[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]








                 IRAN TERROR FINANCING AND THE TAX CODE

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

                                HEARING

                               before the

                       SUBCOMMITTEE ON OVERSIGHT

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                            NOVEMBER 4, 2015

                               __________

                          SERIAL NO. 114-OS09

                               __________

         Printed for the use of the Committee on Ways and Means



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                      COMMITTEE ON WAYS AND MEANS

                      KEVIN BRADY, Texas, Chairman
                      
                                     
SAM JOHNSON, Texas                   SANDER M. LEVIN, Michigan
DEVIN NUNES, California              CHARLES B. RANGEL, New York
PATRICK J. TIBERI, Ohio              JIM MCDERMOTT, Washington
DAVID G. REICHERT, Washington        JOHN LEWIS, Georgia
CHARLES W. BOUSTANY, JR., Louisiana  RICHARD E. NEAL, Massachusetts
PETER J. ROSKAM, Illinois            XAVIER BECERRA, California
TOM PRICE, Georgia                   LLOYD DOGGETT, Texas
VERN BUCHANAN, Florida               MIKE THOMPSON, California
ADRIAN SMITH, Nebraska               JOHN B. LARSON, Connecticut
LYNN JENKINS, Kansas                 EARL BLUMENAUER, Oregon
ERIK PAULSEN, Minnesota              RON KIND, Wisconsin
KENNY MARCHANT, Texas                BILL PASCRELL, JR., New Jersey
DIANE BLACK, Tennessee               JOSEPH CROWLEY, New York
TOM REED, New York                   DANNY DAVIS, Illinois
TODD YOUNG, Indiana                  LINDA SANCHEZ, California
MIKE KELLY, Pennsylvania
JIM RENACCI, Ohio
PAT MEEHAN, Pennsylvania
KRISTI NOEM, South Dakota
GEORGE HOLDING, North Carolina
JASON SMITH, Missouri
ROBERT J. DOLD, Illinois
TOM RICE, South Carolina

                       Joyce Myer, Staff Director
         Janice Mays, Minority Chief Counsel and Staff Director

                                 ______

                       SUBCOMMITTEE ON OVERSIGHT
                  PETER J. ROSKAM, Illinois, Chairman
MIKE KELLY, Pennsylvania             JOHN LEWIS, Georgia,
PAT MEEHAN, Pennsylvania             JOSEPH CROWLEY, New York
GEORGE HOLDING, North Carolina       CHARLES B. RANGEL, New York
JASON SMITH, Missouri                LLOYD DOGGETT, Texas
KRISTI NOEM, South Dakota
JIM RENACCI, Ohio




















                            C O N T E N T S

                               __________
                                                                   Page

Advisory of November 4, 2015 announcing the hearing..............     2

                               WITNESSES

Mark Dubowitz, Executive Director, Foundation for Defense of 
  Democracies....................................................     7
Douglas Feith, Senior Fellow, Hudson Institute, former Under 
  Secretary of Defense for Policy................................    52
David Schizer, Dean Emeritus and Professor of Law and Economics, 
  Columbia Law School............................................    44
Kenneth Stethem, Chairman & CEO, Aegis Industries, LLC...........    61
Jim Walsh, Research Associate, Massachusetts Institute of 
  Technology's Security Studies Program..........................    70

                    PUBLIC SUBMISSION FOR THE RECORD

Additional Written Comments for the Hearing Record...............   103

 
                 IRAN TERROR FINANCING AND THE TAX CODE

                              ----------                              


                      WEDNESDAY, NOVEMBER 4, 2015

             U.S. House of Representatives,
                       Committee on Ways and Means,
                                 Subcommittee on Oversight,
                                                    Washington, DC.

    The Subcommittee met, pursuant to call, at 10:03 a.m., in 
Room 1100, Longworth House Office Building, the Honorable Peter 
Roskam [Chairman of the Subcommittee] presiding.
    [The advisory of the hearing follows:]


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    Chairman ROSKAM. The hearing will come to order. Welcome to 
the Ways and Means Oversight Subcommittee hearing on Iran 
terror financing and the Tax Code.
    Today's hearing will review the President's authority to 
waive provisions in the Tax Code aimed at discouraging Iran's 
support for terrorism and explore whether those provisions 
should be strengthened. Earlier this year, James Clapper, the 
director of national intelligence, stated, quote, ``Iran 
remains the foremost state sponsor of terrorism and is 
increasing its ability to influence regional crises and conduct 
terrorism. This has been the consistent view of the 
intelligence community for more than three decades,'' end 
quote.
    Let's start by looking at how all this began. Ironically, 
today, 36 years ago, it is the anniversary in 1979, Iran's now 
ruling theocratic regime seized the U.S. Embassy and our 
diplomatic personnel in Tehran. In response, the U.S. severed 
our diplomatic relationship and imposed strict economic 
sanctions against Iran. We also enacted provisions in the Tax 
Code to discourage U.S. companies from doing business in Iran.
    Iran has long been one of the most active and prolific 
State sponsors of terrorism in the world, funding hundreds of 
attacks through its terror proxies abroad including, Hezbollah, 
Hamas, and Islamic jihad. In 1984, the State Department 
officially designated Iran as the state sponsor of terrorism.
    A year later, in 1985, Iran supported the Hezbollah-led 
high-jacking of TWA flight 847 en route from Athens to Rome. 
The hijackers diverted the plane, to Beirut, held most of the 
passengers and crew hostage. One victim, Navy petty officer 
Robert Stethem, was singled out because he was a member of the 
U.S. military. He was tortured and murdered during the attack. 
In forced heroism, he was posthumously awarded the Purple Heart 
and the Bronze Star. His brother, Kenneth, is here with us 
today as one of our witnesses.
    Over the years, Iran has increased support for terrorism, 
committed heinous human rights violations, and engaged in an 
illegal mission to develop nuclear weapons. To punish these bad 
acts, numerous countries have imposed economic sanctions 
against Iran, and the United Nations Security Council has 
followed suit. So let's fast forward to the present day. In 
July, the United States and the P5+1 countries finalized the 
Iran nuclear agreement. And under this deal, the U.S. and our 
international partners agreed to dismantle the current 
sanctions regime in the hope that Iran will slow its pursuit of 
nuclear weapons technology. The agreement also gives the 
Iranian regime access to an estimated $150 billion in currently 
frozen assets.
    The Obama administration pursued a nuclear agreement with 
Iran at any cost, rushing forward to implement the terms of a 
bad deal, despite majority opposition in both chambers of 
Congress. In order to do it, President Obama violated the Iran 
Nuclear Agreement Review Act, also known as Corker-Cardin, that 
he himself signed. And instead of submitting the full text of 
the nuclear agreement, plus any related documents and side 
deals to Congress, as the law requires, he refused to provide 
the text of the two secret side deals. And as a result, the 
American public still doesn't know the full scope of the 
concessions President Obama gave to the Iranians.
    What we do know is, that the Iranian nuclear agreement says 
it will, quote, ``Produce the comprehensive lifting of all U.N. 
Security Council sanctions as well as multi-lateral and 
national sanctions related to Iran's nuclear program,'' end 
quote.
    Under the law we are examining today, U.S. companies get 
two benefits for their worldwide business, foreign tax credits 
and deferral.
    One of the relief measures the President may provide to 
Iran while implementing his nuclear agreement is to waive these 
provisions, which work to discourage U.S. companies from doing 
business there. Under current law, because of Iran's extent of 
support for terrorism, and because the U.S. Government has 
severed diplomatic relationships with Iran, no foreign tax 
credit may be claimed by a U.S. company doing business in Iran. 
I would like to show a graph.
    When U.S. companies do business with foreign countries, say 
Japan, for example, they are typically eligible for a foreign 
tax credit which offsets taxes paid to foreign governments. 
These foreign tax credits make sure U.S. companies don't pay 
the same taxes twice, once to their home country and once to a 
country where they may be doing business internationally. But 
business with Iran is not eligible for this benefit, obviously. 
U.S. companies do essentially have to pay tax twice for any 
business conducted in Iran; first, any taxes required by Iran, 
and then also the usual amount of taxes required by the U.S. 
Under current law, for every $100 in profits earned in Japan, a 
U.S. company would be left with over $65 after taxes. This is 
shown on the left.
    But for a U.S. company doing business in Iran, they would 
have far less, from $100 in profits, only $42 after taxes, and 
this is shown on the right. So in addition to the foreign tax 
credit, the Tax Code requires U.S. companies to pay taxes 
immediately on any income derived from Iran by foreign 
subsidiaries. This is much harsher than the rules that would 
apply for international commerce in Japan, for example, where 
taxes are only owed in the U.S. once those profits are 
repatriated.
    These provisions have generally been effective in 
discouraging U.S. companies from doing business in Iran, 
business that would certainly improve the Iranian economy and 
increase the power of financial resources of Iran's regime. 
However, the law currently gives the President the authority to 
waive these punishing tax provisions and allow beneficial tax 
treatment for businesses conducting business in Iran.
    Historically, waiving these provisions has only occurred 
after a country has followed through on the concessions they 
have promised. For example, President Bush waived the 
provisions for Libya in 2004, but only after Libya had 
demonstrably ended its support for terrorism and its weapons of 
mass destruction programs.
    In contrast, President Obama has already entered into an 
agreement with Iran that would waive most of the current 
sanctions, potentially including these tax provisions. But 
instead of requiring concrete proof that Iran's concessions 
have been achieved, the administration actually said it will 
waive sanctions against Iran even if the country doesn't comply 
with the nuclear agreement. So we have to ask ourselves, how 
will Iran move forward under the agreement?
    Iran's supreme leader has publicly said that Iran will use 
some of the $150 billion in newly unfrozen assets to continue 
funding terrorism, and influential Iranian critics and 
government officials, including the supreme leader himself, 
continue to call for death to America. The White House not only 
ignores these declarations, but actually defends them, assuring 
Americans that this rhetoric is only intended for Iranian 
domestic political consumption.
    Secretary Kerry has said that it doesn't reflect Iran's 
intention to destroy the United States, because he adds, quote 
``no specific knowledge of a plan by Iran to actually destroy 
us,'' end quote. I think most people consider illegal efforts 
to build a nuclear arsenal while declaring death to America a 
clear demonstration of intent. With the lifting of sanctions, 
the Tax Code provisions that we examine today are more 
important than ever. This Committee wrote to the President 
asking whether he would waive the provisions or if he would 
commit not to waive them during his presidency. He has not 
responded. Stopping Iran's support for terrorism is crucial for 
the safety of the American people both at home and abroad.
    And on a final note, let's be clear from the outset. Funds 
Iran will receive under the administration's nuclear agreement 
will go to sponsoring terrorism. Whatever one's opinion of the 
Iran nuclear agreement, and we have a wide range of views on 
this panel, we should be able to agree on the importance of 
taking measures to counter Iran's support for terrorism. The 
tax provisions that we are discussing today are in our 
jurisdiction and are related to Iran's support for terrorism, 
not nuclear proliferation. It is that support for terrorism 
which triggers them so they can and should remain in effect 
outside of the framework of the nuclear agreement. And I hope 
that we can work in a bipartisan basis to fight and defeat 
terrorism and examine how we can strengthen these tax 
provisions to achieve that goal.
    I know that Mr. Rangel would like to be recognized just to 
acknowledge that he is called to another meeting of the Ways 
and Means Committee and intends to return.
    Mr. RANGEL. Thank you so much for the courtesy, Mr. 
Chairman.
    I promised Mr. Lewis and certainly the other members that I 
would be here, but Chairman Tiberi has called a meeting, which 
includes the Members of the Committee on Trade. We are meeting 
with the British parliamentary to take a look at the 
transatlantic agreement. And I wanted so much to be here 
because I read recently that Prime Minister Netanyahu next week 
will be visiting with the President of the United States. And I 
have every reason to believe that the Iranian agreement will 
not be renegotiated, especially by our Committee, and that we 
will be looking forward to working to see how we can have a 
binding bipartisan agreement to show Israel the depth of our 
commitment to her as a part of being a leader of the free 
world.
    The $3 billion annual aid package expires in 2017 with 
Israel, and we hope this Committee will play an important role 
in developing a 10-year defense package for Israel and to do 
the best we can to make what some may consider a bad 
agreement--it is certainly, not a good agreement, but it could 
be the best agreement we have had. And I hope the panel and our 
Committee and Congress and the President would do the best that 
we can to show that we are Israel's best friend.
    So thank you for the courtesy, and I will be returning as 
soon as the other committee meeting has expired.
    Chairman ROSKAM. Thank you.
    Mr. RANGEL. Thank you so much.
    Thank you, Mr. Lewis.
    Chairman ROSKAM. Mr. Lewis.
    Mr. LEWIS. Thank you, Mr. Rangel.
    Thank you, Mr. Chairman, for yielding.
    Many of you know that sanctions can be useful diplomatic 
tools. For almost 40 years, Congress has worked with the 
executive branch on Iran's sanction policy and legislation.
    It has always been a partnership. I often think some 
international sanctions help to bring about diplomatic and 
democratic changes to shift the course of history. This legacy 
is the reason why I, and many others, support the bipartisan 
sanction deal that finally brought Iran to the negotiation 
table to discuss their nuclear weapons program.
    Let me be clear, I am no friend of Iran's regime. Like many 
of you, I am sickened by the acts of terror that the Iranian 
leadership has supported. Too many people have lost their lives 
and countless loved ones in senseless attacks and violence. 
This is why I supported bipartisan, bicameral legislation 
seeking justice for former American hostages and their 
families. This is why I speak up for religious freedom and the 
release of political prisoners, and this is why I fight to 
protect victims of human rights abuses in Iran and around the 
world.
    After the Iran nuclear agreement was finalized, I spent 
months attending briefings, studying documents, and listening 
to citizens of my district. I held many long executive sessions 
with myself, and weighed all sides of the argument. In 
particular, I reflected on the words of Dr. Martin Luther King, 
Jr. when he called upon us to rededicate ourselves to the long 
and bitter but beautiful struggle for a new world. You see, the 
way of peace is an immutable principle that I hold near and 
dear to my heart. I believe then, as I believe now, that the 
administration's nuclear agreement is a good deal. Though it 
may not be perfect, we must not, we cannot, let the perfect be 
the enemy of the good.
    As we speak, the agreement is being implemented and Iran is 
just beginning to dismantle its nuclear weapons program. Any 
legislative attempt to undermine this opportunity for peace 
cannot, must not, be entertained. We do not need more war and 
conflict. War is messy. It is bloody, it destroy the hopes, the 
aspirations, and the dreams of a people.
    The American public and people around the world are sick 
and tired of war and violence. As members of Congress, we have 
a moral obligation, a mission, and a mandate to give peace a 
chance. We cannot sow the seeds of failure. We must light the 
way of hope.
    Mr. Chairman, thank you. I look forward to hearing from the 
witnesses, and I yield back.
    Chairman ROSKAM. Thank you, Mr. Lewis.
    We are joined by five witnesses, and I want to thank each 
of you for taking the time to spend with us this morning.
    Mark Dubowitz is the executive director of Foundation for 
the Defense of Democracies. Mr. David Schizer is the dean 
emeritus and professor of law and economics at Columbia Law 
School. Mr. Douglas Feith is the senior fellow at the Hudson 
Institute, former Under Secretary of Defense for Policy. Mr. 
Kenneth Stethem, who I recognized in my opening statement, is 
the chairman and CEO of Aegis Industries. And Dr. Jim Walsh, 
research associate at the Massachusetts Institute of 
Technology's security studies program.
    We have your written testimony for the record. You are each 
going to be recognized for 5 minutes.
    And, Mr. Dubowitz, let's start with you. Thank you.

STATEMENT OF MARK DUBOWITZ, EXECUTIVE DIRECTOR, FOUNDATION FOR 
                     DEFENSE OF DEMOCRACIES

    Mr. DUBOWITZ. Chairman Roskam, Ranking Member Lewis, 
honorable Members of the Committee, on behalf of FDD and its 
center on sanctions and illicit finance, thank you for the 
opportunity to testify, particularly with such a distinguished 
panel of experts.
    Ken, thank you for your service and your brother's service 
to our country.
    I want to emphasize that today the Iranian regime is 
involved in a range of dangerous and illicit activities. In 
fact, recently, the regime tested a ballistic missile capable 
of carrying a nuclear warhead. It has massively increased its 
crackdown on its own citizens. It has expanded its support for 
Syria's murderous Assad regime and for terrorist organizations 
like Hezbollah and Hamas.
    Meanwhile, Iran remains the leading state sponsor of 
terrorism and is currently holding several American hostages. 
The Iran nuclear agreement, the JCPOA, gives the regime a 
patient pathway to a nuclear weapons capability as key nuclear 
restrictions begin sunsetting after 8 years. In addition, the 
agreement provides extensive sanctions relief likely to benefit 
the most dangerous elements of the regime, including those 
directly involved in terrorism. Specifically, the revolutionary 
guards, which control key strategic sectors of Iran's economy 
and the supreme leader's $95 billion holding company called the 
execution of Imam Khomeini's order, or EIKO.
    It is difficult to imagine a significant business 
transaction with foreign companies where the IRGC or EIKO won't 
be in on the deal. These financial gains will enable them to 
expand their dangerous activities. In anticipation of the 
sanctions relief from the Iran deal, President Rouhani's 2015-
2016 budget rewards the IRGC, the intelligence services, and 
the hardline clerical establishment with a 48 percent increase 
in expenditures. The IRGC itself will receive 64 percent of 
public military spending, which is set to rise to $11- to $12- 
billion annually. The IRGC's massive construction arm, Khatam 
al-Anbiya, will see its budget double. If past is prologue, the 
cash will be spent partly on the IRGC's regional aggression, 
ballistic missile program, and support for terrorism.
    Despite Iranian threats, including most recently from the 
supreme leader, the JCPOA does not preclude the use of 
nonnuclear sanctions. The administration has done little, 
however, to respond to Iran's threatening behavior. But 
regardless of whether one believes that the JCPOA was a great 
deal or a terrible deal, Congress needs to take the lead on 
ramping up sanctions to address Iran's support for terrorism 
and using other provisions to target illicit behavior not 
covered by the JCPOA.
    An important first step is to designate the IRGC as a 
terrorist organization and to sanction EIKO, where the nexus 
between corruption and sponsorship of terrorism is 
overwhelmingly clear. There are major loopholes in U.S. law 
given the overwhelming evidence that the IRGC, and not just its 
Quds Forces involved in supporting terrorism, as well as the 
dangers from the imminent lifting of U.S. sanctions on the 
supreme leader's $95 billion terrorism slush fund. Taking these 
steps against the IRGC and EIKO are not a violation of the 
agreement.
    My written testimony provides greater detail and additional 
steps that Congress could take, but I want to emphasize the 
elimination of tax breaks for companies doing business in Iran, 
provisions addressing Iran's support for terrorism, 
nonproliferation, and therefore, not precluded by the 
agreement. The goal is to diminish the funds available to the 
IRGC, EIKO, and their support for terrorism, and other illicit 
activities.
    Now, some may argue that preventing tax benefits to U.S. 
and foreign companies which do business with State sponsors of 
terrorism will have little impact. I disagree. It is the use of 
these nonnuclear measures that will undercut the incentives for 
these companies to engage with illicit Iranian actors.
    First, if the U.S. doesn't increase pressure through these 
nonnuclear sanctions, including through the use of tax 
provisions, to target Iran's dangerous activities, we are going 
to be effectively rewriting the agreement as demanded by Iran's 
supreme leader, Ali Khamenei. We should not be unilaterally 
disarming our course of power by giving into the supreme 
leaders's threats.
    Second, Congress should use its powers to limit the extent 
to which foreign subsidiaries of U.S. companies engage with the 
leading State sponsor of terrorism. If current tax provisions 
are insufficient to deter this business, Congress should 
consider strengthening them. If Congress limited OFAC's 
licensing authorities for U.S. parent-foreign subsidiary 
transactions and imposed a 100 percent tax rate, for example, 
on profits from Iran, these companies would be significantly 
deterred from this business. And Congress should explore 
imposing negative tax consequences on companies doing business 
in the U.S. with foreign affiliates doing business with Iran, 
regardless of the location of a company's headquarters.
    Third, and finally, Congress should examine the criteria 
under which the President could use his waiver authority in 
this tax provision. These tax benefits should be blocked for 
State sponsor of terrorism like Iran. Unlike Libya, a country 
that did benefit from presidential waivers, Iran will not 
dismantle its nuclear program, not end its state sponsorship of 
terrorism, and not make restitution of the past victims of Iran 
terrorism. Unfortunately, there is a substantial risk that tens 
of billions of dollars will flow to Iran, will be used in part 
to kill and maim future victims.
    Thank you for the opportunity to testify today. I look 
forward to your questions.
    Chairman ROSKAM. Thank you.
    [The prepared statement of Mr. Dubowitz follows:]
    
    
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  Chairman ROSKAM. Mr. Schizer.

STATEMENT OF DAVID SCHIZER, DEAN EMERITUS AND PROFESSOR OF LAW 
               AND ECONOMICS, COLUMBIA LAW SCHOOL

    Mr. SCHIZER. Thank you, Chairman Roskam, Ranking Member 
Lewis, and Members of the Subcommittee. Thank you for inviting 
me to testify today about terrorism-related provisions in the 
U.S. tax law. This issue is timely and important, since the 
JCPOA is supposed to ease nuclear-related sanctions on Iran, 
but not terrorism-related sanctions. And in announcing the 
JCPOA, President Obama said, and I am quoting him, ``We will 
maintain all sanctions related to Iran support for terrorism.''
    Curtailing Iran's support for terrorism, obviously, is an 
important goal. Congress can use the tax law to pursue it in 
two ways. First, Congress should discourage U.S. and other 
businesses from paying tax to Iran since this revenue could be 
used to fund terrorism.
    Second, Congress should raise the tax cost of doing 
business in Iran since this commercial activity can strengthen 
extremist groups such as the Revolutionary Guard. Two 
provisions of the Tax Code pursue these goals under current 
law. I believe I am the only tax lawyer among the witnesses, so 
my role is to review how these provisions work. Since both have 
significant gaps, I will also suggest ways to strengthen them.
    The first provision, section 901(j), raises the cost of 
paying tax to Iran. Ordinarily, when U.S. taxpayers pay tax to 
a foreign country, every dollar of tax they pay to a foreign 
country reduces their U.S. tax by a full dollar. But taxes paid 
to Iran are treated less favorably. A dollar of these taxes 
reduces U.S. tax by only 35 cents for corporate taxpayers. As 
the Chairman was observing before, this is instead of the full 
dollar. The reason is that section 901(j) authorizes only a 
deduction instead of a credit.
    The second provision, section 952(a)(5), accelerates U.S. 
tax when U.S. multi-nationals do business in Iran. Usually, 
foreign earnings are not taxed until they are brought back to 
the U.S. But if this money is earned in a state that sponsors 
terrorism, the U.S. tax hit right away.
    I will now flag some gaps in these provisions and highlight 
a few possible solutions. First, the rule forcing the U.S. 
multi-nationals to pay tax immediately is somewhat porous. It 
applies to income and the statutory test it is derived from, 
states that sponsor terrorism, but this derived-from standard 
is imprecise. It applies when a firm is drilling for oil or has 
operations on the ground, but there is an argument that it 
doesn't apply when firms sell goods into Iran from the outside. 
The reason, is that income from the sale of properties 
sometimes is treated as earned where title passes, instead of 
where the property ultimately is used. So U.S. taxpayers may 
argue that income from selling goods into Iran is not derived 
from Iran, so no current U.S. tax is due as long as title 
passes in international waters.
    To plug these gaps, Congress can direct the Treasury to 
promulgate regulations that read that derive-from standard more 
broadly, or Congress can consider legislation. For example, the 
test can be whether states that sponsor terrorism are the 
ultimate destination of the property.
    Taxpayers may try another way to shift income away from 
states that sponsor terrorism in an effort to avoid these 
provisions. Not just by claiming that the revenue comes from 
somewhere else, but also by stuffing deductible expenses into 
these countries, such as interests and royalties. To thwart 
these income stripping strategies and more generally to raise 
the cost of doing business in Iran, Congress can consider 
stopping taxpayers from deducting these and other costs of 
doing business there. In other context Congress has taken away 
deductions for bribes, for fines and penalties, and for the 
cost of drug trafficking. Congress should consider the same 
treatment for costs of doing business in states that sponsor 
terrorism.
    Finally, perhaps the most daunting gap in these rules is 
that they don't reach foreign multi-nationals. These firms 
don't pay tax, U.S. tax, on foreign earnings, so they are 
immune to the costs imposed by these provisions. Now, even if 
these provisions just target U.S. firms, they can still weaken 
states that sponsor terrorism.
    If fewer firms are willing to do business with Iran, Iran 
has less bargaining power and is likely to get less favorable 
firms. Nevertheless, these rules would be more effective if 
they also reach foreign multi-nationals. In an important lever 
here is that these firms do pay U.S. tax on their earnings in 
the United States. So an extra tax can be imposed on the U.S. 
earnings of firms that do business in Iran. The size of this 
extra tax could depend on how much money the firm earns in 
Iran. To avoid discriminating against foreign firms which would 
violate our treaties, this extra tax can apply to U.S. firms as 
well.
    So to sum up, section 901(j) and section 952(a)(5) raise 
the cost of paying tax in Iran and doing business there. All 
these rules have very useful effects in their current form. 
Congress can consider ways of strengthening them. Thank you.
    Chairman ROSKAM. Thank you.
    [The prepared statement of Mr. Schizer follows:]
    
    
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  Chairman ROSKAM. Mr. Feith.

 STATEMENT OF DOUGLAS FEITH, SENIOR FELLOW, HUDSON INSTITUTE, 
          FORMER UNDER SECRETARY OF DEFENSE FOR POLICY

    Mr. FEITH. Thank you, Mr. Chairman.
    Chairman ROSKAM. Your mike is not on.
    Mr. FEITH. Thank you. Chairman Roskam, Ranking Member 
Lewis, and Members of the Subcommittee, it is an honor to speak 
with you about Iran's sanctions.
    I have been asked to discuss a specific question, how 
Iran's situation now, under the new nuclear deal, compares to 
Libya's situation in late 2003, after the Qadhafi regime 
renounced its nuclear and chemical weapons programs. I dealt 
with the Libya matter when I was Under Secretary of Defense for 
policy, working for Secretary Rumsfeld from July 2001 until 
August 2005.
    The question is, does President Bush's waiver of section 
901(j) sanctions regarding Libya, argue for a waiver now by 
President Obama regarding Iran. I see significant differences 
between the cases. The Libyan regime made an unequivocal 
decision, not only to stop its WMD programs, but to invite 
American and British engineers into Libya to dismantle those 
programs facilities and to take the equipment out of the 
country.
    When the Americans and others entered Libya, they were let 
into all the locations they wanted to inspect. They were given 
far more information than they already had. Libyan officials 
didn't play the game of saying that they will confirm data if 
the foreigners will tell them what they know.
    Libya's dictator, Muammar Qadhafi, had resolved to get out 
of the WMD business. His government announced the decision 
without qualifications or ambiguity. Qadhafi himself publicly 
confirmed it. Qadhafi, horrible dictator though he was, was 
serious about permanently ending Libya's WMD programs. His 
words were clear and categorical, and his actions were 
consistent with his words. This is not, however, the case with 
the words and actions now of Iran's leaders.
    In the JCPOA, the Iranian regime reaffirms that under no 
circumstances will Iran ever seek, develop, or acquire any 
nuclear weapons. But that simply restates its essential nuclear 
nonproliferation treaty obligation, which Iran accepted in 1970 
and then in recent years violated.
    Iran's various nuclear activities violate that obligation, 
which is why the U.N. Security Council supported economic 
sanctions against Iran and why there has been all the Iran-
related diplomacy for years. Iran has never admitted that its 
uranium enrichment, ballistic missile, and other nuclear 
programs, aimed to create a weapons capability.
    It has never admitted that they violated the 
nonproliferation treaty; it has never apologized for those 
programs and doesn't, in the nuclear deal, promise to end them 
permanently. So Iran's new reaffirmation that it won't seek to 
develop or acquire nuclear weapons is not valuable. Just as 
some clothing stores sell pre-torn jeans, the Iranians have 
sold President Obama a pre-broken promise.
    Iran has not made an open book of its nuclear weapons-
related secrets as Libya did. It hasn't given inspectors free 
reign to visit anywhere in Iran. On the contrary, it demanded 
restrictions, making it difficult, and perhaps impossible, for 
inspectors to prove violations even if they somehow learn of 
them. The JCPOA inspection regime focuses mainly on declared 
facilities, but it is not reasonable to assume that Iran would 
choose to violate the deal in a declared facility.
    The issue of undeclared facilities is important. Iran, over 
the years, built large nuclear facilities that it managed to 
conceal from foreign eyes for long periods of time. A former 
top IAEA official commented a couple of years ago, if there is 
no undeclared installation today, it will be the first time in 
20 years that Iran doesn't have one.
    Unlike Libya, Iran has not invited American and other 
foreign engineers to come in and dismantle its nuclear 
facilities. Iran, under the JCPOA, is allowed to continue to 
enrich uranium, to continue nuclear research and development, 
to increase eventually the quality of centrifuges used for 
enrichment, and to continue to improve its technology for long-
range ballistic missiles that have no purpose other than to 
deliver nuclear warheads.
    As I mentioned, section 901(j) sanctions can be based on 
the country's support for terrorism, and it bears noting that 
when President Bush lifted them for Libya, the Qadhafi regime 
was showing that it was moving away from such support. The 
Iranian regime, however, appears intent on continuing to 
finance, arm, train, and aid Hezbollah and other terrorist 
organizations.
    Chairman ROSKAM. Mr. Feith, so if you can just bring your 
remarks to a close now, and then we will have an opportunity to 
continue to engage.
    Do you have like another paragraph or so?
    Mr. FEITH. Sure. What I would say in conclusion, is that 
the basic reason we have----
    Mr. CROWLEY. Mr. Feith, just a moment. How much more do you 
have to read or go through?
    Mr. Chairman, if you don't mind me asking.
    Do you have a lot more to go through?
    Mr. FEITH. Well, I can end now if you would like.
    Mr. CROWLEY. I am interested in hearing his full text if 
that is okay. If it is not prolonged, I would be interested in 
hearing it.
    Chairman ROSKAM. I have got the capacity to foreshadow, and 
I think he has more to say than we have. So trust me on this.
    Why don't you just wind it up, and we will get back. And we 
will have plenty of opportunity to have a discussion.
    Mr. FEITH. Sure. Thank you, Mr. Chairman.
    There is an incentive that the Iranians had to enter into 
this agreement, was to lift sanctions and get the enormous 
economic benefits of potentially hundreds of billions of 
dollars for doing so. The incentive that the Obama 
administration had to enter into this deal changed.
    Initially, the Obama administration aimed to end the Iran 
nuclear program. When it became clear that that was not 
achievable, the administration changed its goal without 
admitting as much. And its goal shifted from ending the Iran 
nuclear program to delaying it. And that is all they have 
managed to accomplish. And they can delay it only if the 
Iranians comply with the agreement. But it is not clear that 
the Iranians will comply with the agreement. It is not clear 
that we will be able to detect violations, and it is not clear 
that even if we detect violations, that we could do anything 
effective to enforce the agreement. And those are my main 
concerns about the situation that we find ourselves in.
    Chairman ROSKAM. Thank you.
    [The prepared statement of Mr. Feith follows:]
    
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    Chairman ROSKAM. Mr. Stethem.

STATEMENT OF KENNETH STETHEM, CHAIRMAN & CEO, AEGIS INDUSTRIES, 
                              LLC

    Mr. STETHEM. Thank you, Chairman Roskam, and Ranking Member 
Lewis for the opportunity to be here today and discuss the 
presidential authority to waive the antiterrorism provisions in 
the Tax Code with regards to Iran.
    Before I start, I would like to recognize Representative 
Meehan and the others on the committee who supported H.R. 3457, 
the justice for victims of Iran terrorists. Thank you, sir.
    The question of the day, my remarks can probably be 
distilled down to two or three questions. The first question 
is, will Congress side with Iran and their terrorist activities 
or with America?
    I would like to give you all a brief introduction into my 
family, the Stethem family, which is a family of service. 
Between my father, my mother, and three brothers, we have 105 
years in the Navy. I have got two brothers who served as Navy 
seabee divers, and one of my younger brothers, Robert, was the 
Navy diver that was killed on the TWA flight 847 in 1985 in 
Beirut, by Hezbollah terrorists which were sponsored by Iraq.
    And I was fortunate enough to serve as a SEAL and as an EOD 
technician. I am here today for two reasons. The first is to 
discuss the provisions I mentioned earlier and why I think that 
supporting the antiterror provisions with respect to the Tax 
Code in regard to Iran is a sound policy.
    The second reason I am here is duty and honor. My brother 
cannot be here, and many other victims cannot be here. So I 
would like to take a moment, a brief moment, and recognize my 
brother, the other victims of Iran terrorism, and also our 
fallen vets, and vets who sacrificed their lives and limbs in 
the war on terror.
    Thank you. My experience with terrorism began in 1985. I 
have seen it on a personal level; I have seen it on a 
professional level, and I have seen it on a policy level for 
the last 30 years. During the highjacking in 1985, it was my, 
my family, and our Nation's really first huge terrorist 
incident that played out over TV and over CNN for a long period 
of time.
    For those who don't know the story, I would just like to 
share it briefly. Basically, my brother was beaten and 
tortured, and dragged out front and asked to yell into a mike 
because Hezbollah wanted to refuel a plane and the amal militia 
didn't want them to leave; they were getting too much press. So 
Hezbollah said, we are going to kill--told the tower, we are 
going to kill an American if you don't send out a truck. They 
put a gun to my brother's head, and they said, yell.
    And he had already told one of his fellow teammates on the 
plane that was up there with him, we can't yell, because if 
there is a rescue attempt, the plane has to be on the ground. 
And John Testrake said it best, the pilot, when he said, he was 
beaten and not a sound was heard to come from him. He was shot 
and then just dumped on the tarmac as if his life had no value.
    So I have seen terrorism on a personal level; I have seen 
it on a professional level, and I have seen it on the policy 
level. And I will just share a few things that I have learned 
along the way. Terrorism must be fought on multiple levels 
simultaneously. Not sequentially, simultaneously.
    And this fight, this strategy against terrorism, must be 
based on sound strategy. It must be based on sound strategy and 
not simply on a military action. There is an absolute truth in 
the military, goes something like this, military operations are 
only as good, effective, and successful as the political 
policies and strategies they support. Far too long our 
countries and our administrations have depended on the military 
for quick ops and quick success when it is sound policy that is 
needed for peace.
    A common misconception among Americans is the opposite of 
war is peace, and this isn't true. The word ``war'' is an 
ancient German word. It means to confuse. When you make 
warfare, you make confusion on the enemy. The opposite of war 
is our word of war or aware. It is clarity. The opposite of 
confusion is clarity. The opposite of war is awareness. It is 
sound policy. It is clarity. Peace comes from clarity.
    Look at World War II. The war didn't end and all of a 
sudden there is peace and prosperity. There was a Marshall Plan 
in Europe and we had another plan for Japan. The peace came--
for Japan, the peace came out of clarity of policy, and we 
don't have it today.
    I have heard the comment made over and over again, 
Americans are tired of war. That is a projection. Let me tell 
you something, Americans aren't tired of war. I don't know any 
of my friends in the military that I served with, SEALS or not, 
they are willing to fight for freedom. I don't know how many 
American who doesn't want the military to fight for freedom. 
Americans aren't tired of war; Americans are tired of war that 
is not based on sound strategy, sound policy. Wars that are 
being fought to fight and not win.
    Political strategies and policies against terrorism, they 
need to be simple, they need to be sound, they need to be 
sustainable, and there needs to be accountability.
    I would just briefly mention in accountability, the topic 
of the JCPOA and the flagrant violations by Iran, there is no 
accountability. There has already been flagrant violations. 
There is no accountability. So how good is this policy? If the 
minor violations--they aren't held accountable to by the 
parties, why do we think the major ones will be?
    Specifically, on Iran and terrorism, everybody here wants 
peace. If we could have one thing, we would want peace. I 
believe that. The question I haven't heard asked since 1979, 
since the Islamic jihad was declared, and I just--it blows my 
mind. I have never heard anybody ask Iran, the Ayatollah, are 
you still at Islamic jihad, a holy war, with the United States? 
That question hasn't been answered, because it hasn't been 
asked. And that is the first question that should have been 
asked before we started negotiating about nuclear power with 
them.
    Americans have been asked to separate the nuclear issue 
from the terrorism issue. I would ask has Iran been asked the 
same? Has Iran renounced the Islamic jihad? Has Iran renounced 
their terrorist acts on the Beriut barracks bombing, on the TWA 
flight, on the USS Cole? Chairman, I am almost done. Thank you.
    I believe, I strongly believe that separating the radical 
fundamentalist Islamic regime from their terrorist activities 
is like trying to separate heat from a flame or light from a 
candle. It can't be done. The failure of the current 
administration to develop a sound security strategy policy for 
the Middle East should not preclude Congress from developing 
one against this menace of mankind. The first step in 
developing a sound security strategy for the Middle East is 
asking Iran, are you jihad? Another one might be to actually 
define what war means and what combat means.
    Congress has a great opportunity before it, and this 
subcommittee is laying the cornerstone. And if you miss this 
opportunity, it is going to be like shooting an arrow from a 
bow, and you are not going to be able to call it back.
    In closing, I would like to share two quotes that resonate 
deeply within me. And they are as true and timeless as when 
they were first spoken--today as when they were first spoken. 
The first one, ``I love the man that can smile in danger, that 
can gather strength from distress and grow brave by reflection, 
since the business of little minds to shrink, but to he whose 
conscious approves his conduct will pursue his principles onto 
death.'' My brother pursued his principles onto death for 
everyone here.
    The last quote is written on a plaque outside of his team 
in Virginia Beach: ``We will always remember. We will always be 
proud. We will always be prepared so we can always be free.'' 
Thank you.
    Chairman ROSKAM. Thank you, Mr. Stethem.
    [The prepared statement of Mr. Stethem follows:]
    
    
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    Chairman ROSKAM. Mr. Walsh.

 STATEMENT OF DR. JIM WALSH, RESEARCH ASSOCIATE, MASSACHUSETTS 
       INSTITUTE OF TECHNOLOGY'S SECURITY STUDIES PROGRAM

    Mr. WALSH. Mr. Chairman, Mr. Ranking Member, Members of the 
Committee, it is an honor to be here with you today to discuss 
the implementation of the nuclear agreement with Iran and our 
P5+1 international partners.
    In my testimony, I want to directly address the central 
question raised by this hearing: What are the policy 
implications of providing tax-related sanctions relief. For 
example, will such relief result in an increase in Iran State 
sponsored terrorism? Before addressing the issue of possible 
tax-related sanctions relief, it make sense to step back and 
consider the agreement itself and what it accomplishes.
    My professional judgment is that this agreement is the 
strongest, most intrusive nonproliferation agreement ever 
negotiated. This positive assessment is not mine alone, but 
rather, shared by American nuclear weapons scientists, retired 
diplomats, including three former U.S. Ambassadors to Israel, 
and retired military officers. Support for the agreement has 
included a broad and bipartisan cross-section of the U.S. 
national security establishment, including Republican national 
security luminaries, such as Brent Scowcroft and Colin Powell.
    In addition, Israel's atomic energy agency and more than 40 
retired Israeli defense and the government officials have 
endorsed the agreement, as well as, our European allies. This 
agreement reduces Iran's stockpile of uranium by 98 percent. It 
restricts Iran's enrichment levels. It reduces Iran's installed 
centrifuges by two-thirds and goes beyond the additional 
protocol, the current gold standard, for IAEA verification. 
This agreement provides for 24/7 monitoring of Iran's declared 
nuclear facilities and a first ever expedited procedure for 
investigating any suspicious undeclared facilities.
    Many of its provisions, including snapback sanctions, are 
unprecedented. The agreement quadruples the number of 
inspectors over what had been operating in Iran prior to 
November 2013, and it is difficult to think of a simpler but 
more powerful measure of the difference that this agreement 
makes. If one were to ask virtually anyone, whether increasing 
the number of IAEA inspectors in Iran by 400 percent is a good 
thing? The answer would undoubtedly be yes.
    With that in mind, I want to shift to the issue of tax 
related sanctions relief. And by way of background, it should 
be remembered that the U.S. imposes two broad categories 
sanctions on Iran, primary sanctions, are those that prohibit 
American individuals and entities from engaging in business 
with Iran. Secondary sanctions prohibit foreign individuals 
from interactions with Iran. This agreement provides relief 
primarily from secondary sanctions not primary sanctions. With 
limited exceptions, sanctions prohibiting American trade 
investment in Iran will remain in place for years to come.
    Now let me focus on the policy implications of providing 
tax-related sanctions relief in particular. Based on a review 
of the evidence, I judge that even a full waiver of U.S.-
owned--a full waiver of tax penalties on foreign-owned 
subsidiaries as unlikely and ill-advised as that may be, will 
not, by itself, generate new trade or investment in Iran.
    One, American primary and other sanctions will remain in 
force. In addition, the architecture created by CISADA and 
ILSA, particularly as it relates to money laundering, 
terrorism, and other issues, continues on the books and with 
enforcement.
    Number two, few subsidiaries of U.S. companies will want to 
do business in Iran. American-affiliated companies are not 
welcome in Iran and the supreme leader has made that clear in 
his recent letter to President Rouhani. In addition, the recent 
arrest of an Iran-American businessman will further dampen 
interest by American firms and their subsidiaries.
    Finally, let me address the broader issue of sanctions 
relief and terrorism. There is this larger critique offered by 
some opponents of the agreement suggesting that it will lead to 
an increase in state sponsor terrorism by Iran. In my judgment 
both the assumptions of this critique and its conclusions are 
deeply problematic.
    First, the intelligence community has assessed that new 
funds will be devoted to rebuilding Iran's economy, not to 
terrorism. The L.A. Times reported that, quote, ``A U.S. 
intelligence assessment predicts that Iran's Government will 
pump most of the expected funds into the country's slacking 
economy and won't significantly boost funding for militants,'' 
close quote.
    Number two, Iran received some $16 billion in sanctions 
relief during the 2 years of the interim nuclear agreement, 
yet, there is no evidence pointing to an upsurge in Iran state-
sponsored terrorism.
    Number three, the U.S. continues to enjoy a wide variety of 
tools to combat terrorism with or without an agreement.
    Number four, no American wants Iran to support terrorism, 
to oppress human rights, or to engage in any number of those 
objectionable activities. But the only thing worse than Iran 
that does these things, is an Iran that does these things and 
has nuclear weapons. And absent sanctions relief, there will be 
no agreement, and Iran's nuclear program will be unconstrained.
    In conclusion, this agreement represents a historic 
achievement that is arguably the strongest multi-lateral 
nonproliferation agreement ever negotiated. It will advance the 
national security of the United States as well as the security 
of our friends and allies for decades to come. And nothing 
related to tax-related sanctions relief alters that conclusion.
    I thank the Committee for providing me the opportunity to 
share these views.
    Chairman ROSKAM. Thank you, Mr. Walsh.
    [The prepared statement of Mr. Walsh follows:]
    
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    Chairman ROSKAM. And thank all the witnesses. It is obvious 
that you have more knowledge and more experience than we have 
time in your presentations, so it is our hope and expectation 
now to be able to engage in questions to you. And I will 
recognize Mr. Kelly.
    Mr. KELLY. Thank you, Chairman. Thank you, all, for being 
here.
    Mr. Stethem, thanks so much. I mean, there is an old saying 
that time heals all wounds. It is absolutely false. The wound 
may heal, but it leaves a deep scar that is there forever. Your 
loss and the show of patriotism and courage from your brother 
is an incredible lesson for all of us to look at.
    And I do appreciate people's concern over this. I will say 
one thing, I note there is nobody I think, that would ever opt 
for a war. But let me just read something from President Reagan 
that I think is pretty good on this subject. It says, now let's 
set the record straight, there is no argument over the joys 
between peace and war, but there is only one guaranteed way you 
can have peace, and you can have it in the next second. 
Surrender.
    When we talked about the agreement with Libya, and now we 
look at in the new Iran agreement, there is a huge difference 
between the two outcomes; is there not? I look now where there 
is--we are sending billions and billions of dollars of American 
money over--it is getting distributed through Iraq into Iran's 
hands; a lot of it going to ISIS and other terroristic 
entities, there is just no doubt in my mind, they have already 
violated the agreement.
    So, Mr. Dubowitz, Mr. Schizer, Mr. Feith, if you can, there 
is a huge difference right? I mean, the stark difference of 
this is the difference between day and night where you have one 
person, Qadhafi, who was ready then to say, okay, fine, we are 
going to give into this. And then you have the situation now 
where it is almost like we are the laughing stock of any type 
of a peace agreement, like yeah, we are going to go ahead and 
do what we want to do anyways. First of all, I don't believe 
you can ever have an agreement with anybody unless both parties 
agree that they want to get to a common end. Ours was to keep 
Iran from getting nuclear agreements, their purpose was to go 
ahead and progress on the path that they were on.
    So it went from never getting to for sure getting them. If 
you can tell me, when it came to Libya, there were stark 
differences, and the behavior was completely different. What 
would make anybody think, just after a month or so of this 
agreement being signed that somehow this is going to have a 
positive effect? I don't get it. Is there something I am 
missing?
    Mr. Feith, if you would.
    Mr. FEITH. Representative Kelly, I think that you are 
correct that there is a world of difference between the cases. 
One of the main differences is, it is clear from the history 
that led to Qadhafi's decision to get rid of his WMD. What 
happened was the United States had reacted to 9/11 in a fierce 
fashion. There was an intense commitment on the part of the 
U.S. Government to deal with the problem of countries that 
supported terrorism and pursued weapons of mass destruction. 
And what Qadhafi saw was that the United States had overthrown 
the Taliban regime in Afghanistan and had overthrown the Saddam 
Hussein regime in Iraq. The timing is quite significant.
    Qadhafi, like the Iranians, wanted to get rid of the 
economic sanctions on his country. When he saw the United 
States taking that kind of military action, he became very 
fearful that he was next on the list. And the timing is quite 
interesting that Saddam Hussein was captured and appeared in 
his disheveled, humiliated state on international televisions, 
on televisions all over the world, on December 13, 2003. And it 
was 6 days later that the Libyan Government announced we are 
getting out of the WMD business, and Libya invited in the 
American and British inspectors to come in and----
    Mr. KELLY. If I can, and I understand where you are coming 
from, but I think it really comes down to, Libya knew there 
were consequences if they didn't stop what they were doing. 
Iran has absolutely no respect for this agreement and doesn't 
feel any consequences from it, neither militarily or 
financially, so why should they follow the agreement? There is 
no reason for them to follow the agreement. I just would 
suggest that in any type of agreement, in any type of treaty 
that you come to--this is not a treaty--that if there are no 
consequences for bad behavior, and they have already violated 
this agreement, why in the world would they suddenly say, you 
know what, I think we will start going along with the intent of 
what was trying to be done.
    From the very onset we have done nothing but give, give, 
give and they take, take, take. We talked about the people that 
have been held hostage. That never came into it. We talk about 
now they are testing missiles. They are not going to deliver 
care packages. They are delivering nuclear warheads. And there 
is absolutely no retribution for this. There is no consequences 
for this, so why in the world would we think that somehow, even 
as tax consequences, we have become so vanilla. We have become 
so soft. We have become so weak that nobody respects us 
anymore. Our friends don't trust us, and our enemies don't 
respect us. I would just suggest, and, Mr. Stethem, I got to 
tell you, what your brother did in that airplane is the America 
that I remember. That is the America that the world remembered. 
All of a sudden we are not that America anymore. We are an 
America that turns its back on its friends and encourages its 
enemies to go with bad behavior because there are absolutely no 
consequences at any level for any bad behavior on the Iranian 
side. This is absolutely pathetic.
    Chairman, thank you for calling this meeting, but I will 
tell you what. The sanctions are fine. We should have increased 
them. We shouldn't have backed them off, and we should have 
demanded other concessions before we even sat down at the table 
with these people because they are not on the same page with 
us. Their objective is to wipe us out. It is not to come up 
with an agreement. Thank you.
    Chairman ROSKAM. Mr. Lewis.
    Mr. LEWIS. Thank you very much, Mr. Chairman. Let me thank 
all of the witnesses for being here. Thank you and your 
families for serving. But I must tell you that I still believe 
that American people are tired and sick of war and violence. 
Peace is not the absence of tension and conflict. Peace is the 
presence of justice.
    Dr. Walsh, thank you for being here. You are a native of 
Atlanta, and I want to welcome you for being here. Is there 
anything that you would like to add to your testimony or 
clarify for the record, for clarification, what you said or 
wanted to say?
    Mr. WALSH. Thank you, Mr. Ranking Member, and thank you for 
calling attention to my Georgia roots. I would like to extend 
my remarks because I argued that this is the most robust and 
intrusive nonproliferation agreement in the 70 years of the 
nuclear age. And I included in that a comparison to the Libya 
agreement. I would like to spend a moment talking about Libya, 
if I may.
    The Iran agreement is clearly more robust than the Libyan 
agreement, and I supported the Libyan agreement, by the way. 
The Libyan agreement had no snapback sanctions. It had no 
dedicated procurement channel. It had no IAEA access beyond the 
additional protocol, all of which are features of the Iranian 
agreement. Now it has been said that Libya dismantled what it 
had while Iran gets to keep some of its enrichment capability. 
And while I think that is technically true, it simply reflects 
the huge differences in the two circumstances.
    The Iran agreement came and was negotiated after Iran built 
19,000 centrifuges, almost half of which were built under the 
Bush administration. Libya's nuclear efforts consisted largely 
of boxes of centrifuge parts, not an industrial-scale 
centrifuge program. Obviously it is easier for a country to 
give up what it wants rather than what it already possesses. 
The administration took Qadhafi's word that it would not 
reconstitute the program, start an undeclared program. The Iran 
agreement is not based on trust. It is based on verification. 
As we talk about human rights and terrorism and other concerns, 
it seems odd to me to point to the Libya agreement. It was just 
a few years after the Libya nuclear agreement, that the U.S. 
and its European allies were bombing the supposedly trustworthy 
and reformed Qadhafi because of allegations he was massacring 
his own people. Now as it stands, I still think it was a good 
agreement because it was better, as with Iran, to have a bad 
actor that is doing bad things but doesn't have nuclear 
weapons.
    If we were going after Qadhafi as we did with our European 
allies, and he had had nuclear weapons, that would have been 
worse, but I don't know that I would cite the Colonel as a 
particularly good figure in support of trust rather than 
verification.
    Now, I know you are getting which wildly different 
assessments of the agreement and predictions about what will 
happen in the future, and as a policymaker, I am sure that is 
hard to evaluate. Obviously you should look at the evidence. 
You should look at the history. Are there internal 
contradictions in the arguments we are making to you? Do we 
really get the history right? But I would say in addition to 
that, one way to judge who to believe and what to believe going 
in the future, is to look at the track record of the 
prognosticators, of us here. In the past, have we been accurate 
in our predictions of what would happen?
    Take for example, predictions around the Joint Plan of 
Action, the interim nuclear agreement that preceded the JCPOA. 
Now we have had critics and some on this panel who said 
arriving at the interim agreement would lead to the collapse of 
sanctions, that the sky was going to fall, that all these 
terrible things were going to happen, and none of it did. Those 
predictions were wrong. In fact, many of the fiercest critics 
of the interim agreement found themselves 2 years later arguing 
it should be extended, rather than having an alternative 
comprehensive agreement.
    So, again, it is fair to look at the evidence. It is fair 
to look at the logic, and it is fair to look at the track 
record of whether people have been right or wrong in the past 
about their predictions. So, let me pause there in case you 
have additional questions.
    Mr. LEWIS. Dr. Walsh, going forward, if Iran cheats or 
violates the terms of the agreement, can the United States and 
allies reimpose sanctions?
    Mr. WALSH. Absolutely. I don't think people really 
appreciate the miracle of the snapback sanctions. At any point, 
any member of the P5 on the Security Council for any reason--
doesn't have to wait for IAEA; doesn't have to wait for anyone 
else. If the United States thinks that Iran is in material 
breach of the agreement, it goes to the Security Council and 
says Iran is cheating, and at that moment, bang, the clock 
starts. A 30-day clock starts ticking, and those sanctions snap 
back in 30 days unless the Security Council passes a resolution 
to extend them.
    So you might say, well, maybe the Europeans or the Russians 
will try to extend that and prevent the snapback, and yet the 
U.S. has a veto power. That is the beauty of the new snapback 
sanctions. If Russia tries to block, the Chinese try to block, 
the Europeans try to block, our ability to reimpose sanctions, 
we veto it, and those sanctions take effect.
    Mr. LEWIS. Thank you, Dr. Walsh. I yield back, Mr. 
Chairman.
    Chairman ROSKAM. Mr. Meehan.
    Mr. MEEHAN. Thank you, Mr. Chairman. I don't know where to 
begin. The miracle or the myth of snapback sanctions is really 
the place that I would begin that inquiry, but that is not my 
line of inquiry right now. I have been struggling with a number 
of aspects of this, not the least of which is the recognition 
that in excess of $100 billion worth of assets are ready to be 
returned to Iran in preparation for the conclusion of this 
agreement, most of which, again the myth that these are going 
to flow somehow to the government, which is largely run by the 
Quds Forces and the Iranian Guard to begin with, who are going 
to benefit from that, and we know it is going directly to 
terrorism.
    So as opposed to sending excess dollars that are going to 
support terrorism around the globe, I also appreciate that as a 
matter of law, families like Mr. Stethem's, law created by this 
Congress who enticed the families like Mr. Stethem's to see 
some measure of justice to hold those countries accountable. 
And I found that there were 87 such lawsuits filed in Federal 
courts and an excess of $46 billion worth of judgments against 
Iran directly associated to Iranian-sponsored terror.
    Now let's begin with the fact of precedent. Mr. Feith, you 
were there in Libya in a similar situation when the 
congressional opportunity created by the Foreign Sovereign 
Immunities Act gave victims of the Lockerbie bombing the same 
opportunity. Prior to concluding that agreement, is it not 
accurate that you also negotiated that Libya would pay in full 
the reparations responsible for the terror created by Libya?
    Mr. FEITH. Yes, sir. In the period before the Libyans 
decided--the Qadhafi regime in Libya decided to get rid of its 
WMD, it for several years tried to get out from under the 
economic sanctions by offering a compensation package to the 
families of the victims of Pan Am 103, and it concluded that 
arrangement. It is interesting that what happened was it 
concluded an arrangement with the families. The issue then went 
to the U.N. for the lifting of sanctions, and the position of 
the U.S. Government was we abstained on that resolution, to 
lift the economic sanctions from Libya, because we said that we 
were still troubled by Libyan support for terrorism and Libyan 
WMD, and so our position was very threatening to the Qadhafi 
Government.
    Mr. MEEHAN. But the point was, we assured, that those 
victims were compensated before the conclusion of the 
agreement.
    Mr. FEITH. Right. But we didn't let them off the hook 
merely for that. In other words, we kept the pressure on, even 
when our pressure was successful to get them to compensate the 
families, we kept the pressure on.
    Mr. MEEHAN. Mr. Dubowitz, it is a matter of law, and, 
again, that the families are entitled, including extensions of 
this under the Terrorism Risk Insurance Act and other things 
which gave us access to even more of these assets. Now, is this 
something that can just be unilaterally overrun by the 
President because he reached an agreement, or are there 
requirements on the President with respect to certifications of 
Congress before this kind of agreement can be reached in 
violation of the congressionally mandated opportunities for 
victims like Mr. Stethem's families?
    Mr. DUBOWITZ. Well congressman, unfortunately the President 
is using his national security interest waiver to unilaterally 
release this $90 to $150 billion that is sitting in these oil 
escrow funds in six countries. And money is going back to Iran. 
Not a dime is going back to the victims of Iranian terrorism. 
And I think it is quite an interesting conversation with Dr. 
Walsh here. The notion that somehow this Iranian regime is not 
going to be using this money for terrorism and hasn't been 
using the money that it has already received since the Joint 
Plan of Action for terrorism.
    I think we have all noticed that there has been a massive 
expansion of Iranian terror activity and regional aggression in 
Syria led by Qasem Soleimani of the Quds Force. I mentioned the 
budget of 2015, 2016. President Rouhani is giving the 
revolutionary guards and the Quds Force a 50 percent increase 
in their budget. So the fact that he is anticipating all this 
money that is going to be coming and he is giving the 
revolutionary guards and Soleimani and the Quds Force a 50 
percent increase.
    Mr. MEEHAN. The point of it is though, that he has used 
this power without certifying why it is in the best interests 
of the United States to return $100 billion to Iran to continue 
to pursue terror.
    Mr. Stethem, let me just close my questions by asking you 
something very, very specific. Families like yours who are 
entitled to see some measure of justice, this isn't about the 
money. It is about the opportunity to see some measure of 
justice, and I know from my time as a prosecutor, every time a 
victim replays the circumstances in a courtroom, it is as if 
the incident happened fresh again.
    Now this administration has explicitly stated that they 
continue to assure that they are going to do everything 
possible to assure that the pursuit of the rights of the 
victims are going to be taken into consideration. Do you 
believe this administration is doing that?
    Mr. STETHEM. No. I believe the administration has done a 
better job representing Iran and their terrorist ways than the 
American people. This isn't about the money. If I had to put my 
finger on what this is really about, this is about another 
family not going through a loss like our family had. This is 
about another American man, woman, child, being beaten, 
tortured, and blown up because we happen to believe in a 
different way.
    I really do believe the administration has represented Iran 
better than it has represented American interests in the Middle 
East.
    Mr. MEEHAN. Thank you, Mr. Stethem.
    Chairman ROSKAM. Mr. Crowley.
    Mr. CROWLEY. Thank you, Mr. Chairman. Mr. Stethem, you and 
I actually have something in common that is unwelcome. The fact 
is you lost your brother, and I remember the day your brother 
was assassinated or was killed, and I was heartbroken.
    Mr. STETHEM. My condolences.
    Mr. CROWLEY. And my first cousin, you may know, was killed 
on 9/11. He was battalion chief in the fire department and he 
found himself in Tower 2. His last known words were, I want to 
try and make a difference. And unfortunately, the only problem 
we have is that we both know that America will continue to lose 
men and women, unfortunately, in the future in defense of 
freedom because we know there are enemies out there that want 
to take that away from us.
    But I do appreciate that. My condolences to you and to your 
family and for the history of support to this great Nation, 
that they have lent to this great Nation, so thank you, sir, 
for your appearance today, and for your testimony.
    Mr. STETHEM. Thank you, sir.
    Mr. CROWLEY. You mentioned specifically sound strategies, 
sound politics. Under Secretary Feith, I think it is fair to 
say that Americans have some questions about the strategies and 
the policies and, particularly your judgment, on the matters of 
war and peace. It is interesting that you are here today to 
talk about Iran because you are universally acknowledged as 
having been an important proponent of the war in Iraq. I know 
there is a difference between Iran and Iraq. One ends in N. The 
other ends in Q. In between there is an O and P, and I think 
that stands for oops. We made a mistake here. But having said 
that, you did that while serving in the Defense Department.
    In your book you defend the decision to go to war in Iraq, 
and as late as 2008, you still were justifying the war in Iraq 
as a good decision, and you said, and I quote, ``I think the 
President made the right decision given what he knew and given 
what we knew and to tell you the truth, even given what we have 
learned since,'' end quote.
    Do you still really believe all that given the terrible 
cost of the conflict in Iraq, and was the decision to go to war 
and your prodding to go to war, the right thing to do?
    Mr. FEITH. I think the world is better off without the 
Saddam Hussein regime. The Saddam Hussein regime represented a 
serious threat to the United States and to our interests, and I 
think that after 9/11 when the President looked at the 
vulnerability of the United States that had been exposed on 9/
11 and he looked at the nature of the Iraqi regime and the 
kinds of activities it was involved in, he came to the 
conclusion that after years of trying to deal with that 
problem----
    Mr. CROWLEY. In the interest of time, I think the answer is 
yes. You believe that it was the right move to make. Is that 
correct?
    Mr. FEITH. I think the President made the right decision--
--
    Mr. CROWLEY. I asked you, did you think, your terms, it was 
the right move to make. I take it by the answer the answer is 
yes. I can see that that is the same judgment with which you 
are approaching the deal with Iran. Under Secretary Feith, many 
people were deeply disturbed by the previous administration's 
attempts to play up the ties between Iraq and Al Qaeda. This 
was such a serious problem that the Pentagon's inspector 
general carried out a report of your office's work. The 
inspector general said your office drew, and I quote, 
``conclusions that were not fully supported by the available 
intelligence,'' end quote. They also said that your office, 
quote, ``did not provide the most accurate analysis of 
intelligence,'' end quote, to senior decisionmakers. That 
sounds fairly serious considering what it all led to.
    My question is, did you at that time do anything that was 
inappropriate in the run-up to the Iraq war? Yes or no? Do you 
think you did anything inappropriate leading up to the Iraq 
war.
    Mr. FEITH. No and----
    Mr. CROWLEY. Mr. Feith, the Pentagon's inspector general 
specifically described the work of your office as 
inappropriate.
    Mr. FEITH. Mr. Crowley, you are not doing justice to the 
issues that you are raising.
    Mr. CROWLEY. I have the time, Mr. Chairman. It is running 
out. I am asking you to answer the questions.
    Mr. CROWLEY. Do you not agree with the independent Pentagon 
inspector general, yes or no?
    Mr. FEITH. No. And I wrote an article--by the way if you 
are interested, I wrote an article in the Washington Post that 
addresses----
    Mr. CROWLEY. Answer the question. No, and I am following--
--
    Chairman ROSKAM. No, listen, you are controlling the time.
    Mr. CROWLEY. I am. Thank you. Do you still believe today 
that Iraq and Al Qaeda were as close as implied at that time? 
Many Americans, most Americans, distinctly recall the 
administration making a connection between Al Qaeda and Saddam 
Hussein. Do you believe that was the case and still is the 
case?
    Mr. FEITH. As I have said, I believe that the best 
information on that was the information that ultimately the 
director of the CIA released in a letter to the Senate 
Intelligence Committee chairman.
    Mr. CROWLEY. Mr. Feith, your office was responsible for the 
post-invasion planning of the Defense Department. Is that 
correct?
    Mr. FEITH. We were one of the many offices in the 
government that played a role in that.
    Mr. CROWLEY. Do you believe you did a good job in post-
invasion planning in Iraq? Do you believe you correctly 
anticipated the scale of the insurgency that would arise and 
last for so many years afterwards?
    Mr. FEITH. You are asking a question that is essentially an 
intelligence question, and my office is not intelligence.
    Mr. CROWLEY. I am asking, do you believe that you foresaw 
and planned adequately for what would happen in the aftermath 
of the invasion of Iraq, that empowered not Iraq obviously, but 
Iran while we were sleeping, while the administration back then 
was sleeping, to further develop nuclear weapons?
    Mr. FEITH. It is a large question you are asking; some of 
the planning was good. Some of the planning was less good.
    Mr. CROWLEY. The failure to adequately plan for post-combat 
operations led directly to the chaos and instability that roils 
Iraq and the region today. You were one of the architects of 
our current chaos. Why should we have any confidence--I know, 
Mr. Chairman, my time is just about up. Why should we have any 
confidence that you have any ability to accurately assess the 
situation in the Middle East today, given your track record in 
advocating maybe the biggest strategic blunder the U.S. has 
ever made, why should any American ever again follow your 
advice?
    Mr. FEITH. Calling it the biggest strategic blunder the 
United States ever made I think undermines your credibility, 
not mine.
    Mr. CROWLEY. How is that, Mr. Feith?
    Chairman ROSKAM. The gentleman's time is expired.
    Mr. CROWLEY. No, no, Mr. Chairman. He questioned my 
character. So why is that, Mr. Feith?
    Chairman ROSKAM. The gentleman's time is expired.
    Mr. CROWLEY. Mr. Feith, why is that? Please, please, Mr. 
Chairman, you have to allow him to further that comment.
    Chairman ROSKAM. Listen, he laid a----
    Mr. CROWLEY. I would like to know why he thinks that falls 
on me.
    Chairman ROSKAM. Mr. Holding.
    Mr. CROWLEY. Mr. Chairman, with all due respect. He made an 
comment----
    Chairman ROSKAM. Listen, I have got nothing but respect for 
you. Your time is expired. Mr. Holding? And we have gone well 
over.
    Mr. CROWLEY. No, but you haven't gone nearly as over as you 
have with the other members, Mr. Chairman.
    Chairman ROSKAM. Listen, the gentleman's time is expired.
    Mr. CROWLEY. Mr. Chairman, Mr. Feith made a direct comment 
to me about my responsibility. I accept, but I would like for 
him to further explain what he meant by that.
    Chairman ROSKAM. The gentleman's time is expired. Regular 
order. Mr. Holding.
    Mr. CROWLEY. Thank you, Mr. Chairman.
    Mr. HOLDING. Thank you, Mr. Chairman. I would like to draw 
our attention back to the tax provisions that we are discussing 
today which relate to Iran's support for terrorism. The Obama 
administration has made clear that the JCPOA only addresses 
Iran's nuclear activities and doesn't affect the ability of the 
United States to impose sanctions to address Iran's support for 
terrorism. So tax provisions, terrorism.
    Now there are some who maintain, argue that the tax 
provisions have little impact on whether companies can invest 
in Iran because the sanctions still in place prohibit doing 
very much business with Iran. I want to dig just a little bit 
deeper. So Mr. Schizer, do you think it is correct that the 
current tax provisions impact whether companies invest in Iran 
in all circumstances?
    Mr. SCHIZER. Absolutely. In fact, I can tell you because I 
know lots of tax directors at many multi-national companies, 
they are very focused on the details of the tax law--it will 
not surprise this committee at all to learn that--and the idea 
that the tax costs would be higher pursuing opportunities in 
Iran would have a very significant impact.
    One of the points that I have made earlier is that there 
are ways in which this committee can consider strengthening 
those rules so that the deterrent would be even greater, but 
certainly these rules could be effective in many circumstances.
    Mr. HOLDING. Now to the degree that the tax provisions are 
ineffective, do you think there are ways that we could 
strengthen these tax provisions to have a more meaningful 
impact on whether companies will invest in Iran, and how would 
you propose we do that?
    Mr. SCHIZER. Absolutely. So I think one of the things we 
have to consider is broadening the definition of the kind of 
income that is going to be picked up here. We wouldn't want 
people to make technical, very legalistic arguments about how 
they are making profits with Iranian customers, but it is not 
really in Iran. And that is very much a doable mission for this 
committee or for the Treasury.
    I think another consideration is trying to sweep in foreign 
multi-nationals, because the truth is, these provisions at the 
moment really don't affect them very much. They affect American 
companies but not foreign companies. But this committee could 
propose legislation that would reach them as well.
    Mr. HOLDING. Indeed it is clearly within the orbit of this 
committee and with Congress that we could strengthen these 
provisions and say any company, foreign or domestic, 
considering their options in Iran, it has to have in the back 
of their mind, you know, will the tax laws change, and they can 
certainly change in a way that would be incredibly detrimental 
to their business activities in Iran. Correct?
    Mr. SCHIZER. Absolutely, sir. And the truth is, if you 
think about the calculation that a company could make, they 
could think well, we could make some money in Iran. It is a 
market that we might like to explore. But if there is a 
consequence in the U.S. market, that would vastly overwhelm any 
interest they would have in making profit in Iran because the 
American market is the largest in the world.
    Mr. HOLDING. Mr. Dubowitz, do you really think that it is 
clear the administration isn't going to allow the American 
companies to invest in Iran through foreign subsidiaries?
    Mr. DUBOWITZ. You are asking me, sir?
    Mr. HOLDING. Yes.
    Mr. DUBOWITZ. Congressman, I think it is actually clear 
that that is exactly what is going to happen, that foreign 
subsidiaries of U.S. companies are eager to do business in 
Iran, and as long as there is no U.S. person who is actually in 
the foreign subsidiary, and as long as that foreign subsidiary 
satisfies the specific regulations that OFAC lays out, then 
that foreign subsidiary will be engaging or will be permitted 
to engage not only in business in Iran, but business with the 
revolutionary guards and the supreme leaders, $95 billion 
terrorist slush fund, which as I have been trying to emphasize, 
are the dominant economic players in Iran.
    Mr. HOLDING. But the laws could change?
    Mr. DUBOWITZ. The laws can change. I think the laws should 
change.
    Mr. HOLDING. You don't think that Iran is going to suddenly 
overnight become something other than the largest state sponsor 
of terrorism in the world, do you?
    Mr. DUBOWITZ. Well, there was a New York Times story just 
today actually which I thought was interesting from Thomas 
Erdbrink, who is the New York Times Tehran bureau chief; and 
the point of the story is to show that, in fact, post-deal Iran 
has become even more aggressive, even more anti-American. It is 
funding even more terrorism. It is cracking down even more 
viciously on its own citizens. In fact, I see no indication 
that this deal is going to lead to the sort of transformative 
impact that many of the deal supporters believe.
    And I would just say one other point. I know we don't want 
to get into the nuclear physics of this, but Mr. Walsh has 
talked about this at great length. Understand that the deal's 
restrictions are set to expire beginning in 8 years' time. 
Within 10 years, Iran will be able to install an unlimited 
number of centrifuges in its Natanz enrichment facility. After 
15 years, most of these restrictions will go away, and Iran 
will have an industrial-size nuclear program with near zero 
nuclear weapons breakout capability. That is the Iran you need 
to imagine. That Iran, in my estimation, is not going to 
transform into a moderate, responsible player.
    Mr. HOLDING. Mr. Stethem, one quick question for you. Do 
you think the Congress should use the Tax Code to discourage 
investment in Iran?
    Mr. STETHEM. Yes. I think our administration, our Congress, 
our Federal Government, should use every means available in 
every way to fight them until, until we know the jihad is over 
or that regime is replaced.
    Mr. HOLDING. Thank you for your resolve.
    Chairman ROSKAM. Mr. Doggett.
    Mr. DOGGETT. I yield 30 seconds and only 30 seconds to Mr. 
Crowley.
    Mr. CROWLEY. Mr. Feith, will you please expound upon what 
you said to me at the end of your testimony. I believe you 
suggested responsibility was on me. Is that correct?
    Mr. FEITH. I said that I don't agree with you on your 
characterization of how----
    Mr. CROWLEY. I appreciate that but, what do you mean by 
your last sentence when you said the responsibility is on me?
    Mr. FEITH. No, no. I didn't say the responsibility was on 
you. I said that the assertion that Iraq was the worst disaster 
in American history undermines your credibility.
    Mr. CROWLEY. How does it undermine my credibility?
    Mr. FEITH. Because I disagree with you on your 
characterization of the----
    Mr. CROWLEY. It has nothing to do with my credibility. You 
called into question----
    Mr. DOGGETT. I reclaim my time.
    Mr. CROWLEY. It is your judgment, Mr. Feith, is what is 
being called into question before this committee today.
    Chairman ROSKAM. Mr. Doggett is recognized.
    Mr. DOGGETT. Mr. Stethem, I honor your service as much as I 
completely disagree with your policy recommendations and honor 
your brother, and share the outrage that all of us feel at what 
happened to him. Indeed, I feel outrage about the lost lives of 
over 4,000 Americans from cherry picked intelligence from the 
Bush administration that led us into a totally unnecessary war 
in Iraq.
    The scheduling of today's vote as an anniversary of the 
embassy takeover, like the scheduling of the vote on the 
Iranian nuclear agreement on 9/11, demonstrates that this is 
all about showmanship, not legislative draftsmanship.
    Indeed it is the most slender of reeds that even connects 
anything within the jurisdiction of this committee to the 
Iranian nuclear agreement. No President in American history has 
ever waived these provisions, no President other than President 
George W. Bush on one occasion. And to suggest that Mr. Obama 
is considering the waiving of these provisions, and that there 
is some intelligence to that effect is about like the quality 
of the intelligence, Mr. Feith, that you and Mr. Rumsfeld and 
Mr. Cheney relied upon to get us into the disaster in Iraq of 
which we are continuing to pay a very dear cost.
    There is a serious earnings-stripping, subsidiary abuse by 
multi-nationals, and, Mr. Chairman, if you are interested in 
exploring under existing law, since this committee won't do 
anything about that problem worldwide, if you want to explore 
what pharmaceutical companies in the United States can sell to 
Iran under existing law, whether they charge the Iranians lower 
prices than they do Americans and whether they paid a dime on 
their profits, I would be eager to join you.
    But today is not about legislation. It is about catch up. 
It is about catch up because we have attempted--we have had 
attempts to repeal the ObamaCare provisions 61 or 62 times, and 
we have only had one effort so far in the form of H.R. 3457 to 
repeal and undermine the Iranian nuclear agreement. And so 
today we are on that program. As with the attempts to repeal 
ObamaCare, there is much missing information. Where was the 
concern with the Iranian centrifuges when President Bush was 
the President? Fox News' own Chris Wallace finally got Dick 
Cheney to admit that when he was Vice President, Iran's number 
of centrifuges went up from zero to more than 5,000. That was 
the effective anti-Iranian policy of the last administration.
    Mr. Chairman, there are over 4,000 American lives that have 
been lost, hundreds of thousands of lives of Iraqis, and over 
$2 trillion in United States funds. I think an apology is 
called for. I would like to see an apology from those who 
forced us into that unnecessary war, jeopardized our economy, 
and continue to place the lives of young Americans in danger 
today because they engaged in the greatest foreign policy 
disaster in American history.
    And if we can do a little before we use military force to 
secure our families, our allies, in Israel, and the rest of the 
world from an Iranian nuclear bomb through using negotiation 
rather than putting those young Americans on the line first 
before we have tried to use negotiation, we must do it, and 
that is why I so vigorously support efforts to fully and 
effectively implement this agreement rather than to see it 
undermined with stunts like today. I yield back.
    Chairman ROSKAM. Thank you. Just to give you a little 
editorial feedback, today is no stunt. Today is an attempt to 
draw the attention of what is a possibility of the 
administration. So Chairman Ryan on September 22 wrote to the 
President and asked him the question, are you going to waive 
these things? And so there has been no answer.
    And I understand the nature, the real difficulty that I 
have and I think that all the members on the committee have, of 
separating out the nuclear deal from the other terror 
activities, and it is very hard for us to keep these apart. And 
I think we have got to be disciplined in how we do it. It is 
not an admonition against anybody on the committee. These 
things tend to conflate.
    But what our challenge is, and the effort before this 
committee is, how do these tax provisions relate? We are 
talking about huge commercial enterprises. And so, Mr. Doggett, 
I would rest easy if the President said I agree with you and I 
have no intention of waiving these things. And then, that would 
be a good thing. He has not said that. He has not answered the 
chairman of the Ways and Means Committee, now the Speaker.
    And we can interpret that one way or we can interpret that 
another way. But I think that there is a real opportunity for 
us because what you have noticed is, there is nobody here that 
is defending Iran, nobody. There is bipartisan recognition that 
Iran is a bad actor killing people and being despicable. So 
since I used your name in debate, I will yield to you.
    Mr. DOGGETT. Thank you very much. There has not been the 
slightest indication that this administration attempted to do 
what no other administration has ever done, what this 
administration has ever done, with the exception of the action 
of President Bush in Libya. I think if you want to explore what 
is being sold to Iran today by American pharmaceutical 
companies and others under exception, what they are charging, 
what they are getting, that is a legitimate line of inquiry.
    But to have Mr. Feith, who has so much experience with 
intelligence, tell us he thinks the President might be 
considering doing something here that we have got to stop, well 
it is really a stretch. It is really unfortunate.
    Chairman ROSKAM. Well, reclaiming my time. Reclaiming my 
time. It is not Mr. Feith that is making that assertion. It is 
the chairman of the Ways and Means Committee that is making 
that assertion, and we have not heard from the administration--
--
    Mr. DOGGETT. Based on what? I mean, Mr. Feith says he might 
be considering it. What is the basis for this letter----
    Chairman ROSKAM [continuing]. To a letter from this 
committee.
    Mr. DOGGETT. What is the basis for inquiring at all other 
than to thwart and undermine the agreement?
    Chairman ROSKAM. Mrs. Noem is recognized.
    Mrs. NOEM. Thank you, Mr. Chairman. I think the chairman 
made several of the points that I wanted to make today as well. 
I don't understand why the President hasn't clarified for us 
exactly what his intentions are. I would think the security of 
the United States is in question with this agreement, and that 
is why as much clarity and light as he can shed on the 
situation would be extremely helpful and help us rest easy, 
that we know which side we are on on this agreement.
    And I guess under that kind of discussion, Mr. Dubowitz, I 
would like to ask you in particular, we know that Iran 
endangers Americans, abroad and here at home, and that their 
actions have been to spend billions of dollars to fund 
terrorism over the years. We know on this committee that the 
Tax Code can incentivize or deincentivize actions. That is what 
this hearing is about today. It is to talk about what 
provisions are in the Tax Code that can either be used to 
encourage Iran to take action or discourage them from taking 
action. And that can have a powerful impact on decisions that 
are made into the future. It can be a critical tool for 
punishing Iran's behavior.
    When trying to modify Iran's behavior in the past, what 
works better, concessions, giving them concessions or giving 
them penalties for how their actions go forward? Mr. Dubowitz?
    Mr. DUBOWITZ. Well, Congresswoman, first of all, thank you 
for redirecting the focus to what this hearing is about. I 
think you are exactly right in that we have got a track record, 
a bipartisan track record, of demonstrating that the use of 
sanctions, both nuclear and nonnuclear sanctions, has been very 
successful in actually getting Iran to agree to a nuclear deal. 
Whether you agree with the deal or not, the coercive tools that 
Congress, that you and your colleagues put in place primarily 
between 2010 and 2013, had a major impact not only on Iranian 
behavior but most importantly as you have identified, on market 
behavior.
    And so these non-nuclear sanctions, which I included the 
tax provisions under, are actually a tool that the President 
has said he still has and will still use but is not using.
    Mrs. NOEM. And do you agree these sanctions are what 
actually brought Iran to the negotiating table?
    Mr. DUBOWITZ. Oh absolutely. The Iranians were facing 
economic collapse in a severe balance of payments crisis in 
2013 as a result of Central Bank sanctions, Swiss sanctions, 
oil sanctions, CISADA financial sanctions, that brought Iran to 
the table.
    Mrs. NOEM. So tell me what has happened since the deal has 
been finalized as far as concessions. Do we see a change in 
behavior by Iran? Do we see them complying with international 
law?
    Mr. DUBOWITZ. Well, quite the contrary. We see them 
violating U.N. Security Council Resolution 1929 in testing a 
long-range ballistic missile capable of carrying a warhead.
    Mrs. NOEM. Have they been required to dismantle their 
missile systems or weapons systems at all?
    Mr. DUBOWITZ. Well, certainly the agreement itself 
unfortunately doesn't deal with ballistic missiles. The 
administration promised it would, and then midway through the 
negotiation exempted that from the agreement.
    Mrs. NOEM. And then what has happened since then? Have they 
done anything to deal with their weapons systems, or do they 
remain intact?
    Mr. DUBOWITZ. No. Their ballistic missile program, in fact, 
is expanding, and it is expanding in the direction of an ICBM 
program, which obviously from an Iranian perspective, they need 
an industrial-sized nuclear capacity on the enrichment side, 
they need a warhead, and they need a long-range ballistic 
missile and ICBM to have a full-blown nuclear weapons program. 
And they are able to proceed patiently down those three 
pathways in ways that I think are going to be of deep concern 
to all of us.
    Mrs. NOEM. So tell me about their change in behavior, if 
there has been any, as far as being a regional actor since the 
negotiations have been finalized.
    Mr. DUBOWITZ. Well, Iran has increased its regional 
expansion. It is obviously implicated in substantial bloodshed 
in Syria, in Iraq, in Yemen. They are continuing to ship heavy 
weaponry to Hezbollah via Assad, and they are threatening our 
ally Israel. If anything, Qasem Soleimani, the Quds Force, and 
the Revolutionary Guards itself have become more aggressive and 
are going to be better funded in order to engage in that kind 
of regional expansion, support for terrorism and sectarian 
bloodshed.
    Mrs. NOEM. So are our allies in that region safer since the 
negotiations have been finalized?
    Mr. DUBOWITZ. Well, certainly my assessment is no. Their 
assessment, as they have expressed I think publicly and 
privately, to Members of Congress is that they are deeply 
fearful of what this Iranian nuclear deal and more importantly 
Iran's regional breakout has actually meant for them.
    Mrs. NOEM. Thank you. I would firmly believe from what we 
have seen in Iran's previous behavior and their behavior today 
is that certainly concessions do not work to change their 
behaviors. Penalties, sanctions, certainly do. And that when we 
look at our Tax Code, that we should keep those kind of things 
in mind when we make sure that we are going to have an impact 
to keep our allies in the region safer and our people here at 
home safer as well. With that I will yield back.
    Chairman ROSKAM. Mr. Renacci.
    Mr. RENACCI. Thank you, Mr. Chairman. I want to thank the 
witnesses for their testimony today. I also want to get back to 
the Tax Code and whether really the current tax provisions 
relating to Iran work, and whether they should be strengthened. 
Knowing that there are really two hammers here, one is that 
companies do not get the benefit of the tax credit; and, number 
two, they don't get the no deferral of their income.
    Mr. Schizer, you said in your testimony that denying the 
benefit of deferral, which is the second hammer as I call it, 
is porous and suggests that it will be interpreted more broadly 
by the Treasury, so I kind of want to get into the weeds a 
little bit. Can you explain what types of investments and 
business transactions would likely escape the provisions if 
companies engaged in careful tax planning?
    Mr. SCHIZER. Absolutely, Congressman. That is an excellent 
question. I think the ones that we are likely to catch under 
current law involve activities in Iran, drilling for oil, 
opening a factory there; but a great deal of economic activity 
won't involve that. If a company wanted to sell scientific 
equipment, for example, or other types of equipment and ship it 
into Iran, what they would then do is two strategies, neither 
of which I think are fully stopped by the law currently.
    One would be to sell it to an intermediary, perhaps in 
Dubai, and then rely on that intermediary to sell it into Iran, 
and then that company would simply say we just made money in 
Dubai.
    The other possibility is they could even ship it directly 
to Iran, but if the title passes in the Mediterranean before 
you get to Iranian territory, then the taxpayer could take the 
position that actually this money doesn't derive from--the 
phrase is derive from Iran, and so the penalties don't apply.
    I think technically this committee is very well positioned 
to change the relevant language to capture those activities. 
Treasury could do it through regulations also, but 
unfortunately under current law, taxpayers would have an 
argument that they could do that.
    Mr. RENACCI. It is interesting. It sounds like you could 
actually set up a shell company unrelated to yours and actually 
ship through that company and not have the effect of the 
deferral?
    Mr. SCHIZER. Right. You could form a relationship with some 
independent entity in another country and rely on them to sell 
at a very small margin, so most of the profit remains with you, 
but as long as that agent wasn't in Iran, you could argue that 
this didn't apply.
    Mr. RENACCI. The other thing you talked about which I 
believe is important is, you testified that tax provisions only 
impact companies headquartered in the United States but not 
their foreign counterparts with U.S. operations, which does 
concern me. You know, we have to have a general level playing 
field. We don't want American headquartered companies at a 
disadvantage. Can you tell us what policies we might consider 
to level the playing field and impose negative tax consequences 
on more companies with U.S. earnings doing business with Iran?
    Mr. SCHIZER. So the challenge here is that the U.S. does 
not assert tax jurisdiction over the foreign earnings of 
companies that are not incorporated in the United States. So we 
couldn't directly tax the profits that Siemens or a company 
like that was making in Iran.
    On the other hand, they are earning lots of money here in 
the United States. We are emphatically permitted to tax that, 
and the point is we could introduce some added tax costs on 
their U.S. earnings as a penalty for the fact that they have 
economic activity in Iran, and that could involve either a 
higher tax rate, or it could involve disallowed deductions. I 
think technically it could be done, and the focus would have to 
be on tax they would be paying to the United States anyway.
    Mr. RENACCI. And one other thing. In your testimony you 
talked about--I am a CPA and I have done tax planning and tax 
counseling--companies could shift a lot of their deductions on 
that income in Iran and actually reduce the penalty there too. 
You would agree with that?
    Mr. SCHIZER. Right. And so really even if they admitted 
that the income was earned in Iran, if they were able to offset 
that income with deductions that they said were in Iran, then 
they would get to the same place of avoiding these penalties. 
And it is fully consistent with this committee's approach and 
our tax laws' approach to disallow deductions for activity that 
is public policy matter we don't like.
    So you can't get a deduction for making a bribe. You can't 
get a deduction for penalties for violating the law. There are 
no deductions allowed for people who make their living selling 
illicit drugs. And in the same spirit, this committee and 
Congress could decide that they wanted to disallow those 
deductions as well.
    Mr. RENACCI. Thank you for your insights. I really believe 
this committee needs to continue to explore tax measures which 
discourage business with Iran while continuing, especially 
while Iran continues to fund terrorism. Mr. Chairman, I yield 
back.
    Chairman ROSKAM. Thank you. Mr. Smith.
    Mr. SMITH. Thank you, Mr. Chairman. I definitely appreciate 
you holding this hearing today. This is clearly an important 
issue. Back whenever I was serving in the Missouri State House, 
I worked to pass some legislation that would prevent the State 
of Missouri to invest in countries that support terrorism. And 
Iran was one of the countries within that parameter.
    We have heard a lot of testimony here today that the waiver 
of sanctions will especially help Iranian entities closely tied 
to the regime, including those supporting terrorism. It seems 
to me that the tax provisions are that much more important with 
this agreement.
    And, Mr. Schizer, if the President were to waive these tax 
provisions, how would that impact companies looking to do 
business with Iran?
    Mr. SCHIZER. The waiver of the tax provisions would 
eliminate the penalties that we have been describing. What it 
means is that when an American company pays tax to Iran, it can 
reduce its American tax dollar for dollar, by the amount of tax 
that it is paying to Iran. And a way to think about that is a 
transfer from the U.S. Treasury to the Government of Iran. To 
me that seems like an extremely unappealing proposition.
    The other point is that American companies could then 
benefit from the same deferral that they now benefit from when 
they do business elsewhere in the world. But although we might 
have reasons why we want them to have that deferral when they 
do business in other countries, we really shouldn't, I think, 
want to encourage this economic activity in Iran. So a waiver 
would eliminate the penalties that exist under current law.
    Mr. SMITH. So it would promote more companies doing more 
business in Iran, paying more taxes in Iran, creating more 
revenue for the Iranian Government, and the result, allowing 
more resources to help direct terrorism activities. Would you 
agree with that?
    Mr. SCHIZER. It could, yes.
    Mr. SMITH. And it all comes from the cost to our taxpayers. 
Isn't it right that the foreign tax credits are paid from the 
Treasury?
    Mr. SCHIZER. It is a way to reduce your tax to the Treasury 
dollar for dollar, so yes.
    Mr. SMITH. And a lot of people refer to these types of 
credits of the Tax Code as a subsidy by U.S. taxpayers. Do you 
agree that that is quite common?
    Mr. SCHIZER. I think it is clearly a tax benefit.
    Mr. SMITH. Okay. Isn't it fair so say that if the President 
had waived these provisions, U.S. taxpayer would effectively be 
subsidizing Iranian-sponsored terrorism?
    Mr. SCHIZER. Resources that otherwise would go to our 
government would end up going to their government, yes.
    Mr. SMITH. So subsidizing, using our resources to help 
another country?
    Mr. SCHIZER. Uh-huh.
    Mr. SMITH. Especially a country who is not our friend. I 
would like to ask Mr. Stethem, what do you think about giving 
tax breaks for doing business with Iran, and also do you think 
that this kind of tax policy Americans expect from their 
government?
    Mr. STETHEM. So the first question you asked, what do I 
think----
    Mr. SMITH. About giving tax breaks for doing business with 
Iran?
    Mr. STETHEM. I would like to be clear to everybody on the 
committee. My first choice isn't war. It is peace. But you 
can't have peace unless the other side wants peace too. And I 
hate to keep beating this drum, but it needs to be beat.
    Is Iran at Islamic jihad with us, a holy war or not? If 
they are, we fight them on every street on every corner in 
every way possible, in the banks, in the businesses, and if 
they want, on the battlefield. We do not advance to the rear. 
So I do support it. Your second question?
    Mr. SMITH. So, let me get this right. You said that you do 
support tax breaks to companies that do business with Iran?
    Mr. STETHEM. Excuse me. Excuse me, sir. No, I don't support 
the tax breaks. My apology. No.
    Mr. SMITH. Okay. So you would clearly think that this kind 
of tax policy is not the kind of tax policy that Americans 
would expect from their government?
    Mr. STETHEM. Our government should be representing the 
interests of America and Americans and not funding terrorists 
and not supporting companies that do business with state 
sponsors of terrorism.
    Mr. SMITH. I would agree. Thank you. Mr. Chairman.
    Chairman ROSKAM. Mr. Dold.
    Mr. DOLD. Thank you, Mr. Chairman, and I certainly 
appreciate your leadership on this issue and for calling this 
hearing, and I want to thank our panelists for coming.
    One of the things that I try to do is try to figure out 
what unites us. What do we agree on across the Congress, across 
our country? And one of the things is we want to make sure we 
are protecting our country. The other thing I think is, does 
anybody disagree that Iran is the greatest state sponsor of 
terror in the world today? Any of our panelists disagree with 
that statement? You are going to disagree that they are not a--
--
    Mr. WALSH. I would say Pakistan and Saudi Arabia are 
competitors, but they are in the top three.
    Mr. DOLD. Okay. But we can certainly agree that Iran is a 
great sponsor of terror, and there is no question about it, and 
I would argue probably the greatest state sponsor out there and 
probably widely written on both sides of the aisle. I would 
argue that they are certainly plotting to kill Americans each 
and every day. They are funding terrorist organizations, 
Hezbollah and Hamas, Assad. And so really what we want to try 
to do is how do we stop the terror?
    And Mr. Dubowitz, I know that you have written extensively, 
and the Supreme Leader Khomeni's public letter on October 21 
stated that the imposition of any sanctions at any level under 
any pretext by any of the negotiating countries will be 
considered a violation of the JCPOA. Well, frankly, do you 
think that the Supreme Leader is going to abide by the JCPOA?
    Mr. DUBOWITZ. It is an interesting question actually. If 
the Supreme Leader does abide by the JCPOA, then he has a 
patient pathway to a nuclear weapon. I think that he has an 
irresistible impulse to cheat, as he has in the past, so I 
think he will. I think he will cheat incrementally, perhaps not 
egregiously, but the sum total of those incremental cheating 
will be egregious.
    Mr. DOLD. Has Iran in previous agreements ever kept their 
word or ever abided by the agreement?
    Mr. DUBOWITZ. Iran has a track record of nuclear mendacity 
which is decades long.
    Mr. DOLD. Obviously we are very concerned by the recent 
testing of the ballistic missile and that certainly puts not 
only our allies in the region, but I would argue all over the 
world at risk. And again taking a long range approach, and as 
we look at the tax provisions and the sanctions relief, do you 
doubt that Iran came to the table because crippling sanctions 
were in place?
    Mr. DUBOWITZ. I have no doubt that was exactly the reason 
they came to the table.
    Mr. DOLD. And the sanctions relief that is going to happen 
because of the Joint Plan of Action, is roughly between, I 
think you have written between $90 and $120 billion. We have 
seen estimates of $150 billion. Can you give me some sort of an 
idea as we look at that kind of how that is going to play out, 
and what do you think they are going to do with those resources 
vis-a-vis terrorism?
    Mr. DUBOWITZ. That is just the upfront payment, $90 and 
$120 billion. Then Iran will be able to sell its oil in an 
unrestricted way. The IMF and World Bank predict that Iran's 
economy will grow about 5 to 6 percent in GDP annually, which 
compared to 2013 there was a loss of 6 percent. So the 
sanctions relief is far greater than the initial $90 to $120 
billion in initial oil escrow release.
    But to answer your second part of your question, there is 
no doubt. When you look at the Iranian open books budget, their 
transparent declared budget, they are going to give a 50 
percent increase to the entity, the Revolutionary Guards, 
responsible for carrying out terrorism. So they have actually 
even signalled to us publicly that they are increasing 
terrorism, not to mention the off-the-books money of tens of 
billions of dollars that is sitting in these holding companies 
and shadow entities that they use to fund their terror 
techniques.
    Mr. DOLD. Can you give us some sort of an idea today how 
much Iran is sending in terms of liquid assets to Assad in 
Syria?
    Mr. DUBOWITZ. So according to the U.N. Special Repertoire 
on Syria, the Iranian regime gave $6 billion in cash in kind to 
the Assad regime last year.
    Mr. DOLD. And how much do you anticipate after sanctions 
relief will go to Assad?
    Mr. DUBOWITZ. Well, certainly the Iranians have made it 
very clear that the survival of the Assad regime is their 
number one strategic priority in the region, so one would 
assume that there is going to be a double-digit increase in 
that.
    Mr. DOLD. So I guess as we look at kind of the increase of 
funding of terror, which again I would argue, puts Americans at 
greater risk. We have seen people that have been kidnapped in 
Iran as recently as just this week. You know, President Obama 
has repeatedly stated that he will continue sanctions on Iran 
for terrorism. Yet he has not indicated any support for 
increasing sanctions, particularly against the IRGC.
    Can you give me some sort of an indication as people are 
looking at this saying why in the world would we not want to 
sanction Iran?
    Mr. DUBOWITZ. Well, this is why this hearing is so critical 
because what you are talking about is the tax provision which 
effectively amounts to a nonnuclear sanction. And so you have 
got to basically today, you have got to call the supreme 
leader's bluff. He threatened 2 weeks ago that the imposition 
of nonnuclear sanctions on Iran would lead to the Iranians 
walking away from the agreement.
    If we don't test the Iranians today, by imposing the 
nonnuclear sanctions that the President of the United States 
promised, the longer we wait, the more difficult it will be to 
impose nonnuclear sanctions to stop terrorism, human rights 
abuses, and ballistic missile tests. And so we have got to 
choose nonnuclear sanctions early on that will inflict cost on 
the Iranian regime, and we have to do it early because the 
longer we wait, the more difficult it will be. We will be self-
deterred from using coercive measures to respond to Iranian 
aggression.
    Mr. DOLD. And Mr. Chairman, my time is expired, but I do 
welcome the opportunity to work with you all as we look forward 
on how do we make sure we hold them accountable. Thank you.
    Chairman ROSKAM. Thank you. I just want to follow up, Mr. 
Dubowitz, on that point, and I think it is really important for 
the purposes of today, to take away sort of some of the heat 
and the anxiety and sort of the discussion to get back to this 
crucial point. JCPOA as negotiated by the administration allows 
for nonnuclear sanctions. That is right, isn't it?
    Mr. DUBOWITZ. Correct.
    Chairman ROSKAM. Now in light of that, it is completely 
germane and completely appropriate for us as a committee based 
on our jurisdiction to be thinking, all right, what role do we 
play? And what we are saying is, look, we have posed this 
question to the administration, that is the committee has, and 
we have not heard from the administration about what the 
President's plans are as it relates to these two important 
provisions. That is, the foreign tax credit as it relates to 
Iran, and deferral as it relates to Iran.
    So some people can interpret it one way. Some people can 
interpret it another way. In the words of my son, Steve, I am 
just sayin,' and I am just sayin' that President Obama has done 
many things that no American President has done before, and 
simply because a President has not done something before 
doesn't mean that it is off the table for President Obama. Am I 
being reasonable in how I am looking at the world right now?
    Mr. DUBOWITZ. Chairman Roskam, it is entirely reasonable 
and would have been a very simple response from the 
administration to Speaker Ryan's letter, which is to say, Mr. 
Chairman at the time, Mr. Speaker, we have said repeatedly that 
we will be using nonnuclear sanctions on Iran to respond to 
terrorism, ballistic missile tests, human rights abuses; and 
the tax provisions of the U.S. Tax Code are a nonnuclear 
sanction, and we will be using those, and we will be not 
waiving those. I mean that would have been a very simple 
answer.
    I have to say from my professional assessment, I remain 
deeply concerned that the President will use nonnuclear 
sanctions to respond to Iranian misbehavior and illicit 
activity. And I think it is incumbent upon your committee and 
incumbent upon the U.S. Congress, to get a clear answer from 
the President and from the U.S. Treasury Department whether 
those sanctions, those nonnuclear sanctions, completely 
consistent with the JCPOA, will or will not be imposed.
    Chairman ROSKAM. So I want to thank all of you today. I 
want to thank the panel of witnesses for your time and your 
expertise. Mr. Stethem, particularly you because it is obvious 
to all of us that walking this journey with us today churns up 
a lot within you, and because we value you and your brother's 
sacrifice and the journey that your family has gone through, it 
churns up a lot in us to see you reflecting this. So don't 
assume that that is lost on us today. And I just want to let 
you know I am very appreciative. Go ahead.
    Mr. STETHEM. Thank you very much, sir. I would like to say, 
thank the committee again, thank you; but I will tell you 
something. I am so fortunate to have been born into the family 
I was and the family I have, and nobody needs to feel sorry for 
our family because we are proud Americans who love to serve.
    Chairman ROSKAM. Thank you. There is an audience today that 
is important for us, and I know I am speaking on my behalf. I 
wouldn't presume to speak on behalf of the entire committee.
    Chairman ROSKAM. But to those companies that are 
contemplating a rush to do business with a terrorist regime. I 
urge caution, because I am telling you what, we are interested, 
and we are particularly interested in making it difficult to do 
that. And I think there are a lot of people in Congress that 
are going to try and extract a very high price for American 
companies or anybody else that is trying to do business and be 
complicit with the type of activity that robs the life of an 
American hero on and on and on and on.
    If they just think this Committee's going to lay back and 
not be a challenge to that, they are sorely mistaken. So we are 
going to be looking at tax credits; we are going to be looking 
at deferral; we are going to be looking at the definitions 
within the Tax Code; we are going to work to build a bipartisan 
approach on this, because this is a donkeys and elephants 
issue. This is an issue where the majority of Congress should 
come together around this, and it is an issue that the 
administration itself has said in the JCPOA, these sanctions 
are fair game. And they are absolutely fair game, and we intend 
to be forthright about it.
    And so unless some of these companies think they can just 
go in and make a quick buck and let the Iranians get more 
money, they are going to have a lot of conflict on their hands. 
So on that happy note, I yield back.
    And all members are given the requisite number of time to 
submit written questions to be answered later in writing. Those 
questions and your answers will be made part of the formal 
hearing record. And with that, the meeting is adjourned.
    [Whereupon, at 12:06 p.m., the subcommittee was adjourned.]

                    Public Submission for the Record

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