[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
OVERSIGHT OF U.S. SANCTIONS POLICY
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON FOREIGN AFFAIRS
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
SECOND SESSION
__________
SEPTEMBER 13, 2018
__________
Serial No. 115-172
__________
Printed for the use of the Committee on Foreign Affairs
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available: http://www.foreignaffairs.house.gov/, http://docs.house.gov,
or www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
31-453PDF WASHINGTON : 2018
-----------------------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Publishing Office,
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center,
U.S. Government Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free).
E-mail, [email protected].
COMMITTEE ON FOREIGN AFFAIRS
EDWARD R. ROYCE, California, Chairman
CHRISTOPHER H. SMITH, New Jersey ELIOT L. ENGEL, New York
ILEANA ROS-LEHTINEN, Florida BRAD SHERMAN, California
DANA ROHRABACHER, California GREGORY W. MEEKS, New York
STEVE CHABOT, Ohio ALBIO SIRES, New Jersey
JOE WILSON, South Carolina GERALD E. CONNOLLY, Virginia
MICHAEL T. McCAUL, Texas THEODORE E. DEUTCH, Florida
TED POE, Texas KAREN BASS, California
DARRELL E. ISSA, California WILLIAM R. KEATING, Massachusetts
TOM MARINO, Pennsylvania DAVID N. CICILLINE, Rhode Island
MO BROOKS, Alabama AMI BERA, California
PAUL COOK, California LOIS FRANKEL, Florida
SCOTT PERRY, Pennsylvania TULSI GABBARD, Hawaii
RON DeSANTIS, Florida [until 9/10/ JOAQUIN CASTRO, Texas
18] deg. ROBIN L. KELLY, Illinois
MARK MEADOWS, North Carolina BRENDAN F. BOYLE, Pennsylvania
TED S. YOHO, Florida DINA TITUS, Nevada
ADAM KINZINGER, Illinois NORMA J. TORRES, California
LEE M. ZELDIN, New York BRADLEY SCOTT SCHNEIDER, Illinois
DANIEL M. DONOVAN, Jr., New York THOMAS R. SUOZZI, New York
F. JAMES SENSENBRENNER, Jr., ADRIANO ESPAILLAT, New York
Wisconsin TED LIEU, California
ANN WAGNER, Missouri
BRIAN J. MAST, Florida
FRANCIS ROONEY, Florida
BRIAN K. FITZPATRICK, Pennsylvania
THOMAS A. GARRETT, Jr., Virginia
JOHN R. CURTIS, Utah
VACANT
Amy Porter, Chief of Staff Thomas Sheehy, Staff Director
Jason Steinbaum, Democratic Staff Director
C O N T E N T S
----------
Page
WITNESSES
The Honorable Manisha Singh, Assistant Secretary, Bureau of
Economic and Business Affairs, U.S. Department of State........ 3
The Honorable Marshall Billingslea, Assistant Secretary, Office
of Terrorist Financing and Financial Crimes, U.S. Department of
the Treasury................................................... 10
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
The Honorable Manisha Singh: Prepared statement.................. 5
The Honorable Marshall Billingslea: Prepared statement........... 13
APPENDIX
Hearing notice................................................... 62
Hearing minutes.................................................. 63
The Honorable Gerald E. Connolly, a Representative in Congress
from the Commonwealth of Virginia: Prepared statement.......... 65
Questions submitted for the record by:
The Honorable Eliot L. Engel, a Representative in Congress from
the State of New York........................................ 67
The Honorable Steve Chabot, a Representative in Congress from
the State of Ohio............................................ 87
The Honorable Brad Sherman, a Representative in Congress from
the State of California...................................... 88
The Honorable Michael T. McCaul, a Representative in Congress
from the State of Texas...................................... 91
The Honorable Paul Cook, a Representative in Congress from the
State of California.......................................... 93
The Honorable Adam Kinzinger, a Representative in Congress from
the State of Illinois........................................ 95
The Honorable F. James Sensenbrenner, Jr., a Representative in
Congress from the State of Wisconsin......................... 97
OVERSIGHT OF U.S. SANCTIONS POLICY
----------
THURSDAY, SEPTEMBER 13, 2018
House of Representatives,
Committee on Foreign Affairs,
Washington, DC.
The committee met, pursuant to notice, at 10 o'clock a.m.,
in room 2172 Rayburn House Office Building, Hon. Edward Royce
(chairman of the committee) presiding.
Chairman Royce. If the witnesses and members would all take
your seats at this time. This is a hearing on oversight of U.S.
sanctions policy, and this morning the committee continues to
examine the administration's use of sanctions authorized by
Congress to address threats from hostile states including Iran,
North Korea, and Russia.
As I noted at our last hearing, no matter how tough the
language of our sanctions bills, they are only as strong as
their enforcement.
That's why I am glad we are joined today by two
administration officials directing our teams on the front lines
of this fight.
Assistant Secretaries Singh and Billingslea, your
assessments and your leadership are critical here. I know I
speak for all the members of this committee in saying that I
appreciate the magnitude of the threats you deal with every day
in your position.
But the question is, are we doing enough? Congress has
acted in a bipartisan way to provide the administration with
new tools to combat and disrupt and deter those who would do
America harm.
The Countering America's Adversaries Through Sanctions Act,
which was authored by myself and Mr. Eliot Engel, empowered the
administration with some of the most potent weapons yet.
And to its credit, the administration has acted. Since
January 2017, more than 200 Russian individuals and entities
have been designated for sanctions under CAATSA and other
existing laws. Hundreds of millions of dollars in assets have
been blocked.
That said, we should be doing more--we should be doing more
to hold Putin accountable for his aggressive acts, including
attacks on our democracy.
The administration should use authorities included in
Section 228 of CAATSA to cast a wider net. Those still engaged
in significant business with designated Russian individuals and
entities need to pay a price, as the law prescribes.
We cannot expect Vladimir Putin and his corrupt associates
to change their behavior in Syria, in Ukraine, or anywhere else
until we prove we will hold them to account.
I can't understand why action has not been taken, for
example, against the Russian entities that provide material
support to Iran's Mahan Air.
This sanctioned Iranian airline reportedly transports
weapons and personnel to Syria and still maintains routes with
St. Petersburg and with Moscow.
We should be examining and designating the Russian
individuals and companies that support Mahan with maintenance,
with ticket services, with cargo sales, and with more, and this
is low-hanging fruit.
In the months ahead, the committee will continue to work
with the administration on this and other sanctions policy,
including implementation of the Executive order announced
yesterday regarding election interference, and we'll be
watching to see that another tranche of sanctions is imposed
against Russia later this year for its use of a military-grade
nerve agent on British soil in March.
Putin will certainly be looking for any signs that the U.S.
is wavering. And that goes for North Korea, too. I'm very
concerned that our maximum pressure campaign is faltering.
Kim appears to be using talks, as he has time and time
again, to probe for weaknesses and to buy time. When our
messages are confusing or contradictory, we shouldn't be
surprised when others, like Beijing, reportedly resume
importing North Korean coal.
Sanctions are not a silver bullet. They don't work alone or
instantly. They are best done with others. They can be
overdone, harming the wrong people.
But when deployed thoughtfully and deployed consistently,
with maximum pressure on those entities, sanctions are powerful
diplomatic tools.
Our goal here is to leverage America's economic might to
peacefully and effectively counter urgent threats to our
national security. If we are going to succeed, the
administration needs to fully utilize the tools that Congress
has provided.
With that said, I think we will go to an introduction of
the witnesses, and I think Mr. Engel intended to make an
opening statement but if you would like, Mr. Sherman, I will
defer to you when he arrives. He's----
Mr. Sherman. As long as he has his time to give an opening
statement when he arrives that's----
Chairman Royce. He certainly does. I've communicated that.
He is stuck in traffic at this moment.
So we will go now to an introduction of our witnesses. So I
am pleased to welcome Ms. Manisha Singh, Assistant Secretary of
State for Economic and Business Affairs, and Mr. Marshall
Billingslea, Assistant Secretary of the Treasury for Terrorist
Financing, to the committee here today.
Manisha Singh has been serving in her post since November
2017. Previously, she served as the Deputy Assistant Secretary
in the Bureau of Economic, Energy, and Business Affairs and as
deputy chief counsel to the Senate Committee on Foreign
Relations.
Marshall Billingslea has been serving in his post since
June 2017 and prior to his current role, Mr. Billingslea was
the managing director at Deloitte Financial Advisory Services.
He has held multiple positions within the Department of Defense
and Department of State, and we appreciate both of them being
here with us today.
Without objection, the witnesses' full prepared statement
is going to be made part of the record. Members here are going
to have 5 calendar days to submit any statements or any
additional questions to you or any extraneous materials for the
record.
So, if you would, Ms. Singh, please summarize your remarks.
We will begin with you.
STATEMENT OF THE HONORABLE MANISHA SINGH, ASSISTANT SECRETARY,
BUREAU OF ECONOMIC AND BUSINESS AFFAIRS, U.S. DEPARTMENT OF
STATE
Ms. Singh. Thank you.
Chairman Royce, Ranking Member Engel, and members of the
committee, thank you for the opportunity to speak with you
today regarding the administration's sanctions policy.
As the head of the Bureau of Economic and Business Affairs
at the State Department, I will address from a foreign policy
perspective how the Trump administration is employing sanctions
as a critical component of our national security.
The State Department works closely with our allies and
partners to ensure that diplomatic pressure is applied with
strength, unity, and consensus.
President Trump's national security strategy declares that
we will deploy economic pressure on security threats and that
we will use existing and pursue new economic authorities and
mobilize international actors to increase pressure on threats
to peace and security in order to resolve confrontations short
of military action.
We appreciate the opportunity to work with Congress to
shape and craft these authorities in a manner which will
achieve American national security objectives.
Russia poses a threat to our national security on many
fronts. Our sanctions programs have imposed substantial costs
on Vladimir Putin and serve to deter the nefarious activities
under his regime.
We have witnessed Russian aggression globally threatening
our partners and allies, threatening our very own democratic
process here at home.
U.S. sanctions are intended to heighten the pressure and
curb Russian destructive activities worldwide. Specifically,
the Trump administration has sanctioned a total of 229
individuals and entities for their involvement in Russia's
dangerous behavior.
Notably, 136 of these designations were imposed under
sanctions authorities codified by CAATSA. These actions have
sent a stark message that those who support election
interference, human rights abuses, and other malign activity
will suffer severe consequences.
Another nefarious regime where economic penalties are a key
tool to force behavioral change is Iran. Sanctions on the
Iranian regime have crippled their government by preventing
access to the global financial system and by deterring its
capacity to destabilize.
On May 8th, President Trump announced that the U.S. was
ceasing its participation in the flawed Joint Comprehensive
Plan of Action. Secretary Pompeo has formed an Iran action
group and outlined 12 specific changes in Iranian behavior,
which are detailed in my testimony for the record.
Teams from the State Department and the Treasury Department
have now visited over 30 countries around the world, engaging
with our partners and allies on a new strategy for dealing with
Iran.
The Iranian regime has a choice to make--either come to the
table to resolve these issues diplomatically or face
unrelenting economic pressure.
If we see the fundamental desired changes in behavior, only
then will be consider easing the pressure of sanctions.
Turning to North Korea, our severe economic pressure
continues and has yielded the outcome of the first meeting
between a North Korean leader and a U.S. President.
The Trump administration is committed to working toward a
complete verifiable irreversible denuclearized North Korea.
Secretary Pompeo has an unwavering commitment to this result.
The administration has a number of sanctions authorities
that apply to the DPRK. These authorities limit its access to
technology and equipment that could be used to support its WMD
and missile programs and hold the regime accountable for its
widespread human rights abuses.
We have urged all United Nations members states to take
firm action in applying pressure to the DPRK. International
solidarity and continued pressure are imperative until the DPRK
denuclearizes.
Turning to the Western Hemisphere, in Venezuela we are
using sanctions to address the Maduro regime's authoritarian
rule. Our goal is to create the conditions for restoration of
democracy in the interest of the Venezuelan people.
Let me also note the administration's commitment to fully
implement the Global Magnitsky Human Rights and Accountability
Act, which advances the best of America's values abroad.
I've listed a few examples from the many actions the Trump
administration has taken to utilize sanctions pressure as an
instrument of powerful diplomacy.
We look forward to continuing to work with you to ensure
that sanctions remain an effective tool which work in the
interest of American national security.
I'd be happy to answer any questions you might have.
[The prepared statement of Ms. Singh follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
----------
Chairman Royce. Thank you, Ms. Singh.
We'll go now to Mr. Billingslea.
STATEMENT OF THE HONORABLE MARSHALL BILLINGSLEA, ASSISTANT
SECRETARY, OFFICE OF TERRORIST FINANCING AND FINANCIAL CRIMES,
U.S. DEPARTMENT OF THE TREASURY
Mr. Billingslea. Thank you, Chairman, members of the
committee. It's great to be back here with the committee today
to discuss how the Treasury Department is using our authorities
in support of our national security strategy and our foreign
policy.
It's a broad waterfront to cover. We are talking about
Iran, North Korea, and Russia, among many other topics today,
and so I will attempt to touch on each of these briefly.
Each of these countries poses its own unique particular
challenge to the United States and our allies in the
international order but there are some common threads that link
the three together.
Iran is the world's leading sponsor of terrorism and they
continue to fund groups such as Hezbollah and Hamas and they
bankroll the Syrian regime's slaughter of its people while
continuing to advance their own missile program and sow
regional instability.
Russia, on the other hand, is providing weaponry and
defense material to Iran and extensive support to the Syrian
regime that enables Assad's brutal targeting of his own
citizens, and further, Russia continues its occupation of
Ukraine and Crimea and subversion of Western democracies and it
remains a very permissive environment for North Korean
procurement efforts to circumvent the U.N. Security Council's
resolutions and our own actions.
And then, of course, North Korea continues to attempt to
evade international sanctions and pressure and has not yet
abandoned its weapons of mass destruction or missile programs.
So on the one hand, all three of these countries use
similar tactics to exploit the global financial system,
particularly as they establish an employee front and shell
companies they try to mask the origin of the beneficial
ownership associated with illicit flows and to disguise the
nature and the intent behind certain transactions.
And, very importantly, all three collude with one another
in an effort to blunt the effectiveness of our actions. But, on
the other hand, these three countries are very dissimilar in
terms of the size of their respective economies and the extent
to which they have businesses intertwined with global supply
chains and in the degree to which their financial sectors are
connected to the global system.
And for these various reasons, our sanctions programs have
to be nuanced and have to be tailored to address each of these
challenges.
I am going touch briefly on all three countries. First, on
Iran--as the Assistant Secretary of State mentioned, the
President's decision on May 8 has now set in motion the
reimposition of a wide range of sanctions, and this is
occurring over a 180-day period that were structured in two
phases, and the intent here was to give businesses--global
businesses a chance to wind down their business operations with
the Iranians prior to the full imposition of sanctions of
November 4.
On November 4, we will reimpose far-reaching sanctions on
Iran's energy and shipping sectors and on foreign financial
institutions that conduct business with the Central Bank of
Iran and other designated Iranian banks, and we are going to
very aggressively enforce these authorities.
Mr. Chairman, you mentioned in your opening comments Mahan
Air and I could not agree with you more. It's not just Mahan
flying. Mahan is the airline of choice for the Quds Force. When
they want to move weaponry, money, foreign fighters, Mahan Air
is by and large the airline they select for these operations.
It's their covered air asset program.
We need to go after Mahan and we are going after general
service providers and third parties, imposing secondary
sanctions. You mentioned Section 228. Secondary sanctions are a
very powerful tool and we have begun designating companies that
foolishly remain intertwined with Mahan Air.
We did so in the case of Malaysia. Other actions are
imminent. I also find it objectionable that certain countries
who are close partners of ours who are threatened by the
Iranians continue to allow Mahan to fly into their cities in
the Middle East, and so this is a matter we very much see eye
to eye on and we will continue to target.
Our efforts, together with Iranian economic mismanagement
and corruption, are already generating results and I show for
the committee here today I think one of the most important
financial metrics to keep your eye on in the coming days and
that is the value of the Iranian rial as compared to the U.S.
dollar.
We have never seen a precipitous drop like this in the
history of our sanctions programs on Iran. The Iranian rial is
now trading somewhere around 140,000 to the dollar. It's lost
more than two-thirds of its value, and why this is important is
that the Supreme Leader has got to make a choice.
He can either take his scarce dollars and euros as hard
currency to prop up his rial or he can continue to allow Qasem
Soleimani and the Quds Force to loot the Central Bank, to
divert money--$700 million a year they give to Hezbollah alone.
But they can't have it both ways. He's got to make a choice and
we intend to force him into that decision.
Very briefly, turning to Russia, the Assistant Secretary
has summarized our actions on Russia. We have sanctioned 212
Russia-related individuals and entities and we have targeted
key sectors of their economy.
On April 6th, we designed seven of the big fish oligarchs.
These are individuals that the previous administration was
unwilling to touch. But we did reach out and touch them in a
very clear fashion and our actions have undeniably been felt.
When we took that action, the Russian stock market experienced
its biggest plunge in 4 years and the ruble still has not
recovered its value. Oleg Deripaska, one of the elites who
serves as a major proxy for the malign activities of the
Kremlin, has seen his estimated net worth cut in half. Others,
like Viktor Vekselberg, have lost $3 billion as a result of our
actions.
On North Korea, I have to assure you, Mr. Chairman, we are
not faltering on the economic pressure campaign. We are not
stepping away from this one iota.
The pressure is on and we continue to ramp up pressure to
combat North Korean efforts to evade sanctions. We are very
focused on deceptive shipping practices in particular and ship-
to-ship transfers of oil and coal to get around the U.N.
Security Council's embargoes on those products, and we have--
you will have seen since August that nearly every single week
we are targeting entities involved in helping the North Koreans
evade these sanctions.
In fact, today we are issuing designations just about now
at this moment on a number of entities that are employing North
Korean slave labor in the IT sector, and these companies are
located in Russia and China but we have in recent days
designated a Russian bank for facilitating trade with the North
Koreans. We designated a port operator that was willingly
helping circumvent the shipping sanctions, and so on.
So we will continue this economic pressure campaign until
denuclearization is achieved.
Mr. Chairman, in conclusion, my written testimony contains
a great deal of additional details. I am pleased that you
incorporated that in the record and I look forward to answering
all questions from the committee.
[The prepared statement of Mr. Billingslea follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
----------
Chairman Royce. We thank you, Mr. Billingslea.
On August the 8th, because of this committee's persistence,
the administration announced new sanctions on Russia for its
poisoning of a British citizen and the poisoning of his
daughter and, as you know, another British citizen lost their
life as a result, and that poison was with a chemical nerve
agent.
This poisoning was an outrageous act that demands a strong
response. Under the Chemical and Biological Weapons and Warfare
Elimination Act of 1991, if Russia does not take certain steps
by November, including allowing the U.N. or other international
observers to conduct on-site inspections, the administration
will have to impose additional, more severe sanctions on
Moscow.
Should Russia not take the steps necessary required under
the Chemical and Biological Weapons Act, as we all suspect they
will not, is the administration prepared to take the strongest
necessary action, and that means, for example, things like an
export ban or an import ban, air transportation ban, bank loan
prohibitions?
I would ask you, Ms. Singh, if you would give me your
observations.
Ms. Singh. Thank you, Mr. Chairman, and the answer to that
is yes, absolutely. We are well aware of the impending deadline
on the second tranche of sanctions to be issued against Russia
the CBW. We are watching their actions.
We have indicated to them that they can evade--they can
make themselves not subject to these sanctions if they allow
the onsite inspections, as you have indicated, if they give us
a verifiable assurance that they will not use these nerve
agents against their own people again. They have not done so so
far.
So to that extent, we are looking at this November deadline
as absolutely we plan to impose a very severe second round of
sanctions under the CBW.
The global community will not tolerate behavior such as
we've seen from Russia, especially in poisoning and killing its
own citizens.
Chairman Royce. Thank you.
On North Korea, while we can be hopeful, so far there has
been little progress toward North Korean denuclearization.
We must keep up the pressure on the North Korean regime if
we are to have a chance at getting a good deal, and to that
end, Title 3 of the Countering America's Adversaries Through
Sanctions Act requires that the administration designate the
shipping registries of countries that deliberately do not
comply with U.N. Security Resolutions barring trade with North
Korea, and you addressed that, Mr. Billingslea. You mentioned
actions the administration has taken, and let me also add I
find effective the focus on North Korean slave labor, given the
amount of hard currency, since those workers are fed but the
money--the check--goes to the regime and ends up going toward
their military programs. That is an effective program.
But when will the administration begin implementing
sanctions against not just the shipping registries of
individual companies but the shipping registries of
governments, and let me explain where I am going there.
We are not talking here about shippers. We are talking
about governments that knowingly violate these U.N. Security
Council resolutions on North Korea and that is a two-fer in
this case because it puts the pressure on Pyongyang but it also
puts the pressure on Tehran, since Tehran is involved in that
kind of work.
I wanted to ask you if the administration will consider
blacklisting Iran's shipping registry due to their deliberate
violations of such resolutions that have been passed at the
Security Council level.
Mr. Billingslea. Chairman, thanks for that question.
The short answer is that many countries have different ways
that they maintain shipping registries. In some cases, it's
even a commercial vendor that provides the registering process.
I've been active with a number of the countries that are
flags of convenience nations such as Panama and others to
identify specific vessels that we know are in fact owned and
operated by North Korean shell companies to get them to
immediately de-register, de-flag, de-list these companies and I
think we've had, together with the Department of State, a very
high success rate when we have the facts at our disposal.
Chairman Royce. Panama is complying with your request at
this moment?
Mr. Billingslea. Panama has done a great job on this. We
see them pop up in Micronesia a fair amount now and we are
working very closely with the Australians and the New
Zealanders on that.
We also are designated specific companies and their ships.
We just went after a Russian company and six of its vessels for
engaging again in this ship-to-ship transfer behavior, which is
the primary method by which North Korea is undercutting the
intent of the Security Council. We have got to clamp down on
these ship-to-ship transfers in open waters.
Chairman Royce. I will be in further discussions with you
about the Iranian Government's shipping registry on this issue
as we press this point.
Mr. Billingslea. Thanks, Chairman. That's a good point,
because on November 4, we are reimposing sanctions on the
Iranian shipping lines--IRISL and some of the other associated
companies.
Chairman Royce. All right.
Let's go to Mr. Eliot Engel of New York for his opening
statement and then afterwards for his questions of the
witnesses, and I thank you both for your testimony here today.
Mr. Engel. Thank you very much, Mr. Chairman, and thank you
for calling today's hearing, and Assistant Secretary Singh and
Assistant Secretary Billingslea, welcome, and thank you for
your service and your time this morning.
We appreciate having administration witnesses here, but if
I have to be honest I have to say it happens too rarely. Since
coming into office, frankly, the administration has been
increasingly reluctant to work with Congress. That's how it
seems to us and it's very, very frustrating. But we are happy
you're here.
The latest example pertinent to our conversation this
morning was the development of this week's Executive order on
sanctions. There was no discussion of this effort with Congress
whatsoever. We learned about it from Reuters, and from what I
hear, your agencies were caught equally by surprise and,
obviously, that's not the way it's supposed to work.
So I want to use this time that we do have administration
officials before our committee to tackle this important topic.
Sanctions can be a very effective tool to achieve our
foreign policy objectives. But I am concerned that this
administration is turning reflexively to sanctions instead of
taking the harder look at how they should fit into a broader
strategy. Sanctions are a tool. They are not, by themselves, a
strategy.
I am also troubled by the administration's reliance on
using unilateral sanctions without developing support among our
friends and allies. It's a standard practice, apparently. I
don't know why.
We need to check in with other governments that share our
priorities. The power of sanctions is, obviously, amplified
when we build support among other countries.
When we act alone without consulting our partners, we run
the risk of them in turn acting in ways that undercut our
goals.
And, for example, Iran--we pulled out of the nuclear deal
and sort of left our partners and allies sort of twisting in
the wind.
Now, I didn't vote for the Iran deal. I was not happy with
it. But it became the law and we were pursuing it, and now,
going against our allies and isolating us instead of isolating
Iran I think is the wrong way to go.
So facing the threat of U.S. sanctions it seems to me we've
pushed foreign governments closer to Tehran rather than further
away from Tehran. These are the same allies who stood beside us
as we dialled up pressure on Iran.
And so by embracing a unilateral sanctions approach without
a clear objective, we created a situation, I believe,
counterproductive to our own policy goals and I am concerned
that we still don't have a clear long-term strategy for Iran.
The administration uses loud rhetoric but there's little
substance, I find, behind the tough talk. So if sanctions don't
bring Iran to the table, what is the administration's Plan B?
For sanctions to be effective policy tools, they must work
in conjunction with a broader diplomatic effort and actually I
think diplomacy seems to be sidelined as a foreign policy tool.
We see it again when it comes to the approach to North
Korea. Despite the President proudly boasting success after the
June summit, there's been no progress on denuclearization.
In fact, it now seems the so-called success has turned into
a failure. We need to think about how sanctions play into our
broader strategy if we have one. What are we doing to exert
pressure on our international partners to keep up multilateral
sanctions enforcement?
Do we have any reason to believe that sanctions will be
enough to convince Kim to give up his nuclear weapons without a
broader diplomatic strategy to provide him a compelling reason
to do so?
What are we doing outside of sanctions to build trust and
reassure the North Koreans that we are committed to peace?
These are important questions that obviously we need to
consider. Now, there is, of course, one glaring exception to
the rule and that's the one in which the Trump administration
has been remarkably restrained in its use of sanctions. Russia.
To be fair, the administration has imposed new sanctions
against the Russians. But the sanctions they have put forward,
in my opinion, amounts to a Band-Aid on a bullet wound.
In 2016, our country was attacked. Russia conducted cyber
attacks to steal and disseminate information with the specific
goal of helping Donald Trump win the presidency.
They attacked our election institutions and flooded
cyberspace with divisive propaganda and they haven't stopped
the assault. Our elections are vulnerable to Russian influence
at this very moment.
Now, I am going to be just as outraged if they try to help
Hillary Clinton. I want them out of American politics. They are
not our friends. They are our adversaries, and I don't want
them interfering with our American democracy.
And we haven't done nearly enough to stop it. The President
has many sanctions tools at his disposal to punish the Russians
for their attack on our democracy, and instead of using the
full force of U.S. sanctions power, he cozies up to Vladimir
Putin, the very man who directed this assault--the former head
of the KGB in the Soviet Union.
And let me say the Executive order announced yesterday is
not really an answer to this problem. It creates a complicated
overly broad process that will not do much to deter the ongoing
attack on American democracy. It reminds me of being too little
too late.
I want to note that we in Congress could be doing more as
well. My bill with Mr. Connolly, the Secure Our Democracy Act,
is a response with real teeth. We introduced it last January
when we first got a clear picture of what the Russians did in
2016.
But it hasn't really moved, and here we are, less than 2
months from an election and I don't think we've done nearly
enough to tackle this threat. We are vulnerable to more
attacks. It's imperative that we act now.
We need to punish those who attacked our democracy and work
to deter future attacks. We need to incorporate a stronger
sanctions regime into a broader strategy to deal with Russia's
aggression and utter disrespect for international rule of law.
So I would like to know when you answer these questions
what your agencies are doing to meet this challenge as well as
the other range of issues I've mentioned.
That's my statement. So let me take Iran and then Russia.
Well, actually let me do Russia first and then Iran.
Why is the administration not utilizing the full range of
sanctions that Congress passed last year in CAATSA, notably,
the sanctions on Russian energy projects and against Russian
arms exports?
Mr. Billingslea. Thank you, Ranking Member Engel. I think
I'll take the Russia questions and Secretary Singh will----
Mr. Engel. Could you put your microphone a little closer,
please?
Mr. Billingslea. Yes, sir.
Mr. Engel. Thank you.
Mr. Billingslea. So, again, appreciate the chance to be
here. I've had the opportunity--every single time you have
invited me to testify I've been pleased to accept and appear
before your committee----
Mr. Engel. And we appreciate it.
Mr. Billingslea [continuing]. And it's great to be here. We
look to your support on these issues.
Look, on Russia the numbers speak for themselves. The Obama
administration imposed 550 sanctions over its 8 years in
office. In the time we've been in office, we've imposed 223
sanctions. We've imposed three times as many sanctions on
Russia for their cyber-related activities in our first 20
months as compared to all 8 years of the previous
administration, 50 percent more on blocking actions, the same
number of banks that we've gone after that they went after, 14
times as many Russian sanctions for North Korea-related
behaviors, and on top of that, as I described in my opening
remarks, the oligarchs that we have targeted are the big fish.
They are the inner circle around Putin. The message has
been sent very clearly by the Treasury Department that there
will be consequences and costs including personal costs imposed
for the intolerable and unacceptable continued efforts to
manipulate our electoral processes. We will not tolerate this,
we will not agree to it and there will continued consequences.
Mr. Engel. What about the sanctions on Russia's energy
projects and Russian arms exports? Those really--the full range
of sanctions that Congress passed have not been implemented.
Mr. Billingslea. So, Ranking Member, you're putting your
finger on a very important issue. We have designated a few
months ago Rosoboronexport which is the arms sale entity of the
Russian Government. It's the group that arranges all of the big
sales and we also designated their bank, the bank
Rosoboronexport controls, which has made it very difficult for
them to engage in a number of transactions.
We are, together with the Department of State, following
very closely Russian sales pitches regarding the S-400 systems
and other weaponry systems and we've made incredibly clear to a
number of countries around the world that purchasing those
systems would expose their country under CAATSA to possible
additional sanctions.
Mr. Engel. Okay. Thank you.
Let me ask a quick Iran question. If any of the major
buyers of Iranian crude oil, which is China, India, Japan,
South Korea, and Europe--if they refuse to sharply cut their
purchases, are we really prepared to cut their banks off from
the global banking system, which is the penalty under the U.S.
sanctions?
Are we really prepared for that? An ancillary question with
that is how will that contribute to our goal of constraining
Iran and how would it affect our relations with these countries
who are, generally, some of whom are our friends?
Ms. Singh. Thank you, Ranking Member Engel, for that
question.
In response, we are prepared to take the most serious
actions possible on Iran. We need to demonstrate to the Iranian
regime that we will not tolerate its development of a nuclear
program for illicit purposes.
As Assistant Secretary Billingslea has mentioned, the
flawed Iran nuclear deal was determined not to be the right
vehicle to address the range of Iran's maligned behavior. We
are having conversations with our allies and our goal is to
get--purchase of Iranian crude oil down to zero by November
5th.
That's a critical goal for us. We are talking with all of
our allies including the countries that you mentioned, helping
them to understand that the only way that we can achieve this
global goal of Iran's nuclear program not commencing is through
partnership and cooperation with our allies, as you have
indicated.
So we are working with them. We are trying to explain to
them that the bigger picture here is we need to work together
on putting this pressure onto Iran and the sales of oil are a
critical way to do that.
We are prepared to take the strongest actions possible on
people who will not assist us in complying with this new range
of sanctions that we are putting back into place.
I also wanted to address your earlier question about
cooperation with allies. Secretary Pompeo and Secretary Mnuchin
have directed teams from the State Department and Treasury
Department to travel together. We've visited over 30 countries
so far and sat down with our Government counterparts and talked
through with them our withdrawal from the JCPOA. We are trying
to help them understand what it means for them.
We are trying to engage in all kinds of diplomatic
conversations to make sure that our allies don't feel like we
are going at it alone. We are explaining to them that we need
to work as a global community to address Iran's range of malign
behavior.
So I just want to assure you that it is a priority for
Secretary Pompeo that we do this on a basis of engaging with
our allies.
Mr. Engel. Let me ask you one final question.
China is Iran's top, top oil purchaser. Will they get to
zero by November?
Ms. Singh. We are working with all countries including
China to get them to zero. We've made it clear that unless we
act as a global community, Iran's behavior is not going to
change.
The JCPOA was not going to change Iran's behavior. We have
a new strategy, a new list of behaviors that we are going to
insist that they take and we need cooperation from the global
community in order to achieve this goal.
Mr. Engel. Thank you.
Thank you, Mr. Chairman.
Chairman Royce. Joe Wilson, South Carolina.
Mr. Wilson. Thank you, Mr. Chairman, and thank you,
Secretary Singh and Secretary Billingslea. Thank you for your
service and it's so positive to hear your messages.
And, in particular, Secretary Billingslea, you mentioned
about the impact of the sanctions. The President was very
courageous to pull out of the flawed Iranian nuclear deal.
So, Secretary Singh, you are absolutely correct. They never
stopped their policies of ``death to America'' and ``death to
Israel.'' And so it is just refreshing that we have a President
who has made promises--he's keeping his promises to protect
American families.
In line with that, I was really impressed, Secretary
Billingslea, with your presentation of the effect on the
Iranian economy. Just extraordinary, and we are hopeful for the
people of Iran--that this great people of Persian heritage that
they can re-establish a free and democratic society.
I also was encouraged, Secretary Singh, by your pointing
out that visiting with 30 different countries around the world
to promote cooperation. It somehow is misreported by the
negative media that nothing is being done. So thank you. I hope
some who that might be picked up because it is really positive.
And for Secretary Billingslea, what role do you see for
Congress in the process of implementing the sanctions in line
with the new policies? Are there any new tools that we could
provide from Congress that would be bipartisan?
Just as Ranking Member Eliot Engel did not approve of the
Iranian nuclear deal, we have worked bipartisanly together,
particularly on this committee.
Mr. Billingslea. Thank you, Congressman, and your continued
support--I think your support in the context of the Foreign
Affairs Committee I have to tell you how crucial it is that we
have fully staffed Embassies globally, particularly in the
regions where we are dealing with Iranian aggression, Russian
interference activities, and so on.
It's not always the case that I am actually able to engage
with a confirmed Ambassador in some of these key countries. So
that would be an area for help.
From a parliamentary engagement standpoint, as you work
with other governments and other parliamentarians, reinforcing
the need for countries to establish and enforce effective anti-
money laundering regimes is so crucial.
I can't tell you how important that is. I mentioned Panama,
where there's a lot of offshore shell company formation in
Panama. But other countries like Latvia, Cyprus, they need help
as well and they need encouragement.
In terms of additional authorities, we'd be happy to work
with the committee on that. I have testified in front of the
House Financial Services Committee about the fact that I found
in previous positions the ability to offer rewards information
that leads to the identification of suspicious bank accounts or
other things to be a valuable tool in the counterterrorism
context. So measures such as that might also be very helpful.
One key point on maintaining, and I think Ranking Member
Engel makes a good point about the importance of doing things
in a multilateral context as best we can. That's not always
going to be the case. Sometimes we do have to act on our own to
protect our own interest in equities.
But in the case of Iran, it is absolutely the case that we
enjoy broad support. We, in fact, received the support of all
six of the Gulf countries to designate the leadership council
of Hezbollah. That is something that has never happened before.
That's a big deal, and we are appreciative for the Gulf nations
that they are supporting us on the Iran portfolio.
Mr. Wilson. Thank you, Mr. Secretary.
And Secretary Singh, again, it was refreshing to hear your
reports of working with other countries, how meaningful that
can be.
And particularly, back to Hezbollah, it remains as one of
the most deadly terrorist organizations in the world,
responsible for the deaths of hundreds of Americans.
In addition to funding from Iran, Hezbollah runs a
sophisticated network of criminal activities to fund its
terrorist activities in Lebanon and throughout the world.
Secretary Singh, what are the steps by the department to
stop flow of resources to Hezbollah, particularly from Iran?
Ms. Singh. Thank you, Congressman, for that question. You
have hit on exactly the type of thing that we are trying to
prevent. We have found that cutting off Iranian access from the
global financial system cripples its ability to funnel money to
organizations like Hezbollah.
As Assistant Secretary Billingslea has detailed, the fall
in the value of the Iranian currency has also had a huge impact
on the Iranian Government's ability to fund illicit activities
by terrorist organizations.
One of our key goals is to prevent Iran from supporting an
organization like Hezbollah.
Mr. Wilson. Again, thank both of you for your service. It's
extraordinary. Thank you very much.
Chairman Royce. Mr. Brad Sherman, California.
Mr. Sherman. I want to commend your work. Sometimes we just
sanction an individual, and if that individual has no assets in
the United States we are just basically saying we have a no war
criminals at Disneyland policy. That is to say, the wrongdoing
individual will never be able to be a tourist in the United
States, and I hope we focus more on sanctioning countries where
we can go after the economy, maybe multi-billionaires who would
naturally have business in the United States. But sanctioning a
few individuals in St. Petersburg just means they'll go to Euro
Disney instead of Disneyland, in some cases.
It's integral to build and important to build support for
our sanctions. What worries me with regard to Iran is not only
may the tool not work if you don't have support in Europe and
Asia, but you may break the tool.
If we inspire Europe to develop payments systems that avoid
U-turn transactions at the New York Fed, then we won't have
that tool to be effective in future sanctions regimes.
In order to build support for sanctions on Iran, instead of
focusing on the JCPOA, which Europe does not believe is a
reason to sanction Iran, we need to focus on Syria, Yemen, and
their terrible abuse of their own LGBT community.
As to Mahan Air, it may not be enough to sanction the
individual companies. They have to sanction the airports. I am
told that Ukraine has finally stopped, given their dependence
on the United States. That should never have happened--at least
it stopped.
I want to focus on Russia. Many reasons to sanction
Russia--from the Ukraine to Salisbury, England--and I want to
focus, though, on interference in our election.
I am not just talking about influencing. Every country
might issue a press release that would affect a U.S. election.
We might conclude a deal with some country in October. That is
natural and sometimes designed to affect a U.S. election.
I am talking here about interference such as false flag
advertising, cyber theft, and attempts at manipulation of the
tabulation of our votes.
Mr. Billingslea, is it the position of the administration
that the Russian state illegally interfered in the 2016
election?
Mr. Billingslea. That's my understanding of the
intelligence community's assessment. And from everything I've
seen I think that's----
Mr. Sherman. Have we imposed a sanction on the Russian
state for their interference in our 2016 election?
Mr. Billingslea. Yes. But let me explain. Let me explain
how I am getting to that yes.
Mr. Sherman. Well, there are 19 individuals who we--and,
again, this may just be they're not allowed to visit the United
States as tourists, but there are 19 individuals who are
sanctioned for wrongdoing in the cyber world and that may or
may not--if they had not--even if we hadn't had a 2016 election
they might face the same sanctions for other cyber wrongdoing.
Can you point to a--what's the strongest thing you can point to
and say but for the interference in our election that sanction
wouldn't exist?
Mr. Billingslea. Well, I will give you some very clear
examples. So Yevgeny Prigozhin and the Internet Research
Agency, which is the troll farm they were using to try to spin
up the hate on both sides of the political spectrum is a great
example. But I've gotten many, many more if you'd like.
Mr. Sherman. Okay. What have we done--so you're saying that
that's a sanction against the Russian state or against a
Russian----
Mr. Billingslea. The thing with the Russians, and I mention
in my testimony how each of these countries is different in the
way they operate.
Mr. Sherman. Right.
Mr. Billingslea. The Russians are----
Mr. Sherman. Okay. So they've interfered in our election
and we tell them that one little entity won't be able to get
some contracts. That seems like responding to Pearl Harbor with
a strongly worded message.
Mr. Billingslea. Taking their stock market down by 9
percent in 1 day is not----
Mr. Sherman. Well, do you support legislation that would
prevent U.S. persons from buying Russian sovereign debt?
Mr. Billingslea. I would have to get back with the other
part of Treasury that does the international affairs work to
make sure we understand what the knock-on consequences of that
would be for our banks and for our citizens who are heavily
leveraged into indexed mutual funds.
Mr. Sherman. Well, we'd obviously give those funds a chance
to divest themselves. But, obviously, no additional purchases
could be made.
Ms. Singh, China may be incarcerating as many as 1 million
Uighurs right now. Are we going to apply Magnitsky Act
sanctions?
Oh, did I say Russia? I meant China. China is imprisoning
perhaps 1 million. Are we going to use the Magnitsky Act
against them?
Ms. Singh. Thank you, Congressman, for that question.
The State Department is very concerned about Chinese
treatment of Uighurs. We are encouraging the Chinese Government
through diplomatic channels to ensure that they allow the
practice of freedom of religion, to respect human dignity.
Mr. Sherman. But this is a hearing on sanctions. Are we
going to sanction them?
Ms. Singh. Yes, Congressman.
When it comes to sanctions roll-outs, we are not able to
preview what we might do. But I can tell you we are looking at
the situation and Global Magnitsky is a tool that we use to
curb human rights abuses around the world.
Mr. Sherman. It's peculiar you can't talk to Congress about
what you might do. But I yield back.
Chairman Royce. We go to Mr. Ted Yoho of Florida.
Mr. Yoho. Thank you, Mr. Chairman. I would like to thank
both of you for being here today.
And when you look around the world there's a lot of enemies
that are not treating us real nice and they're going after a
lot of different systems and our electoral system.
And then you throw North Korea in there and what China is
doing to march around the world and take over global dominance.
What we have done is--this committee and I think this
committee has been great at passing bipartisan legislation to
give you guys tools, and we are separate branches of government
but yet we can work coherently together to accomplish that
goal.
And as you know, this committee has for years, regardless
of administration, led the way in pressing for increasing
pressure on North Korea.
As the chairman, along with others on the committee, has
passed H.R. 1771, the KIMS Act, and other bills to tighten the
screws on the Kim regime, the Trump administration deserves
credit for sanctioning the Bank of Dandong and others, and I
have little doubt that these measures are what drove Kim to the
negotiating table. I think that's pretty self-evident that he
came to the table.
Without question, we are playing a winning hand with strong
sanctions and we can't back off, and we are in a different
situation now that I want to address.
However, I am concerned that we are not taking full
advantage of our strong position. In May, Ranking Member Mr.
Sherman, on the Asia and the Pacific Subcommittee, and I wrote
a letter to Secretary Mnuchin encouraging Treasury to target
larger financial institutions that have been implicated in
laundering North Korea's illicit funds with secondary
sanctions.
As you may recall, we specifically highlighted the
Agricultural Bank of China and the China Construction Bank.
Given evidence that customers have used accounts at these banks
to launder money for North Korea, to date we have not received
a response to our letter and these Chinese banks remain
unsanctioned.
Do you have any idea or comment on where we are at with
that? Is that going to happen?
Mr. Billingslea. Well, first of all, let me apologize if
the letter has gone unanswered. That's----
Mr. Yoho. It's all right. I get that same response from my
constituents. [Laughter.] Occasionally.
Mr. Billingslea. So we'll get on that and get you the
response.
You're correct, we have not sanctioned those two particular
banks at this stage. We have very recently designated a Russian
bank for continuing to facilitate trade with North Korea.
Mr. Yoho. Are we going after the bigger ones? Because
secondary sanctions are some of the most powerful tools that we
can have. And we can give you the tools. We can give you the
tools, but if you're not using them and it's at your
discretion, are you looking at these banks as too big to fail
or too big to sanction, I guess?
Mr. Billingslea. Definitely you have to look at some of the
Chinese banks and recognize that they have, under their
management assets that really, in several cases, dwarf anything
under the management of a U.S. bank--the largest U.S. bank.
So we have to keep that in mind. But that's not going to
deter us.
Mr. Yoho. I would hope not.
Mr. Billingslea. What I would say is with a big bank,
though, where they've got a lot of diversified activities, what
we are doing is engaging in very specific discussions with the
banks, particularly through their New York operations, to drill
down into the particular account holders that we believe are
North Korean related to get them to expunge those people from
their bank rolls, and we have made some pretty good progress
along those lines, Congressman.
Mr. Yoho. I know this committee is open to suggestions. If
you need other tools let us know, because if we are going to
bring the North Korea conflict to an end peacefully, we need
all people at the table and we can't have China and Russia
backing off and saying, you know what, we are not going to play
anymore and we are going to supply North Korea with these
products.
And if we are not using those tools in our arsenal, this is
going to go down in history, 5 years from now they'll say,
well, President Trump did this and it was a failed attempt.
We don't want to do that. We want this to come to an end.
So what would it take for you guys to put more pressure on
them, or do we need to put more pressure on the Treasury or the
executive branch?
Mr. Billingslea. I mean, we are going after entities on a
weekly basis. Today's action that I mentioned on the slave
labor in----
Mr. Connolly. Could you please speak into the microphone?
Thank you.
Mr. Billingslea. Yes. So we are targeting companies and
entities that are helping evade sanctions on a weekly basis.
The drumbeat is persistent.
Mr. Yoho. Okay.
Mr. Billingslea. We are not easing up in any shape or
fashion.
Mr. Yoho. Okay. And I hope not, and I look forward to your
response on that.
And the last thing is we just passed, on the House floor,
H.R. 5576, the Cybersecurity Deterrence and Response Act, that
lays the groundwork for what an attack on our infrastructure
is, or cyberspace, and this will go right after any country,
i.e., Russia, that's hacked into our system and it lays out
what can be done by the executive branch.
I hope you look at that because that's something we think
will be passed out of the Senate with this Congress and use
that as another tool in your arsenal because we'll do the
follow-up and ask why are these entities not being sanctioned.
With that, I yield back, and thank you, Mr. Chairman.
Chairman Royce. Thank you, Mr. Yoho.
We go to Albio Sires of New Jersey.
Mr. Sires. Thank you, Mr. Chairman, for having this hearing
and thank you for being here with us today.
I believe that sanctions are the way to go, and it seems
like we pass sanctions and you're getting more and more work
and more and more sanctions to look after.
Currently, have you hired additional people at the Office
of Foreign Asset Control to investigate individuals that we are
sanctioning and all these sanctions that--yes?
Mr. Billingslea. Congressman, yes, we have. But I would say
we are tapped out. We are running as hot as we can.
Mr. Sires. So, I mean, do you have an adequate amount of
people to handle the kind of sanctions that we are passing
here?
Mr. Billingslea. We make do with what Congress appropriates
for us.
Mr. Sires. That tells me you don't have enough. Who do you
make that request to? Can we help you in any way?
Mr. Billingslea. It goes up through the Office of
Management and Budget and they make the final----
Mr. Sires. Can this committee help you in any way? Because,
I mean, it's important that we track all these sanctions.
Mr. Billingslea. A hundred percent agree and we welcome all
the help we can get on these issues.
Mr. Sires. Nicaragua is the latest country in the Western
Hemisphere that has turned on its people.
Are the sanctions that we have put on some of these
individuals enough? What else can we do to deter this kind of
behavior?
Mr. Billingslea. Thank you.
The situation in Nicaragua is an outrage. They have killed
more than 300 people in the past few months with targeted
assassinations.
The attack on the church is a good example. We have
designated the head of the national police and several of the
other individuals. But we are digging into this because
President Ortega and the Vice President, his wife--Murillo--
must be held to account for these outrageous atrocities.
Mr. Sires. Not only them, but I think the whole country. We
should put some pressure on the government because they're just
squandering money, stealing money left and right.
Mr. Billingslea. The problem is those two are the
government. There isn't anything else.
Mr. Sires. I know. Yes.
Mr. Billingslea. That's the problem.
Mr. Sires. And in terms of North Korea, it's very
interesting that I hear that he's calling around different
leaders of the world now to assist him. Is that going to help
him get by some of the sanctions that we are implementing on
him?
All of a sudden he's become a very communicative guy in the
world.
Ms. Singh. Congressman, we remain in very close contact
with our allies and partners about maintaining pressure on
North Korea. In fact, we've had four sanctions roll-outs--
sanctions designation roll-outs since the Singapore summit.
So our economic pressure from the United States Government
side has not relented at all. We maintain the sanctions that we
have and we are encouraging our allies and the United Nations
to keep sanctions in place.
The only time that the North Korean regime will see any
relaxation of sanctions on their government is if we see a
serious effort--a serious attempt--for them to comply with our
demands of denuclearizing.
We've made it very clear to Chairman Kim what we are
looking for. President Trump is committed to this result. So we
are in constant contact with our allies and want them to share
our posture of completely maintaining the economic pressure
until we see the changes we desire.
Mr. Sires. And in terms of Russia, you mentioned a date
before where the Russians have to conform to not using nerve
gas on its people, otherwise you're going to put additional
sanctions.
Do you think that they're going to admit that they use
nerve gas on their own people?
Ms. Singh. Congressman, at this point, it's not even a
matter of Russia admitting it. We know that they did this.
Mr. Sires. Well, I know. But there's a date coming up that
you mentioned before. What--I forgot the date.
Ms. Singh. It's coming up in November, and what we are
looking for is an ability to conduct inspections and a
affirmation from them that they will not use nerve agents on
their own people anymore, and if we don't see this, the second
rounds of sanctions is mandatory. Those sanctions will be
imposed.
Mr. Sires. And what does that include?
Ms. Singh. It's going to include banking sanctions,
prohibitions on procurement of defense articles, any sort of
foreign aid money. There's a long list of things.
It's a laundry list of items which will penalize the
Russian Government.
Mr. Sires. You're going to have to--you're going to have to
need more staff, because I don't think they're going to admit
that they're not--if they admit that they're not going to use
it against their people that means that they did it before. So
I suggest you start getting ready.
Ms. Singh. We are prepared. We are absolutely prepared to
fully implement the second round of sanctions.
Mr. Sires. Okay. Thank you very much.
Thank you, Chairman.
Chairman Royce. Will the gentleman yield?
Mr. Sires. Sure.
Chairman Royce. I just want to indicate that in raising the
issue of what is going on right now in Nicaragua, I think that
there is certainly cause for the international community to be
very concerned.
A constituent of mine recently raised the issue of an
attack on the village where she previously lived--not by the
army but these are private militia that come in and people are
disappeared or they're subsequently found sometimes tortured,
sometimes killed.
And she was talking about the circumstances there, saying
it's reminiscent of the way Joe Stalin kind of went off the
rails. And you ended up with anybody, any student who was
suspect in Nicaragua now or any worker who's suspect of not
having fealty personally to Ortega just being brought in by
this private militia force.
And so I am glad you raised the issue today because, from a
human rights perspective, push back is essential right now, I
think, on the regime and I am sure there are many within the
government who are concerned about the fact that this is done,
not through the state but it's being done through private
militia activity.
Mr. Sires. Chairman, I just had in my office some of the
victims of Nicaragua. They're using water boarding. They're
using sharpshooters to shoot people who are demonstrating.
Doctors who assist any of the victims of the demonstrations--
they're going after them also.
So I think--I would love to work with you on something.
Chairman Royce. Thanks for raising it today and I will work
with you.
Mr. Billingslea. Mr. Chairman--on that point, Congressman,
you know, they actually--the health minister issued an edict
that wounded victims of their attacks would not be treated.
This is how outrageous it is.
Very quickly--you asked another area where you could help--
one area I would just put a plea in is every time you're
looking at legislation I understand that sometimes the
compromise is, well, let's just get them to do a report for us.
Obviously, that's fine--you need to have whatever
information you need to have. But if you could just kind of
keep in the back of your mind that some of these reporting
obligations impose a huge workload on a very tiny staff.
Mr. Sires. So you need more staff.
Mr. Billingslea. Or if there are reports that aren't
getting read anymore then we could----
Mr. Sires. You can admit it. You know, you need more staff.
Thank you.
Chairman Royce. Lee Zeldin of New York.
Mr. Zeldin. Thank you, Mr. Chair, and I appreciate our
witnesses for being here.
Whether it's the last administration, the current
administration, or future administrations, I subscribe to the
principle that it's important to always be pursuing a stronger,
more consistent, more effective foreign policy from one month
to the next.
Sometimes we see an inconsistency from one country to the
next, and this is something that's plagued American foreign
policy for a long time.
I believe that the President has surrounded himself with
some great leaders who believe that we need to be strengthening
our relationships with our friends, treating our adversaries as
our adversaries.
Secretary Pompeo, Secretary Mnuchin, Ambassador Bolton all
understand, as this President does, that we have the largest
economy in the world and we can effectively leverage that.
We are hearing a lot of good news about our economy. So
while we hear about our markets hitting historic highs,
unemployment hitting historic lows, consumer confidence hitting
historic highs, GDP--the fastest growth in 4 years.
At the same time, we are hearing about China and Russia and
North Korea and Iran--the state of their economy going in the
opposite direction, and in many respects its effective use of
sanctions.
It's good work that's done at the United Nations with
Ambassador Haley as well. Both of our witnesses, I thank you
for your efforts.
I believe that the President was correct in withdrawing
from the Iran nuclear deal. It was here actually Secretary
Kerry said that it was an unsigned political commitment. It was
not submitted to Congress as a treaty.
The reason that they decided not to do that was because
they didn't believe it was going to get passed. That was the
answer to the question of why is this not a treaty. The answer
was that they would not have been able to get it passed. That
was here in his room.
I thank the administration for moving the Embassy in Israel
to the capital of Jerusalem, for the implementation of the
Taylor Force Act, which a lot of good work here at this
committee on a bipartisan basis worked to implement.
I support--Ambassador Bolton, a few days back, was talking
about sanctions as it relates to the ICC. We have pro-
Palestinian anti-Israeli entities that are out there that want
to bring the United States up on war crimes charges and the
Israelis up on war crimes charges and effectively leveraging
sanctions there is important, too.
And also I would be remiss, and I don't want to steal
Congressman Deutch's thunder--he's the one that--he always
makes sure to bring it up because it's his constituent--but I
think in our work with Iran leveraging our sanctions and our
interactions with them to return Bob Levinson back to
Congressman Deutch's district and to the Levinson family is
very important and I thank Congressman Deutch for all of his
work on that.
But I want to ask you about--there were some news reports
that came out that former Secretary of State John Kerry has
been conducting shadow diplomacy with top Iranian officials to
salvage the nuclear deal.
This reportedly includes meeting three or four times with
Iran's foreign minister. Is the administration aware of these
meetings?
Ms. Singh. Thank you, Congressman.
We've seen reports of those meetings.
Mr. Zeldin. Have the efforts by a former Secretary of
State--John Kerry--or other former Obama administration
officials to undermine the implementation of this
administration's Iran policy using such shadow diplomacy, has
it had any effect?
Ms. Singh. Well, Congressman, we remain focused on our new
Iran strategy. You know, as I've outlined, Secretary Pompeo at
the State Department has formed a new Iran action group.
We have specific steps that we've outlined. We have a team
at the State Department, those working with the White House,
with the Treasury Department, with the Interagency, to make
sure that we are focused on sending a message to the Iranians
that the only way that we will ease up on the economic pressure
which is debilitating their economy and their leadership
because our goal, of course, is to hit the government, not the
Iranian people. We want to see these changes. They have to show
us that they are not developing a nuclear program--that they
will release political prisoners like Bob Levinson--that they
will promote political freedoms--that they will allow onsite
inspections--that they will stop their aggressive behavior in
their neighborhoods--they will stop threatening Israel. They
need to stop supporting the violent Assad regime--their
terrorist activities in Yemen.
We have a long list of things that we are focused on and
it's unfortunate if people from a past administration would try
to compromise the progress we are trying to make in this
administration.
Mr. Zeldin. Would that be improper for Secretary Kerry to
be meeting with Iran's foreign minister with that shadow
diplomacy?
Ms. Singh. Well, Congressman, I don't have personal
knowledge of those meetings. But if that is happening, again, I
would find it very inappropriate.
Mr. Zeldin. Thank you. I yield back.
Chairman Royce. We go to Karen Bass of California.
Ms. Bass. Thank you, Mr. Chair.
It's actually the first I've heard of this shadow diplomacy
taking place. But, frankly, I am not sure that it's such a bad
thing that other people are trying to represent our country,
considering the erratic nature of this administration.
Anyway, I wanted to ask you a few questions about sanctions
and wanting to start with Zimbabwe and wanting to know where we
are with sanctions on Zimbabwe and if there's any plans to
reassess Zimbabwe sanctions.
I was just there for their election and, needless to say,
there are numerous problems that happened after the election.
But Zimbabwe is trying to reach out to us now and I want to
know where we are with that.
I also want to talk to you about sanctions against Iran and
want to know if you are aware of the specific case of Noura
Hussein. She is 19 years old. She's a Sudanese girl who was
sentenced to death in May for fatally stabbing her 35-year-old
husband that she was forced to marry when she was 15.
There has been a lot of international pressure to stop her
from being executed. She says she killed him in self-defense
because she was being raped.
And so I want to know, given that we have been considering
changing our policy toward Sudan if that is a leverage point,
number one, to save her life, but where we are with sanctions
toward Iran.
Then I have a few other questions especially for Mr.
Billingslea. That was for Ms. Singh. Those are for Ms. Singh.
Ms. Singh. Thank you, Congressman.
When it comes to Zimbabwe, we still have a 141 individuals
and entities including the President and the former President
who are designated. So our pressure on Zimbabwe remains in
place.
We are trying to use this pressure to leverage political
and economic reforms, human rights observations. And so the
response to your question is, basically, it remains on our
radar. This pressure remains. We want to see fundamental
changes in Zimbabwe and only then will we resume normal
relations with them.
Ms. Bass. And considering they want to move forward in that
direction, I think we certainly have a lot of leverage right
now and we need to figure out how to step that up as well.
Ms. Singh. Thank you, Congressman. As with every nation
that is subject to U.S. sanctions, we are always open to
conversations. We are open to a demonstration from the
government that it is changing its ways, that it is observing
human rights, that it is taking----
Ms. Bass. Thank you. Before I run out of time, would you
respond about Sudan and Noura Hussein?
Ms. Singh. I don't have personal knowledge of this young
woman. It sounds like a very unfortunate situation. The purpose
of our sanctions, you know, again, is to get these governments
to properly observe human rights and that would be in the case
of both Iran and Sudan.
I can look into the case of this individual woman and get
back to you.
Ms. Bass. I would appreciate that, because they still are a
state sponsor of terrorism. They still have that designation
and there are even forces within our Government that think that
that designation is actually problematic.
And so it might be in the context of us examining that,
raising her case as well, since they're very anxious to have
that designation removed.
Ms. Singh. Okay. I will look in that and get back to you.
Ms. Bass. Thank you. I appreciate that.
And for Mr. Billingslea, specifically from the Treasury
Department's perspective, there are many human rights abusers
in Africa that have tremendous wealth here in the United
States--real estate and other financial investments--and I was
wondering if we are beginning to track those.
Mr. Billingslea. We are, and we are working very closely
with a number of nongovernmental organizations such as
Century----
Ms. Bass. Oh, good.
Mr. Billingslea [continuing]. And others. In fact, I just
was in New York with John Prendergast, who--he presented to the
Security Council on this very topic and on the matter of
corruption at the invitation of Ambassador Haley.
We are using the Global Magnitsky sanctions authority that
was developed under the administration to go after these human
rights abusers.
I think one of the most notorious ones that we've targeted
very aggressively is a weapons trafficker named Dan Gertler,
who is profiteering in the Congo, and we've had a fairly
significant effect on his finances as a result of our actions,
as an example.
Ms. Bass. Well, I appreciate that. I would like to continue
to work with you on that and raise some specific cases, because
although we target individuals for sanctions I actually think
looking at their assets here in the country would probably be a
lot more effective than what we've done.
Mr. Billingslea. A hundred percent agree. Also in Europe,
too.
Ms. Bass. Exactly.
Mr. Billingslea. A hundred percent agree.
Ms. Bass. Thank you.
Mr. Chair, I yield back.
Chairman Royce. We go to Ileana Ros-Lehtinen of Florida.
Ms. Ros-Lehtinen. Thank you so very much, Mr. Chairman.
If fully implemented and enforced, U.S. sanctions can be an
effective foreign policy tool to pressure dangerous rogue
regimes including those in Iran, in North Korea, in Russia, as
well as those in our own hemisphere, like my native homeland of
Cuba, Venezuela, Nicaragua.
Regimes like these can both threaten our national security
and the human rights of all those forced to suffer under their
despotic rule and it undermines the stability of key regions
with significant consequences for our national security and
that's why I've worked in a bipartisan way alongside so many in
this committee, especially under the leadership of Chairman
Royce and Ranking Member Engel, to author sanctions laws
including the strongest sanctions on Iran on the books, the
Iran Threat Reduction and Syria Human Rights Act, as well as
Iran, North Korea, and Syria Nonproliferation Act.
I am also proud to have authored the Venezuelan Human
Rights and Democracy Protection Act and have helped secure the
passage of the Sergei Magnitsky Act.
The Global Magnitsky Act, authored by our colleague, Chris
Smith, has become a very important tool and I am pleased to see
that the administration has made use of it, especially in
Nicaragua.
Following up on the excellent questions and observations of
Mr. Sires and our chairman--what they were saying about
Nicaragua--I would like to ask you if--as the human rights
violations in Nicaragua, sadly, spiral out of control, how can
we encourage responsible nations to implement similar
sanctions?
Then on Russia--while it's still not enough, I was very
pleased that the administration just days ago--yesterday--
finally authorized additional sanctions for those interfering
in our elections.
I do, however, strongly urge the administration to take it
a step further and signal support for our DETER Act, which I
introduced alongside our colleague, Brad Schneider, earlier
this year, and Marco Rubio and Senator Von Hollen have it in
the Senate, and this bill would ensure, as you know, that key
Russian officials and oligarchs are sanctioned if Putin
interferes in our electoral system again.
So I will ask you would such a law requiring automatic
sanctions be an appropriate signal that there will be severe
repercussions for any future interference in our democratic
process?
And, finally, on Cuba, it's been nearly a year since the
State Department updated its list of restricted entities
associated with the Cuban military.
Is the administration looking at additional companies and
entities to add to that list and what additional sanctions can
we use to support the people of Cuba?
Thank you to our witnesses, Mr. Chairman.
Mr. Billingslea. Okay. On Global Magnitsky, again, we
appreciate the authorities that were given.
Ms. Ros-Lehtinen. Could you put the mic a little bit----
Mr. Billingslea. Yes, Congresswoman.
To date, we've designated 84 individuals and entities under
Global Magnitsky, which I think signals our determination to
combat human rights abuse and corruption wherever it occurs and
Nicaragua is, clearly, an outrageous situation--a truly
atrocious situation.
Venezuela--but Venezuela takes the cake. I mean, what
they're doing to the people of Venezuela with 2.3 million
migrants, an economy that's in a death spiral--they've stolen
everything there is to steal from the oil sector and now
they're looting--they're stripping the forest and looting gold
and whatever is left.
Maduro and his cronies must be held to account. And to that
end, Ambassador Haley held a session of the Security Council to
put a spotlight on this matter, and please know that the
Treasury Department is all over this matter.
You asked a key question regarding ``automatic sanctions.''
I have to say automatic sanctions--mandatory sanctions--are
really not the way to go, in our view, simply--it's not because
we don't want to designate these individuals.
I think we've proven with our track record that we will not
hesitate to go after these people but we have to be able to
synchronize the way we go after them together with the
Department of State but also together with our own financial
diplomacy efforts.
A lot of what we do are things you never really hear about
or see, as we are out preparing the battlefield for the
imposition of the sanctions to ensure that we have maximum
effect with partner nations. So I appreciate the chance to
comment on that.
Ms. Singh. Thank you, Congresswoman.
I just wanted to make a quick statement on the elections
because you mentioned the DETER Act. As you know, the President
has signed an Executive order. We very much share Congress'
concerns and I think the intent behind the Executive order is
similar to the pieces of legislation that are out there.
We are all serious about preventing any election
interference, and if we find out that election interference has
occurred, we are very serious about imposing mandatory
penalties upon those who have interfered with our democratic
process.
When it comes to Cuba, as you know, the State Department
was very concerned about the health and security of our
employees in our Embassy there.
We remain concerned. We are not convinced that the attacks
on our Embassy have ceased entirely. So our security situation
there remains precarious. We are always evaluating new means
and methods to be able to achieve the desired changes in Cuba.
We have a long history of being able to try to work through
these issues with Cuba. In fact, I am a countryman. I am a
native Floridian. I grew up in Winter Haven, Florida. I went to
the University of Miami. So, for me, Cuba is a--go Hurricanes,
yes--is a very--is a very personal issue and one that I think
we need to use the most effective tools to straighten out.
I don't know at this time if we are looking at new
entities. But I can assure you that we are constantly
evaluating the process and the tools we have to change the fate
of the Cuban people, and I can get back to you on----
Ms. Ros-Lehtinen. That would be lovely. Thank you.
Ms. Singh [continuing]. Additional potential.
Ms. Ros-Lehtinen. And when we said ``go 'Canes,'' we don't
mean Florence.
Ms. Singh. No. We mean Miami Hurricanes.
Ms. Ros-Lehtinen. Thank you, Mr. Chairman.
Chairman Royce. Thank you.
We go to Bill Keating of Massachusetts.
Mr. Keating. Thank you, Mr. Chairman.
We've had many witnesses, officials, former officials,
international experts talk about sanctions in front of this
committee. So I wanted to get a real clear distinction here.
Was it a legal determination that you had to withdraw from
the JCPOA in order to pursue these new sanctions on Iran for
their malign activities or was it a policy determination?
I want to be clear, because we've had much testimony about
this from some very credible people.
Ms. Singh. Thank you, Congressman, for that question.
One of the flaws in the JCPOA was that it was an agreement
that was not approved by Congress, by the Senate. As you know,
there has been much debate about that and as was observed
earlier just by this committee it was----
Mr. Keating. Well, excuse me. I want to interrupt.
That's not what I am asking. Don't go back to that issue.
I am saying for what was in place with the JCPOA was it a
legal determination or was it a policy determination----
Ms. Singh. Well, President----
Mr. Keating [continuing]. Not what the JCPOA was.
Ms. Singh. Okay. President Trump took a look at the JCPOA
and determined that his policy would be to----
Mr. Keating. So it's not a legal determination. It was a
policy determination. Is that--are you clear on that?
Ms. Singh. Well, Congressman, lawyers have looked at
withdrawal from the JCPOA as well, but at the end of the day,
the President determined that this was not the right course of
action for----
Mr. Keating. That's not answering my question. This is not
a tough question. To respond to the malign activities of Iran
on other areas, you did not have to legally leave the JCPOA. I
don't understand.
Everyone that's testified before us has said that.
Ms. Singh. But there was no----
Mr. Keating. So are you agreeing with them or disagreeing?
Ms. Singh. Well, there was on compulsion to legally leave
the JCPOA.
Mr. Keating. Okay. So it wasn't a legal determination. It
was all policy.
Ms. Singh. Well, I guess I would say there was not--we were
not compelled legally to leave it.
Mr. Keating. To do other sanctions on malign activities. So
here's--okay, so here's the issue. Why did you do it? Because
one of the greatest strengths we have in dealing with Iran is
our coalition. We pulled out of the JCPOA. We created a
fracture with our Western allies. The strongest thing we have
that the--no other country, frankly, that we compete with--
China or Russia--has and we didn't have to do it.
Mr. Billingslea. Congressman, I am not sure the strength
that referring to was there at all. Let me explain what I mean.
When the--and this predates me, obviously--when the JCPOA
was negotiated, ``the deal'' with our European allies was that
Iranian terrorism and Iranian ballistic missile activities and
all of that other stuff would not go unchallenged--that it was
still very much on the table for everyone to work together.
But----
Mr. Keating. My time is running out. I am asking the
questions.
Mr. Billingslea. But you don't have any sanctions----
Mr. Keating. May I ask you the question here?
Mr. Billingslea. Sure. Sure.
Mr. Keating. The question is simple. I mean, we have the
power to do sanctions outside the JCPOA. The JCPOA is a
discrete agreement about the nuclear program, not about these
other activities.
So it's clear that's one separate avenue. Don't confuse the
two. Don't conflate the two, because that's what I've heard all
morning. It's just not right.
Mr. Billingslea. The two should not have been conflated but
they were--no, you're not--you're not right.
Mr. Keating. I am not right? Tell me why I am not right.
Mr. Billingslea. The European Union imposed not a single
sanction on the Iranians since the JCPOA was completed--not
one--and I experienced this first hand when we were trying to
go after Iranian terror organizations and the Europeans would
refuse to do it----
Mr. Keating. You're going right back to it. I am talking
about the agreement that was discretely a nuclear agreement.
Mr. Billingslea [continuing]. Every time we tried----
Mr. Keating. And you're jumping back to something that we--
--
Mr. Billingslea [continuing]. Every time we tried to act.
Mr. Keating [continuing]. Have alternate sanctions for and
every other set of experts we had in front of us since I've
been here has said----
Mr. Billingslea. Every time we----
Mr. Keating [continuing]. The two things weren't exclusive.
I am going to move on to Russia because I take umbrage to
you saying I am wrong. I am not wrong, and every expert that's
come in front of us, before us, then is not wrong.
So let me talk about Russia. You place sanctions on certain
defense companies and entities. We had--Mr. Sherman said
clearly you're not doing it on the state of Russia. So you did
it on some defense industries, but you didn't do it--it was
patchwork. You didn't do it on all of them, and why isn't the
administration not implementing sanctions on, you know, Sukhoi,
which is--continues to enable Russian activities in Ukraine and
Russian activities in Syria? Why are you making these
determinations and leaving out companies that have constantly--
they're doing it right now.
Mr. Billingslea. That's a great question. We are looking at
Sukhoi. Obviously, we are very concerned that their aircraft
may have been used in chemical weapons attacks on innocent
people in Syria, for instance, and if that proves to be the
case that's unacceptable.
Mr. Keating. My time is up. But I would want to reiterate
what the chairman and other people have about Nicaragua. The
threats to people like Reverend Jose Alberto Idiaquez and other
people specifically are a great threat and it's a continuing
area we'd like to work with you on.
I yield back.
Chairman Royce. Thank you. We go to Chris Smith, New
Jersey.
Mr. Smith. Thank you very much, Mr. Chairman, and thank you
to our two assistant secretaries. You answered many of my
questions previously today so I will just cut to one final set
of questions.
As you know, an effective sanctions regime presupposes
financial transactions denominated in dollars with the dollar
functioning as the global reserve currency.
China and its allies, however, have been attempting to
attack the dollar, thus U.S. power, by supplanting it with the
yuan. In Africa, for example, government officials from 14
African nations from eastern and southern Africa met in
Zimbabwe earlier this spring to discuss using the yuan as a
reserve currency.
China recently engaged in a $2 billion currency swap
agreement with Nigeria and just a few weeks ago African leaders
met in Beijing where they were offered $60 billion in Chinese
financing which includes a focus on African countries doing
bond issuances in Chinese currency.
This move away from the U.S. dollar regime is exacerbated
by U.S. dollar shortages which makes currency swap arrangements
with China all the more attractive.
China's interest in actually propping up corrupt rulers and
helping them circumvent anti-corruption monitoring and
eventually a sanctions regime countless African resources are
being sold in yuan without any global accountability.
In Congo Brazzaville, for example, the Congolese Government
signed a yuan convertibility agreement that allows Chinese
businesses to operate in the six-country central African states
region unhampered by the U.S. dollar regime.
China's gambit has even been abetted by sensible allies
like German Foreign Minister Heiko Maas, who recently called
for ``a global payment system free of the U.S. dollar.''
It appears that the U.S. dollar regime on which our
sanctions system is built is under threat. I wonder if you
could tell us what Treasury and State are doing to address this
concern.
And, secondly, could the use of block chain technology
among financial institutions help with compliance with a U.S.
sanctions regime?
And I yield to our distinguished assistant secretaries.
Mr. Billingslea. Thank you, Congressman.
On the currency swap issue, I mean, you're very much onto
something of great concern to us as well.
That said, there remains a great desire among most of the
countries in Africa to maintain correspondent banking
relationships with U.S. banks and at the end of the day they
still, I think, are finding it necessary to ultimately clear
trade in U.S. dollars.
But it's the maintenance of those correspondent banking
ties that is our best line of defense ensure that we maintain
not just a degree of transparency and visibility into the
transactions occurring in Africa but also for the effective
insular sanctions regimes, as you pointed out but further to
ensure that effective anti-money laundering standards are being
applied and implemented.
One of our big concerns in line with Chinese actions not
just in Africa but around the world are very opaque debt-
focused infrastructure transactions that we are not clear that
some of the countries involved really understand the financial
risks downstream of what they're committing to. So transparency
in lending is another big issue.
Finally, on block chain, as with all innovative
technologies there are going to potentially be a great force
for good and also a potential complicating factor for some of
the regimes that we have in place.
Distributed ledger technology is going to revolutionize the
financial services sector and we very much encourage that and
look forward to that, and I think as it evolves it will
actually improve anti-money laundering regimes.
But the same technology also underpins virtual currencies
and there is an urgent need for the world to really step up
through the Financial Action Task Force and effectively
regulate in a uniform way virtual currencies.
Ms. Singh. Thank you, Congressman.
I will just quickly second my colleague's comments on both
China and block chain. We at the State Department remain very
concerned about China's practices globally. We all know what
happened with the port in Sri Lanka. It ended up being a very
bad deal--a bad situation for the Sri Lankans.
We've also seen recently that the country of Malaysia has
not moved forward with certain transactions with China. We are
encouraging our partners and allies to think twice before
entering into transactions based on these simple examples.
Mr. Smith. I thank you.
You know, having just returned from Ethiopia, having met
with the new prime minister, Abiy, there is a concern among
members of that government as well and others in Africa that
this debt that is piling up vis-a-vis China is enormous.
So thank you for your answers. They were very, very
incisive. I appreciate it.
I yield back.
Chairman Royce. Mr. Ted Deutch of Florida.
Mr. Deutch. Thank you, Mr. Chairman. Thanks to both of our
witnesses for being here.
Mr. Chairman, thanks to you and the ranking member for,
again, showing true bipartisan commitment to passing strategic
sanctions that are aimed at achieving a targeted foreign policy
goal since sanctions themselves aren't, obviously, foreign
policy. They're a tool to help us accomplish intended results.
The sanctions were never meant to end Iran's nuclear ambitions.
We needed to bring them to the table and I just want to start
with Iran and then ask a couple questions about Russia.
You had said earlier that the goal is to get--Ms. Singh, I
think you said the goal is to get the purchase of Iranian crude
oil to zero by 11/5.
So I would just like to know--we know about the biting
sanctions that are set to snap back on November 4th. I've
spoken to some of our European friends who said that they're
trying to understand what the administration is trying to
achieve, whether we want constraints to continue on Iran's
nuclear program.
So the goal is one thing. How we get there is another, and
if--whatever the goal is, which we could talk about--if we are
trying to get there by driving down the sale of Iranian oil and
gas the question is what are we telling our allies--what are
we--do we--I guess the simple question is do we expect that to
happen?
Do we think it's going to get to zero on November 5th?
We've given time for this to ratchet down to zero. What's going
to happen? And if it doesn't, then are we fully prepared to
impose sanctions on our friends as well who don't comply?
Ms. Singh. Well, Congressman, thank you for that question.
That's the purpose of the wind down period.
Mr. Deutch. Right.
Ms. Singh. We've had the 90 days, the 180 days. November
5th ends the wind down period. So it is a ratcheting down. It
gives our partner countries a chance to seek alternate energy
sources.
But we are serious about penalizing the Iranian regime.
This has been one of the methods that we've determined will
impose the greatest cost on the Iranian regime.
Mr. Deutch. I understand. Have we seen that wind down? Have
we seen it from our allies? Have we seen China take steps to
wind down and do we think we are going to get to zero on
November 5th, and if we don't, then what?
Ms. Singh. Well, we are seeing cooperation from our allies
and if we don't get to--we are prepared to impose the second
round of sanctions.
I mean, we've made it clear that the wind down period is a
time for countries to be able to comply with the sanctions that
will be fully in place again.
So we have seen some cooperation for--and since we've seen
80 companies from the private sector----
Mr. Deutch. I appreciate that. I am sorry. I don't have a
lot of time.
Are we prepared to sanction central banks in Europe if they
maintain relationships with the central bank of Iran?
Ms. Singh. We are prepared to do everything that the JCPOA
withdrawal entails.
Mr. Deutch. Should we expect it to happen on November 5th?
Ms. Singh. Well, Congressman, again, we are prepared to
fully reimplement sanctions.
Mr. Deutch. On November 5th, if we are not at zero and if
those relations continue.
Let me just ask, since I don't have a lot of time--do we
know--do either one of you know whether the President brought
up either Iran sanctions and cooperation on Iran sanctions or
our imposition of Russia sanctions in his meeting with Vladimir
Putin?
Mr. Billingslea. I am not sure that that topic was raised.
All I can tell you is the guidance within the Treasury
Department to continue to massive pressure campaigns has not
changed.
Mr. Deutch. Is it--and I ask this--I ask this honestly. I
am not trying to make a political statement here. It just seems
difficult that you're doing the important work that you're
doing imposing sanctions and the message coming from the White
House about policy--not sanctions but about policy--is
seemingly--seemingly stands at some points in contrast to the
important work you're doing.
So, for example, when we are focused on Russia sanctions
because of what Russia did to the United States in our last
election and the President, on a stage with Vladimir Putin,
says, I hold both countries responsible--I think the United
States has been foolish--I think we have all been foolish--I
think we are all--we are all to blame, it doesn't seem
consistent with the work that you're doing.
Is it hard for you to continue to focus on sanctions to get
to a policy end when the language coming out of the White House
and in particular from the President seemingly diverge from
accomplishing that same policy goal?
Ms. Singh. Congressman, our policy throughout the
administration is consistent whether it's the Treasury
Department, the State Department, or the White House.
Our policy is that we will not tolerate and we will
actively prevent anyone from attempting to interfere in our
elections.
The President has signed an Executive order just yesterday
imposing penalties for anyone we find who has interfered. We
are talking proactive measures with--throughout the inter
agency.
Mr. Deutch. I know that, Ms. Singh. I know. No. No. And I
know that.
Ms. Singh. But I just want to make sure you know that----
Mr. Deutch. I do know.
Ms. Singh [continuing]. The White House policy is
consistent. We are all working together toward one common goal.
Mr. Deutch. I do know. I am just--okay. Well, you,
obviously, don't see any divergence. It just seems to me that
that common goal is a lot harder for us to focus on when the
President of the United States, when asked, do you hold Russia
accountable, says, I think that both countries are
responsible--that the United States has been foolish.
The message from the President should be entirely
consistent with the policy that you're trying to carry out and
that you, Mr. Billingslea, are trying to carry out and too
often, unfortunately, it is not.
And I yield back.
Ms. Singh. But the President's policy is reflected in the
Executive order that he signed yesterday, Mr. Chairman.
Chairman Royce. Mike McCaul of Texas.
Mr. McCaul. Thank you, Mr. Chairman.
Iran's Revolutionary Guard Corps--the IRGC--is a terror
organization, a terror arm of Iran. At one point, I know the
administration talked about designating it as a foreign
terrorist organization.
I introduced a bill to do that and also a bill to sanction
the IRGC. Can you tell me where the administration is on this
issue?
Ms. Singh. Congressman McCaul, we remained very concerned
about the IRGC, as you have indicated. I don't have an answer
to that question. I can get back to you.
Mr. Billingslea. The IRGC is an organization and the vast
majority of its shell companies are already under Treasury
sanctions, and we continue to target them very aggressively.
The Quds Force within the IRGC--the Quds Force, of course,
is the source of the truly evil behavior in support of these
various terrorist organizations, Qasem Soleimani leading that
group.
The thing about the IRGC also that I think really needs to
be highlighted is their role in the endemic corruption within
the Iranian economy--the case study of how the IRGC alone
looted $5 billion from the municipality of Tehran and left them
in a complete bind is not getting told to the extent it needs
to be.
So it's not just the terrorism outside of the country and
the fact that they're moving hundreds of millions of dollars
for terror operations globally and trying to conduct
assassinations in Europe and other things.
It's also what they're doing domestically inside the
Iranian economy that needs to be showcased.
Mr. McCaul. Yes, I tend to agree, and yes, if you could get
back to me on that question. They've taken all the sanction
relief money and funnelled it into terror operations. Forty
percent increase in military in Iraq and Syrian, Lebanon--
weapons--you know, rockets being manufactured, on and on.
On the issue of China, they steal about $600 billion
annually from the United States, mostly intellectual property
theft, technology transfer theft. They have a 2025 plan to be
militarily and economically dominating on the world stage.
Has the administration looked at sanctioning China for its
theft of intellectually property? Twenty million security
clearances including mine and there were no consequences to
that behavior.
Yes, ma'am.
Ms. Singh. Congressman, we are very concerned. As you know,
this is the highest priority for the President is addressing
the practices by China that steal our intellectual property--
that steal our innovation. The force technology transfer--of
course, we know of reports of Chinese officials coming here,
taking technology back, and reverse engineering them.
As you may know, we've instituted a 301 initiative which
heavily penalizes China on many different fronts. We are
utilizing the World Trade Organization--the WTO--direct
bilateral penalties, the tariffs, the serious significant
historic tariffs imposed upon China.
All of these are economic measures intended to demonstrate
to China that they need to take us seriously when we have
directed them to stop stealing our intellectual property. Our
companies should not be forced to transfer their technology in
order to do business in China.
Chinese companies are able to come to business here freely.
Our companies should be able to go there as well.
And, of course, as you know, with the new FIRRMA bill the
update of CFIUS--the Committee on Foreign Investments in the
U.S.--we will be screening investment carefully through the
mechanism as well, which will address some of the problems with
emerging technologies and the China 2025 program that you had
mentioned.
Mr. McCaul. When I was a young Federal prosecutor at
Justice, I prosecuted Johnny Chung, who led us to the director
of Chinese intelligence putting money into the Clinton
campaign.
It's not the first time a foreign power has tried to
influence our election and in that case it was about technology
transfer. It was China aerospace, satellite technology, and
weapons. And so I just highlight that as an illustration.
Finally, I think your job, Ms. Singh, is very important
because when I talk to a lot of African Ambassadors they talk
about China--and you talked about Sri Lanka and they're in
Djibouti and they over leverage these African nations and
exploit their natural resources with their own workers, not the
African workers, and then they can't pay these balloon type
notes at the end of the day and then they take over ports and
things like that.
So I hope that you will encourage your Ambassadors to be
aware of this, and when I asked the question, why do you deal
with China, they said, because you're not there--Americans
aren't here. And I think your Ambassadors have a role to play
with respect to economic interests of the United States.
Ms. Singh. Thank you, Congressman.
We hear that message and, in fact, I am committed to trying
to increase our economic engagement with Africa. So as you have
indicated, they will have an alternative to China because that
is simply the case in many instances where African nations
don't know that they can deal with us rather than the
alternative of China. I commit to you that we will make that a
priority at the State Department.
Mr. McCaul. Well, I applaud you for that. Thank you.
I yield back.
Chairman Royce. Brendan Boyle of Pennsylvania.
Mr. Boyle. Thank you, Mr. Chairman. I hadn't planned on
speaking about this but I just want to echo 100 percent what
Congressman McCaul said--the last part anyway--as it regards to
the dramatic investment China is making in Africa and the fact
that we are asleep at the switch.
I just had a constituent--a former head of the Philadelphia
Black Clergy--come back and he actually wants to come and speak
to Congress about this because he was so alarmed at the
foothold that China is building in Africa while we are doing
nothing.
But in terms of what I wanted to ask about, one of the real
successes of the Obama administration was getting our European
allies on the same page as it relates to sanctions against
Russia, which was a bit of a challenge because they end up
bearing a little bit more of the cost financially than we do,
especially those countries that are closer to Russia.
Given the deterioration in relations that we've had with
some of our EU and NATO allies, I want to know what this
administration is doing right now to make sure that we keep the
Europeans on the same page as it relates to the hard-hitting
sanctions on Russia.
Ms. Singh. Thank you, Congressman.
We have very close relationships with the EU and our allies
there. I think it's a myth that our relationships are
deteriorating.
We at the State Department----
Mr. Boyle. Excuse me. Reclaiming my time.
It is not at all a myth. You need only have an off-the-
record conversation with any one of the members of the
ambassadorial corps and other officials, whether it's NATO or
the European Union.
I recently returned with a bipartisan validation from
Sofia, Bulgaria, as part of the European Union-U.S.-NATO
parliamentary exchange or dialogue--a group that has been going
on for decades--and as one of their senior members has been
involved within the '80s who was a member of a center right
party in Germany expressed to me, he's never been more alarmed
about the state of relations between the U.S. administration
and NATO member countries.
So anyway, what are we doing right now to make sure they
keep the sanctions on Russia as they are an important part of
their success?
Ms. Singh. That's a very important question, and I can tell
you Secretary Pompeo is committed to working with the EU and EU
member states to make sure that we impose costs and pressure on
Russia.
We have continuing ongoing conversations with them about
utilizing our sanctions authorities as well as United Nations
sanctions authorities to work together to pressure the Russian
regime to change its actions.
Mr. Billingslea. I will give you a concrete example. I was
just in Scandinavia together with one of Manisha's deputy
assistant secretaries coordinating actually on this topic. We
rely very heavily on a couple of key countries within the EU to
maintain that pressure and to maintain those sanctions.
In fact, one of the things we have to work through with
Brexit is that we are losing our Five Eyes partner inside the
EU. And so we are actively exploring alternative approaches to
have countries very actively supporting continued pressure on
Russia.
Mr. Boyle. Let me, just in the minute and a half that I
have remaining, shift gears toward Iran.
One of the most encouraging developments that I've seen in
Iran is what is happening on the street--these remarkably brave
ordinary Iranians who are protesting their own regime.
They offer, in my view, real hope for potential for change
in this awful regime that has ruined their country since 1979.
I want to know in what way is our sanctions policy working
in coordination with that and hopefully not at cross purposes
with what is going on in the street.
Ms. Singh. Well, Congressman, thank you for that.
One of the things that we try to do--one of the activities
that is exempted under our sanctions regimes are coordination
and communications. You know, we want----
Mr. Boyle. That's right. Let me just clarify. I don't
necessarily mean in campaign politics we would distinguish
between hard dollars and soft dollars.
I mean more in terms of an independent expenditure to draw
the analogy more in terms of the ways--not in hard coordination
but the ways that our policy complement the same goal that the
protestors have on the street, not that we are necessarily in
direct coordination with them.
Ms. Singh. I understand that, and our goal is very much to
return the governance of Iran to the Iranian people.
Mr. Boyle. Right.
Ms. Singh. The students that you mentioned--we believe that
the students, the fresh voices in Iran, are the future of the
country and that's the example I was going to give you is the
communication that flows through them. So these ideas coming
from the West that we support the people. We have a problem
with the Iranian regime--the government. We support their
voices. We support these students who want to take control of
their own country.
Mr. Billingslea. Two additional points on that. You know,
they're protesting because Iran is----
Mr. Connolly. Mr. Billingslea, you have got to move the mic
closer so we can hear you. Thank you.
Mr. Billingslea. I am sorry, Congressman Connolly.
The ayatollah and his inner circle run the Iranian economy
to their own benefit and the protests in many ways reflect the
fact that the Iranian people are fed up with that.
Mr. Boyle. Correct.
Mr. Billingslea. And this currency peg where they actually
favored regime insiders with preferential trading rates as the
currency continues to weaken is a good example.
So we are very focused on that and focused on calling out
and also identifying the key economic players under the control
of the ayatollah and the Supreme Leader and the IRGC for
additional pressure and sanctions.
Chairman Royce. We go to Mr. Ted Poe of Texas.
Mr. Poe. Thank you, Mr. Chairman.
I applaud the sanctions applied to Iran's Islamic
Revolutionary Guard. My bill, H.R. 4238, the Iranian Proxies
Terrorist Sanctions Act, would apply the same E.O. 13224
terrorist sanctions on two of the most dangerous Iranian proxy
militias in Iraq and Syria.
Can you describe the effect of these Executive orders--the
specific sanctions that have already had on the IRGC and do you
support sanctions against As-Saib Ahl Al-Haq and Harakat
Hizballah Al-Nujaba?
Before you answer that question, I want to give you a
little bit of background. Recently, congressional staff was in
Baghdad, the fortress of the Baghdad Embassy, and the Embassy
there scoffed at this legislation, saying they opposed the
legislation. Soon after that comment was made, there were
mortar attacks from As-Saib Ahl Al-Haq at the Embassy.
So do you take the same position as the fortress Baghdad
takes or what is your position on these two terrorist groups
that already have blood on their hands?
Mr. Billingslea. So, Congressman, I would, also as a former
congressional staffer on the Foreign Relations Committee, I
would never scoff at any piece of legislation.
I am not familiar with the particulars here. I want to look
at it and get back to you on the details. I will tell you, from
the Treasury standpoint we are very concerned about what the
Iranians are trying to do with these paramilitary groups in
Iraq. They are attempting to replicate the play book that
they've exercised with Hezbollah, the Houthis, and others by
creating, basically, rival power sources in the form of these
militias.
We have been going after the different conduits in Iraq
that the Iranians are using for terror operations for
financing. We took down, together with the Iraqis who are
actually really great partners on this--the central bank
governor in particular--we took down one of the major banks
that they were using to flow money through fairly recently.
Mr. Poe. Excuse me. My question is not about what we've
done. It's about what we are going to do in the future. Do
specific terrorist groups with American blood on their hands--
do you think that they should be sanctioned or not? That's
really just the question.
Mr. Billingslea. Well, if they've got American blood on
their hands, we need to go after them. I need to dig into the
details of what you have in your legislation, though.
Mr. Poe. Okay. That's a fair answer.
Any other comment?
Ms. Singh. I would just echo my colleague--Assistant
Secretary Billingslea's comments. We would need to take a look
at the legislation.
But as far as these terrorist groups, we need to impose the
most severe penalties as possible. We are very concerned about
what's happened recently at our Embassy in Baghdad, and thank
you, Congressman, for recognizing that.
Mr. Poe. Well, I just want to reiterate it's a little
disturbing to me that the State Department and Embassy people
quickly scoff at going after terrorists and I want to know
whether or not that's going to be the position of our
Government or is our Government going to go after other
terrorist groups that have caused mischief--blood on their
hands? The Iranians will do anything necessary, I think, to
retaliate and cause crimes against folks--Americans and
Iraqis--in Iraq.
So I would appreciate a thorough response or a thorough
study and then a response from the both of you on this
legislation, and thank you both for what you do.
I yield back to the chairman the rest of my time. I know
that's a shock to you, Mr. Chairman, but I yield a minute back
to the chair. [Laughter.]
Chairman Royce. Judge, thank you. You're a great example to
the rest of us.
Gerry Connolly of Virginia.
Mr. Connolly. Thank you. My good friend from Texas could
have given me that minute.
No. Thank you, and thank you, Mr. Poe, and welcome, both of
you, and I didn't realize, Mr. Billingslea, we have something
in common. You were a staff member of the Senate Foreign
Relations Committee, an honored revered title here, at least in
this little corner of the world.
I want to talk a little bit about the law and about
cooperation, and----
Mr. Billingslea. Congressman, Manisha too. She was general
counsel over there.
Mr. Connolly. Oh, my God. All right. Well, you--God bless
you, both of you.
So since you both helped write laws, when Congress passes a
law and the President signs it, like he did CAATSA--and I will
remind you the vote was overwhelming. Ninety-eight to two in
the Senate and 419 to 3 here in the House. That's about as
unanimous as you're going to get in the United States Congress
at any time.
So the President signed that into law. Would you agree that
law is binding?
Mr. Billingslea. Absolutely.
Ms. Singh. We would.
Mr. Connolly. Was that--I am sorry, Mr. Billingslea.
Mr. Billingslea. I am sorry. Absolutely.
Mr. Connolly. Ms. Singh?
Ms. Singh. Yes, we would.
Mr. Connolly. So it's mandatory. It's binding. So why then
would the sanctions that are mandatory in that law--why are
Sections 225, 226, 227, 228, 233, and 234 not yet invoked? Only
one of the seven areas of sanctions has been invoked even
though we all agree it's the law of the land and binding?
Mr. Billingslea. So there are a couple of reasons for that.
First of all, these sanctions that are contained in those
provisions are prospective. They're forward looking, and it
does take us time.
There's lag between when I get the intelligence necessary
for us to us to put the packages together. But we will be
imposing sanctions under those sections as we go forward.
Another key point here, though, is that it's not just
CAATSA. There's a number of other pieces of legislation
actually dating from our time and from your time as well that
are sanctions authorities. We also have Executive orders that
give us authorities and we want to get onto the target as
quickly as we can with as minimal fuss as possible to have the
effect we need to have.
And so while we may not have invoked a particular section
under CAATSA, the pertinent parallel Executive order that
predated in many cases we have used those and you will find
sanctions imposed in many, many cases that are consistent with
the intentions of CAATSA even if not formally under those
statutes.
Mr. Connolly. Okay. That's good--that's heartening to hear.
I think that's the first time we've heard that and that is
heartening.
Sometimes when one--going to efficacy, sometimes one
wonders why we don't do certain things that are at our
disposal, and let me give an example.
North Korea, to break sanctions, to continue to trade with
other countries, needs access to ports and that gets to marine
insurance, and one of the tools at our disposal is to cut them
off--that we simply will not allow marine insurance for their
shipping or ships in a third country flag that do business with
North Korea.
We haven't done that. That's at our disposal but we haven't
done it, and that would--that potentially could cripple their
ability to cheat on sanctions.
Are we looking at tools like that, even if Congress hasn't
specified that? But they're clear and obvious tools that would
significantly tighten the economic screws on North Korea.
Ms. Singh. Congressman, that's a very good point about the
shipping sanctions and we are considering all tools at our
disposal.
As you know, with sanctions, we look at everything very
carefully, deliberately. A lot of times there's a pressure
campaign. We start with certain sanctions and then we ratchet
up.
In the case of both Russia and North Korea we are
determining how our sanctions will have the most bite and we
progressively increased the pressure to have the maximum amount
of effect.
And, you know, we agree with you about the North Korea--the
shipping sanctions. That is something that is fully under
consideration. We want to use absolutely every tool and as you
have very correctly observed, that would be a strong tool to
seriously impact the North Korean regime.
Mr. Connolly. Well, in my last 25 seconds, let me also just
make a statement. I could not disagree with Mr. Zeldin of New
York more. By ripping up a nuclear agreement with Iran,
negotiated with our allies, that was working, and negotiated
with our adversaries, China and Russia, it was actually
working.
It was verified as such. I think it makes it harder to get
compliance with allies on sanctions when we rip up our own
agreement--our own U.S.-led agreement. I think it makes us less
reliable and I think, frankly, it dilutes the efficacy of
sanctions we want to reimpose.
So I think it was a very misguided and mistaken decision
and I wish Mr. Zeldin were here to hear that. I thank you both
for being here and thank you for your wonderful service on the
Senate Foreign Relations Committee.
Thank you, Mr. Chairman.
Chairman Royce. Thank you.
Mr. Ted Lieu of California.
Mr. Lieu. Thank you, Mr. Chair.
Russia continues to supply arms equipment to Syria as well
as Iran and my question to you is how much as the U.S.
sanctioned Russia for providing those sorts of assistance to
countries like Iran?
Mr. Billingslea. Assistance to Iran, not so much. But what
they're doing with Assad we've targeted the main export engine
of the Russian Government, which is Rosoboronexport and their
bank.
They control a bank, and by doing--and we sanctioned them
for--in connection with the atrocities Assad has committed.
That's actually complicated their ability to conclude a number
of arms deals around the world.
Mr. Lieu. So I've been told there is a Russian company,
Sukhoi, that has provided support to Iran. What's the reason we
haven't sanctioned that company?
Mr. Billingslea. Well, so Sukhoi fighter jets are all over
the place, not just with Iran. But also Sukhoi passenger jets
are in service here in the United States and other places. So I
think we need to kind of keep that in mind.
As I had responded to a similar question earlier on Sukhoi,
we are looking into that very carefully because we cannot agree
that any Sukhoi support is given, particularly if chemical
attacks are launched on citizens--innocent people in Syria.
Mr. Lieu. Okay. Thank you.
So I note that you're the Assistant Secretary for the
Office of Terrorist Financing and Financial Crimes. So let me
ask you a few questions on money laundering.
The Russians and the Kremlin, they do engage in money
laundering, correct?
Mr. Billingslea. Correct.
Mr. Lieu. And is one of the ways they do it by buying up
real estate in the United States such as condos?
Mr. Billingslea. That is a persistent suspicion we have.
That is a really hard challenge for a variety of reasons.
But in line with that thinking we have established a series
of geographic targeting orders that are designed to have the
real estate community conduct due diligence into who really is
underneath these various real estate transactions and then they
have to report that back to FinCEN.
And very recently, my office made the policy recommendation
to get more reporting by reducing the dollar threshold for that
reporting obligation because it's not just in the case--it's
money laundering in general where we see real estate is a
favored vehicle for value transfer.
Mr. Lieu. Does your office investigate these kinds of
allegations?
Mr. Billingslea. My office is the policy shop that also
handles all the international engagement. But within the
territory of the United States, the part of the Treasury
responsible for the investigative functions would be the
Financial Crimes Enforcement Network--FinCEN.
Mr. Lieu. There has been some public reporting that a
significant number of Russians purchased a lot of condos owned
by the Trump organization. Are you aware of that?
Mr. Billingslea. I've seen press reports on that but not--I
mean, all over New York.
Mr. Lieu. And do you know if that's true?
Mr. Billingslea. I don't know if that's true.
Mr. Lieu. Okay. I would like to move on to North Korea. The
President has engaged in a trade war with China. Have you seen
China lessen their sanctions against North Korea or China
taking other actions to help North Korea in the wake of the
current trade war with the U.S.?
Ms. Singh. We remain committed to having conversations with
China to instill upon them that we need their cooperation on
North Korea including decreasing trade with North Korea.
Mr. Lieu. So I've been at various briefings where some of
the experts have said in fact China has been helping North
Korea more than they used to. Is that true?
Mr. Billingslea. I think the President has been very clear
that he needs to see China step it up.
Mr. Lieu. Has China engaged in more trade with North Korea
in the last few months than they have before?
Mr. Billingslea. I think we are watching the cross-border
traffic very carefully and I think we are concerned about that.
The big thing to focus on though is the ship-to-ship transfers
in the China Sea and we need to see more policing to disrupt
those transfers because that's how North Korea is getting
around the U.N. Security Council oil sanctions.
Mr. Lieu. Have more North Koreans been allowed to work in
China in the last few months?
Mr. Billingslea. I don't know about more working there but
they continue to operate there, which is why this very morning
we sanctioned an IT sweatshop--actually a couple, one of which
was operating in China and another in Russia.
Mr. Lieu. Has China ever said or implied that if this trade
war gets worse or continues that they will take certain actions
in North Korea that the U.S. may not like?
Ms. Singh. Well, Congressman, I think I can address that.
We are keeping those dialogues separate. We need cooperation
with the Chinese on North Korea. It is just as much in their
interest to have a denuclearized North Korea as it is in ours.
Our trade conversation with the Chinese is separate. As you
know, our trade issues with the Chinese have been going on for
decades. We've been having conversations with them in the form
of a strategic economic dialogue--a strategic and economic
dialogue.
So this President came in and decided that conversations
with China were not working. He was going to have to take
serious action on our intellectual property on the theft of our
innovation from American industries, their state-owned
enterprises--a litany of things that you're aware of.
So our trade conversation is happening. We still expect
full cooperation on North Korea. We've told the Chinese that it
is very much in their interest to cooperate on North Korea as
well.
Mr. Lieu. Thank you.
Chairman Royce. Thank you.
We go to Tom Suozzi of New York.
Mr. Suozzi. Thank you, Chairman Royce. Thank you, Ranking
Member Engel, for holding this hearing. Thank you to our two
witnesses today. You have got big portfolios--a lot of
different things to focus on.
I am really mainly focused today on Russia and its malign
activities in Europe and Eastern Europe. Because of our focus
in America on the partisan issues related to the 2016
elections, I think we've lost focus on how much Russia is doing
to undermine democracies in Europe and Eastern Europe and I
think we need to call more attention to that.
And I just want to use your language, Ms. Singh. Russia
poses a threat to our national security on many fronts. We have
witnessed Russian aggression globally threatening our partners
and allies.
Russia is just a grave a threat to our European allies and
other partners from conducting targeted chemical weapons
assassinations in the U.K. to using energy as a weapon.
And Mr. Billingslea, I just want to quote from you the
different remarks that you put in your testimony--Russia
continues its occupation of Ukraine and Crimea and subversion
of Western democracies, and for decades Russia has been
developing complex and resilient networks to raise, transfer,
hide, and obscure the origin and movement of proceeds generated
through illicit financial activity including corruption,
sanctions evasions, and arms sales. The scale and
sophistication of Russia's malign activity is far more advanced
than that of other states currently subject to broad U.S.
sanctions.
And so I got a report from the Congressional Research
Services about the sanctions, which designations have been made
in those that have not been used and you talked earlier before
about the use of Executive orders versus CAATSA, and I want to
ask you, first of all, do you think that we are doing
everything that we can do?
Because when I look at the sanctions that we've done, we've
only done broad sanctions on nine out of 100 of the largest
companies in Russia and we've only used more targeted sanctions
in 23 out of the top 100 companies in Russia.
And I want to suggest that we could be using some more
sanctions related to Section 224 of CAATSA related to this
specific area that I am talking about.
So my question is do you think we are doing everything we
can do, can we do more, and do you have enough resources and
authority to do everything you think we should be doing?
For both of you.
Ms. Singh. Thank you, Congressman. I will start off very
quickly.
We do have the authorities and we are continually exploring
what more we can do to ratchet up the pressure on Russia. I
would say when it comes to actually imposing sanctions, just
the fact that we have these authorities and our ability to
implement them has given us significant leverage. We have seen
that Russia has lost billions of dollars in transactions from
the private sector because our companies know that they would
be subject to our CAATSA sanctions, the primary----
Mr. Suozzi. But they continue these malign activities. So
the question is can we do more and should we be doing more, if
only nine of the top 100 companies have the broad sanctions
against them.
Ms. Singh. I think, Congressman, we should be doing more. I
think we should be increasing the pressure on Russia.
Mr. Suozzi. And do you have the resources to do that?
Ms. Singh. We do have the authorities that we need but we
are always----
Mr. Suozzi. Not the authorities. The resources. Do you have
enough personnel in order to be implementing these sanctions
against these large companies?
Ms. Singh. Well, the State Department is known for using
limited resources very wisely. We deploy our personnel very
effectively.
Mr. Suozzi. Okay. So you don't have enough resources.
How about you, Mr. Billingslea?
Mr. Billingslea. Thanks, Congressman.
One key point, though, particularly in the cyber domain
where you're focused on 224, the size of the company may not
really be the right metric. It's sort of what they----
Mr. Suozzi. I am only suggesting that as one thing that's
got very broad applicability to this particular area. But you
have got other authorities that have not been any designations
under CAATSA that you could be using, I believe, to try and
hold these companies accountable. But continue.
Mr. Billingslea. Sure. I know. But 224 in particular has
been a very valuable authority that you gave us. We've used it
in nine cases so far against Russian cyber actors and then
there have been a variety of other areas where an Executive
order--some other legal authority got us onto the target faster
so we used a different avenue.
But in total, we've gone after 34 of these cyber players
for various----
Mr. Suozzi. Do you think you could be doing more?
Mr. Billingslea. Absolutely.
Mr. Suozzi. Do you have the resources necessary to do that?
Do you have enough personnel dedicated to this function?
Mr. Billingslea. I would love to work with you on that.
Mr. Suozzi. Okay. Thank you very much, Mr. Chairman.
Chairman Royce. Thank you.
We go to Norma Torres of California.
Ms. Torres. Thank you, Mr. Chairman.
I do have a couple of questions that I hope both of you
will comment on, and I am sorry to be jumping continents.
Mr. Billingslea, I am very concerned about the current
situation in Guatemala. As you may already know, the President
of Guatemala, President Morales, has been working with a group
of corrupt politicians to undermine the fight against
corruption there, specifically, the work of CICIG.
I worry that if we don't do more to deter this backsliding
of the rule of law, Guatemala could break down into chaos and
we could see the real crisis or an even bigger crisis at our
southern border.
So my question is what is the role of sanctions in our
policy toward Guatemala and what kind of sanctions would be
most effective in making clear that the U.S. will not stand
idly while the Guatemalan President and his cronies allows
years of progress to be turned back, utilizing our own
equipment that was gifted to them?
Mr. Billingslea. So, Congresswoman, you have put your
finger on a really crucial issue. Ultimately, the Department of
State is responsible for CICIG and the reformation process
there.
But we are watching the situation very closely. The tools
we have would include, among other things, if we identify a
financial institution that's being used to launder funds and
it's touching the U.S. system, then the various provisions of
the Patriot Act are available to us to go after.
We do expect and demand that Guatemala implement anti-money
laundering regimes and reforms, and then in the event that we
see and can document and working with the prosecutor can
document corruption actions, the Global Magnitsky Act in
particular is the tool that we use to impose consequences on
people for those kinds of actions.
Ms. Torres. I certainly hope that your office is closely
watching the actions. I am very alarmed at what is going on
right now with the army mobilizing within the capital.
Ms. Singh.
Ms. Singh. Thank you, Congresswoman. We are very concerned
about what is going on in Guatemala and we are looking at
CICIG. The U.S. supports a reformed CICIG. We want to see more
transparency, oversight, and accountability. It's an
institution--it's an entity that should transfer more of its
capacity back to the institutions. But we do share your
concerns and we are monitoring the situation closely.
Ms. Torres. I am not sure what you mean by transparency,
and although I do agree that more of the work after 10 years
should have been already transferred to the Guatemalan
institutions.
However, I do want to point to you, and I am sure you
already know--I don't have to educate you on this--is that the
Guatemalan congress has not been able to pass laws to address
their own issues of corruption and transparency.
So on what ground do we stand to say transfer the power or
authority to an institution that has shown that they are
willing to be on the record to find themselves or to refuse to
allow themselves to be put before a court to investigate their
own crimes?
Ms. Singh. Congresswoman, you raised a very good point and
that's exactly what we are looking at. We do want to find ways
to increase the oversight and accountability for the entire
situation.
Ms. Torres. Please don't miss that mark. I think, you know,
a lot of times we've done a great job but sometimes we have--
it's like head in the sand and when we don't send a very, very
clear message then we end up with people coming to their own
understanding on things.
We do not want to empower the drug cartels. We don't want
to empower what is happening there now. So I want to just be
very clear with both of you that if we don't do anything now,
if we continue to stand idle and allow them to move forward
with their effort of intimidating reporters, of intimidating
human rights people there, activists--then we are responsible
for what ends up happening there and we will continue to be
responsible for the number of children that are being held in
ICE cages in our southern border, and that is what we need--
that is the bigger picture that we can't lose sight of.
And, Mr. Chairman, I've ran out of time so----
Chairman Royce. Thank you, Congresswoman Torres.
Ms. Torres. Thank you for that.
Chairman Royce. Thank you. And, again, we thank our panel
and the committee stands adjourned. We'll see everyone at 12:30
for our markup.
[Whereupon, at 12:22 p.m., the committee was adjourned.]
A P P E N D I X
----------
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
[all]