treasury will pursue investigations using the tools and how you verify the banks have voluntarily withdrawn from iran and do not reverse course. >> thank you, mr. chairman. let me begin by describing the effort that we have been undertaken and how that has resulted in what we have seen is a dramatic reduction in iran's access to the international financial system. dating back before fasada the treasury department was active in going out to the international financial community, the private sector, as well as government officials around the world, and explaining the case for why they should

voluntarily withdraw from the iranian financial sector, in particular the designated iranian banks, banks sanctioned for involvement in iran's proliferation activities and its support for terrorism. we were making good progress in isolating iran in limiting the number of banks around the world that were willing to do business, particularly with designated iranian banks. the number of banks, turkly in europe, that will willing to continue to do business with iran were reducing iran's ability to access the international financial system. with the enactment last july, that provided us a powerful new tool, to go back to those countries, back to those financial institutions in particular to the ones that had not been yet persuaded, and to say to them, as i said in my

testimony, you have a choice to make. you can continue to do business with the united states or you can continue to do bins with designated iranian banks but you can't do both. it has been tremendously effective. where we had seen a steady decline in the access of these designated iranian banks to the international financial sector, after fasada, the line drops straight down. we have continued to go around the world -- i was in china just two weeks ago, meeting and hong kong with major banks, including major chinese banks in beijing, meeting with government officials to continue the conversation about tosada and it has been remarkably effective.

we're going continue to pursue this issue, and the newly issued 104e rule will help us. that rule became effective this week and immediately upon the effectiveness date of that rule, the effect of that rule, we issued a series of information requests to u.s. financial institutions asking about behavior of some of their correspondents. this rule -- and this follows up on a question that senator moran asked or issue he raised in his opening statement. this rule allows to us go out to u.s. financial institutions where we have reason to believe there may be potential fasa d.a. violation. it's a verlander and low threshold, where we have some reason to believe there might be an issue and to seek this information. so we have begun that process immediately upon the effect of

that rule, that will compliment other sources of information we have and we will continue to pursue those investigations. >> senator shelby. >> thank you, mr. chairman. secretary cohen, just tell us, who is doing business with iran? who are they selling their oil to and who are they buying from in the world, basically? just for the record. >> well, iran sells its oil to a number of different jurisdictions around the world. they sell into the eu. spain is a major purchaser. >> spain is a major purchaser. okay. >> turkey buys oil from iran. >> okay. >> some of our closest allies -- >> japan? >> japan, south korea. >> who are their largest purchasers, japan? >> if you allow me to look it up. >> go ahead. >> i actually have a -- well, i

don't know where my cheat sheet is on this. china this major purchaser, south korea and japan, major purchasers, the i, turk yes, india, are all major purchasers. they're not -- none of them are wholly dependent on iran. they all purchase oil from a variety of producers, but each of those jurisdictions that i just listed, buy between seven and 15% of their oil, give or take, from iran in a given year. >> are the chinese investing in exploration of more oil and gas in iran? directly or indirectly? >> i will give you an answer to that question but i think undersecretary sherman has information on that. i think the basic dynamic that

we see in china is that clearly before the most recent round of sanctions, including the security council resolution 1929 from last june, china was involved in exploration in iran's oil fields. certainly helping them to develop new oil fields. we across the administration have made verlander and clear to the chinese that we expect restraint, that not just the united states but the international community as a whole. and the -- the response has been by and large that china has exercised restraint. i would invite secretary sermon to -- sherman to elaborate. >> we share your concern.

president obama has raced these issues. vice president biden hayed the issue. secretary clinton has raised the issue you have raised. we stressed with the chinese the need for restraint in iran's energy sector by not only slowing down but stopping their activities, not concluding any new deals and, to your point, not backselling the business of other firms that have responsibly departy iran. we all know that chinese looks for those opportunities when others leave the field. we have seen reports that has hatt had an effect. we believe that chinese companies have not finalized any new upstream investment or refinely construction projects since the enfactment of fasada. we will continue to monitor this as closely and in as many ways

as we can, because we quite agree with you there is concern in this regard. i will add one thing about the chinese, and is that they have been certainly in the p5 plus one much more closely lashed up with us, the european union, and even russia in this regard, over the last several months, understanding the increased threat that iran places, and in fact, as you know there was january 19th u.s.-china joint statement that called for full implementation of all u.n. sanctions. so we share your concern. we're staying on top of this at the highest level. we think there has been a slow down, but we will not stop our vigilance. >> mr. cohen, it's obvious to most people, that china and

russia are obstructing, through their various ways, of really pushing the sanctions regime, like we wanted to do it. explain the committee russia's relationship with iran as best you can here in open forum, and our uphill fight to bring them along on real sanctions against iran and china, too. >> let me focus in particular on the russian-iranian financial relationship. and i'll invite secretary sherman to talk more broadly about russia's rule in the security council and bilateral relations. the reality is that russia does not have a particularly deep or extensive relationship with iranian financial institutions. we do not see russia providing a

significant access point for iranian financial institutions. that being said, iran is under increasing pressure. the isolation that it's facing is unprecedented. they've never been under the pressure they feel today with their financial channels narrowed. and we are being watchle -- watchful to see where iran may go to develop additional financial connections. russia is a potential point for iran to look, and we're going to stay on top of that verlander and aggressively. but as we sit here today, i can't say that russia is a

significant problem with respect to iran's financial access. >> but you're not saying that they're not a significant problem overall politically, though, in this area? you're not weighing in on that, are you? >> i am focusing on the financial relationship. >> your tiptoeing around the political ramifications, which is probably -- >> i'm mindful to my immediate right is secretary sherman who has the responsible for covering that issue. >> secretary sherman, why has the state department declined so far to designate the islamic revolutionary guard as a terrorist organization? >> senator, we have considerable sanctions on the islamic revolutionary guard corps as you know through treasury's edition nice of irgc and designation for their part in human rights

abuses, which irquite egregious. generally foreign terrorist organization designations are used for nonstate actors, and i can't think of any state actor for which designation shouldn't be used. >> that -- >> we will certainly, as we go forward, and as we ratchet up the pressure, consider any option that we have to deal with iran's amibitions and its terrorist activities. so, i think, however, if you look at the full array of the sanctions we have in place, the irgc is quite prominent in many of them, and as david outlined in his testimony, we have already cut off some of their economic wherewithal, in terms of some of the companies they operate, since they are becoming

a greater and greater economic force in iran. >> do you believe that you will reach the point, are you moving down the road to designate them as a terrorist organization, which they are? >> well, i never really speak to specific designations until they occur, and is a said we have never used the fto option of -- >> you're not going look the other way on this, are you? >> there's no way we're looking the other way. with your help, senator, we have the toughest sanctions on iran. >> senator. >> thank you, mr. chairman i'm going to ask both secretary and cohen to work with me and hopefully the chairman will be a little lenient since i'm one of the prime sponsors of the legislation here, but in terms of the conciseness of your answers because there's a lot of ground i want to cover. secretary cohen, is it fair to say -- and maybe you can give me just yes or no -- that in fact

fasada issue i.e. sanctions, have worked to finish dramatically commercial and banking transactions for iran? >> yes. >> and therefore has hurt them significantly financially as well? >> yes, it has. >> so then sanctions work. >> no question. >> and that is the point i want to first drive here. that sanctions work. the reality is we have never seen an administration, public ran or democrat, that said give me a sanctions law. they always want the flexibility. so i hope my colleagues, as they consider the legislation, that hasp 6 co-into sponsors, understand that any administration has asked for repeal of the sanctions law because sanctions work. in that regard, madam secretary, i listened to your statement and read it verlander and carefully, and i must say, when you say, american policy regarding iran remains unambiguous, first and

foremost, we must prevent iran from acquiring nuclear weapons. its elicit nuclear activity is one of the greatest global concerns we face. that's pretty significant statement. which means to me we must do everything that we can to ensure that its elicit nuclear activity doesn't take place. if that is the case, can you explain to me why the administration has been reluctant to sanction china's state-run energy firm, which has been reportedly shipping refined petroleum products to iran monthly for the last year, despite abundant information about this trade, the united states has not sanctioned the company and why has the administration been reluctant to sanction this type of a chinese

company for energy violations when there is ample evidence that they are violating our laws and there's precedent for us sanctioning them, particularly chinese companies for nuclear weapons proliferation concerns. that's my first question. my second question is, in response to senator shelby, you talked a lot about the energy sector in robb -- in iran investing is a violates selling refined petroleum products is a violation, but buying crude oil is not a prohibited activity, which goes to my second question. the united states has passed all of the sanctions law to put pressure on investments in iran's energy sector, which have reduced iran's oil and natural gas production. the iranian regime continues to sell 2.3 million barrels per day of crude oil, which generates over $80 billion annually for

the iranian treasury. the say of iranian crude represents between 50-75% of the iranian regime's budget, literally fueling the regime0s able to export terrorism, build a nuclear weapons program and repress its own population. it's clear to me that if this is 2009 greatest global concerns we face, we must find a way to target this life blood of the iranian regime one major loophole in our law permits iran to sell oil to europe, writ is refined and sold to the united states. today when americans fill up their cars with gasoline, it's possible and legal for this gasoline to be derived from iranian crude oil. i think most americans would be appalled to learn they're putting iranian gasoline in their vehicles. have been working with industry experts to close this loophole to ensure the united states is

an iranian free oil zone. we can do that without imposing the oil embargo on the sale of iranian crude. the solution is simple. european refiners interested in selling to the united states would have to replace their purchases of iranian crude with supplies from elsewhere. this would redirect sales of iranian crude to a small group of buyers, who with less competition for the price of iranian oil, would be able to negotiate significant price discounts from iran on every barrel of oil. these discount was deny the iran age regime billions of dollarness hard currency. can you tell me, are you open to closing the loophole, establishing the united states as an iranian oil-free zone and ening the practice of americans buying gasoline from iran and in doing so, effectively paying an iranian regime, which commits

violence against americans and our allies, against our troops in iraq, and, and which you yourself has said is our greatest global concern. >> thank you verlander and much, senator. first, regarding your question about the chinese entities. the administration is not reluctant to sanction and to designate companies when we have gone through the data, the investigation, meet the evidentiary standards, and indeed designate and sanction. in fact, under inksa, the iran north korea syria act, we have designated dilong industries of china. so this is not about never sanctioning a chinese entity or any other entity from any country. it's matter of doing the thorough investigation, making

sure we met the evidentiary standards, and i can assure you, whether it's the company of which you spoke or the list from the gao, we look at all the data that is incoming and look through everything that is in front of us to decide, along the lines of the standard that have been set out by the law, to meet the standards of those laws. so you have my assurance that we look at each one of these situations with a tremendous care because we quite agree with you, nothing should be off limits. we should look at every single situation and those that immediate the standard should be designated and sanctioned. >> on that point, year later, public report -- this is not even intelligence reports, -- a year later public reports of this company selling refined petroleum products clearly within definition of an elicit activity, we have not sanctioned them. how long do we have to wait

before that happens? >> i hear your concern and i will take it back we with me, senator. regarding your legislation and buying crude oil, i certainly understand your concern. this is one where i'm sure secretary cohen will have much to add on it. you have raised the issue that has been the concern of some but does not mean we shouldn't take a close look at what you're suggesting, and that is that iran is the fourth largest producer of crude oil. there has been much debate and discussion and obviously you have done incredibly careful study about the impact of such an even targeted embargo on the world's economy, the price of oil, and what that would mean for american concerns, and i'll let secretary cohen take up the implications on this and we look

forward to seeing if we can find a way forward and close the loophole. >> let me verlander and quickly -- i thank the chairman for this leniency. i'm not suggesting an oil embargo on iran. that would drive up prices. i'm saying we should not permit refined petroleum products made from iranian crude to come to the united states. that would make the europeans have to figure out in the world market to buy from other places. a fundmental difference and i don't want to get it confused for the record. >> senator menendez, that proposal to create the iranian oil-free zone and in particular to implement that by having european refiners, if they want to sell to the united states to certify they're not using any iranian crude in the refined gasoline they're selling, is something that we have seen that proposal. we are looking at that proposal.

the economics you described are complicated, and one of the things that i think we certainly share is the desire to reduce the revenue that iran is able to earn on its sale of crude without causing collateral ill effects to the u.s. or global economy. one of the attractive features of this proposal is it promises to do that, which is to reduce iran's ability to earn revenue without having the knock on the effects on the globe economy by raising the price of petroleum. we have economists at the true treasury department who are a heck of a lot smarter on this. but it does hold promise to

achieve that objective. >> thank you, mr. chairman. >> i allowed senator menendez some leniency in time because he has legislation pending, but do the committee -- are you -- senator cook. >> mr. chairman, and undersecretary sher major welcome. i know you're verlander and new to this. you just came out of the private sector three weeks ago, so i'll mainly direct my comments to david cohen, who has been in this much longer. i think it's verlander and important that here at this hearing we not hear your concerns, we hear your consequences for what has

happened, and i think it's verlander and important for us not to look at this from washington's view looking at tehran in which one of your staffers gives long reports about how we have cut off cupcake sales from belgium to iran, and it's important to look at what is happening in tehran and whether this is having an effect. maybe if you put up the other chart you have there. this is iranian enrichment activities, and you can see here that the program is accelerating fairly impressively. and so while we have long briefings of a lot of banking activity, we see the principle objective of the policy is not yielding results, and as i think senator corker has been verlander and eloquent on, once we get over 20% enrichment, i

would be worried if you felt that there was any doubt that the iranians would transfer nuclear weapons to terrorist organizations once they had them, and i think that should be a fundamental assumption of our policy that they will. i'm also worried, when we look at tehran, if we compare imf statistics of u.s. economic growth to iranian economic growth, the imf says the united states economy grew by 2.5% last year, and the iranian economy grew by 3.2%. 22's faster. we got another chart that shows, this is iranian economic growth, and the point of this policy is also to cripple their economy. but their economic growth rate has expanded by four times. when you look at debts held by the public, according to the imf -- i know some people should

say we shouldn't believe the imf but it's the best dat set and almost every other administration decision is based on imf data. the united states at 70% of its gdp in debt to the public, and iran has 4.5's. the u.s. economy remains vulnerable. with regard to iran, growth recovered on the strength of international oil prices, strong rebound in agriculture sector and rapid credit expansion and inflation was contained and fiscal positions improved. this is the imf. i'm worried the iranians seem to be accelerating in their aggression towards you. in the verlander and week that

marzei is convicted with 90 lashes for appearing uncovered, we learn that the 330,000 basijs have been kicked out of university, and their houses have been registered. i would simply suggest this is a movie we have seen in a different decade wearing different uniform but has all the markings of farsi, and now we hear from undersecretary cohen, he said in may, we remain concerned the cbi, the central bank of iran, may be facilitating transactions for sanctions iranian banks and 9 2 senators wrote to you saying, let's take this action. you haven't even designated the iranian revolutionary guard corps under the law as you should have. here's my question to david.

i verlander and much respect the work and all you have done but press reports indicate you have known about this plot since june. you have known about this hearing for a month. and yet we have no significant action on designating the irgc or on the central bank of iran. and you have known about this plot well now on five months. >> well, let me pick up with the last point about designation of the irgc. it is a designated global terrorist under executive order 13224 and has been for several years now, and we also designated a number of irgc affiliates and individuals. so, for example, the president of iran.

...

you can get closer to ahmadinejad than that. >> it is a very senior official in iran, no question about it and he was designated on tuesday for his involvement in terrorist activity and he has previously been designated twice before by the treasury department, once about two months ago for providing material support to the sirri and gip, which was involved and repression in serious so under an authority that allows us to designate individuals who are involved in human rights violations in syria will provide support, individuals who are abusing -- >> can the senator began to wrap it up? >> with 92 senators writing you on the iranian central bank, is it impossible for you in response to a plot to kill 100 americans do not say anyone who does business with the central bank of iran cannot do any

business with the united states and cripple baird -- you look at their economic growth. you look at the acceleration of their nuclear program. you look at prominent actors with 90 lashes. can you get moving? >> well senator, we are moving. we are looking very actively at the possibility of designating the central bank of iran as well as taking other actions in response to this plot and we are generally in response to iran's continued defiance of the international community with respect to its nuclear program. there is a lot of work underway and we are looking quite intensively at how to ratchet up the pressure. >> if i would, with the chairman's indulgence i would like to take a second to address the point about gdp growth if i can. >> go ahead. >> it is i think actually quite difficult to compare iranian's

gdp growth with u.s. gdp growth. the iranian economy is about 800 yen dollars in gdp. the u.s. is 14.6 trillion so iran is about 5% the size of the united states. it is heavily dependent, as you noted senator, on the oil sector so when oil prices increase, as they have in the last year or so, that has the disproportionate effect on the gdp growth in iran. the imf -- >> i will just correct you. iranian gdp was $338 billion in 2008 and $357 billion in 2010 so it is about a 5.5% growth over that time. >> the imf, and without quibbling about whether the imf's members are accurate or not, but the imf rejects gdp growth not just for iran and the u.s. but for other countries in the middle east who are oil

producers. looking at just the countries in the middle east that are oil producers, iran is the lowest of all of those countries and in projected gdp growth. is projected gdp growth by the imf is less than half of the average projected gdp growth of other middle eastern loyal exporting countries. so i think that is the comparison. it is iran versus other middle eastern countries that are dependent on the exploitation of oil -- exportation of oil for their gdp and if you look at that iran is doing quite deadly compared to its peers which i think is a reflection in part of the effectiveness of sanctions. >> senator. >> thank you mr. chairman and thank you to the panelists for your testimony today. i want to pick up on what senator kirk's line of questioning. you know, this week as you have testified and as we have read in the paper, we have learned that

there was a plot to assassinate the saudi ambassador in washington d.c., on american soil and there was 100 or 150 americans were killed as a result of it, that was okay. and i guess the question that i have is, sitting here, i'm wondering what the testimony be had that plot succeeded? had law-enforcement failed, and i'm very glad obviously that our law enforcement didn't, had that plot succeeded the iranians had every intention that it would succeed, what your testimony would be today about what our response would be. the reason i ask it that way is that for months, years really, this committee has been saying we need to do absolutely everything that we can do to make sure that iran his nonsupport terrorist organizations and that iran never develops a nuclear weapon. so, what if this plot had

succeeded and what with the implication before the internet, nationalization of the sanctions madam secretary? what more can we ask of the rest of the world to protect the united states and our allies from iran? >> senator, i actually, without knowing it, stole your talking.. inside telephone conversations with my counterparts around the world, one very long one with one of the countries we were discussing this morning, just this morning, and they basically said to him, think about what your country needs to do and think about it in terms of what you would have done and what the international community would have done if indeed this had been successful. >> would have been catastrophic and so many ways that i think we can even begin to imagine. so i quite agree with you about the seriousness of what occurred here, and i too agree with you

that our law enforcement officials did a truly superb job and if i may senator -- say senator as did the governor of mexico which cooperated closely with the u.s. government in a really excellent law enforcement effort between our two countries, which i think is quite important going forward. so, i agree with you and it is why we are saying to those who had hesitated in enforcing the sanctions that are on the table, there are many tools on the table, many tools on the table and all countries have to do is pick them up and make them real. and that is our effort. we showed by example with treasuries actions that one can move speedily to designate. we are encouraging every country to do likewise to look at those designations and see if they are appropriate under the laws of their own country and clearly

under the multilateral sanctions that exist from the u.n., and i think we have to do everything we can to follow through on those enforcement actions to look at additional sanctions and additional opportunities, which david and i have discussed this morning, including legislation that has been suggested by members of this committee and further designations, all of which are on the table. >> mr. cohen. >> i think secretary sherman put it exactly right, the right way to look at this plot is that it was a plot that was intended to assassinate the saudi ambassador here in washington with you know, if others were killed in the execution plot. the quds force was -- would be fine with that as well so the right response to this is to look at this plot as further

confirmation really of what we already know about the quds force, and the quds force obviously being a very significant component to the iranian government and that is that the quds force is involved in the exportation of terrorist activity around the world. they are active in the region. the fact that they are active here is you no -- has crossed a red line as the secretary of state has said, but we have known that the quds force is a terrorist organization and we have acted against did with that knowledge in the past. >> it would seem to me mr. chairman, and my time has expired, but it would seem to me that there is no need for any other evidence than what we saw this week to inspire those who have hesitated from joining us

in the work that you have been trying to do, from getting out and in making sure that action like this actually can be carried out and even more horrific things can't be carried out. i hope you are doing absolutely everything you can do and we will do everything we can do to push the international community in the direction it needs to move. >> senator corchran. >> thank you mr. chairman and thank you for the -- we had yesterday and and we have a lot more time actually to ask a lot of questions at a whole different level and i appreciate your responses in the work you are doing. is interesting following senator bennett and senator kirk, if you look at americans previous responses to things like this, i mean if you really boil it down they were willing to do something here in our country that likely would have created a war. that has been our response to these kinds of things in the past. so if you really just take a a

to be mac2 c, it is very evident that the iranian government was willing to conduct an act of terrorism on our soil, knowing the history of the way americans have responded to that and they were willing, it appears to me to provoke a war which is i think what this most recent incident points out to us. so, you gave us some great stats yesterday and i know all of this is hard work and i really do appreciate what you have been able to accomplish as far as the effect on the banking system. i know again most of that was classified but let me ask you this question. iran is on a trajectory as far as enrichment. we know that where they are today, and i don't know how much of this is classified and how much isn't so i won't -- but we know that where they are today very quickly they can get to a point where they have bomb grade material. so, as i listen to you, i mean

all these things that you are doing have had the effect of freezing various activities but i guess what i would like to ask is, the trajectory that we are on, a trajectory that will alter their behavior fire to the time they are able to produce a bomb. i made that is the only reason we are doing this. all these other things are nice and economic growth compared to other countries, that is nice but that is really not our point. our point is to keep them from producing a bomb and i would like for you to tell me whether you think we in fact are on a trajectory that is going to keep that from happening. >> senator, i don't know the answer to that question. what i know is that we are doing everything we can to increase the pressure as extensively as we possibly can, so that we are

able to persuade the iranians as part of the dual-track strategy that secretary sherman described in her testimony, persuade the iranians to engage meaningfully with the international community before we get to that point that you described. what we are doing on our part and is part of a broader government effort is to develop the pressure on iran to try and induce them as soon as possible to engage meaningfully. that means continuing to take the steps we have taken to isolate the iranian financial institutions from the international financial sector. these are institutions that are involved in iran's proliferation activity. it serves a dual purpose. it fills the overall pressure on iran and service of the desire to have them engage

meaningfully. it also impedes iranians ability -- iran's ability to develop its nuclear program. the morgue difficult -- >> so, we went into great depth yesterday and all of this was shared. what i think we never got to us whether we think we are on a trajectory that is going to be the appropriate trajectory and again you have shared all this with me and i think you all are doing some great work. i just want your judgment as to whether a trajectory is deep enough. >> what i can say is that we remain persuaded ourselves that this is the right course, that we, by applying pressure across the board on iran, that this can be an effective approach. so i don't have a crystal ball. i can tell you for sure. >> again thank you and we welcome you and thank you for your call.

let me just close with this question. i want to stay on time. let me read -- reiterate i guess the question. menendez and kirk had developed some legislation that gives you additional tools, and you will basically are saying to us, please don't give us these additional tools. so we are on a trajectory and all of us want to make sure we have done everything we can to enhance your ability, and i know we have met directly with the state department to understand the reasons the state department doesn't want these tools, but just one more time. i think you are saying to us today, all of us want to help you get on a steeper trajectory, you are saying you don't really want the help we are trying to provide. >> i would not -- and i don't think the administration rightly feels that way. i think our view is the tools that have been provided have been enormously effective and we are making good use of them.

as senator menendez described earlier, legislation to perfect -- i think we would welcome. the question is, as always, you know, will this enhance our ability to pursue the objectives we are pursuing and i think we are very much willing to work with congress to perfect the overall sanctions. >> thank you and i thank all of you for your efforts. >> senator tester. >> thank you is your chairman and i want to echo the statements by many of the folks here. thank you free work. very much appreciated. you have got a very difficult job for thank you for what you do. we have heard folks talk about investments in the oilfields, from foreign companies to -- we have heard wendy talk about the fact you have had conversations with foreign governments about making sure that whatever sanctions out there are real. i want to talk about a little

bit closer to home. and, just tell me if i have got good or bad information here, but recently i heard one of america's largest companies, coke industries, was in the business of supporting iran through energy development. if they are doing it there are probably others that are doing it. i've got concerns with this and number one i think you can manipulate loopholes and so what he did might be in fact legal. the second one is that i am concerned the american companies would exploit loopholes and give iran the tools they need to be a morgue powerful player in the world. more of a threat to everybody in the world. so, the real question is, since obviously with some companies you can't enforce common sense or the sense of patriotism.

should we be allowing subsidiaries and american companies to be able to dupe business in iran, or should we be, as i said in my opening putting the screws to these companies? because quite frankly, does one thing for a chinese company to do it. that is unacceptable. it is really unacceptable american subsidiary to be doing it. could we get your comments on that? >> senator tester, i think i saw the same article about koch industries that you saw, and i will not speak specifically about koch industries, but i will address the issue broadly of subsidiaries of u.s. companies doing business in iran. it is a violation of u.s. law for a u.s. company to do business in iran via a subsidiary. what that means is if the u.s. parent is acting through a subsidiary, directing activity

that violates u.s. law. law. at the subsidiary is at the holy independently of the parent, u.s. law does not reach that subsidiary with the exception of, and i think secretary mills can elaborate on this. the re-exportation of control of items from the united states. the balance that has been struck in the law thus far is that we direct our laws to u.s. companies and been u.s. companies do, subsidiaries or not by definition u.s. persons. they are foreign persons, and so the basic theory is, we will look at what u.s. persons and u.s. companies do. if they are acting through a foreign person, then the law are habits that but if there are are foreign person acting independently -- >> she to be changed? >> well, think for subsidiaries of u.s. companies, i think it is

fair to look at that very carefully. >> should we be doing things like requiring american companies to disclose to their investors their subsidiaries? and what kind of business they are and to? >> i think that is an interesting idea. we are working on some other ideas in the treasury department on how to more effectively limit to what subsidiaries can do and the benefits of a subsidiaries to their parents. i think there are ways to go about this without crossing that line of saying gluck we are going to try to directly regulate a foreign person. there are ways they think to focus on the u.s. parent that will have an effect on whether a foreign subsidiary would be willing to do business with iran. >> i agree. david mills, would you like to

comment on the whole point about american company subsidiaries and if there is anything we could or should do if we need more flexibility from a congress perspective? >> i would differ on the overall policy issue to my colleagues here but i will say that if there is a u.s. national working at a foreign company, whether it is a u.s. subsidiary or not that national remains subject to u.s. jurisdiction and may not participate in any transactions with a prescribed party. but, we could just put the screws to the company for illegally subsidiaries of which illegally sourced goods from the united states when the u.s. exporter had no knowledge or reason to know that these goods were going to be shipped to iran so we did hold them accountable in that regard. to the fullest extent we can under the current law. speeches roker thing closing, think senator corker was right in some of his potential crystal

ball stuff he was doing as if that attack would have been successful. i have got to tell you, i think any company that has a subsidiary that is doing business with iran, we need to shine some sunlight on that because quite frankly i don't think the american people will accept that very well, and quite frankly i think that would take care of the problem so thank you. >> senator. >> thank you very much mr. chair. and mr. secretary, sherman. libya gave up its nuclear ambitions, nuclear weapons ambitions and it reached out some time ago. did our choice of supporting the invasion of libya undermine our core foreign-policy interests in iran?

>> i'm sorry, senator i missed the first part of your question. >> libby is one of the few countries that gave up their nuclear program. did our support of basically the dislocation or removal of the government undermined our for policy objectives in iran? >> actually i think quite the opposite, senator. i think that our support for the people of libya to wage the battle that they have one with the support of nato, with america having provided some support to that effort, but having being a nato-led effort in support of the opposition and libya says that people in a given country can and obviously great cost of living people get a government and a future that will better support their rights

to exist in dignity, prosperity and hope that we all take for granted. and i think to that extent, if you are suggesting that iran might look at that and say we had better not give up their nuclear weapons because we will end up like libya and the regime will be gone, that may be some thinking on behalf of the leaders of libya just as it made the of other states like north korea, that they had better hold onto their nuclear weapons to deter the rest of the world. but at the end of the day, as we saw in the beginnings of the green movement in iran, it is not sustainable over time. we live in a 24/7 internet and media connected world, and the iranian people understand that there are better and different ways to live their lives. so, think the real question here, which goes to what senator corker raised, is the timeline and that is our strategy of both

intense pressure, internationalized and persuasios changed -- achieve the deterrence that we see, the ultimate elimination of iran's nuclear weapons ambitions. >> i'm going to cut you off here because you are taking my full five minutes. i must say your answer is exact to the answer i've heard every time, but i think you would find if you really pondered it, that many leaders around the world have looked at north korea and pakistan and said we would rather be in their shoes than in been in libya's shoes so i think it is a nice tight argument, but i would say the world is more complicated than that when you are looking at the psychology of foreign leaders. one of the concerns in terms of the ability of persistence to organize the iranian government has been embraced by various

groups, is whether we are in a position to if you will, assist with the cell phone and internet technology access in ways that might help resistance organized in iran, and occasionally, well, just in that term sustained because i only have a short time. is there more we can do to assist in the communications that have proved so effective for grassroots groups around the world? >> we in fact have a fairly robust program to train people how to use technologies and how to reach through to the media in a way that you suggest, and given the repression that exist in iran, this is probably not the best form in which to discuss some of what we are able to do. >> thank you, and finally, it is

quite likely that very high iranian leaders approved or where involved in approving they plan to put -- on u.s. territory. is it time to try something far more aggressive, and i realize there are huge downsides but i just posted as a question. such as saying you want to export oil tankers out of the persian gulf? you can do that when you enter the program. >> senator, i certainly understand, we all have the same impulse, which is what can we do to make iran understand how rivas such an action was and had it occurred, how it would have been for them and the entire international community. i think that one of the things we have tried to do as the secretary would say, is used

power and be very careful about the responses we make to any circumstance that we don't escalate it beyond the point of which it is. but i understand the concern, and we are certainly looking at all of the options that might he available to us. >> thank you. >> i want to thank the witnesses for their testimony on this important issue. i think that today's hearing provided us useful information as we consider this issue going forward. thanks again to my colleagues and our panelists for being here today. this hearing is adjourned.

[inaudible conversations] [inaudible conversations] [inaudible conversations] ..

>> i have to get up in the morning and tell myself i can do this. if there's no one better to do this than i am. >> i have to believe that every time i go into the arena, into that room i had a mudslide in my hand and i am fully capable of

getting this patient in and out of the operating room because that is the trust these patients have on me. and i walk that fine line between confidence and arrogance. >> of course i am delighted, but not surprised by the final repeal of the 18th amendment. i felt all along that when this matter was properly submitted for the rank-and-file of people, they would readily see it had no place in our constitution.

>> cabinet officials discuss threats to u.s. security in a hearing before the house foreign affairs ready today on capitol hill. william brownfield, assistant secretary of state for latin forest meant discuss mexico's assist in sun stopping potential terrorists at the border. this is two hours 15 minutes. [inaudible conversations] [inaudible conversations] >> the committee will come to order. i'd like to recognize the visiting delegation from the

afghan national assembly. we have 16 members of parliament from the afghan national assembly, mostly from the budget and economic committees. we have the secretary of the budget committee, the chairman of the budget committee. we have many important folks here in the delegation is here to observe how committee hearings operate in the house. good luck with that. and if you could please stand, i know that you are over here and over here as well. thank you very much. [applause] thank you. thank you, ladies and gentlemen. it is an honor for us to have you visit our committee, learn from our mistakes and get a good democracy going there in afghanistan. we are so appreciative of your answers and your hard work.

thank you so much for honoring us with your present. after recognizing myself and my friend the ranking member, mr. bergman for seven minutes each for opening statement, i will recognize the chair in the ranking member of the subcommittee on western hemisphere for three minutes each and then one minute for any members who seek recognition. we will then hear from eyewitnesses and without objection, the witnesses prepared statements will be made part of the record. members may have five days to ensure his statements and questions for the record subject to the length limitation in the rules. the chair now recognizes herself for seven minutes. in light of this week's foiled iranian top five on american soil, and this meeting could not be more timely. i want to commend the work of the dea and fbi and all of our outstanding agencies for their

incredible work in uncovering this plot. i applaud the efforts of all law enforcement personnel and intelligence officers that continue to protect our homeland and keep it safe. kudos also to the mexican agencies who collaborated with us in making this a successful operation. the issues to be covered by this hearing has been a priority -- have been a priority for many of us on this committee for some time as we thought to develop legislative policy and responses to counter iran's increasing the dvds in the western hemisphere , the threat of islamic extremists in the region and threat posed by the narco trafficking networks and related violence in and of, but also as ready-made networks to facilitate and support other terroristic duties throughout the hemisphere, including right here in the united states as we saw in that plot. we must stop looking at the drug cartel today solely from a law

enforcement active and consider designating these narco trafficking members as foreign terrorist organizations and their leaders as specially designated nationals if they are providing material support and assistance to other foreign terrorist organizations and is specially designated nationals and their state sponsors. the foiled iranian plot also underscores the need to assess current u.s. strategy and examine what actions the united states must now undertake looking beyond existing initiatives to confront the evolving and emerging threats and security challenges in the western hemisphere. the u.s. provided nearly $2 billion in charity related assistance to the countries in latin america and the caribbean in last fiscal year. is this assistance advancing u.s. security check is in what has been a tangible return on our investment?

while violent crime in central america it continues to increase, our counternarcotics support for these countries remains limited. i central america is ripped apart by drug violence, and the state department continues to dole out counternarcotics funding to regimes elsewhere in latin america that are actively working against u.s. interests. in bolivia, for example, the state is providing $15 million for fiscal year 2011 to fight drug trafficking and get bolivia is actively working against u.s. interests come out with john from the single convention on narcotic sharks at the u.n. and the former bolivian drug chief, general rené sanabria was sentenced last month to 15 years in prison for drug smuggling charges. in peru, the state has spent over $70 million in the past two fiscal years on counternarcotics programs, but according to the office of national drug control

policy, coca cultivation increased in 2010 by 33%, which led to a 13 all-time high, no pun intended. further, the new peruvian administration temporarily suspended u.s. funded coca eradication programs earlier this year. there is no question that equipment intact allergy are necessary for protect the integrity of this region from drug cartels, from extremist groups and from rogue regimes. i am pleased to see that many countries in the region, such as columbia, assuming a more active role in taking on the threat. however, venezuela and brazil's increasing purchase of advanced lethal military equipment from russia and china is very troubling and may lead to an arms race in the region. as we formulate and implement our security policy in the hemisphere, it is crucial that

we understand the transnational nature of the illicit individuals and groups when we are targeting. rogue regimes come extremist groups leverage the resources of the sympathize or is too strength and their capabilities in the region and advanced their hate filled agenda is. for years, the state department has reported on the fund-raising activities of hezbollah and hamas in the region. this week spoiled plot contributes to the growing evidence of the potential links between these groups and the drug cartels as we know such a linkage was not made has those were our guys posing as members of the drug cartels. but it seems that her sworn enemy, a land, sees a potential kindred spirits in the joe cartels in mexico. we see report on the expansions into west africa and it

potential links with hezbollah and al qaeda in the land of islamic monogram. in june, koran and the rest of the venezuela aligns alba countries in latin america, inaugurated a military academy in bolivia to educate and train their forces. and we know that cuban intelligence officers are indicted throughout the venezuela government as well as spread across the hemisphere working against u.s. national security interests. this week we also learned that venezuela and cuba foreign minister zloty delegation, which included representatives of ecuador, nicaragua and bolivia juicier yet to meet with al-assad to show their support of his brutal attacks against his own people. and finally the department of defense report from last year stated that iran could force has increased presence in latin america, particularly venezuela.

our national security interest on the stability of our hemisphere the whole and this week philpott has reminded us that our homeland security is at stake. we must take immediate action to counter these threats and to not waste valuable resources on misplaced diplomacy with those who seek to do us harm. so i think oliver witnesses for being here today and i am now so please return to my friend, the ranking member of our committee, mr. berman of california for his statement. >> thank you very much, madam chairman and i join you in welcoming our brothers and sisters from the afghan national assembly. i hope that d.c. this morning will cause you to lose faith in democracy, but we will leave here. and what you'll probably see little bit of is some disagreements but hopefully not being more disagreeable than

usual. and we are glad to have you here. this is our first full committee hearing that we've had this congress that touches on our own hemisphere. and the title is revealing. while there are certainly security related issues in the region that deserve our very close attention, like the foiled plot to murder the saudi ambassador, i think it is a mistake to view our neighborhood is a constellation of threats rather than a series of opportunities. this approach is not only understate. it has the real cost for the united states. in his first term, the administration of president george w. bush emphasized that the confrontations in the americas. but in the second term, his administration at that did a very different tone. why? because it became painfully clear that his initial approach did not review a centrist. and in fact, it did considerable

damage. the u.s. is still recovering from the colossal loss of influence in the region that resulted from those policies. our constant post-9/11 lectures on terrorism to the region by this effort and homegrown terrorism for 50 years left at that piece. today, much of what latin america perceives that we hold them at arms length or worse as the title of this hearing implies. rather we see them as a problem rather than the partners. to its credit, the obama administration ignobly leon that it understood the need to chart a different course. in his speech to this region's leaders, a few months after taking office on the president obama sought to defuse the threats and security legacy by emphasizing the trust has to be earned over time and pledging that the u.s. seeks an equal

partnership in the hemisphere. all of this he said must now renew the common state that we haven't one another. this administration has made significant strides in regaining that damage trust as well as the influence that flows from it. the presidents trip to the region this past march was understated, but self-assured and purposeful. secretary plantains engagement in the region have also paid great dividends. in the first state of the union speech, president obama said our power grows there is prudent use. our security and many from the justice of our cause and the force of our example. nowhere is this notion were sitting in our own hemisphere and much more needs to be done. to be sure, the u.s. must remain aware of all security can turns in this region and the list is long. it ranges from the fight against barbaric drug cartels in neighboring mexico to the

possibility of mass migrations to the u.s. from cuba or haiti. these issues must be placed in a policy contact and in a framework that permits the u.s. to understand and forcefully pursue its strategic interest in its values. the witnesses before us today represent heroes which deal only with some call it, the drugs and hugs issues in the western hemisphere. this is no reflection on the panelist whose work i hold in the highest esteem. but it paints an incomplete and skewed picture of our relationships with our neighbors. assistant secretary brown filled because of your past work in the state department bureau exposition to frame these issues for us and the bureau of western hemisphere affairs, i look to you to help us understand the complete picture. just last week, the western hemisphere said committee held a

second hearing intended to peddle the notion that in the fight against the drug cartels, mexico is facing a full-scale insurgency from politically motivated terrorists. then the republican candidate appeared in cavalier fashion that we should then u.s. troops in mexico. this is a clear slap in the face of mexican neighbors and particularly to ally, president calderon on an issue that both of our government has declared as a shared problem and requires a true partnership to solve. it is critical our policy toward the region peace based on solid facts. yet we sometimes seem to be chasing ghosts are creating caricatures of security threats. we should condemn the israeli embassy and the amia center in argentina by a man and hezbollah back in the 1990s. and if the foiled iran plot to murder at the ambassador u.s.

turns out to be true and i assume it is, this would represent a significant escalation of the iranian government terratec takes command reminiscent of those actions in argentina decades ago. at the same time, the persistent and bizarre statement that iran has built his largest embassy in the world in managua or alternatively caracas is simply untrue and only a distraction of what should be a serious distraction of the two nature and dimension of the uranium threat and what we should do to prepare for it. this is neither a semantic nor an academic exercise. the stakes are real and they are hired. this hemisphere is by far our biggest trading partner and our biggest energy supplier. we aspire to the same values. overwhelmingly, the constitutions of these countries are based on ours. if we don't keep relations with our neighbors on the right track, there is a real risk that the biggest regional threat he said the united states could

become our own ability to take advantage of the irreplaceable tyson enjoyed with a diverse and dynamic countries of our hemisphere. and i yield back. >> thank you so much. i am pleased to yield three minutes to the subcommittee from the chairman, mr. mack of florida who doesn't paddle, that puts forward a thoughtful non-pollyanna ss is that the threat that our latin american allies face. please steal 103 minutes. >> thank you, not an share. i also want to say that i associate myself with all of your opening statement and thank you for your leadership. i also would like for those who are watching or paying attention to this, you could not have seen or heard more of a clear difference in direction down from the chair of the committee and the ranking member. the idea that we are going to be

safer in our hemisphere, which is a shared desire by all of the countries on the western hemisphere that this administration has somehow improved our security in the western hemisphere i think is at stake in, shortsighted and unrealistic. not wanting to address the real threat creates opportunity for those that wish to do harm on the united states and other countries do not america. i have been suggesting i'm proposing for years now to hugo chavez be placed on the state sponsor of terrorism. there is no doubt to hugo chavez supports terrorist organizations. whether it's a or iran, we know that there are flights from iran into venezuela to go unchecked.

and that has to stop. and chavez needs to be held accountable. we also know that in mexico, the situation on the ground is changed and there's no denying it. we've had two hearings in the western hemisphere focus on mexico and the evolution of the threat of the drug cartels. and i think what we've seen over the last couple days with this plot -- this assassination plot highlights the work of our committee in defining what is happening in mexico with the cartels as an insurgency that uses terrorist activities to further its cause. you cannot deny it. now you might have a disagreement about wanting to label it as an insurgency for political means.

but i think if you're unwilling to identify the problem correctly, then you are unable to properly put a policy forward to help combat it. i will say this, our friends in mexico, we share the same goal. we want freedom and security and prosperity for all of our people. mexico doesn't want guns and cash moving south. we don't want drugs and terrorists moving north. we must do something about our border. we must secure our border. i think the challenges in the western hemisphere can be overcome. inflict a free-trade agreement that passed the house yesterday are very good start. unfortunately, it took a long time for those to come. and i've had meetings with the president of panama and colombia, where they almost gave up.

so i'm glad to see that we passed those. madam chair, thank you for the time. i think there's a lot of challenges and i appreciate the hearing today. >> thank you very much, mr. mack for your leadership on this issues. mr. angle is the ranking member of the subcommittee on western hemisphere and he is recognized for five minutes. >> thank you very much, madam chairwoman. thank you for holding this important hearing today. as ranking member of the western hemisphere subcommittee, i'm well aware personally of your long-standing interest in the region and i believe it is good that under your leadership committee paying close attention to the issues which impact our friends south of the border. today's hearing focuses on security and emerging threats and latin america and the caribbean. these are important topics in this committee is right to focus on them. only tuesday we learned that the elements of the iranian government tried to hire mexican drug criminals to murder the saudi ambassador. but the work of the dea and fbi

along with the improved security cooperation with the mexican government, we were able to apprehend the perpetrators before they could carry out this terrible plot. we've spent much time and effort expanding security coordination with mexico, colombia and others in the region interact in a drug and crime flow through the caribbean and central america and keeping a close eye on the relationship between venezuela and iran. as chair of the western hemisphere subcommittee during the previous four years, i held hearings on all of these issues and as i consider them serious and worthy of our attention that they now our new chairman, mr. mack does as well. however, we must recognize issues that the region to extend beyond security during my tenure in the chair, the western hemisphere subcommittee covered poverty, inequality and remittances press freedoms and other issues. i share the turn of the chair of the full committee that committee and applaud this hearing. but i want to reiterate we must also not forget that the issues

which affect western hemisphere for well beyond security in the u.s. relationship with countries in the region extends significantly beyond the threats and dangers which this hearing will rightfully bring out. yesterday's passage of the colombia panama fta is pleased to vote for both of them, are only examples of the issues which connect us to this hemisphere. the u.s. shares cultural linguistic, social and other links of our southern neighbors. i have long said that one of our major problems involving security south of our border is the of the number of american guns, which flowed down to legally south of the border coming to our country illegally and then go south to mexico illegally. president calderon has told me personally that he believes 90% of the crimes committed by victor cartels are committed with a -- weapons that come from the united states out of new mexico. if we could stop that low, imagine much we could stop the

cartels and the drug violence. so as we move ahead with today's important hearing, let's remember that security is one component of the rich relationship the u.s. has the flat america and caribbean, but an important component and i'm very pleased, madam chair when commanded to call this important hearing today. >> thank you very much. i'm pleased to recognize members for one minute statements. mr. john and of ohio is recognized. >> thank you, madam chairman and thank you two witnesses for being here today. i find it too often we tend conditions serious threats to national security coming from far across the ocean one or the other. what is happening in our hemisphere is or it might just as important, if not worse. it is especially disconcerting when these emerging threats have been to reflect a joint venture with those who declare the destruction of the united states is one of their stated goals.

of course at this hearing today would be remiss not to mention the uncovered terrorist plot of earlier this week in the alleged role of the western hemisphere have played in facilitating a planned attack on american soil. iran's continued interest in partnering with nations so close to home is a legitimate danger to our national security, one that should also draw focus remains interest and connect team mineral exploration in countries that just happen to have a large unexploited uranium deposit. and with that, i look very much forward to the testimony from eyewitnesses. >> mr. sears said new jersey is recognized. >> thank you, madam chair and welcome to our committee hearing. i'll be very brief and just say that i hope would happen serves as a wake-up call for this country. the arabians are not in cuba on any other place to go to the beach or anything else other than to try to destabilize and to cause as much disruption to

the country as possible. i really believe that in my heart and i hope that we wake up and i always believe we should take a regional approach to security of this country, especially when it comes to south america and central america. the effort is a great effort, but i think more of a regional approach should be taken. so with that, i note that the balance of my time. >> thank you are much, sir. mission of ohio. >> thank you very much, madam chair. on the announcement of the plot to assassinate the ambassador from saudi arabia and the united states by an iranian operative living in texas illustrates the dangers that we live in. i mean, this gentleman attempted ura presumed drug cartel member from mexico to help carry out the deep. it showcases what illegal drug activities can do to our national security. venezuela's close relationship

with iran and its tentacles in the western hemisphere raises further can earn. more investigation into illegal activities and the western hemisphere are critically necessary and at least three questions need to be addressed first. exactly what are the threats to the national security in the western hemisphere? how penetrating and what kind of threats to they also pose to our allies? to, what are we currently doing to address these threats? and three, what can be done -- what can we be doing better and what more needs to be done? i'm looking forward to the testimony and i yield back. >> thank you, man. mr. chandler is recognized. >> thank you, madam chair. i am just very interested. i want to thank the panel for being here. i'm very interested to hear exactly what it is we are not doing that we ought to be doing, particularly vis-à-vis mexico and what solutions you all have. i think all of us have a sense

generally of what the threat to our peer at what are the solutions? what can this country actually do to secure our country from threats to our south that were not doing? i hope you all focus on that project dillard inasmuch as you can. >> thank you, sir. mr. turner of new york is recognized. >> thank you, madam chairwoman. i'm here to listen there today. >> mr. connolly of virginia. >> thank you, madam chairman. for a country preoccupied with the great, one has to conclude no one on earth is more familiar with the satanic announces the regime in tehran. the outrage that was revealed this week about a plot to assassinate the representative of another sovereign nation in this capital of this sovereign nation is unacceptable and that stretches virtually to believe that the highest levels of the

government both in the clerical and ahmadinejad regime, did not know, were not aware of this plot. seems to me that a lot has to be evidence to the contrary provided by that government that we will hold them accountable as if they plotted this from the highest halt the government in tehran itself. i look forward to the chairman. >> mr. bass is recognized. >> thank you, madam chair. from the comments in opening statements by my colleagues today on both sides of the aisle, we all recognize important challenges that must be addressed within the region. the united states and other western hemisphere nations must increase cooperation and collaboration to successfully and effectively address emerging challenges. while i know this hearing is focused on challenges and threats in the western hemisphere is about positive it

temples and i thought i would highlight those. the u.s. has played a critical role in recovery efforts in haiti since the devastating 2010 earthquake. the u.s. in close collaboration with the action center has successfully located and destroyed more than 3900 landmines left over from the 1995 conflict between peru and ecuador. the department of state continues to pursue pathways to prosperity, which links western hemisphere countries committed to democracy and in this regard, one question i hope will be answered is why we don't have ambassadors to ecuador and bolivia. maybe that will come up in the testimony of the witnesses. >> thank you so much. mr. deutsch of florida. >> thank you, madam chairman and witnesses are being here today. events of this week leave no doubt that the iranian regime is expanding dangerously so in the western hemisphere. but we've been aware irani

present in south america for some time, the possible link to the foiled plot to dangerous mexican drug cartel is particularly troubling. there's no doubt the machinist looking for additional opportunities to expand your influence diminishing seems to have a willing partner mr. sade are the merchants of venice within an iranian banks has led to bringing shame to be tested as many throughout the international banking system and interns continue to fund its illicit dvds -- nuclear activities and be the leading state sponsor of terror. just a venezuela benefit and their effect on the region remain unclear. as i said before, i've been concerned about the exploitation and terrorist organizations the rams and drug trafficking document currency fraud and money laundering. it's widely known. proxy has benefited financially from the manufacture and movement of pirated goods in the area appeared to look forward to discussing these issues with witnesses today.

the night mr. poe of texas, the advice shared by the sub committee on oversight and investigation. >> western hemisphere has been at work for a long time. i think we're starting to remember that what happens to a south is important to our national security. everyone south of the border in the united states and their neighbor after all. president then wrote in 1823 announced that a doctrine called the monroe.trim, many of us learned this in school. i don't know this eventide school anymore, but i'd like to see if that plays anything into what is taking place at their national policy or if it's been replaced by something else. certainly if it is still a policy of the u.s., ayn rand violated the monroe doctrine and i just say to you often put on that philosophy of the monroe doctrine. being a border state with mexico, i think the border is a national security issue. last year, 663 individuals came

from special-interest countries that were caught by our law enforcement at the border. and i'd like to you more about that. and we do, i think, labeled the drug cartels as foreign terrorist organizations and deal with them accordingly. >> thank you so much, mr. poe, kadesh is the way it is. i think all of our members for wonderful openings daemons and now we are so pleased to turn to our witnesses and welcome them. first, an old friend of our committee, william brownfield, the assistant secretary for the euro of international narcotics and law enforcement affairs at the department of state. or to his appointment, ambassador brownfield served

from 20,722,010 and ambassador to venezuela from 2,422,007. welcome. it's great to see you. next i'd like to welcome philip gold heard here at his assistant secretary to bureau of intelligence and research at the department of state. he previously served as coordinator for implementation of u.n. security council resolution 1874 on north korea and its u.s. ambassador to bolivia from 2006 to 2008. welcome, mr. goldberg. i'd like to welcome daniel glaser, the assistant secretary for terrorist financing in the office of terrorism and financial intelligence at the department of treasury. prior to this position, mr. glazer served as treasury department deputy assistant secretary. for terrorist financing and financial crime since november 2004. welcome, mr. glazer. finally at like to welcome paul stockton. thank you, mr. chairman. his assistant secretary of defense for homeland defense and security affairs. responsible on homeland defense

that judy, defense support for civil authority and western hemisphere security affairs for the department of defense. i think all of our witnesses. i kindly remind the prepared statements will be made part of the record and if you could then make your remarks to no more than five minutes and without objection or written statements will be answered into the record. we will begin with ambassador brownfield. >> by thank you, madam chairman, ranking member berman, ladies and gentlemen of the committee. thank you for the opportunity to appear before you today. madam chairman, i've been in the foreign service for 32 years. i mention this not just to make you feel sorry for me, but to suggest that the answer to today's theme of emerging threat in the western hemisphere have evolved over time. we are providing a snapshot of a moving train. in many ways, the speed and direction of that trained are

determined by your own policies and programs. if you had asked me to assess major threats in 1980, i would've pointed to guerrilla insurgencies supported by governments both within and outside of the hemisphere. in 1990, i would've answered huge vertically integrated colombian drug cartels controlling all trafficking in the andes. in the year 2000 would've said that the threat was the nexus between drug traffickers and guerrilla insurgencies in colombia and peru. in 2007, i would've argued that the most serious security threat to the united states had moved to mexico, were crammed in our call tells produce traffic and market their product into the united states. today, i believe our greatest threat has moved to central america, where traffickers and criminal gangs now facilitate

the flow of up to 95% of all reaching the u.s. and threatened the very government of. madam chairman, i suggest there is cause and effect here. we correctly focused on central america in the 1980s and cartels grew. after he broke the backs of the major cartels, smaller traffickers developed an unholy alliance with the colombian and the peruvians also. as columbia squeezed colombian traffickers, mexican cartels filled the void. and as the metadata initiative begins to fight against those cartels, we see them moving into central america. we still face security threats from drug cartels, guerrilla movements, organized crime and trafficking networks. but our job is to stay ahead of

the emerging threats. and right now, i believe that a central america. the president made that clear last march when he announced his central america citizen security partnership. our tactical challenges to provide additional resources for central america law enforcement and security programs, like the governments more closely together in regional efforts, engage other partners and supports our essential plan colombia admitted that initiative and caribbean basin programs. and we very much appreciate the committee support in this effort. the committee asked us to consider as well security threats from outside the hemisphere. they may not be as great as those from what end, but they very definitely exists. i served three very long years as an acid or to venezuela.

when i arrived in 2004, the diplomatic list showed fewer than 10 diplomats assigned to the ukrainian embassy. when i left in 2007, the number was above 40. the iranian ambassador never told me what his people were doing, but i assumed they were doing some thing. and if you had asked me when i left urgent tenet in 1989 the prospects for a massive terror attacks within five years supported by the reigning government that would kill more than 100 innocent people in buenos aires, i would've said that probability was scarier note. i would have been wrong, dead wrong. members of the committee, our mission is to assess threats from the hemisphere to the american people and support the programs that solve them. i believe our highest priority right now is central america, but we cannot lose sight of

mexico, colombia, caribbean and the andes. we must look ahead to tumorous priorities. i see an emerging trafficking threat from south america across the atlantic to west africa and from there to europe are back to north america. and we must not lose sight of the external players in our hemisphere. we did that in the early 1990s. we should never do that again. i'm chairman, i thank you for this opportunity and i look forward to your questions. >> thank you, mr. ambassador. now with a tear. can i thank you, i'm chairman, ranking member berman for this committee to be with you today. although much of the western hemisphere is experiencing strong economic growth, improving social and consolidated democratic institutions, their continued to be some threats to u.s. interests in the region and indications of new threats from outside the region.

attack that the united states continues to emanate primarily from the western hemisphere. the flow of drugs feels violence in mexico and contributes to survival of terrorist groups in colombia. populist governments continue to work to undercut u.s. influence in the region. we are concerned about increasing iranian activities in the hemisphere are together by church is in individuals directed elements of the reigning government were conspiring to assassinate the saudi arabian ambassador to the united states on u.s. soil. president calderon said russia's efforts to combat mexico's powerful drug cartels have achieved important successes but faces enormous challenges. mexico is pursuing a multifaceted strategy to eliminate the cartels leadership come to dismantle their and string to the rule of law. mexico faces escalated levels of virtual violence or told state amongst themselves for

dominance, but also seek to intimidate the government and population. mexican drug trafficking organizations are expanding into central america as the master brand is that, which is experienced in citizen security crisis that threatened the democratic gains made over the past two decades. across the region, we have witnessed surges in murder rates by transnational gangs of narcotics traffickers and rising crime. political instability challenge state institutions, ramp that corruption hamper efforts to that's a citizen safety in the region. in colombia in the 11 years since the initiation of plan colombia, remarkable success has been achieved in the fight narcotics trafficking and terrorist groups. the colombian military attacks have weakened the leadership in the group's membership has been cut nearly in half in the last decade. the colombian government has

expanded its presence throughout the country. these achievements have accompanied a successful counternarcotics strategy with ariel and manual eradication in one of the park's primary revenue resources. despite successes, colombia faces significant security challenges. jeremy's largest terrorist group in the hemisphere with over 8000 insurgents. it continues trafficking drugs and inflict casualties on the military police on a regular basis. in addition, criminal bands have emerged as a threat to public safety having consolidated control of the production and trafficking in some areas of the country. in addition, ion are committed to represent continues to track connections between venezuelan government and the allen. july 2010 the colombian government publicly exposed the presence of in venezuela. in the first half of 2011, venezuelans took stronger action against arresting two of its

members but his response to the diplomatic outreach initiated by colombian president sans toes. remains focused on potential for instability in cuba as a result of changes through castro has proposed to combat economic terry riche on the island. these plans are proceeding slowly and the regime strictly limits and suppresses. although some changes are underway, others will take much longer if they are instituted at all. despite the consolidation of democracy in much of the hemisphere, some countries continue to suffer decline in the quality of their democratic institutions. in some countries, with the narrowing of freedoms is the 10%, delegitimization of political opposition and a weakening of independent legislatures and judiciaries at the hands of populist presidents. although elections are held regularly in these countries, electroplating fields are skewed heavily in favor of incumbents. i say that not just because the issue is one of democracy, which

has been a long-standing policy in their are intelligent community has developed over decades, but also it has an impact on the ability to work with governments in the critical areas of counterterrorism and counternarcotics. there are continuing regional efforts to diminish u.s. diplomatic influence by creating organizations that a number of hopefuls supplant the oas and marginalize the u.s. on the international level, iran continues to reach out to latin america as a way to diminish international isolation. so far as relations with latin america so far as relations with latin america so far as relations with latin america typically only with governments to share its goal of reducing u.s. influence. since ahmadinejad took office in 2005, bilateral cooperation between iran and venezuela has the main diplomacy and defense into a more limited extent on energy and trade. most moderate governments and this is important to keep in mind, responded coolly to tehran to reach. we remain concerned that

hezbollah is able to tap into large lebanese diaspora in venezuela and elsewhere in latin america for fund raising. and we continue to look very closely for any indications of other activities particularly operational activity. came back again for the opportunity and i look forward to your questions. >> thank you for it much, sir. mr. glazer is recognized. >> thank you ltd. chairman, ranking member berman and established members of the committee for the opportunity to appear before you today to discuss emerging threats and challenges the western hemisphere. the western hemisphere is a riche of particular import at the treasury department. economic and financial institutions are fundamentally intertwined with those neighbors peered illicit financial opportunity will inevitably find its way across borders and into financial institutions. stand by to talk about how we are going to treasury department to new tools and capabilities to address this threat. the threat emanating narcotics has been and remains the

preeminent illicit finance challenge in the region perhaps within any other illicit financial activity, narcotics related money laundering cases financial institutions at risk and undermines the integrity of financial systems throughout the region. historically economic sanctions have been a primary weapon to target financial networks of drug trafficking organizations. over the past several years, u.s. distinction you're 2300 individual entities in latin america involved in narcotics trafficking. even if sanctions remain a centerpiece of the counternarcotics strategy, we recognize the importance of drawing upon additional tools for a deeper more lasting impact. this requires enhancing understanding the financial infrastructure of mexican drug trafficking organizations to enable deception. along with agency partners commodes and working closely with mexican counterparts to improve bilateral information sharing and coordination as part of a comprehensive strategy to attack financial resources of drug trafficking organizations. in addition to partnership with

the united states signed the site has, the cover of mexico is supposed to inactive far-reaching domestic anti-money laundering of it on. further, mexico showbread leadership in the region. recently, my counterparts in the mexican finance and banking commission jointly on a trip to guatemala and panama are we together engage country authorities on the importance of taking concerted action to undermine cartel financial networks. other the terrorist financial challenge does not rise to the level of the narcotics related financing, we take terry's fundraising seriously wherever it occurs. the phillies derive significant support in the region. hezbollah anadarko terrace revolutionary forces of colombia remain a. we have therefore focused are targeting efforts on fund raising and facilitation in venezuela and hezbollah activities in the border area persaud, paraguay and argentina. given the hearings focus on terrorist threats in the western

hemisphere, they think it's important to say a few words about this revelation we disrupt it and iran to assassinate the saudi ambassador here in washington. the dramatic reminder of the urgent and serious threat we face is not limited to iran's nuclear ambitions. earlier this summer the department exposed al qaeda network operating in iran under agreement with the reigning government announced the new evidence for terrorism. this is why we've been working for several years to address the full spectrum of ringing with the conduct. while it is in the interest of an increasingly isolated area to seek extension of it economic and financial ties to become a reality of today's iran has failed to establish a meaningful financial foothold in this region here when iran has managed to make rosy then click to that, most notably the u.s. designates along with european union of venezuelan subsidiary of the expert development of a man. we've also engages governments and private sector officials throughout the region torn against risky business with

iran. also working to build a robust domestic and international money laundering trademark to safeguard entire region from these types of threads. this financial passwords we've been working for many years to set antenna 200 counterterrorist prospectuses and hope countries in the region, both for implementation. every country with the notable exception of cuba has been rescheduled to be assessed against the united states standards. these assessments are published and highlight weaknesses in each jurisdiction along with recommendations for remedy deficient these. madam chairwoman, the treasury department is committed to prioritize and counter illicit financing work in the western hemisphere. we'll continue to seek ways to disrupt and dismantle financial networks and develop strong systemic safeguards across the region. thank you not torture questions. >> mr. stockton. >> madam chairman, ranking member berman of the distinguished members of the

committee, the western hemisphere's in the midst of a transformation. there are two trends of fundamental importance to u.s. security. the first-round does that security challenges in this hemisphere are becoming increasingly severe. i look over to talking about pacific that in response to your questions. but there is something else important going on and that is we have new opportunities to partner with the other nations on this region in order to work together to meet the emerging threats. the foil geranium plot was fascinating to saudi ambassador to the united basic amplified how these two trends are coming together. on one hand we have a very severe threat in our hemisphere from iran. at the same time, the governments of mexico was an absolutely indispensable partner in helping us meet this

challenge and i want to praise the government of mexico for stepping up to the plate in a way that is absolutely essential. the two trends are coming together here. threat and opportunities for partnership. there's also a broader trend here for partnership opportunities that i wanted to address. all across the hemisphere, we have nations that are not only increasingly able to handle their own threat to countries, but to be what i would call security exporters. that is to partner together with the united states to meet the shared challenges that we face. just a few examples. i always start with canada, our most special partners in the western hemisphere. there's nothing like norad for us. canada increase in the hopes of the caribbean, helping him in central america in ways that are very valuable from the u.s. perspective. this not only canada. chile working in central america

to build capacity. purcell, invaluable leadership role with medusa. and in colombia, let's look at columbia as the exemplar of this trend. call me and i will be making progress training helicopter pilots from mexico to go after the narco traffic cop is. this is a broader trend for making progress in building these partnerships, but i would suggest, madam chairman can i ranking member berman, there's much more we can do when i look forward the opportunity to talk about this. before i close it was to thank you, ranking member, members of this committee for helping make this progress possible. it's because of the assistance the united states is provided to her partner nations to build their capacity that enables them not to become security providers across our hemisphere. so together we can meet the increasingly severe challenges we face.

thank you so much. >> thank you and i think all of the panelists. i'm so glad that you brought up columbia being such a stable allied and security exporters. you wouldn't know it from the debate that took place on the house floor. you should see that. it's like the cambodia killing fields you. we thank columbia for everything it has done to transform the country by fighting against these extremists and we hope that mexico, their leadership is equally as successful before the stroke cartels destroy the beautiful country. i want to ask you about iran. there's been reports that are no longer one from iran to venezuela, the airship into madrid. is that so? if so, why the change? what information do we have about who was transported on what is a transported?

the second question just a test for operations in latin america. what changes have we seen in their involvement in latin america? what are they targeting? emission money laundering in the tri-border area, et cetera. where do you think they will expand next and what is their goal? thank you. >> underplayed tissue, madam chairman, we understand the commercial flight that existed turning around and venezuela has ceased. but we do keep in monitor other flights coming back and forth. >> when you save flights -- so using an addition to this commercial flight, there were other flights that may still be taking place quite >> no, i don't want to be push into the information we gather from the intelligence would have

to be discussed in a classified setting. as for hezbollah, are interesting and our understanding of their operations are largely in the fund-raising area. they tap the large the lebanese shia expatriate community and not american venezuela and other countries in the tri-border region to raise funds. we do not know of operational activities, but we watched that very closely. >> what can the u.s. do to put an end or this illicit hippity of money laundering and the tri-border area? mention these countries that are strong allies of the united states is that we have very strong diplomatic and commercial ties. are we without tools? did not defer to my treasury department. >> thank you, not him. first of all, any time we talk

about hezbollah fundraising, first thing important to flag is by far the most significant donor to hezbollah is iran. all other forms of countries powell and a very thin. that's not to say we should tackle all sources of fundraising, but it is chief financial of hezbollah and survives on iranian support. that said, as he pointed out and as hezbollah to raise financial support from the western hemisphere's phone from fundraisers and venezuela. and i think we need to take a broad approach to addressing a cute one of the most important things to do on a systemic level is a noted in the testimony's ensure all these countries have terrorist financing, regulatory regimes, law-enforcement something work closely with

countries in the region on, pay merely through financial task force and regional affiliates of the task force. if important countries like argentina, for example, an act money-laundering laws. >> t. believe in these three countries, have they done enough to do away with the hezbollah money-laundering activities? >> well, i think there's more to be done on that. and they said, it is important to a natural at. and they said, it is important to a natural outcome of that addition, in argentina remained to be enacted, it is to take the reaction respect to hezbollah fundraising appear to treasury department department has designated 19 hezbollah individuals over the years. i think it an interesting fact that we took earlier this year than it is sufficient federally designated under section 11 of

the lebanese canadian bank in beirut, which had ties into western atmosphere but they central america by necrotic trafficking. >> c. were able to use the patriot act to get to some of these banks that have ties if they are ties to the united states? >> absolutely. we as the patriot act. the lebanese canadian bank also showed the pattern but have so i was driving financial support from criminal activities of this drug trafficking ring. >> how many -- that's one case. you have similar success stories we've been able to use the patriot act to get to these illicit operations in latin america? ..

>> the written testimony for assistant secretary goldberg talks about three, the top per sis tent threats of drugs, pop populous governments like venezuela and iran. secretary brownfield, his written testimony and verbal testimony did not mention iran or populous government. it did not mention venezuela. obviously, some of that comes from each function that you

have, but there's -- building on what this assistant secretary stockton said, could you take two minutes, ambassador brownfield, to give from your western hemisphere background a broader policy perspective in terms of our security and general relationship with the hem steer, in two minutes. -- hemisphere, in two minutes. >> sure, congressman, i'll tray. you correctly noticed we attack the same issues from different perspective given what our speedometers are, not because -- responsibility, not because we disagree. that does not include the boston red sox, by the way.

i'll also try not to move into the terrain of the acting assistant secretary for western hemisphere who obviously that has the responsibility for overall policy. congressman, i suggest to you latin america is in transition for the past 10 or 15 years. that transition is evidenced by what both phil and i have attempted 20 talk about in -- to talk about in terms of an appeal of some countries with pop pew louse governments with fairly simplistic solutions to government problems. we have that package of countries. call them what you will. there's another group of countries that have committed themselves to a model, in my opinion, has proven to work fairly well for the past 200 years, and that's a model driven on market economies and governments that provide basic protections, but that do not attempt to run the economy

themself, and then you have a group of countries 234 between -- in between that swing between one or the other. our policy in the last ten years has been dealing with the three sets of countries attacking the problems, the security problems, the law enforcement problems, the threats, if you will, that come from the region taking into account or overlaying on that approach this fundamental issue of transition within the reason. permly, i believe -- personally, i believe we've done a fairly good job at it. i would suggest to that you latin america today in the year 2011 offers a better, more positive picture than ten years ago and certainly better than 15 or 20 years ago. i think we have some extraordinary good news stories to tell. colombia, formost morning them, i personally believe we're making progress in mexico, and that progress will be increasingly evident in the years ahead. >> well, thank you.

i'd love to hear you expand on this, but i got a minute. >> you just gave me two minutes, congressman. >> that's right, and you only took two and a half. [laughter] maybe this is for secretary glazer, although, ambassador goldberg, maybe you also. does the assassination-bombing plot that was stopped, and i will take what secretary stockton said, that there's no disagreement among the panelists that mexican government was a partner in helping us to apprehend the plotter and stop the plot, but does that change the way we understand the threat from the government of iran? i'm asking you in your worldwide hats. >> sure. i don't think it changes the way we view the threat from iran.

earlier this summer, we exposed an al-qaeda facilitation network operating under an agreement on iranian government on their territory. iran supports for terrorism and participation in terrorism is not a new phenomena. now, certainly, this most recent plot makes it more troubling than ever, but from what we do at the treasury department, this just reaffirms the importance of what we do broadly trying to put financial pressure on iran broadly, flout the world, -- throughout the world, western hem -- hemisphere, and as said by numerous people over the last couple of days, my hope and expectation is that this most recent blot -- plot is going to make it a lot easier to even take it to the next level internationally with respect to our friends, allies, and partners throughout the

world to demonstrate to them the importance of excluding iran frustrate world financial system. >> i only add iran is on our list of state sponsors for terrorism for decades. we go back to the early 1990s and the attacks you mentioned, mr. berman, in argentina, the attacks on u.s. troops in iraq, and support for those activities, nuclear program that is not fully accounted for to say the least. >> thank you, mr. ambassador. thank you mr. berman. chairman mac of the western hemisphere subcommittee. >> thank you, madam chair. i want to thank the panel for your insight and for being here today. before i get into some of my questions, i

there was a gao report. as you drill down, it's 90% of the guns 245 are traceable, and it's only the u.s. guns that are traceable. that has to be put on the record for people to understand. if we're worries about guns going into mexico, that policy, the fast and furious policy, everyone in this room should be appalled by that policy. let me first start with venezuela. is hugo chavez in control of his government? ambassador brownfield? >> i would answer the question this way, mr. chairman. virtually his entire government

is unwilling to, in my opinion, make decisions without hearing his view. to that extent, he's clearly in control. if the question is everything that is going on in his government known to and controlled by him, that's a more open question. >> but you would agree that government officials in venezuela would not want to go against the president chavez? >> i would agree with that statement for sure. >> okay. so we know that venezuela was selling gasoline in violation of the iran sanctions act supporting a terrorist organization. the treasury department in early september put sanctions on or does enated -- designated four government officials in venezuela on the

drug kingpin and their quote was, "today's actions exposed four venezuela government officials as key facilitators of arms, security, training, and other assistance in support of the farq operations in venezuela ." my question is if we have a list of state sponsor of terror and we have a country and government in venezuela that is supporting terrorists and trors -- terrorist organizations whether it's iran or the farq, and we agree that hugo chavez is in charge with an iron fist of his government and then sanction four members of his government in support of the farq, how can we not designate venezuela as a state sponsor of terror?

>> mr. chairman, there is not a human being in this room who is less likely to defend the actions decision of the president of the republic of venezuela than your humble servant. that said, you've moved into an area that's beyond my area of responsibility, so i'll defer on answering your specific question. >> somehow i thought that would happen. let me go into another question. what is the difference tween the farq and the mexican drug cartels? >> you're looking at me. i'll take a crack at that one, mr. chairman. i mean, i could speak for days, but i suppose the fundamental differences i point to is that the farq is an organization that climbs 20 have a -- claims to have a philosophical, political, ideological philosophy if you will, and the drug trafficking organizations do not. that's how i describe it. >> okay. going off of that, if the

cartels in mexico offer health care, trying to displace the government, isn't that politically motivated? offering health care, putting on, you know, going into these communities and putting on barbecues or picnics and trying to win the support of the public so the public will listen to the cartels and not the government, isn't that a political motivation? >> you know what i'm going to respond, mr. chairman, because you got me to commit to this last week in this very same room. i do acknowledge that many of the facts on the ground of the things that are being done by those organizations are consistent with what we would call either terrorism or insurgency in other countries. >> thank you very much. madam chair, it is clear an insurgency is happening in mexico and venezuela must be placed on the state sponsors of

terrorism list. >> thank you. mr. engle is recognized. >> thank you, madam chair. i have to say to my friend, mr. mack, we agree on a great deal. i don't really think it matters whether -- i mentioned that president calderón said it was 90%, and in fact, in jamaica, the prime minister says it's more than 90% in his country. it doesn't matter whether it's 70% or 90%, i think what matters is that illegal guns are coming into this country and then going south of the border. we know that these people who set up gun shops on the texas-mexico border or gun shows or things like that to sell multi. -- multiple guns, we know where the guns are going. it's way beyond second amendment rights. if we are to identify terrorism in mexico as a threat as you say, if we are going to say that

this is a real problem with the drug cartels, we have to do something to curve the illegal flow of guns coming from the united states and south of the border. let me quote secretary clinton in march of 2009. she said, quote, "we know very well that the drug traffickers are motivated by the demand of illegal drugs in the united states, and that they are armed by the transport of weapons from the united states." to me, this means in effect that the united states has played a role in creating the top persistent threat, ambassador goldberg, which you identified in the testimony, you put drugs at the top of the regional threats list, so how is the u.s. government's response to the threat taking the of our own -- taking account of our own responsibility to the threat. i'm disappointed president obama has not invoked u.s. law which was utilized by the first president bush and then by

president clinton to be able to get at these things. what are we doing in the government to acknowledge and try to stop the flow of illegal weapons south of the border? >> mr. engel, i'll hide behind the fact that what we do is on the south side of the border, obviously. we do the foreign relations side of this effort. i will say to you that we are supporting programs, organizations, and institutions in mexico that provide their side of trying to control the movement of illicit product, goods, and people across that border, and just as we have an obligation to control what moves across the border from the

northern side, we are working with them to assure one, they have the equipment, two, they have the skills, the training, and the expertise necessary; and three, they have the coordination and jointness with u.s. institutions to control it. that, i can tell you from where i sit. if you bring up the larger political and policy question, you move beyond the area where i can offer you useful input. >> thank you. let me raise a couple of other things quickly. mr. goldberg, your testimony points out the u.s. regional muscle is under stress probably because the region's countries are forming competing organizations and is not inviting the united states to become a member. the only regional organization in which we are members is the oas, but recently, we voted, every majority member voted to fund the oas. i think that's a mistake. can you talk about the importance of the oas, flawed

that it is, i think we're there. we are an influence. we're important, and i think these competing organizations, you know, if you take some of these other groups or whatever where we are not a part of it, we're much better off trying to strengthen the oas in my opinion because we're there at the table. >> mr. engel, my point was straightly analytical and speaking about the trends in the region, and i'm not on the policy side, so i'm not able to speak about the utility of oas. it's, as i say, it's an overarching point of what's happening in the region, but i take your point obviously, but the wha bureau would need to -- >> let me ask you, ambassador goldberg, we sat together in february of 2008 in la paz when you were ambassador of bolivia. currently, we do in the have relations with bolivia. you were the ambassador of

venezuela and ecuador as well. should we be thinking about sending ambassadors back? also, in the four seconds left, i'd like if some of the people answers questions, some of the other colleagues later on, talk about russia, china, in the region, should we be worried about their influence? >> thank you so much, mr. engel. mr. rivera, my florida colleague is recognized. >> may i yield 30 seconds to mr. mack? >> yes. >> thank you. to answer the question to ambassador brownfield, two things to stop the gun and the flow. one, secure the border, finish the double layer fence, add more border patrol agents, use of technology, and two, stop the destructive policies like fast and furious that undermind or policies in latin america.

i yield back. >> thank you so much. secretary glaser, thank you for being here. i appreciate it. are you in charge of o fact report to you? >> my office and that organization are both part of the office of financial intelligence. >> you work together closely 1234 >> absolutely. >> perhaps you can help me. we had the directer testify forever another committee, and i was asking about one issue of terrorist financing, financing the terrorist state of cuba, on the state didn't list of officials sponsor of terror. they are holding an american hostage right now. we know they have murdered americans over international air space. they certainly have earned their label as a terrorist state, and one of the ways we finance terrorism from cuba is by expanding the flights and travel and the money that goes to the

cuban dictatorship through the flights that they regulate. i wanted answers as to how many flights are going because the obama administration expanded the flights, how many passengers? what's the cost involved? how much money is the united states facilitating the terrorist activities in cuba, and i couldn't get answers. he was aunware of how many flights and passengers, but if we could work together, maybe you can help facilitate that information on how we're trying to regulate, if they are, indeed, regulating that activity, perhaps i could appeal to you to help me get some of that information. >> as always, we're at your disposal and happy to answer any questions to the extent that we have the information. >> thank you. i appreciate that because it does seem contradictory that we're trying to fight the

financing of terrorist activities, but we're facilitating that financing of terrorist activities by allowing more and more resources, capital resources to go to a terrorist regime like cuba. let me go to a specific example that you can perhaps also help me with, and that's hezbollah's activities in cuba. information that you can provide, what is -- we've seen recent reports about increased activity of hezbollah's terrorist activities and cooperation with cuba. request you tell us about that? >> i'd refer to ambassador goldberg about his relationship with cuba. i'll tell you from the financial angle is there's very little financial connectivity between hezbollah and cuba, but with respect to operational issues or other issues -- >> please. >> i add also on the operational activity that we haven't seen such. we've seen allegations of such activity, but have not been able to corroborate them or have not

corroborated them. >> so have you not seen any of the media reports regarding hezbollah setting up a base of operations in cuba regarding something called the caribbean case. does that ring a bell at all to you? >> i've seen allegations and press reports. as i mentioned, we have not corroborated that. perhaps we have actually -- we could go into more detail in a closed session. if you'd like more detailed information. >> absolutely. i can understand, perhaps, to this point haven't corroborated, but i suspect it's of interest to you that hezbollah is setting up in cuba. >> if that were the case, certainly. >> thank you. >> thank you. mr. chandler is recognized. >> thank you, madam chair. welcome gentlemen. ambassador brownfield, nice toe see you again. ives particularly interested --

i was particularly interested in your very brief history of our efforts in the last several decades in the region, and what struck me about it was that it seems like your view is that we put needed pressure on particular areas that are causing problems at a particular time. we solve those problems, at least up to a point, at least we make great roads, but then the problem moves elsewhere. it moves from one country or one region to another, and now you're most recent -- your most recent comment is you think it's worse in central america than in mexico, colombia, or elsewhere. it seems like it moved. it sounds like you think we're playing a big game of whack-a-mole. wherever we hit them, we tamp them down, but they pop up elsewhere. my question, so much of it, of course, has to do with illegal

drugs, the whole drug trafficking problem. i guess my question -- one of my questions would be are we ever going to be able to truly solve this problem, the problem of the supply of illicit drugs into this country, or do we, as mexican president calderón is quick to suggest, do we need to solve the demand problem in this country? will we ever be able to do it without solveing that problem? also, i would like any of your all's thoughts, please, on the chinese efforts here, in this hemisphere. they are obviously making significant investments in different countries in the hemisphere. do y'all consider their efforts to be a serious emerging threat? thank you. >> why don't i start, congressman, and i try to

address three issues you raised. one, are we playing whack-a-mole? i don't think so, but i do acknowledge we have to deal with certain realities. one is we have a finite number of resources that we have available to dedicate to our efforts and programs in the western hemisphere, and you pay us to get maximum value out of the resources that are made available to us. personally, i believe we made progress. the fact we are no longer talking colombia as a potential failed state or narco state. the fact we are seeing progress in our large neighbor to the immediate south, to my way of thinking is progress over where we were 10 or 15 years ago. second, you bring up the issue of demand reduction. you are absolutely correct. as is anyone who says part of the solution must be demand reduction, but my response to those who believe it is the only solution is that just as it is

wrong to put your entire focus on eliminating supply, it is equally wrong to put your entire focus on eliminating demand. you have to have a balanced approach. surely, that is one lesson we have learned the hard way over the last 40 years. i, for one, am open on figuring out how to adjust the balance between the two so long as no one tries to convince me we ought to do all on one side or all on the other. third and finally wiehle i'm not -- while i'm not an expert on china and their involvement in the region, i'll offer the very personal observation. i was ambassador to chile for two and a half years, venezuela for three, and colombia for two. china was an important player in each of those three countries in this past decade. 30 years ago, i very much doubt that would have been the case.

if dr. goldberg wishes to offer more observations, i give the floor to him. >> quickly, china clearly has economic interests around the world. looks for raw resources in much of africa and latin america, continues to do so. it seeks markets for its exports. these are economic challenges is how i best describe it, and in terms of political relationships, china has a growing relationship with brazil because of the involvement in the bricks group of countries, brazil, russia, india, china, and south africa, and so there is some concert of that diplomatic positions, but that's how i would describe it. >> just to add very quickly from an illicit finance perspective, which is what i focus on, i have not seen chinese activity in the reason to raise a concern, however, i think it's worth

pointing out that the black market peso exchange in which how narcotics are laundered, and it's been with #us for decades, it use to be a closed system within the western hemisphere now branched throughout the world including east asia. it's important to work with the chinese counterparts to focus on narcotics, money laundering. that's not to say the chinese are part of the problem, but working with them will definitely be part of the solution to that. >> thank you so much. mr. dunkin of south carolina is recognized. >> thank you, madam chair. thank you for being here. ambassador brownfield, we were involved in a committee hearing last week that i want to you remind you about, but i don't think anyone was surprised who have been following the threat that quds force and hezbollah, the arm of iran, used the

mexican drug cartel as a proposed conduit to carry out that assassination attempt that was thankfully foiled by the fbi this week. the relationship between hezbollah and the drug cartels already exist. we have been trying 20 raise the a-- to raise awareness for months. it's not whack-a-mole of chasing this or that group. we know there's a relationship between the mexican drug cartel and hezbollah for a long time. the evidence is clear with a number of hezbollah agents that have been incarcerated and captured along the border. the ied that exploded in july of 2010, the tunneling that resemble what is gone on in southern lebanon, so i don't believe anyone that's been following this has been caught off guard, but i think america as a whole is caught off guard, and it's timing for us to -- time for us to wake up and this is a real threat in the western hemisphere. madam chair, i want to bring to

your attention house resolution 429 that i filed on tuesday night that basically says we will urnlings the administration -- urge the administration and include the western hemisphere in the 2012 national strategy's area of focus absent in the 2011 edition. they will utilize an existing task force to be led by the department of homeland security in coordination with other members of the intelligence community to examine iran's presence, activity, and relationships in the western hemisphere including the united states of america. >> i look forward to reading it, thank you, mr. duncan. >> it's been co-sponsored as well, so it's a bipartisan issue. i want to remind ambassador brownfield we talked about this last week and talked about the triborder region, the southern border, and named a number of countries, and you remappedded me, let's not --

remined me, let's not forget vens venezuela, one of your past posts, so i wanted to remind everyone of that as well. how do links between terrorism, drugs, arms trafficking increase the ability to attack? >> the point, congressman, that i was making earlier was that what's new here and what we have found in the last few days is a renewed interest by elements within the iranian government to carry out attacks on the u.s. soil, but in the hemisphere. we saw it in earlier times. >> but it was also a backup plan in buenos aires again from what i've heard. the last attack and largest attack prior to never in this hemisphere happened in buenos aires with that attack on the israeli em bay sigh. --

embassy. >> that is true. in terms of what's happened, there is a case before a federal court at the moment, and we need to allow that to play out. what i think this case shows more is iran's interest in working in mexico or doing something in mexico than the other way around. >> okay. if hezbollah has a relationship with the cartels and can smuggle arms or people through our southern border, what would prevent them from bringing wmd's here? >> that's a kind of hypothetical question, and one that clearly we watch, we monitor, we try to prevent any kind of attack or use of the hemisphere for these kinds of activities. international terrorist groups, of course, are looking for that opportunity everywhere, and we have to be vigilant against them

and the law enforcement community and intelligence community, that's what we do. >> yeah. in the remaining time, ambassador brownfield, can you enlighten me more on the relationship between iran and venezuela as we've seen it in the last few months? >> congressman, i've been out of venezuela now for more than four years, and as a consequence, much of my personal data is going to be somewhat dated, but i say very briefly first, there is a much greater presence, official presence, of the iranian government in venezuela today than say ten years ago. second, there is obviously a much stronger political relationship, visits between the two presidents and engagement at senior levels than there was ten years ago. third, there's greater mutual support in international organizations like the united nations, the iaea atomic energy

agency than there was ten years ago. that is evident. it's public. it's in the media, and neither side denies it. >> thank you very much. thank you, mr. duncan. mr. meeks is recognized, the ranking member of europe and euroasia. >> thank you. one of the things i think everybody can agree that president obama is faux cuesed -- focused and doing a good job fighting terrorism and terrorists coming in here and getting rid of al-qaeda, and a number of the others. his record speaks for itself, and americans arguing is one thing, but one thing they agree on is president obama's focus and the way he's utilizing all intelligence to be sure he keeps america safe. now, i love this hemisphere. you know, i was sitting listening and i believe we must,

indeed, examine the topic of today's hearing, but we must do so without the polarizing rhetoric of policies a decade ago when the nation looked at the region through the cold war prism and chose our allies and interventions on that basis alone. we made some poor decisions when we were driven by fear, and had a single and narrow focus in those days. this is not the time to be fearful of developments in latin america and the caribbean. we're better served to look at the developments in the hemisphere. i think we can reflect on some very positive and meaningful changes in recent years that show remarkable progress and promise. i scolded colleagued yesterday when they look at colombia is only through the past, those who voted against colombia was about their past. nobody looked at why colombia is today, and their improvements it made and the direction it was moving forward. we got to stop just looking at

the past. our hemisphere has never been this democratic. the social and economic reforms of the past decade have done much to shore upmost of these nations. clearly, democracy is always a work in progress, and there's challenges that must be addressed and objectives to be pursued, poverty radification, strengthening the rule of law, equal opportunity, security for all segments of security, eliminating corruption, and protecting human rights, and that is precisely why i have argued in this committee that cutting u.s. foreign aid is such a small, but important item of our budget, and it's not in our interest to cut foreign aid. emerging threats don't just stem from outside of our borders. a significant number of countries in the western hemisphere could very well hold a similar hearing on threats that stem from our own nation. if we're going to talk emerging threats, i hope we include issues that resinate so deeply south of the border.

mr. engel talked about some. the u.s. demand for drugs, the flow of guns from america, my gracious, trade -- migration, trade embargo to name a few. let me make an unacknowledged point about regional progress. we are seeing, for the first time, sit participation in democratic light on the part of disadvantaged communities who finally feel free, feel they have a voice in a region where black and indigenous communities historically suffered without recourse. i speak in this instance about the united states as well. democracy's more inclusive as it's ever been. countries elected presidents that were born in poverty and do not come from the white elite. take belief -- bolivia, for example. that population is more involved and take pride that president morales is the first indigenous person to lead that country. this is not labeled as

demagogues and ideologs. people in her hemisphere who chose the leader, the biggest threats are criminality and poverty. neighbors live in the center politically than we are willing to acknowledge. my colleagues are quick to see ideologs, but if we look closely, we find pragmatists with whom we might build constructive relationship and dispel assumptions about the simple clinging -- without clinging to ideology. a decade ago when there was a new leader on the scene in brazil, many worried about him saying he was going to be a bad guy, but we see years later after the economy was expected to tank and social chaos was to ensue, instead, what we saw with the movement of brazil as a rising star in emerging nations. of course, we must not be polyanuos.

there's evil doers out there. we have to confront threats head on. alliances are essential so with continued engagement and continued cooperation and intelligence sharing, continued assistance to build the capacity of our neighbors, intelligence, security institutions, and continued joint operations and trining. i think the -- training. i think the glass is half full. we should salute our friends. i love the progress that the people of the western hemisphere. we talk down to them. we always say bad things. there's a lot of good things going on in the western hemisphere, and that's good for all of us. >> thank you thrch. mr. deustch of florida is recognized. >> thank you. you had a hard time imagining the bombing in the time you were there, and the terror plot highlights growing ties in the western hemisphere, but what's

troublesome, at the same time, iranian officials like defense minister travel freely in places like latin america. he spent time in bolivia this summer. i refer back to your comments because he's been subject to an interpoll red notice. what are we doing to prevent sanctioned officials from traveling to areas of concern and skirts sanctions by traveling under the disguise of official business. how are we tracking that and how can we prevent it? >> congressman, you raid a very -- raise a very valid question. it's in the case you're talking about, involving the questions of iran, argentina, and bolivia. he's under the equivalent of indictment for homicide related charges. at the end of the day, we're members of interpol, and we

support it to the extent a warning or notice is out there that would give us and u.s. law enforcement the authority to act against an individual. we would exercise that authority. if your question is asking more what are we doing or able to do in bolivia to get that government to take certain steps while i am not responsible for bolivia, obviously, we have perhaps less ability to influence the direction that government goes than certain other governments in the reason. >> the question -- thank you. the question really is more the former. it is individuals like him and others that ahmadinejad, the regime understands that the angsts law that ban on terror can be skirted by appointing officials the positions giving them the ability to travel freely.

i throw it up to other witnesses. i suggested, and i think there are others who have looked at this that existing sanctions law gives us the opportunity to sanction -- perhaps not those individuals who should not be traveling, but can because of our treaty obligations and the like, but to sanction those fuel suppliers who provide the fuel for the airlines, for example. what else can we do to crack down on those who would otherwise be subject to a travel ban, but get around it by they official capacity, the official title that they may hold? >> well, congressman, i think part, you have part of this in mind because you mentioned the whole issue relating to transportation. i mean, that is something that

we take seriously, and in this part of overall efforts with iran, and as you know, the treasury department, earlier this summer, we designated iran air, and we have the republic of iran shipping lines for sometime. i think you're thinking about this the right way. part of our efforts to squeeze iran, part of our efforts to apply pressure on iran is not just related to the financial side, but it's related to isolating iran on a broader basis than that. we're trying to do that when we target iran air and entities like mahan air. >> when we go forward and look forward to the debate on further iran sakss, given the work you do, what's the most important missing piece that helps you most that you don't currently have?

>> well, i think when we look at our ongoing efforts to continue to squeeze iran, it's, you know, it's about, you know, it's about finding where are they finding points of access to the international financial system and closing those off. you know, some of the things we look at, there are numerous branches of designated iranian banks around the world, branches of bank neli, operating in various countries. those are our banks we want to focus on, and isolate as much as possible. you know, we continue our efforts to engage with countries that engage with banks around the world with the to the saud enforcement. that's something we take seriously. we're on the right track, but it's a question of finding the points of entry into the international financial system and trying to close those off. >> thank you. >> thank you.

mr. mccaul, the vice chair of subcommittee on the western hemisphere. >> thank you, madam chair, welcome to the panelist. mr. ambassador, great to have your presence twice in a week. ex>> [inaudible] >> extreme pleasure for me as well. i'm sure it's been discussed, i had a mark up on homeland security, but the events of this week clearly called into question the relationship between terrorists and the drug cartels, and it's something that we, i think, we've been talking about it for quite some time. certainly, the hezbollah influence is nothing knew. we've known that has existed in latin america, particularly with venezuela. we had the operative who was brought across the border by a coyote and prosecuted in detroit several years ago, but what

happened this week is again, i think, hard evidence that these groups are now attempting, at least from their point of view, to reach out to members of the drug cartels, in this case, the z etas to carry out their plot of a high level official, an ambassador in the u.s. capitol. a brave move on the part of iran. it wonders if they have not tried to make those connections with the drug cartels in the past. i know this is not a classified setting, but have there within contacts between terrorist organizations and the drug cartels? >> mr. chairman, as so avoid being hit over the head by ambassador goldberg sited to my immediate side, i'll say i'm unaware of hard evidence in that

regard. i've seen reports, rumors, to the same extecht you have. -- extent you have that i can say it's official. >> i'd like to discuss it in a classified setting. >> sure. it's hard to believe something this high profile, that this would be the first time they've reached out to the mexican drug cartels. let me ask a couple other questions. ambassador, do you believe that the mexican drug cartels intimidate the civilian population in mexico? >> i believe you know my answer to this question, mr. chairman, because i believe i gave it last week. in certain communities, in certain places, at certain times, yes, i do. >> do you believe they intimidate or coerce of government in mexico? >> the same answer, depending on

location and time, but the answer is yes. >> do you agree they carry agents out by extortion, kid napings, and political -- kidnappings and political assassinations? >> those are among the tools. >> that is the definition of terrorism under federal law which is why i introduced my bill that has been -- it's been provocative, to designate them as foreign terrorist organizations, not to label, but rather to give us additional authorities to go after them far beyond the kingpin statute. this would be jurisdictionally, we would not be limited to just in the united states, and i think the 15 year enhancement, the freezing of assets in the united states, and the ain't to deport them would be a valuable tool, and i think in light of what happened this week, i think we really got to start taking this pretty seriously. if they are attempting to reach

out and, you know, get in bed, so to speak, with the mexican drug cartels, that's a serious issue. my judgment is this is not some rogue operation on the part of iran. mir judgment is this -- my judgment is this goes to higher levels within the iran government, and it was sanctioned at higher levels by iran, and i -- that leads me to my next question to anybody on the panel. what should be our response? i mean, i think the secretary's come out, and i think she's a very smart lady, talked about harsher sanctions. we certainly all support that, but what else can we do? for instance, should we be expelling suspected iranian intelligence officers that we know may be in the united states and help mexico expel the ones in mexico because the mexicans tell you we don't have a handle on who is down here. we don't know if there are, you know, we know that they are here, but they are having a hard

time identifying them. it seems to me we need to help mexico in that effort. i'll throw that out to the panel in general. what should be our response? >> i think you might have the wrong panel for that. >> that's true. this is western hemisphere; however, given the imfliewns they have in the -- influence they have in the hemisphere, what do you believe? >> well, i'll -- i'm -- i think i'm qualified to talk about the sanctions policy with respect to iran. it's what i spend a considerable part of my job doing, and i think that our overall efforts to date have been from the financial sanctions perspective, again, to isolate iran from the international financial systems, to isolate them economically, apply pressure on iran, and i think that that is the right approach. i think that's an approach that this government has taken for

years. >> thank you. thank you so much. >> can i just have one last question? >> given the -- >> mr. mccaul, i like you lots and appreciate and respect you, but i have to brutal with the time. >> okay. well, i appreciate it. >> i apologize. >> all right. g mr. conley is recognized for five minutes. >> thank you, mr. chairman, and if he were to formulate a question, i'll yield to him. >> thank you for your generosity. i appreciate that. i'll return the favor in the future. >> i know you will. >> real quickly. if there was an act, at the highest levels of the iranian government, political assassination, after all a political assassination started world war i, the start of the first world war. would you view this attempt to assassinate the ambassador, if indeed sanctions at the highest levels, an as act of warfare?

nobody wants to answer that? >> mr. chairman, as ambassador goldberg says, you have the wrong panel for this one. i can offer personal opinions, but that's not why we are here. >> uh-huh. >> i think it's safe for all of us to say that we share the same personal view of what has been revealed to us this week than you do. where we go from there, obviously, does require other people with other responsibilities to give a useful response to your question, and let me just reiterate, this does represent something that is very disturbing, and the use of mexico, the proposed attempt on the life of an ambassador here in washington on american soil. all of those things, the premises are correct.

>> and i'll yield back. thank you so much for your generosity. >> thank you so much. if i can follow-up on that, mr. ambassador, it's disturbing -- it's actually a lot more than that presumably, and what bothers one is that with impunity, these people went to mexico knowing that's where they would find a willing partner, and i guess part of my question is, you know, i went to mexico with mexican officials over a year and a half ago, and with a rather high level delegation here from the house, and we expressed great concern about violence, especially in the northern part of mexico, and we even raised the question, frankly, of a failed state.

the situation in northern mexico seems to have actually gotten worse, not better, and so i guess i would ask, in light of the recent revelations this week, how concerned do we need to be about stability in our southern neighbor? >> why don't i start with the response to that, congressman, and first, i'd like to remind everyone on the committee that at the end of the day, what we have is a positive outcome. let us not forget that a -- a plot was foiled. it was foiled in no small measure due to the cooperation between the governments of the united states and mexico which, in turn, is a product, perhaps of four years of unprecedented historic cooperation between our two governments, our two countries, and our two peoples in addressing common threats from a perspective of shared responsibility, so i do want to

remind you that that is our starting point. where do we go from here? the part of this project that i am responsible for, which is the merida initiative, obviously, we want to assure the support, the technology, the cooperation that we are providing to and with the cooperation of the government of mexico will also address this sort of threat. failing to do that would make us guilty of stupidity, and while i'm willing to be many things, i prefer not to be stupid. what we obviously have to do and what we are doing is assessing the nature of our programs, the organizations that we are working with, the institutions that we are working with to ensure that they are better able to address this sort of threat in the future. in my opinion, what we have done over the last four years has contributed to foiling this plot, and i think for that, we

all should owe ourselves a debt of gratitude. >> i think you make a good point, mr. ambassador, but part two of the inquiry has to do with concern about stability in northern mexico because it looks like, frankly, the situation has gotten worse. how concerned should we be about a de facto failed state in the northern part of mexico. >> yep. my own view 1 the initiative is -- is the initiative is in transition, and that initiative addresses the issue, and that's the support for federal institutions and organizations to support for state and local organizations and institutions. police, prosecutors, courts, municipal governments. the extent to which we are able to make that pivot, that transition, to strengthen the states of northern mexico, particularly the five states that border on the united states of america, will address that

specific issue. >> i thank you, mr. ambassador, and mr. chairman, my time is up. >> now that i have the chair, i'll be more generous. [laughter] >> if you allow me a personal privilege, i want to welcome paul stockton to the committee. we worked together many, many years ago, and it's good to see one of us at least did well. [laughter] >> congressman, i can see who did well, and, again, thank you and all the members of the committee for their contributions and leadership. >> well, thank you for that, and chair now recognizes the gentleman from new york, mr. higgins. >> thank you, mr. chairman. the theme of this hearing is emerging threats, and as important as knowing where terrorist activity exists, it's as important to know where it will exist in the future, and with a lot of these terrorist organizations including

hezbollah, it's a new generation. they are younger. they are more aggressive. they are more technologically sophisticated, and in the 12 country reaming of latin america, -- region of latin america, there's an estimated 138 hezbollah operatives. this concerns me because hezbollah is a proxy or acts as a proxy for venezuela, see ya, and iran. it's estimated that hezbollah has a presence in the united states in 15 major cities, and also in four major cities in canada. my concern is that they have the presence there and some will say, well, they are not really a threat because they have a preps. -- presence. well, it's an organization committed to jihad, and it's an organization we identify as a

major threat. i ask each of you to address the concern of the hezbollah presence not only generally in the western hemisphere, but specifically in the united states and in canada because those four cities in which hezbollah has a presence, the sense is that they are there so as to have access to major areas of the united states, so i ask you to assess that for us. >> our view of hezbollah and what it has been doing in the hemisphere and particularly south america has been in the area of fundraising for its activities. we talked some about that earlier. we have not -- we follow very closely, we track attempts to do operational activity of these groups around the world, and i'm -- i don't have information to corroborate