REP. BERMAN: The committee will come to order, and in a moment I will recognize myself and the ranking member for up to seven minutes, each for purposes of making an opening statement. I will then recognize the chairman and ranking members of the Middle East and South Asia Subcommittee, and the Terrorism, Nonproliferation and Trade Subcommittee for three minutes each to make their opening statements.

We have to end today's hearing by noon. So without objection, all the members may submit opening statements for the record.

Before I begin my statement, I want to say a few words about Steve Solarz, one of our most distinguished former colleagues, who passed away on Monday after a long battle with cancer. Steve had struggled for several years with this terrible illness, but with his typical discipline and good humor, he maintained an active and productive schedule.

We -- he served in Congress from 1975 to 1992. On this committee he was chairman of the Africa Subcommittee and later chairman of the Asia Subcommittee, where his hearings and activism played a key role in ending the dictatorship of Philippine President Ferdinand Marcos.

Steve was one of the most creative legislators I've ever worked with. Time after time, the committee would be debating an amendment to a bill that was resisted by the committee leadership. Arguments would be made on both sides, and then Solarz would seek recognition, offer the perfect synthesis between the two positions and get the unanimous backing of the committee for his compromise. He was a unique talent.

After leaving Congress, Steve continued his activism as a leader of the International Crisis Group. Those of us who had the privilege of calling Steve both a friend and colleague will remember him for his sharp insights, good humor and willingness to push American foreign policy beyond the boundaries of conventional thinking.

We express to his wife, Nina, and his family our deepest regrets and condolences at this loss to them and to our nation.

And I ask for us just to sit, but take a moment of silence while we remember Steve. (Pause.)

Now to my opening statement. Iran's nuclear program is a fundamental threat to the United States, our friends and allies, and to the global consensus on halting and reversing the spread of nuclear weapons.

As we meet this morning, Iran's centrifuges continue to spin, making more and more enriched uranium that could ultimately be turned into fuel for nuclear weapons. This threat continues to grow with each passing day.

This summer, in response to that threat, Congress passed the most rigorous sanctions ever imposed on Iran, the Comprehensive -- (audio break). There it is. We passed the Comprehensive Iran Sanctions, Accountability, and Divestment Act, or CISADA, as it is widely known.

The overwhelming vote for CISADA -- 408 to 8 in the House, 98 to nothing in the Senate -- was a powerful demonstration of the bipartisan commitment to a tough approach to halting Iran's nuclear program. This act broadly expanded the applicability of the original Iran Sanctions Act, including sanctioning third-country companies and banks involved in activities such as sales of refined petroleum to Iran, assistance to Iran's domestic refining capacity; and financial dealings with the Iranian Islamic Revolutionary Guard Corps, or IRGC.

The fundamental premise of our approach is that companies should choose the U.S. market over the Iranian market. It's a sound approach, but by no means a silver bullet for addressing Iran's desire to acquire a nuclear weapons capability.

Our legislation, even before the president signed it into law on July 1, helped to galvanize international opinion regarding the Iranian nuclear issue. The European Union, previously a key source of Iranian commerce and investment, passed -- (audio break). All right. It's a surge. (Soft laughter.) No. No.

The European Union, previously a source of Iranian commerce and investment, passed its own set of tough sanctions in late July. Other states -- Canada, Australia, South Korea, Japan and Norway -- followed with their own national sanctions.

As a result of our sanctions and additional financial measures pursued by the administration, most major Western, Japanese and South Korean energy companies have ceased selling Iran refined petroleum and investing in Iran's energy sector; and the doors of much of the financial, (insurance ?) and shipping worlds have been closed to Iran. Major oil companies such as Royal Dutch Shell, Total of France, Italy's Eni Vitol, Norway's Statoil, Spain's Respol -- Repsol and Japan's INPEX have all ended or are in the process of ending their energy projects in Iran.

And there are numerous reports that these sanctions have seriously hurt the Iranian economy and deepened political fissures in the Iranian leadership. But is that in fact the case? And if so, how much closer does it bring us to our real objective, which is to -- (audio break). Roll the clock back. I get 10 more seconds for the last play. (Laughter.) Right.

The purpose of this hearing is to attempt to answer these very questions. I'd like to hear the witnesses' candid assessment of the current sanctions regime.

Is it helping to -- us to achieve our goal of an Iran without nuclear arms? Are sanctions having the desired impact on Iran's economy? And are we getting closer to persuading Iran to suspend its uranium enrichment program, as repeatedly demanded by the international community?

In particular, is international support for sanctions holding firm? How much backfilling is there by companies whose governments have not imposed national sanctions? At that last point -- on that last point, there seems to be no doubt that Chinese companies are pursuing energy investments and selling Iran refined petroleum. The Chinese acknowledge it. I'd like to know why we haven't sanctioned any of the Chinese companies engaged in clearly sanctionable actions. I'm concerned that we will not be able to sustain a robust -- (audio break) -- have pulled out of Iran because they feared we would otherwise impose sanctions? Will they stay out if they see that others are getting off scot-free? Is the problem that we lack over the -- lack leverage over the Chinese companies? What kind of message do we send if we fail to sanction companies that are transparently engaged in sanctionable activities?

I know the administration did impose sanctions on one company, NICO, which is based in Switzerland. But since NICO is an Iranian state-owned company that by definition will be barred from dealing with the U.S. market, that action doesn't seem to me to have much of a deterrent effect. I hope Undersecretary Burns in particular will address these issues.

And in addition I would welcome Undersecretary Burns' views on other key aspects of the Iranian nuclear issue, such as the recent interruption in Iran's enrichment activities, and the general diminishing of its enrichment efficiency, as reported by the IAEA. How meaningful is that slowdown? Should it alter our previous calculations regarding Iran's nuclear program? Have the recent revelations regarding North Korea's apparently enhanced nuclear facilities affected those calculations? What can you tell us regarding upcoming negotiations in Iran now scheduled to commence in a few days in Geneva?

Lastly, this month marks the one-year anniversary of the last major demonstrations by Iran's reformist Green Movement, which mushroomed in the wake of the June 2009 hijacking of the presidential elections by Ahmadinejad. What does the Green Movement -- where does the Green Movement stand today? What can we do to affirm our clear support for the pro-democracy forces in Iran?

And I'd like to close by reaffirming my own strong support for our sanctions effort. It is our last best hope for resolving the Iran nuclear issue in a peaceful manner. As I've said on many occasions, the alternatives are military action and, even worse, acquiescence to a nuclear-armed Iran. Both of these alternatives are unpalatable.

And I also want to really commend the administration for placing such a high priority on the Iranian nuclear issue, and for the effectiveness of its policies thus far. Thanks to this administration's artful diplomacy, we have far more international support on this issue than most of us thought even remotely possible as little as six months ago.

From the outset, this administration has made Iran a top-priority item in virtually every meeting with foreign leaders, and the results show. The administration's successful jawboning of many banks and energy companies have also made a significant contribution to the effort to isolate Iran economically.

So five days -- five months to the day since the CISADA became law, I look forward to your candid assessment of the effectiveness of our sanctions effort, how it can be improved, as well as your assessment of the prospect that we will succeed in our larger goal of preventing Iran from achieving nuclear weapons -- (audio break).

I'm pleased to recognize the ranking member, the gentlelady from Florida, Ileana Ros-Lehtinen for her opening remarks.

REP. ILEANA ROS-LEHTINEN (R-FL): Thank you very much, Mr. Chairman.

And I'd like to start by recognizing some of my constituents who are in the audience. They are Iranian-Americans who are staunchly opposed to the Iranian regime, who have shed light on Iran's nuclear program through the unveiling of information on different Iranian nuclear facilities. Many have relatives in Camp Ashraf. And I raised with Assistant Secretary of State Feldman a few weeks ago the need for the administration to ensure that Iraq -- the Iraqi government lives up to its human rights commitments and protects the residents of Camp Ashraf.

Welcome.

With respect to Iran, Mr. Chairman, as we all know, the United States must have one vital objective, and that is to stop the regime's pursuit of nuclear and other unconventional weapons and the missiles to develop -- to deliver them, its sponsorship of terrorism, and other activities that threaten Americans, our interests and our allies.

However, since the 1990s, the U.S. and international efforts to stop the growing Iranian threat have been halfhearted at best, with results to match. The problem is not that a tough approach has failed, but that it has yet to be fully tried. The sanctions were not fully implemented or enforced. Then the focus was not on measures the U.S. could easily take, but instead on persuading the so-called international community to act collectively -- "collectively" meaning agreeing to the lowest common denominator, while continuing to cultivate ties with the regime in Tehran.

Russia, of course, has a long record of cooperation with Iran on missiles and on nuclear matters, particularly its construction of the Bushehr reactor, which is scheduled to come on line in January. To secure Russian cooperation, the current and previous administrations have resorted to a series of concessions to Moscow. What did we buy at so great a price? Tacit support for U.N. sanctions and, quote, "assurances," end-quote, that Russia will wrap up investments in Iran's energy sector and that Russia will not at this time proceed with its sale of advanced missiles to Iran. Of course, despite all of our concessions, Russia has indeed offered a nuclear cooperation agreement and advanced missile sales to the Syrian regime.

China is another key ally and protector of Iran, and has made it clear that it will prevent significant -- prevent significant pressure to be placed on Tehran. Chinese companies are eagerly expanding their trade with and investments in Iran, many taking advantage of opportunities created by Western and other companies which are curtailing or finally severing their ties. Recent reports indicate that China has actively facilitated North Korea's providing Iran with advanced missiles and ingredients for chemical weapons, in violation of U.N. Security Council sanctions.

But support for Iran comes from other places, as well. Determined to demonstrate its growing distance from the U.S., Turkey has publicly embraced Tehran, increased its economic cooperation, signed a major gas pipeline deal, and tried to undermine U.S. efforts to stop the Iranian threat, including voting against U.N. Security Council Resolution 1929. Turkey recently prevented NATO from designating Iran as a missile threat to be countered with a proposed antimissile shield, despite Tehran's expanding missile capabilities.

Armenia is expanding financial trade, transport and energy cooperation with Iran.

Unfortunately, securing effective action by one administration after another has been an uphill battle. For over 14 years, since the passage of the Iran Sanctions Act, only one determination of sanctionable activity has ever been made, and the resulting penalties were immediately waived. Efforts to strengthen existing laws were opposed by each administration, citing a reluctance to tie the president's hands or upset other countries who want to keep doing business with Tehran.

This past June, after a long, hard-fought struggle, the Comprehensive Iran Sanctions, Accountability, and Divestment Act, CISADA, was enacted. Although weaker than some of us had hoped, this law could prevent -- could represent a major step forward, especially through its energy, refined petroleum and financial sanctions. This congressionally driven effort has led some countries, including the EU, Japan, Australia and South Korea, to finally impose their own, albeit more limited, sanctions on Tehran.

On the financial front, the actions taken by foreign governments to sever their ties with the Iranian financial institutions and other Iranian entities designated as involved in Iranian proliferation and sponsorship of terrorism is encouraging.

Undersecretary Levey, let me again thank you and your team at Treasury for your pivotal role in these developments, and your years of dedication in acting against the Iranian regime and its enablers. Thank you, sir.

I am, however, concerned that history may be repeating itself regarding the State Department's implementation efforts.

For example, the law requires the administration to investigate, upon receiving credible evidence, suspected sanctionable foreign investment in Iran's energy sector. The U.S. has known for years about Chinese energy investment in Iran, but only this past September did the administration initiate investigations of sanctionable activity. Yet State still refuses to publicly disclose whether Chinese companies are among the targets.

The State Department has issued one determination under CISADA, just one, imposing the minimum number of sanctions on NICO, an Iranian subsidiary, for its role in Iran's petroleum sector. Likewise the administration has listed and sanctioned just eight Iranian regime officials responsible for human rights abuses.

We've wasted enough time, 14 years. No more waivers, exceptions or excuses. We cannot live with a nuclear Iran. We must ensure that the tools we have are used to their maximum effectiveness and look for new means of compelling Iran to cease activities that threaten our security, our interests and our allies.

I'm not just referring to this nuclear pursuit but also to its state sponsorship of terrorism. Of particular concern is Iran's support for Hezbollah in Lebanon, Mr. Chairman, which has threatened violence if, as expected, its operatives are indicted for the assassination of former Lebanese Prime Minister Hariri; has amassed an arsenal of about 50,000 rockets; and participates in and has veto power over the current Lebanese government. I would ask Undersecretary Burns what the U.S. is doing to address this situation before it becomes a full-blown crisis and Hezbollah takes over completely.

Thank you, Mr. Chairman, and I'll ask the administration also about the continued military assistance to the Lebanese armed forces. Thank you very much, Mr. Chairman, and I thank the witnesses.

REP. BERMAN: Well, thank you.

And now I'm pleased to recognize for three minutes the chairman of the Middle East and South Asia Subcommittee, the gentleman from New York, Mr. Ackerman.

REP. GARY ACKERMAN (D-NY): Thank you, Mr. Chairman.

In the 112th Congress, the challenge before our witnesses and before those of us returning in January will be the same: How do we prevent Iran from acquiring nuclear weapons? It is, I believe, the most critical national security question facing our nation today, and the success or failure of our efforts will determine what kind of world our children will inherit.

Iran's drive to acquire nuclear weapons is near to success, but it has not yet succeeded, and it must not. The consequences of a successful effort by Iran to acquire nuclear weapons in open defiance of numerous U.N. Security Council resolutions, solemnly undertaken treaty obligations, and amid an endless stream of genocidal rhetoric against the state of Israel, would change the world, and this must not happen.

The implementation of new sanctions so far has been surprisingly successful, with the combined effect of U.N. sanctions and the new CISADA sanctions imposing real economic pain on the ayatollah's regime. But for pressure to succeed, it must be comprehensive, and here there are two points to make.

First, the economic pain must be as severe as we can make it. Sanctions must be applied without exception or distinction. The Congress will accept nothing less.

Second, economic pain is not enough. By luck or Providence, the mullahs' regime is facing an international political -- an internal political crisis more severe than any since the creation of the Islamic republic. While it is true the Green Movement has been effective -- effectively suppressed by the tools of repression, the legitimacy of the Iranian regime has been permanently undercut in the eyes of the Iranian people. Elections whose results have to be forced down an unwilling population's throat by means of mass murder, rape, torture are a sign of weakness, and that weakness needs to be aggressively exploited.

I call again upon the Obama administration to emulate the Reagan -- President Reagan's approach to the Soviet Union, which applied comprehensive, across-the-board pressure with combined economic, political, diplomatic, cultural and military pressure, with arms control negotiations -- what we might call today engagement -- that advanced American interests.

The Iranian regime is likewise ripe for comprehensive pressure. Multilateral forums and multinational institutions need to be pushed to focus -- Iran's deplorable human rights record. Our broadcasting into Iran must be ramped up to let the Iranian people know that they're not alone. The president and the secretary of State need to consistently remind the world of the oppression of the Iranian people by the illegitimate Iranian regime. The armed forces of the United States need to be deployed and exercised with key partners to demonstrate our ability to respond overwhelmingly to aggression and provocation. Those willing to take up arms against Iran's -- Iranian influence should have our material support. Iranian agents attempting subversion or the acquisition of illicit materials or arms must feel the shadow of the United States pursuing them with vengeance.

It is not too late to stop Iran, to roll back the nuclear program, to aid the Iranian people in taking back their country. But we must engage in this great and necessary challenge with even greater effort and vigor than we have managed so far. Time is running out.

Thank you, Mr. Chairman.

REP. BERMAN: Time has run out, and the ranking member of the Subcommittee on Middle East and South Asia is not here, so I'm going to recognize the chairman of the Terrorism, Nonproliferation, and Trade Subcommittee of this committee, the gentleman from California, Mr. Sherman, for three minutes.

REP. BRAD SHERMAN (D-CA): Thank you for holding these hearings, Mr. Chairman. I believe that the SADA and its implementation is the most important work for us to do this month. I think that we need to see even more enforcement of existing law and the adoption of new statutes. I hope that later this month or early next year we consider the Stop Iran Nuclear Program Act (sic), which would strengthen the sanctions still further.

In addition, I should note that our colleague Congressman Filner of California has a bill with over 106 cosponsors to take the PMOI off of the terrorism list. And I hope that respect for our 106-plus colleagues that have co-sponsored that bill would lead to a serious consideration of the bill, and hearings on it. So we have much legislating to do, just as our friends from the administration have much to do as well.

Major oil companies from the West for the most part won't invest in Iran's oil sector or sell refined petroleum. This is a success. It is a success that comes perhaps a dozen years too late. At this point, we have to not only prevent investment in the energy sector of Iran, we have to prevent Iran from getting refined petroleum products.

Had the executive branch of government decided to follow the law when it was passed over a dozen years ago, we would be in a much better position now. Now the only way to stop Iran's nuclear program is not only what is already being done, but the much, much more difficult job of preventing Iran from getting refined petroleum.

And I'd point out that we are where we are not because the -- there's been a radical change in State Department policy. The policy has been since the Iran Sanctions Act was adopted to follow the law only to the extent that its implementation did not offend any foreign government except that of Iran. This is, as described by our ranking member, the lowest common denominator policy. The good news is the lowest common denominator is now a higher number than it used to be, especially for Japan and Western Europe. And we have obtained a lot of cooperation, and it is now difficult for Iran to find partners to invest in its oil fields. We also ought to give credit, however, to the wisdom of our -- of our allies, but especially to the corruption and ineptitude of those who are running Iran who make doing business with that country so difficult.

As to the Stop Iran Nuclear Program Act (sic), it would, for example, prevent or sanction the $5 billion euro sovereign bond issuance that Iran has now engaged. They've realized that they may not be able to get Western investment in their oil fields, so they feel they'll borrow the money and do the investment themselves. The way to stop that is we do legislation, which I look forward to taking up expeditiously. I yield back.

REP. BERMAN: The time of the gentleman has expired. The ranking member of the Terrorism, Nonproliferation and Trade Subcommittee, the gentleman from California, Mr. Royce. Recognized for three minutes.

REP. ED ROYCE (R-CA): (Off mic.)

REP. BERMAN: I got one. (Laughter.) Hold on tight.

REP. : Does this one work? This one works here.

You can have this one, Ed.

REP. ROYCE: I'll take my (Red Bull ?). You can have the mic.

Mr. Chairman, I want to thank you for holding this hearing because we face a crisis. And this has to sink in. Here's the headline from The Washington Post recently.

The Obama administration has concluded that Chinese firms are helping Iran to improve its missile technology and develop nuclear weapons. That represents a crisis. When we learned yesterday that China declined to act on multiple, multiple U.S. requests that it stop shipments of ballistic-missile components from North Korea that were going through Beijing on Korean airlines, North Korean airlines, on Iranian carriers as well, when we learn that our secretary of State has asked China to act on the fact that Iran was trying to buy gyroscopes and carber -- carbon fiber for its ballistic missiles from Chinese companies, when we find that Chinese companies were supplying Iran with precursors for chemical weapons, when we find that Iran gets both its parts and its technology from China, we face a crisis.

And I am appreciative of the fact that Mr. Levey is here, because, as he puts it in his testimony, foreign financial institutions have a choice. If you conduct certain business with Iran, you risk losing access to the U.S. financial system. The message we need to convey, Republicans and Democrats alike, is, this conduct on the part of China in terms of violating these sanctions and helping give Iran the wherewithal to develop the missile technology and the nuclear weaponry has to stop immediately. And if it does not stop, there certainly is going to be legislation from this Congress to bring it to a halt. The way to do it is to simply have an understanding that this is now the law on the books of the United States. It needs to be followed by China, and it needs to be followed now.

Thank you, Mr. Chairman. I yield back.

REP. BERMAN: The time of the gentleman has expired. And now I'm quite pleased and honored to introduce our two witnesses, two people who I think are among the most exceptional public servants we have working for the United States government. The first is Ambassador William Burns, undersecretary of State for Political Affairs. Previously, Ambassador Burns served as ambassador to Russia, assistant secretary of State for Near Eastern Affairs, and ambassador to Jordan. A career foreign service officer, he has also served as executive secretary of the State Department and as a special assistant to Secretaries of State Christopher and Albright.

Ambassador Burns is a central player in the Obama administration's Iran policy team. In October 2009, he led the U.S. negotiating team in the P-5 plus one talks with Iran in Geneva, where he struck an agreement with the Iranian negotiators that would have removed significant amounts of low-enriched uranium from Iran's stocks. The agreement was widely hailed internationally at the time but was subsequently rejected by the leaders in Tehran.

As I understand, he will once again be leading the U.S. negotiating team at upcoming P-5 plus one talks with Iran scheduled to begin in a few days in Geneva.

Stuart Levey is the undersecretary of Treasury for Terrorism and Financial Intelligence, a position he has held since 2004. In this position, he has played a central role in the efforts of both the Bush administration and the Obama administrations to combat Iran's illicit conduct in the international financial system. In fact, he is widely considered a key architect of those efforts. That, no doubt, is why the Obama administration asked him to remain in his position. Previously, Mr. Levey served as the principal associate deputy attorney general in the United States Department of Justice, and before that as a -- an attorney in a private law firm.

Gentlemen, thank you for coming this morning. We look forward to hearing your testimony. If you decide to, you're -- you can summarize; your entire statements will be part of the records. And Undersecretary Burns, why don't you lead off.

MR. BURNS: Well, thank you very much, and good morning. Chairman Berman, Congresswoman Ros-Lehtinen, members of the committee, thank you for the opportunity to appear before you again with my friend and colleague Undersecretary Levey.

We meet today at a moment of great consequence in the long and complicated history of international concerns about Iran and its nuclear ambitions.

In recent months, working closely together, the administration, Congress and our international partners have put in place the strongest and most comprehensive set of sanctions that the Islamic Republic of Iran has ever faced. It is a set of measures that we are determined to implement fully and aggressively. It is a set of measures that is already producing tangible results, and it is a set of measures that reinforces our collective resolve to hold Iran to its international obligations.

A great deal is at stake for all of us. A nuclear-armed Iran would severely threaten the security and stability of a part of the world crucial to our interests and to the health of the global economy. It would seriously undermine the credibility of the United Nations and other international institutions, and seriously weaken the nuclear nonproliferation regime at precisely the moment when we are seeking to strengthen it.

These risks are only reinforced by the wider actions of the Iranian leadership, particularly its long-standing support for violent terrorist groups like Hezbollah and Hamas; its opposition to Middle East peace; its repugnant rhetoric about Israel, the Holocaust, 9/11 and so much else; and its brutal repression of its own citizens.

In the face of those challenges, American policy is straightforward: We must prevent Iran from developing nuclear weapons, we must counter its destabilizing actions in the region and beyond, and we must continue to do all we can to advance our broader interests in democracy, human rights, peace and economic development across the Middle East. President Obama has made clear repeatedly that we will stand up for those rights that should be universal to all human beings and stand with those brave Iranians who seek only to express themselves freely and peacefully.

The simple truth is that a government that does not respect the rights of its own people will find it increasingly difficult to win the respect that it professes to seek in the international community.

We have emphasized from the start that what is at issue between Iran and the rest of the world is not its right to a peaceful nuclear program, but rather its decades-long failure to live up to the responsibilities that come with that right. If Iran is sincere, it should not be hard to show the rest of the international community that its nuclear program is aimed at exclusively peaceful purposes.

Facts are stubborn things, however, and it is a telling fact that Iran alone among signatories of the NPT continues to fail year after year to convince the IAEA and the United Nations of its peaceful nuclear intentions.

Nearly two years ago, President Obama began an unprecedented effort at engagement with Iran. We did so without illusions about whom we were dealing with, with the scope of our differences over the past 30 years. We sought to create early opportunities for Iran to pursue a different path and to build confidence in its intentions. This was both a serious demonstration of our good faith and also an investment in partnership with a growing coalition of countries profoundly concerned about Iran's nuclear ambitions.

When regrettably those early efforts made little headway, we and our partners were left with no choice but to respond to Iran's intransigence by employing another tool of diplomacy: political and economic pressure. The cornerstone of this campaign was U.N. Security Council Resolution 1929, passed early last June. By far the toughest of the four Chapter VII resolutions enacted in recent years, 1929 broke important new ground in curbing arms transfers to Iran, targeting the central role of the IRGC in Iran's proliferation efforts, banning for the first time all Iranian activities related to ballistic missiles that could deliver a nuclear weapon, sharply limiting Iran's ability to use the international financial system to fund and facilitate nuclear and missile proliferation, and for the first time highlighting formally potential links between Iran's energy sector and its nuclear ambitions.

Russia's partnership was particularly crucial to passage of such an effective resolution, which led directly to its enormously important cancellation of the S-300 surface-to-air missile sale to Iran.

The significant of 1929 is only partly about its content. It is also about the message of international solidarity that it sent and the platform that its carefully crafted language has provided for subsequent steps. Barely a week after the passage of 1929, the European Union announced by far its most sweeping collection of measures against Iran, including a full prohibition of new investment in Iran's energy sector, bans on the transfer of key technology, and the strictest steps to date against Iranian banks and correspondent banking relationships.

Canada, Australia, Norway, Japan and South Korea have followed the EU's example.

New provisions in 1929 regarding cargo inspections are already being applied, resulting for example in the recent seizure by Nigeria of an illicit Iranian arms shipment. None of this is accidental. We have worked intensively with our partners in conversation after conversation and trip after trip around the world to produce an unprecedented package of measures and to ensure robust enforcement.

Central to our strategy have been the efforts made by the Congress, by all of you, to sharpen American sanctions. When the president signed into law CISADA in early July, the administration and the Congress sent an unmistakable signal of American resolve and purpose, expanding significantly the scope of our domestic sanctions and maximizing the impact of new multilateral measures.

We are enforcing the law rigorously and energetically. Already, more foreign investment in Iran has been curbed than at any time since Congress enacted the original Iran Sanctions Act nearly 15 years ago. In late September, Secretary Clinton imposed sanctions for the first time in the history of the ISA on a Swiss-based Iranian-owned firm involved in hundreds of millions of dollars worth of deals in Iran. Deputy Secretary Steinberg announced that we've opened formal investigations into other firms.

Just as importantly, we've used the powerful instrument provided by CISADA's special rule to persuade major European and Asian firms, including Shell, Statoil, Eni, Total and INPEX, to terminate existing sanctionable activities in Iran and provide clear assurances that they would not undertake any such activities in the future. According to reliable estimates, Iran may be losing as much as 50 (billion dollars) to $60 billion overall in potential energy investments, along with the critical technology and know-how that comes with them.

Faced with new international concerns and the choice between doing business with Iran and doing business with America, more and more foreign companies are pulling out of the Iranian market. Major energy traders like Lukoil, Reliance, Vitol, Glencore, IPG, Tupras and Trafigura have stopped sales of refined petroleum products to Iran.

Until last July, according to open sources, Iran imported roughly 130(,000) barrels per day of refined petroleum products. In October, that figure had dropped by 85 percent to 19,000 barrels per day. Large shipping companies like Hong Kong-based NYK are withdrawing completely from the Iranian market. Major firms like Lloyd's have stopped insuring Iranian shipping. Daimler, Toyota and Kia have stopped exporting cars to Iran. Major banks like HSBC and Deutsche Bank have pulled out.

Stuart will address the impact of these developments in more detail, and his own personal efforts with firms and governments around the world remain hugely important. But the short answer is that the net result of all of the measures we've applied in recent months is substantial -- far more substantial than any previous set of steps.

I'd also like to emphasize that we take very seriously CISADA's provisions regarding human rights concerns in Iran. Earlier this fall, we designated eight senior Iranian officials for human rights abuses, and we are working with Treasury on other potential designations. One of the best ways in which we and others can support the cause of universal human rights in Iran, and the brave people who defend them, is to hold accountable people who deny them.

I cannot honestly predict for you with any certainty how all these collective and individual measures will affect the choices that Iran's leadership makes. We will continue to sharpen those choices. We will show what's possible if Iran meets its international obligations and adheres to the same responsibilities that apply to other nations. We will intensify the costs of continued noncompliance and show Iran the pursuit of a nuclear weapons program will make it less secure, not more secure. And in the meantime, we will continue to reassure our friends and partners in the Gulf of our long-term commitment to their security, a commitment clearly reflected in the visits to the region that both Secretary Clinton and Secretary Gates will be making in the next two weeks.

Let me conclude by emphasizing two simple but important realities.

First, Iran is not 10 feet tall. Its economy is badly mismanaged. Iran's leaders have tried very hard to deflect or divert the international pressures building all around them, itself an acknowledgment of their potential effect.

Second, and just as significant, sanctions and pressure are not an end in themselves; they are a complement, not a substitute, for the diplomatic solution to which we and our partners are still firmly committed. There is still time for diplomacy if Iran is prepared to engage in serious discussions.

There is still room for a renewed effort to break down mistrust and begin a careful, phased process of building confidence between Iran and the international community. There is still an opportunity for an outcome which ensures both Iran's rights and the fulfillment of its responsibilities.

The P-5 plus one, led by EU High Representative Ashton, will approach next week's meeting with Iran with seriousness of purpose and a genuine readiness to engage constructively on international concerns about Iran's nuclear program. The door is open to serious negotiation, if Iran is prepared to walk through it. Thank you.

REP. BERMAN: Thank you very much, Secretary Burns.

And Secretary Levey.

MR. LEVEY: Thank you, Mr. Chairman, Ranking Member Ros-Lehtinen, members of the committee. Thank you for inviting me here today to discuss the current status of the global effort to impose sanctions on Iran. I appreciate the true partnership we've had with this committee over many years, and I'm happy to be here with Undersecretary Burns, who has been an excellent leader on this issue and on many others. And he's given an excellent overview of our overall Iran policy.

I can assure you that we share the sense of urgency that you all expressed, and we have the same priority placed on this challenge. I can report to you today that we have made significant progress in implementing our strategy to impose sanctions on Iran, and the strategy is beginning to have the effect it was designed to have. By sharpening the choice for Iran's leader -- leaders -- between integration with the international community, premised on their living up to their international obligations, and ever-increasing isolation, we are beginning to create the leverage we need for effective diplomacy.

The strategy we designed and are now implementing has several critical elements. First, we recognized from the outset that no one measure would put enough pressure on Iran, and so we are imposing a variety of measures simultaneously. Second, as Bill pointed out, we took steps in advance to generate the support necessary for a broad coalition of governments and the private sector to support us on sanctions. Third, we focused our measures on Iran's illicit conduct, such as WMD proliferation and its support for terrorism, as that has proven to be an effective way to build a broad coalition. And finally, we designed a strategy that uses Iran's expected attempts to evade sanctions to our advantage, by aggressively exposing Iran's deceptive conduct and thus underscoring Iran's riskiness as a commercial partner.

It's difficult to overstate the importance of Security Council Resolution 1929 in building our international coalition and in implementing this strategy. In addition to the provisions that Bill mentioned, the resolution's financial provisions are particularly powerful, that they call upon member states to prevent the provision of financial services if there are reasonable grounds to believe that such services could contribute to Iran's nuclear missile program. And given the vast body of public information demonstrating the scope of Iran's illicit conduct and deceptive practices, it is virtually impossible for banks and governments to assure themselves that transactions with Iran could not contribute to proliferation-sensitive activity.

Indeed, in the aftermath of the resolution's adoption, many of our partners, as was mentioned by several of you and Undersecretary Burns, have enacted robust sanctions programs. These sanctions regimes impose asset freezes and financial restrictions on a wide range of illicit Iranian actors, including the IRGC and IRISL, the Iranian shipping line. And they have enacted broad measures to protect their financial systems from Iranian abuse, such as reporting or preapproval requirements for transactions involving Iran.

Also critical to our strategy is the passage and implementation of CISADA. As you know, the financial provisions of CISADA are quite powerful, as they force -- as they indeed force the stark choice that Mr. Royce pointed out. If you conduct certain business with Iran, you risk losing access to the U.S. financial system. It's a very draconian potential sanction.

We have moved quickly to implement CISADA. We published required regulations promptly, and we have traveled to more than -- to 24 countries since June, both to educate governments and the private sector about CISADA, and also to share information about Iran's illicit conduct. We have reached out to governments and financial institutions in more than a dozen countries to investigate conduct that could be sanctionable under the act. What we have seen thus far is very dramatic. Even banks that had previously been willing to do business with designated Iranian banks are now reversing course and cutting ties with Iran altogether.

Beyond this outreach, Treasury has used its authorities to designate a wide range of Iranian actors involved in illicit conduct. As I mentioned earlier, we expected Iran to try to evade any sanctions we imposed, and continued actions such as designations are critical to counteract this evasion and to maintain the effects of our sanctions.

Just since June, we have designed 53 IRISL-related entities, nine IRISL-linked individuals, 10 individuals or entities linked to the IRGC, and two Iranian-owned banks, Post Bank and the Hamburg-based BIH. We have also identified 43 entities as being that of the Iranian government.

The cumulative effect of sanctions has been to increasingly isolate Iran from the international financial system. Iran is effectively unable to access financial services from reputable banks, and it is finding it increasingly difficult to conduct major transactions in dollars or euros.

Iran's reduced access to the international financial system has also made it very difficult for Iran to make payments on loans and maintain insurance coverage on IRISL's ships, and is having an impact on IRISL's ability to continue operations. It has even led to the seizure of some IRISL ships by its creditors.

As the chairman indicated in his opening statement, with great regularity, major companies across a range of industries -- finance, engineering, energy, manufacturing, automobile, insurance, accounting firms -- they are all announcing that they're curtailing their business dealings with Iran. There are clear signs that the speed, scope and impact of sanctions have caught the Iranian regime by surprise. In the face of pressure, the Iranian government has increasingly turned to the IRGC for key economic projects. That trend meshes perfectly with our conduct-based strategy, and it's hard to imagine a better sanctions target than the IRGC.

Relying on the IRGC is likely to exacerbate Iran's isolation, as companies around the world have begun to shun all business with the IRGC, given its support for terrorism and involvement in Iran's proliferation activities and human rights abuses.

Our efforts to consistently expose Iranian sanctions evasions are also paying off. In September, a high-ranking Iranian government official underscored exactly the effect we have tried to create when he said, quote, "We have never had such intense sanctions, and they're getting more intense every day. Whenever we find a loophole, they block it," close quote.

In order to maintain and even increase the impact we have created, we need to remain vigilant and intensify our efforts. By doing so, we can continue to create the leverage needed for our diplomacy to be effective. I look forward to continuing our work with this committee to achieve that goal. Thank you.

REP. BERMAN: Well, thank you very much, Secretary Levey, for the testimony and the overview. I will now yield myself five minutes to begin the questioning.

Neither of you mentioned China in your testimony. Are Chinese companies involved in Iran's energy sector? And, if so, why are we not sanctioning them? I understand the dilemma. What are the implications for our relations with China if we were to sanction a state-owned energy company?

But I also throw out the alternative proposition. What are the implications for our entire sanctions regime if we don't? How important are Chinese companies to Iran's energy sector and refined petroleum products? And are there other countries or companies that are currently supporting Iran's energy sector?

MR. BURNS: Well, Mr. Chairman, first, we take very seriously, just as you and Congressman Royce emphasized, concerns about Chinese involvement in the Iranian energy sector. We have at the very highest levels, including in President Obama's most recent meeting with President Hu a few weeks ago, emphasized the importance that we attach to restraint on the part of China in its dealings in the Iranian energy sector. We've seen reports -- and also the importance we attach to not only slowing down existing investments, not engaging in new ones, but not backfilling behind companies, the large number of companies that are pulling out of the Iranian energy sector.

We've seen reports since then in the trade repress -- press -- and other open sources of slowdowns in Chinese activities in the Iranian energy sector. It may be that the Chinese are concluding that the Iranians, as so many other companies around the world have found, are not reliable energy partners. They're clearly -- the Chinese are clearly trying to diversify their energy partnerships around the world.

It's also clear with regard to your question about refined petroleum products that rising domestic demand in China is occupying a much greater proportion of the attention of Chinese refined petroleum producers. So for all those reasons, we will continue to push very hard on this issue, which remains quite significant, I think, to our hopes to apply the sort of pressure that's going to be needed.

REP. BERMAN: Thank you. I don't like raising points based on revelations from WikiLeaks, but I'm going to make an exception here because it concerns a matter of great -- potentially great significance.

And I think both the ranking member and Mr. Royce made references to this.

Do you wish to comment on the New York Times claim, based, it says, on WikiLeak(s) documents, that Iran has acquired 19 medium- range, nuclear-capable missiles from North Korea? According to the article, these missiles can reach Berlin or Moscow. The article also says that possession of these missiles can facilitate Iran's development of intercontinental ballistic missiles. And I should point out that that claim was treated skeptically today, in today's Washington Post, based on the Post's interpretation of the same WikiLeaks documents. Rather than take one or the other slant, what's your thoughts about this --

MR. BURNS: I mean, just several quick comments. First, on WikiLeaks in general, I think, you know, the reality is that the despicable breach of trust that we've seen through the WikiLeaks disclosures has done substantial damage to our ability to carry out diplomatic efforts like the one we've just described to you. Confidentiality of conversations is at the core of what we do as diplomats, just as it is for journalists or doctors or lawyers or others. And it has done damage.

Secretary Clinton is literally working night and day in conversations with countless leaders around the world to try as best we can not only to express regret but to work through these issues. And we've also taken some quite stringent measures to ensure that information in the State Department that doesn't need to go to other agencies of the U.S. government isn't going to people who don't need to know it. So that's the first general point on WikiLeaks.

I can't comment on the contents of, you know, particular alleged cables that WikiLeaks has referred to. What I will, however, stress -- this is in response to Mr. Royce's, I think, you know, very serious reinforcement of concerns about any evidence that we come across of support for Iran's illicit missile or nuclear activities -- we take seriously every piece of information that we see. We have, on a number of occasions, raised that information with the Chinese government as well as with other governments. In some cases we've seen them act on it. But the record is a mixed one, to be honest.

And we're continuing to press those specific concerns that we have, because I agree with you that it is extremely important to fully implement the provisions particularly in resolution 1929, which adds significantly to the flat prohibition of any support, technical or otherwise, for ballistic-missile activity in Iran that's capable of delivering a nuclear weapon. So we'll continue to take this very seriously and follow up on it vigorously.

REP. BERMAN: My time has expired. I yield now five minutes to the ranking member.

REP. ROS-LEHTINEN: Thank you so much, Mr. Chairman. Thank you gentlemen for your testimony.

As you pointed out, Secretary Burns, the next round of the P-5 plus one negotiations with Iran is tentatively scheduled to take place in just a few days in Geneva. However, it's -- in the leadup to these talks, Iranian leaders have reiterated their commitment that -- to continuing their uranium-enrichment program. Given these statements and the position of Iranian leadership, what does the administration expect to accomplish with these upcoming negotiations? And related to that, previous negotiations were aimed at reaching an agreement that would require Iran to suspend its uranium-enrichment activity, as mandated by the United Nations Security Council. So is a complete halt to enrichment prerequisite? Or is the administration willing to consider a partial halt?

Also, there are rumors of a new P-5 plus one offer to the Iranians. Does such an offer exist? And what type of incentives and disincentives are included in the proposals? Also, what is the administration's plan regarding the uranium that Tehran has enriched to the 20-percent level? Will we insist that Iran surrender the entire amount? Or is a deal in the works allowing Iran to keep some portion or -- of what is -- has already amassed? And how do you plan to deal with Iran's using the negotiations as a stalling procedure by the U.S. and other countries?

And then -- and then lastly, I know we -- the chairman has talked about the energy and refined-petroleum activities with Iran, and China being a repeat offender.

We also have the Iran, North Korea, Syria Nonproliferation Act, INKSNA. And that's also a sanctionable procedure that we can use. And I wanted to ask about the administration possibly taking action against Russia and their entities implicated in the proliferation assistance to Iran. I don't know if we'll have time to -- for all of that, but thank you, sir.

MR. BURNS: No, thank you. And I'll try as best I can very briefly to go through four or five points.

First, in terms of our general approach, as I emphasized in my opening statement, the P-5 plus one will go into what we hope will be a serious round of discussions with the Iranians, prepared to engaged seriously about our very profound concerns about Iran's nuclear program. We will continue to emphasize the importance of taking tangible steps to address those concerns, tangible steps which are necessary as a result of Iranian noncompliance over many years and the mistrust that that has created.

We will be guided -- and this is in response -- this is my second point -- in that approach, the P-5 plus one will be -- will be guided by a whole series of Security Council resolutions and IAEA decisions, Security Council resolutions which include the mandate and the provision that you mentioned.

Third, we will certainly look for ways in which we could build confidence in steps the Iranians could take that could be taken together to build confidence. Last year, as you know, we made an attempt through the original Tehran Research Reactor proposal to do that. We're still prepared to consider the P-5 plus one or the possibility of making use of that concept, but last June we made clear to Mr. Amano, the director general of the IAEA; that we -- the Russians and the French are partners in the so-called Vienna Group on the TRR issue -- had several concerns that would have to be addressed if the TRR is to be a real confidence-building measure, because circumstances have changed since this was originally proposed last October --

REP. ROS-LEHTINEN: Thank you.

MR. BURNS: -- including -- sorry.

REP. ROS-LEHTINEN: We talk about -- you talked about the steps. Are there tangible steps, and is there a deadline? Are we -- are we really --

MR. BURNS: But --

REP. ROS-LEHTINEN: -- providing these deadlines for them to make good on what they supposedly offer or just keep stalling and stalling and run out the clock?

MR. BURNS: No. Well, first, in terms of the tangible steps, you mentioned the issue of enrichment, almost 20 percent. That's one of the concerns that we made clear. I mean, that's something that would have to be addressed. In terms of --

REP. ROS-LEHTINEN: Thank you. And we'll talk later. And I wanted to ask about the Russian entities. Any movement in sanctioning those?

MR. BURNS: Well, on INKSNA, which was the question, I think --

REP. ROS-LEHTINEN: Right.

MR. BURNS: -- you had asked, we -- we've produced -- we're -- the State Department has finished its draft of the report for 2008. We're trying quickly to catch up. We provided the 2007 report, I think, a few months ago, and that's in circulation in our agency right now. So we take very seriously the importance of following through on INKSNA and hope to have that report to you early next year.

REP. ROS-LEHTINEN: Thank you very much. Sorry, I ran out of time. Thank you, Mr. Chairman.

REP. BERMAN: The time of the gentlelady has expired. Chairman of the Middle East and South Asia Subcommittee, the gentleman from New York, Mr. Ackerman.

REP. ACKERMAN: Thank you.

REP. BERMAN: You're recognized for five minutes.

REP. ACKERMAN: Thank you for your testimony. Several thoughts first. It seems that the evil twins of Iran and North Korea had been separated at birth and have now reunited and found each other and have certain things in common and certain things that are different, with Iran insisting that its nuclear program is for energy only and the North Koreans protesting very, very loudly that is absolutely for nuclear weaponry and demonstrating that at every moment that they can.

The combination of the two of them joining in their mutual interest is very lethal. It seems to me that among terrorist and terrorizing nations, it almost seems that possessing a nuclear program is a rite of passage to becoming a respected member of the international community, and they're pursuing that at all cost.

Trying to evaluate the effectiveness of placing sanctions on Iran -- to drive it to the point where they become an economic basket case such as North Korea, where we really don't have to have too many economic sanctions because they're there already at the bottom of wherever they have to be -- still not giving up their program.

I think we should reflect a bit on what happens when the Iranians are driven to that economic low point, should the program of imposing strangling sanctions, as the successes seem to indicate that we will have, whether or not that produces the goal that we're looking for.

Some of the things we've seen in these leaks that have appeared in the media a lot of us have found to be true, those of us who have spoken personally to world leaders, especially in the Middle East, who tell you you have to impose tough sanctions. And when you ask them the question, will they work, they say, hell no. There's no way that they're going to work.

At what point do we make the determination that the sanctions, no matter how successful in measurable aspects, are not going to prevent the Iranians, whose game is intent to just run the clock on us till they have the weapon, that we have to find and exercise an alternative means? Where is that point?

MR. BURNS: Mr. Ackerman, I can't -- I can't give you a precise point. I mean, all I can say is that I think there's still time to continue the approach that we've used to tighten pressure, to try to make clear that there is an alternative pathway through which Iran could have a peaceful nuclear program and enjoy the benefits of contacts with the international community, but it's going to have to take some very concrete steps to address international concerns about its nuclear program. I think there's still time for a serious diplomatic effort to try to produce that outcome.

REP. ACKERMAN: And I'll ask the same question of both. Secretary Levey?

MR. LEVEY: I was just going to comment, Mr. Ackerman, I think the distinction that you've drawn between North Korea and Iran, and also that there are differences, I think, also in the potential effectiveness of sanctions. And the basic point, I think, is that Iran doesn't want to be isolated, and perhaps that's not so much the case with North Korea.

Iran doesn't want to be isolated. They're facing situations as they look -- as they look out from where they are now, they see lack of investment coming in. They see the inability do business with major financial firms. They see the inability to do business with first-tier energy firms. They see that that has potential impact on their oil and gas production in the medium term, the inability to create jobs, et cetera. They don't want to be this kind of pariah, and that -- as Bill pointed out, there's no guarantee here -- that at least gives us some reason for a confidence that they'll want to change that dynamic.

REP. ACKERMAN: Let's assume that -- let's assume that you're wildly successful, and in a period of -- I've give it -- 90 days, you've cut their GNP, their economy and everything else by 99 percent, and they have an atomic weapon. They have a nuclear weapon. Where are we?

MR. LEVEY: Look, I think -- I think the point --

REP. ACKERMAN: I think they're -- I think they're -- I think- your clock runs faster than theirs is the point I'm making. And I think that we have to have a plan B because plan A by anybody's estimation, even if successful beyond our wildest dreams in a real quick time frame, is not going to change the dynamic.

REP. BERMAN: The time of the gentleman has expired. The gentlemen from Florida, Mr. Mack, is recognized for -- the ranking member of the Western Hemisphere Subcommittee, recognized for five minutes.

REP. CONNIE MACK (R-FL): Thank you, Mr. Chairman. And thank you to the ranking member as well, and for the witnesses today for being here. I also -- someone earlier said that we didn't hear you talk about China in your -- in your opening statements. I also didn't hear you talk about Venezuela in your opening statements. And let me suggest that Venezuela is in violation of the Iran Sanctions Act. That being said, if both of you could answer, why have we not sanctioned Hugo Chavez? That's question one. And I'll let you answer that real quick, and then I have a couple of follow-ups.

MR. BURNS: Well, sir, I'll just start by saying we did sanction one Venezuelan bank because of its connection to an Iranian bank, the Export Development Bank of Iran, which we had already sanctioned. We will continue to monitor very carefully the Venezuelan-Iranian relationship, and particularly Venezuela in compliance with U.N. Security Council resolutions, and hold them to their international obligations.

REP. MACK: Secretary Levey?

MR. LEVEY: As Bill pointed out, we have -- we have taken action when we identify conduct that is in violation of the sanctions, and will continue to do so.

REP. MACK: What information do you have on the allegation that gasoline in excess of 1 million U.S. dollars has been sent from Venezuela to Iran, utilizing China's National Petroleum Corporation and the Emirates National Oil Company?

MR. BURNS: I'll have to try to get you an answer on that, sir. I don't know.

MR. LEVEY: I have no further information right -- at my fingertips.

REP. MACK: Okay. Then -- well, let me suggest that Venezuela has violated the sanctions act by its shipment of gasoline to Iran.

Next question, what is the status of the joint Venezuela-Iranian international development bank and its U.S.-alleged connections to Iranian military entities and nuclear ambitions?

MR. LEVEY: I'll get back to you with a -- with a more complete answer, but in general, let me say that we have been looking very carefully at banking ties between Iran and Venezuela. We have -- when we've identified sanctionable activity, we have taken action, where there was a subsidiary of the Export Development Bank of Iran in Venezuela which we had sanctioned.

But there is also a fair amount of bluster that we have also seen from Venezuela, where they're playing up some of these ties, and so sometimes there's not as much substance behind the bluster as they would like us to believe. And we have to make sure that we cut through all of that and act based on the evidence.

But we'll have to get back to you with a more detailed answer on the question.

REP. MACK: Well, let me suggest this. If -- that's their problem. If they choose to bluster about it, then we need to hold them accountable. I mean, I think that, you know, as you've listened to some of the other members, that the clock is run -- you're trying to run the clock out. And so let's take their word at it -- word for it. If Hugo Chavez says that he's sending gasoline, let's take his word at it. If he's got -- if he's -- if his banks are in violation with this Iran Sanctions Act, let's take his word for it.

Now, if you don't want to take his word for it, I think there's plenty of evidence also to suggest that in both those cases he is in violation. And the problem that I have is when you have an act like the Iran Sanctions Act, and you apply it to some and you don't apply it to others and you're slow on the draw, others figure out a way to game it. So if you have -- if we're going to be serious about the Iran Sanctions Act, it starts with countries like Venezuela. We need to hold Hugo Chavez accountable. I think that as you look through, you'll find even more connections that are in direct violation of the Iran Sanctions Act.

Let me -- let me ask you this, Secretary Levey. Will you set up a task force on PDVSA involving the development -- developing Iran's nuclear capacity and other corrupt activities?

MR. LEVEY: I guess the question on PDVSA would be more of a State Department lead, but we're happy to take a look at it in detail and take whatever action is appropriate. I want to assure you, there would be no hesitation to take action against Venezuela -- or any other country, for that matter -- but no hesitation to take action against Venezuela if we identify sanctionable activity. There's not a --

REP. MACK: Well --

MR. LEVEY: -- there's -- we -- no question about that.

REP. MACK: Well, I'll suggest again that he is in violation, and so actions need to be taken.

Secretary Burns?

MR. BURNS: Just to reinforce what Stuart said, we'll devote all the resources we need to get to the bottom of all the concerns that you rightly raised. And where we come across evidence, we'll certainly hold the Venezuelan government accountable.

REP. MACK: Thank you.

REP. BERMAN: The time of the gentlemen has expired.

The gentleman from California, chairman of the Terrorism, Nonproliferation and Trade Subcommittee. Mr. Chairman, five minutes.

REP. BRAD SHERMAN (D-CA): The chair and several members have focused on China. China attacks us in a hundred ways: attacks the economic security of Americans; attacks the national security of our country; cooperates with and subsidizes rogue regimes. And this is best exemplified in the example from the ranking member of our subcommittee, where China facilitates the transfer of missile technology from North Korea, which it subsidizes, to Iran, which it uses the threat of its U.N. veto to protect. And I don't blame so much Beijing, as I blame Washington.

We in Congress have a choice between two approaches. One is to continue to denounce China in this room and others with -- in the hopes that our words will sting so badly that Beijing will change its policies. And occasionally we grant to the administration the authority to actually hit China a little bit, just as the CISADA would allow you to sanction Chinese companies, but we know you're not going to do it to any significant degree.

So one approach is to continue our current policy. The other is to take a radical approach such as the bill I proposed, which within six months would end most-favored-nation status for China. Given the power of Wall Street, I think it's clear that, at least at the present, we're going to continue our present policy. As to plan B, the King of Saudi Arabia told us what our plan B was. I'm hoping plan A works.

Secretary Burns, I was struck by your opening comment in which you said that sanctions were a mere complement to negotiations. Now, one view is that Iran really wants a Kumbaya moment with the United States. Another view is that Iran wants nuclear weapons so badly that nothing but the prospect of the brutal murder of all regime leaders by their own people would cause them to abandon their nuclear program. Assume -- and I realize I may be less optimistic than you -- assume the second Iran. Are our sanctions policies enough not to just encourage a Kumbaya Iran to join us in negotiations, are they -- are you building towards sanctions strong enough to force a determined, belligerent Iran to choose between regime survival and abandonment of their nuclear program?

MR. BURNS: Well, Mr. Sherman, Kumbaya moments are not something I've ever associated with doing business with this Iranian leadership. It's a pretty unsentimental leadership, and I think our approach is also pretty unsentimental. What we're --

REP. : A little closer to the mic, Bill.

MR. BURNS: Sorry. Sure, yeah, no. What I said is that Kumbaya moments are not something that I normally associate with dealings with the Iranian leadership. What we're determined to do is to sharpen the choices that that leadership faces to try to ensure that it sees both the possibilities of addressing international concerns about its nuclear program, but also the costs. And the costs -- the costs are rising.

REP. SHERMAN: Secretary, I -- (inaudible) -- understand that. The question is, do you have a plan A that will force this regime to choose between regime survival and a nuclear program? Or do you only have a plan of sanctions that would encourage a rational regime to try to reduce the sanctions?

MR. BURNS: Yeah, as I've -- as we've described to you, Mr. Sherman, what we have is an approach which is very unsentimental which seeks to sharpen the choices for that leadership and imposes a stiffening set of costs. And I think what we've seen --

REP. SHERMAN: Let me move on. The idea of stiffening implies that we have a lot of time. Had the executive branch complied with the law back in the mid-90s, we might have that time, but we don't. We've got to take action that immediately bites the Iranian economy.

Toward that, the recently enacted law provides for sanctions for those who provide gasoline to Iran. The standards are a million, 5 million in the law. Is the failure to launch formal investigations against -- and actually sanction firms due to a lack of will or just a belief that we don't know who it is that's providing this gasoline? Do we not know which tankers are arriving at Iranian ports? Do we not know who owns those tankers, even if we don't know who owns the oil on them? Do we not know from which refineries they arrive? What do we have in intelligence? Why have they -- have you not sanctioned or even begun formal investigations against any entity taking gasoline to Iran?

MR. BURNS: With regard to gasoline, refined petroleum products, I think it's pretty striking that just in the few months since CISADA was passed, you've seen an 85-percent drop, according to open sources, in the amount of refined petroleum product that Iran is importing. We all have mentioned a number of companies which have pulled out of that business. So I think what we've seen is a quite significant move in the direction that we've all intended --

REP. SHERMAN: Secretary, thank you for your answer, but it wasn't to my question.

REP. BERMAN: The time of the gentleman has expired.

The gentleman from Texas, Mr. Poe, five minutes.

REP. TED POE (R-TX): Thank you, Mr. Chairman.

And I want to thank all of the Iranian Americans that are here in the audience today concerned about a mutual concern that we all have, and that is Camp Ashraf and a delisting of the MEK as a foreign terrorist organization. I know the State Department and Foreign Affairs Committee are supposed to work very close together. My question, Secretary Burns, is, why has the State Department refused to brief the subcommittee chaired by Mr. Sherman on the delisting of the MEK?

MR. BURNS: Well, sir, we're in the midst of a review that was ordered by the court last summer, as I understand in, in which --

REP. POE: I guess my question is this: Will the State Department brief this committee and the subcommittee on information it has on the MEK and why the State Department relentlessly believes it should still be on the FTO list?

MR. BURNS: First thing, it's my understanding --

REP. POE: No, just answer that, my question.

MR. BURNS: Sure. Yesterday afternoon, we provided an intelligence briefing, as I understand it.

Second, I would be glad to take back your question and see if, in addition to the briefing we provided yesterday afternoon, there's more that we can provide at this stage. The only --

REP. POE: Briefing?

REP. SHERMAN: Will the gentleman yield? I would point out the State Department has refused to brief -- do a classified briefing at the request of our subcommittee for over a month, but did arrange for the classified briefing from the CIA, which couldn't address many of the questions but did address some.

REP. POE: Reclaiming my time, that's exactly my point. The briefing yesterday, which I attended, was not by the State Department; it was by the CIA. And those two agencies aren't the same. I'm just curious why the State Department, it appears to me, is so obstinate, even after going to court and the court ruling against the State Department, ordering them to provide information about the MEK in this lawsuit, information that is required to be delivered in January, which is next month the way I figure it; and why Secretary Clinton, in 2009, said that she would review the whole designation of the MEK in the next two years, that has not been done. The two years is up in January. I want to know what information the State Department has that is so relentless on your part that they should remain on this list. Do you know that information?

MR. BURNS: We are reviewing, in response to what the court said and what Secretary Clinton said. One step in that review is to allow the MEK to have an opportunity to review the unclassified material which led to former Secretary Rice's decision in January of 2009. We've provided that to the MEK, we await their input, and then we will complete the review as we promised. And if there are other questions beyond the briefing that was conducted yesterday afternoon, as I said, sir, be glad to take that back and see if we can provide further answers in the meantime.

REP. POE: The situation in Camp Ashraf appears to me just to be getting worse, not better. People are very concerned about their relatives that live there. What are some hard-line new procedures that we are taking as the United States to ensure the safety of those people in Camp Ashraf?

MR. BURNS: As Assistant Secretary Feltman said when he testified before you, we take very seriously the concerns that have been raised about inadequate availability of medical treatment and other kinds of activities at Camp Ashraf. There were two individuals in particular who had been raised in that hearing, and we made sure afterwards that they did have access to the cancer treatment that they needed. We, along with the U.N. Mission in Iraq, meet regularly with the Iraqi government to hold them to their obligation to ensure that the basic human and individual rights of the residents of Ashraf are protected, and we will continue to do that.

REP. POE: In other words, the -- our position is we're just encouraging the Iraqis to do the right thing. I mean, is there hard- line evidence that we are really encouraging, in a way -- I guess diplomatic way -- that they protect the safety of the people in Camp Ashraf, other than talking about it?

MR. BURNS: We and the U.N. mission will continue to insist that the Iraqi government meet its obligation to ensure the human rights of the residents of Ashraf, and that's to say that they are not subject to forcible repatriation to a place that might persecute them; that's to say that they have access to the medical treatment that they need. And we will continue to push that hard.

REP. POE: Lastly, my own opinion is that the greatest hope for Iran and the world is a change -- peaceful change in regime in Iran. That's not to go to some type of military conflict, and hopefully the good folks in Iran will change their own rogue, unauthorized, illegitimate government, in my opinion.

What are we doing to encourage that, if anything?

MR. BURNS: Well, sir, we -- as I said in my opening statement, the president and the secretary very seriously the importance -- the importance of supporting universal human rights of Iranians. We do that in several ways: first, by applying SADA, designating individual senior Iranian government officials who are guilty of human rights abuses to hold them accountable; second --

REP. POE: Reclaiming my time, Mr. --

REP. BERMAN: The time --

REP. POE: Chairman, may I have that answer in writing?

MR. BURNS: Sure.

REP. POE: My question was, what are we doing to promote the opposition in Iran, not human rights? And I'd like to -- (inaudible) --

REP. BERMAN: Okay. If -- would the administration be willing to lay out a number of a different things that you are involved in doing in communication to the committee or to Mr. Poe? Thank you.

And the time of the gentleman has expired. The gentleman from Florida, Mr. Deutch, is recognized for five minutes.

REP. THEODORE DEUTCH (D-FL): (Off mic.)

REP. BERMAN: Yes, you can -- I -- among my limitations of power is the ability to get your mic to work. And even the other ones are fast evaporating.

REP. DEUTCH: (Off mic.)

REP. BERMAN: You want to come up?

REP. DEUTCH: (Off mic.)

REP. BERMAN: No.

We -- I think we should start it again at five minutes.

REP. DEUTCH: Thank you, Mr. Chairman. This is a nice place for a freshman to sit. Mr. Chairman, I'd like to commend you and Congresswoman Ros-Lehtinen for your leadership on these issues.

And thank you, Secretary Burns, Secretary Levey for your testimony. On September 30th, Deputy Secretary Steinberg announced that Total, Statoil, ENI and Royal Dutch Shell have pledged to end their investments in Iran's energy sector, and as a result, pursuant to the special rule provided for in CISADA there would be no investigation into their activity. The special rule provides that -- and as the notice said to our committee stated -- that they are no longer engaging in or have taken significant verifiable steps towards stopping activity. My question -- first question is, to what extent do those four companies continue to operate in Iran's energy sector?

MR. BURNS: Well, just to add, sir, there's a fifth company since then to which the special rule has applied -- Inpex, a Japanese company. So I think broadly speaking it's a demonstration that that instrument, which is a very important one, is working to produce the outcome that we want.

We -- with regard to the companies that you mention, I can try to get you a more detailed answer. But we've had quite detailed conversations with those companies. They're winding down their operations quite rapidly, and they've given us very clear assurances that not only are they winding them down, current operations, but they're not going to engage in any sanctionable activity in the future.

REP. DEUTCH: All right. Do we know how quickly they'll wind down? When will they stop doing business in Iran?

MR. BURNS: I can't give you the precise answer, but it's in the very near term, and, in some cases, I think, already wrapped up. But I'll try to get you a clearer answer.

REP. DEUTCH: If you could for each of those. And do you know, though, is it -- is it weeks? Is it months? Are they finishing existing contracts?

MR. BURNS: No, it's -- you know, I can't give you a precise answer. I promise I'll get you one. But it's in the very near future. I mean, these are companies that are pulling out of the Iranian energy sector, and have also, as I said, committed not to engaging in future activity.

MR. LEVEY: Look, I would --

MR. BURNS: So we -- I think in most cases we're talking about weeks. I, you know, can't tell you if it stretches much beyond that. But I'll certainly try and get you a -- (inaudible) --

REP. DEUTCH: Hey, if you could, I'd appreciate that. Mr. Secretary, if you confirm that those companies that at the end of September had certified that they would be leaving will be -- will no longer be doing business in Iran within the next several weeks, I would appreciate that very much.

That then leads to the next question, again, with respect to what companies have said they're going to do and when they're going to do it, and what constitutes credible evidence. The Boston Globe reported on November 12th that Schlumberger has promised the United States government that it will end operations in Iran upon completion of existing contracts, but then it cites internal Schlumberger documents that existing contracts worth hundreds of millions of dollars, we'll keep them in Iran until 2013.

And in fact, according to that report, those contracts -- they had entered into 12 new contracts valued at more than $400 million even after telling U.S. officials in February of '09 that they'd cease activities.

Do you have anything -- first of all, do you have anything further on their efforts and when Schlumberger will be leaving Iran?

MR. BURNS: No, we remain concerned about Schlumberger, for all the reasons that you just described, and we'll continue to press those concerns. I don't have anything further to add on that at this point, unless you do.

REP. DEUTCH: Well, does -- so -- and Mr. Secretary, then does the -- does this report --- and this is, I think, the main question I had today -- does a report that cites internal documents of the company like this report that was published in the Boston Globe -- does this constitute credible evidence that will then -- that either has or will cause an investigation to be launched against Schlumberger?

MR. BURNS: Well, you know, in trying to determine what the threshold is for credible evidence, I mean, we go through all of those reports. We also talk to companies themselves. We talk to governments, you know, of which those, you know, companies are hosted. We also obviously go through all the information in our intelligence community. So I can't give you a simple answer on that, except to say that we try to exhaust all the information we have at our disposal to make that judgment.

REP. DEUTCH: Right. I understand. If you determine that these internal documents are valid and actually come from the company itself and -- the broader question then is, if any one company identifies -- self-identifies as a company that is doing business in Iran, does that constitute credible evidence? And if it's not clear, shouldn't that constitute credible evidence?

MR. BURNS: Well, it's certainly in -- a very important factor in coming to that judgment, just as you said. I mean, I think, just to take a step back for a second, you know, last summer, when we were asked the question about, you know, how many companies or how many instances are there where there may be sanctionable activity, I mentioned in a hearing that there were seven to 10 that we were looking at carefully. That was in July.

Since July, we've actually formally sanctioned one company. Five, through the use of the special rule, have pulled out or are pulling out of the Iranian energy sector, and we've launched formal investigations into several others. So we're trying to follow through quite energetically and thoroughly on these issues.

REP. BERMAN: The time of the gentleman has expired.

I'm just going to interject here -- it's probably not the way I should do it, but I'll sort of take it as the privilege of the last hearing of my chairmanship, at least for a while -- (laughter) -- and just put out -- the law provides for this credible evidence threshold, and then it provides for a 180-day investigation. I don't know if that was what Mr. Deutch was getting at, but to my mind, there is a difference between the finding that comes at the end of a hundred and day -- 80-day investigation or within that 180 days, and the threshold of credible evidence. And we shouldn't fall into the trap of needing enough evidence to make the final determination about a sanction in order to decide whether or not to launch an investigation.

And with that, I think I've exhausted whatever privilege I gave myself and I better go on to the next member. The gentleman from California, Mr. Royce, recognized for five minutes.

REP. EDWARD ROYCE (R-CA): Thank you, Mr. Chairman.

The story I pointed out from The Post actually predated WikiLinks (sic), the story on the Obama administration concluding that Iran was being helped by China in terms of the development of its nuclear weapons and its missile technology. And it comes from a story -- last month our State Department special adviser for nonproliferation presented Chinese officials with what was called a significant list of companies and banks that were assisting Iran with its missile and nuclear technology.

I think what concerns us is, as The Wall Street Journal said yesterday, China's role in Iran's procurement activities is growing. It's on the upswing. And we know that China looks the other way as weapons trade between North Korea and the Islamic Republic of Iran ends up entrenching both regimes.

And that reality pours cold water on the latest U.N. sanctions resolution that the administration lodged this morning -- a resolution that put congressional sanctions on the back burner. And I can't help but feel a sense of lost time.

But as Stuart Levey has pointed out, the new legislation does include potent new financial sanctions, and these are patterned after Section 311 of the Patriot Act, which was once used to great effect on North Korea, which brings me, Stuart, to my question. I remember when that was imposed -- the Banco Delta Asia. And it had a certain effect on the hard currency that ended up being constricted from the hands of the regime.

And I thought you might want to lay out for us what the effect was on North Korea at the time. And there -- it worked probably because there was some concern about reputational risk on the part of the banks that participated in that effort.

But I'd also ask you, is it possible that Chinese banks today would be concerned about reputational risk and therefore could -- this could be just as effective? But let's go -- let's go through the effect of it, if you would.

MR. LEVEY: Well, thank you, Mr. Royce. You're referring to an action that we took under the Patriot Act back in 2005, I believe, to designate a bank in Macao as being a primary money launderer -- (inaudible) -- under the Patriot Act, under Section 311. And to summarize quickly, the overall effect was it led banks around the world to stop doing business with North Korea because we had put into the public domain a catalogue of the kind of illicit activity that North Korea engages in. And the fear that banks had that they might be inadvertently swept up into that led the responsible financial institutions to say this wasn't worth the risk to continue doing business with North Korea.

I think -- as I said to Mr. Ackerman, I think North Korea was a more contained target, if you will, and so we've applied some of the same principles in going after the Iranian strategy in that there's a much broader integration into the financial system that we're already dealing with, and I think just one action like that wouldn't have had the same dramatic effect.

But we have drawn upon the same principle, which is that reputable financial institutions will not want to do business if they fear that they might get caught up in illicit activity like Iran's nuclear procurement, its missile procurement, its support for terrorism and so forth. And that is the reason why we've had the ability to have the effect we've had thus far on the bank. And we had already had a significant effect, and then CISADA dramatically increased it, because it created a situation where any bank that continued to do business with the banks that we had already pointed out is now at risk of losing access to the U.S. financial system. It made, if you will, a multiplier effect on our designations, and it has had a dramatic effect thus far.

And to come down to the -- your final point, which is I think that that effect even applies with respect to Chinese banks. As many people have expressed and as Bill has said, we're quite concerned about the role of China in this whole strategy and we're continuing to press it. But we do have one thing going in our favor, which is that Chinese financial institutions seek to have a global business model and a global footprint, and therefore they do take these sort of reputational concerns seriously, and that gives us the ability to be somewhat persuasive with them.

REP. ROYCE: My only regret, Mr. Chairman, was that those sanctions were ultimately listed -- lifted. And I think, you know, it's sanction enforcement. It's sanctions enforcement. The stakes are too high for subtlety. It's the enforcement that's going to get the demonstrative effect. Thank you, Mr. Chairman.

REP. BERMAN: Talk later. (Chuckles.)

The gentleman from California, Mr. Costa, is recognized for five minutes.

REP. JIM COSTA (D-CA): Thank you very much, Mr. Chairman and the ranking member, for this timely hearing. Unfortunately, I don't think that time is necessarily on our side.

Clearly, as has been noted by many of the members here on the dais, China continues to be a key and a challenge as we try to impose these sanctions.

And sanctions, I agree with Mr. Royce, must be enforced.

I'd like to move this a little to -- to a little westward on another country that I think is a important participant, a NATO ally: Turkey. Mr. -- Secretary Levey, how have the Turkish banks reacted to the new sanctions, and are Turkish banks continuing to conduct business with entities that the U.S. has sanctioned?

MR. LEVEY: With respect to Turkey, I think on the one -- there are a couple points worth making. One is that, while Turkey did vote against the resolution, as we all know, they have stated that they will implement the resolution. And they have also stated that they'll leave to their private sector decisions about what business the private sector will do.

And I've been to Turkey since CISADA was passed, and other Treasury officials have also been in Turkey since CISADA was passed. And we've engaged with the private sector there; we engaged with their banks, the banking association; we've engaged with their government officials. And what we're finding is that the private sector, the banks in Turkey, are reacting similarly because they are concerned about the potential of losing access to the U.S. financial system, and they are concerned about their reputation.

I can't give you more detail in an open setting about that, but that's the general trend.

REP. COSTA: Will it be our policy to enforce sanctions if in fact we find that their banks continued to do business, and would we impose the CISADA sanctions?

MR. LEVEY: Yes.

REP. COSTA: Ambassador -- Secretary Burns, I'd like to bring this back around. We discussed earlier Russia's role in making these sanctions work. Do you believe that there is a correlation or a connection with regards to our efforts to secure the START treaty that is pending over in the Senate as to how Russia's behavior will be as we go forward on enforcing these sanctions? Do you think there is -- in your view, is a direct correlation here?

MR. BURNS: Well, just two points there. First, I think Russia's partnership in the diplomacy, which led to Resolution 1929 and to its own decision to cancel the S-300 sale, was crucial. Without Russia's partnership, I don't think we would have had Resolution 1929. Without Resolution 1929, I think it's most unlikely that we would have seen as significant a set of measures from the EU and from many others.

So that painstaking effort to work together with regard to a shared concern about Iran's nuclear ambitions has been right at the core of our relationship with Russia over the last couple of years. Certainly the START agreement is in the interests of both of our countries. It's very much in the American national interest. And as the president and the secretary have made clear, we hope very much that it can be ratified this month, because I think it is an important demonstration of a partnership with Russia, which has also produced important dividends with regard to our shared concerns about Iran.

REP. COSTA: I'd like to ask a final question, and I noted it earlier. The Revolutionary Guard in Iran -- how effective are these sanctions in trying to impact their ability to continue to operate? Have we made any determination? I mean, clearly they are, in essence, a part of the government, but obviously -- and I don't know whether, Secretary Levey, you feel best prepared to respond to this -- but it seems to me that the Revolutionary Guard in Iran is at the -- at the head of many of the problems we deal with there.

MR. LEVEY: The short answer is that you're right that their involved in many of the problems, but the only good news I've got is that that is now something that is not just recognized by the United States, but recognized by the international community. So one of the most significant pieces of 1929, which I think was widely underestimated when it was first passed -- one of the significant pieces of 1929 is its designation of a number of IRGC companies for sanctions in the resolution. That led to other countries, including the EU, designating the IRGC as an organization.

Similar action was taken by Japan and South Korea. The overall effect of this has been to create a dynamic that has companies around the world saying they won't do business with the IRGC. And if you add to that the way the -- Iran engages in deceptive conduct, so you don't know who you're really dealing with in Iran, and the increasing likelihood that if you're doing business with Iran you're doing business with the IRGC, this adds to the overall effect of sanctions.

I'll give you a good example of this --

REP. COSTA (?): Uh --

MR. BURNS: But I don't have to. (Laughter.)

REP. BERMAN: Well done.

The gentleman from California, Mr. Rohrabacher.

REP. DANA ROHRABACHER (R-CA): Thank you very much, Mr. Chairman. And let us note the good job that you've done in conducting being chairman of these hearings over the last two years. And it's been an honor to work with you, knowing and also considering the fact that we are demonstrating for the world that, here in the United States of America, people can disagree but we have respect for one another and we treat each other fairly in trying to decide policy. So thank you, Mr. Chairman, for your leadership over these years.

I'd like to associate myself with the concerns of Congressman Poe in terms of the citizens of Camp Ashraf. And I think that it's disconcerting to understand that we have to play games with the government of Iraq. After we have invested such a massive amount of treasure and blood, we need to hear from Iraq, from the government of Iraq a solid commitment that they will not betray the people of Camp Ashraf to the mullah dictatorship. That would be a terrible sign for anyone opposing the mullah dictatorship in Iran. We would lose leverage, et cetera. So if you could pass that on, I would appreciate that.

What we hear today -- and thank you, Mr. -- Secretary Burns, for your analysis, there, of the relationship we are -- have with Russia in dealing with Iran. It's easy to see -- put this in one-dimensional to understand, Russians built that nuclear power plant. We also understand that when they signed the contracts they were in a horrible economic situation and felt that they were being pushed in -- to make such deals. So you have testified today that we have cooperation from Russia now in dealing with Iran.

But I think also this hearing has demonstrated that our China policy has been a dismal, dismal failure. Not only are the Chinese not cooperating, but we can see that not just Iraq and Iran and that area, but Chinese, of course, provided the nuclear weapons for Pakistan through Korea, and they're using -- Chinese seem to be using Korea as a -- as a puppet. And the Chinese, of course, have just been playing a very negative role in the world. And my compliment to the chairman also indicate -- should suggest that in his opening statement he outlined the problem with China. If we're going to have a peaceful world, we're going to have to start dealing with China in a more forceful way.

One last note, and then I'd like you to answer this. But I understand that the oil now is being transferred -- some of the sanctions you're talking about have been working, but oil is now being transferred, and a -- and a large amount of oil, from Iraq, from the Kurdish areas of Iraq. Is that true? And let me just note, if it is, that we passed a resolution that I authored that would establish a counsulate (sic) in Erbil for a Kurdish counsulate (sic). We passed that, and that would not have passed had we known that the Kurds were shipping large amounts of oil to Iran. So what -- what's going on with that oil shipment?

MR. BURNS: Well, sir, we share the concerns about reports of oil smuggling across the border of northwest Iraq. We've had a State Department/Treasury team in Baghdad as well as in Erbil recently to talk specifically about those concerns and emphasize the need for this practice to stop. I don't know if Stuart wants to add to it, but we take it very seriously. We've followed up, and we'll continue to.

REP. ROHRABACHER: Well, is this oil smuggling? Or is this a wink and a nod with the government oil smuggling?

MR. BURNS: Well, there have been reports of smuggling that are worrisome, you know, whatever their origins or content. And it needs to stop, because it runs counter to obligations.

REP. ROHRABACHER: Okay. One last note here about this WikiLeaks. I find it disconcerting that I have to find out information about wrongdoing of other governments and other countries through these type of leaks of classified documents. Mr. Chairman, one of the things we're going to have to work on is the fact that we as members of Congress deserve to know. If hostile countries know what's going on and our government is protesting something that's going on with a hostile government, meaning we -- our government knows about it, the American people and certainly Congress should know about these things.

And for example, there is a -- on a -- we know that at least one weapons systems from China has been shipped over. Well, we protested it; the American people don't know anything about it.

Thank you very much.

REP. BERMAN: Time of the gentleman has expired.

(Note: technical difficulties.)

(Off mic.)

REP. SHELLEY BERKLEY (D-NV): (Off mic.)

REP. BERMAN: Shelley? Why don't you come up here and --

REP. BERKLEY: (Off mic.)

REP. BERMAN: Your mic's not working.

REP. BERKLEY: (Off mic.)

REP. BERMAN: And your -- and your papers.

REP. BERKLEY: (Laughs.) I hope you heard all the accolades. Okay. I don't have to -- (laughter) --

REP. BERMAN: Thirty seconds off for the accolades and we'll set it. (Laughter.)

REP. BERKLEY: Sorry I mentioned it.

I had an interesting exchange of ideas with a high-ranking Turkish official yesterday, and in the discussion he assured us, the members of the Foreign Affairs Committee, that Turkey was in fact doing everything they can to help implement the sanctions against Iran and have a successful result from the implementation. That seemed to me a bit out of sorts with the fact that they voted against the sanctions, and it's my understanding that they've done just about everything they can not -- (noise) -- that's my phone -- not to -- not to be helpful. My question to you -- (off mic).

MR. BURNS: Let me start, ma'am, and then Stuart may want to add to this.

The Turkish government has made clear, as they did to you, that they're determined to implement Resolution 1929 and all the other sanctions. Whatever their vote in the Security Council, they're obligated to do that, and we will work closely with them to ensure that.

We've already seen evidence of some Turkish companies -- I mentioned earlier Tupras, which has pulled out of the supply of refined petroleum products to Iran.

You know, the truth is that the total volume of Turkish trade with Iran is not that great. I think something like 2 percent of Turkish exports go to Iran and 2 percent of Turkish imports come from Iran. So beneath a lot of the public statements, I think as Stuart said, you know, Turkish firms, banks and businesses have a lot more at stake, in a sense, in their business with the rest of the international community and with the United States than they do with Iran right now.

I think Turkey has made clear that they share our profound concern about a nuclear-armed Iran. We've had tactical differences sometimes over this, but I think they have a lot at stake in this too. I think they've played a constructive role in Iraq, for example, in working with us to help produce a -- help Iraqis produce a broadly inclusive government. I think they're very mindful of the danger, sometimes, of Iranian behavior in Iraq. So I think there's a partnership with Turkey that's not perfect, but that we need to continue to work at because it's significant for us in a lot of different ways.

REP. BERKLEY: (Off mic) -- any loophole in the law -- (off mic).

MR. BURNS: No, ma'am. We're just trying to make the best possible use of the instruments that have been provided, especially in CISADA.

And as we've both described today, that's what we're working very hard to do.

REP. BERKELEY: (Off mic.)

REP. BERMAN: The time of the gentlelady has expired. The gentleman from Nebraska, Mr. Fortenberry, is recognized for five minutes.

REP. JEFF FORTENBERRY (R-NE): Thank you, Mr. Chairman. And let me add my voice to those who have thanked you for your leadership over these few years. We're grateful for your service. I look forward to continuing to work with you.

And thank you, gentlemen, for coming today. I appreciate your hard work, and I do think the administration's dual-track policy is very important. With that said, the Iranian people have a deeply historic and deep cultural sensitivity to the fundamental notions of justice, and yet they are ruled by a religious autocracy that is bent on repressing its people and preventing Iran from taking its place among the members of the responsible international community.

We will all soon awaken to the headline that Iran has the bomb. And this will be a geopolitical game changer. And if we look back at this, we see a pattern here where Russia in its previous engagement has empowered this development. China is clearly committed a sin of commission. North Korea has an exchange program with the country. And the European business interests are still involved there.

Having Iran obtain nuclear weapons in the most volatile region of the world is going to leave very, very difficult defense questions for countries like Saudi Arabia and the Egyptians and the Turks and may spark a nuclear arms race, again, in this most difficult part of the world. And no one in the international community is going to be served if Iran uses a bomb or gives it to a proxy and it goes off in Berlin or Chechnya or Tel Aviv or New York. I just don't think that we can get our minds around the horror that would ensue.

So with that said, again, I appreciate your hard work on this. But here we are as a committee in the United States Congress holding hearing after hearing on this, and we're talking about the minutiae of Iran sanctions, which is important, and it's an important part of the dual-track strategy. Is this going on in the EU? Is the Russia Duma doing the same thing? Expound upon your discussions with the Chinese. You had earlier said we've emphasized restraint with China. Okay. Thank you. But restraint -- the nature of this dilemma and the probability of what's coming has to compel us all to act swiftly. And the burden of this shouldn't just fall to this committee and on you. This has to be an international effort of the highest urgency.

So, again, the question primarily being, give me the disposition of your counterparts in Russia and the European Union, and talk further about China's engagement here.

MR. BURNS: Sure, let me start. First, I absolutely agree with you there's an enormous amount at stake here. I think there is -- what's striking about the last year is the growing realization on the part of many other partners around the world, in EU, in Russia, parts of Asia about what's at stake and about the dangers of a nuclear-armed Iran.

And what that has led to is an unprecedented set of measures -- not only Resolution 1929; that provided the foundation for it -- but a truly unprecedented set of steps that the EU took, steps that they had been reluctant to take before that, as Stuart said, Australia, Japan, South Korea, Canada, Norway and other countries have taken, steps that Russia has taken that it hadn't been prepared to contemplate in the past, like significant curbs on arms transfers to Iran in a U.N. resolution and cancelling of a major arms sale. All that reflects, I think, a widening realization of what's at stake.

And we will continue as energetically as we can to work with our partners to drive home to Iran the choice that it faces and the importance of it making -- of it choosing a path that's going to allow its people the connection to the rest of the world, as you rightly said, that I think they thirst for, and that we saw very vividly in the rioting and the other concerns that played out on Iran's streets the summer before last.

REP. FORTENBERRY: Do we have the time?

MR. BURNS: We feel a real sense of urgency. And we need to see action as quickly as we possibly can, and that's why we're going to drive this as energetically as we possibly can.

REP. FORTENBERRY: Who else is driving it, outside of the United States?

MR. BURNS: Well, I think, as I said, in the European Union you see a much greater recognition of what's at stake and a willingness to act. You see that on the part of Russia. You see that on the part of our major allies in Asia. You certainly see that on the part of many of our partners in the Gulf. So, you know, I think there's a growing recognition of what's at stake here, and we're going to do everything we can to build on that.

REP. FORTENBERRY: All right. Thank you.

REP. BERMAN: The time of the gentleman has expired.

The gentleman from Georgia, Mr. Scott, is recognized for five minutes.

REP. DAVID SCOTT (D-GA): Thank you very much, Mr. Chairman. Again, welcome to the committee.

So it is without any question in both of your minds that Iran is after a nuclear weapon?

MR. BURNS: I think we see increasing concerns which lead people toward that conclusion. I mean, if Iran wanted to demonstrate the exclusively peaceful purpose of its program, it wouldn't be hard to do it. They can answer questions the IAEA has posed over the years, that the U.N. Security Council has posed.

REP. SCOTT: So without question, you will go on record saying they are after a nuclear weapon? That is your conclusion, and your conclusion; is that correct?

MR. LEVEY: I think we have to -- as policymakers, we have to take that -- make that assumption, because we have to pursue a policy that assumes that that is what they're doing.

REP. SCOTT: Okay. We've talked about China, we've talked about Russia, we're talking about North Korea. And all of this presents a very dangerous geographical, geopolitical scenario of an impending sort of axis. Within that context, we have not touched upon another country which I think could hold a balance here, and that is India. And I'd like to ask you -- India fascinates me in terms of their approach to this. It's -- I think it's very important for us to examine India, particularly in view of the fact that they now are, from some information, rejecting the sanctions. And that is particularly peculiar, in view of the fact that just a few years ago -- 2005, 2006 -- they supported the sanctions that were put forward under the Bush administration. Tell me what is going on in India.

MR. BURNS: Well, sir, I mean, the Indian government has made very clear its commitment to uphold the new U.N. Security Council Sanctions Resolution 1929, and every -- everything we see of its behavior suggests that it's serious about that commitment. For example, one Indian company, Reliance, which had supplied a considerable amount of refined petroleum product to Iran, has pulled out of that business already. India has voted three times in the IAEA Board of Governors to condemn Iranian behavior. In its last vote last November, it voted to condemn the Iranians at a moment when a number of other countries were on the other side of the vote, including Brazil, Turkey, Egypt and South Africa. So the Indians I think have made very clear their determination to do everything possible to ensure that Iran does not develop a nuclear weapon.

REP. SCOTT: Well, that's what bothers me. I have information here that says, for example, India's foreign secretary, Nirupama Rao, made India's position explicit earlier this month when she said restrictions on investments in Iran's energy sector could have a direct and adverse impact on Indian companies, and in fact that they look forward to more investment by Indian companies directly into that energy sector; and sort of goes on to say that the United States is thousands of miles away, they are next-door, and have a long, centuries, centuries-old relationship. Seems to run counter to what your assessment just said.

MR. BURNS: Well, sir, I'd just say two things briefly.

First, the Indians, at the very highest level, have made clear their concern about nuclear-armed Iran. Second, I think you have to judge by the -- by the practice on the ground. Reliance, one of the major Indian firms, has essentially pulled out of business in Iran. Secondly, in the South Pars gas field, an Indian company that was involved in the past in development there has also begun to pull out. So I think the facts suggest a real concern on the part of India.

REP. SCOTT: Do you think that the sanctions are going to work? There is some "worriation" of that. And particularly, as I mentioned earlier, with North Korea, China, even with Russia we wouldn't be in this position with Iran if it weren't for Russia investing first of all in the Bushehr plant, which, seems to me, might have been a convenient cover for them to pursue. So I guess my point is that I'd like to -- is a military option on the table, in your opinion, and how realistic is that?

MR. BURNS: Well, let me just make a quick comment first on Bushehr. I mean, I think it's significant -- the last administration recognized this as well -- that Russia significantly adjusted the terms of the Bushehr project so that it would not only supply the fuel for the reactor but it also would take back the spent fuel, all under IAEA safeguards, which just simply helps to reinforce the point that Iran doesn't need a domestic enrichment capability in order to have a peaceful nuclear program. That's the first point.

REP. BERMAN: The --

MR. BURNS: The second --

REP. BERMAN: Finish the answer to the last question, but the time has expired. Yeah.

MR. BURNS: All I can say on the second point you made, sir, is the president has made clear we haven't taken any options off the table. But what we're focused on now is making diplomacy and all of its dimensions -- engagement and negotiation, but also political and economic pressure -- work.

REP. BERMAN: The time of the gentleman has expired.

The gentleman from Illinois, Mr. Manzullo, is recognized for five minutes.

(Pause.)

REP. DONALD MANZULLO (R-IL): Taking a look at the Iranian Sanctions Act passed in 1996, I believe, and then the latest act that we passed this spring, all of course dealing with sanctions, can you -- can you give an opinion or at least some thoughts on the best way to, as it were, toughen up these laws, to give them real teeth, to come up with the real results that we're looking for?

MR. BURNS: I'd just start simply by saying that I think what we have before us now in the laws passed by Congress, signed by the president, but also, in Security Council resolutions, steps that other countries have taken, is a very broad array of instruments. What we need to do now and what we -- as we've described, we've been doing very energetically in recent months, is to apply those and enforce those as vigorously as possible. I think we can continue to have a significant impact if we do that.

MR. LEVEY: I would agree with that. The sanctions that we have on Iran are the toughest in the world, and we have made a very, very high priority to implement them. One thing that -- when we -- when we say that CISADA's had a very positive impact, I think we -- to put that in context, the effect that CISADA is having is on behavior of companies outside of the United States. It does have that impact. And so if we go ahead and continue to implement that, I think it can have a great effect, because now there is a broader recognition of how important this is, goes -- going beyond the United States, we have a much broader set of governments that agree with us in the fundamental principle that this is a very high priority.

REP. MANZULLO: If these sanctions don't work, then the next step would be a blockade and the next step would be some type of, you hate to use the word, but military action. Do other countries around the world realize, to the extent that the United States does, of the importance of complying with these -- with these sanctions?

MR. BURNS: I think, sir, there's -- as I mentioned before, there's an increasing recognition of that. You see that in the behavior of many other countries -- I won't say all of them -- but many other countries in recent months in particular. I think there is a growing awareness of what's at stake here, and of the importance of trying to make this approach work.

REP. MANZULLO: That's -- I agree 100 percent with what you're saying. But how do you -- how do you increase the awareness? How do we get the message across to other countries in the world that this is probably the last best shot that we have diplomatically to do something?

MR. BURNS: Well, as I said, I mean, I think many other leaderships around the world have already come to that conclusion. They've concluded that because of Iranian behavior itself. They've concluded that because they also see the concerns of many others in that part of the world, whether it's in the Gulf or in other parts of the Middle East, and they understand the risk that a nuclear-armed Iran would pose to a part of the world that's central to the health of the global economy. So I think many other leaderships are coming to those same conclusions.

REP. MANZULLO: Mr. Levey, did you want to comment on that?

MR. LEVEY: I agree with entirely with what Undersecretary Burns said.

REP. MANZULLO: Okay. Well, I appreciate your time on it. It's obviously an issue of utmost concern to our country, and actually to the stability of the whole area. Thank you. I yield back.

REP. BERMAN: I thank the gentleman, and recognize the representative from America Samoa Eni Faleomavaega.

DEL. ENI F.H. FALEOMAVAEGA (D-AMERICAN SAMOA): Thank you, Mr. Chairman, and our ranking member for calling this important hearing. I certainly want to commend both Secretary Burns and Secretary Levey for not only testifying before the committee, but too often, I think, we don't say enough on this side of town how much we appreciate the services that you gentlemen provide not only to our president, but to our nation.

The important question of whether the implementation of stronger economic sanctions against Iran have been -- have been proven effective or not -- and I think this seems to be the question that we're trying to determine here. And I'd like to share with you -- (audio break) -- research that was conducted by the Congressional Research Service, and I want to share this with you. And I certainly would like to have your comment on it.

It says that -- and I quote -- because so many major economic powers have imposed sanctions on Iran, the sanctions are by all accounts having an effective on Iran's economy. However, data on Iran's economy is often sparse or incomplete, and it is difficult to form a precise picture on the impact of sanctions on it. Now, officials who have spoken said that it has its effect. And then it says again, however, there is not a consensus that sanctions are causing a demonstrable shift in Iran's commitment to its nuclear programs, the key strategic objective of the whole idea of sanctions.

Would you care to comment on that?

MR. : (Off mic.)

REP. BERMAN: How come mine works? Not working, huh? Do you want to --

DEL. FALEOMAVAEGA: I think these mics are bugged, Mr. Chairman, or something.

Well, I'm losing time, Mr. Chairman, and I know the gentleman want to --

REP. BERMAN: We're told that there is a rebooting process going on which will take a minute or so.

MR. : So meanwhile -- (audio break).

REP. BERMAN: (In progress after audio break.) Try yours.

MR. BURNS: Oh. Yeah, I think we're back in --

REP. FALEOMAVAEGA (?): Testing.

REP. BERMAN: Okay.

REP. FALEOMAVAEGA (?): So much for modern technology.

Please proceed, Mr. --

MR. BURNS: Sir, let me just start to answer your question about the impact of sanctions in Iran. I mean, I think in terms of objective impact on the Iranian economy, I think sanctions clearly have amplified what is already considerable mismanagement of the economy. And you can look at a number of indicators: the fact that oil revenues for the Iranian government have declined steadily over the last three or four years --

REP. FALEOMAVAEGA: Let me ask you -- I didn't mean to interrupt you, Mr. Secretary, but how much is the estimate of the value of the oil reserves that Iran currently has? And I'd also like to know how much oil reserves Iraq has put away in terms of its capacity for whatever it has. Because it seems to me that this is one of the fundamental reasons why we're in the Middle East: the concern about whoever's going to take possession of this oil supply. And ironically, if I'm correct, when 30 companies offered bids of the oil in Iraq, it was a Chinese company that won the bidding. Didn't even lift a finger. With all the billions and billions of dollars that we expended, Chinese got the oil.

And I wanted to ask you, Mr. Secretary, how much oil reserve does Iran have?

MR. BURNS: Well, Iran has considerable reserves of both oil and gas. I'll have to get you the specific figures. And of course Iraq does too, particularly in terms of oil reserves. So I don't know whether Stuart wanted to add to the answer on the economic impact on Iran.

DEL. FALEOMAVAEGA: Well, I know, from the administration's point of view, you feel that sanctions is proven successful. But here's the problem that I have and has been raised by my friend from Florida, as well as Mr. Ackerman. China is in this mix in the most important way, to the fact that it's in China's national interest to get as much energy resources they can get, and I don't think Iran is any exception in all the efforts that have been made worldwide. Africa -- wherever they can get energy supplies, they will do this, and so is India.

So is it in China's national interest that they get this oil from Iran one way or another?

MR. BURNS: Sir, I think it's clearly in China's national interest to have stable access to energy reserves in the Gulf. And if you have a nuclear-armed Iran or greater instability caused by Iran in behavior in the gulf, then you can easily put at jeopardy access to energy resources in a part of the world that's critical not only to the global economy but to Chinese economic growth. So I think that strategic concern has very much focused attention in Beijing.

DEL. FALEOMAVAEGA: Here's one question -- and I know I've got six more seconds, Mr. Chairman -- very, very difficult for us to tell --

REP. BERMAN: (Off mic) -- get answered, though.

DEL. FALEOMAVAEGA: -- very, very difficult for us to tell the Chinese what to do, and I think this is the biggest problem we're faced with.

Thank you, Mr. Chairman.

REP. BERMAN: (Strikes gavel.) That's an observation.

The gentleman --

REP./MR. : (Off mic.)

REP. BERMAN: -- is not here.

The gentleman from Florida, Mr. Klein, is recognized for five minutes.

REP. RON KLEIN (D-FL): Thank you, Mr. Chairman. And again I want to thank the chairman and the ranking member for the opportunity to serve on this committee and the staff for being great support, making us all look good. And of course Mira Resnick, who's -- Mira Kogen Resnick, who's worked with me for the last four years, has been an invaluable tool.

And I'd like to thank our guests today, who have really provided a tremendous amount of resources, going back to the last administration through the current administration. So thank you for your work.

A few thoughts. Number one, there's been a lot of talk about China, which -- I certainly support a consistent and aggressive enforcement across the board. I think we saw that even before the sanctions were actually passed, word was already getting out, and we already saw -- we started seeing some anticipated reaction by businesses around the world.

But more particularly, since the sanctions have passed the United Nations, United States, European Union and other countries, we're starting to see more, and I would heartily and aggressively encourage you, as fast and as quickly as possible, continue that process.

As relates specifically to China, though, we have lists of China National Petroleum, China Petroleum and Chemical, and other companies that specifically and very openly are doing things that would be considered sanctionable, as I understand it. So it's not so much of a question, but it is a very strong statement that I would make and, I think, be joined by most of the members of this committee -- we need to go after them. I know there's a lot of delicate issues between China and the United States relating to a whole variety of things, but if China supported this at the United Nations level and understands, for all the reasons you just explained, the importance of why a stable Middle East and a non-nuclear Iran is essential to its future and everyone else's future, they got to get on board, and they have to be held accountable just like every other country world. That's my first point.

Number two, the Central Bank of Iran has been a facilitator, if you will, in stepping in the void when other banks are being sanctured -- sanctioned. What is it that we can do and why are we not sanctioning the Central Bank of Iran?

MR. LEVEY: With respect to the Central Bank of Iran, for the first time, the U.N. Security Council resolution actually expressed concern about the activities of the Central Bank of Iran, which had previously been something that we had been expressing some concerns about, in that we had seen it engaging in the sorts of deceptive and -- deceptive conduct that other Iranian banks were engaging in.

With respect to the central bank, though, it is already in the United States a violation of sanctions to do business with the Central Bank of Iran. And in fact it's a crime for a U.S. person to engage knowingly in a transaction with the Central Bank of Iran.

REP. KLEIN: Well, and if you take it to the next level, other countries, our allies are --

MR. LEVEY: Well, I think that having this in the Security Council resolution helps to bolster us when we do what we do all the time, which is to go and share information and express concerns and try to raise awareness.

Now, it's not so much -- it's not only a U.S.-expressed concern, but it's one where we can point to the Security Council resolution, and that does -- that does help the conversation considerably. And we'll continue to do that and continue to raise those concerns.

REP. KLEIN: How big -- how big a problem is that, though, in terms of them stepping in and, you know, facilitating transactions when other banks are being sanctioned? How big a problem is that in terms of the overall scheme of clamping down and isolating Iran?

MR. LEVEY: I'd speak more generally that, you know, Iran is going to do whatever it can. That's our presumption, that they'll do whatever they can do evade the sanctions. And that's a presumption that we had going in. And so what we've tried to do is continue to expose that so that it's not only do we make that more difficult for them, but we also in the process make the private sector around the world even more wary of doing business with Iran. So the Central Bank of Iran is one concern that we have in that regard, but it is not the only one. And so our engagement on this issue is -- you know, has a number of concerns that we would -- that we would raise.

REP. KLEIN: Okay. Again, I would encourage that. Also, there are a number of examples that have been brought forward, the UAE as being one country where companies are getting around -- (audio break).

MR. LEVEY: We've engaged -- is my mic working?

MR. : Yes.

MR. LEVEY: We've engaged very intensively with the UAE. They take the implementation of 1929 very seriously. They take very seriously their desire not to be abused by Iranian illicit conduct. And so that seriousness of purpose has been reflected, I think, in recent months with -- in their actions as well.

REP. KLEIN: Mr. Chairman --

REP. BERMAN: Time.

REP. KLEIN: -- can I just ask one last comment? It's not a question, but just as it relates to this. It's my closing comment.

It relates to the anticipation of what happened with -- the sanctions coming online, I think, were very indicative of a process. We're now in the enforcement stage, and again, we all feel very strongly about that. But you heard from some of the members about the notion of layers of additional things that can come down the road.

Now, we all know time is of the essence. We want to continue that process. But to the extent that ideas can continue to come forward from the experts about additional things that we can and should be doing -- even in the form of, these are the next steps we will continue to take -- I think they will continue to build layers of enforcement and message that are very, very substantively important in getting the possibility of a change of behavior. Thank you.

REP. BERMAN: The time of the gentleman has expired. The gentlelady from California, Ambassador Watson. Ms. -- (off mic) --

REP. DIANE WATSON (D-CA): Thank you so much.

(Audio break.)

REP. BERMAN: We know you have to leave soon.

REP. WATSON: As time goes short in many ways, I want to get to a bottom line. We've talked about sanctions. We've worked with the EU and the surrounding countries of Iran.

This is really going to Ambassador Burns. You see Ahmadinejad. And I have been told by a panel of British parliamentarians who were able to go into the back door of Iran that the people in the streets don't necessarily go along with the ideology of Ahmadinejad.

Do you think that we can converge on the current leadership of Iran to sit down and negotiate with us about the sanctions about nuclear power and so on? Are we at that point? And is there a separation of the top leaders, the ones that are speaking, and the common people in the street? I remember Iran in other decades, and we had a very -- the czar (ph) came here, we remember. And we had a very good working relationship with -- (audio break) -- very near future.

(Audio break.)

MR. BURNS: What was made clear in the summer of 2009 in all the discontent you saw unfolding on the streets of Iran was a real disconnect --

REP. WATSON: Yeah.

MR. BURNS: -- between the thirst of many, many Iranians for connections to the outside world and for the individual rights that are so important to us and to any society in the world. I think what the leadership has done since then is quite ruthlessly suppressed the Green movement, but I don't think it's eliminated those concerns, that discontent, that thirst for connections to the rest of the world.

Second, with regard to the prospects for negotiations, I mean, all I can tell you is that we will approach -- we and our P-5 plus one partners will approach the next set of discussions with the Iranians with real seriousness of purpose. And what we will emphasize is that there is a choice available here. We are not taking issue with the right of Iran or any other country to a peaceful nuclear program. What's at issue here is its responsibility, like any other country in the world, to demonstrate that it's going to conduct a purely peaceful program.

And because of all the mistrust that's been built up because of Iranian behavior in recent years, it's going to take time and hard work to build some confidence. But we're going to approach this with real seriousness and with a clear focus on that choice, because there is a path whereby Iran and its people can have access to peaceful nuclear power, just like any other country in the world. They just have to convince the international community of the seriousness of their willingness to live up to their responsibilities. And that's really what's at issue here.

REP. WATSON: Just yesterday, several members of this committee, under the leadership of our great chair, we met with Turkey, the minister from Turkey, ambassador, et cetera. And the gist of it to me is that they're acting as a go-between between Iraq and the countries of the West. And I felt a little differently after hearing them, Mr. Chairman, than what we felt before we went into that meeting. I think it was explained quite clearly that they wanted to continue trade with Iran, they wanted to continue to address them in terms of being, shall I say, more cooperative in terms of the sanctions, and looking at their nuclear development of uranium as something that cautions the rest of the world, because we feel the irresponsibility of the leadership.

I somewhat applaud the Turks for playing that role for us. We're going to continue our discussions with them, hoping that they will have an impact. And can you comment?

MR. BURNS: Simply to say that, you know, whatever our tactical differences with Turkey in the past, Turkey's an important partner for the United States in many, many areas. Certainly Turkey has made very clear that its interests argues very strongly against a nuclear-armed Iran. Turkey has a border with Iran. You know, Turkey has as much at stake as anyone in that region in avoiding the instability and the risk that would come from a nuclear-armed Iran.

So we're going to continue to work with the Turks on these issues -- not just on that issue, but on Iraq, on Lebanon, many other areas where I think the Turks can continue to play a constructive role.

REP. WATSON: Thank you very much.

REP. BERMAN: The time of the gentle lady has expired. And our last questioner is the gentle lady from Texas, Sheila Jackson Lee.

REP. JACKSON LEE: (Off mic.)

REP. BERMAN: (Inaudible) -- it is my hope this is the last hearing.

REP. JACKSON LEE: (Off mic.)

REP. BERMAN: Thank you.

REP. JACKSON LEE: (Off mic.)

MR. BURNS: Well, I -- well, I think, ma'am, we're aiming for the strongest possible set of measures that produces changes in behavior, certainly with regard to the nuclear issue, so that Iran chooses a path of demonstrating to the rest of the world that it wants to pursue a responsible, peaceful nuclear program; but also on issues like human rights. And I think on human rights, we'll try to take full advantage of the provisions you've provided in CISADA.

I think identifying individual officials who are responsible for abuses is a way to hold them accountable and demonstrate our commitment. I think the truth is that the Iranian leadership would like nothing better than to paint opposition movements as foreign agents. And we need to be careful of that, because the Green Movement, for example, has made clear that it's a -- it's a homegrown movement, and it can't afford to be seen as an instrument of anybody outside the country. So we're very mindful of that. We don't support particular opposition groups or political factions. But what we do, what we are determined to do, is stand up for universal human rights. And finally, I would say it's important for us to work to mobilize others in the international community to make those same points.

REP. JACKSON LEE: (Off mic.)

MR. BURNS: I think we have seen some movement, for example, on the part of India, as I mentioned to you before. As a result, as they look at not only Resolution 1929, but what other countries in the world are doing, I think you've seen an interest in diversifying their sources of energy in the world.

I think with regard to human rights, we have from time to time seen some movement and changes in behavior when you've had a strong international chorus of concern in the -- in the -- in particular cases. In the Third Committee in the United Nations a few weeks ago, there was the -- by far the largest vote yet of countries condemning Iran for human-rights abuses. So the more that other countries speak out, I think the more impact it may have on concrete behavior.

REP. JACKSON LEE: (Off mic.)

REP. BERMAN: The time of the gentlelady has expired.

And I'm going to just, so you won't get quite off that easy, ask one last question. In September, the Treasury Department sanctioned the Iranian-owned bank EIH, incorporated in Germany, for providing financial services to Iranian WMD proliferators and facilitating transactions on behalf of other sanctioned banks.

Why has the German government refused to take action against the bank? What are we doing to convince the German government to close them down? And are we getting -- considering any sanctions against any entities doing business with DIH?

MR. LEVEY: Mr. Chairman, you're right. We did take that action against against DIH in September. We consulted in detail with our German colleagues on that action. The -- they are looking at the evidence that we are able to share, and looking into it themselves. We do, as you know, have authorities that go beyond what most other countries have in our ability to take action on administrative record, and to rely on information that we don't have to make public. But the Germans have been good partners on this, and they are looking at this seriously.

The answer to your final question, though, is the -- is answered by the effect of CISADA, which is now that we have designated DIH, which, for those who are not familiar with it, was a very big financial facilitator for Iran in Europe and was one of the main ways in which they were accessing euro transactions. But now that we have designated DIH for its involvement in Iran's proliferation program, any bank that does substantial business or engages in substantial transactions with DIH puts at risk their access to the United States financial system, and we will take that provision very seriously, and enforce it as appropriate.

REP. BERMAN: Well, thank you both very -- thank you. And thank you both very much for coming here. I know how busy you are. I know how much is coming up on -- even on this subject in the near future. We appreciate you very much taking the time to come on this, and also for what it is really -- I mean, it -- so much of it is quiet. Some of it is government-to-government. And the time you are spending on this, I think, the one thing, the other aspect of WikiLeaks, as terrible as and deplorable as that was, is it demonstrates that this administration's commitment to this issue is intense, sincere, enduring and hopefully at the end of the day successful. Thank you.