[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]

IRAN IN THE WESTERN HEMISPHERE

=======================================================================

JOINT HEARING

BEFORE THE

SUBCOMMITTEE ON
THE WESTERN HEMISPHERE

AND THE

SUBCOMMITTEE ON
THE MIDDLE EAST AND SOUTH ASIA

AND THE

SUBCOMMITTEE ON TERRORISM, NONPROLIFERATION AND TRADE

OF THE

COMMITTEE ON FOREIGN AFFAIRS
HOUSE OF REPRESENTATIVES

ONE HUNDRED ELEVENTH CONGRESS

FIRST SESSION

__________

OCTOBER 27, 2009

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Serial No. 111-52

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Printed for the use of the Committee on Foreign Affairs

Available via the World Wide Web: http://www.foreignaffairs.house.gov/

______

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COMMITTEE ON FOREIGN AFFAIRS

HOWARD L. BERMAN, California, Chairman
GARY L. ACKERMAN, New York ILEANA ROS-LEHTINEN, Florida
ENI F.H. FALEOMAVAEGA, American CHRISTOPHER H. SMITH, New Jersey
Samoa DAN BURTON, Indiana
DONALD M. PAYNE, New Jersey ELTON GALLEGLY, California
BRAD SHERMAN, California DANA ROHRABACHER, California
ROBERT WEXLER, Florida DONALD A. MANZULLO, Illinois
ELIOT L. ENGEL, New York EDWARD R. ROYCE, California
BILL DELAHUNT, Massachusetts RON PAUL, Texas
GREGORY W. MEEKS, New York JEFF FLAKE, Arizona
DIANE E. WATSON, California MIKE PENCE, Indiana
RUSS CARNAHAN, Missouri JOE WILSON, South Carolina
ALBIO SIRES, New Jersey JOHN BOOZMAN, Arkansas
GERALD E. CONNOLLY, Virginia J. GRESHAM BARRETT, South Carolina
MICHAEL E. McMAHON, New York CONNIE MACK, Florida
JOHN S. TANNER, Tennessee JEFF FORTENBERRY, Nebraska
GENE GREEN, Texas MICHAEL T. McCAUL, Texas
LYNN WOOLSEY, California TED POE, Texas
SHEILA JACKSON LEE, Texas BOB INGLIS, South Carolina
BARBARA LEE, California GUS BILIRAKIS, Florida
SHELLEY BERKLEY, Nevada
JOSEPH CROWLEY, New York
MIKE ROSS, Arkansas
BRAD MILLER, North Carolina
DAVID SCOTT, Georgia
JIM COSTA, California
KEITH ELLISON, Minnesota
GABRIELLE GIFFORDS, Arizona
RON KLEIN, Florida
Richard J. Kessler, Staff Director
Yleem Poblete, Republican Staff Director
------

Subcommittee on the Western Hemisphere

ELIOT L. ENGEL, New York, Chairman
GREGORY W. MEEKS, New York CONNIE MACK, Florida
ALBIO SIRES, New Jersey MICHAEL T. McCAUL, Texas
GENE GREEN, Texas CHRISTOPHER H. SMITH, New Jersey
GABRIELLE GIFFORDS, Arizona DAN BURTON, Indiana
ENI F. H. FALEOMAVAEGA, American ELTON GALLEGLY, California
Samoa RON PAUL, Texas
DONALD M. PAYNE, New Jersey JEFF FORTENBERRY, Nebraska
JOHN S. TANNER, Tennessee GUS BILIRAKIS, Florida
BARBARA LEE, California
JOSEPH CROWLEY, New York
RON KLEIN, Florida
Jason Steinbaum, Subcommittee Staff Director
Eric Jacobstein, Subcommittee Professional Staff Member
Fred Ratliff, Republican Professional Staff Member
Julie Schoenthaler, Staff Associate
Subcommittee on the Middle East and South Asia

GARY L. ACKERMAN, New York, Chairman
RUSS CARNAHAN, Missouri DAN BURTON, Indiana
MICHAEL E. McMAHON, New York JOE WILSON, South Carolina
SHEILA JACKSON LEE, Texas J. GRESHAM BARRETT, South Carolina
SHELLEY BERKLEY, Nevada JEFF FORTENBERRY, Nebraska
JOSEPH CROWLEY, New York MICHAEL T. McCAUL, Texas
MIKE ROSS, Arkansas BOB INGLIS, South Carolina
JIM COSTA, California GUS BILIRAKIS, Florida
KEITH ELLISON, Minnesota DANA ROHRABACHER, California
RON KLEIN, Florida EDWARD R. ROYCE, California
BRAD SHERMAN, California
ROBERT WEXLER, Florida
ELIOT L. ENGEL, New York
GERALD E. CONNOLLY, Virginia
GENE GREEN, Texas
Howard Diamond, Subcommittee Staff Director
Mark Walker, Republican Professional Staff Member
Dalis Adler, Staff Associate

------

Subcommittee on Terrorism, Nonproliferation and Trade

BRAD SHERMAN, California, Chairman
GERALD E. CONNOLLY, Virginia EDWARD R. ROYCE, California
DAVID SCOTT, Georgia TED POE, Texas
DIANE E. WATSON, California DONALD A. MANZULLO, Illinois
MICHAEL E. McMAHON, New York JOHN BOOZMAN, Arkansas
SHEILA JACKSON LEE, Texas J. GRESHAM BARRETT, South Carolina
RON KLEIN, Florida
Don MacDonald, Subcommittee Staff Director
John Brodtke, Subcommittee Professional Staff Member
Tom Sheehy, Republican Professional Staff Member
Isidro Mariscal, Subcommittee Staff Associate

C O N T E N T S

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Page

WITNESSES

Mr. Eric Farnsworth, Vice President, Council of the Americas..... 19
Ms. Dina Siegel Vann, Director, Latino and Latin American
Institute, American Jewish Committee........................... 25
Mr. Douglas Farah, Senior Fellow, Financial Investigations and
Transparency, International Assessment and Strategy Center..... 32
Mohsen M. Milani, Ph.D., Professor and Chair, Department of
Government & International Affairs, University of South Florida 51
Norman A. Bailey, Ph.D., Consulting Economist, The Potomac
Foundation..................................................... 69

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

The Honorable Gary L. Ackerman, a Representative in Congress from
the State of New York, and Chairman, Subcommittee on the Middle
East and South Asia: Prepared statement........................ 3
The Honorable Connie Mack, a Representative in Congress from the
State of Florida: Prepared statement........................... 6
The Honorable Eliot L. Engel, a Representative in Congress from
the State of New York, and Chairman, Subcommittee on the
Western Hemisphere: Prepared statement......................... 15
Mr. Eric Farnsworth: Prepared statement.......................... 21
Ms. Dina Siegel Vann: Prepared statement......................... 28
Mr. Douglas Farah: Prepared statement............................ 34
Mohsen M. Milani, Ph.D.: Prepared statement...................... 53
Norman A. Bailey, Ph.D.: Prepared statement...................... 71

APPENDIX

Hearing notice................................................... 106
Hearing minutes.................................................. 108
The Honorable Albio Sires, a Representative in Congress from the
State of New Jersey: Prepared statement........................ 109
The Honorable Dan Burton, a Representative in Congress from the
State of Indiana: Prepared statement........................... 110
The Honorable Gerald E. Connolly, a Representative in Congress
from the State of Virginia: Prepared statement................. 112
The Honorable Gene Green, a Representative in Congress from the
State of Texas: Prepared statement............................. 114

IRAN IN THE WESTERN HEMISPHERE

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TUESDAY, OCTOBER 27, 2009,

House of Representatives,
Subcommittee on the
Western Hemisphere,
Subcommittee on the Middle East
and South Asia, and
Subcommittee on Terrorism,
Nonproliferation and Trade,
Committee on Foreign Affairs,
Washington, DC.
The subcommittee met, pursuant to notice, at 2:15 p.m. in
room 2172, Rayburn House Office Building, Hon. Eliot Engel
(chairman of the Subcommittee on the Western Hemisphere)
presiding.
Mr. Ackerman [presiding]. The subcommittees will come to
order. Today we have a meeting of the three subcommittees
meeting jointly, the Subcommittee on Western Hemisphere, the
Subcommittee on the Middle East and South Asia and the
Subcommittee on Terrorism, Nonproliferation and Trade. First, I
want to thank my friend, Mr. Engel, for organizing today's
trilateral hearing on Iran's activities in the Western
Hemisphere, and thank Chairman Sherman for also bringing his
subcommittee to the table. Chairman Engel is on his way and I
just wanted to get started so that we didn't keep everybody
waiting.
I don't think it takes a lot of convincing to make the case
that Tehran's goals in our part of the world are not benign.
The Ayatollah's foreign policy has always been simple, a good
offense is the best defense. We see this vividly in the Middle
East where Iran has built up Hezbollah and Hamas to create
chaos and terror, and, most importantly, to drive events away
from Iran and to create a deferent; likewise, in Iraq, where
Iran has stroked the fires of sectarianism with arms, money and
political support, all in the hopes of keeping Iraq far
straight.
Iran's strategy in Afghanistan is much the same with
Iranian military aid even going to the Shia hating Taliban, all
in an effort to prevent the United States and our allies from
bringing order and stability to Afghanistan. In each case, Iran
seeks to maximize its gains by betting on insurgents,
terrorists and militants hoping that their allies will either
take over the body of politics, or by murder and intimidation
seize an important or even dominant position in the political
system over the long term.
What should worry all of us is Iran's intention to
establish the same capability in this hemisphere. It is a
heads, I win, tails, you lose, strategy and it has worked
remarkably well for a remarkably low cost. Every year the State
Department reports on sponsors of terrorism and describes in
remarkable detail the extent of Iran's activities to create
chaos, turmoil and crisis around the world. Ever since 1979,
Iran makes threats, supports diversion and dispenses military
assistance to terrorists at war with their own or other
governments, and every year, the international community does
absolutely nothing whatsoever.
As a major oil producer in a volatile region, the world has
decided to minimize the significance of Iranian misbehavior.
While Israel is routinely condemned in the United Nations for
defending itself against aggression and terror, Iran, which is
actively making trouble, or developing, or sustaining the
ability to do so in Afghanistan, Iraq, Lebanon, Egypt, Kuwait,
Bahrain, Yemen, Morocco, faces not a single word of censure. As
a feat of diplomacy, it is really quite remarkable. When
considered in the light of Iran's steady march toward acquiring
nuclear capabilities, which is in clear contravention of both
Iran's NPT obligations and three mandates from the U.N.
Security Council, Iran's success at avoiding punishment is
altogether astonishing.
Iran has gone untouched for two reasons. First, by
supporting Hamas and Hezbollah, Tehran has effectively co-opted
the Palestinian cause, which, due to the salience of the issue
and the political weakness of the Arab states, effectively
neuters the entire Arab league, and with the Arabs goes the
organization of the Islamic conference. It is not that states
with strong ties to the United States, like Saudi Arabia,
Egypt, Indonesia or Pakistan think Iran is undeserving of
censure. The governments of each of these countries are well
aware that Iran is the greatest threat to both peace and
stability in the Middle East and to the international nuclear
nonproliferation regime.
The problem is that the governments of every one of these
countries are absolutely petrified of the price that they would
pay in public opinion if they acknowledge these convictions
publicly. Second, Iran has tapped effectively into the
lingering hostility borne of the anticolonial struggles of the
last century. Over time, appeals to fight against the United
States in the west may have less resonance in a world where
colonial dominance is more of an abstraction than a memory. In
the present, anticolonialism still delivers the goods
diplomatically for Iran and has given Iran entry into the
Western Hemisphere.
The fact that Iran is seeking hegemony over the Middle East
and that in June it effectively went to war against its own
people has apparently done nothing to diminish Iran's
credibility with some of the developing nations in this part of
the world. We are not going to be able to constrain Iran until
we understand the full scope of its ambitions and begin to work
in a truly comprehensive manner to constrain, counter and
defeat those ambitions. Today's hearing on Iran and their
activities in the Western Hemisphere is thus extremely
important. We will turn next to the ranking member, Mr. Mack.
[The prepared statement of Mr. Ackerman
follows:]Ackerman statement deg.

Mr. Mack. Thank you, Mr. Chairman. I also want to thank
Chairman Engel for bringing this hearing together and thank all
the members who are here today as well. One of the greatest
threats the hemisphere faces is the rising influence of Iran.
Together with Venezuela, Iran has slowly inserted itself into
our hemisphere. Today's hearing will address some of these
concerns. Mr. Chairman, where Ahmadinejad goes, so does
trouble. Take Honduras, for example. When I was in Honduras and
met with President Micheletti, he was clear. Honduras will no
longer side with Ahmadinejad. Under Zelaya's leadership and
Chavez' influence, Zelaya was moving Honduras close to Iran.
Zelaya and Chavez, together with their friend Ahmadinejad,
created conditions that had allowed anti-Semitism to foster.
Mr. Chairman, the shocking comments of Zelaya supporters are
unacceptable. Using the Jewish community as scapegoats is
something we have seen in Venezuela. First, we have Chavez and
Zelaya claiming that Israelis were behind Zelaya's removal, and
then Israelis were trying to kill Zelaya. Then we had Radio
Globo, a staunch supporter of Zelaya. The anti-Semitism of
Zelaya's supporters is so egregious that I would rather not say
it here and today, Mr. Chairman. This wave of anti-Semitism
cannot be tolerated. Of course in Venezuela this is nothing
new.
We all have heard the reports: Synagogues being attacked
and state companies printing anti-Semitic propaganda. I
actually want to commend some of our witnesses today for
speaking out against anti-Semitism in Venezuela. The AGC showed
true leadership when it spoke out against Chavez. Just as the
AGC has done, we in Congress must make sure the world knows
what is happening in the Jewish community in Venezuela. I urge
my colleagues to join my resolution, H. Con. Res. 124, and
express support for the Jewish community in Venezuela. Mr.
Chairman, when it comes to Iran and the Western Hemisphere,
Venezuela is where all the dots connect.
Many of us already know how close Chavez is to Ahmadinejad.
This close bond has created dangerous conditions in our
hemisphere. Hezbollah operating in Latin America, flights from
Tehran to Caracas and no checks whatsoever, Iranian banks
operating with Venezuelan banks, a bank link that has one sole
purpose, to avoid sanctions and fund terrorists. Now we have
reports of a scientist selling nuclear information to
Venezuela. Just a few weeks ago, Chavez and Ahmadinejad met to
strengthen their relationship. At the top of the agenda was how
to get uranium and how to help Iran of aid sanctions.
Mr. Chairman, I was a vocal critic of the Bush
administration and their hands off approach of Hugo Chavez. I
believe that by failing to confront Chavez we have left a
vacuum. The Obama administration must take the dangers of Hugo
Chavez seriously. We must confront Chavez and Ahmadinejad and
not wait until it is too late. Today, in a bipartisan manner, I
introduced a resolution with my good friend, Congressman Klein,
who just stepped out, that calls on the administration to
designate Venezuela as a state sponsor of terrorism. Venezuela
is a danger that cannot be overlooked, Mr. Chairman.
I would like to conclude with Brazil. Reports tell us that
Ahmadinejad and the President of Brazil are set to hold a
summit this November in Brazil. Additionally, my understanding
is that Lula intends to visit Iran next year. As may of us
know, Brazil was the first country to recognize the most recent
elections in Iran, elections which I believe were neither fair
nor free. Brazil is clearly a leader in this hemisphere. That
said, along with leadership comes responsibility. Brazil should
not be following Venezuela. Instead, it should be leading. This
meeting between Lula and Ahmadinejad is one that we will be
paying close attention to. I call upon President Lula to put
pressure on Ahmadinejad so that Iran understands that all
responsible nations stand together. I urge President Lula not
to take the same path as Chavez. Mr. Chairman, I look forward
to the hearing today, and thank you for holding the hearing.
[The prepared statement of Mr. Mack follows:]Mack
statement deg.

Mr. Ackerman. Thank you for your opening statement. We will
tell Representative Klein about your shout out. Chairman
Sherman?
Mr. Sherman. Thank you, Mr. Chairman. Iran and Hezbollah
have increased their influence in Latin America since the
pernicious involvement that was shown by the bombings of the
Israeli embassy in Buenos Aires in 1992, and then the bombing
of the Argentine Israeli Mutual Association in 1994. Since
Ahmadinejad came to power in 2005, Iran has opened six new
Latin American embassies, specifically, Colombia, Nicaragua,
Chile, Ecuador, Uruguay and Bolivia, adding to the embassies
already in Cuba, Argentina, Brazil, Mexico and Venezuela. This
hearing is an opportunity to examine our ongoing efforts to
counter this influence and to isolate those who support
terrorism.
Iran has used its petrodollar windfall--or at least the
illusion that it may be willing to actually spend its
petrodollar windfall, to influence Latin American nations,
including the Governments of Bolivia, Ecuador and Nicaragua.
For example, Iran opened an embassy in La Paz in February 2008
and pledged more than $1 billion in assistance to Bolivia. In
turn, President Morales announced his country's intention to
move its only Middle East embassy from Cairo to Tehran, and
Bolivia lifted visa restrictions on Iranian citizens.
In September, 2008, Iran and Ecuador signed an energy
cooperation agreement. Meanwhile, President Correa, and this
may or may not be linked, has refused to renew the U.S.
military's 10-year lease on the air base at Manta. In May, the
Ecuadorian defense minister was quoted on Iranian television as
saying that his country wants to work with countries, such as
Iran, that are willing to help Ecuador develop its defense
industry.
In 2007, Iran promised, and I just want to emphasize this
is a promise, to help fund a $350 million deep water port and
to build 10,000 houses in Nicaragua. Although Iran has yet to
fulfill these promises, Nicaraguan officials removed Iran from
the list of countries whose citizens must get visas in advance.
I want to point out that there is no visible support among the
Iranian people for any expenditure of the funds of a struggling
country in foreign aid to a different hemisphere, namely the
Western Hemisphere.
Of greatest concern is the relationship between Iran and
Venezuela which has been central to Iran's rising influence in
Latin America. Presidents Chavez and Ahmadinejad have
collaborated on numerous cooperative ventures worth billions.
In 2007, Presidents Chavez and Ahmadinejad announced a
joint $1 billion investment fund would be set up by the two
countries and would be used to finance projects in friendly
developed countries. Chavez boasted it will permit us to
underpin investments, above all, in countries whose governments
are making efforts to liberate themselves from the so-called
imperialist yoke.
Later, in 2008, an article in the Italian periodical La
Stampa reported that Iran has been using Venezuelan-owned
commercial aircraft to transport computers and engine
components to Syria for Syria's missile program. In turn, the
Iran Revolutionary Guard Corps, including its elite Al-Quds
unit, has trained the Venezuelan police and secret service.
Then, in April of this year, Iran and Venezuela signed a
memorandum of understanding on military cooperation comprised
of training and mutual exchange of military experiences.
The U.S. has responded to some degree. In October, 2008,
the U.S. Treasury Office of Foreign Assets Control designated
the export development bank of Iran and three affiliates,
including Banco Internacional de Desarrollo, I am sorry for
that mispronunciation, in Venezuela as proliferators of Iran's
WMD programs. OFAC freezes any U.S. assets of these entities
and prohibits any U.S. person in the United States from doing
business with them.
Additionally, in February, 2008, Representative Ros-
Lehtinen requested that Departments of State and Treasury
investigate CITGO to determine whether a 2007 petro chemical
sector agreement between the Governments of Venezuela and Iran
benefits the American subsidiary, which would be a violation of
the Iran Sanctions Act. I hope that we focus on the public
diplomacy in Latin America. We need to remind our friends in
Latin America that the United States has provided trillions in
trade, billions in aid; whereas, Iran promises but, aside from
making investments that are in its own interests, does almost
nothing. We have to remind the people of Latin America that
Iran may be involved in that continent region now, but may not
be a year or two from now.
In fact, as I pointed out, Iran's involvement in Latin
America has no visible support among the Iranian people. In
contrast, America isn't going anywhere. We will be involved in
Latin America for centuries to come. I see that my time has
expired. I will use other time to comment upon Hezbollah's
involvement, Hezbollah being virtually a wholly owned
subsidiary of Iran. I look forward to hearing the witnesses'
statements, but I will point out that not only myself, but
other members of this tripartite subcommittee, will also have
to go to financial services where we are writing legislation of
great economic importance, so if I am not here to hear your
statement, I will be reading it. I know that you have provided
a written copy. Thank you.
Mr. Engel [presiding]. We are going to call on Mr. Royce.
Before we do that, I want to thank Mr. Ackerman for filling in
for me. After Mr. Royce gives his statement, I will give mine.
Mr. Royce?
Mr. Royce. Thank you, Mr. Chairman. Let me first say I
appreciate very much the fact that we are holding this hearing.
We had several hearings, Mr. Sherman and myself, a few years
ago when I chaired the Terrorism Subcommittee on Hezbollah's
global reach, was one of the hearings that we held. That
focused on the terrorism in our own hemisphere, the significant
presence we have. Those of us from California know only too
well about the case, for example, of Mahmoud Kourani, who was
trained by Iranian intelligence, a Hezbollah terrorist who made
his way over the California border in the trunk of a car and
subsequently was detained and convicted here in the United
States.
During these hearings I think a great deal of information
was focused on the Venezuelan connection to this. During the
hearing on Venezuela, terrorism hub of South America, the
subcommittee heard from the State Department that said at that
time forgers alter Venezuelan passports with childlike ease.
Most worrisome, they said, Venezuelan Government officials
direct the issuance of documents to ineligible individuals to
advance political and foreign policies agendas. Now, given
growing Iran/Venezuela ties, I think that is a great concern.
One witness who is with us today, Doug Farah, will
characterize Iran's relationship with governments and groups in
our own hemisphere as direct and growing and it is a threat. My
colleagues have mentioned specific concerns. Two Venezuelan
companies sanctioned for connection to Iran's proliferation
activities. Large passenger planes conducting weekly flights
between Caracas and the capitol of Iran, and yet, there is no
tourism between these two countries. Hugo Chavez signing a
number of energy agreements on a visit to Tehran.
This year's growing threat assessment by the Director of
National Intelligence noted that Chavez' growing ties to Iran,
coupled with Venezuela's lax financial laws and lax border
controls and widespread corruption, have created a permissive
environment for Hezbollah to exploit. With Iran being a Middle
Eastern country, this connection, I think, may seem odd to
some, but I think history is full of oddly twinned rogues
conspiring together. During my years on this committee I have
been surprised, certainly, to find some of this history. In the
1980s, North Korea went into Zimbabwe and trained the fifth
brigade there, trained them to slaughter and terrorize people,
and in Zimbabwe I saw the after effects of some of that where
citizens had been thrown down wells.
North Korea also worked more recently covertly to assist
Syria in building a nuclear reactor. The IRA, of all
organizations, developed connections with the PLO in the Middle
East and with FARC in Latin America. So it is nothing new to
have these types of connections from terrorist outfits, but we
better keep our eyes on our hemisphere, and it might be harder
and harder to do that because the Wall Street Journal reported
last month that interviews with diplomatic officials suggest
that western intelligence in this region is very, very limited.
That must change.
We have to do a better job of collecting this intelligence.
We don't want to find many more Mahmoud Kouranis after the
fact, after they are in our country, and after they are
arrested with a terrorist cell on our own soil. One strategy we
could adopt to confront this threat would be to solidify our
relationships with those who frankly are not that interested in
Hugo Chavez' and Ahmadinejad's agenda, that frankly see an
alternative to that kind of Chavez Ahmadinejad agenda. That
means moving forward with free trade agreements for Colombia
and Panama. They are languishing, and that is too bad. Thank
you, Mr. Chairman.
Mr. Engel. Thank you very much, Mr. Royce. I would like to
make my opening statement now. First, I want to say that I am
delighted that the three subcommittees are working together on
Iran in the Western Hemisphere. The jurisdiction touches on all
three subcommittees. It is obviously a very important subject.
Obviously, looking at the turnout today, there are a lot of
people here who are interested in doing this, so I am pleased
to belatedly welcome everyone to today's hearing on Iran in the
Western Hemisphere. The question I seek to explore in this
hearing is whether Iran's expanding presence in the Western
Hemisphere is a threat to our region or merely a nuisance. Is
it only about expanded trade or is there something more
nefarious going on? I believe it is both.
Many poor countries in Latin America and the Caribbean
actually seek financing from oil rich Iran for development
projects. Every day, it seems, I hear about another country
expanding diplomatic relations with Iran or seeking greater
economic contacts. In fact, trade and investment deals between
Iran and Latin America now total well over $20 billion. Is
Iran's expanded presence in the Western Hemisphere nothing more
than an effort to earn some hard currency? I doubt it strongly.
First and foremost, we must never forget the 1992 bombing of
the Israeli embassy in Buenos Aires that killed 30 people, and
the 1994 bombing of the AMIA building in Buenos Aires that
killed 85 people.
While the perpetrators have not yet been brought to
justice, the state prosecutor of Argentina concluded that the
bombings were executed by Hezbollah, which is supported by
Syria and sponsored by Iran. In November 2006 an Argentine
judge issued arrest warrants in the AMIA case for nine persons,
including Ahmad Vahidi, who recently became Iran's defense
minister. Absolutely disgraceful. I would like to commend the
Government of Argentina for condemning Iran's selection of
Vahidi as ``an insult to Argentine justice.'' I add my voice to
President Cristina Fernandez de Kirchner of Argentina, who, in
her recent speech to the U.N. General Assembly month, demanded
justice on behalf of the victims of the bombings.
So the Iranian role in the region is anything but well-
meaning, and this brings me to Venezuela. When President Obama
went to the Summit of the Americas he shook hands with
Venezuelan President Chavez and our countries have now restored
their ambassadors. Unfortunately, there are few other positive
things to report. President Chavez recently traveled to Iran
and Syria, leading sponsors of terror in the Middle East, and
alleged from Damascus that Israel had committed genocide
against the Palestinians. This was a vile attack on Israel, and
I immediately issued a statement condemning these offensive and
absurd remarks.
I thought it was a bit strange that he would say this from
Damascus, which is the headquarters of both Hezbollah and
Hamas. It is just amazing. However, Venezuela's relationship
with Iran is more than just an outlet for Chavez' excessive
rhetoric. The Director of National Intelligence, Dennis Blair,
recently said that Venezuela ``is serving as a bridge to help
Iran build relations with other Latin American countries.'' The
rationale underlying the Venezuelan/Iranian connection is
apparent. Both leaders, Hugo Chavez and Ahmadinejad, are not
friends of the United States and seek any opportunity to
denounce this country.
Concerns about the Iran/Venezuela axis run much deeper than
harsh rhetoric and expanded diplomatic cover. A recent op ed in
the Wall Street Journal by Manhattan's district attorney,
Robert Morgenthau, raised serious concerns about the expanded
financial ties between the two countries. He said ``failure to
act will leave open a window susceptible to money laundering by
the Iranian Government, the narcotics organizations with ties
to corrupt elements in the Venezuelan Government, and the
terrorist organizations that Iran supports openly.'' In fact,
in October, 2008, the U.S. Treasury Department imposed
sanctions on Iranian owned banks in Caracas.
Furthermore, a State Department report has expressed
concern about weekly flights between Caracas and Tehran where
passengers and cargo are not subject to proper security checks.
In the wake of 9/11, for a country to have loose security
procedures on international flights with Iran is simply
reckless, if not downright dangerous. I am very troubled with
agreements signed during President Hugo Chavez' visit to Tehran
last month. According to press reports, Venezuela would invest
a 10-percent stake in Iran's south parts gas projects valued at
some $760 million and provide 20,000 barrels per day of refined
gasoline to Iran.
While it is anyone's guess as to whether these schemes will
ever be implemented, they carry potentially serious
repercussions. According to the Congressional Research Service,
investment in Iran's gas fields ``could be sanctionable under
the Iran Sanctions Act with potential ramifications for U.S.-
based CITGO, a wholly owned unit of PDVSA.'' If the bill being
marked up in the Foreign Affairs Committee tomorrow becomes
law, providing refined petroleum to Iran may also trigger
sanctions. While some question whether Venezuela has the
ability to provide gasoline to Iran since it imports gasoline
to meet its own domestic demand, President Chavez is clearly
approaching a perilous area.
Iranian involvement with Latin America also has a
transnational element. In 2007, while in Brazil, I visited a
city called Falls de Iguazu, or Iguazu Falls. This city falls
on the so-called tri-border region between Brazil, Argentina
and Paraguay. It is known for lawlessness and reports of
Islamic extremists and Hezbollah agents smuggling to finance
their bases in Lebanon and elsewhere. The United States is
working with the governments of the bordering countries in the
three-plus-one arrangement where we are trying to halt the
smuggling and the possibility of terror financing. I have no
information about any active and operative terrorist cells in
the region, but we must continue our vigilant monitoring. While
I appreciate Brazilian cooperation in the tri-border region and
on other issues, I am concerned about President Lula's
diplomatic outreach to Iranian President Ahmadinejad.
Immediately after this summer's flawed and stolen Iranian
election, President Lula said he saw nothing wrong with the
election and proceeded to invite Ahmadinejad to Brazil. It is
my understanding that this visit will take place in November.
When Venezuela expands its relations with Iran, I may not like
it, but I chalk it up to President Chavez and his altered sense
of the world. When Brazil expands its ties to Iran just as the
world is trying to deal with the secretive Iranian nuclear
program, I am frankly left bewildered. Brazil is a rapidly
modernizing country which wants to join the U.N. Security
Council and be a world leader.
I truly hope Brazil reaches that point. Expanding ties to
Ahmadinejad who denies the Holocaust and calls for the
destruction of another nation's state, Israel, is not the way
to get there. In the future, I think we have to expand our
dialogue with Brazil on the dangerous role of Iran and
encourage our friends in Brasilia to reconsider their ties with
Tehran. So, in the end I am left with two questions: 1. What do
Latin American countries hope to get out of their relationships
with Iran; and 2. What should we in the United States do about
it? As to the first question, some seek money and investment,
but we must remember with investment comes influence and I have
serious concerns about expanded Iranian influence in the
region.
As for the second question, we must increase our diplomatic
engagement to better explain our views. I have long been
concerned that during the previous administration we did not
pay enough attention to Latin America and the Caribbean and
this was at our own peril. So who came to fill the gap? Iran. I
think the Obama administration is today effectively reengaging
in Latin America and hopefully will be able to describe our
approach in a way that the region will more readily hear. In
some ways, we have tarred our own hands. We still do not have
an Assistant Secretary of State for the Western Hemisphere or
an ambassador to Brazil because both names are facing a hold by
Senator DeMint.
Iran is making inroads into countries in the region and
Ahmadinejad about to travel to Brazil, I hope that Senator
DeMint rethinks his position and lifts these holds so we can
more effectively engage our partners on the dangers of Iran and
on the myriad of issues which confront the hemisphere. Thank
you. With that, I would like to call on Mr. McCaul.
[The prepared statement of Mr. Engel
follows:]Engel statement deg.

Mr. McCaul. Thank you, Mr. Chairman. I appreciate this
joint hearing and the importance of it. In the interest of
time, I will take a pass so we can move on and hear the
testimony of the witnesses. Thank you.
Mr. Engel. Okay. Ms. Watson? Pass. Mr. Fortenberry?
Mr. Fortenberry. Thank you, Mr. Chairman. I am going to
forego an opening statement as well.
Mr. Engel. Mr. Scott?
Mr. Scott Mr. Chairman, I will forego an opening statement.
Thank you.
Mr. Engel. Okay. Mr. Green?
Mr. Green. Mr. Chairman, it seems like we are on a role. I
will forego a statement and ask a statement be placed into the
record.
Mr. Engel. Okay. Finally, Mr. Klein. I don't want you to be
intimidated, Mr. Klein.
Mr. Klein. I am not going to be intimidated. I come from
south Florida. I am not going to be intimidated on something
like this. Thank you, Mr. Chairman. I will be brief. I want to
thank you again for holding the hearing. I thank my friend Mr.
Mack. He and I have been working together on resolutions and
dealing with some of the threats from Venezuela and the
relationships that seem to be developing with President
Ahmadinejad. Obviously, we are all very concerned about the
issues that have been developing in this region, and
particularly with President Ahmadinejad planning on being in
the region visiting Brazil, Venezuela having pledged oil and
refined petroleum to Iran, the district attorney of New York
stating that there are certain banking relationships that
obviously have to be examined.
We need to obviously develop a comprehensive policy. At the
same time, the United States continued to by significant
amounts of oil from Venezuela. So I think there needs to be
some reconciliation, but I think what our panel can do for us
today is give us your perspective so we can understand how to
best approach this. I thank the chairman.
Mr. Engel. Well, thank you. Well put, Mr. Klein. I am now
pleased to introduce our distinguished private witnesses. Eric
Farnsworth is vice president of the Council of the Americas and
is no stranger to my subcommittee having given excellent
testimony many times previously. Dina Siegel Vann is director
of the Latino and Latin American Institute of the American
Jewish Committee. She does great work, and I rely on Dina a
lot. Douglas Farah is senior fellow for financial
investigations and transparency at the International Assessment
and Strategy Center. Welcome.
Mohsen Milani is a professor and chair of the Department of
Government & International Affairs at the University of South
Florida. Welcome. Last, but not least, Norman Bailey is a
consulting economist at the Potomac Federation. Dr. Bailey
previously testified at our Western Hemisphere Subcommittee
hearing on Venezuela in July 2008. Welcome back. I thank all of
you, and we will start with Mr. Farnsworth. Let me say, as I
always do, that you have 5 minutes each. Could you please, it
would be helpful if you could summarize your testimony and we
could enter your actual statements into the record in addition
to your testimony. Mr. Farnsworth?

STATEMENT OF MR. ERIC FARNSWORTH, VICE PRESIDENT, COUNCIL OF
THE AMERICAS

Mr. Farnsworth. Thank you, Mr. Chairman, and thank you for
your generous comments. Good afternoon to you and to the
members of the subcommittees. If I can, I would like to give
you the bottom line first. Despite worrisome trends, we are
dealing with imperfect information regarding the intentions of
the Iranian regime in the Americas, and therefore, in my
estimation, the ultimate implications for regional security,
democracy and development priorities are not entirely clear.
What is clear is this: Nations that disrespect democratic
principles in the Americas tend also to be nations that offer
aid and comfort to global actors who reject the norms of the
international system, ungoverned regions within countries offer
permissive environments for mischief making, and a weak inter-
American system offers little in terms of the ability to
counterbalance extralegal or threatening acts.
As the ongoing crisis in Honduras shows, the first priority
of the hemisphere must therefore be to strengthen democracy and
the institutions of democratic governance. Although a flurry of
think tank reports for the new administration ignored this
central point, this is not a theoretical academic exercise.
Democracy must be patiently nurtured and reinforced as a
priority. It is a fundamental national security concern of the
United States because healthy democracies in Latin America and
the Caribbean make better partners to advance a common agenda
consistent with broader U.S. national interests.
On the other hand, countries where democracy is weak, where
the institutions of the state are ineffective or where
democratically elected leaders have in fact curtailed
democratic institutions for their own purposes have proven time
and again to be the most likely portals through which unhelpful
influences, such as Iran, are introduced into the region. Of
course, each nation of the Americas is a sovereign, independent
state. Each nation has the right to maintain relations with
whomever they wish, subject to prevailing international law and
practice. It is truly unfortunate, however, that any nation of
the Americas would go out of its way to intensify state to
state relations with Iran, a regime that has been repeatedly
identified as a state sponsor of terror, as has already been
mentioned, which has been directly implicated in the only
examples of extra regional terrorist acts in the Americas other
than 9/11, and which is in violation of numerous U.N.
resolutions.
In this regard, Venezuela's well-known efforts to midwife
Iran's entry into the Americas through reciprocal leaders'
visits, trade and commercial agreements, including air links,
potential sanctions busting, and friendly votes in bodies such
as the International Atomic Energy Agency, are at best
polarizing and counterproductive in the hemispheric context.
Most recently, in fact, Mr. Chairman, you referred to the
Morgenthau report, and that also provided some important
information in terms of the Iranian/Venezuelan links on the
financial side.
At the same time, when the list of hemispheric priorities
includes economic recovery from deep global recession, job
creation to eradicate poverty, reducing a comparative education
deficit, among many other things, it makes little obvious sense
for leaders like those in Bolivia, Ecuador and Nicaragua to
take actions to undermine the very cooperation that they need,
and claim to want, from the United States. For Iran, the
benefits of closer relations in the Americas are not in doubt.
Iran is able to build commercial relations with other parts of
the world, especially in agriculture, the regime is able to
exchange information and technology, particularly on energy,
and gain access to raw materials, which may include uranium.
By developing close regional ties, Iran also has the
ability to leap frog its international isolation, potentially
evading sanctions, as has been discussed. The regime is also
able to build international coalitions in support of its
domestic activities, including potential development of nuclear
weapons. By expanding its diplomatic representation, Iran has
enhanced its intelligence capabilities while outreaching,
should it choose to do so, to nonstate actors and affinity
organizations which may be working to raise funds through drug
trafficking and other means in the Western Hemisphere for
certain activities in the Middle East or which may be building
their own extra legal capabilities in the Americas.
With this in mind, the pending visit of Iran's President to
Brazil next month is of potential concern because Brazil's
engagement with Iran will give a political boost to the
Ahmadinejad regime, even as the international community seeks
in Vienna to find a solution to the nuclear nonproliferation
dilemma. To the extent the visit does go ahead, one would hope
that the Brazilians would use the opportunity to reaffirm that
the Western Hemisphere is no place for Iranian meddling and
would seek to use their access and emerging hemispheric
leadership role for the purpose of vocally supporting
international nonproliferation efforts.
Mr. Chairman, I appreciated your comments about the pending
nomination of Tom Shannon as well. I think it is important to
have an active Ambassador in Brazil to make exactly this point.
More broadly, these are issues that should be watched
carefully. In other words, Iran's engagement in the Americas.
For the United States, several actions are appropriate. We
should be wary, we should be watchful and we should be prepared
to act in concert with the international community,
particularly on the law enforcement side. We should not act on
incomplete information unnecessarily, nor take steps
precipitously.
We must continue to understand better the true nature of
the threat and pursue actions with others, as may be
appropriate. Second, we should continue to emphasize the
hemispheric growth agenda, including trade and investment
expansion, which has already been mentioned, and the rule of
law, which will help build strong and expanding middle classes
and reinforce just, transparent societies that are less prone
to authoritarian manipulations from elected leaders of any
ideology or stripe. Finally, I would return to where I began.
In testimony before the Western Hemisphere Subcommittee earlier
this year I said that despite our efforts to build democracy
elsewhere around the world the United States cannot be
complacent about such matters closer to home.
Honduras subsequently proved the point I was trying to
make. Democracy offers no guarantees, but we stand a much
better chance of achieving our strategic goals in the
hemisphere, including a peaceful, growing, vibrant region that
works in tandem with us to address issues of common concern and
rejects outside meddling from Iran and others, if democratic
institutions in the Americas are strong. Thank you again, Mr.
Chairman. I appreciate the opportunity.
[The prepared statement of Mr. Farnsworth
follows:]Eric Farnsworth deg.

Mr. Engel. Thank you very much, Mr. Farnsworth. Ms. Siegel
Vann?

STATEMENT OF MS. DINA SIEGEL VANN, DIRECTOR, LATINO AND LATIN
AMERICAN INSTITUTE, AMERICAN JEWISH COMMITTEE

Ms. Siegel Vann. Thank you, Mr. Chairman, for the
opportunity to share with you and with the members of the three
convening subcommittees a summarized version of our prepared
statement on the many reasons our organization has been
following with growing concern the increase of Iran's presence
and influence in the Western Hemisphere. In fact, AJC brought
this issue to light in 2005 when Venezuela and Iran made a
strategic decision to expand their economic and political
relations, which date back to the creation of OPEC in 1964.
Since then, Venezuela has become the gateway to heightened
cooperation between Iran and other countries within and outside
the former's sphere of influence.
This seems to have had an impact on the level and intensity
of anti-Semitic expressions, on bilateral relations with Israel
and on the quality of the relationship between local Jewish and
Arab communities. As we continue to travel throughout the
region and raise the issue with Latin American government
officials, leaders of Jewish communities and representatives of
civil society as a whole, we have found that growing concern
for this trend is shared by many. Some of Iran's main goals and
activities in the region became quite evident as early as the
1990s. As has been already pointed out, Iran and Hezbollah are
thought to be complicit in the bombings of the Israeli embassy
in Buenos Aires in 1992 and AMIA in 1994 which resulted in 115
deaths and more than 500 injuries.
Just last July 18 we commemorated the 15th anniversary of
the 1994 bombing, the worst anti-Semitic attack since the
Second World War, and an atrocity labeled as a crime against
humanity by the Argentine justice system. As Tehran attempts to
expand its influence in our hemisphere, it is important to
understand that today, as yesterday, the so-called moderates in
Iran's ruling circles have been directly involved in exporting
terrorism and massacring innocents. Although diversification of
bilateral and regional relations is the sine qua non for
countries intent on being perceived as global players, the
alliances struck in the last few years by many Latin American
countries with Iran could be viewed as somewhat problematic.
This derives from Iran's confrontational attitude toward
the United States and Israel and its apparent attempt to take
advantage of democratic rule, competitiveness and a generalized
climate of freedom to advance its agenda. All this comes as it
is increasingly clear that a healthy hemisphere depends on
nourishing a sense of partnership and connectedness among all
its nations to ensure regional stability. At his June
confirmation hearing, the head of the U.S. Southern Command,
General Douglas Fraser, reaffirmed his predecessor's concerns
about ``Iran's meddling in Latin America.'' General Fraser also
underscored that ``the real concern is not a nation to nation
interaction,'' but rather ``the connection that Iran has with
extremist organizations like Hamas and Hezbollah and the
potential risk that that could bring to the region.''
With the backing of Venezuela, Iran has pursued a proactive
policy of outreach to other countries in Latin America,
exploiting anti-American sentiment and offering sorely needed
funding. Since the election of President Ahmadinejad in 2005,
the first election, Iran has inaugurated, reestablished and
increased its diplomatic representation in 10 nations. Against
this backdrop, many of Latin America's 450,000 Jews are feeling
quite vulnerable. Of particular concern is the situation of
communities in countries, such as Venezuela, that maintain
intense bilateral contact with Iran.
The use of anti-Semitism as a political tool and virulent
anti-Jewish, anti-Zionist expressions in the official media,
particularly during the 2006 Lebanon War and the 2008 Gaza
operation, seem to have been the result of this alliance.
Pronouncements from Presidents Chavez and Morales and other
government officials denouncing Israel as genocidal and racist
culminated in the severing of relations with the Jewish state
after six decades of warm and constructive bilateral ties. This
worrisome trend persisted during President Chavez' recent trip
to Libya, Syria and Iran.
There have been several incidents of violence against
community institutions, the most recent in February, 2009,
against the Tiferet Israel Synagogue in Caracas. Strained
relations, and even confrontation, between members of local
Arab and Jewish communities are another disturbing development
and contribute to the fracturing of society as a whole. This is
the result of virulent anti-Zionist rhetoric and media
campaigns that reflect a concerted attempt to import political
conflicts alien to the region. Witness what just happened last
month in Honduras. Anti-Semitism totally unrelated to the
complex political impasse in the country was utilized in the
same way it has been done lately in Venezuela, to scapegoat and
to delegitimize.
Although a direct cause/effect relationship cannot be
proven, it is most probable that the development of close
personal relationships and shared world views and agendas,
including President Ahmadinejad's stated desire to destroy the
Jewish state, have had an impact on the state of affairs in the
region. In this context, we are deeply concerned that despite
President Lula's best intentions, the programmed visit of the
Iranian leader to Brazil on November 23 will be perceived by
many as a gesture of support for his extreme positions. Three
years ago AGC first published a briefing recording a trend that
had escaped most of the region's observers.
Today, although the topic is more commonly discussed,
evident threats are being ignored or minimized. The mere
establishment of relations between sovereign nations does not
in itself constitute cause for concern. Nevertheless, the
assault on AMIA is a tragic and compelling reminder of the
potential dangers posed by Iran and its allies to the security
and well-being of the Americas. Unfortunately, many countries
have chosen to marginalize this event as they seek expanded
commercial and diplomatic ties. Indeed, regional and
international double talk has blocked the Argentine
Government's efforts to extradite and punish those who
masterminded the attack, including members of Iran's current
ruling circle.
The generalized perception by some governments that the
AMIA attack is far off in time and disconnected from their own
reality has provided the necessary conditions for the expansion
of Iranian influence and activities. Its growing presence could
certainly have strong implications for democracy and security
in the region. The growing strategic relationship established
between countries in the Western Hemisphere and Iran deserves
our attention and concern. Concerted and decisive action is
needed to closely monitor the activity of Iran and the groups
it subsidizes to correctly assess their potential for mischief
and to establish mechanisms to prevent potentially dangerous
scenarios. Thank you so much, Mr. Chairman.
[The prepared statement of Ms. Siegel Vann
follows:]Dina Vann deg.

Mr. Engel. Thank you, Ms. Siegel Vann. Mr. Farah?

STATEMENT OF MR. DOUGLAS FARAH, SENIOR FELLOW, FINANCIAL
INVESTIGATIONS AND TRANSPARENCY, INTERNATIONAL ASSESSMENT AND
STRATEGY CENTER

Mr. Farah. Well, thank you very much for the opportunity to
be here to discuss the issue of Iran in Latin America. I think
that the growing influence of Iran is a significant threat to
the United States and an underreported part of the equation
that is driving instability and an uncertainty in Latin America
from the crisis in Honduras to the rapidly closing space for
democratic freedoms in Venezuela, Bolivia, Ecuador, Nicaragua
and elsewhere where the Bolivarian revolution has gained a
foothold. There is broad agreement that Iran is expanding ties
with Venezuela forged by the personal friendships between
Presidents Ahmadinejad and Chavez, respectively; anchor the
relationship with Ecuador's Rafael Correa and Bolivia's Evo
Morales.
Iran's relationship with Nicaragua is slightly different
given President Daniel Ortega's longstanding personal
relationship with the Iranian revolutionary leaders dating back
to his first term as President from 1979 to 1990. A second
point of general agreement is that Iran, facing international
sanctions because of its nontransparent nuclear program, is
primarily seeking political support and leverage against the
United States rather than true deep economic relationships in
Latin America. The exceptions are ventures related to strategic
minerals and hydrocarbon.
A final and most important point of agreement is that the
primary and sole real point of convergence between Ahmadinejad
and Chavez in forging their relationship is their openly
declared hostility toward the United States and its allies,
particularly Israel. The leaders make a central point of
publicly linking the Bolivarian and Iranian revolutions. This
common desire to build an alternative power structure free of
the perceived dominance of the empire, as these leaders call
the United States, is the only real reason that a populist and
self-described revolutionary, socially and staunchly secular
government in Latin America would make common cause of a
reactionary theocratic Islamist regime thousands of miles away.
Trade relations between Latin America and Iran are still
minimal, particularly when compared to Latin America's
commercial ties to the United States. There is no shared
history or religious heritage, and virtually no cultural bonds
or linguistic bonds. The only shared platform is the deep
dislike for a common enemy, and that is the only thing that can
explain this otherwise improbable alliance. Manhattan district
attorney Robert Morgenthau, as has been mentioned, last week
talked about the investigations ongoing in his office into
Iranian front companies in banks in Latin America. I want to
focus on a series of these types of relationships that
highlight this murky and nontransparent web in Latin America.
For some time it has been known that the Banco
Internacional de Desarrollo, known as BID, established in
Caracas in September, 2007, under highly unusual circumstances
is wholly owned by Iranian financial interests. The Toseyeh
Saderat Iran Bank owns all the shares and all seven directors
are Iranian citizens, yet, the BID is registered as a
Venezuelan entity. The Saderat bank group was sanctioned by the
U.S. Treasury, OFAC and the United Nations as a financial
vehicle for the Government of Iran to fund Hezbollah, Hamas and
other terrorist groups and evade international sanctions. The
BID itself was sanctioned by OFAC in October, 2008, for its
links to the Export Development Bank of Iran.
The Export Development Bank was also sanctioned for
providing financial support to Iran's ministry of defense and
armed forces logistics, yet, the Ecuadorian newspaper Loja last
month revealed that in December, 2008, the Central Bank of
Ecuador and the Export Development Bank of Iran signed a
protocol of cooperation in which the Export Bank agreed to
extend credit facilities of up to $120 million to help
stimulate exports and imports between the two countries. The
document commits the nations to find ways for the two countries
to ``expand their mutual banking relations.''
Article VI of the protocol states that the Export Bank of
Iran manifests its readiness to establish a branch of the Banco
Internacional de Desarrollo, BID, in the Republic of Ecuador
and the Central Bank of Ecuador will pave the way for this act.
Two things stand out in this protocol. The first is the total
amount of exports and imports between Ecuador and Iran over the
past 2 years has been less than $1 million. A credit line of
$100 million is not proportionate to any actual commercial
activity. The second thing is the Export Development Bank, as
an Iranian bank, is offering to open a branch of the BID in
Ecuador, confirming that the BID is in fact an Iranian bank
rather than a Venezuelan institute.
The concerns about these other unusual activities cloaked
in official secrecy would be more easily dismissed if not for a
longstanding and complex web of relationships between state and
nonstate actors that carry across Iran's relationships with its
Latin American allies. Iran is the primary sponsor of
Hezbollah, a terrorist organization that has carried out
numerous attacks against American citizens, as well as in
Argentina. Iran, in turn, has a cordial relationship with
Chavez, who, in turn, has developed a deep relationship with
the Revolutionary Armed Forces of Colombia, or the FARC, in
neighboring Colombia.
Another prominent regional player, Daniel Ortega in
Nicaragua, has maintained a close relationship with both the
FARC and Hezbollah for more than two decades. The common
denominators among the state protagonists are a strongly anti-
U.S. platform and a sponsorship of nonstate armed groups
operating outside their national borders. It is therefore
necessary to ask whether nonstate actors protected by their
state sponsors will themselves form alliances and further
threaten the stability of the region, as well as the security
of the United States.
Of primary concern is the possible Hezbollah/FARC alliance
centered on the training of armed groups and drug trafficking.
Given Iran's ties to Hezbollah and Venezuela and Venezuela's
ties to Iran and the FARC, and the FARC's history of building
alliances with other armed groups, and the already existing
presence of Hezbollah and Hamas and other Islamist groups on
the ground in Latin America, it would be imprudent to dismiss
this alignment as an annoyance. It is, instead, I believe, a
direct and growing threat to the United States and Latin
America. Thank you.
[The prepared statement of Mr. Farah
follows:]Douglas Farah deg.

Mr. Engel. Thank you, Mr. Farah. Dr. Milani?

STATEMENT OF MOHSEN M. MILANI, PH.D., PROFESSOR AND CHAIR,
DEPARTMENT OF GOVERNMENT & INTERNATIONAL AFFAIRS, UNIVERSITY OF
SOUTH FLORIDA

Mr. Milani. Thank you, Mr. Chairman. I am honored to appear
before you today. There are three key questions about Iran's
relationship with Venezuela. What is the nature of their
relationship? Can their axis of unity blossom into a strategic
alliance between the two? And does this unity pose a national
security threat to the United States?
The defining feature of this relationship is political
cooperation, followed by cooperation in the oil and gas
industries. Economic and military issues are peripheral to this
relationship.
The two countries each view the U.S. as a threat to their
own survival and believe that they will be more able to defend
themselves, expand their power through a united front and push
the world toward a multipolar order.
Isolated, the two countries support each other. Examples
include Venezuela's support for Iran's nuclear program and
Iran's condemnation of the failed coup d'etat against President
Chavez in 2002. President Chavez was also one of the first
leaders to congratulate Ahmadinejad after the disputed election
in June 2009.
Today, the legitimacy of both governments has been
questioned by a significant portion of the population and they
are rather isolated. For Ahmadinejad and Chavez, therefore,
having an important ally might be as much about domestic
politics as about international relations.
Ultimately, oil is what unites these two countries. They
seek to increase price by lowering production, intend to use
Euros instead of dollars in their transaction, and have joined
the Gas Exporting Countries Forum that Iran and Russia formed
in 2001. They have recently agreed to invest some $700 million
in others energy sector. Iran reportedly will import up to
20,000 barrels of gasoline daily from Venezuela in case of new
sanctions against Iran. They also plan to build a refinery in
Syria.
The volume of trade and commerce is limited but growing.
The two countries have established a joint production company
to manufacture tractors. Iran is building 2,500 housing units,
as well as a variety of other factories, in Venezuela.
Iran, however, represents less than 1 percent of
Venezuela's total export to the world and is not even among the
top 13 trading partners with Venezuela, and Venezuela is not
even among the top 20 countries that trade with Iran.
In April, 2009, the two countries officially established a
bank with an initial contribution of $100 million each. The
bank could obviously become a convenient channel for Iran to
bypass U.S. sanctions.
The military cooperation between the two governments is
growing. Venezuela seems to be anxious to learn from Iran's
advanced strategies of asymmetrical warfare. Asymmetrical
warfare could become useful to Venezuela in case of its
conflict with its neighbors.
Regarding terrorism--an area beyond my expertise--although
the Economist conclude that ``there is no firm evidence of a
continuing and active Iranian inspired terrorist presence in
the region,'' there are experts who believe otherwise. Iran is
unlikely to use Venezuelan soil to embark on any terrorist
activities which would make its most important ally in the
region vulnerable to allegations of sponsoring terrorism. There
are other countries that Iran could use.
Clearly, Iran has made a strategic decision to slowly find
its way into Latin America. This is part of Iran's policy to
find ways to neutralize the United States policy of containing
Iran, bypass U.S. sanctions, and, most importantly, develop
retaliatory capabilities against the United States should Iran
be attacked. Although there are no confirmed reports that Iran
has developed any infrastructure in Venezuela to allow it to
retaliate against the United States, still Washington must be
concerned.
Can this political unity blossom into a full strategic
alliance? The probability is very low. The two countries seem
to have recognized that the U.S. will not tolerate such an
alliance and will react forcefully if needed. Venezuela is not
among the top foreign policy priorities of Iran, and Iran does
not seem to be Venezuela's top priority.
Finally, does this relationship pose national security
threat to the U.S.? Thus far, I would argue the relationship
between Iran and Venezuela has been more of an irritant and
nuisance to the United States, but this nascent alliance has
the real potential to become a low level threat, and therefore,
it warrants close watching and diligent monitoring. Thank you.
[The prepared statement of Mr. Milani
follows:]Mohsen Milani deg.

Mr. Engel. Thank you, Dr. Milani. Dr. Bailey? Dr. Bailey,
could you push your button? I don't think it is on.

STATEMENT OF NORMAN A. BAILEY, PH.D., CONSULTING ECONOMIST, THE
POTOMAC FOUNDATION

Mr. Bailey. I wish to thank the chairmen of the three
subcommittees and the members of the committees for this
invitation. I have the advantage of coming last so that I will
try not to repeat what has already been said by other
witnesses, as well as by the members who gave their opening
remarks.
The activities of Iran in the Western Hemisphere have been
made possible thanks to the essential collaboration of
President Chavez of Venezuela providing Iran an operational
base from which to expand its influence and operations
throughout the continent. Many, if not most, of these
activities and installations are designed to facilitate and
provide cover for illegal and subversive endeavors that not
only involve the Iranian Government, but also terrorist
organizations such as Hamas, Hezbollah, Islamic Jihad, the
Colombian FARC and ELN and drug cartels from Colombia, Mexico
and elsewhere.
The financial aspects of the penetration of Iran in
Venezuela and elsewhere in the hemisphere have already been
outlined and this gives, of course, Iran the ability to use the
Venezuelan banking system to evade financial sanctions declared
by the United States, the European Union and the United
Nations. The Treasury Department has sanctioned the Iranian
banks and various individuals but so far has not sanctioned any
Venezuelan bank. This is odd because Iran makes extensive use
of the Venezuelan banking system, especially Banesco, including
Banesco Panama, Banco Occidental de Descuento, Banco Caroni and
Banco Guyana. The availability of these financial institutions
for Iranian use is advantageous to Iran for obvious reasons.
In the industrial and mining area, the Iranians have
acquired so-called industrial installations throughout
Venezuelan territory, including a tractor factory in Bolivar
State, a cement plant in Monagas, a car assembly plant in
Aragua and a bicycle factory in Cojedes. Some of these
installations in reality are used primarily as warehouses for
the storage of illegal drugs, weapons and other items useful to
them and their terrorist clients. In addition, the Islamic
Republic bought a gold mine in Bolivar which indeed produces
gold, but also produces uranium. Recently, Venezuela signed
agreements with Iran and Russia for the transfer of nuclear
technology.
The weekly flights between Caracas, Damascus and Tehran
have been mentioned several times. Additionally, however, Iran
and Venezuela have formed a joint shipping line, the IRISL
Group. On December 30, 2008, Turkish authorities intercepted 22
containers marked ``tractor parts'' in the Port of Mersin that
in fact contained materials for making bombs and weapons bound
from Iran to Venezuela. IRISL has now been blacklisted by the
U.S. Government.
Iranian technical assistance has been provided to Venezuela
in the areas of defense, intelligence, energy, security and
industry. Iran has agreed to build an explosives plant in
Carabobo state and produces weapons in the so-called tractor
plant in Bolivar. Technical assistance, as we have seen, will
now be granted to Venezuela by Iran in the area of nuclear
power and for the purpose of finding and efficiently mining
uranium deposits. I might add, recently a delegation of
Iranians went to Bolivia for the same purpose.
Iranian participation in drug trafficking through Venezuela
to Central America, Mexico, the United States, Caribbean and
West Africa and Europe is extensive and the proceeds are used
to finance further penetration of Iranian interests in the
region, as well as to fund the terrorist organizations
mentioned above.
Ocean-going tuna boats purchased in Ecuador and refitted in
a shipyard in Panama which was bought by a private sector ally
of Chavez are now used to transport cocaine across the
Atlantic. This is perfect because it has tuna on top and
cocaine below, and the smell of the tuna masks the cocaine. The
so-called cement plant packages cocaine in bags marked cement
and are taken by the tuna boats across the Atlantic to West
Africa, and from there, transshipped to Europe. Other routes
through Venezuela to Santo Domingo head to the Gulf Coast, and
to the U.S. west coast and Florida. Cocaine is also flown or
shipped in boats through Central America, particularly Honduras
and Guatemala into Mexico, and from there, to the United
States. Protection of the drug trade by the Venezuelan National
Guard is notorious. In summary, Iran over the past several
years has built up an extensive network of facilities
throughout the region concentrated in Venezuela, Ecuador,
Bolivia, Central America and Panama, and involved with the
financing of terrorist organizations, drug trafficking, weapons
smuggling, money laundering and the provision of chemical
precursors to the Colombian drug cartels. It is becoming
increasingly clear that one of the principal motivations of all
this activity is to be able to retaliate against the United
Stats if it is attacked, particularly through damaging the
Venezuelan oil facilities and blocking the Panama Canal.
In short, the Iranian penetration into the Western
Hemisphere indeed is a security threat to the United States and
the rest of the hemisphere. The United States and other
governments should implement immediate action to confront this
threat, including action against Venezuelan financial
institutions, patrolling the mouth of the Orinoco River,
actively monitoring Iranian activities in Panama and throughout
the hemisphere while denouncing the activities outlined above
in hemispheric and international fora. District attorney
Morgenthau has it right. When will the rest of the government,
other than the Treasury, come along, not to mention the rest of
the hemisphere? Thank you very much, Mr. Chairman.
[The prepared statement of Mr. Bailey
follows:]Norman Bailey with appendix deg.

Mr. Engel. Thank you very much. Let me start with the
questioning. I know that prior to World War II, Hitler and
Stalin had a pact and they both invaded Poland. We have found
that in the past marriages of convenience have been made. The
relationship between a conservative, theocratic government,
like Iran, and a number of secular leftist governments in Latin
America seems rather unnatural to me. Forced, unlikely to
appeal to citizens of those countries. Can someone describe the
public perception of Iran in countries where the ties are the
closest, such as Venezuela, Nicaragua and Bolivia? To what
extent has there been any discord between the idealogy of
Iran's conservative, theocratic government and that of secular
Latin American governments, like Venezuela and Bolivia? How do
moderate leftist leaning governments, like Chile and Brazil,
view Iran's overtures toward Latin America? Anyone want to take
a stab at that?
Mr. Farah. I have just spent some time in Ecuador and in
Bolivia and I think that most people are fairly oblivious to
the Iranian presence there. The tractor factory that is
supposed to be rolling out these tractors is actually rolling
out about five or six a month that arrive there and sell for
far more than other tractors that actually function, so it is
not much of a boon for the people there. There is a cheese and
milk factory on the Altiplano that is also largely
nonproductive. So I don't think that there is a great deal of
connectivity with the people in the regions, but I do think
there is a great deal of concern in the banking sectors of
Bolivia, and Ecuador and elsewhere of what the Iranians are
doing there and the constant Venezuelan accompanying of Iranian
officials to meetings, and the recruiting of young people, as I
outline in my written testimony, for training in Iran I think
is one of the other things that has caused a great deal of
concern, particularly in Bolivia, Venezuela, Ecuador and from
the Communist party of the FMLN in El Salvador.
They have been taking cadres of students and government
workers over to Iran for training for 30-90 days in
counterintelligence, crowd control, a whole series of things.
So I think there is among the people who are in the political
elites or in these political circles a great deal of concern. I
think in the strata below that there is not much known about it
and it is viewed as one of the other sort of ongoing
multicircus things that President Chavez and others do to keep
people distracted. I think in the people who actually work in
the regions, in the areas where Iran is most active, there is a
great deal of concern about that.
Mr. Engel. Thank you. Dr. Milani?
Mr. Milani. To answer your excellent question, I can think
of three major areas where the two countries have been
ideologically pushed together. One is the incredible
similarities between Christian liberation theology and radical
Shiaism. A number of scholars have written about the
commonalities between the two, and that is why the two
countries can form a united front. Second, both Mr. Ahmadinejad
and Mr. Chavez are populists and believe in the same kind of
``model of resistance'' against the U.S. In fact, if you study
the writings by Chavez and others about the so-called U.S.
imperialism, they have remarkable similarities to what Khomeini
used to say, the ``Great Satan.'' I think, finally, the most
important one is a practical reason: The enemy of my enemy is
my friend. The two countries see in the United States a great
threat, and therefore, they have formed a united front.
Mr. Engel. Thank you. Let me ask one other question. We
have heard a lot of mention of terrorist groups, like Hezbollah
or Hamas. We have reports that Hezbollah conducts fundraising
in Latin America, along with other activities. In March of this
year in congressional testimony, Admiral Stavridis, then
Commander of the U.S. Southern Command, or SOUTHCOM, noted that
two U.S. antidrug operations in 2008 targeted Hezbollah
connected drug trafficking in Colombia and the tri-border
region of Argentina, Brazil and Paraguay. Separately, in April
2009, police in Curacao in the Netherlands, Antilles, arrested
17 people for alleged involvement in a drug trafficking wing
with connections to Hezbollah.
How would you characterize Hezbollah's role in drug
trafficking in the region in relation to its financing? What is
the extent of Hezbollah's financial network in Latin America?
How important is such financing to Hezbollah? What types of
infrastructure does Hezbollah have in Latin America and the
Caribbean, and where is it? Is it the tri-border area of
Argentina, Brazil and Paraguay? Is that the main nexus of
Hezbollah activities? Or are there other areas of concern in
the region? Want to try that?
Mr. Bailey. Well, yes, both Hamas, Hezbollah and other
terrorist organizations such as Islamic Jihad raise money, and
have been doing so, for many, many years in the tri-border
area, and they continue to do so. Another major center for this
activity is the island of Margarita off the coast of Venezuela
where the Islamic Cultural Center which has 4-feet thick
concrete walls and armed guards and is notoriously lacking in
art exhibits and musical programs is a major center of these
kinds of activities. It is not only drug trafficking, although
that is a major source of financing, it is also extortion, and
kidnapping and other activities of this kind.
Mr. Engel. Thank you. Mr. Farnsworth, did you have your
hand up? No?
Mr. Farnsworth. Well, I would simply reaffirm what Dr.
Bailey said and add that the tri-border area has traditionally
been defined as a lawless region of the world, and so, frankly,
a lot of bad things go on in there. Having said that, it
clearly is an area where Hezbollah has been active in terms of
financing some of their operations. I think the key question
is, what is that money to be used for? I think that it goes to
my oral testimony about the intentions of the Iranian regime
and the affinity organizations that it supports. The question
is, is that money channeled back to the Middle East to be
utilized for activities in the Middle East region or is it
designed to be used for activities in Latin America itself to
expand perhaps the Iranian revolution into the Latin American
framework? That is the question I think that remains undefined.
To go the question that you asked, Mr. Chairman, about are
these activities expanding, I think the answer to that is yes
because we are seeing now Hezbollah engagement in drug
trafficking, as Admiral Stavridis said, we are seeing
engagement in other activities that frankly didn't exist in the
past, and so it is always a little bit dangerous to predict the
future, but based on trends, one could anticipate that this
behavior will increase. Even if that money is designed to
return to the Middle East, if you will, nonetheless, the
lawless activities that are going on to engage in that
fundraising are disruptive, and, in fact, destructive to much
of Latin America, and drug trafficking is a perfect example, as
well as to the United States.
Mr. Engel. Thank you. Well, let me ask my last question to
Ms. Siegel Vann because this tracks some of your testimony, Ms.
Siegel Vann. As you mentioned, there has been an uptick in the
number of anti-Semitic acts in Venezuela. You mentioned the
thrashing of a synagogue by hooligans, which I think was more
than just hooligans. There have also been police raids on a
Jewish center in Caracas in 2004 and 2007. The State
Department's annual human rights report indicates that
incidents and attacks against Jewish institutions have become
more frequent in Venezuela. So let me ask you, to what extent
is the rise of anti-Semitism in Venezuela linked to the
country's strengthening its relationship with Iran under
President Ahmadinejad? That would be Venezuela's strengthening.
Obviously, Ahmadinejad is known for his anti-Jewish and
anti-Semitic views. Do you see a pattern of increasing anti-
Semitism in other countries in the region with increasing
Iranian engagement, such as Nicaragua or Bolivia? Is the anti-
Semitic messaging in Latin America similar to the anti-Semitic
references in Iran?
Ms. Siegel Vann. Mr. Chairman, we haven't detected an uptik
in anti-Semitism in other countries other than Venezuela. We
have seen isolated cases, but we cannot refer it directly to
Iran's involvement in the hemisphere. What we have seen is that
in crisis situations, like the Lebanon war or the crisis in
Gaza at the beginning of this year, we did see that there was
an increase in radical extremist rhetoric in the media, anti-
Semitic/anti-Zionist rhetoric, and we can say that that has to
do very much with the permissive atmosphere that President
Chavez has created for this type of discourse.
So even though we cannot see a cause/effect relationship
exactly, we can say that a new type of discourse is now present
in the hemisphere where we didn't have it before. Anti-Semitism
in general terms has become politically incorrect very much in
most of Latin America, and as Latin American societies become
more democratic, more inclusive, Jewish communities have really
enjoyed an atmosphere of tolerance and inclusiveness. We have
seen that since President Chavez increased its strategic
cooperation with President Ahmadinejad this type of atmosphere
has changed.
Mr. Engel. Thank you. Mr. Mack?
Mr. Mack. Thank you, Mr. Chairman. I want to follow-up on
the chairman's question. Clearly, I think we agree that there
is a threat to the Jewish community in Venezuela. Do you think
now is the time for the United States Congress to speak out
against anti-Semitism in Venezuela?
Ms. Siegel Vann. I believe at this point we have been in
very close contact with our partners from the Jewish community
in Venezuela and with other political representatives and
members of civil society who continually give us an overview of
what is going on there. The Jewish community now is really
living in a situation where they don't know what is going to
happen tomorrow. It is a fact that since the attack against the
Tiferet Israel Synagogue the atmosphere in Venezuela has
improved for the community. Attacks in the official media have
decreased about 70 percent, there is increasing security in
Jewish institutions, and there are open channels of
communication with the government, so there has really not been
any overt attack against the community.
Having said that, because of the atmosphere that has been
created, we don't know when this can change. I don't know if
this is the moment really for the U.S. Congress to intervene. I
know that the U.S. Congress has been very much involved and
very much concerned about this situation and it is something
that the community appreciates tremendously, such as we do, but
I do believe that at this point it is a wait and see situation,
but we have to monitor and keep our eyes open and have the
channels of communication open at this point. I really don't
know if this is the moment to interfere in a stronger way.
Mr. Mack. Okay. So the answer was no, you don't think we
should do that now. So let me ask you this. What has to happen
that then would make it the right time? I mean, you know, in
these issues the question always is what do you wait for? Let
me just finish by saying, you know, we don't want to look back
and say, wow, you know, we should have moved in Congress and
with one voice and spoke out against anti-Semitism in
Venezuela. So the question is, what has to happen? What is it
that has to happen? We have already seen such an attack on the
Jewish community in Venezuela. What further has to happen for
us to do something?
Ms. Siegel Vann. Well, I think that the message was
delivered loud and clear during the attack against the
synagogue. I think that President Chavez understood very well
that their type of behavior was not correct, and I think that
he, or the people who followed him, understand that this
shouldn't be their modus operandi. I do believe that it is very
important to have the cooperation of governments in the region
which we did have during those times as well.
Mr. Engel. If I can just interrupt for a minute.
Ms. Siegel Vann. Yes.
Mr. Engel. I just want to point out that this committee,
the Foreign Affairs Committee, sent a very strongly worded
letter to President Chavez signed by 11 Democrats and nine
Republicans. It was truly a bipartisan letter with strong words
in it. I think Mr. Mack's question is a very excellent
question, but I do think at times when the United States
Government speaks out it does have a positive effect. I agree
with you that the timing has to be right. I am sorry. Just
wanted to add that.
Ms. Siegel Vann. So basically I do think that having
partnerships with different countries in the region has helped
a great deal. There were many countries that saw the attack
against the synagogue in very negative ways and approached the
Chavez government letting him know that this was a no, no. So I
do believe that our partnerships with different governments in
the region are a very good dissuasive for this----
Mr. Mack. Thank you. Let me just point out that there is a
pattern with Hugo Chavez. He pushes and he pushes until he gets
in trouble, and then he says he is sorry or he won't do it
again, and then when no one is looking, he does it again. I
don't want to wait for the opportunity when he is going to do
it again. The chairman is right, there was a letter that went
from this committee, but there is also a resolution in the
House that I believe is very important that we move forward.
Maybe tomorrow there will be an opportunity for that. I don't
know. I think now is the time. It is always the right time to
speak out against anti-Semitism. So, with that, Mr. Chairman,
my time is up. Thank you.
Mr. Engel. Thank you. Mr. Ackerman?
Mr. Ackerman. Thank you, Mr. Chairman. Iran seems to be
reaching out to various places in the world, different
countries. Today, I think we have the Western Hemisphere under
the microscope. Is what they are doing based on a counter
reaction to what some of us are trying to do? Notably, to try
to place the toughest, strongest sanctions upon Iran because of
their nuclear weapons program in order to prevent eventually
having to possibly go to war? Are they reaching out to other
countries so as to undermine the possibility of sanctions so
that other countries, whether it be Venezuela or some other
countries in Latin America or all of Latin America, not voting
in the United Nations for sanctions, are they trying to make
themselves sanction proof? Mr. Farnsworth?
Mr. Farnsworth. Well, yes. Thank you for the question. I
think that that is what the situation has evolved into. I don't
think that is how it began. This relationship has been budding
for several years and it really, in my view, is at the behest
of President Chavez of Venezuela. If you look at what happened
initially, the Iranian response was not overly receptive, it
was a little bit skeptical. I believe it was the chairman who
said well, what is the relationship between these two
countries? They are dramatically different character nations. I
think over time the Iranians have realized the value not just
of a relationship with Venezuela, but frankly being introduced
into the neighborhood with Bolivia, Nicaragua, Ecuador, and
that is what is involved in the sanctions issue.
Mr. Ackerman. Got to get through everybody.
Mr. Farnsworth. Absolutely.
Mr. Ackerman. Thank you.
Mr. Farnsworth. Sure.
Mr. Ackerman. Ms. Vann?
Ms. Siegel Vann. Definitely we think that Iran is seeking
support in the hemisphere in order to sidestep isolation and
sanctions against them in the Middle East and around the world.
Mr. Ackerman. Thank you. Mr. Farah?
Mr. Farah. Well, I think it is clear, particularly given
the financial institutions that they are working through, that
that is one of their primary goals because if their banks are
sanctions to the New York u-turn and they can't go there but
Venezuelan banks, Ecuadorian banks can, and as long as they
have access to that, they are not going to be very hurt by the
sanctions.
Mr. Ackerman. Dr. Milani?
Mr. Milani. Yes. I think it is both a reaction to the U.S.,
but also, it is part of the emergence of Iran as a regional
player with ambitions to play on global stage. It is very
important to remember that the foundation of the relationship
with Hugo Chavez was not laid during Ahmadinejad's presidency,
but was laid during the tenure of the more moderate Mohammad
Khatami.
Mr. Ackerman. Dr. Bailey?
Mr. Bailey. Yes, definitely, the involvement of Iran in the
Western Hemisphere is intended to find ways to circumvent
sanctions and also to prepare itself to retaliate against the
United States in case it is attacked.
Mr. Ackerman. Different question. Are any of you aware of
or tracking the upsurge in the planning or actual construction
anywhere in Latin America of mosques? Anybody? Something I
think we have to take a close look at.
Mr. Farah. The one place where you see a notable increase
in the presence is in Panama. I am not aware in any other
country where it is noticeable but Panama is seeing a
significant upsurge in the presence of Pakistanis and Pakistani
mosques.
Mr. Ackerman. Dr. Milani, you seem to have taken a very
studied but moderate attitude toward the threat of the Iran/
Venezuela axis and implied that maybe it wasn't the strongest
of axis' that we should be looking at. I would like to go just
down the line. If you could pick the biggest, fill in the
blank, Iran-some Western Hemisphere country axis that we should
be the most concerned about. Why don't we start with Dr.
Milani?
Mr. Milani. Well, I think at this time it would be
Venezuela, but Brazil would be the key to watch.
Mr. Ackerman. Dr. Bailey?
Mr. Bailey. Well, Venezuela obviously, and tremendous
activity in Panama.
Mr. Ackerman. Mr. Farah?
Mr. Farah. I would say the one country with largely ignored
scrutiny is Nicaragua, and it has the longest and most
longstanding radical ties to the Iranian revolution, Daniel
Ortega.
Mr. Ackerman. Ms. Vann?
Ms. Siegel Vann. I would say Venezuela, but Chile, even
though it has the largest Palestinian community in the
hemisphere, generally very moderate. We have heard that in the
last few months there has been some presence from foreign
actors that have been stirring things up among----
Mr. Ackerman. Thank you. Mr. Farnsworth?
Mr. Farnsworth. My view is without Venezuela you wouldn't
have Iran in the region in the way it is, so Venezuela,
clearly.
Mr. Ackerman. So we have at least four countries to be--it
is quite a mix, and I think that fills up our plate. Mr.
Chairman, back to you.
Mr. Engel. Thank you, Mr. Ackerman. As you can hear, we
have three votes and I am told those will be the last votes of
the day, so I am going to try to see if we can get people to
ask questions before we have to go to vote. Mr. Royce?
Mr. Royce. Thank you, Mr. Chairman. Mr. Farah, I mentioned
in my opening statement some of the observations about our
intelligence collection there in this hemisphere and a press
report I saw had an official complaining that we don't even
have fly overs, another official says we don't even know what
we don't know, and yet, you pick up the Wall Street Journal and
there is a story about an intrepid report who shows up at a
factory that is a jointly owned Iranian and Venezuelan factory,
so you have done that kind of aggressive reporting throughout
your career. What is your assessment of intelligence collection
capabilities here? Then maybe also you could tell us a little
bit more about your observation on Nicaragua, which is
something that is off our radar and it would be interesting to
know. Go ahead.
Mr. Farah. Thank you, Congressman Royce. I think that
partly because of the antipathy of Venezuela, Bolivia, Ecuador,
they have reduced our embassy staffs so much there, especially
in Bolivia where they have PNG'ed out most of the embassy in
Venezuela, that we have limited capability and we have not
concentrated on nonofficial covert type folks in Latin America
I think for some time, so I think that the intelligence
gathering is not great there, and I think that the embassies
have confined so many of their people to such limited access
across the countries. I was just down in the Lago Agrio region
on the Colombia/Ecuador border where American embassy personnel
are simply not allowed to go, and it is this relatively safe
place and you can actually walk across to Colombia, but there
is all kinds of interesting stuff going on that you wouldn't
know about unless you were able to get on the ground there.
So I think the assessment of our ability to move in the
hemisphere and our resources allocated to that are minimal, and
I think it is somewhat concerning. I think that journalists or
people doing other types of research, such as myself, are
unconfined by what the embassy rules are and it lets us do a
lot more than sometimes they are able to. Nicaragua, I would
say that Daniel Ortega, if you will recall, during the
Sandinista time Iran had the largest embassy in Nicaragua aside
from, and they were constantly complaining about the size of
the U.S. Embassy. There is a history of Ortega where, as you
recall, the last thing he did in 1990 as he was leaving office
was grant citizenship to almost 900 foreigners living in
Nicaragua. Many of them were Red Brigade, and Iranians and
other folks.
Violeta Chamorro tried very hard to undo some of that, but
most of that stayed. So he has a history that goes back. He
always said, Ortega has always said that the Sandinista and
Iranian revolutions were twin revolutions, they were same year,
same anti-imperialists, et cetera, and so I think that as sort
of a gateway to Central America and given Ortega's longstanding
history of ties to subversive groups, particularly the FARC and
the Tumpac Amarus in Peru and elsewhere, that that relationship
is extremely dangerous. I think what Ortega brings to the table
is an ability to run clandestine networks that are very useful
to Iran that other governments simply don't have, including
Venezuela, don't have near the sense of development of those
type of networks as Ortega brings to the table.
Mr. Royce. And what is Ahmadinejad looking for in Brazil on
his trip there? What do you think his objective is?
Mr. Farah. Well, I think, you know, Brazil does have
nuclear technology and is, I think, the emerging leader in the
hemisphere that is garnering a lot of international attention.
Lula, I think, until very recently had been very studied in his
relationship with Iran. If you will look back, he refused to
meet with Ahmadinejad for several years. When Venezuela
insisted initially that Iran be brought into this nuclear
program and asked Brazil to help, Brazil said no because of
Iran's involvement. I think Lula has changed. I think in the
last few months he seems to have changed his mind on a lot of
those issues. I think they are a serious power, their economic
entry of the world. Chavez is viewed, I think, largely as a
clown. Lula is not. If he gets legitimized by Lula it is
something much more important than Chavez could ever give him.
Mr. Royce. On the other hand, Lula has the opportunity
basically to send the message after the meeting that Latin
America is no place for Iran to be meddling, so we will have to
wait and see how that plays out.
Mr. Farah. If he were to do that, or to stand up to Chavez
more publicly, it would have a tremendous impact in the region.
No question.
Mr. Royce. The last, I have no reason to believe there is a
connection, but you read the cases of the myriad, this endemic
kidnapping that occurs across Venezuela of businesspeople, and
especially in the province in which the President's brother
happens to be governor. Who is doing that kidnapping? Is there
any indication? Is that just local?
Mr. Farah. I think some of it is spillover from the FARC
and some of it is people--I think, you know, if you look at the
homicide in Caracas, it is higher than Medellin was during the
drug wars of Medellin.
Mr. Royce. Yes.
Mr. Farah. So I think the lack of rule of law is endemic
there, and I think that the Chavez government has proved
singularly inept at providing that.
Mr. Royce. Thank you very much, Chairman.
Mr. Engel. Thank you, Mr. Royce. I would like to try to
finish this before we go to vote, so I would just see if we can
restrict the questions maybe to a quick question or two so we
can give everybody a chance. Mr. Klein?
Mr. Klein. Thank you, Mr. Chairman. One of the things that
we have been watching is the transportation issues between
Caracas and Tehran, air flights. There has also been a report
by the United States State Department, Country Reports on
Terrorism, that was published in April of this year that stated
that Venezuelan citizenship, identity and travel documents
remain easy to obtain and making the country a potential
attractive weigh station for terrorist threats. They have also
assessed from our transportation system that there is a gaping
hole in aviation security. We have direct flights between the
United States and Miami, I mean, Miami and Venezuela,
obviously. Frequent flights. Can you help us assess the threat
of what is coming in, what is not coming in? Should we be
developing a policy that deals differently? I mean, I think
there is some concern about this.
Ms. Siegel Vann. I think that one of the problems is that
really we don't have a clear assessment or real understanding
of the scope of the problem. There is a lot of hearsay and we
have read a lot of reports regarding people who are in the
airport, reports through open sources that talk about this. The
truth is that there is nothing really concrete about it that we
can point out to. I think it is very important to start
assessing and start collecting the data that will lead us to an
assessment of how dangerous this is and if we have to really
establish some sort of policy with respect to that. The
flights, I just read last week another report about them, but
again, the information is really very dubious, even the
sources. It is not really clear what is going on there. They
talk about some phantom planes. People really don't know.
Mr. Bailey. The question, and Dina's response to it, goes
back to the previous question of how good is our intelligence
in Latin America? We have, and I know this as from my own
experience, decent intelligence operations in Mexico and
Colombia, period. Our intelligence apparatus in the rest of
Latin America is very, very thin. In order to get the kind of
information that we need with reference to some of these
activities, quite frankly, we are not equipped for. Often, open
source and private organizations do a better job than the U.S.
intelligence community.
Mr. Klein. So are we just closing our eyes to the fact that
this is a place where we have no real good information, and
cargo and individuals can be coming in from this point to the
United States without any--I mean, obviously on our receiving
end there is some level of verification, but is there a concern
that we should be taking a deeper look at this?
Mr. Bailey. Well, it is certainly a concern in my mind. It
is a matter that has to do with the fact that dealing in Latin
America for the people in the intelligence community is no
longer a good career path because that is not the way to get
promoted. You want to deal with the Middle East, and the Far
East and China, and, you know, et cetera, et cetera.
Mr. Farah. I would just add that every country in the
Bolivarian revolution has lifted all visa restrictions on
Iranians coming and going. Bolivia, Ecuador, Venezuela and
Nicaragua have all lifted restrictions, so you have no idea how
many people are coming and going there. Ecuador lifted
restrictions on everybody and now they are inundated with
Russian organized crime, Chinese organized crime, and every
major bust of foreigners or illegal immigrants into the United
States that aren't Mexican, Guatemalan, pass through Ecuador. I
think it is one of the serious issues.
Mr. Engel. Thank you. We have about 4 minutes left. I am
going to divide it between Mr. Fortenberry and Mr. McCaul. Mr.
Fortenberry?
Mr. Fortenberry. Thank you, Mr. Chairman. Let me do this
quickly. First of all, thank you for holding the hearing. Dr.
Milani and Dr. Bailey, you hold similar sentiments but your
conclusions are quite different. Dr. Milani, you drew a loose
parallel between the Iranian revolution, liberation of
theology, and you concluded by suggesting that the Iranian
presence in the hemisphere is a nuisance. Dr. Bailey, you
suggested prior to this later surge of interest in the
hemisphere by Iran there was no cultural or political historic
tie so that, in your view, this rises to a very serious level
of national security concern. These panels are helpful in that
you get a spectrum of perspectives, but clearly, there is some
incompatibility here in the conclusions, so I would like you to
further unpack your conclusions, please.
Mr. Milani. Well, I think you need to put the relationship
in a sort of comparative perspective. When you talk about grave
national security, what can Iran actually do to the United
States by its relationship in Venezuela? You have to look at
the actual numbers economically speaking, in terms of military
exchanges, and other areas. The only area that I do not know,
and I am not going to make any judgment about, is of course the
case of terrorism. If you look at all of the interactions and
activities between Iran and Venezuela, they are not very
different from what Iran is doing with many other countries.
Now, that does not mean Iran is not a threat to the United
States just because it has the same kind of relationship with
others, but compare what Iran, for example, is doing in
Lebanon, what Iran is doing in Afghanistan and Iraq with what
Iran is actually doing in Venezuela and ask yourself: What is
the national interest of Iran in Venezuela? There really aren't
much. I think there is great deal of sensationalization about
this whole business. That is why I said you need to watch it
carefully. It has the potential to become a serious one, but
not yet.
Mr. Fortenberry. Thank you. Dr. Bailey, you care to
respond?
Mr. Bailey. The fact that, as Doug said, terrorists can
come and go, Iranians and others, freely in these countries,
the financing of terrorist organizations, the involvement in
drug trafficking, the capacity, for retaliation, if the United
States were to attack Iran or, for that matter, if Israel were
to attack Iran, of damaging the oil facilities in Venezuela and
blocking the Panama Canal to my mind represents an important
national security threat to the United States.
Mr. Engel. Let me call quickly on Mr. McCaul.
Mr. McCaul. Thank you, Mr. Chairman. I will be brief
because I have to. I want to follow-up on this potential
terrorist threat. The alliance between Iran and Venezuela has
been highlighted very well. I am concerned about also the
alliance between Hezbollah and the drug cartels in Mexico, the
movement of human trafficking. We know Kourani was captured. He
actually got in to the United States. You don't need a visa to
enter Mexico from Venezuela? Then, when the former Ambassador
Shapiro is asked about Venezuelan passports, he basically said
that anybody in this room except for me could probably obtain a
Venezuelan passport because it can be forged so easily.
So I think that is of grave concern. I am also concerned
that if we pass this legislation, the Iran Sanctions Act, that
Venezuela is going to be one of the first violators of that act
in terms of sending refined petroleum to Iran. Then what would
the response be to that? So, with the 30 seconds I have left, I
am going to throw it to perhaps Dr. Bailey and Dr. Milani.
Mr. Bailey. Well, there is no question about it that
Venezuela is in violation of sanctions imposed not only by the
United States, but by the European Union and the United Nations
in many different areas, and nothing is happening to them as a
result of that, with the exception of certain measures taken by
the Treasury Department. All praise to the Treasury Department.
It is the only branch of the U.S. Government that is doing
anything effective about the situation. So, again, I say that
as far as I am concerned, you don't have to forge Venezuelan
passports, I will happily give you one, and identity documents
and so on and so forth. So if you run into somebody in Latin
America that says his name is Guillermo Rodriguez but he speaks
Farsi, you can be pretty sure that he is not really a
Venezuelan.
Mr. Engel. Dr. Milani, if you could do it quickly, you will
have the last word.
Mr. Milani. Thank you. I think any time you try to pressure
Iran or Venezuela, what you do at the end is make them closer.
Rather than make them closer, I think you need to have subtle
ways of creating distance between them, subtle political ways,
rather than putting them in a corner so that they would need
one another and therefore they would solidify their
relationship.
Mr. Engel. We will let those be the last words. As I can
see on my screen, we are down to zero minutes remaining in the
vote. I want to thank all of our excellent witnesses. I want to
thank Mr. Mack, as always, and I want to thank the chairs and
the ranking members of the other subcommittees, Mr. Ackerman,
Mr. Sherman and Mr. Royce, for cooperating. I thank you all
very, very much. It has been very enlightening to me, and I
know to the other members of the subcommittees. The hearing is
now adjourned.
[Whereupon, at 3:56 p.m., the subcommittees were
adjourned.]

A P P E N D I X

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