Thank you, Mr. Chairman. Thank you, Undersecretary Burns for testifying before this Committee today. 

There are a growing number of voices arguing for the U.S. to engage Iran, and even to enter into negotiations with its regime.

I believe that this would be a disastrous mistake.

Direct or indirect U.S. engagement with the Islamist regime, without preconditions, would only be interpreted as evidence that, regardless of what the U.S. proclaims about our resolute opposition to Iran’s destructive policies, we will in fact overlook that regime’s continuing support of terrorists, such as Hamas and Hezbollah, its moves to dominate the Persian Gulf, and its defiance of UN resolutions.

Worse, it undermines our all-important efforts to stop Iran from acquiring nuclear weapons.

Diplomacy does not mean surrender.

Certainly, our willingness to discuss diplomatic ties and the removal of North Korea from the list of state-sponsors of terrorism in exchange for initial, temporary assurances from North Korea, further undermines our efforts in dealing with Iran.

We must stay focused on denying the Iranian regime the political and diplomatic legitimacy, the technology, and the resources to continue its destructive policies.

We are at a critical juncture and the opportunity for successful application of our sanctions has never been greater.  
 
Iran’s economy is heavily dependent on its energy sector, which requires foreign investment. 

According to James Phillips of the Heritage Foundation:

“The United States should lead international efforts to exploit Iran's Achilles heel, its faltering economy. High oil prices have boosted Iran's regime but allowed it to postpone long-needed economic reforms. Iran's rapidly growing population is plagued by high unemployment, high inflation, endemic state corruption, and low economic growth. Iran's oil exports, which provide about 85 percent of export revenues, are projected to shrink without huge injections of foreign investment, technology, and expertise.”

Furthermore, Jim Woolsey, former director of the Central Intelligence Agency, made the following assessment during his testimony in front of this Committee in January:

“Iran's economy is driven by oil exports, and we have indeed begun to have some effect on its oil production by our efforts, although they could well be intensified to dry up its oil and gas development.”
In order to succeed in placing the necessary economic pressure on Iran, it is critical that the following two-track strategy be effectively implemented.

The first is what we, ourselves, can do, including enforcing our existing laws and building upon them.

The second prong includes convincing other nations that they must take effective action and not simply hide behind the UN Security Council to avoid their obligations.

These nations must show that they are committed to non-proliferation, or face consequences in their relations with the U.S.

At the crux of securing such commitment from other nations is full implementation of all sanctions under current

U.S. law, namely the Iran Sanctions Act.  

This and other Iran-related laws were strengthened by the Iran Freedom Support Act (IFSA), which I introduced last Congress with my distinguished colleague Chairman Lantos, and which was enacted into law in September of last year.

In the last few months, there have been multiple reports of proposed investment deals in Iran’s energy sector that would be in violation of some of these laws.

Some of the firms include China’s National Offshore Oil Corporation (CNOOC), Australian LNG Co., Royal Dutch Shell in cooperation with Spain’s Repsol company, and Malaysia’s SKS.

These entities are testing U.S. resolve and we are failing to meet the challenge.

In many of these proposed investment deals in Iran’s energy sector, foreign governments and export credit agencies would help to subsidize these investments.

Yet, rather than making it clear to these entities and their governments that we will implement the Iran Sanctions Act to the fullest extent, the Department of State refuses to enforce the sanctions.

We must also hold export credit agencies, insurers, and other financial institutions accountable for their facilitation of investments in Iran’s oil industry and subject them to sanctions as well.

According to Ambassador Greg Schulte, the chief U.S. representative to the IAEA, the European governments must discontinue granting credits “to subsidize exports to Iran,” and they must “take more measures to discourage investment and financial transactions.”

To address this dynamic, I introduced H.R.957 with our distinguished Chairman.

This bill was passed by this committee last month and I hope it will be considered expeditiously by the full House. 

This bill also seeks to expand the activities covered under the law to include petrochemicals and liquefied natural gas, as well as impose liability on parent companies for violations of sanctions by their foreign entities.

Today, I will also be introducing a bill aiming to put even more pressure on the Iranian regime by requiring that pension funds and savings plans are divested from investments in Iran.

I am especially grateful that our distinguished Chairman, Tom Lantos, has agreed to co-sponsor this bill.

The bill requires that all federal pension and savings plans be divested from Iran and includes a sense of Congress urging private funds to divest. 

Moreover, the bill mandates that all future investments in federal and private funds be divested.

That said, even as we strengthen the implementation of our own laws and take further steps to isolate and punish the Iranian regime, we must convince our allies and other countries that they, too, must significantly increase their efforts to isolate and deny the Iranian regime critical resources.

Thus far, the burden of isolating Iran economically has almost entirely been carried by the United States.

We hear a great deal of rhetoric from other countries about the need to do something, but concrete action on their part is rare.

In fact, for many countries, it is business as usual.

China, for example, has clearly demonstrated that it intends, not only to continue a business-as-usual policy with Iran, but to greatly expand it.

For its part, Russia has repeatedly blocked substantive action by the UN against Iran and has become a major source of conventional arms to Tehran, which the regime is using to realize its ambition of dominating the Persian
Gulf and the world’s oil supply, as well as spread the Islamic revolution.

As recently as last month, even as Iran continued its defiance of a UN deadline, Pakistani and Indian officials were in Tehran negotiating the terms of a multi-billion dollar project to build a natural gas pipeline from Iran through Pakistan to India.

What signal could this possibly send to the regime in Tehran other than that these countries will do nothing to hamper Iran’s ambitions?

These countries and others have repeatedly pledged cooperation with the U.S. across a broad range of foreign policy issues, and many are even seeking a special status and generous consideration in many areas.

Russia is seeking stronger trade relations with the U.S., in particular, the lifting of Jackson-Vanik sanctions, to advance its economic positioning.

China fears that the U.S. may take stronger action against Beijing to penalize its tolerance of intellectual piracy regarding U.S. products.

Pakistan wants to acquire a range of advanced U.S. weaponry.

And yet each of these countries is confident that it can engage in actions that undermine U.S. policy toward Iran without penalty.

I believe the time has come for the U.S. to make clear to other countries that Iran’s pursuit of nuclear weapons is not a U.S. problem, but a global one, and that we expect a global response.

That message cannot come from the UN alone.

It is only with great difficulty that the U.S. has managed to persuade Russia and China to stop putting up roadblocks and allow the UN to approve what in truth is a bare minimum of sanctions and other measures against Iran.

But these countries have made clear that they will continue to use their vetoes to prevent truly punitive actions, regardless of what Iran does or does not do.

If the U.S. is truly committed to stopping Iran’s nuclear program, we must make clear to our allies and other countries that we will hold them accountable for their policies regarding with Iran, that unless they adopt and enforce far more stringent measures than the minimal steps cautiously put forward by the UN, our relations will be directly affected.

There can be no business as usual regarding direct threats to our national security.

Many in this country and around the world are fearful that the U.S. is considering war with Iran as an option.

President Bush has said that “all options” are on the table.

The measures I have outlined, move us away from even having to consider military action.

If the regime in Tehran is convinced that the U.S., the West, and the international community as a whole will continue to increase its isolation and immediately ratchet up the financial and other pressure on it, until it abandons its efforts to acquire nuclear weapons, it will eventually change course, just as Libya did.

Any effort by the U.S. to engage Iran-  directly or indirectly-- significantly undermines that simple message.

I hope the Administration understands this reality and will be able to make the rest of the world understand it as well.

In closing, I would also like to add that, yesterday, Interpol made a decision to issue capture notices for six people, including five Iranian officials and one Hezbollah leader suspected of planning the 1994 bombing of a Jewish community center in Buenos Aires, Argentina which killed 85 and injured more than 150 innocent people.

This is yet another reminder that the Iranian threat is not limited to the Middle East and that we are dealing with a global problem that will require a robust and comprehensive strategy to be resolved.  

Thank you Mr. Chairman