cash and the revolution -- and the revolution. they are not going to enter into any agreement that does not preserve the regime. and the revolution. they would think this is a good agreement for them to accomplish that goal. that is worrisome. i understand the hope that the agreement implies in that they will perform. but when they don't perform, i don't think we are going to be in a better position at that time. that's my concern. senator: investor -- ambassador sherman, i'm wondering if you can help me what you think congress is actually voting on. whether or not congress would kill the deal, does that matter in any way to the iranians, or are they guaranteed all the benefits of what is then negotiated today? undersec. sherman: of course they are not. the u.s. congress has the authority and the right under our constitution to in fact review and vote a resolution of

disapproval. the president of the u.s. then has the right and the authority to exercise his veto, if you -- he wants, and i would expect that he would. then the u.s. congress has the right to override that veto. that's how our system works. i would hope the u.s. congress would not override that veto, because i believe that this plan is the most profound, the most far-reaching arms agreement ever negotiated and that will keep this country, israel, and our allies safer. senator: thank you, but what i am asking is, if the congress did override that veto, why would it matter to the iranians? what would they lose? undersec. sherman: they would lose an opportunity to have sanctions relief. they would lose the opportunity to end their isolation from the rest of the world. they would lose their opportunity to come into the community of nations. they may not care about that.

and what i would expect is that -- if the u.s. congress overwrites a presidential veto, which i would not expect that to happen, because i believe this congress has united behind democratic and republican residents for war, and i believe they would unite behind them for peace. that is what this deal is about, not having to go to war, but ensuring that iran does not get a nuclear weapon. senator: i agree this should not be a partisan issue. theisn't it the case that administration is arguing to undecided members that we have already lost the international community? so that if we do not go forward with the deal, the iranians will get this relief anyway? if no, isn't that an answer to senator menendez's question? frankly, isn't it what secretary kerry was saying 3-4 weeks before, it isn't a choice between this deal and war, but there are other scenarios where sanctions could have an effect?

you can't have it both ways. undersec. sherman: yes, i understand that. issue is what kind of effect, and whether that will stop their nuclear program. is it true that our unilateral sanctions could be put back in place and continue on? is it possible that the rest of the world, maybe not europe, europe may follow through because they are allies, but other parts of the world that have taken huge economic costs by stopping their importation of iranian oil or taken huge costs by ending trade with iran would not pay attention to our unilateral-bilateral sanctions? yes, that is indeed the case. our sanctions regime would not be as effective as it would be. the international community has come together behind the steel. -- this deal. they will not stay together behind our alone rejecting this deal if the united states congress overrides a veto. the u.s. will be in a weaker

position, not only on this, senator, but on many other things we are trying to do internationally. senator: just to be clear, it is your position that if the congress would kill this deal, the u.s. sanctions regime could still have some significant effect? undersec. sherman: it would have some effect, i would suspect so. but not to the effect that it does today. everyone has to remember that iran will then move forward with its program. the sanctions, as devastating as they have been, and i would say to senator menendez, that indeed this administration has enforced both unilateral and multilateral sanctions than every previous administration. -- more profoundly than every previous administration each of , which has tried to do a very good and credible job. but we have intensified that. that is what president obama set out to do, intensify sentient -- sanctions pressure, so that iran would come to the table. senator: thank you.

i do appreciate your advocacy for the agreement. i think this was a yes or no question that you just gave. you don't believe that it is war or this deal. you just outlined a third scenario. you wouldn't answer yes or no for him. undersec. sherman: even though our sections would have some bite, iran would move forward with its nuclear program. because why wouldn't they? they wouldn't get all the relief they wanted. they would keep marching forward with their program. it would force us into a choice. where we allow them to have a nuclear weapon? president obama is resolute he will not allow that to happen. that leads us down a road heading to war. senator: secretary szubin, i'd like to ask you a question. you and i have had previous discussions and you know i appreciate the work that you do. i know that we have mutual affection for one of your

predecessors. i don't know if you have read his testimony today. i won't read the whole of it, but you said in your opening statement to that the irgc receives no sanctions under this deal. the business empire driven by the irgc, most of those entities receive sanctions relief under this deal. it meaningless that they get sanctions relief until all of the entities they get their money from do? sec. szubin: on this point, i respectfully beg to differ. the business empire of the irgc will remain under sanctions. that meanscontrols, the businest drives revenue from will remain under sanctions as well. thanks to congress, that will have international effect.

an international bank that does business -- let me give a specific example. the largest construction engineering firm in iran we have designated for being controlled by the irgc. it is a revenue source for the irgc. it is not coming off. not at five years, 8 years, 15 years under this deal. any international bank that holds accounts for it will face cut off from the u.s. financial system. those are tough, aggressive sanctions, and those all remain in place. there are companies who have done what i would call arms length transactions with the irgc which we have designated conducting business with the irgc. they are due to receive relief under various phases. but the business empire as you described it remains intact. undersec. sherman: and the irgc does not support this deal. that should tell you something. senator: thank you, mr. chairman. chairman: thank you. senator.

senator: my understanding is that the irgc controls smuggling benefits very handsomely. that is one of the reasons they are opposed to that. is that a correct impression? sec. szubin: the irgc is engaged in a lot of nefarious activity within iran's economy. we have heard and credible -- seen credible allegations of profiteering and black markets, including goods going to the help of the iranian people. ms. sherman, i want to turn to you. i submitted a series of questions to this administration. in response to one, the administration responded that iran has committed indefinitely to not engage in specific activities that could intervene to the design and develop a nuclear weapon. in this context, does "indefinitely" meaning that the time period has not been established, or does it mean

perpetually? ms. sherman: it means that under this agreement and the nonproliferation treaty, iran is prohibited from acquiring or obtaining a nuclear weapon, ever. senator: so it really means perpetually. undersec. sherman: yes. senator: does iran have the right to enrich weapons grade uranium after the enrichment cap? undersec. sherman: no, because if they indeed move to enriching, what we would consider weapons grade, it would raise a red flag to the iaea. and the entire international community. there are very few circumstances where iran needs to enrich above 5% for peaceful purposes. one could argue for submarine fuel perhaps. but if they went to weapons grade, it would raise red flags immediately and we would see it as a major noncompliance.

senator: so enrichment over 5% starts to essentially raise this red flag with the exception of submarine fuel? undersec. sherman: there may be one or other two things. i am not an expert. i could ask my physicist, who is sitting behind me if there may be other instances, but they are very few. senator: what would submarine fuel be near? undersec. sherman: it could be 20%. senator: that's a big and 20.ion between five are you basically saying that if the amount of fuel enriched didn't specifically meet the quantity profile of the nuclear submarines, that that would be a red flag? so essentially, for most purposes it is 5%. undersec. sherman: yes, 5% or less. the one other distinction i should make is for the tehran research reactor, which helps to make medical isotopes for cancer

treatment in iran. it uses 20%, but this agreement says that we will provide fabricated fuel for that tehran research reactor overtime. we put controls on that so that it cannot be used for other purposes. senator: how much enriched uranium above 5% could iran store without creating a red flag? undersec. sherman: two point acting under secretary sbuzin, -- two points, acting undersecretary soup and helpfully reminds me. for 15 years, iran is not allowed to enrich beyond 3.67%. the concern you raised only begins to raise those red flags after those 15 years. they are allowed for those 15 years to only have a stockpile of hundred kilograms. -- 300 kilograms. that 300 kilograms is not enough

to provide enough physical material or a nuclear weapon. senator: after those 15 years, they can have more than 300 kilograms? there is no limit? undersec. sherman: there is no limit, but again, we would look at and ever increasing stockpile and want to understand the reasons for it and uses of it. we have centrifuged reduction for 20 years. they have to make a declaration to the iaea of their additional protocol. there will be many metrics for measuring what they are doing with their program for a very long time. senator: my last question is, when you look at snapback, it is kind of a sledgehammer approach. given the scale of the violations, is there a scalable response? sec. szubin: yes, senator. we reserve the right to snapback in full or in part.

that is a quote from the agreement. we can do that with unilateral , andions, u.n. sanctions the eu has reserved a similar right. whether it is on a category transactions all the way to full snapback's. senator: thank you. chairman senator cotton. senator cotton: i have to know with some astonishment that there was an eight minute exchange about the meaning of the grandfather clause. i think we got some kind of answer out of it. administration officials have said repeatedly that iran will exploit every ambiguity in the text of this agreement to their advantage. i can only imagine what they will say about that clause should it come to pass. moving on, secretary sherman. there's a lot of commentary about access. access to iran's nuclear sites, their military sites. secretary kerry and moniz talked about access. -- managed access. can you assure us that this

access will be physical access, iaea inspectors will be physically walking into these sites and taking samples for installing equipment? undersec. sherman: i think every situation is different. the iaea has the capability, the expert knowledge to make sure that whatever they do can be technically authenticated. i can't go through every hypothetical situation. i know the director general byl be asked these questions your colleagues in this informal meeting. i would rely on his answers more than my answers. what i am assured of is that whatever they do in every circumstance where they believe the need to have access, it will be technically authenticated and will meet the standards that they must have and they require for ensuring verification. sen. cotton: it sounds like the answer is no we cannot verify

that iaea inspectors will be physically present on every site. undersec. sherman: you don't have to be present on every site in this technological world to get done what is necessary. our labs can walk you through those parameters as well. sen. cotton: who will decide what is and what is not a military site? undersec. sherman: the better way to respond to your question, if the iaea has justification to have access to a site, we have a process to make sure they get access, whether that is military or nonmilitary. senator cotton: can iran deem its research universities to be a military site? undersecretary sherman: if they have justification to enter any site, regardless of what it is, and the axis agreement, they will get access. the u.s. would not have agreed to an agreement where access was not assured if the iaea believed it had to happen.

sen. cotton: are you aware of any actions iran has taken it to sanitize any sites? undersec. sherman: there is an all senate briefing this afternoon. i am not going to discuss anything that would be considered classified. that is classified information. we will be prepared to answer these questions. sen. cotton: was moved to the side deals for iaea and iran. you acknowledged to senator scott that you read the side agreement between the iaea and iran. did anyone else read these side agreements? undersec. sherman: some of her -- our experts at it as well. as it all of the p5+1. sen. cotton: can you give me an estimate? undersec. sherman: a handful. i would have to stop and think. sen. cotton: you said earlier to senator corker that we have to honor the confidentiality of this agreement between iaea and iran. undersec. sherman: it is the iaea and every country with

safeguards protocol. sen. cotton: the fact that you read them, doesn't that undermine the claim of supposed confidentiality? undersec. sherman: we were shown them in a confidential setting. i will share with the senate, as i have with house leaders, my confidential understanding and hopefully keep it in a classified setting. sen. cotton: how long are these documents? undersec. sherman: very short. sen. cotton: why are these documents classified? it's not a u.s. document, a covert action, it's not sensitive to the methods of our intelligence community. iran knows what it agreed to. you know what's in it. why are these classified? undersec. sherman: the reason is that they are called safeguard confidential. under the comprehensive safeguards agreement, to which we are also a party, we have confidential documents and

protocol with the iaea, as do all of the countries that are under the csa. the iaea has committed to keeping them confidential. and so therefore, they are committed to keeping these protocols under csa confidential as well. sen. cotton: i'm aware that is the statement you also gave to senator corker. i assume you're not implying any kind of moral equivalence. undersec. sherman: i indeed said to the senator -- you were not here yet -- that i understood that this was a very different circumstance in the sense that we are trying to keep iran from obtaining a nuclear weapon and that this was a international understanding negotiated amongst 6 parties and iran. so yes, i understand this is a different circumstance. which is why i believe the iaea at an expert level shared the

protocol arrangements, understanding they would be classified. and i made clear to the iaea under our system, i would be required to share, in a classified, confidential setting, with members of the u.s. congress what i had seen. and i will do so this afternoon. sen. cotton: did you make clear to iran that these laws required congress to receive all of the texts? undersec. sherman: our understanding of the legislation passed by the house and senate is that we must give you every document that we have. and we have given you every document that we have. sen. cotton: it says it doesn't matter whether the u.s. government has it in its possession. undersec. sherman: it's very difficult to give you something that we don't have. iran and the iaea are well aware

of our legislation. i can assure you they follow what you do every cycle day. -- single day. sen. cotton: fascinating new interview from secretary kerry today. secretary kerry says that if congress was to vote no on this, it would be screwing the ayatollah. congress kerry says if rejects the deal it would show iran "america is not going to negotiate in good faith. that would be the ayatollah's point." surely, you made it clear to iran that congress has to vote on this deal before he could -- they could move forward. undersec. sherman: of course they knew that congress was going to vote on this. everything was very public. everything that happens here in our country is transparent, democratic, and public. and we are very proud of that fact. sen. cotton: are you concerned about congress screwing the

ayatollah? undersec. sherman: i will not comment on that. i have not seen the interview. i can say that secretary kerry, secretary moniz, myself, the negotiating team that has been working diligently on this for over two years, having briefed the u.s. senate and congress countless times, hundreds of times quite frankly, did everything they could to ensure the safety and security of the united states. that is our solemn obligation. that is what we did. sen. cotton: thank you. chairman: senator warner. warner: thank you. let me start by saying, one, i appreciate what you have been doing. many of us have concerns about components of the deal. many of us would like to monday morning quarterback. i find it remarkable that some members seem to impugn that we are doing the best deal for the -- that you are not there trying to do the best deal possible for

the united states of america and for long-term prospects of stability in the region. agree or not agree with what you have negotiated, but i would never a question the approach or dedication that you have taken in this process. clearly mr. szubin, your actions to both administrations working on this brings a lot of history and commitment. i absolutely believe that you want to make sure that we follow-up, particularly on iranian actions in the region. on thent to continue line of what would happen if we don't act. there are some who put forward a theory that if the u.s. congress turns this agreement down, that iran would still have an interest to go through with

-- go through to the implementation date, take down stockpiles, assemble parts of their reactors so that they could still obtain the 50 plus and thens isolate themselves from the rest of the world. that has been speculated on a lot. could you comment on that? sec. szubin: it's always dangerous to speculate about highly complex international scenarios like the one you are describing. but the point ambassador sherman made is important in this respect. it is not a black-and-white answer. we would implement the sanctions as it is in our obligation to do. if congress rejects the deal. we would still see some international enforcement, whether it is on the oil side or reserve side. that enforcement would begin to erode, especially in the scenario you were describing,

where iran goes through with its commitments to isolate us. to show that they through with -- to show they buried through with their commitment and the u.s. is the one that walks away. that would be terrible for us in terms of our credibility. when we exercise our authority, we need to be able to do so in a way that is meaningful. i very much hope it doesn't come to that. it certainly would be a situation of weakened leverage. it is not going to be zero or 100%, but it will be weakened leverage. the question is, could be turned -- could we turn weakened leverage into a much stronger deal? my assessment is no. undersec. sherman: i could not agree more. my assessment would be no, if we walk away, even if we retain some sanctions capability, the rest of the world will go in another direction.

more importantly, iran will go in another direction. and the president of the u.s., whether it is president obama or the next one, will receive this challenge. : would they walk away or go through with the implementation? undersec. sherman: i doubt very seriously if the u.s. sanctions remain in place, iran will perceive that we have walked away from the deal and they no longer have to stick with it. senator: two more questions. one concern we have had is that the administration mentioned -- the administration did say when congress moved forward, they mentioned the swift system. there was great reluctance in taking that step. in retrospect, that was important in helping taken down -- titan down -- titan down the

sanctions. i do wonder, if we don't move forward, will we be prepared to move forward with those same sections, particularly as we -- sanctions, particularly as we look at the banks of indian, korea, japan. comments on that? sec. szubin: it is a very stark scenario you are depicting. the institutions you're talking about are some of the most significant and fundamental institutions in the international financial sector, whether it is swift, the leading secure messaging company for banks worldwide. whether it's the largest commercial banks in korea, india, the central bank of japan. the prospects of us having to use our sanctions authority against those entities are frightening. it would be threatening those institutions unless they come along with the u.s. approach.

senator: let me just get my last question in. one of the statements you made earlier, i would like further expiration on how you got to the 24 days. i was surprised at first about that time. still i have some concerns, but at least i have a little more clarification. one of the things you have said, and i think it is an artful process you have created. we in effect have a default veto. what kind of assurance can we really have that our current eu partners and friends in the u.k., if they have engaged with iran on a business basis, that they will stick with us, had we -- how do we get more comfort around that? undersecretary sherman: the best

comfort is the one the acting secretary gave. in 2012, we were in the same circumstance. europe had a lot of business with iran. they were very concerned about iran having a nuclear weapon and moving down that pathway. so they joined us in enforcement of unilateral sentience and -- sanctions and their own sanctions. multilateral sanctions. in fact, they enforce them. companies had to leave. senator: i would like to hear more from our european allies on that matter. undersec. sherman: i would urge you to speak with them directly. i will think you will think -- get the right answer you are looking for. >> senator warren? sen. warren: i like to yield to senator donnelly and come back when it is my turn. sen. donnelly: thank you both for your hard work. in regards to the iaea agreement and moving forward -- and this has been asked by others, but i

want to clarify. moving ahead in every other facility, is it your understanding that the iaea can get into every facility, that if they choose to, they can go in there physically themselves as opposed to having iran turnover materials? that they have physical access? undersec. sherman: i be happy to get into this in greater detail in a classified session. what i can tell you is that whatever the iaea believes that it needs to do to have a technically authenticated result for whatever access they believe they need to have, they will get it.

>> so if they believe they need to have physical access to a place, that will not be denied? undersec. sherman: as i said, whatever they believe they need for a technically authenticated process, they will get under the agreements that we have negotiated here. and i will be glad to discuss this in greater and more exquisite detail in a classified session. >> that would be fine. we can talk this afternoon, but it sounds like yes to me. is there any reason to believe there are any other documents out there? undersec. sherman: no. or i do not know about them. >> have you asked the iaea if there are any other doctorates out there? -- other documents out there? undersec. sherman: i talked with the director yesterday, i asked him questions about where we were with various things. i had no reason to believe there were any other documents. >> have you asked the iranians, who you have had these discussions with, do you have any other agreements with anybody else at this time that we don't know about? undersec. sherman: i have not asked that question explicitly,

but given the hours and hours we have spent together, i do not believe there are any other documents. >> i think that is question well worth asking. mr. szubin, the alternative theory, or one of the alternative scenarios is that the u.s. walks away and then we, in effect go country by country, saying make a choice economically. don't deal with iran or else we will section -- we will not deal with your economy. what is the likeliness of that kind of scenario? sec. szubin: in the event of us walking away from this deal, i think we would be very much swimming against the tide. the cooperation we have obtained to date in going around the

world, just as you have described, saying we need to pressure iran, was predicated on a diplomatic path. china, india, south korea could see here's a way to test iran to see if they are ready to make a deal. >> so in this context, we are walking away from that? so if we walk away, what is left in terms of strength of the sanctions? some folks have said we have some a significant impact still on iran. what other global effects will take place? undersec. szubin: the u.s., as you know, senator, would maintain sanctions. take place? that is true either way, our embargo is going to remain in place. the eu has sanctions with

respect to iran's bad activity outside the nuclear file. but the most severe economic sanctions that we have spent time talking about today and this congress helped to put in place affects things like sales of crude oil, petrol chemicals, and access of the central bank of iran, the banking system internationally. those are all built on the threat of u.s. sanctions with international acquiescence. it is that acquiescence -- sen. crapo: the alternative suggestion is for countries who aren't willing to also continued their sanctions come if we walk away, we go to them and say make a choice. how realistic is that? undersec. szubin: i think it would be a very tough conversation and when you go to a country like china or india and told them we will dictate

where you buy your oil from, which is what we have been doing the past few years, they will say with an eye on what? if they think that our bar, having moved the goalposts, the bar is unrealistically high, we will have a hard time securing that cooperation and that means that the sanctions leverage will the road considerably. -- erode considerably. sen. crapo: thank you, mr. chairman. sen. warren: thank you, mr. chairman, thank you, undersecretary szubin, and ambassador for your work. i think everyone understands that a nuclear-armed iran threatens the united states, threatens israel, threatens the entire world. the only question before congress is whether the nuclear agreement negotiated alongside other countries represents our best available option for preventing iran from acquiring a nuclear weapon. i'm wondering if you can pull these pieces together and evaluate the option.

what happens if we go forward with a deal versus if we back out? let's start with the tough sanctions imposed by the united states with the cooperation of other countries around the world, such as the u.k., france, china, germany, the eu. if we reject this deal, we need our international partners to continue the tough sanctions, block iran's access in order to be effective. ambassador sherman, if we walk away, do you believe that all the other nations that have endorsed this deal are likely to continue working with us to impose strong sanctions against iran? undersec. sherman: no, because as acting undersecretary szubin said, the reason they cooperated is because they believe we were pursuing a diplomat excision and they thoughtnd

that was worth trying to accomplish. that has been accomplished. they believe it was worth taking the economic hit they did it to do that, but if we walk away from what they consider to be a good deal -- 90 countries have spoken out in support of that deal -- they will believe we have changed the equation, we have not operated in good faith, and we are on our own. sen. warren: let's look at what happens if we are on our own. if the united states continues sanctions on our own while other nations resume trade with iran, how effective will our sanctions likely be? undersec. szubin: they will be less effective than they are today and were when we negotiated this agreement. sen. warren: thank you. now let's consider the roughly $50 billion of iran money that is frozen and could be granted as part of sanctions relief if iran complies with the deal. undersecretary szubin, is most or even a very significant part of this $50 billion held in the united states?

undersec. szubin: no. sen. warren: if we walk away, do you believe the other countries who hold this money will continue to keep it out of iran's hands? undersec. szubin: i think we will begin to see those funds be released if iran starts meeting its commitments under the deal. sen. warren: but the question i ask is if we walk away from the deal, are you convinced that other countries that hold these funds are going to continue to withhold those funds from iran? undersec. szubin: i can't guarantee that they will. sen. warren: all right, let's talk about iran's nuclear weapons ambitions. if we reject this deal and iran decides to build nuclear weapons, what would be iran's breakout time? how long do you estimate it would take iran to produce enough material for a nuclear weapon? undersec. sherman: the assessment today is 2-3 months.

sen. warren: what would be iran's breakout? undersec. sherman: at least 10 years. sen. warren: let's talk about cheating. iran may try to build a nuclear bomb anyway. ms or sherman, will it be easier or harder for us to detect secret iranian nuclear weapons program if we accept the deal or reject the deal? undersec. sherman: clearly if we accept the deal we will have many more eyes and the iaea will have access to declared sites in iraq and also have surveillance over uranium, the entire supply chain through the procurement channel, they will have eyes on centrifuge production, they will laugh access to undeclared sites

-- that is, suspicious sites, if they police there is a justification. most of that, nearly all of that, will disappear if there is no deal. sen. warren: i have one more question on this. let's talk about war. i don't think americans want to be dragged to another war with the middle east, but let's face hard facts. if we reject this deal, the breakout time will go down and that will increase pressure to take military action very soon. what i want to compare here is the effectiveness of these 2 options, negotiated option versus a military option. in the long-term, which action is likely to be more effective at preventing iran from developing a nuclear bomb? accepted the agreement and closely monitor iran's nuclear program, or rejected the agreement and if there is escalation, bomb iran? which one is more likely to be effective? undersec. sherman: clearly a long-term negotiated solution, which is what we have in the plan of action, is more effective.

if we take military action, which the president of the united states will do if he has absolutely no choice, indeed, we will only set back their program as estimated by the intelligence community two-three years, because iran has the know-how to master the fuel cycle to create fissile material for a nuclear weapon. although we could bomb away their facilities, they can reconstruct of them. you cannot bomb away knowledge, you cannot sanction away knowledge. the only way to control it is a solution that is highly monitored and verify. that is what we have negotiated. sen. warren: thank you. some have said they want a better deal, but that is not the choice that congress faces. the deal is the deal. congress has two choices, accepted or rejected. no one can say for certain that

this deal will prevent a nuclear-armed iran, and i won't say it. but no one has put a better or more realistic alternative on the table, and until i hear a better option, i intend to support this deal. thank you. thank you, mr. chairman. senator shelby: senator heitkamp. senator heitkamp: thank you, mr. chairman, thank you for your patience today. i have watched you let members get to the heart of what they need to examine, and i wanted personally thank you for that. we have a lot of attempt here to unbake the cake, right? i've been somebody engaged in multiparty negotiations, including some of the largest civil settlements that this country has seen, and i know how difficult it is to unbake a cake and say that this could be better. i think elizabeth, senator warren, just took us through the paces in terms of what the real options are. i will tell you that one thing i don't believe has been talk a lot about is the fact of lifting the sanctions regime will in

fact build a bigger, better, more economically stable iran into the future. as long as iran is on the terrorism list, creates incredible opportunity. as i think mr. secretary, you have so appropriately talked about the challenges that they have economically today, it is -- if in fact the sanctions regime is lifted and we look 10 years in the future, iran will be much more stable economic power. i don't think there's any doubt about it. this might seem off-topic for some people, but it is certainly on-topic for me, which is the one thing we could do that would provide competition against an iran that has the ability to market their oil into the market and have the resulting economic growth as a result of marketing that oil, is actually exporting american oil to compete with the iranian oil. it is very difficult in my

state to explain why we should lift sanctions on iran when we are sanctioned in the united states of america in terms of our oil exports. i would like to hear from both the state department and the department of treasury your response to that statement, especially looking into the future in a 10 years when we know that that competition could in fact curtail the economic might of an enemy that is pretty powerful. undersec. szubin: senator, thank you for the question. unfortunately, i am not the right treasury official the two jurisdictions on sales of american oil -- sen. heitkamp: what you do manage the sanctions, and that is a big part of it. as part of your job of managing the sanctions, is to look at how the sanctions have an impact on the viability economically of iran. you kind of are, for me, the right back to ask. undersec. szubin: well -- sen. heitkamp: no dodging. undersec. szubin: what i can say with respect to the sanctions is you are right. what is important is to relieve the secondary pressure

not the u.s. sactions, but the secondary pressure internationally on iran's economy, and if iran adheres to all of its commitments, iran can expect some economic recovery. i think it will be many, many years in the making before iran gets to where it ought to otherwise have been today -- sen. heitkamp: but you do understand that there is a lot of concern about an economically empowered iran and what it means for stability in the region. undersec. szubin: i understand it to my very core. sen. heitkamp: i don't have a lot of time and i think the chairman has been externally extraordinarily generous, so i would turn to you, ambassador sherman. undersec. sherman: senator, neither adam nor myself can comment on u.s. to mr. policy, although we -- u.s. domestic policy, although we understand how it has a profound impact on international relations and the international market. i am sure that particular interest that you have, that we

all have come in american economic security and independence when it comes to oil and gas, is something that has to be resolved here. sen. heitkamp: but there has been a lot written about the ability to provide some kind of energy security into europe that could be one of those soft power measures. undersec. sherman: absolutely. sen. heitkamp: i understand that it might be above your a great or whatever it is, but i want and a knowledge than oil of moving into international markets has the effect of curtailing the economic power of iran, and economic power of russia, and a whole on able -- for a lot of people or nation states that really are not friends of this country, and this is an opportunity to give our allies step forward and the energy security that may in fact strengthen the sanctions regime if we ever snapped back. undersec. sherman: i think no one would disagree that energy security for our country, for the world, and, for that matter, dealing with issues of climate and how we manage that, will

have a profound impact on the development of countries and america's continuing to be the preeminent economy in the world. no question. sen. heitkamp: thank you, mr. chairman. sen. shelby: senator vitter. sen. vitter: thank you, mr. chairman. thanks to both of you for being here and for your service. i want to follow-up on a fairly important issues that -- a very important issue that my colleague senator scott got into, and that is these two significant iaea agreements. they are certainly significant in terms of enforcing this agreement, are they not? ambassador: sherman: i would say they are important arrangements on the modalities that the iaea will use, but the public roadmap, which you all have access to, lays out with the iaea requiring of iran in broad

terms as one of the steps it must take in order to get sanctions relief along with all the other nuclear steps. although i agree that possible military dimensions are important, they are, the united states has already made its judgment about it, but we are much more focused on where the program is today and where it is headed in the future, which is what people of the joint -- what the bulk of the plan is about. sen. vitter: you said what is available to members of the senate and the public is laying in broad terms. aren't the real specifics of verification very important with this agreement? ambassador: sherman: of course, and that is white in a briefing -- why in a briefing is something i will share in a classified session the arrangements of the confidential protocols between iran and the iaea.

sen. vitter: and you have read those secret agreements? ambassador: sherman: i've read the safeguard confidential arrangements, yes. sen. vitter: ok, when do i get to read them? ambassador sherman: you know more than any other country will get to read the confidential protocols between united states and iaea. sen. vitter: do you have a vote on this agreement? ambassador sherman: i do not. sen. vitter: i do. you have read these agreements, and i think that is appropriate, i'm not arguing with that. i have to vote on this agreement. you don't think it is appropriate that i would get to read it? ambassador sherman: as i said to the iaea and all of my colleagues, i would have to share the arrangements in a

classified session with united states -- sen. vitter: that is not my question. do you think it is appropriate i don't get to read it when i have to vote on the matter? undersec. sherman: senator, you will have to make your own judgment about it -- not sen. vitter: i'm asking your opinion, do you think that is appropriate? undersec. sherman: my opinion is that it is in the united states national security interest for there to be a comprehensive safeguard protocol and that those remain confidential good that is in our national security interest. sen. vitter: do you think it is appropriate that i as a sitting u.s. senator representing a significant number of americans who has to vote on this do not get to read those agreements? i'm not talking about putting them on the internet, i'm not talking about handing out -- undersec. sherman: i don't have those agreements to give to you, sir. sen. vitter: that was not my question. please answer my question. do you think it is appropriate i don't get to read them? undersec. sherman: i think the system that has been put in place that maintains these as confidential documents between the iaea and the countries which operate under the coverings secret agreement is appropriate. sen. vitter: under the appropriate system, you get to read it, although you don't have

a vote. i don't get to read it, although i do have a vote. ok, let me move on. president obama earlier said that "in year 14, 15, they," meaning iran, "have centrifuges that have grown rapidly and the breakout times has shrunk close to zero." is that accurate? undersec. sherman: what is accurate -- sen. vitter: is that quote accurate? undersec. sherman: in those years it will not come down to zero, no. sen. vitter: what will it come down to? undersec. sherman: we can discuss those in a classified session. sen. vitter: his quotation was almost down to zero. undersec. sherman: it is not close to zero. sen. vitter: so he was wrong. undersec. sherman: it is technically impossible for enrichment to go down to literally zero. it is just not possible.

that is why today it is 2-3 months. sen. vitter: 2-3 months. ok, maybe it is something comparable to that. in that context, do you think other middle eastern countries will strongly consider developing nuclear weapons? undersec. sherman: i do not, and it is the intelligence community's assessment that they will not. sen. vitter: and to a layperson, that makes no sense. to a layperson, when you have a radical, dangerous regime, just the capability of within months having nuclear weapons, it is not credible that everybody's just going to sit on their hands. explain to me why that judgment would be credible. undersec. sherman: first of all, to build a nuclear weapon, you not only need it fissile material, which today the breakout time is 2-3 months, under this agreement it would be

a year to 10 years, which would give us plenty of time to take action could you also have to weaponize that material and you have to have a delivery system. it is the assessment of our community that even if iran were able to enrich the highly enriched uranium to have for some material for a bomb, which he does not have today, and would take some time for them to get, they would indeed still -- maybe as much as a year or two away from getting a nuclear weapon, if in fact they had a program to weaponize and the delivery system to carry it. sen. vitter: well, again, i'm not talking about today. i'm talking about assuming they live under the agreement -- in the later years, those timeframes considerably shorten. undersec. sherman: well, the fissile material time frames shorten. we would have to ask intelligence -- i am not aware of the current weaponization program i'm not aware of a current program that marries a bomb with a delivery system in iran. i expect that they could do that

should they make the decision to do that. but your question was about other countries, and i didn't get to that, and i apologize. i believe other countries will not go there because it is expensive, very expensive. secondly, we would know about it. they would find themselves under the intense sanctions that iran has been under, because some of the countries that you are talking about our partners or allies of hours and are trying to deal with aspects of state sponsorship of terrorism of iran, and they want to work with us to do that and we are working with them to do that. i believe that any number of incentives or disincentives for those countries to choose not to move in the direction that iran has moved in. sen. vitter: ok, thank you, mr. chairman. sen. shelby: this is been a long hearing, an interesting hearing. i have a few observations and will forgo the question. what is and what is not in the

agreement is very important, is not, mr. szubin? but if you don't have all the information, it is hard to discern what is in the agreement. my question to both of you, we know the history of iran. we know what is at stake here. ambassador sherman, do you trust iran? undersec. sherman: of course not. sen. shelby: ok. mr. szubin? undersec. szubin: no, senator. sen. shelby: so we are entered into an agreement of great importance with a country we don't trust that we have reason to believe is going to cheat or do whatever they have to because they are determined, they are in pursuit of nuclear weapons, and as you have said, they are close to it right now, is that correct undersec. sherman: actually, they are not close to it right now. they are a year or two away from a nuclear weapon, should they decide to pursue one, and it is

not clear that the supreme leader has made the decision to pursue a nuclear weapon. two to three months for fissile material. sen. shelby: fissile material. undersec. sherman: under this agreement that would change to a year. sen. shelby: which is a huge step. mr. szubin, do you trust iran to forgo their terrorist activity not -- and if we say $50 billion on promoting terrorism and unrest all over the world? undersec. szubin: mr. chairman, i do not trust iran, and we can be fairly certain that iran will continue to sponsor terrorism and groups like the quds force. it is incumbent on us to intensify the campaign against that. sen. shelby: strange agreement. thank you for your appearance before the committee.

we have another panel of important issues. i will call them up, of witnesses for the second panel the senior advisor for the transnational threats project. directorn, executive of the foundation of defense. the director of the sky and program for counterterrorism. in the messenger nicolas burns. we welcome all of you here to and all of committee you have written testimonies will be made part of the hearing record in its entirety. when we get seated we will proceed.

we'll start with you and you are ready. mr. zarate: i am privileged to be testifying with my fellow companions, given the gravity of this agreement. i come to this issue with the views born from a wealth of experience dealing with iran and the national security council. i know that all involved including my colleague adam sz

ubin have been working incredibly hard to the iranian nuclear problem. mr. chairman, the restriction campaign that you know this committee is been a part of and built methodically over the course of a decade help bring iran to the table. the sanctions threatened to drive a run back to the stone age. these efforts have also been designed to constrain and isolate rogue iranian behavior. to protect the integrity of the u.s. and international financial systems. unfortunately, the sanctions framework is flawed. the relief is too frontloaded, it is not account for the increased risks, and it ultimately constrains the u.s. government's ability to use effective financial power

against the rainy and nonnuclear national security risks. there are structural problems, the snapback is a blunt instrument. winds sanctionsn too broadly. it may put the u.s. in a position of rehabilitating iran's economy. appellatehe processes, and the u.s. sanctions which iran subjects would be subject to view by the other parties, including inran, -- iran, china, and russia. they have an immediate right to challenge in an international venue, this will be dealt with the support of parties that do not like or want to see u.s. financial power and influence. it may even drive a wedge between the u.s. and europe moving forward. numbernimum, this will

our use of financial tools against iran. the spirit and letter of the agreement may neuter u.s. agreement -- power in the future. from the start, what the iranians wanted most was the ability to do business again, unfettered and unplugged, back into the global system. to regime is needed access banking, shipping, insurance, and new technologies. that is what they lost over the past decade, that appears to be what they have gained in this deal. the u.s. really to amplify its use of financial measures aggressively against key measures of the iranian economy to deal with increased risks. it is not at all clear that this is well understood by all parties, or even part of our strategy. we have the ability to do so, unilaterally if needed. the u.s. has been shaping efforts t