Thank you Mr. Chairman, and Senator Sarbanes, for holding this hearing on ILSA, a law in which I believe very strongly. In the 107th Congress, I introduced the initial legislation to reauthorize ILSA because I believed it was a very important tool in keeping up the pressure on both Iran and Libya - countries who harbored and supported terrorists. It was an important law for us to extend then and it is now.

In the past five years, Libya has improved its behavior - although I have some concerns about compensation for family members of PanAm 103 which I will address in a moment. But as we consider reauthorizing ILSA, I believe we must look at ways to strengthen it, possibly by expanding it to other types of investment or trade activity, so hopefully we can help bring about the same result in Iran.

Iran is a state sponsor of terrorism and President Ahmadinejad has steered Iran further and further down an extremist path since assuming office saying Israel should be "wiped off the map…" And they have not yet shown that they're willing to deal with the international community in good faith with respect to nuclear weapons.

Until we see dramatic change in Iran's behavior, we must keep up the pressure through the threat of sanctions authorized by ILSA. It's clear that Iran is not going to seriously heed the world's call to be more responsible unless they are truly diplomatically and economically isolated.

I'd like to address Libya for just a moment. As we know, Libya agreed to pay compensation in the amount of $10 million to each family. Libya admitted responsibility for this vicious attack which killed 189 Americans… some of whom were my constituents and neighbors. Unfortunately, Libya has only fulfilled 80 percent of its obligation to these American families. I don't believe 80 percent is good enough and I know many of my colleagues agree. I was disturbed to learn of reports that a State Department spokesperson suggested that the Department is not a party to this settlement and will not get involved in further compensation issues. But clearly there are steps this Administration can take to pressure Libya to do the right thing here. For example, the State Department and this Administration can refuse to accept the credentials of Libyan diplomats even before Libya has fully compensated the Pan Am 103 families. I have joined a resolution, led by Senator Lautenberg, urging the Administration to do just that.

It's simply unacceptable that State Department is not supporting these American victims of terrorism in their quest for justice and instead siding with Libya. So although a reauthorization of ILSA would not apply to Libya, we must be vigilant and do all we can to ensure the families of Pan Am 103 are fully compensated.

Turning to ILSA - our original purpose was to curb growth and modernization of Iran's energy sector and I note that it appears that it has worked, at least to some extent. In the 1970's, Iran was pumping an average of 6 million barrels a day; today it pumps approximately 4 million barrels a day. Measures like ILSA have clearly played a role in deterring foreign investment in Iran's energy sector. We must keep ILSA in place to further discourage any foreign investment in Iran's energy industry.

I am concerned, however, about China's growing involvement in Iran's energy sector. For example, the Administration has accused the Chinese company Norinco of proliferating weapons technology and missile components to Tehran. And according to the CIA, the Chinese are working on a zirconium production facility that will help Iran produce cladding for reactor fuel. This is a complete end-run around what we intended to do with ILSA.

While we have targeted sanctions at Norinco and other Chinese companies, we also must be clear with China itself that we will not look favorably upon its dealings with Iran. We have much to gain from our relationship with China, but as with their actions to manipulate their currency, we must be watchful and apply constant pressure. And I believe our discussions with China must specifically address their involvement in Iran.

Similarly, there are reports that Russia has been providing Iran with nuclear and military assistance. The Administration is supposedly considering negotiation a nuclear cooperation agreement with Russia, something we have steadfastly refused to do unless Russia ends its nuclear cooperation with Iran. I hope the Administration is prepared to demand that Russia end its nuclear cooperation with Iran before we enter such an agreement.

As we reauthorize ILSA I believe we must consider whether a few additional measures are necessary and that's why I'm glad we're having this hearing. Under current law, the Administration has the ability to sign national interest waivers whenever it finds it is "important to the national interest of the United States."

I believe a stricter approach, examining whether a country is preventing the acquisition and development of weapons of mass destruction by Iran and perhaps other national security issues should be part of the waiver process. We must no long limit our view to economic considerations in this post 9/11 world - national security must always be at the forefront of our decision making.

Another issue we should consider is whether we should set a timeline for determining whether an investment violates ILSA. I am concerned that, for some investments, no determination is ever made - that the Department simply avoids the issue altogether. The implications of these investments are far too important to let them quietly languish in the review process.

Finally, I'd note that given Iran's most recent behavior, I believe we need a strong law that will clearly establish our view that investment in Iran's energy sector, either directly or indirectly, aids Iran's larger objectives and is contrary to what our country is trying to achieve in the middle east - a peaceful region that no longer supports terrorism.

ILSA is an important tool in our fight against terrorism and I look forward to working with you Mr. Chairman and all of my colleagues on the committee on the appropriate way to extend this law.