Chairman Howard L. Berman
Remarks at CSIS
September 21, 2010
As Prepared for Delivery
Thank you very much for inviting me here today to speak to the CSIS Middle East Program Gulf Roundtable. CSIS is a world-class institution whose experts provide important information and thoughtful analysis to policymakers throughout Washington. Thank you for what you do.
I would like to extend a special thank-you to Jon Alterman, our moderator and the director of CSIS’ Middle East Program, and to the Embassy of the United Arab Emirates for sponsoring this speaking series.
The CSIS Gulf Roundtable seeks to build a greater understanding of the complexities of the Gulf region. As we all know, the Gulf is not lacking in such complexities.
For example, US combat operations in Iraq have officially ended, but Iraq is struggling to form a government and build a stable nation-state in a land with a diverse population and a long and contentious history. Saudi Arabia, which possesses much of the world’s known petroleum reserves, and is often accused of turning a blind eye to terrorist financing by wealthy Saudis, is led by an 86-year-old monarch, and its future is clouded by a lack of clarity about succession in the next generation of the royal family. Qatar is blessed with massive natural gas resources, which it has turned into incredible wealth. It is home to the U.S. Fifth Fleet, but it also shares a defense cooperation agreement with Iran and maintains strong ties to Hamas. The small island kingdom of Bahrain struggles with a mixed Sunni-Shia population and an aggressive Iranian neighbor.
Yet despite all these challenges, there is one Gulf country – Iran — that presents by far the greatest challenge and threat to the Gulf, Israel, the United States, and the international community. Preventing Iran from acquiring a nuclear weapons capability is an absolute necessity for our national interests. As chairman of the House Foreign Affairs Committee, I have made that my number-one priority.
Iran reportedly now has enough low-enriched uranium to create one-to-two nuclear weapons and is perhaps only about one year away from perfecting the necessary technology to build and detonate a functional bomb. With such a capability, Iran would be virtually impervious to US and Western diplomatic pressure and, accordingly, could pursue its human-rights abuses at home and its terrorism abroad with near-impunity.
Iran’s terrorist partners in Iraq, as well as Hizballah in Lebanon and Hamas in Gaza and the West Bank, would be emboldened. Intimidated Arab regimes in Iran’s neighborhood would make political accommodation with the new nuclear power in order to ensure their survival; for example, they could succumb to Iranian pressure to reject or rescind US basing rights.
An Iran armed with nuclear weapons would have greatly increased leverage inside OPEC to cut back oil production, which could lead to massive increases in the price of oil.
And it would provoke its larger neighbors to pursue their own nuclear weapons programs, which would effectively destroy the global nonproliferation regime.
In worst-case scenarios, Iran might share its nuclear arms or technology with terrorists, or it may even use its arms as an offensive weapon. That last possibility cannot be dismissed, especially in the case of a regime that is so ideologically-driven and has so little regard for human life that it sent thousands of its own children to their deaths as human mine-sweepers during the Iran-Iraq war. Israelis justifiably fear for their future if Iran becomes nuclear-weapons-capable.
We need a solution to this problem, and it is important that it be a peaceful solution. I strongly supported President Obama’s diplomatic outreach to Iran last year. Unfortunately, Iran didn’t reciprocate. Its recalcitrance — like the discovery of the secret enrichment facility underway in Qom — merely deepened international suspicion of its intentions.
Under these circumstances, we had no choice but to pursue hard-nosed sanctions. The other two options – strikes against Iran’s nuclear installations, or even worse, accepting Iran as a nuclear weapons state – are far more risky, with potentially dire consequences to U.S., regional and international security and stability.
The Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 — which passed both Houses of Congress overwhelmingly and was signed into law by President Obama on July 1 — is an important contribution to the international effort to ratchet up pressure on the Iranian regime. Through a variety of measures, it aims to force foreign companies and banks to choose between the US market and the Iranian market. It specifically takes aim at foreign businesses and financial institutions that provide financial service to Iranian entities, including the Islamic Revolutionary Guards Corps (IRGC), that are involved in terrorism or weapons of mass destruction.
Additionally, our legislation targets foreign companies that sell Iran refined petroleum or that assist Iran in developing or maintaining its own domestic refining capacity. Likewise, it sanctions foreign companies that sell Iran goods or services that help it to develop its energy sector. It also provides a legal framework by which U.S. states, local governments, and certain other investors can divest their portfolios of foreign companies involved in Iran’s energy sector and establishes a mechanism to address concerns about diversion of sensitive technologies to Iran through other countries.
I introduced this bill in April 2009, and we were under great pressure to pass it immediately, but my colleagues and I deferred action until the Obama Administration had sufficient time to get greater buy-in for tougher multilateral sanctions, as reflected in UN Security Council Resolution 1929. By deferring action until the Security Council had acted, our bill has been met with significant international acceptance. One important result of that is that the European Union, long the source of so much of Iran’s energy-related technology, now stands fully united with us in the sanctions effort – a far cry from the situation when the original Iran-Libya Sanctions Act was passed in 1996.
In fact, the European Union and others — including Canada, Australia, Norway, Japan, and South Korea — have now imposed their own sanctions. Virtually every Western energy company has now agreed to cease sales of refined petroleum to Iran and refrain from new investments in Iran’s energy sector.
Following the passage of international and U.S. sanctions, most banks in the United Arab Emirates, an important trading partner with Iran, stopped money transfers to Iran. Press reports indicate that sanctions have cut in half Iranian trade with Dubai, long a critical re-export center for Iran.
South Korean sanctions have suspended the operations of the Iranian Bank Mellat branch in Seoul. Bank Mellat is a known facilitator of Iran’s proliferation activities, and South Korea is Iran’s fourth largest trading partner, so the impact on Iran is likely to be significant. Based on our discussions with the Korean government, Bank Mellat’s operations in that country have effectively been shut down for good.
Japan’s recently announced sanctions target Iranian entities and individuals of proliferation concern, including Iranian banks, the Islamic Revolutionary Guard Corps, and the Islamic Republic of Iran Shipping Lines. These sanctions – along with the prohibition on the transfer of proliferation sensitive dual-use items to Iran and on new investment or sale of goods, services, and technology to Iran’s energy sector – will deepen Iran’s isolation from the international financial, industrial, and energy sectors. Japan, like Korea and the UAE, is a major trading partner with Iran.
I recognize the significant step these countries are taking with their actions – in some cases, powerful local business interests have fought tooth-and-nail against these actions — and I applaud their determination and courage. I hope other nations that are involved in the Iranian economy soon choose to make to make the same sacrifices for the greater good and safety of the international community. In the end, everyone’s interests are served by preventing Iran from achieving nuclear-weapons-capability.
If the US, UN, EU and other sanctions against Tehran are properly enforced, Iran will now be essentially unable to purchase vital parts for its refineries, other than through the black market, as some of the necessary equipment is available only from Western firms. We have seen numerous reports that Iran is starting to feel the squeeze. Treasury Undersecretary Stuart Levey went into some detail about this in his CSIS speech yesterday. Nevertheless, it is still early, and no definitive conclusions can be drawn yet about the impact sanctions may have on Iranian government decision-making.
The Obama Administration appears serious about pursuing sanctions. Secretary Clinton has appointed a talented policy-maker, Ambassador Robert Einhorn, to head the sanctions effort in the State Department, and he has already assembled an impressive staff.
At Treasury, Undersecretary Stuart Levey continues his highly effective work in unmasking Iranian individuals and financial institutions involved in terrorism and weapons of mass destruction — and warning the rest of the world’s financial institutions about them.
Earlier this month, the Treasury Department designated for sanction the German Bank EIH, which is one of the few remaining European banks actively facilitating business with Iranian banks. Treasury’s action will isolate EIH from the U.S. financial system.
As the international community begins to implement sanctions, it may be that China, Russia, and others — relying on a strictly literal interpretation of UN Security Council Resolution 1929 — may step up sales of refined petroleum to Iran and otherwise try to move into areas of the Iranian energy market vacated by others. Indeed, several Chinese companies already appear to be engaged in sanctionable activities. We need to re-double our efforts to convince China and others that a nuclear-armed Iran is a threat not only to the physical security of the region but also to the stability of energy markets.
Congress will remain deeply engaged on this issue. I have established a Congressional monitoring group that will closely follow sanctions-related developments and meet regularly with Administration and foreign officials.
am fully committed to making sanctions work. My goal, however, is not simply to squeeze Iran’s economy; my goal is to change Iran’s mind.
We want the Iranian leadership to conclude that its uranium enrichment program — and other nuclear-weapons-related efforts – simply aren’t worth the cost. I believe sanctions are our most viable, effective, and peaceful means of achieving that goal. If, as many believe, it turns out that Iran is committed to its nuclear-arms program at any cost, then we will have to consider the implications of that further down the line.
For more information on Hon. Berman’s remarks, please visit: http://csis.org/event/iran-addressing-nuclear-threat
