H.R. 1905, The Iran Threat Reduction Act

Washington, DC – Congressman Howard L. Berman, Ranking Democrat on the House Foreign Affairs Committee, delivered the following opening statement at today’s full committee mark-up of H.R. 1905, The Iran Threat Reduction Act.

Madam Chairman, I’d like to begin by commending you and your staff for the hard work, creativity, and cooperative spirit you’ve brought to our joint effort to produce a strong bill. I also thank Members on both side of the aisle for their efforts and ideas geared toward improving this bill and strengthening our overall sanctions regime on Iran.

Madam Chairman, last year the President signed into law our Comprehensive Iran Sanctions, Accountability, and Divestment Act – or CISADA. This law provided the tools for the Administration to impose strengthened sanctions against companies that support Iran’s energy sector and against financial institutions that support the Iran’s Islamic Revolutionary Guards Corps, or IRGC. That bill has been effective in many ways. It has impeded Iran’s access to international financial markets. As Iranian President Ahmadinejad noted yesterday. And it has led every major Western energy company to draw down its Iran operations. It also laid the groundwork for the EU to impose tough sanctions.

Yet, as I have said previously, nothing that we do or that the Administration has done can be deemed truly effective until Iran ends its nuclear weapons program and stops supporting terrorism. And we know that Iran is continuing to increase its stockpile of low-enriched uranium and make progress in other ways toward a nuclear-weapons capability.

Accordingly, we now must seek to strengthen sanctions significantly. The bill we are marking up today, the Iran Threat Reduction Act, builds on past efforts by restricting the terms on which a company can pledge to end its work in Iran as an alternative to sanctions; expanding the types of activity that trigger Presidential investigations of potentially sanctionable activity; and widening the scope of sanctions on human rights abusers.

I also want to make clear my view that nothing in this bill should limit in any way the President’s ability to conduct diplomacy as he sees fit.

For now, I’d like to focus on two of the measures which – with the Chairman’s cooperation – I added to this amendment in the nature of the substitute, and then I’d like to discuss briefly the amendment I plan on offering this morning.

One of the measures I included in this substitute would restrict foreign subsidiaries of US companies from engaging in business with Iran, making them subject to the same sanctions as their parent, US-based company. The notion that a foreign subsidiary of a US company can conduct business that would be sanctionable in the US – conduct business that US national security interests prevent the US company itself from conducting – undermines our efforts to prevent Iran from achieving a nuclear-weapons capability.

Almost equally as bad, it undermines the perceived integrity of those efforts. Over the years, I have repeatedly heard foreigners cite the activities of US subsidiaries as a basis for claiming that the US isn’t serious about sanctions. “Sure, you don’t let your companies sell computers – or some other sanctioned, dual-use product – to Iran,” they say. “You just let their subsidiaries do it instead.”

Although this argument is often ill-intentioned or self-serving – offered more as a justification for opposing sanctions than as encouragement to us to close that gaping loop-hole – it is an argument we must take seriously.

We should never allow the slightest bit of doubt as to our seriousness of purpose regarding our efforts to prevent Iran from achieving a nuclear-weapons capability. That’s why we have to bring the behavior of foreign subsidiaries of US companies into line with US practice. When US companies allow their foreign subsidiaries to sell Iran materials that are prohibited under US law, those companies are violating the spirit of our sanctions regime. Once this bill becomes law, such behavior will be a violation of the letter of the law as well.

Another measure I included in this substitute would impose sanctions on foreign commercial enterprises that do business with the Iranian Revolutionary Guards Corps, or IRGC. In CISADA, we established a sanctions regime for foreign banks that conduct business or facilitate transactions with the IRGC and IRGC-owned entities. Given the prominent role that the IRGC plays in the Iranian economy, we believe that sanction has had a significant impact. Now we need to widen the net.

We need to extend this prohibition to commercial enterprises, in order further to deny the IRGC the funds it uses for its terrorist and WMD-related activities and for its human rights abuses. Among its terrorist activities, we all know, is the recent plot to assassinate the Saudi ambassador to the United States; that was carried out by the Quds Force, which is the IRGC’s “special operations” force. There should be consequences for this type of behavior, and I believe the international community must stand up against this threat. This measure will give foreign companies incentive to do just that.

In that regard, the amendment that I will be offering shortly would sanction the Central Bank of Iran if it is found to be engaged in facilitating WMD development, terrorism, or any type of support for the IRGC. In fact, I believe the Central Bank of Iran is not only engaging in those activities; I believe it is the ultimate engine of those activities. Of course, we will need to work with our global partners to make a sanction on the Central Bank as effective as possible. Our hope, as with all our sanctions, is that an economically-challenged Iran will have less money to spend on weapons of mass destruction, terrorism, and other nefarious activities.

Madame Chairman, by all accounts, the sanctions we passed last year have made life difficult for the Iranians. But oil prices remain high, a life-saver for the Iranian economy; Iran continues to increase its stockpile of enriched uranium; and it is enriching at increasingly higher levels. The nuclear clock is moving ever closer to midnight.

We cannot nibble around the edges. We need a sanctions-regime that is as bold as the Iranian nuclear program is brazen. I believe our legislation, fortified by sanctions on the Central Bank of Iran, is an important step in that direction.