. They would have to ration 
fuel again if IRPSA went into effect. The BBC has called such a 
step dangerous for the government of an oil-rich country like 
Iran, where people think cheap fuel is their birthright. 
Squeezing Iran's gasoline imports would remind the Iranian 
people that instead of choosing to invest in improving refining 
capacity to meet Iran's growing demands----
    Ms. Woolsey. Okay. Thank you. I do have to go vote also. 
Thank you very much for taking this extra time.
    The committee is in recess briefly. We have four more votes 
after this one. So thank you again.
    [Recess.]
    Chairman Berman. The committee will come to order.
    I am going to use the chairman's prerogative. I have cut a 
deal with Mr. Rohrabacher, so I can use my prerogative, and he 
can get an extra 1 or 2 minutes.
    Just to clarify some of the questions and points made, I 
think, regarding the strategy here, I think it is good to get 
those on the record. First, I believe assets of the Iranian 
regime have been frozen in the United States since 1979. Now, I 
like ``The Producers'' as a play, but I think you can't keep 
selling 1,000 percent of this.
    So, secondly, with a few exceptions--and I am actually 
surprised to hear the notion of the level of bilateral trade 
between U.S. and Iran. But with a few exceptions, we pretty 
much have a, quote, deg. ``unilateral embargo,'' a 
comprehensive set of sanctions. I don't know if that 80-fold 
increase in trade is all pistachio nuts, carpets--well, the big 
thing was we have exempted food and medicine from all 
embargoes. And if you want to challenge that issue, I think, 
okay, but let's clarify that that has to be--I like pistachios, 
but that would not account for an 80-fold increase in trade. So 
it must be the food and medicine exemption.
    Mr. Clawson. Mr. Chairman, if you will allow me, it was 90 
percent wheat, U.S. sales of wheat to Iran.
    Chairman Berman. Ah, yes. We used to do that to Iraq, I 
remember.
    Third, Dr. Rubin earlier talked about you have a plan A, 
and you better have a plan B and a plan C and a plan D. My 
legislation I view as plan C.
    Plan A is to make it clear that, whether it is bilaterally 
or multilaterally, the United States is prepared to engage with 
the leadership of Iran. That, I think, the President has made 
clear in many different times, in many different fora. And, as 
we have talked about earlier, it hasn't been responded to.
    Plan B is the issue of international sanctions. No one can 
argue with a straight face that unilateral sanctions are 
anywhere near as effective as tough international sanctions. 
And there are key players that make up part of that.
    I took note of the fact that what had been a timeline on 
the engagement of the end of the year became a move to an 
assessment of plan A at the G-20 in late September. And, 
presumably--I know the groundwork is being laid for a plan B 
now. It is my belief that, at the summit, the single longest 
time spent discussing any subject in the meetings between 
President Obama and Medvedev and Prime Minister Putin was the 
subject of Iran. And I believe other efforts are going on, as 
well.
    Plan C, for me, it isn't that my bill is unilateral 
sanctions by the legislation we have. There are already 
unilateral sanctions. These are extra territorial unilateral 
sanctions, which I am talking about some time in the early fall 
marking up in this committee and moving out.
    And there is an aspect of this that can have an impact if 
it is actually enforced by an administration, because it does 
force some critical companies to choose between doing business 
with the United States and people involved with the sale of 
refined petroleum products or investments in the energy sector 
or increasing Iranian refining capacity. It requires these 
companies to choose.
    Other countries hate those sanctions, but sometimes, in the 
context of their hatred, it makes them more open if they think 
we are seriously moving down that road toward considering 
taking the international sanctions issue more seriously. So it 
is in that context that I have proposed this bill and have the 
timeframe I had.
    And, with that, I am happy to recognize the gentleman from 
California, Mr. Rohrabacher, for 5 minutes.
    Mr. Rohrabacher. Thank you very much, Mr. Chairman. And, 
again, let me congratulate you on choosing an excellent group 
of witnesses today.
    Each and every one you has made a contribution to my 
understanding of what is going on. And I hope that people read 
your testimony who weren't here.
    Especially, of course, Dr. Rubin, I already congratulated 
you, because I think that some of the fundamentals that you 
talked about were very clear and very to the point. And they 
are truisms that need to be recognized if you are going to have 
any real influence in this world.
    Theorizing and philosophizing will get someone nowhere when 
dealing with a gangster or a tyrant. And soft talk--and if I 
had any criticism of this administration, it has been the soft 
talk. And soft talk does no good, even if you have a big stick. 
If you talk softly or if you apologize, it will be taken as a 
sign of weakness. And I believe that is what has happened with 
the current administration and those goons that control the 
Iranian people.
    Tough condemnation of human rights violations and 
aggressive vocal support for the cause of freedom can have an 
impact. Speaking too softly to tyrants certainly will have a 
negative impact, but speaking aggressively and condemning 
tyranny can actually have a positive impact. So weak remarks 
are likely, as I say, to be seen as weakness.
    Now, to Ronald Reagan, who was mentioned, he knew how to do 
it. Well, he used tough rhetoric, and I am very grateful that I 
had the opportunity to work with President Reagan for 7 years. 
I was one of his senior speechwriters. But let me note that it 
wasn't just the rhetoric. It was also that Ronald Reagan had 
acting programs that he personally had approved, covert 
operations, to weaken the Soviet Union.
    And so our choice isn't, as Mr. Burton might have been 
mistakenly interpreted as saying, we need to have military 
action or threaten military action. We don't need to do that. 
There are other actions that can take place, which leads me to 
the question for the panel.
    Number one, do you think that freezing the bank accounts of 
the mullahs who have robbed their people of hundreds of 
millions, if not billions, of dollars would have an impact, 
number one?
    Number two, should we have the covert support, which we 
have not been? And do you believe that, had we over these last 
10 years been providing covert support, which would have given 
money and other type of financial support behind those people 
within the Iranian society, the young people, the other 
nationalist elements there that oppose the mullah dictatorship, 
would that have made an impact, as it did with the Soviet Union 
when we supported solidarity and we supported various pro-
freedom elements within the Soviet bloc?
    So those are my two questions about freezing the assets--
and, for the record, I think that the United States should, 
right now, step forward, find out where that money is, and 
freeze the bank accounts of every one of those mullahs who run 
their country with an iron fist.
    And, number two, if we are going to succeed, we need to 
support, not just vocally, the cause of freedom in Iran, but we 
need to support those people who are struggling on the ground 
so they know they have outside support. Would that make a 
difference?
    Right on down the line, very quickly.
    Mr. Clawson. Interesting indications suggest that there 
have been significant amounts of money transferred by some of 
those mullahs to Europe in the last 2 months. And I would hope 
that we could help provide European governments with 
information about this.
    There is some considerable interest to Europe in freezing 
money along the lines you described for human rights reasons 
and also for banning their travel. Because a number of those 
people, especially their family members, go to Europe on a 
regular basis on shopping trips.
    Mr. Rohrabacher. And the second part of it, very quickly, 
because we only have a little bit of time, would covert 
support--for example, the union that was mentioned already--
unions and other religious groups, other national groups and 
other student groups, would that have a chance at succeeding? 
And could it have already succeeded had we done so 10 years 
ago?
    Ms. Maloney. To the first question, let me just say that, 
obviously, there are no bank accounts of regime officials in 
this country. We would need cooperation from Europe, and 
particularly from the Gulf, from Dubai, where much of the 
regime's money is banked.
    And if we had a blanket frozen order, what we would likely 
do is pick up accounts associated with Hashemi Rafsanjani, who 
is, of course, now a de facto leader of the opposition. So it 
would have to be somewhat targeted in the way that we did that.
    In terms of covert support, I think that would be 
disastrous. It would be exactly the wrong lesson to take from 
what we have just seen on the streets. Iranians want an 
authentic opposition movement. They don't want our money; they 
don't want our involvement in what they see as an indigenous 
movement.
    Mr. Rohrabacher. And you know that--just for the record, 
the only time any revolution has ever worked against tyrants, 
including the American Revolution, they had outside support, 
especially the Orange Revolution.
    Ms. Maloney. Not in 1979.
    Mr. Rohrabacher. Well, in----
    Chairman Berman. The time of the gentlemen has expired.
    The gentlelady from Texas, Ms. Sheila Jackson Lee, is 
recognized for 7 minutes.
    Ms. Jackson Lee. Thank you very much, Mr. Chairman, for 
this hearing. And courtesies have been extended by the members, 
primarily the members of this panel, for giving us your 
insight.
    Many of us are reminded of the apartheid fight in South 
Africa, when those who loved South Africa dearly rose and asked 
for sanctions by the world. Bishop Tutu, whose love of his 
country can never be challenged, felt compelled to stand in the 
eyes of the world and ask that his nation be condemned.
    I believe it is important to stand in the eyes of the world 
in solidarity with what has to be one of the most provocative 
expressions of opposition in Iran for a very long time. I stand 
in solidarity. I believe individual voices of this country 
should be raised continuously. I make a plea to our 
nongovernmental organizations to take up this cause.
    Today, I want to salute entertainers who are now on a 
starvation strike, artists who typically are called, in many 
instances, ``soft,'' whose voices we may not know here in the 
United States, but are clearly raising their ire.
    So my questions go to this whole world attitude, and where 
is the outrage? Where are the voices? Where is the United 
Nations?
    It is difficult to promote sanctions when you think of what 
could happen to the most vulnerable and children. So I am going 
to start with those questions.
    One, where is the world outrage for what is occurring? And 
let me pose my questions to--if I can find my list--let me 
start with Dr. Milani, if I can, on that question.
    Mr. Milani. I absolutely share your wonder about where the 
rage is. Ahmadinejad, a Holocaust-denying anti-Semite, came to 
New York, and no more than 1,000 people went to protest his 
arrival. There should have been hundreds of thousands of people 
demonstrating his presence there. If they had done so, he would 
not come back for more and more.
    Every time he comes back here, he gets treated like a rock 
star. He gets asked the same repeated questions about whether 
he, in fact, has denied the Holocaust, whether he, in fact, has 
asked for the destruction of Israel, and not a single serious 
question about the fate of journalists in Iran, about prisoners 
in Iran, about the Baha'is of Iran, about other religious 
minorities is asked.
    Ms. Jackson Lee. My time is short, and I appreciate what 
you have given us.
    Professor Kittrie, would you answer the question of 
sanctions?
    I come from energy country, Houston--sanctions on my 
domestic producing or domestic-owned petroleum companies. 
Sanctions on the most vulnerable, babies needing milk--what 
kind of story will come out of a sanctions regime?
    Mr. Kittrie. Sure, thank you for your question.
    The ``Iran Refined Petroleum Sanctions Act,'' in fact, 
doesn't target U.S. companies. The only companies that supply 
gasoline to Iran currently are a handful of European companies 
and one Indian company. And it is those companies that would 
bear the brunt.
    And, in fact, U.S. companies have long been cut out of, 
have long been prohibited by sanctions from selling gasoline to 
Iran. And I would think they might be supportive of leveling 
the playing field and having those European companies play by 
the same rules.
    Ms. Jackson Lee. Let me ask Dr. Maloney, because I believe 
in free speech and equal time, on your position on the 
engagement and sanctions.
    Ms. Maloney. On the question of this particular act?
    Ms. Jackson Lee. World outrage, and I believe that you have 
expressed some question about sanctions.
    Ms. Maloney. On the question of world outrage, I actually 
think that there has been a lot of sympathy voiced around the 
world by, as you suggest, entertainers and celebrities who are 
conducting this hunger strike in New York, rock bands--U2 has 
swathed their concerts in green. There has been a lot of 
interest in Iran, probably more interest in Iran than countries 
like Burma, China, elsewhere, where we see----
    Ms. Jackson Lee. Can you answer the question about the 
sanctions, your position on that?
    Ms. Maloney. Well, I think you raise an interesting point. 
Thus far, we have not heard the voices of Iranian opposition 
leaders calling for greater sanctions, as we did here with 
South Africa. And I think that would be an important barometer 
to watch for.
    Ms. Jackson Lee. Dr. Rubin, what about her point? We have 
not heard from the activists in Iran.
    And what kind of leader would Mousavi have been? Would we 
have been more pleased with him?
    Mr. Rubin. The presidency in Iran is more about style than 
about substance on the issues of concern to U.S. Foreign 
policy: Nuclear proliferation and terrorism. The problem is 
with the Revolutionary Guard and with the Office of the Supreme 
Leader.
    With regard to sanctions and opposition, it is hard to--
certainly, Hashemi Rafsanjani is not the opposition figure. He 
is widely disliked inside Iran.
    The issue is that, when it comes to what has been said 
before with regard to taint, we are darned if we do, we are 
darned if we don't, because whether we do act covertly or not, 
the regime media apparatus is going to accuse us of 
interference. So we might as well base our policy on what we 
believe to be correct and right.
    Ms. Jackson Lee. Dr. Sadjadpour, let me just ask you this 
pointed question: Do we have a breach in this Iranian 
Government that we can build on democracy? Do we have the 
potential of a regime change? Is this sustainable? What do we 
need to sustain it?
    I know your position on sanctions, but there has to be some 
evidence to you that we need a change.
    Mr. Sadjadpour. I wouldn't use the term ``regime change''; 
I would use the term ``regime transformation.''
    And, actually, on sanctions, I think that there are many 
members of the opposition and the population who are actually 
starting to come around. Their views toward sanctions have 
changed. They are not in a position to publicly articulate that 
right now.
    Ms. Jackson Lee. They see value in it.
    Mr. Sadjadpour. They are starting to see value in it.
    Ms. Jackson Lee. And do you not believe that this is a 
historic time in Iran, for the government to change? Our words 
may be different, but since I speak Americanese, ``government 
change,'' this is not a time for government change?
    Mr. Sadjadpour. Absolutely, I think this is a truly 
historic moment. And I think that we shouldn't underestimate 
the magnitude of what has transpired the last 6 weeks and, I 
think, what may continue to transpire.
    Ms. Jackson Lee. It is sustainable?
    Mr. Sadjadpour. I believe that it is going to be very 
difficult for the regime to go back to the status quo ante, 
because sacred red lines have been crossed.
    Ms. Jackson Lee. Thank you, Mr. Chairman. I yield back my 
time.
    Chairman Berman. The time for the gentlelady has expired.
    The gentleman from Arizona, Mr. Flake.
    Mr. Flake. I thank the chairman and thank the witnesses. I 
was able to read a lot of the testimony, but I wasn't able to 
hear much. So I apologize if I plow ground that has already 
been plowed.
    But the last vote on sanctions we had in this committee, I 
think it was 45 or so to one, me being the one. I am reluctant 
to use economic sanctions as an instrument, in this case. I 
have always felt that the difference between Iran and some of 
the other countries that we deal with is you don't have a 
population that is inherently anti-American. And I am loathe to 
make them so. And so, I have heard some of the comments. I know 
that is a concern that many of you have. And if some want to 
elaborate on that, I would appreciate it.
    And, also, first, I wanted to ask Dr. Maloney, if you will, 
with this new proposal on sanctions, it would affect some 
European countries, one Indian country you mentioned. I think 
we all recognize that, to the extent sanctions could be 
effective, we have to do them on a multilateral basis. And that 
involves our European allies, and we need to pull them into it.
    Would enacting these petroleum sanctions make it more or 
less likely that we could get cooperation with our European 
allies in a broader set of multilateral sanctions?
    Ms. Maloney. I think the Europeans are coming around to the 
issue of sanctions support in a much more significant way, but 
it is still episodic, it is still very spotty across Europe. 
The British, the French are probably not too far from at least 
being willing to consider a wholesale ban on investment and 
trade. The Germans, the Italians remain in a very different 
place, although the human rights issue now changes their 
calculations, to some extent.
    There had been a lot of European companies that have left 
Iran of their own volition, both because of the political risks 
but also because of some moral suasion from the Treasury 
Department. And I expect to see more of that.
    But, obviously, to the extent that we engage in the 
business of potentially sanctioning trade partners, whether it 
is in Europe or Chinese state oil companies that are now 
talking to the Iranians about investment in their refinery 
sector, then we are going to have some repercussions.
    And I think that is why, as Chairman Berman has suggested, 
the next round, the sort of plan B needs to focus on what we 
can do multilaterally, what we can do that has the broadest 
international buy-in. Because that is what is going to have the 
greatest effect on Iran's decision-makers.
    Mr. Flake. And that is my premise. I believe that if we 
want to be successful, we have to have that buy-in. And what I 
am asking, if Dr. Milani or somebody else wants to comment, 
would enacting this new sanctions regime, these tertiary 
sanctions, make it more or less likely that we can get that 
buy-in that we need? 
    Mr. Milani. I would like to continue essentially what my 
friend, Mr. Sadjadpour, said. I think if you asked the Iranian 
democratic leaders inside Iran about the effectiveness of 
sanctions, 2 months ago, they would have almost universally 
told you that they have helped the regime, they haven't helped 
our cause.
    But now things have changed. Things have changed in two 
ways. First, when oil was at $120, the regime found a way of 
circumventing the embargo and, in fact, benefitted from it. 
Revolutionary Guard commanders became billionaires over these 
illicit trades; the sons of these clerics that created 10,000 
companies in the United Arab Emirates whose sole job was to get 
commodities into UAE and send them to Iran. UAE suddenly became 
Iran's biggest trading partner. But now with oil at $70, with 
them needing about maybe $40 billion at least to keep the 
subsidies going, they are not going to be able to circumvent.
    Second, the regime is now shaken to its core. And some of 
the leaders inside Iran, though they cannot yet publicly come 
out and say it, are suggesting that this sword must be held 
over their head for the regime to know that there is a limit of 
what it can do to the Iranian people and that the world is 
willing to stand with the Iranian people if the regime doesn't 
back down.
    I am hearing for the first time--in fact, just before I 
came here, I talked to someone, and that was precisely the 
position that they had. And this is someone who is a very 
important member of the opposition inside Iran.
    Chairman Berman. Professor Kittrie, you wanted to get into 
this, I think.
    Mr. Kittrie. Thanks, yes.
    With respect to our allies and the impact that this might 
have on them, we have seen, very interestingly, an example with 
Under Secretary Levey, who has been talking to banks all across 
Europe, and those banks have been getting out of the business 
of doing business with Iran. And there hasn't been a rally-
around-the-flag effect in Iran, nor have our allies 
particularly complained aggressively.
    I think we will see the same thing if the Iran Refined 
Petroleum Sanctions Act is passed. In fact, there is just a 
handful of companies that supply gasoline to Iran. One of those 
that supplied, British Petroleum, already got out. When, 
frankly, Chairman Berman and Congressman Sherman and some 
others started making a fuss about this issue last fall, 
British Petroleum got out.
    Total, I know, I know is on the fence as to whether to get 
out or not. Reliance, the Indian company, got out for 2 months 
earlier this year and got back. These companies are on the 
verge of getting out of this business. They will get out, and I 
don't think their governments are going to make a big fuss 
about it.
    Mr. Flake. Dr. Rubin or Sadjadpour?
    Mr. Sadjadpour. Thanks for your thoughtful question, 
Congressman.
    I would say that in a couple of years of being based in 
Iran and traveling throughout the country, it was very, very 
rare that--people always complained about the economic malaise, 
but when you would ask them why, they would complain about 
corruption and mismanagement. It was very, very rare that 
people would cite U.S. sanctions as the root of their economic 
problems.
    I would support unequivocally sanctions or prohibitions on 
companies like Siemens Nokia, which have provided the Iranian 
regime repressive technologies. Unequivocally, I would support 
that.
    And, lastly, I keep going back to this issue of oil. And I 
recognize that, you know, sanctions are something that you in 
the Congress can do. But, again, just the statistic is quite 
startling, that a $1 drop in oil prices is about $900 million 
lost in annual revenue for Iran. And if we really want to hurt 
this regime, I think a precipitous decline in oil prices would 
be the best way to do it.
    Chairman Berman. The time of the gentleman has expired.
    The gentleman from Arkansas, Mr. Boozman.
    Mr. Boozman. Thank you, Mr. Chairman.
    I appreciate the testimony. I think it has really been very 
helpful to help us understand what is going on.
    I think we all agree that, certainly, there is unrest over 
the economy, freedoms, and the list goes on and on. I guess I 
don't see any evidence at all, though, that with the regime 
change, with the current regime change that might be coming on 
board, that that group will renounce nuclear weapons.
    Some of our allies have said that this is going to happen 
within the next 6 months, that they are right on the verge. So 
I believe in going forward vigorously with talks, sanctions, et 
cetera. But the reality is, none of that has worked in the last 
5 or 6 years, and we are facing this very looming deadline. If 
Iran goes nuclear, all of our work on nuclear proliferation for 
the last decades will be down the tubes.
    So with that being said, I would really like for you to 
comment. I support, if Israel feels like it, it needs to defend 
itself based on what Iran has said it is going to do with 
nuclear weapons once it acquires it. I support them 100 percent 
if they feel like they need to go forward and defend 
themselves.
    What I would like to know from you all is what you feel 
like Hamas and Hezbollah in Iran will do in retaliation. And 
then, again, how important it is that we as a Congress, we as 
an administration resupply and do what it takes to help Israel 
during those very crucial hours after that happens.
    We will start with you, Professor Kittrie.
    Mr. Kittrie. Sure. Thank you.
    You raise the option of an Israeli military strike on Iran. 
I mean, it is not a good option. Nor is a U.S. military strike 
on Iran a particularly good option. I certainly wouldn't 
recommend them today. Although, on the other hand, the only 
thing worse than a U.S. Military strike on Iran would be a 
nuclear-armed Iran.
    The challenge is that, if you go in and try and take out 
Iran's nuclear program, you really have to do the job right. 
There are a lot of sites that are well-hidden. There are sites 
that we may not know about. And for one squadron of Israeli 
planes to go and drop a few bombs, it worked in Osirak; it may 
well not work with respect to Iran.
    So if anybody is going to do a military strike, it would 
have to be the United States, because only the U.S. has the 
capacity, the manpower to do the job right.
    Mr. Rubin. Well, I just have three quick points.
    The United States should not be the practice of sacrificing 
allies. That is not realism; it is just stupid.
    Two, a nuclear Iran would feel itself overconfident. And 
one of the greatest threats we have to Middle East peace and 
security is overconfidence or states not understanding the 
others' red lines. After the 2006 Hezbollah-Israel war, the 
Secretary-General of Hezbollah, Nasrallah, said that if he had 
known how Israel would have reacted, he never would have 
launched the operation he did that started the war. The problem 
is, a nuclear Iran--Ahmadinejad and the IRGC and the supreme 
leader, surrounded by like-minded people, may be prone to 
overconfidence and miscalculation.
    The last point I want to make which has direct relevance to 
both the popular protests which we have seen and the issue of 
Iran's ideology is that a lot of people say that, should Iran 
develop nuclear weapons capability, we could live with a 
nuclear Iran because they are not suicidal. The problem is 
that, among certain portions of the people that would be in 
command and control, specifically within the supreme leader's 
circle and the IRGC, there may be people that are ideologically 
committed to the destruction of Israel.
    Now, should there be a popular uprising when Iran has that 
nuclear capability, they may feel they have nothing to lose, 
with the calculation that ``Look, we are done for anyway. And 
is the United States or Europe really going to retaliate 
against an already changed regime?'' Therefore, it is essential 
for the peace and stability in the region that Iran not be 
allowed to get this far in the first place.
    Thank you.
    Mr. Boozman. And with Iran having nuclear ability, then the 
Saudis and the whole region are going to feel threatened, 
aren't they, and also start the proliferation? We are already 
hearing, perhaps, deals with Pakistan and things like that, 
with the Saudis.
    Mr. Rubin. You are absolutely correct. It would be a 
cascade of instability, and the nuclear nonproliferation regime 
would be dead.
    Mr. Sadjadpour. Also, three quick points, Congressman.
    I would slightly disagree with Michael here, in the sense 
that I think that what we have seen from the last 6 weeks is 
that this Iranian regime is incredibly odious, but it is not 
suicidal. On the contrary, it ruthlessly wants to hold on to 
power.
    The second point is that the problem we have with Iran has 
far more to do with the character of the regime than its 
nuclear ambitions.
    And the third point is that, if we bomb Iran, I feel that 
we could do serious damage to this opposition movement and 
alter its trajectory and further entrench these odious 
hardliners in Tehran.
    Mr. Boozman. So do you feel like Iran is serious about 
doing what it says, if they have nuclear weapons, to Israel?
    Mr. Sadjadpour. What do they say they are going to do?
    Mr. Boozman. I think they have made it clear that they 
don't feel like Israel should exist. And Israel is probably a 
one- or two-bomb country.
    Mr. Sadjadpour. Well, they have never articulated a policy 
of military destroying Israel. They articulated a policy of a 
referendum in Israel, which is essentially----
    Mr. Boozman. So, for you, that is way too far of a stretch, 
if you felt----
    Mr. Sadjadpour. Again, I would just simply reiterate that 
the problem we have with this regime, in my opinion, is the 
character of it, not its nuclear ambitions. And if we bomb the 
regime, we are going to extend its shelf life indefinitely.
    Mr. Milani. I think, first of all, whether it is Israel or 
in conjunction with the United States, the United States will 
be blamed for it. No one in Iran or in the Middle East 
believes, whether right or wrong--there is, as you well know, a 
prevalence of conspiracy theories, where people will believe 
that the United States is complicit in it.
    I think it would be the gravest mistake Israel has made. I 
think it would be counterproductive to Israel's security. I 
think it would be extremely counterproductive for the U.S. 
Thousands of U.S. soldiers sit within a missile strike of 
Iranian soldiers and Revolutionary Guards.
    And I can tell you that, if they are attacked, they will 
respond. And there will be thousands of collateral damage. They 
know that this strike might come. They have fortified their 
bases. They have taken it and put it in some of the most 
sensitive places underground in the city of Esfahan. So you are 
going to have a lot of unfortunate collateral damage.
    Chairman Berman. The time of the gentleman has expired.
    The gentleman from Florida, Mr. Klein, is recognized for 7 
minutes.
    Mr. Klein. Thank you, Mr. Chairman.
    And thank you. I appreciate you all being part of this 
panel today.
    As has been stated by many of the colleagues up here and 
many of you as well, the choices of what the United States can 
or should do fall into a few different categories. I do support 
the notion of trying, recognizing that we may not succeed and 
we need to have our plans B and C, et cetera, in place. But, 
certainly, in terms of the discussions to stage and setting up, 
if necessary, for what would be the next stage would be 
significant or what I would call crippling sanctions, which I 
think would be appropriate.
    I am from Florida, and I just heard recently that the 
company Vitol, the European company which apparently supplies 
over half of the refined oil to Iran, or gasoline, is 
constructing a $100 million fuel facility in Port Canaveral, 
Florida.
    And, again, those are the kinds of transactions and 
investments that I think the United States needs to be 
concerned about. And if we are going to have a serious 
conversation of creating strong economic impact or the effect 
of an impact which will cause a change of behavior, not only 
throughout the United States, because we have limited capacity 
and involvement with them, but throughout Europe and Asia and 
other places.
    My question--maybe I will start with Professor Kittrie and 
Dr. Clawson--is, how responsive do you think companies like 
Vitol will be if we pass legislation in the United States which 
says that you make choices, you either do business with Iran 
and you don't do business in the United States? How effective 
is that? How will a company like Vitol or others react to that?
    Mr. Clawson. One problem we have had in the past is if 
other governments, such as European governments, think that our 
policies are utterly inappropriate, then they would encourage 
their companies to ignore our legislation and assure those 
companies that, in fact, they will provide political and 
economic cover for them to ignore what we are doing.
    But what we have seen recently, with the actions of the 
Treasury Department, especially Stuart Levey, is that, instead, 
the attitude of European governments has been to say to 
European banks, ``Well, the Americans may be a bit pushy here, 
but they do have a good point.'' And I think that that would be 
the attitude of a lot of European governments if we were to 
enact sanctions about refined petroleum products; is that, 
indeed, there are a number of European governments, some of the 
most important European governments, that are frustrated that 
smaller European states are blocking EU action on this issue. 
And a number of the big European governments would be quite 
delighted to go to their companies and say, ``You know, the 
Americans have a point here. You really ought to think about 
this one.''
    Mr. Klein. So your opinion is that the European governments 
may react favorably to this legislation. But, more 
specifically, these multinational businesses that are making 
their own decisions--some of which are impacted by governmental 
authority and some are not.
    And I guess the question with a company like Vitol--I am 
just using them as an example, though--is, if you have 
millions, hundreds of millions, possibly billions of 
opportunity to do business in the United States, these are 
behavior--they obviously have to weigh that against the rest of 
the world and what they are going to be doing.
    Mr. Clawson. Well, in a situation where your home 
government says to you, ``We are going to get the Americans off 
your back; we are going to really threaten the Americans if 
they try to go after you,'' then the company will say, ``Well, 
we can ignore what the Americans are doing because we will be 
protected.'' But in a situation where their home government 
says, ``You really ought to listen to what the Americans are 
saying,'' then the company will say, ``Uh-oh, we better change 
our policies.''
    And I think we are much more in that latter situation than 
we were in--the former situation is was prevailed with regard 
to the Iran-Libya Sanctions Act in the 1990s. And we are not in 
that situation at all now, not at all.
    Mr. Klein. Professor Kittrie?
    Mr. Kittrie. Yeah, I agree with the gist of what Dr. 
Clawson had to say. I mean, we have seen, in fact, that 
congressional efforts with respect to these gasoline suppliers 
to Iran have already begun to work. British Petroleum got out 
of the business of supplying gasoline to Iran. Reliance 
Industries, an Indian firm, got out of the business of 
supplying gasoline to Iran for 2 months earlier this year. And 
the press reports, the trade press reports, said it was due to 
the efforts of Congressman Berman and Congressman Sherman, due 
to their letters that they wrote to the Ex-Im Bank raising 
questions about loan guarantees.
    With respect to Vitol specifically, they are a privately 
held Swiss company. They are in it to make money. If you put 
them to a business choice where it is clear that they are going 
to lose more business in the United States than the profit they 
are making in Iran, they are going to choose the U.S. market.
    You mentioned Port Canaveral. Frankly, Los Angeles 
International Airport, LAX, buys some $600 million a year of 
jet fuel from Vitol. And if, you know, the L.A. City council 
that runs LAX puts Vitol to a choice, that by itself may be 
enough to get Vitol out of the business of supplying gasoline 
to Iran.
    Mr. Klein. Okay. And as a follow-up to the question, 
sanctioning suppliers of refined petroleum--obviously, refined 
petroleum is an important issue for Iran because of their 
capacity. Do you recommend this sanction?
    Let me quickly just go down the row, if we can. United 
States Congress, do you recommend that we lead on this sanction 
of limiting refined petroleum entering into Iran?
    Mr. Kittrie. Oh, yes, absolutely.
    Mr. Rubin. Yes, absolutely.
    Mr. Sadjadpour. I would say I am not there yet until the 
opposition has reached that point, but I think they are getting 
there.
    Mr. Milani. I approve it in precisely the manner that the 
chairman indicated, as plan C. After plan A and B fails, then 
the plan C is certainly called for. And I think, by then, many 
Iranian democrats will be calling for it, as well.
    Ms. Maloney. I think, unless you have figured out a way to 
deal with the Chinese--and that would be part of your plan B, 
but also needs to be factored in here--you are likely to spark 
a trade war with the Chinese as a result of this. And I am not 
sure that is what the U.S. economy needs. So I am not in favor 
of it.
    Mr. Clawson. Give the President the authority so he can use 
this as an important part of the way that he bargains with the 
Chinese and others for multilateral sanctions to much to the 
same end.
    Mr. Kittrie. Let me just point out, China provides no 
refined petroleum to Iran----
    Ms. Maloney. They are in talks to upgrade a number of 
Iranian refineries right now.
    Mr. Kittrie. They are in talks to upgrade them, but 
currently they provide none.
    Mr. Klein. Thank you, Mr. Chairman.
    Chairman Berman. All right, thank you.
    The gentleman from California, Mr. Royce, is recognized for 
7 minutes.
    Mr. Royce. Thank you, Mr. Chairman.
    You know, Ahmadinejad once made the comment that ``I pray 
to God that I will never know anything about economics.'' And 
based on the inflation rate at 20 percent and the official 
statistic now of 30 percent unemployment, it looks like his 
prayers have been answered.
    And the question I have is, there seems to be a growing 
consensus that petroleum--and I know it can be a lynchpin for 
this reason. I have seen a clip of an interview in Iran of cars 
backed up for 4 hours. And one of the fellows in line who is 
being interviewed says, ``You mean this regime has millions of 
dollars to send to Hezbollah, and we are standing here in this 
gas line for 4 hours without petrol?''
    It seems to me that this would be a lynchpin in this. But I 
am wondering what else could be a chokepoint, in terms of 
affecting that kind of an attitude, creating that kind of 
animus. We have examined other concepts for something along the 
lines of a South African-type, apartheid-type sanctions. What 
do you think would really do the trick?
    Dr. Clawson?
    Mr. Clawson. A ban on travel by the families of the key 
regime figures, many of whom go on regular shopping trips or 
other trips to Europe. That is something that the United States 
and Europe can act on together. These people are not interested 
in going to Moscow for shopping. They want to go to Harrods.
    There is precedent for what we and the European Union did 
together with regard to the former Yugoslavia, where we, by the 
end, acting outside of the United Nations, had banned the 
travel of 600 named individuals, targeting regime figures.
    Mr. Royce. I think that is a great concept.
    Go ahead, Doctor.
    Mr. Rubin. Thank you very much.
    Before, it was talked about perhaps one should sanction 
Nokia and the other companies which are contributing to Iran's 
ability to repress. You don't need any sanction there. If the 
President and Congressmen and Senators would publicly name and 
shame these companies, it would have great effect. Generally 
speaking, public exposure of corruption is a theme which 
resonates inside Iran.
    And when it comes to credibility, for example, of U.S. 
outreach, oftentimes the regime will say, ``Oh, what the United 
States is doing is just propaganda.'' But instead of the Open 
Source Center, for example, simply translating and distributing 
national press, if it focuses on the local press, if it reads 
back verbatim, word for word, stories of labor movement strikes 
and other instances of local corruption, amplifies local 
stories into international stories, the Iranian Government 
cannot say that that is simply external propaganda, because all 
you are doing is reading back its own press but on a national 
level.
    Mr. Royce. Let me make another observation. We have Iran 
spinning 5,000 centrifuges, and I guess soon it is going to be 
7,000. So that is reality, that is a nuclear weapons program. 
And Iran continues this relationship with North Korea.
    So let me ask a question. There has been a lot of well-
documented evidence in terms of the proliferation between the 
two. India forced down that plane that was carrying, 
presumably, missile parts to Iran from North Korea. And we 
understand the North Korean motivation for this: It is cash.
    But let's look at it from the other perspective, because 
that is something I don't understand. What is Iran's motivation 
for its technology transfer and its engagement up in North 
Korea? Is that technology, or is there something else?
    Nobody has commented on this relationship, and I just 
wondered if there is any perception as to what the incentive is 
on the Iranian side for this.
    Mr. Milani. You know, if the regime makes the decision--and 
I don't think they have made it yet--to go from becoming a 
virtual nuclear state to an actual nuclear state, in other 
words if they decide to weaponize, then they also have to 
decide to find a way of delivering that weapon somewhere. They 
need missiles. And I think North Korea has been very much 
helping them in developing the kind of technology that allows 
them to put a warhead on and deliver it.
    Mr. Royce. So the North Korean experimentation with three-
stage ICBMs and miniaturization on nuclear warheads is 
something that, apparently, Iran is attempting to--is there 
kind of a consensus that that is probably the rationale for 
this relationship?
    Mr. Clawson. The North Korean rationale seems to be money.
    Mr. Royce. Right. That I understand.
    Mr. Clawson. But the Iranian rationale, as Dr. Milani 
suggested, is that this is a powerful way for them to get 
access to technology they would like. I mean, they would much 
rather have that technology from other sources, and they turned 
to the North Koreans because they can't find anyplace else.
    Mr. Royce. And the specific technology that is in question 
here are three-stage ICBMs, the long-range ICBMs, and 
miniaturization to put it on that kind of an ICBM.
    We are cutting back on our strategic defense initiative, at 
this point. It would seem like an inopportune time to do so, 
given not only North Koreans doubling down on their efforts to 
develop this capability, but the presumption now that perhaps 
the transfer of that potential capability to Iran would give 
the Iranians long-range delivery capability.
    Mr. Rubin. Correct.
    Mr. Clawson. This regime has been very excited about what 
it describes as its space launch programs. And so we see every 
reason to believe that the regime is interested in developing 
very long-range missiles. And that would be technology which 
would be ideally suited for carrying a nuclear warhead that 
long distance.
    Mr. Royce. Yes, Doctor, go ahead.
    Mr. Rubin. Indeed, there are many reasons why we continue 
to doubt Iran's explanation that their nuclear program is 
intended for civilian use only. It is not just their trade with 
North Korea for nuclear technology. There are a number of other 
factors, as well.
    Mr. Royce. Thank you, Mr. Chairman.
    Chairman Berman. Thank you. The time of the gentleman has 
expired.
    The gentleman from California, Mr. Costa, is recognized for 
7 minutes.
    Mr. Costa. Thank you very much, Mr. Chairman.
    One of you mentioned earlier today, likened this regime to 
the Sopranos. If we reflect on that as an analysis, I mean, 
organized crime reached its heyday in the 1920s and the 1930s, 
but we spent another 50 years, some would argue still today, 
combating organized crime. I am not so sure we have the same 
luxury in terms of dealing with this regime over that kind of a 
time period.
    I want to move from sanctions a bit and talk a little bit 
about some of the other influences in the area. First, the 
other Arab states in the neighborhood. Are we, either formally 
or informally, using all the tools available?
    I mean, certainly, if, in fact, the result of it is a 
nuclear weapon in Iran, we know that there is going to be a 
reaction to that with the other Arab states. Are they as 
focused on this as we are?
    Yes, Mr. Rubin.
    Mr. Rubin. The other Arab states are certainly, especially 
in the Persian Gulf, are very cognizant of it. The problem is 
that if they do not believe that we are serious, if they do not 
see an effective effort for sanctions and other reasons, then 
they will come to the conclusion that they have no choice but 
to accommodate with the Islamic Republic of Iran. Therefore, 
our intentions should go beyond dialogue. And I should say that 
organized crime wasn't simply defeated by talking to them.
    The other issue which we need to focus on is the continued 
pursuit of the Gulf Security Dialogue, which--George Bush 
relaunched an initiative that had been initiated by the Clinton 
administration. And the basis of the Gulf Security Dialogue 
isn't just talk; it is to enable the Persian Gulf emirates on 
the other side of the Persian Gulf, the Arab states, to better 
defend themselves, to better implement containment.
    And this is what we had talked about before, when it comes 
to what is taught in our U.S. military academies, the DIME 
paradigm, where every component should have a diplomatic, 
informational, military, and economic component. And when I 
talked about ``military,'' I am not talking about bombing. I am 
talking about containment, and I am talking about deterrence. 
And that actually amplifies diplomacy, when they are all done 
in conjunction.
    Mr. Costa. And you don't think this administration is using 
all of those elements in this strategy?
    Mr. Rubin. No, the problem with this administration, in my 
opinion, is that we are prone a little bit too much toward 
sequencing rather than using these multiple aspects of strategy 
in which the sanctions bill will play a part to amplify the 
diplomacy and to amplify the package as a whole.
    Ms. Maloney. Let me just disagree with that, because I 
don't think that, at this stage, we are in a position where we 
can say we are holding back with the Gulf states.
    The Gulf Security Dialogue, launched by the Bush 
administration, was, for all intents and purposes, an arms 
sales package, massive arms sales package, which obviously has 
its role in reassuring those states. We didn't ask anything in 
response from them, in terms of their support either from the 
Iraqi Government, for example, or their support for tougher 
sanctions against Iran. It was a gift, and I believe it served 
a purpose.
    This administration has been very up front in going to the 
Gulf states, talking to them about Iran, about ensuring the 
continuing defense cooperation that is an integral part of our 
regional strategy.
    Mr. Costa. And, on that point, to the other gentleman's 
notion, do you think they believe that we are serious?
    Ms. Maloney. I think they do believe that we are serious. 
On the other hand, their long-time--it predates us, predates 
this regime in Iran--their strategy for dealing with local 
threats is balancing. And so they balance their relationship 
with the United States with a continuing relationship with the 
Iranians.
    They are not prepared to cut off their nose to spite their 
face. They are not prepared to break ties with Tehran. They are 
not, in the case of most of the smaller Gulf states, prepared 
to engage in serious economic pressure on the Iranians, because 
it would have direct and very problematic impact on their own 
economies.
    And so I think we have to recognize that we need to help 
reassure them, but if we are looking to do more to pressure 
this regime, we are going to also have to ask more from the 
Gulf states.
    Mr. Costa. And you think we are doing that?
    Ms. Maloney. I don't believe that we are there yet. I think 
that those conversations occur, but, obviously, you know, the 
focus of efforts so far of this administration has been on 
engagement. But, notably, obviously, Dennis Ross, who is the 
Secretary's envoy for this issue, his very first international 
trip was to the Gulf states.
    Mr. Costa. Yeah, quickly, Mr. Sadjadpour, because I want to 
move into another direction.
    Mr. Sadjadpour. I agree with Suzanne's point. And I would 
simply add that I fear that many of the Persian Gulf countries, 
the smaller ones, don't necessarily share the United States' 
interest, meaning I think the United States would love to see a 
more progressive, democratic Iran emerge. I think the----
    Mr. Costa. Which is not necessarily in their interest.
    Mr. Sadjadpour. Exactly. They don't necessarily want to see 
Iran emerge from its self-inflicted isolation.
    Mr. Costa. And they are probably not so sure about the 
consistency of our policy.
    Mr. Sadjadpour. Of the U.S. policy?
    Mr. Costa. Right.
    Mr. Sadjadpour. Well, I think that, in many ways, they want 
to see the status quo ante. They want to see a beleaguered, 
isolated Iran. They don't want to see Iran get bombed, and they 
don't want Iran to get the bomb.
    Mr. Costa. Well, let's talk about internally. And I know 
there have been comments about it earlier, with regards to the 
elections and the protests since the elections. And the 
comments of Rafsanjani and some of the others seem to be rather 
outspoken in this aftermath of the election.
    Where do you think this is all going, in terms of--I mean, 
obviously, there seems to be a challenge for power among the 
council. And how does this play out? I mean, I think it is 
fascinating from an outsider, but we are not in the inside. And 
this, obviously, isn't a transparent process.
    Mr. Milani. I think there are two tracks to watch. One is 
the Mousavi track, to watch what the popular people will do, 
led by Mousavi and Khatami. And Khatami's recent announcement 
that there should be a referendum is truly a remarkable 
statement coming from him.
    Mr. Costa. Is that getting reported throughout the country?
    Mr. Milani. It is very much reported. And he has already 
received literally a death threat by the Keyhan, which is a 
mouthpiece of Khamenei. Shari'atmadari is the editor, and he 
has already written an editorial saying that this idea is 
concocted in Washington. In fact, he attributed it to a 
commentator here, Michael Ledeen. He said this idea came from 
Michael Ledeen. And that Khatami will pay a very heavy price, 
Khamenei also threatened.
    But in Rafsanjani's speech, there was a very key sentence. 
He said, ``Everything I am saying I am saying after consulting 
with people in those two clerical bodies.'' Both of which he 
leads.
    Mr. Costa. In other words, he has more support.
    Mr. Milani. Absolutely.
    Mr. Costa. If I might, one more question, Mr. Chairman?
    Chairman Berman. Actually, the time has more than expired, 
so I think----
    Mr. Costa. Thank you.
    Chairman Berman. Yeah, the time of the gentleman has 
expired.
    The gentleman from Texas, Mr. Poe.
    Mr. Poe. Thank you, Mr. Chairman.
    Thank you for being here.
    I am a believer in self-determination. I commend the 
Iranian people for speaking out. I admire them for that.
    I think it should be clear that America's quarrel is not 
with the people of Iran; it is the way they are being treated 
by their own government and run roughshod, black-booted thugs 
killing Iranian citizens on the streets.
    My concern is how we approach that from an official point 
of view. I mean, the Iranian Government blames us for all the 
unrest anyway. After the crooked elections, we took--the 
administration took I think somewhat of a soft approach on what 
took place over there, that it was unfortunate or whatever. 
Would it help--this is an opinion question for you--would it 
help with the issue of self-determination if the United States 
was more vocal in supporting the people of Iran in determining 
their own destiny?
    Dr. Rubin, you are looking at me first, so go for it.
    Mr. Rubin. Generally speaking, if the United States uses 
its bully pulpit in a very careful manner and talks about how 
we value freedom, we value liberty, we value the ability of 
elections to matter, that is very important. We should not get 
into the nuts and bolts of specific opposition figures, 
especially since we have a habit of misidentifying who the 
opposition figures truly are. But there is no reason why we 
should be ashamed of moral clarity.
    Mr. Poe. All right. Anybody else want to weigh in on that?
    Yes. Dr. Clawson, go ahead.
    Mr. Clawson. Actually, the regime in Iran has been blaming 
the Europeans much more than blaming us, and particularly 
blaming the British.
    Mr. Poe. They never liked the British.
    Mr. Clawson. Very true. But it was also intriguing, the 
considerable contrast between the statements of the Chancellor 
of Germany and the President of France with the President of 
the United States; and it is an interesting situation when we 
see the French President being much more active, supporting a 
stand of principle than the United States President.
    Mr. Poe. So my question is, if we were more vocal, the 
bully pulpit, for example, idea, would that help that country 
have self-determination? That is my question.
    Mr. Clawson. Certainly the leaders like Khamenei believe 
that is the case.
    Mr. Poe. All right.
    Mr. Clawson. And I suspect he knows his country better than 
I do.
    Mr. Poe. All right.
    Mr. Sadjadpour. I like Michael's term about moral clarity. 
These themes which universally resonate of justice and freedom 
without anointing a particular party or individual I think are 
the right way to go. I think we should continue to condemn 
human rights abuses. There is even a U.S. citizen now 
languishing in Evin prison, Kian Tajbakhsh.
    And I would also add--this is in response to some of the 
questions earlier--that we should also try to provide the 
Iranians the means for self-determination, meaning now 
communications--they have great difficulty communicating. 
Internet is down. They are not receiving news from the outside 
satellite broadcasts. Anything we can do to help lift that 
communications embargo I think would be a great service to 
them.
    Mr. Poe. My next question is the protests since the 
election. Do you think that this is going to--is this a flash 
in the pan or is this going to be a continuous opposition to 
the government? I am not talking about the players, so to 
speak, and the different leaders. But is this something that is 
going to keep going or is this just something that happens in 
the summer? Dr. Rubin?
    Mr. Rubin. Iran is a tinderbox, and it has been a tinderbox 
for some time. The issue is whether the Iranian Government is 
better at putting out sparks than--and if the sparks will get 
out of control. Some people like Rafsanjani want to preserve 
the regime but want a controlled burn. Ultimately, this is why 
greater U.S. attention to the state and the factions within the 
Islamic Revolutionary Guard Corps and the security forces 
becomes so important.
    The problem with muddle-through reform is that if you are 
the Supreme Leader--and we don't want to engage in projection. 
He may really believe that sovereignty comes from God, not the 
people. Therefore, it doesn't matter what 90 percent of the 
people think. Then you are not going to be responsive to the 
will of the people. The question for U.S. policy should be, how 
can we create a template upon which the Iranian people can take 
action in their own hands?
    Mr. Poe. Dr. Milani?
    Mr. Milani. I don't think this is a flash in the pan. I 
don't think this is the 1999 student movement, where they can 
throw a few thugs and throw some students off the fourth floor 
and quiet it down. This is a much larger movement in terms of a 
social base; and it has enormous support amongst both stalwarts 
of the regime like Rafsanjani, Khatami, and the clergy.
    We haven't talked about the clergy. Many of the most 
influential Shiite clergy have said either nothing in support 
of Ahmadinejad or have taken Ahmadinejad and Khamenei to task. 
They are an enormous force that I think indicate--their silence 
indicates that the rift is much bigger and the problem is much 
more serious than a flash in the pan.
    Mr. Poe. The opposition, different factions--and without 
giving me how many you think there are, are the opposition to 
the government--are they generally united or are they 
independent entities all in opposition?
    Dr. Milani, what do you think?
    Mr. Milani. I think the opposition right now is clearly 
united inside Iran around the issue of the election, around the 
issue of the fairness of the election, and around the issue of 
the overreach of Mr. Khamenei and his Revolutionary Guard 
cohorts in making this coup. The demand of the opposition is to 
turn this coup back and create a more democratic, less despotic 
personal government. I think everybody is in agreement with 
that.
    Mr. Poe. I think the best hope for Iran, in my opinion, and 
the best for the Middle East and the United States, is a regime 
change, without going into dealing with the issue of nuclear 
weapons.
    And I will yield back the rest of the time that I don't 
have.
    Chairman Berman. Such as it is.
    The gentleman from Georgia, Mr. Scott, is recognized for 7 
minutes.
    Mr. Scott. Thank you, Mr. Chairman.
    First of all, Dr. Milani, I felt that you gave a very 
descriptive, very riveting analysis of describing the situation 
and the volatility and the precariousness that Iran is in as a 
result of this crisis from the election. But my concern is that 
we interpret this uprising, this revolt properly. And I think 
it would be good for us to examine why and examine it from the 
perspective of the people who are doing the uprising and not 
just automatically assume that they are rebelling against what 
has become the standard attitude toward Israel or the standard 
attitude toward developing nuclear weapons.
    So I would like to find out from each of you to what degree 
is this crisis and this uprising and this surge for liberty and 
democracy and the revolution against this--revulsion against 
the election returns has to do with their dissatisfaction of 
Iran going down a nuclear track and Iran's very professed 
disdain for Israel?
    So if we can say that the reason they are upset is not just 
because it was a bad election but because we, the people of 
Iran, are not interested in pursuing a nuclear weapon--and I 
don't know if that is the case or not--or we in Iran, the 
people in Iran, we are upset and our crisis is because we don't 
like this attitude against Israel.
    So I would like to get your comments, and each of you, 
because these are the issues that concern us. We don't want 
them to get a nuclear weapon. We don't like their attitude 
toward Israel. What degree of this uprising and disdain and 
crisis can we take from this to support our two interests?
    Mr. Clawson. Sir, I don't think anyone is on the street in 
Iran because of the nuclear program or because of Israel. But 
they are on the street because they would like to see Iran 
reintegrated back into the world and better connected with the 
world, and they don't want to see their country isolated from 
the world. That is the issue for these people. And that is true 
about cultural isolation; it is true about political isolation; 
it is true about the difficulty of travel; it is true about 
economic isolation. They don't want to be isolated from the 
rest of the world.
    And if in that context then being seen as supporting 
terrorists and being seen as having an unacceptable nuclear 
program is part of this isolation and much as many people in 
Iran who are out there on the streets who think it would be 
good for Iran to have nuclear weapons, if they have to give up 
much of the nuclear program in order to end their isolation 
from the world, I don't think it is going to be a tough call 
for them. I think they would be prepared to do that.
    Mr. Scott. Okay.
    Mr. Milani. I refer again to a poll that was done, a poll 
that was done by a group in Washington. It is as close to a 
scientific poll--it had a flaw. It was done outside from phone. 
It had that flaw. But they talked to about 1,000 people. Fifty-
two percent of those asked said Iran should recognize the State 
of Israel. Ninety percent said Iran should make all the 
necessary--give all the necessary guarantees to the West that 
its nuclear program is not military in return for scientific 
cooperation.
    As Patrick said, Iranians want to join the world. There are 
24 million Internet users in Iran. There are 500,000 bloggers 
in Iran. This is not a country that can be ruled by a medieval 
ideology that says I speak for God. They want that change, and 
they want to come to the rest of the world and join the 21st 
century.
    Chairman Berman. Dr. Maloney wants to respond.
    Ms. Maloney. Let me jump in and just add that I am from 
Boston, so I live by the maxim that all politics are local. To 
what I can interpret--obviously, none of us were in Iran for 
the protests, so we are all looking through the glass darkly--
most Iranians were provoked to take action that they haven't 
taken in the past because of the simple outrage of the just 
blatant rigging of the election. And this speaks to how 
important the electoral process is for Iranians, how important 
the tradition, this 100-year-old tradition of constitutionalism 
is in this country and how even elections that were never fully 
free and fair provided a voice for Iranians that they valued. 
And when that was taken away from them, they were prepared to 
go to the streets in a way they never have before.
    Mr. Scott. Okay. Yes.
    Mr. Rubin. I would certainly agree that all politics are 
local. The issues here are both the Iranian people and the 
United States Government face a common adversary in the Iranian 
state security apparatus, albeit for different reasons and 
different interests.
    That said, we have seen protests over the years. The 
teachers union protesting in Tehran under the banner ``forget 
about Palestine and think about us.'' In 2006, there were 
protests when the Tehran government wanted to send money to 
Lebanon after the 2006 war. This is one of the reasons why I do 
think it is essential that the United States doesn't miss 
another Lech Walesa moment and we do support the growing and 
nascent independent trade union movement inside the Islamic 
Republic of Iran in order to force the Iranian regime to become 
more accountable to its people. It is in both our interests and 
theirs.
    Mr. Scott. And my final remark is that I hear this, but, on 
the other hand, you are saying for the United States not to get 
involved. I think that was the consensus before we left to go 
to vote. It was stay away. I mean, don't interfere at all.
    Mr. Rubin. That is not--so there is no consensus.
    Mr. Scott. Oh, you were the only one then.
    Mr. Rubin. I don't know.
    Mr. Scott. Wasn't that the consensus, that our best deal 
here is to allow this thing to work out?
    Chairman Berman. There was a majority view of let the 
Iranian people own this, not us. That may have been a consensus 
view. But the notion of detachment totally may not have been a 
consensus.
    Mr. Rubin. Correct.
    Mr. Clawson. I think we probably all support Michael's call 
for an endorsement of moral clarity and principles. We would 
all say that we should be actively supporting our principles, 
not just things we see in the G-8 statement and so on.
    Chairman Berman. I think the time of the gentleman has 
expired.
    The gentleman from New Jersey.
    Mr. Smith. Thank you, Mr. Chairman.
    Chairman Berman. Mr. Smith.
    Mr. Smith. Thank you for assembling an excellent panel and 
for an outstanding hearing, which has brought a lot of clarity 
to this debate. So I thank each of our witnesses for your 
testimony.
    A few years ago, I read a very disturbing and a very 
insightful book by Edwin Black called, ``IBM and the 
Holocaust.'' In his heavily footnoted book, the author points 
out that, beginning in the early 1930s, Nazi Germany was 
significantly aided and abetted in its plan of conquest and 
genocide by IBM and its subsidiaries. IBM helped Hitler to 
create the Hollerith punch card technologies to identify Jews 
so they could be targeted for asset confiscation, deportation, 
ghettoization, slave labor, and finally extermination.
    And the question was often asked, where did Hitler get all 
the names? Well, IBM provided that and helped the Nazis develop 
that capability.
    It is well-known today that certain governments are using 
modern technology, including technology from the United States, 
to violate fundamental human rights. We have had several 
hearings in this room on the shameless collaboration of certain 
Internet giants, from Google to Yahoo and others, in aiding and 
abetting the Chinese dictatorship. As a matter of fact, I have 
introduced legislation, the Global Online Freedom Act, which is 
designed in part to compel at least transparency as to what 
they are doing; and hopefully we will mark that up soon or some 
day.
    On June 22nd, the Wall Street Journal reported that 
Siemens--and a couple of our distinguished witnesses have 
already made mention of that--and Nokia during the latter half 
of 2008 provided the Iranian regime with the capability not 
only to block communication but also to monitor it and to 
gather information about individuals and to alter that 
information in order to spread disinformation. This 
sophisticated system, which the Wall Street Journal 
characterized as the world's most sophisticated system for 
controlling and censoring the Internet, was used, as we all 
know, to suppress the uprising after the fraudulent elections.
    On the same day, the Wall Street Journal reported that 
Siemens, again enabling the Iranian Government, had reported 
that the company expected to land some $21 billion worth of 
stimulus contracts globally, of which some $8 billion would 
come right from the United States. And, as we know, several 
California politicians and Iranian human rights advocates are 
trying to pressure that Siemens not be awarded hundreds of 
millions of dollars in sales at the L.A. Metropolitan 
Transportation Authority, which I think sends a very clear 
message; and I hope they succeed.
    But I would deeply appreciate--since there is so much 
stimulus money in this country and abroad in the pipeline, that 
money is almost assuredly going to be spent--what your views 
would be on limiting those dollars from going--as we can; 
hopefully, other countries will do the same, which would be my 
view--to companies like Siemens.
    Because the complicity with the Iranian crackdown obviously 
hasn't stopped. You know, the communications center continues 
and e-mails are being interrupted every day. Information is 
being gleaned from it and used in a repressive way by the 
regime.
    I would appreciate all of your thoughts on that. Should we 
limit our stimulus money or other contracts as well to 
companies like Siemens?
    Mr. Milani. First of all, a point of clarification. I wrote 
a letter to the office--the MTA office objecting to it and 
threatened that I would write a letter to the editor in the 
L.A. Times. I got a letter back saying that they are not about 
to give Siemens anything, that the deal is something else, and 
it is with a different company.
    But I 100 percent agree. I think it would send an 
incredible message to the Iranian people if you could sanction 
a company like Siemens. If people in Iran learn that companies 
that are complicit in this regime's crimes get punished, that 
would be the most invigorating message that that democratic 
movement can hear.
    Now whether it is possible to do it or not, you folks know 
that much better than I do.
    Mr. Sadjadpour. I would just simply second Abbas' comments 
and say I would also unequivocally support a prohibition of 
repressive transfers of technology to regimes like Iran; and I 
think it would send a wonderful signal if Siemens, Nokia--
McAfee is another company--would be censured and punished for 
this.
    Ms. Maloney. Let me just at least suggest an additional or 
even alternative route, which is that, you know--and I am not a 
tech person, but I think one of the difficulties with dealing 
with technology is it is constantly evolving. And whatever we 
preclude the Iranians from getting today, they will be able to 
develop or get their hands on. And I would suggest that the 
bulk of our efforts in this regard should be focused on finding 
alternative ways for Iranians to communicate and providing that 
to them to the extent that we can.
    I know that there are a lot of people with Internet 
expertise and particularly in the Iranian American community in 
California who have already begun talking about this, and there 
were likely efforts under way even before June 12th. But, you 
know, providing mechanisms for Iranians to communicate with one 
another that evade whatever technology their government is able 
to get its hands on--because, you know, we may block Siemens, 
but we may not be able to block the Chinese and Russians, who 
can provide similar technology.
    Mr. Kittrie. I agree wholeheartedly with the gist of what 
you are saying.
    I also happen to think that we should be looking to help 
the Iranians find other ways of communicating. But the fact of 
the matter is that there are certain technologies that are 
cutting edge. There was a study recently, two-thirds of Iranian 
industry depends heavily on German machinery. If Germany 
stopped exporting, stopped servicing that machinery, the 
Iranians wouldn't be able to turn to--you can't just put a 
Russian part in a German machine.
    I think it is a great idea that we put companies to a 
choice between the United States market and the Iranian market, 
and then we consider doing that as well with the stimulus 
funds. I think that would be a very powerful tool.
    Mr. Rubin. I also agree with the gist, in addition to which 
we don't need to enact any legislation for the White House to 
become much more active in naming and shaming these companies.
    The other point I would make--and I concur with Dr. Maloney 
with regard to providing independent media. I would note that 
while in the previous administration the Iran Democracy Fund 
was quite controversial, the plurality of money in that went to 
Radio Free Europe and Voice of America's television and radio; 
and it is important that that not be withdrawn.
    Chairman Berman. I thought it went to polling.
    Mr. Rubin. The Iran Democracy Funds.
    Chairman Berman. Yeah.
    Mr. Rubin. Oh.
    Chairman Berman. The time of the gentleman has expired, and 
the gentleman from----
    Well, first, I want to say people here are grandfathered 
in. Anyone else who straggles in now, not going to be 
recognized. At some point, we have to show some mercy to the 
panel and to the chairman.
    Mr. Ellison. In other words, Ellison, Pence, Sherman, 
Berman, and Costa for 1 minute each. Mr. Ellison.
    Mr. Ellison. Thank you, Mr. Chairman; and thank you to the 
panel.
    Given that President Obama's projection in terms of when 
negotiation or engagement will have run its course as being 
September was before the new political situation we see with 
the election, do any of you think that we might delay that 
deadline and sort of take that deadline off the table and sort 
of begin counting, if ever we want to do that counting, after 
the political environment has settled down? Mr. Rubin?
    Mr. Rubin. Very quickly, the issue isn't just the deadline. 
The issue is that neither the Obama administration nor the 
Clinton State Department has not indicated the metrics by which 
they are going to judge that engagement.
    Mr. Ellison. Yeah, Mr. Rubin, that is a good point. But I 
only got 7 minutes. So is there anybody who wants to answer the 
question I asked?
    Mr. Clawson. The problem we face is that the nuclear 
program is advancing; and if we let this issue slide until the 
dust settles, we have got a real problem, especially with our 
Israeli friends, who are already very nervous.
    Mr. Ellison. I will take that as a no.
    Mr. Clawson. I am saying we are stuck between a rock and a 
hard place. Because it is going to be very--I would agree with 
my colleagues that engagement now is tough to do and that there 
is much reason to wait for the dust to settle. However, 
hopefully, that is not nuclear dust. And the problem we face 
is----
    Mr. Ellison. I think we all understand that. I get that. 
But I just want to----
    Does anybody think that, given that this timeline was set 
forth before this new situation, should we consider this 
September deadline as sort of a--should we be more flexible 
with that, understanding some of the points that have been made 
already? Mr. Milani? Dr. Milani, excuse me.
    Mr. Milani. I agree with you. I think the September 
deadline was an arbitrary deadline, and I think it is going to 
be impossible to imagine that from now until September anything 
substantive can happen between Iran and the United States, 
particularly because I don't think we still know who we will be 
engaging with in Iran. I think it is unwise to engage with Iran 
before we know who it is that is in power.
    Mr. Ellison. Dr. Sadjadpour?
    Mr. Sadjadpour. I would agree with what Abbas just said. 
And I will say that probably a better approach would be to--
instead of rushing into engagement so we can meet the September 
deadline for failed negotiations in order to then pursue 
crippling sanctions which will foment unrest and create 
fissures among the regime, that already exist right now, the 
agitated population and the fissures. And let's let this 
process play out. Let's wait until the dust settles before 
attempting engagement.
    Mr. Ellison. My concern about rushing into negotiation now 
would be that they would inevitably fail, and then there is a 
real cost to failed negotiations. Because, in my subjective 
opinion, there are people who want war; and they would get what 
they want without ever letting negotiation really have an 
opportunity to succeed.
    I just disclosed my own bias.
    Let me ask this question. Has the 2003 NIE comment about 
weaponization been altered since--has that been revisited and 
reviewed and therefore changed--and thereafter changed since 
they made that pronouncement that the weaponization program 
ended in 2003? Have they revised and changed their perspective?
    Mr. Clawson. You would know better than we what the 
intelligence community may have done.
    Mr. Ellison. No, I am not on that committee, so I don't----
    Mr. Clawson. The intelligence community may have done.
    May I point out they said in the NIE that they had a high 
confidence that Iran had suspended its program in 2003 but 
moderate confidence as to whether or not the suspension was 
continuing.
    Mr. Ellison. Thank you very much.
    In terms of the weaponization in 2003, has that been 
revised and changed? Because, of course, there is this thing 
that some have already alluded to, which is this ticking clock. 
And I guess if they haven't restarted or if we don't have 
evidence that they have restarted, I mean, do we have--I mean, 
you know----
    Mr. Clawson. Sir, I don't know anyone in the technical 
community who believes----
    Mr. Ellison. Thank you very much.
    Mr. Rubin. You might want to ask the IAEA, which----
    Mr. Ellison. Let's talk about the IAEA for a moment. The 
IAEA has recently indicated that their level of cooperation is 
not what is expected, but they have not--unless you guys can 
correct me--said that they have restarted a weaponization 
program.
    Mr. Clawson. They haven't looked for one.
    Mr. Ellison. Ms. Maloney?
    Mr. Clawson. They don't look for one. Since they don't look 
for one, they----
    Mr. Ellison. I would like to hear Ms. Maloney's opinion on 
this issue.
    Ms. Maloney. I think you get at the fundamental ambiguity 
that is the problem that we are all trying to deal with with 
the Iranian nuclear program, which is we don't know what we 
don't know, and the IAEA doesn't know what it doesn't know.
    Mr. Ellison. Right.
    Ms. Maloney. And there are many skeptics about the state of 
the Iranian weaponization activities, but at least the 
intelligence community assessment of 2007 still stands that 
this was stopped in 2003. The difficulty, of course, is that 
without that level of cooperation, without any sort of 
confidence----
    Mr. Ellison. I got it----
    Ms. Maloney [continuing]. And access to those facilities--
--
    Mr. Ellison. I am at 1:26. I am sorry. And I want everyone 
know my sharpness is not designed to comment on your view. I 
respect all of your views and thank you for them. But I have to 
move on, so I can get my questions answered.
    Okay, we have had about 15 years of Iranian sanctions and 
about 30 years of limited--in deference to Dr. Rubin's point--
limited engagement. It hasn't been total isolation. Dr. Rubin 
is right about that. But I would say limited engagement.
    My question is, if we were to pass these crippling 
sanctions that have been talked about, could we impact the 
Iranian economy unilaterally, or does--have we sanctioned 
ourselves out of economic sanctions? Do we have any more cards 
to play against the Iranian economy or have they built a world 
around themselves such that they really don't need us very 
much?
    I would like to know Mr. Sadjadpour's opinion on this.
    Mr. Sadjadpour. I think what will concentrate minds in 
Tehran is not when they wake up in the morning and they see 
there is an amplification of existing U.S. sanctions but when 
they see the Chinese and the Russians and Indians are not 
returning their phone calls. So certainly if it is pursued in a 
multilateral fashion I think it would impress them much more.
    Mr. Ellison. Dr. Milani, can we impact the Iranian economy 
unilaterally, or don't we depend upon the cooperation of the 
world community?
    Mr. Milani. I don't think the United States can 
unilaterally impact the Iranian economy. They don't buy much of 
its oil, they don't sell much to it, and unless there is----
    Mr. Ellison. Dr. Milani, I have to ask you a question real 
quick and forgive me for this. Can the United States gather the 
world community around--can I finish?
    Chairman Berman. No. You got a lot of questions in there, 
but----
    Mr. Ellison. I was in a rush, and I appreciate everybody's 
indulgence.
    Chairman Berman. It is past the time.
    And the gentleman from Indiana, Mr. Pence, is recognized 
for 7 minutes.
    Mr. Pence. Thank you, Chairman. I want to thank you and the 
ranking member for calling this very timely hearing.
    I want to thank this distinguished panel for your testimony 
today. I look forward to reviewing the balance of this hearing.
    As the chairman knows, this is an area of profound interest 
to me; and I am grateful for the leadership and the intellect 
represented on the panel.
    As I am sure this panel knows, quite recently Chairman 
Berman and I authored a resolution for the Congress that 
expressed the support of the people of the United States of 
America for Iranian citizens who embrace freedom, human rights, 
civil liberties, and the rule of law. It condemned the ongoing 
violence against demonstrators by the Government of Iran and by 
pro-government militias, as well as the ongoing government 
suppression of independent communication.
    I want to take this public opportunity to thank Chairman 
Berman for the bipartisan and, if I may say, statesmanlike 
approach that you took to moving that legislation in an 
expeditious and substantive manner.
    To this panel, I would say, as news comes to us of 
challenges from former leaders in Iran, reformers, to the hard 
line taken by Iran's Supreme leader, the question obviously 
before Congress and before the American people is the subject 
of this hearing. That is, what role will the United States play 
in a relationship with Iran and how might we best, I would add, 
expand the horizon of freedom in that nation by our conduct?
    Now, I believe the American cause is freedom, and in that 
cause we must never be silent. Those of us who cherish that 
tradition of bold, pronounced rhetorical leadership on behalf 
of freedom in the world have been troubled, frankly, by this 
administration's first 6 months on the world stage. The 
President has traveled the globe, often apologizing for 
America's past. It seems to me that he has passed by a number 
of opportunities to advance the cause of freedom in the global 
debate. And this administration, I believe, has met each 
international crisis, whether it be in Honduras--the country of 
Honduras or Iran with an unpredictable foreign policy.
    In the streets of Iran, hundreds of thousands of Iranian 
dissidents rallied to have their votes properly counted and 
their voices heard. Sadly, the Iranian Government responded 
with a violent crackdown of the dissidents. The 
administration's first response was not to, 
quote, deg. ``meddle in the internal affairs of Iran.''
    While the administration waited, Congress acted and spoke 
forcefully into the world debate, as did the EU, as did other 
countries. And while the President found his voice after 
Congress acted, the mixed message on our commitment to the 
freedom the people of Iran were clamoring for on their streets 
was regrettable. The President often says, ``The arc of history 
bends toward justice.'' I would argue the arc of history does 
bend toward justice, but it also teaches us that weakness 
emboldens evil, and rogue dictators grow stronger when 
appeased.
    Recently, Secretary of State Clinton, I believe speaking at 
the Council on Foreign Relations, reaffirmed the commitment of 
the United States of America to a policy of engagement; and I 
know it has been much of the discussion this afternoon. And I 
guess my question--I would direct it to Dr. Rubin, if I may--is 
the Secretary of State, I believe--although I don't have a copy 
of her speech in front of me--she referred to a commitment to 
engagement with the leaders of Iran. She said Iran has the 
opportunity to be, quote, deg. ``a constructive actor 
in the region.''
    And I would just--I would ask you, Dr. Rubin, given your 
written testimony that I had a chance to review and your 
comment that the administration is going with sequenced policy, 
is it proper for the United States of America to denote who are 
the leaders of Iran in an engagement if the people of Iran by 
the millions have not agreed on who are the legitimate leaders 
of Iran?
    And does it serve the interests of freedom, first for the 
Iranian people, and freedom in the world stage, for us to 
pursue engagement following a clearly discredited and 
fraudulent election, followed by violence, and one that I 
believe evidence in the news media in the last 3 days indicates 
continues to foment unrest within that country?
    Mr. Rubin. I would just respond with two points.
    First of all, it is a fallacy to believe that engagement is 
a strategy that can be implemented without a cost. And with 
regard to who the leaders of the Iranian people are, I do think 
that it is important that we not snatch defeat from the jaws of 
victory and make the same mistake three times.
    Mr. Pence. In which respect?
    Mr. Rubin. With regard to siding with a government and 
against reform when the Iranian people had already made up 
their minds that that government no longer had popular 
legitimacy.
    Mr. Pence. I am going to startle the chair and yield back 
the balance of my time.
    But I had that one question. I am grateful to the panel, 
and I do appreciate the voices of all the intellectuals on this 
panel. This is an extremely important question. The chairman 
and the ranking member I know are grateful for your time, and 
we will continue to avail ourselves of your thinking on this 
topic.
    Chairman Berman. Thank you very much. The time of the 
gentleman has been yielded back; and the gentleman from 
California, Mr. Sherman, is recognized for 7 minutes.
    Mr. Sherman. Thank you, Mr. Chairman.
    We have engaged with Iran. We did so through our European 
friends. Throughout that process, for virtually every day, the 
centrifuges turned. If the Iranian powers that be were serious 
about negotiations, they would agree not to be going in the 
wrong direction while they were negotiating. They would freeze 
the centrifuges.
    It will take years for sanctions to affect the Iranian 
economy, perhaps a shorter time to have some political effect 
inside Iran.
    The gentleman from Minnesota talks--focuses on the NIE and 
weaponization. We had hearings in our subcommittee on 
nonproliferation, and a number of things emerged.
    First, weaponization is very, very hard to detect. It can 
take place anywhere. Whereas the creation of the fissile 
materials is a major industrial process. So we don't know 
whether they have resumed weaponization or not. What we do know 
is weaponization is the easy part--not completely easy, but the 
easy part--and they could suspend weaponization until next year 
and still be very much on target to have a nuclear device by 
the end of 2012.
    What they have to do to have a weapon by the end of 2012 is 
keep producing the fissile material. For that, they need the 
centrifuges; and the centrifuges are turning now. That NIE 
report buried in footnote number one the important aspect of 
the report and was perhaps deliberately designed to be 
misinterpreted.
    It is true that all serious sanctions have got to affect 
the behavior of European and other foreign businesses. That is 
why all our sanctions bills are designed to affect the behavior 
of foreign companies.
    Of particular note--and the chairman will agree--that those 
of us from Los Angeles also believe that all politics is local, 
and we have two very local things happening directly relevant 
to this hearing. I believe it is Thursday the MTA will vote 
whether to go with the contract I believe they have already 
approved but are reviewing again with an Italian firm, AB, or 
instead reject that contract and in effect give it to Siemens.
    I hadn't thought of the MTA as a major foreign policy 
instrumentality of the United States, but I for one--and 
perhaps the chair will join me in this--will call our friends 
on the MTA and let them know the role that Siemens is playing 
in Iran.
    The second is Vitol, a major supplier of refined petroleum 
to Iran, just acquired a company that has--I believe it is a 
month-to-month contract to provide jet fuel at LAX. So we could 
just in L.A. County have a dramatic effect on two of Iran's 
leading business partners. And I think it is particularly 
important that we do so. Because the front page of the 
Washington Times, the number one story was about Siemens, Iran, 
and the Los Angeles transportation system.
    I don't believe in punishing European companies just for 
the joy of doing so. The purpose is to affect their behavior, 
and the best way to affect their behavior is in something that 
is widely publicized. Also, I think at least one of the 
witnesses says that is the kind of message that people in Iran 
would want to see.
    I want to bring to the attention of everyone here H.R. 
3284, which Mr. Royce, Mr. Klein, and I introduced based on a 
theft of intellectual property from Senator Schumer and that 
prohibits Federal contracts with firms that provide monitoring 
or blocking Internet equipment to Iran.
    And that brings us to our friends Nokia and Siemens, and my 
question for the panel is that the Nokia Systems network Web 
site says that they sold Iran a product marketed as 
intelligence solutions monitoring center. They disclaim having 
provided more advanced technology. And perhaps one or two 
members of the panel would want to comment.
    Do you believe Nokia Systems when they say they didn't 
provide the deep packet inspection add-on, and do you think we 
should give Nokia Siemens a pass if all they sold was an 
intelligence solutions monitoring center?
    Do I see someone who wishes to respond?
    Mr. Rubin. Dr. Rubin.
    Mr. Rubin. Sir, that would be like saying, if you were 
Nokia, that don't worry, we only shot the victim in the 
abdomen; we didn't shoot them in the chest. The net effect of 
it is the same, and it is quite unfortunate and shameful on 
Nokia's part.
    Mr. Sherman. Nokia Siemens part.
    Yes, Mr. Sadjadpour.
    Mr. Sadjadpour. I would just say I am not a technical 
expert myself, but I have spoken to several technology experts 
who disagree with Nokia Siemens' assertion that they simply 
provided this benign technology to the regime.
    Mr. Sherman. They have been remarkably non-forthcoming with 
the press and others. They flatly say, well, we did only in the 
abdomen, but they have been unwilling to provide information 
about what they did to the victim's chest.
    I would like to shift here. I don't know if anybody has the 
answer to this. What are the foreign cash reserves of the 
Iranian regime?
    Mr. Clawson. About $80 billion.
    Mr. Sherman. $80 billion.
    Mr. Clawson. It is not clear how much of that is actually 
usable. There is some reason to think that, in fact, the usable 
reserves are more like $50 billion. And to what extent is 
Iran's----
    Mr. Milani. Could I add?
    Mr. Sherman. Yes, Doctor.
    Mr. Milani. I don't think we have any clear indication that 
that is in fact the figure.
    Mr. Sherman. You think corrupt officials may have kind of 
spent that without notifying anybody?
    Mr. Milani. Ahmadinejad has dipped into it several times 
and has dipped into it in spite of the law. And when members of 
the Parliament tried to look into it----
    Mr. Sherman. Let me just interrupt with one thing. To what 
extent is Iran's credit rating enhanced by the new IMF facility 
that provides roughly $2 billion in special drawing rights but 
also gives the IMF the new capacity to bail out the Iranian 
economy should the IMF choose to do so?
    Mr. Clawson. There is very little chance the IMF would 
choose to do so, because Iran's policies are exactly the kind 
the IMF has warned against on many different occasions.
    Mr. Sherman. So they would have to change their economic 
policies in order to get that. Of course, they probably would 
rather change their economic policies than their political and 
nuclear policies.
    I yield back.
    Chairman Berman. All right. Everyone has had a chance.
    First, I want to ask unanimous consent to include a letter 
from the Iranian American Bar Association in the record of this 
hearing.
    [The information referred to follows:]Berman 
FTR deg.




    Chairman Berman. Secondly, I am going to recognize myself 
for two short questions; and if somebody else hung around, they 
can get two short questions, too.
    Question number one. In fact, I am just going to make it 
one short question. An analysis firm called STRATFOR produced a 
paper sometime soon after the Iranian election which appeared 
to have a sophisticated mathematical analysis, which for me 
means they had a bunch of numbers in different paragraphs, and 
therefore I assumed it was sophisticated. The thrust of it was 
that all this stuff about election-rigging and the breadth of 
the opposition was massively overstated. That if you looked at 
the different logical population centers, Ahmadinejad would 
have won a resounding victory with a fair count. That 
essentially the opposition to him is isolated to some college 
students, some feminists, a few discontented mullahs. That the 
notion that there is some groundswell in Iran against the 
supreme leader and Ahmadinejad is hyperbole, exaggeration, 
almost mythology.
    Now, in all fairness, that was done at least a month ago. 
But it is contrary to what a number of you particularly focused 
on internal Iran political developments have been saying. So I 
would like your reaction. I don't know if you saw that paper.
    Mr. Milani. I have read the paper, and I think it is deeply 
misinformed. It doesn't take into account many of the data that 
we have acquired since then, many of the evidence about how 
they rigged the election, about 15 million ballots that were 
printed without authorization and without numbers and many 
other things that basically show us that the government did in 
fact steal the election. Three million people, according to the 
Mayor of Tehran, came out in Tehran out of a population of 12 
million. That is a quarter of the population.
    Chairman Berman. Came out not for the election.
    Mr. Milani. To oppose the election. They came out to oppose 
the election.
    Chairman Berman. Out in the streets.
    Mr. Milani. A quarter of the population came out for 5 
days. That would be like 80 million people demonstrating in 
America for 5 days. When you have that level of support, to 
then claim that there are only feminist pockets that support 
this Moussavi is absolutely I think ridiculous.
    If the regime had the ballots, they would have produced it. 
They could have solved the problem very easily. The only person 
that has been allowed to see a ballot is Mr. Rezai's 
representative. Mr. Rezai said they opened one ballot for us. 
Seventy percent of the ballots in there were in one 
handwriting, in one pencil and for one candidate. That is the 
ballot they opened.
    Chairman Berman. Ballot box.
    Mr. Milani. Ballot box, I am sorry.
    Chairman Berman. Mr. Sadjadpour.
    Mr. Sadjadpour. Congressman Berman, Ahmadinejad went from 
5.7 million first round votes in 2005 to 24.7 million first 
round votes in 2009, an increase of 19 million after overseeing 
an economy in which inflation doubled, economic malaise deeply 
increased. That is the first point.
    Second point is that I think that the images really say it 
all. They deeply discount this analysis from STRATFOR that this 
was simply an isolated movement of students in northern Tehran.
    And, lastly, as Abbas alluded to, if you genuinely win an 
election two to one, you don't need to imprison thousands of 
people and kill hundreds. You agree to a recount.
    Chairman Berman. Anybody else? All right.
    Ms. Maloney. No, I mean it is important to actually take 
this notion on. Because as much as there is kind of unanimity 
on this panel and probably in most of Washington that it was a 
rigged election, I do hear these strands of skepticism when I 
talk to people. And I find it sort of inconceivable, because 
there is so much anecdotal evidence, reports of things 
happening in the Interior Ministry before the election was 
called.
    There is statistical analysis which shows that the way that 
the votes were reported had to have been concocted rather than 
real. But there is also the gut level analysis of anyone who 
knows anything about Iran and the Iranian people. Nobody found 
the idea that nearly two-thirds of the electorate wanted 
another 4 years of Ahmadinejad credible. And I think that is 
more powerful than anything else.
    Chairman Berman. Mr. Costa.
    Mr. Costa. Thank you very much again, Mr. Chairman, for an 
excellent hearing. And what a very good panel that we have here 
today.
    It is a follow-up, and you partially have answered it, I 
think, but on the line of questions I was asking earlier, and 
that is the battle that is taking place among the highest 
levels of leadership within Iran. And is this just a battle for 
the leadership for power or is it something bigger like for the 
hearts and minds of the Iranian people? Is there really below 
that level of the highest council a fermenting of this 
population that are 30 and younger, or half the population is 
30 years of age or younger that want a different Iran, a new 
Iran? Yes.
    Mr. Milani. I think it is both. I think we have a major 
rift within the clerical leadership. Some of the clergy who 
were with the regime have now completely taken a different 
side, like Mr. Khatami, Mr. Karubi, Mr. Rafsanjani, and Mr. 
Montazeri, who was one of the founding fathers of this regime 
has just issued a fatwa that basically says Khamenei is not 
morally fit to have this job.
    There is another bunch of clergy who have never been inside 
the government who oppose the idea of velayat-e fagih. They are 
also speaking out against the current status, because they 
realize that people are becoming completely areligious, if not 
anti-religious. They are trying to save some of the religion 
for them.
    And, finally, the youth, which are modern, savvy, want a 
job, and 40 percent of them are without a job.
    Mr. Costa. And secular many of them.
    Mr. Milani. And for that I have anecdotal as well as 
empirical evidence.
    Again, that poll shows that the majority of the people want 
the spiritual leader's job elected. That basically means the 
presidency elected by people.
    Mr. Costa. Anyone else care to comment?
    Chairman Berman. Mr. Ellison.
    Mr. Ellison. Again, I want to join Mr. Costa and the chair 
in thanking the panel. It has been a great panel.
    I also would like to ask unanimous consent to have an op-ed 
from Mr. Trita Parsi to be entered into the record.
    Chairman Berman. Without objection, his op-ed will be 
included.
    [The information referred to follows:]Ellison 
FTR deg.





    Mr. Ellison. You know, I would love to see Iran be a 
constructive and positive force in the Middle East, not 
contribute to dissension within Israel and Palestine and 
southern Lebanon but actually help bring parties to a good 
resolution. I would like to see the talents of its people 
flowered forward. And I really do join my colleagues in really 
hoping for the best for the Iranian people.
    My big question is how. How? What is the best way forward?
    So I will say that I haven't been persuaded that the best 
thing for us to do is to rush to crippling sanctions. Because, 
quite frankly, we need the world community to support our 
efforts if it is going to be successful. We have sanctioned 
ourselves out of sanctions unilaterally.
    How do we get the world--and I am talking about the whole 
world--to help us out the way sanctions brought about change in 
South Africa if we do not give real diplomacy a chance to work? 
And not the kind of diplomacy that says, well, we tried, so 
let's oil up the guns. That is the concern that I have.
    I am not in principle against sanctions, if that is what we 
need to do, but I am skeptical of this idea that we only--that 
we can't move anything past September, that there is going to 
be a nuclear weapon in October if there is not one. I am just 
very concerned about that.
    And so I would just like to get your reaction to some of my 
fears. Help me feel more comfortable, if you think I am wrong, 
about my analysis. And, Mr. Kittrie, I have heard you before, 
so let's let somebody else get started. Dr. Milani and Mr. 
Sadjadpour are the first two I would like to hear from.
    Mr. Milani. Sir, I think your concern I completely share. I 
think the Iranian people have the capacity to really become a 
major force for change. Iran has been a bellwether state in the 
Middle East. If there is democracy in Iran, I think there will 
have an effect for the rest of the region. And I think they 
deserve better than this leadership. And I think the United 
States is in the position to help them by sending the kind of 
messages that we talked about.
    I agree with you. Unilateral sanctions will only enrich the 
Revolutionary Guards some more.
    Mr. Ellison. And hurt the people.
    Mr. Milani. Unless it is--as I said, unless it is an 
internationally sanctioned and participated, like what they did 
to South Africa, that would cripple the economy. Unless the 
world agrees not to buy oil from these people. These unilateral 
sanctions pours deg. water, as we say in Iran, in 
their pot rather than the pot of the people. But sending a 
message to Siemens and others that doing this kind of thing in 
Iran has a price to pay I think will help a great deal.
    Mr. Sadjadpour. I agree with that.
    Mr. Ellison. Anybody else?
    Chairman Berman. All right. Again, I want to thank the 
panel very much. You gave us some wonderful information and 
analysis. I thought it was an excellent panel, and I am very 
grateful for the nearly 6 hours that you spent here. Well, 5. 
Thank you very much.
    [Whereupon, at 2:36 p.m., the committee was adjourned.]
                                     

                                     

                            A P P E N D I X

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