i said in my statement the impact of the celebrity culture on the rest of the media and what britain was becoming as a culture. and he said we'll perform a useful roll. he said what would you rather have articles or public executions? >> we allowhey these people or . some of them want to be in the magazines, and some do not. there is no distinction, but i think it performs a huge public service. >> his position is that all the press is doing is nearing society outside and perhaps inuring human nature --

mirroring human nature. >> i saw when your colleague? -- nocolleage questioned, and i do use the word now brutally honest, and there is no doubt of the reason the celebrity magazines are so successful is because it is what the public wants. the questions you should ask is about whether there are broader responsibilities about the sort of country we are and the sort of country we want to be. >> he said the only barometer was the fact of somebody puts a

pound coin on a news agency table and buys the table. they rarely ever see corrections on what is wrong, so they may say they are accountable to their readers on a commercial level, but there is no transparency about .ournalists sinc >> the very impact about what has been happening in this room is creating our reaction. >> absolutely. if you go back to the reason you

got me to come here, my statement about if the public knew the truth, the public is horrified by what they have heard in the last few weeks don because of what they saw, and they will argue these are atypical. my argument is this is not atypical. this is a major news commodity. >> thank you. point that thela culture of desperation make someone think it is permissible to spite the law to commission or turn a blind eye to

criminality, so you are making a point but is it now turns to one direction and it is hardly surprising that certain types of activity and soup. >> mr. mullins said basically the attitude is whatever it takes to get the story you get it, and if that is the attitude, whatever it takes, and they decide to cross a legal line, what is to stop them the next time or the next time? the editors may not know the law is being broken left, front, and center. here is what may happen. let's say a newspaper commissions a private investigator to do something and they do it successfully and it helps the newspaper published something they want to publish, and the private investigator knows there is good money in it,

so they look for stories and sell as if they were freelance journalist, and the newspaper does not want to know or even ask how the story is coming in. they treat these people as if they were a journalist, but you're talking about the criminal underworld feeding newspapers. do they know where they came from? do they always know? he had never published a story based on illegally obtained information. now can you really say that? does he really knows that? i do not think he does. >> heading to the fusion of news and comments -- >> can i pick up on one thing? i think this is the important thing about the prince's of

wales, because i was involved in the aftermath, and i found it very interesting the extent to which the debate about the role of the proper route seen in the death early figured in the days to follow. -- role of the paparazzi in the death figured in the days to follow. i think some of our papers were deliberately fanning a sense of public hysteria as a way of diverting attention from genuine public unease about the role of photographers in her death. >> this isn't the wavy lines between facts -- this is a wavy line between fact and comments.

could you expand upon and if it is in line with what you say? >> if you look a code, the press must distinguish between comment, conjecture, and fact. i would say most of our newspapers reach out on something. our river -- i refer to the sun on the issue of europe and the star on asylum seekers. there is a complete fusion of news and comment, and it is taken for granted. >> they are all fairly right-

wing papers. >> if you go down, i would say the mirror on pretty much everything the current government does. >> you have a certain position with relation to the mail, pekoes -- because anything that does not coincide with the peculiar world view of its editor you believe might be problematic. >> that is the judgment, isn't it? >> you would presumably accept that if we were in the rome of commons, -- realm of comments, it is your interpretation the difficulties survive only when facts are misrepresented.

>> if you were to rely upon, let me take the daily mirror. it is a paper i worked for and much closer to my political views than the mail. if you only see stories that are bad for the current government, that is not distinguishing between fact, conjecture, and comment as a strategic decision for the newspaper. the often i do not -- the reason i do often concentrate on the mail is because it is the most distinct. rupert murdoch is the most

powerful in the world. the mail is extremely successful, but it is utterly the product of one person. there is nothing that goes in that newspaper that is not decided by hamaim. what ever is being written is probably being decided by him. that is how that paperworks. within the media industry, it is seen as an incredibly successful product, which it is. one thing they decide is that an organization or a profession or people on strike today or anybody that had anything to do

with tony blair, once they decide they are one of his targets, you will never read anything about negativity in that newspaper. to my mind, the code says you must distinguish between facts, comments, and conjectures. they only take the facts in the agenda and infuse them with comments and drive their agenda through every single headline, and it is the whole thing. >> aren't you talking about balance rather than distinguishing between fact and conjectured? aren't you saying that they are making a strategic decision about what stories they want to put in the paper and that is what it is all about? >> i would except that is a

legitimate thing to do, but newspapers have been strong positions and using their position to promote them i do not have a problem at all, but when they are taking a fact and using that to promote an agenda when it turns out the fact is inaccurate, which is routinely the case and a lot of these newspapers. i talked about the issue of europe. i am not a europhile. i am somewhat of a skeptic, but i have given you some examples of things europe has done, and they are all untrue, so you have an agenda. you then tell the public brussels is standing kilts and charity shops and the british army, and it is complete

nonsense, and they know it is nonsense. >> you give us a couple of examples, the selling of eggs by dozens. >> it is not that serious of a story, but it is typical, and you have the example of the muslim-alaionly grocers, so they say they are going to ban grocer's selling it by the dozen, and then they say it is complete nonsense. they have two bytes of the

cherry on something that is utterly false but since their agenda a. -- but fifth their agenda. >> there was a statement by the parliament. maybe the next document under tab 3, the story in relation to the schoolgirl. can we look about as an example because you have drawn back to our attention? you have that? >> yes. >> you can see the headline. farmers schoolgirl found hanging after a round with people's comprehensive. let's not provide too many details. the details of the fact but not the names. >> i am not going to give names. >> what happened is there was an

inquest. we noted with the headline was. the first line of the story, the girl was found hanged and bullied. you make the point that fits into a certain world view. >> gross school is good, comprehensive school is bad. -- grammar school is good, comprehensive school is bad. >> you look at the second page. >> will be in question did not hear evidence of -- the inquest did not hear evidence of bullying. >> the point is there was not in fact former evidence of bullying in the inquests. >> there is no evidence of a bullying in the inquests, and that is a story which, in having

research for this, i have deliberately not gone for one that made big headlines. this is routine. you see a story like that, and the attitude is, how do we fit what we think about the world? would any consideration have been given hammond and not a second. -- with any consideration have been given? not a second. >> just to go back to the story referred to common -- as you referred to, is the story right

or wrong? we can develop early that the commitment to accuracy in your view, whereas it was a cornerstone some time ago. is that a fair summary? >> not with all journalists, not with all newspapers, but in some of those and make the most noise, i think the impact is deemed to be far more important than accuracy. good >> you give some political examples on the next page in relation to the cabinet reshuffle, and there is a lot of mythology about that. is that a phenomenon we have seen over the last 20 or 30 years emme?

>> i think it is grown or developed. i cited an example where a road to story -- i wrote a story about the budget. i did not even say it was going to be in the budget. i just speculated. i did not have a clue what was in the budget. i could be wrong. i think very few editors today -- will they be going to that journalists and saying, you missed last week and you did not do it? i can remember george robertson was being moved to about nine

different apartments. did anybody ask hon journalists were did it come from? they will say, somebody told me this from our they can defend it. it is nonsense. >> has there ever been a case where the government has reacted to press speculation and done something different? >> what you mean by that thelma -- what do you mean by that? >> would maybe do the opposite? >> no. the reason we knew these stories were made of is we did not talk to journalists. for a few people would know what the prime minister is planning,

but it would be routinely writing about it. we're going to get fired or debilitated in an apartment. there is not much you can do about it. the only way to do is to stop it and say this is what is going to happen. and you get accused of telling the ministers what you have told parliament or whatever. >> of the bottom of the page, you deal with the evidence, which we have obviously heard from him tomorrow. >> the point i was making is that i met with journalists the other day at an event i was at. he came and talked to me.

are used to work for her father, and she told me she was turning virtually the same today as her father had done almost 30 years ago, so very few people will do what he has done and resign and say why they have resigned. i understand these people need to live and work, and they know there are plenty of people who will come along and do these low-paid jobs, so i was emphasizing considerable wage should be attached to his analysis as opposed to those who painted a far more rosier picture and try to pretend these practices were behind them. >> the next section of your evidence is a section which foreshadows our third to some

extent. the point you made about eight lines from the top, the public knew the truth about politicians they would be pleasantly surprised. that is the flip side of the point you made. i think what you're really saying is the culture of negativity and cynicism in the procesess have a quality of political discourse. is that right? a >> i imply that -- i apply that statement to all the main parties. i did most people go into

politics for the right reasons, and even though some of them may be incompetent or whatever, i think they are basically who decent people but utterly surrounded by the sculpture of - 80 -- this culture of negativity. we had two journalists whose job was to cover parliamentary debates. they have a guy who writes jokes about politicians, and they call it a sketch. unless there is a crisis or a sense of scandal, you see very little coverage of actually what politicians are saying and why they are saying it. you see plenty of the downside,

and unless you get the balance a little bit better commoyou shout be surprised if people say what is the point of going into public life? >> i was not expecting you to come up with suggestions about that. >> summoned the press might blame you. >> they do, and that is because i talked earlier about the denial in my view of what this change of culture who is doing and their responsibility within it. i think both sides have to accept some responsibility for the fact we have gotten to where we are, for failing to recognize

what he is doing and doing something about it. also the desire to have not a strain year -- have them not destroy you. i think it is a self-serving argument. these are things we will take up in the spring. and i move on to the decline of genuine journalism, and you launch the section with a reference. can you help us with that please amazose?

>> bernstein said whwatergate was a disaster for journalism. what happens is journalism is journalism. you can have the sort of impact. when in diamond was giving her evidence, that is the investigation people talk about as been the greatest investigation. you see the sort of arguments and now he has with himself, so

i had a colleague who sometimes spends six months doing a story. they did not have the time or the resources. there is some work going on, but how you boost general journalism is also part of this debate, because journalism is dying. i think television is subject to a lot of the same forces.

>> relations between politicians and owners and editors. >> you appreciate we are coming back to do that, but we are focusing on the public? >> political players, journalists, spin doctors. this is a point which i think there's on our module -- bears on our module. you say it is also the case that newspaper editors and journalists are becoming a political players rather than to promote their own cultural interest, which often happens in issues related to their interests or to promote their own political agenda.

they often continue to carry the nativity. that is your basic thesis. you then give us an example with regards to the guardian. could you elaborate on that? wrote that after the a journalist decide what speech. they tell each other it was not very good and they made a mistake and that becomes the news of the speech, and that is

what i mean by they are the spin doctors. deciding what is, and then it gets promulgated. my web site when i drew attention common and and he describes how happens. i am not sure there is much you can do about that, but i think it is important the public understands. the same thing could happen with a conservative leader as well they decide this is the line and the next day it becomes public opinion. they know public opinion? probably does relate more but this idea that they will decide how the public reacting and what the public thinking when the public does not get to hear what the

. >> 21083, reliance on anonymous, often invented quotes. related point, many are invented. is that an inference you are drawing, or is it something you of? >> it is impossible to know the could point bike to dozens of stories you know to be wrong. that is why it is frustrating when you are in a situation where you know it to be wrong.

quote. was kicked off with anonymous quotes not being good enough. example of versions with reactions. how did they have the reaction? they publish the wrong version complete with reactions. how did they do that? , -- tabloid watch. we can recall the verdict was

given at 20 past 10:00 tonight, so presumably what people had to is lock up two versions because there could only be to outcomes, and here we have the presumably other papers did. >> i do not think they did. >> there are points. if you look to the bottom of the delighted with the verdict. as had been done. trite. >> it would be a very odd thing to say before the verdict. >> it is something they would

obviously say. sad young people would spend a year in jail, they also said. speed accuracy. both versions are properly prepared and people are spoken same way. >> that means a journalist has prosecutor. like to ask if i was covering a court case and i said, can you give me a quote for guilty and one for innocent, i would be very surprised if he is a

surgeon. >> you are exemplifying some of concerns, and i understand the point. your whins about budget coverage it is one we have already covered -- your point about the budget coverage is one we have already covered. you deal with one concrete example to the bottom of the page in relation to an independent columnist.

it is right to say he was suspended. >> that is the point i am making. was an independent who was suspended when it was revealed quotes and making when he was pretending to be a , i making a point about that same accountability. they printed their so- called apologies, they said it , so they

in mitt actually they made it up. they made it up. >> what is the system? >> the journalists will write an will then have whose job check the facts. they would say this is an accurate perception. >> the sunday times did narrowly apologize. guardian.

>> they did say it was a error. >> it was wrongly attributed. >> these are two different stories. the first story was a genuine quote. was an error by an editor, and the paper apologized for it. it was an entirely different . neither was the case of them made up. >> i appreciate it. there were two issues.

>> the great advantage to i saw great disadvantages, but the events as -- the advantages that it is not the absolute detail, but i will have to resolve this detailed. for people to make their position clear. examples, and i understand the point. >> i would be very surprised and not if he shared the assessment the inquiry. >> you may be right, but they decide the. story that relates to you. you were about to take a position of manchester united.

-- tell us. was at home on a saturday evening spending time with my the phone started to to manchester united. to do what? i was saddened. there were close friends. was fed up with this and die. i said, this is completely untrue. . it is one of those things you

say, life is too short. life goes on. >> i suppose it is not a very good story. >> let's move on. printed out are worth reading, but we are not afford to read them. >> up with the there to show this is an ordinary person -- i show this is an ordinary person who gets involved. >> the culture of negativity.

you make it clear in your of your -- in your view, the past stemmed from a tripartite. you elaborate on that that? >> i do not suggest they come but influential media owner. he is a hugely influential media figure. the market, and the reason i do them, why

would differentiate between they do it least have a optimism and a strand were everything is terrible, but where it is most relentless is general of the industry have presided over this believe culture of negativity. i think they have done it deliberately. i think they are wrong. that is one reason newspapers are not as popular. they have misunderstood this idea of what the public wants. that is what they give them.

>> what harm does this do? tell, but i mention one area where the quality of people interested in putting their head above the parapet and all of these aspects is merely an organization i would add some press for what we do, and i mention something like social workers. important. the only rarely get a fine negatively. -- get a fine right give

defined negatively. most is a weak field. but it would have gone nowhere given the weight of opinion against him had not been for the fact that the newspapers wanted him ventilation of his years rather than the vast . yes, they can blame mr. wakefield or the press on this issue. negativity happened to be the prime minister tony blair, and using this spurious arguments that not tell us whether his son had the job, --

jab, there was some conspiracy. utterly self serving and in danger to public health. underlying science is understand. say we regard . is that not legitimate? >> they would say that, but i to and it as a way of seeking to damage of the term. crimes occurs

are at the heart of what . interested journalism, they would have said, here is the opinion that says this guy is wrong. their interests and this guy is right, leads to them being the television, and before you know parents have stopped giving vaccine and never any accountability. subject to . nothing. no comeback whatsoever. >> thank you.

>> paid seven you draw attention to a speech the prime minister gave possibly in his last days . sixth -- tab 6. is broadly with what you're telling me. is that fair? >> yes. >> with the issue of regulation .

last two paragraphs on the page when he refers to the need is done is an open question. think it is clear this is the case, but where they discussions between you and the prime minister about this in particular? much of this time. in to this speech. street, we about it, and we did disagree that much, but this was one thing we did fundamentally disagree about, because i felt he had reached a they fell that -- i think the foot and

been a point where he actually felt what the press was was something of just for the damage it did to the government but for the damage it was during to the country. his argument was very much but as the all- . of them, and the public would not understand this. minister saw a problem and a responsibility to address 5. was too much to do. i completely understand that.

beyond a doubt that the system of self regulation had completely were utterly incapable of being trusted with regulations, and if issue, it was their responsibility to address never got done. there was no appetite. analysis but . >> we will come to your , what was required then and what may be required now. you noted the lack of serious

response to mr. blair's speech. is that right? >> the and it on page 6 about regulation, i could be wrong, but i do not remember much coverage at all on the issue of him addressing regulation and whether there should be a change. about today. the issue sparked new debate whatsoever. not forgive me, but he says, i thought it was pretty the herd. he said, i am sorry, but i think there was a collective refusal .

get over it. actively sums up the way covered. >> before we have a short break, may i draw your attention in this document. . it is sometimes said the media is accountable daily to viewers. that is true common but the viewers have no way to measure what they are being told. in every other walk of life that power, there are external forms of in the media itself. it is true politicians are accountable. i am not in a position to

determine this one way or another, but only needs to be found. i do believe this relationship is damage in a manner that requires repair. this undermines the assessment of institutions and reduces our capacity to tailor our positions in the right spirit for our future, and he says, i have made this after much hesitation. had he made the speech earlier on, he might have been heavily rubished in certain quarters. >> no doubt about that at all. subsequently the question will be before parliament about what to do about it, but something has to be done i do not see how any reasonable person can

disagree with that. >> someone might be prodding me to ask this question, so i will ask it. owing to mr. blair's relationship with a press, it was not really in his interest to pursue these issues. was there a big downside and no up sign? >> i do not think it mattered that much, but i think back when philip died recently, he reminded me i had been raining on this well over 10 years ago, and i think part of the judgment would have been deaths region would have been they did not give us as much time as they

used to give the government. that would be seen as a plus. our reach the conclusion that was kind of irrelevant. yes, it is easier if you have the press not trying to destroy you on the day to day basis systematically, that makes your job easier, but the argument i kept making is this has gone beyond any particular thing they might have gained, and i hope the current government and those in it to approach this from principal, because i think they should be an issue. >> it is one reason why it is

important to move on with the inquiry so the debate could be rather than later. >> you have five minutes. thank you. >> you have drawn attention to the back end of # six. but if go to page 5 now, you will see the reference to the very bottom in response to tony blair's speech been pretty

-- being pretty pathetic. about you on the next page, which i had better read out. three lines on the top of page 6 and page 16. i am large, the response to the attack, just press the keys. seemed a rich and when the media tried to control it more of effectively than any previous administration. once waiting to do an interview with gordon brown and assigned joran opening. -- the side door opening. i was surprised to see what seemed to beat a fiber-optic version.

at the top, could you really be ? is that factually correct? >> no.

eventually gordon brown moved there when he was prime minister. >>-not going to criticize you. i doubt you would nowheres with the young people were drinks -- why don't you would know what the young people were doing. i also notes he says it would turn out a goldmine for future psychiatrists. >> labor should have addressed this issue. of that.oversed some

.

>> we have a disagreement in the tactics to achieve that. >> if our close ally wants to work with us and block the central bank of iran, country b or ally does not, isn't it helpful for country a to know there is a reward and punishment issue involved to adhering to the sanctions? doesn't it help our allies to know we want all of our allies to cut off the financing of iran through a central bank in order to avoid a nuclear iran?

it will be helpful. at the risk of repeating myself, the judgment of the administration and not just secretary geithner but the administration broadly is that best way to work with our llies on this is not by threatening our most severe sanction against their largest financial institutions but to work with them and to build on the international consensus that already exists and take these steps. >> i understand your point, and i think it represents a traditional difference of view between the executive and legislative branches and i think the legislative branch will speak today. >> thank you very much. >> thank you, mr. chairman. first of all, let me say the views expressed by senator menendez, senator cardin,

senator corker are all views that are very representative of the consensus of the legislative branch of government right now. don't no doubt and i think any member of the congress has any doubt that the goals and objectives of the executive branch are exactly the same as the goals and objectives of the branch.ive however, we have a real problem in what i would call an at that point or an urgency gap, sense of urgency gap between how the legislative branch views this and how the executive branch views this. the frustration you are seeing today is the result of that gap that exists between us. that needs to be resolved and it needs to be resolved urgently. i would think -- and i think many of my fellow senators believe -- that after the iaea

report your sense of urgency should have risen to our sense of urgency and we are not seeing that. we hear the words and talk but we have wanted action for some time and it hasn't happened. so, the result of that is what you see in front of you. i would strongly suggest that, rather than coming up here with a strategy on how you will try to torpedo this amendment you figure out how to make it work. because it is going to pass and it won't be by a close vote but a large vote. those of house who serve in the senate hope it will send the signal that we want to see sent. this issue is not a trade issue we are arguing over, it is not some dispute we have on borders

borde . when it comes to issues in the world today this ranks at the top. the united states can't be wrong this. the world cannot be wrong on this. we cannot make a mistake on this. unfortunately, i think most of us agree with what senator corker said when he said, well, you know, you are trying to do through sanctions and, to quote him, i don't think you are going to get there. and i have to tell you that i believe that is the consensus view of the senate up here. that is why you are seeing what seeing in the form of this amendment. what i would tell you is you probably need to figure out how to make this work and how you are going to raise to the level of urgency that we have and that you have seen here today. thank you, mr. chairman. >> thank you, mr. chairman.

i apologize for arriving late. in the armed services committee we have a mark-up but i was able to watch a good portion of your testimony while we were considering amendments in my office. i want to ask you a couple of questions and i apologize if i may have missed them already being discussed while i was doing other things and getting over here. first of all, i'm not a great fan of sanctions in general and i believe if the circumstances require they take place, they should be clearly targeted, there should have somewhat of, i can't say a guarantee but somewhat of a isn't that they would be effective and also that they would be widely supported am the international community. listening to your testimony, i can hear a very sincere concern about the possibility you may

under up doing more harm than good if certain types of sanctions are put into place. i haven't decided how i'm going to vote on this amendment. i'm still thinking it through. i would like to ask you three questions. first, again i apologize if you stated this, but could you compare the sanctions that would be put in place under this amendment with the sanctions that u.k. put in place earlier? >> the sanctions that the u.k. put in place last week essentially brought the u. kfk. into line where the united states has been for many years. we, years ago, cut off the iranian financial sector from the united states. the u.k., over the past several years, has taken actions against particular institutions. what they did a week ago monday was to cut off the entire

iranian financial sector. so they are in line where we e are, the canadians are as well in line where we are and have been for some time. >> with respect to your concern and the concern also being expressed from a letter of the secretary of the treasury that our closest allies would curtail purchases altogether in the future or cease to cooperate, do you see a predictable outcome among these countries that you are discussing if this amendment were passed? >> senator, i think what we, and what secretary geithner was driving at is we see and we are working with our partners to have them reduce their reliance on imports from iran, as the

done. states has we import no oil from iran. we are seeing that our partners recogni recognize, in part because of the actions we have taken and we have put out in the public domain, recognize the danger involved in purchasing iranian oil and having those revenues flow to the c.b.i., which uses those revenues to fuel iran's dangerous activities. so, what we are doing and have been doing and want to continue do is work with our partners to draw down, and if possible entirely cease importation of iranian oil. >> are you saying in your testimony the potential of the amendment is to reduce that level of cooperation? >> i think in is a danger that it will result in less

cooperation because of a reaction to the threat that is being visited on their financial institutions. >> if i might, senator, a you believe can of things to that. there are very close allies of ours who have very complex commercial represents with iran, not in the arenas in which we have already imposed sanctions but in everyday things, like selling tell investigation sets or just household goods. and our reading of the effort by senator menendez and senator kirk and so many senators to achieve the same objective that we achieve, which is to cut off the life blood of iran's economy so they pull back from their nuclear weapons program, will see our taking such an action as a blunt instrument that takes

away their capability of deal with their financial life. >> obviously we would at this point not characterize china as one of our closest allies here or in other places. as these other policies have been put into place, china has very noticeably not cooperated. they are becoming iran's most active trading partner. they are still trading oil. what is their reaction -- what do you think would be their reaction to this sort of proc s process, new legislation, or existing pills? are they doing? >> let me speak to the broad relation with china with regard to iran and defer to the undersecretary on the specific c.b.i. reaction. we take what china is doing quite seriously. i just returned from beijing,

and a great deal of the meetings i held were exactly on this poi point. that, they have finally agreed that the special envoy can go to china, sit down and help them to better enforce the sanctions regime that is in place. they have in fact slowed down their actions. they have tphnot, to the best o our knowledge, backfilled from others who have pulled out. we had indeed sanctioned a chinese individual and five chinese firms under sanctions. there are other chinese companies currently under investigation and i was quite candid with china about each of those cases and the action that we would expect -- >> i apologize for interrupting you but i have about seven seconds. do you see china's economic activity with respect to iran

decreasing if this goes forward? >> senator, i don't -- i can't pretend to predict how china would react to this. it is quite possible that the chinese, if this amendment were adopted, would take the risk, essentially, that we would cut off their financial institutions from the united states. but i'm just not in a position to predict how the chinese will react for many raopbs reasons that undersecretary sherman described, the relationship between china and iran is complicated. >> to this point they have not reduced their economic participation as we have put policies into place? i'm a minute over so a

limitedance is better. >> i think what the chinese have sanction remained at the level of economic engagement with iran, give or take, over the last several years. >> thank you, mr. chairman. >> thank you very much, senator webb. senator isaacson. >> undersecretary sherman there have been expressions of administration about the kwpbs of oil prices with the passage of this. i have heard testimony about the concerns of what it might do to other countries that have banking relationships with iran that are friends of ours. are we measuring what the consequence of an iranian test might do to the world stability or oil prices or what a nuclear incident in the straits of hormuz might do? i know the concern that i have and i really only speak for myself but i think i'm expecting for the people of georgia. it seems like the sand in the

hour glass is running out. we don't know when but there is no question thated a medicine jed and -- that ahmadinejad and the iranians would use material against israel or somebody in the middle east. th that is a calculation that must be paramount of how we deal with iran. that is why it is important we send the legislative message from the congress of the united states that the time is running out on iran as well. i would like you to respond to that as well. >> senator, we share the sense of urgency of the congress. we are not surprised by the report that said that up until 2003 there was a structured in iran to develop nuclear weapons and since then there have been ongoing and there are possible military dimensions

because their activities for which there is no plausible explanation except military use and iran hasn't offered us a plausible explanation. we were not surprised because we were one of the 10 countries that supplied information to the director general to produce that report. so away quite understandably know what is happening in iran and where it is heading. we have successfully, through this multilateral and phased and cooperative sanctions approach that has been helped with tools that congress has given to us as well as executive orders, have down iran's capability, have extended that time line, not only from their hoepbg to have -- hoping to have 50,000 sentcentrifuges to sever.

we have not ended our sense of urgency. so we agree with you. that is why, when the amana report came out and that was virtually a unanimous vote that was not by accident, that was by a concerted diplomatic effort to make that occur. we took action along with the u.k. and canada to add additional sectors and additional sanctions to our arsenal to deal with iran's nuclear program. so, we are completely where the congress is in terms of the sense of urgency. what we are talking about today is tactics of getting there. in that we have some disagreements and we should continue this debate. as secretary cohen said, we are well aware of the strong support for this amendment and we understand the many pulse for we share ment because the objective. we just think there is a better way to go about it. >> thank you. undersecretary cohen, as i

understand it, treasury and 311 findings had pretty astounding revelations about the central binge bank of iran in terms of funding other sanctions and the irgc construction firm that is under sanction. what do those findings alone tell us about why we have not sanctioned the central banco yet? because those are clear findings of treasury of what i think are clear violations of our sanctions already. senator, in our 311 finding broadly described the iranian financial system involved in illicit activity and specifically included information about the central bank of iran deceptive practices that you identified. we are using the foundation of that finding with our partners as a way to further highlight

the risk of doing business with iran, any financial institutions of iran and central bank of iran particular. it has allowed us to have in one place the comprehensive presentation of the risks involved in doing business with iran including the central bank. the question of how we then take the next step is something that is left for us to continue to work on, work on with the congress and within the administrati administration. the findings in the 311 don't predetermine any particular action, but we have at our disposal a range of possible next steps with respect to iran. i think this gets back to the comment that undersecretary sherman said. what we are looking to do is to

bring to bear on iran and on the central bank of iran but more generally in iran overall, substantial additional pressure. if the right step is to bring a sanction on the central bank of iran, we are prepared to take that step. we think that, as we sit here today, the right thing to do is to proceed with a multilateral effort to isolate the central bank of iran, to work with partners to reduce their import of iranian oil, and to take an action to freeze the assets of the central bank of iran. that would be, in essence, the steps we would want to pursue with respect to the c.b.i., with a real sense of urgency, with a notion that the clock is ticking and we've got to ramp up our

efforts here. that is is where we're looking to proceed. >> i respect the fact that both of you have a very difficult job and the diplomacy under any circumstances is tough particularly when you are dealing with a dishonest broker like the iranians have been. but i think the amendment does reflect the people of georgia and i would think the united states and urgency is something all of us must deal with in considering the central bank and nation of iran. >> i don't think it is an award but i think that you get internspecial recognition for greatest price paid trying to get to a meeting of the foreign realizes committee. >> thank you, mr. chairman. i hope you will acknowledge that when i have legislation pending before this committee. >> absolutely. we owe you. >> you should have seen the other guy. >> let me begin first by

thanking both of you for the efforts you have been making to address iran's move toward achieving a nuclear weapon. i do want to, though, share the sentiment that has already been expressed by my colleagues that i believe the menendez-kirk amendment is going to pass so that if there are suggestions that the administration has about things that you would like to see different in that amendment that you would share those with us. because i do think, as you have heard, we are going to act on this within the next 24 hours. so it would be helpful to tphkn what else you might like to see happen. having said that, i wonder, both senator machine anyone des and -- menendez and center webb rai

raised the criticism that the administration is not already doing enough with the things that have been done and especially the chins companies. is there -- chinese companies. is there more you can tell us about whether the administration has, in your opinion, been doing enough with the sanctions you already have or what else could be done? >> thank you very much, senator. and thank you for the suggestion of bringing to senator kirk and senator menendez any additional suggestions we might have in the short period of time that is left and we will certainly take that back and consider that. as i said, we understand the concern about china. it was the focus of a trip that i made last week to impress upon china the reality and prompt action that was required on their behalf regarding a number of situations.

am request for -- my request for special envoy bob einhorn to be welcome to china to help follow through on the sanctions regime which we have not talked about under the u.n. security resolutions. there are five resolutions that have passed, four which have legally binding requirements. so, this is not just a united states request. this is a u.n. security council obligation of states around the world. we have sanctioned 280 individuals and entities over the last few years. we of course think we should do more and better. when the qddr was written at secretary clinton's request, one of the things that came out of that was to in fact increase our

enforcement capabilities, to increase the number of f.t.e.'s, to organize the state department better way to enforce sanctions. that process is under way. we are trying to not have it constrained by the budget, that we all now face. but, yes, we think we should do more. we have schedule arithmeticed that progress and we -- we have accelerated that progress and we expect to accelerate it further. >> there is an interesting opinion piece in the european edition of the "wall street journal" which i assume both of you may have seen that highlights the involvement of the revolution narrow gua -- revolutionary guard in so many other economic areas in the country. it quotes you, mr. cohen, from

your october testimony to congress that the revolution narrow guard has expanded its reach into so many critical sectors of the economy. can you talk about how difficult it is to draw a line between the reach of the guard and how that affects our ability to address through sanctions to bring pressure on iran? and then also, if you would, talk about how we are working with our european allies to address the irgc's move into legitimate businesses? >> i'm happy to, senator. i think the irgc has been one of our key targets for sanctions last several years. it is recognized in security council resolutions and e.e.u.

and in our sanctions as a target that is very deserving of sanctions. the irgc is involved in the most dangerous activities in iran. as it continues to expand into the iranian economy to the of the average iranian citiz citizen, it is -- frankly, it provides us with additional ways to apply pressure on the iranian regime. so, earlier this year, for instance, we applied sanctions on tidewater middle east company which is a port operator at seven of the ports in iran including the largest kinner terminal -- largest container terminal in one port. they had come in and taken over ownership of that entity several years ago. we have applied sanctions to tidewater. to the is now the law in the

united states that any foreign financial institution that engages in transactions with tidewater risks having its access to the united states terminated. we are continuing to press our allies in europe to add tidewater to the list of sanctioned entities in europe as well. because europe has taken a number of steps to sanction irgc related entities including most importantly an entity that is a major construction firm in iran that has been subject to sanctions. >> have we been successful in persuading them on tidewater? >> to be candid, senator, i'm if it is in the list of 180 new sanctioned entities that the e.u. has announced today. but if we're not successful today i can assure you we will

continue to press the europeans to add tidewater to the list of sanctioned entities on the e.u. list. but the irgc -- and my time has conspired -- the irgc, as it continues to expand into the iranian economy, as more and more average iranian citizens are manufactured out of -- moved out of the economy and the government and the most dangerous entities expand their reach, we will continue to take action and designate those entities and work with our partners to do the same. >> thank you. , chairman kerry. i'm going to renew comments i know you have heard from literally i have member of this panel so far about how rapidly iran is making progress toward the acquisition of a nuclear weapon and how gravely the

people i represent are concerned about this and about a real lack of clarity about the communication with senator menendez about an amendment of which i'm a co-sponsor and which i continue to vote in the absence of some better understanding of why it is not sufficient. it is rare -- i take simple the letter of the secretary and your input and respect your efforts. august 9 a letter went from 92 senators urging prompt engagement and action on the central bank of retained more the sanctions regime that we have been discussing and i think what you are hearing, just speaking for myself, is a steadily increasing level of grave concern bordering on alarm. since august the iaea report has

come out, allegations of a assassination plot against a saudi diplomat, the assault on the british embassy. there is no doubt in my mind that iran is the most dangerous nation in the world at this and that this situation as it steadily moves in a bad direction is going to push us toward some tough decisions. the ranking monitinority member asked you by planning for a potential military action. i wonder what we are doing by preparing the people about a close action between israel or the united states. i think the level of engagement you are hearing from this panel reflects that, a concern that six months on that letter was in august and it is december and you are pushing back very hard on an amendment by senator menendez that by its structure gives months more for diplomacy. i think the iranians have made clear to the international

community what they are doing and their intentions. and the statement s ofed a medicine jed are a chore -- ahmadinejad are a chore source of the people of israel, the united states and all of our allies. i hope you take this seriously and in the absence of clear input from you on what is insufficient about the menendez amendment i intend to vote for it today. there is not a lot of time for back channel communication. this is an active issue and i mean that both between our branches and between the united states and iran. i'm eager to hear from you anything more that would give me some confidence that the chinese, who are still the worst actors in this field, with whom we have so many other problems in intellectual property, currency manipulation and ongoing, we are in a full on trade war with the chinese. we just need to manage it as appropriately as we can in the interests of the people of the united states. one thing i hoped to hear today

is we are making progress with them innen beginning them in an -- innen beginning them in a regime that is bearing down on iran. but i don't see that we have aggressively and effectively sanctioned chinese actors in this area and given the hour glass that has been referred to by senator menendez and others i'm concerned we are not being aggressive enough. please if you would. >> would my colleague, before the secretary answers give me 30 seconds before i have to leave to respond to something? >> certainly. >> two things. number one, the second mentioned that -- the secretary mentioned there are many nation was complicated relationships with iran. but our section e specifically only focuses on sale or purchase of petroleum and petroleum products. it is not getting after all of those other complicated relationships. number two, pursuant to your question and concern and i

appreciate your support of the amendment, the chinese have already taken the risk under the existing sanctions and have not moved so the answer to that question is pretty clear. i thank the gentleman for giving me some time. >> thank you, senator. under secretary. >> thank both of you senators. on china, i would reiterate what i said earlier, which is i agree, we want more action out of china. they have taken some action to slow down their activity, not to backfill from others who have pulled out of the iranian oil sector in particular. we had sanctioned one individual and five or six entities in china. others that we are looking at that were the subject of my discussion with them last week. so, i would agree with you, they should take more action. i will say this.

they have stuck with the international coalition. they did co-sponsor the resolution at the iaea. they voted in the u.n. general assembly for the resolution condemn being the actions -- condemn being the actions the saudi ambassador. it is important having them inside the tent as opposed to outside the tent. but there is no doubt that they need to take far more action than they have and we are quite aggressively engaged with them. this was the subject of some of the president's discussions in honolulu and in bali. secretary clinton's also. at every level with vice president biden with ping who is set to be the next leader of china. so, we share the focus, the urgency, the attention and the obligation china has under u.n.

security council resolutions to follow through. we share that and i take your message that we need to pursue it more urgent will i than we already are. on the kirk-menendez we appreciate that this will pass. we would appreciate more discretion than even exists in the current draft of the amendment. we think tactically that it may both increase the price of oil, which will give iran a windfall. it may have that effect. and, secondly, we are concerned and may even create that windfall during this five-month period of extensions that exist in the legislation because of the anticipation of the markets. no one knows exactly what

will happen but there is most definitely a risk that iran could get a windfall from this let alone complicate our relations with close friends and allies. >> seeing that i have run out of time i will submitish questions. i urge the undersecretary to use his skills to convey effectively to the markets things that might avoid that spike. i think that reality is members of the senate are concerned that we send a clear and strong message about our determination to prevent iran from making further progress in acquiring a potential weapon. >> thank you. senator casey. >> thank you, mr. chairman. we are grateful for your testimony and public service. i think what you are hearing in this discussion today is a real concern about a sense of urgency or what some would assert a lack thereof. we get the chance to travel in

places like the middle east. when i was there last, in the summer of 2010, senator shaheen was on the trip and we had a visit to about seven countries in nine days and at that time, months about of the arab spring and at a time when there was a real consensus about the threat posed by the iranian regime -- whether you were in israel or saudi arabia, egypt or some other mace -- place, a real sense of worry. that was the summer of 2010. if anything, it has become more, not only more apparent but i think more urgent. i think it is finally more apparent to people controls our own country because of the assassination plot, because of what the iaea reported recently. i think that i don't want to

walk through all of it but the language is pretty compelling when the iaea says they have credible information that iran has carried out activities relevant to the development of a nuclear explosive device. then they out liline it further. so, there is a sense of urgency here, or i think a greater sense of urgency that a lot of people feel in our country and perception is very important in these situations as you know. but there doesn't seem to be an administration policy or set of actions kphpbs -- commensurate with that. i'm a co-sponsor of what senator menendez and senator kirk have tried to do, but when we read letters like the one from secretary geithner continue to work with, you know, negatively

affect many of our closest allies, likely to have allies resent our actions or resist following our lead. and we all want to have collaboration, we all want to have a steady effort here. but this is moving way beyond where with respect in 2010. and the problem here, let's assume for a second that there was no nuclear threat, if we could magically remove that threat. just the impact this central has only being the banker for a lot of bad guys in that reasonable, hamas, hezbollah, so manied about guys that they -- so many bad guys they provide resources for. that is another reason for the sense of urgency. my question is very simple. if not this, what should we do arithmet

right now, in the next month or two? and if not this now, how long will the strategy that you want to continue, how long will that take? >> senator, on the sense of urgency, i can assure you that on my own behalf and on behalf of the entire administration, there is not an issue that focuses the attention of the administration more than the threat of iran and as it is laid out in the iaea report. we feel that sense of urgency every day. i just returned yesterday morning from a short trip to israel and the u.a.e. and which is the most recent of my journeys both to consult with our allies, who are working on

this issue, and to learn about their perspective on the threat and to bring that back and to feed that into our process. we are working on this issue every day and have tan steps to bring -- we have taken steps to bring to bear more financial, commercial and isolation on iran before.has ever soon i think it is fair to say we have applied a substantial degree of pressure on iran and at the same time we recognize there is more to do. so, the steps that we are prepared to attack in the short te term, assuming this amendment is not adopted, which i recognize may not be a valid assumption, we are committed to taking

action against the c.b.i. to freeze its assets, to work with our allies to have them take a similar action, and to work with our allies to encourage them to tack the steps that they have already indicated a willingness to consider, which is to ramp down their involvement with the c.b.i. and purchases of iranian oil. that will constrict iran's access to the hard currency and revenue it needs to fuel the that you address, senator. that is the course that we want to proceed on while at the same time continuing to apply the sanctions that we have across a range of areas. the new executive order from just 10 days ago on the chemical

sector and production of oil in iran is a very significant new step that goes after anyone providing goods or services to either of those industries. is petrochemical industry the second most important source of export revenue to iran. the petroleum industry is the first. those sanctions directly target iran's ability to continue to develop both of those sectors. so, we have been pursuing and are intent on continuing to pursue a range of significant and powerful sanctions on iran. the issue is how best to achieve that while minimizing the potential of an adverse consequence of its become

firing. as undersecretary sherman alluded to and secretary geithner alludes to, we have real concern that the amendment as it is currently drafted, even with the phase in and even with the potential for waivers, has the potential to actually increase revenues to iran. that is obviously something that we all want assiduously to avoid. >> i know i'm out of time. undersecretary sherman, i don't know if you have anything to add. >> the only thing i would add we have not discussed is the international environment is changing on a daily basis and of the most significant things that will happen some time in the near future is a change in syria. iran has really only two allies left, syria and hezbollah. when assad steps aside which he

most under doubtedly will do, iran will lose one of its last proxies in the world. and it will further focus the attention of the international community on what has to occur here and create some differing political circumstances that i think will help us to further isolate iran and make it pay a price for its illicit activities. >> thank you. >> senator casey, thank you. let me just say, i think we in the congress have a difference of opinion about a particular st step. but i want to assure my friend and colleague that on the issue of urgency i can attest that i can't think of any issue that is concentrating the minds of the administration right now more than this or at any other time. yesterday i was at the white house in a meeting about this technique topic. i know that the secretary of

state and state department are as focused on it as can be. i don't think anybody has tphan illusions about the time frame or urgency. there may be differences about timing on a particular step or particular methodology but i wouldn't view this amendment or the discussion this morning as somehow some great departure. i think it is important for everybody, particularly outside of here, to understand that. there is a universal understandi understanding, amongst our allies also, this is the topic of conversation right now and i think that everybody needs to be aware of that. senator udall. kerry.k you rb, chairman and thank you for holding this hearing at this very appropriate time. andeciate your being here

your service to the country. undersecretary cohen, i don't know if you can answer this but i thaought publicly i wanted to explore it with you. it has been reported that the a.q. khan designs and plans have been copied. do you know if that black market network are currently supporting iran's program? and what tools do we have to deal with black market nuclear materials? the whole discussion here has been about our allies and working with our allies. ut we have some other very dangerous situations to deal with here. nd secretary sherman, if you want to start, please go ahead. want to be mindful of the setting in how i respond. let me just say this. we are focused very carefully on who is supplying material to iran and in particular to iran's

nuclear program. we have obviously a range of sanctions in place against entities in iran as well as entities outside iran that have been supportive of their nuclear proliferation activities and we continue to track very closely the individuals and entities involved in supplying iran's nuclear program, the material for its program. i don't want to get into any greater specificity on that in this setting. we are happy to brief you in a different setting with additional information. we spend an enormous amount of time trying to understand who it is that is supplying iran and taking action to try to isolate them from the international

economic and commercial and systems so they are not able to do so. >> i would only add, senator -- and be glad to go into further detail in a classified setting -- a.q. khan's tentacles throughout the world have been much discussed, much absorbed and much tracked, and that the state department and entire administration pays close attention to sort of the trading routes of nuclear materials. one of the great experts in this regard is the ranking member of this committee who probably understa the trade of materials and technology as well as any of us do. i would note as well, we do this not only for iran but north korea and other would-be nuclear powers. and second clinton, in her meetings in burma in efforts to not only uncourage the trends

that are taking place but is being quite clear that ties to north korea and potential shipments need to stop. so, the tracking of these rules that might increase nuclear proliferation is something that is quite well attended to. >> thank you for that answer. and we may have an opportunity to explore this in other settings. the amendment that has been discussed today is targeting the sale of iranian oil. i had a couple of questions and i will just throw them all out and have you try to answer them. in light of the widely reported pullout of major energy firms from iran's energy sector, what is your assessment of the iranian oil and gas industry at this point? if that sector is declining, how will world energy prices be affected going forward?

who is purchasing iranian oil? who are the big purchasers? what are the percentages there? are those numbers going up or do down? for example, with the chinese how major of a purchaser are they and from what you described, secretary sherman, is that going down? and is there any indication that iran can't sell any of its oil on the world oil market? >> thank you. the data on all of this fluctuat fluctuates. in this setting i can discuss open source reports. iran is still doing relatively well because the praise of oil is quite high. that actually has been the nature of a lot of our discussions and concerns about the kirk-machienendez amendment.

in terms of monthly delivery, the refined petroleum to iran which is crucial to their economy, whether they are her today than in the past, there is, although month-to-month numbers fluctuate, it is our view that they are significantly lower than before sasada was passed. that has had an impact and the price for the products is reportedly higher, that is the refined petroleum coming in as most people know on the committee but the public may not know, although iran has a lot of oil it doesn't have the capacity to refine it for its domestic use so it has to send it out and have it refined and have it come back in and the price for that refined oil has increased 10% to 2

25%. the sanctions that we have are biting. yes, iran is deploying some deceptive practices it circumvent the sanctions. but i think we are work being very hard to stay ahead of those tactics. >> to respond to the question about who is purchasing iranian oil today, e.u. china, japan, south korea, india, turkey, sri lanka i think gets all of its oil. those are the major purchasers of iranian oil tad. >> do you have any sense on percentages? is china the biggest purchaser? do they purchase 50% of it?

>> china purchases about 20% of iranian output. why don't i give -- these are unclassified figures. sets give you a chart that out exactly how much each of those countries imports from iran and what percentage it makes up of their imports. >> is your sense because of the our activities, the things you have been describing, are any of those going down at this point? which countries would be impacted or taking action or doing something that is putting a crunch on the iranian situation? >> senator, i think what we are looking to do is to work with our closest allies, particularly in the e.u., in asia, in india potentially, to try to have them reduce their importation of

iranian oil. i think that we have tphnot seeo date that occur. but i do think we see the potential for a coordinated effort to bring that about. >> thank you very much. sorry, mr. chairman, for going over. >> no, thanks. >> i appreciate your doing this today. >> thank you, senator udall. i appreciate your participation and everybody's. i think you can see from the broad presence here today and number of questions the intensity of the concern and focus here and i know you knew that before you came. we are very appreciative for your presence here today. i think that it has helped this hearing has helped to under score for the public certainly and for all interested parties the deep concerns that exist right now and hopefully in the

next weeks and early months here everybody will be able to come together in a sense believe way to avoid the potential very dangerous alternatives and options that are facing everybody in this. almost certainly we will have another hearing on a broad policy aspect regarding this, i would say in early february, depending again on the return schedule and what happens in the next few days here. and we will sort of start it lay the plans for that. but we know you are focused on it and as i said a moment ago, i'm confident about the intensity of the efforts and breadth of the options that are being considered here. thanks for contributing to this. we are very appreciative for your presence and we look forward to continuing a good dialogue with you. we stand adjourned.

thank you. [captions copyright national cable satellite corp. 2011] [captioning performed by national captioning institute] >> later that e.j. the senate approved the amendment by a 1 - 100-0 vote and approved the defense authorization bill 97-3. a final version must be negotiated with the house. >> today on c-span 2 a discussion about the economic trends of young adults and ways the current economy could impact the future middle class. you can watch life courage at

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c-span.org/rad c-span.org/radioapp. >> carl colby discusses his latest documentary about the life and death of his father former c.i.a. director william colby. host: carl colby, why did you do a documentary on your father? guest: you might have asked that 10 or 15 years ago when he was alive and i was down in washington, d.c. making documentaries with whole crews and interviewingers you may think why didn't i interview him then. he was the kind of person that you could talk to him gaddafi or what is going on with the drones but as a son asking him personal questions as to his motivation questions as to his motivation and