fairgrounds and it was labor day. we thought stopping by the fairgrounds would be a good thing. donald that now you are in my strikes on. i affairs. -- i know county fairs. [laughter] get a corn dog. lemon shakeup. you are there. i was briefing him on that. the only thing is, when you go to the pair with donald trump, it is a little different. we arrived and you can look at the pictures, we arrived in the streets were lined with so many people. people heard that this good man, our nominee for president would be there at the camfield fair.

before we would lead, we would stand on the railing about car, both of us waving to the crowd. it was as far as the eye could see. we were told there were 50,000 people that came out to the county care around -- county fairgrounds. [applause] they know a better deal is coming. know that they are part of a movement. donald says that to me more often than anything else. when we see the crowds, he will say, this is a movement, mike. it is bigger than us. he says it with the kind of humility that we so admire leaders. in leaders. i admire him as my running mate. america's choice has never been

clearer. the most straight talking candidate since ronald reagan is running against one of the most dishonest candidates ever. [applause] let me say, as i stand in this hallowed place, the american people picked a bold truth teller in 1980 and i know they're going to elect a bold truth teller in 2016. [applause] these challenging times, let me reflect on the policies and then i will close. challenging times are similar to the times we faced in 1980. then, as now, we stand at a fault line of history. an economy and decline.

joblessness stretched as far as the eye can see. upheaval inial america pushed around abroad. we need smart and decisive leadership to fix america's problems while there is still time. respects,old, in many elites in both political parties, then as now have failed to give us government as good as our people but that is about to change again. [applause] how will it change? it all because of security. americans of every act ronald reagan at the common dangers we face. this week it will be 15 years since 9/11. it is hard to believe. the threats and dangers have not receded. in fact, as you have learned and shocking and heartbreaking

tragedy here in california, they are closer and more serious and never before. during a trump residency, i can assure you we will restore the arsenal of democracy. we will restore the alliances that keep a strong and secure. you will have a commander-in-chief as you have heard last night, and heard yesterday who will take those resources and of those new alliances and we will hunt down and destroy those who threaten our people and inspire those who would bring us harm. [applause] donald trump, like ronald reagan, will rebuild america's military. it is extraordinary to think that since 1991, our active duty armed forces have diminished from 2 million to just 1.3 million today. our navy has shrunk from a fleet of over 500 chips down to 272.

the air force is roughly one third smaller. the armed forces deserve better. knowseagan, donald trump that we can only have peace if america is strong. on day one of a cap administration, donald trump will submit a new budget to rebuild our military and active army of 540,000 soldiers. he will build a remain core -- marine corps of 36 the times. improve the navy. our air force will have at least 1200 fighter aircraft. we will modernize our naval cruisers and force our last vacation roles, command relevant department to conduct a thorough iniew of cyber defenses america, america will once again .e known as the arsenal [applause]

as a proud father of the united commanderg, our new -- marine, our new commander-in-chief will support our soldiers, sailors and airmen with attorney did need to get the job done safe and come home to us. [applause] that is probably why so many million families -- military families are supporting our campaign. why somebody veterans make their way to our rallies around the united states. any men and women who have for the uniform of the united states of america, could you stand or raise your hand to allow us to show one more installment of appreciation?

[applause] thank you for your service. a strong military and a strong america makes for a strong america in the world. in america that the world takes seriously. whatd trump and i know ronald reagan knew, america needs to be strong for the world to be safe. of thispolicy record and ministers and has weakened america's place in the world. it's a store near to think of the policies of this administration. it was secretary of state hillary clinton. the picture of the middle east on the day they took office and look at the map of the middle east today, it does not look like the same place. civil war in syria.

rise and role of the isis caliphate. civil war in libya. terrorist forces that have overrun the hard-fought gains that were secured in the last republican administration by our soldiers. libya, the wider middle of a greater and more emboldened russia and china, activities in the south china sea. russ's interventions in ukraine. it all has a big familiarity to it. vague familiarity to it. that the examples truth of history, reagan knows, donald trump knows that weakness arouses evil. week foreign policy by the united states of america embo

ldens our enemies and abandons our friends. those days are over starting november 8. [applause] but semi my to those times as well as the times we live in -- similar to those times as well as the times we live in. policies that have stifled the american economy. there in the midst of slowest economic recovery since the great depression. we have a few days after labor day, we had the lowest river -- labor participation rate since the 1970's. do not be deceived by the low unemployment. the truth is that there are millions and millions of men and women in this country who are not counted in that number because they are not looking for work anymore. all, they aref

nearly 7 million more americans living in poverty today in the day that barack obama became president of the united states. their nominee, her plan is more of the same. more taxes. more regulation, more obamacare and more of the war on american energy that has run our nations economy into a ditch. you, just as in those days that we celebrate and remember on this false, we are about to elected president who knows that the strength of the american economy is in the ingenuity and freedom of the american people. donald trump will empower the american people to revive this economy again. [applause] donald trump and the detroit economic club, a place that ronald reagan used to like. out ant a plan to lay

revive our economy. i like to say that conservative ideas work every time you try them. they work in the future state -- hoosier state. they will work in washington dc. donald will sound familiar. lower marginal rates. we will end that taxes once and for all. -- death taxes once and for all. we will lower corporate tax rates so american businesses can compete with businesses around the world and keep jobs here. reagan also knew what donald trump knows that is regulation is a form of taxation. donald trump will do what we did, we will sign a moratorium on any new federal regulation and he will repeal everything one of barack obama's job killing executive orders. every single one of barack obama's job killing executive orders. [applause]

donald trump becomes negotiator and chief. we also will have trade deals that work for american workers. [applause] donald trump and i believe in free trade. we believe in arms length transaction. we believe trade is to be a win-win. we need to renegotiate nafta to ensure it works for the people of the united days. we will get out of this multinational deals like the tpp . at the end of the day, we will hold our trading partners to the promises they make when they sign a deal with the people of the united states of america. [applause] lastly, the fact that we are running against someone who boasted, if she was elected

president, we will put a lot of coal miners and coal companies out of business. one, we will end the war on coal once and for all. we will unleash the boundless power of the natural resources of the united states of america. [applause] matterspeak to one other and then close and get to your questions. elects on, we will literally, as the calendar speaks today, on september the , we willwo months elected president for the next four years. it is so important for those of us that church the ideals and legacies of ronald reagan to remember that what we are electing a president for the next four years, the president will likely set the course and

direction of the supreme court of the united states for the next 40 years. we need to think long and hard about that. donald trump for his part has made it clear, when he becomes president of the united states of america, from the supreme court on down, we will appoint to the federal judiciary men and women who will strictly construe the constitution of the united states and not legislate from the bench. [applause] ronald reagan said it so well. i quote, the importance of judicial restraint, the belief of our founding fathers that the role of the judges to interpret the law, not preempt the rights of the people and their legislatures by making the law. [applause] judicial restraint.

the role of the judge. i have said throughout this breach that ronald reagan and views trump had similar on some key issues. similar ideals and several -- similar backbone. the me be clear, after my tenures on the judiciary committee on capitol hill, working in and around these , ronaldor a lifetime reagan and donald trump views on the supreme court are not similar, they are identical. he will appoint justices that will make the reagan tradition proud on our supreme court. [applause] finally, one last point, for too many in washington, for too many seems togton, politics have morphed into a rigged game of self-enrichment and cronyism.

one great democrat that i'm pretty sure ronald reagan said,d, harry truman, he no young man should go to politics if he wants to get rich. he said an honest public servant cannot become rich and politics. [applause] -- in politics. [applause] past thatpence's test. -- pass that test. [applause] today?d we see politicians enter office with modest needs and merge as minors. auction access and policies.

allentown,ike pennsylvania, youngstown, ohio, fort wayne, indiana, people do not know how to work the system. they just know how to work. all they ask for is that chance. in our ministry to come will make sure they haven't. americans are fed up. that is what independents and republicans and many democrats are reeling from the headlines that we see one day after another. reagan knew what donald trump knows. we must have the highest standards of integrity in the highest office of the land. we will when donald trump comes president of the united states. -- becomes president of the united states. [applause] 1980, 2016, 2 different men, two different times. seems familiar.

the challenges that we face. the opportunity that we have. i cracked open that old but this bookng and i happened -- this morning and i happen to land in ecclesiastes. ago, there isnnia nothing new under the sun. what has been will be again. what has been done will be done again. boy, i sure hope so. [applause] you that i'mell very humbled to be in this place with you all. charlotte and i have the great privilege of laying a wreath at the final resting place of this wonderful couple that change their country and change the

world. it was an emotional moment for me. i want to give you a word of encouragement as well. something big is touring in our country. -- stirring in our country. it is coming from the american people. thatpirit of 1880 propelled ronald reagan into the white house is alive and kicking. i see it every day. i just joined this ticket little more than six weeks ago. trumpgning with donald and for donald trump, i see in the faces of americans in big cities and small towns and thatism and determination i think is going to turn this country around. i see it in the faces of the thousands that we meet on the campaign trail. people feel that out of touch

washington elites. i had a woman walk up to me and she said, thank you for running with donald trump. wait to vote. [applause] 61 days. an opportunity we have to restore confidence to our people. to have america standing tall again. .t home and abroad in economy working for all of foundationand the and constitution with people we all respect. i have faith. i think we will do it. it is not because of the polls. i don't pay a lot of attention to the polls. ago, you a long time

get into a rough campaign, you have to turn on the television with a stick every morning. what is going to be there. it is something else. intos manifested conversations i will close with. one is with my running mate and one with a man whose name is on this building. the rest of the conversation with ronald reagan happened in the east room. i did a little photo op thing with him. i got up, started reading again. i walked into the east room and my wife was waiting there with some other couples. a were maybe 30 of us. we were there. we wait until the president the party. he burst into the room. you might remember those days. that i heard there were

some ladies and here and i wanted to meet you all. -- in here and i wanted to meet you all. my wife got to ask him a question. several people asked about policies and important things. my wife raised her hand and said, where is nancy? [laughter] he really melted. made a point to reach over and shake her hand before he left the room. he said something that day that i will never forget. i guess a couple other people must have said to him what i said. i wanted to thank him for what he had done for the country. said, several, he of you made a point to thank me for what i have done for this country for the last eight years. it was august, 1928. -- 1988.

the soviet union was on it tells -- heels. he said several of you have thanked me for what i did for this country. then he said, i want you to know that i'd don't think i did anything for the country. said, i think the american people decided to write the ship ship and i was just the cap they put on the bridge when they did it. we were running over to the convention. the night of his speech. donald trump, ever the coach, ever the ceo was sitting next to me. he said, mike, we have a great opportunity. he said, we will have to work. it felt like i was in a locker room. [applause]

we're going to have to go after it and roll our sleeves. and,e get to election day we get this thing done with the iraqi people -- the american people and it will be great. this confidence. i had not heard that since 1988. men, i justhese want to tell you that there is so much that is different in terms of style and background. , oath ronaldore reagan and donald trump are ronald reagan and donald trump are united in a boundless faith in the american people. that is where i know that if all of us will do all that we can to as the 45thood man president of the united states of america, if we put that new know weon the bridge, i

will make america great again. thank you very much. god bless you. [applause] thank you for the honor of being here today. [applause] >> just a remarkable speech. think you very much. -- thank you very much. we have time for one, maybe two questions.

some people are nice enough that they came to read questions. we have a whole stack here. propose a lawou or rule that would prevent influence selling by anyone in government so a clinton foundation type fiasco does not happen again? gov. pence: donald trump has already laid out policy points. and he will continue to lay out those plans. regard to individuals in their ability to advocate for four interests. it is one of the things that is so troubling about what we see unfurling and becoming more public every day. foreignlking about contributors to the clinton foundation.

there are some schoolkids here. and foreignrest contributors cannot participate in american politics. vehicle that there is a while she was secretary of state for foreign companies and four interests to donate -- foreign interests to donate to the clinton foundation come i think it should be troubling to every american. and thanks to the associated press, three found that more than half of the private meetings that the secretary of 85 of the more than 150 meetings were extended to people who are given millions of dollars to the clinton foundation in many cases, for contributors. senator richard lugar who is an icon in indiana and a man of enormous integrity warned senator clinton of this issue in her confirmation hearings.

he warned her against the interest that foreign companies and for individuals would have in contributing and seeking access. thepromise you, the days of pay to play politics in washington dc are over the day that donald trump becomes president. [applause] >> second and final question. what is the biggest misconception about donald trump? [laughter] gov. pence: someone came up to of theother day and said donald trump for a long time and i really like him. that said, i have not known him very long at all and i really

like him. we have had the chance to get to know the trump family. even before this opportunity was extended to me. when they were considering a number of highly qualified men and women for the position. they graciously invited us to come and spend a weekend with him. we tend to make decisions as a family. the trumps are the same way. to know donald trump is to know very quickly that he loves his family and he loves this country. thingshink one of the that i was most touched by was his graciousness and kindness. as i said at the republican national convention, we have a larger than life nominee. very charismatic.

out, charlotte was with karen and me. what we found is that all that energy is there in person. my daughter might be mad if i quote her. but we got on the plane after we spent a weekend with him. the wholehe was trump weekend, but he is so nice. [laughter] [applause] gov. pence: you like that? thank you. him, aa kindness about consideration about him. here is a man that built buildings to the sky in the world's largest city.

he is just as culpable talking able talkingcomfort to the bricklayer and the groundskeeper as the people who run the executive offices. i think it comes from an upbringing that is, in many ways, similar to mine. his grandfather immigrated to this country. my grandfather immigrated to this country. his dad was a self-made man. had a business as a builder. andad married my mom started running gas stations. that is where i showed up. donald trump and i were raised to believe that to whom much is given, much will be required. the man decided to go to manhattan island and build on

what his grandfather had built. for me, it was a calling into public service. zeros, he and i have an awful lot in common. [laughter] gov. pence: what we have in were raised inwe a family with the foundation of faith, raised to treat people the way we want to be treated. we were raised to believe in the american dream. i will leave you with that because of the special place we are at. i think you can boil everything down ronald reagan ever said -- and i have read a lot of it. conservative. i am. what you hadore, in ronald reagan, god rest his

soul, and what you have in men whorump, are two were fundamentally raised to believe in the american dream, and they spent their whole life living it. and they spent their life defending it. that is what is most in common between the two. [applause] gov. pence: let me thank you all. thank you to the reagan library. to the patrons who are here, the youd, the governor, thank for all you are doing to continue to keep alive the life, work, and the ongoing mission of ronald reagan. let me promise you that, come november 8, you will see the reagan revolution lives on. thank you. god bless you.

[applause] [captions copyright national cable satellite corp. 2016] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] c-spancampaign 2016, continues on the road to the white house. >> i will be a candidate for democrat, republicans, and independents. >> we will win with education and the second amendment. >> live coverage of the presidential and vice presidential debates on c-span, the c-span radio app, and c-span.org. the first debate is live from hampstead, new york. october 4, mike pence and tim kaine debate at longwood university in virginia. october 9, washington university in st. louis hosts the second presidential debate, leading up to a third and final debate between hillary clinton and donald trump at the university

of nevada las vegas. live coverage of the presidential and vice presidential debates on c-span. listen live on the c-span radio app. or watch anytime on-demand at c-span.org. c-span,g up on president obama's final news conference before leaving laos. then a hearing on a cash payment to iran shortly before the release of u.s. prisoners. hillary clinton holds a conference in white plains, new york. journal,'s washington live every day with news and policy issues that impact you. friday morning, tom reed will join us to talk about his endorsement of donald trump and the statement the congressman has made on the record saying mr. trump needs to be reigned i n.

then, gregory meeks will talk about the latest campaign donaldment, including trump hillary clinton outreach efforts to minority voters, as well as immigration and the congressional agenda leading up to the november election. watch washington journal beginning friday morning. join the discussion. >> president obama closed his nine-day trip to asia in laos. in his remarks, he criticized donald trump, saying he did not think he was qualified to be president. he addressed his legacy in the region and u.s.-asia relations. this is 30 minutes.

president obama: good afternoon, everybody. i want to thank the people of laos and express gratitude for the warmth they have shown me is the first u.s. president to visit this nation. it has been memorable and at times, a very moving visit. we are here because, as a region with 600 million people, several fast-growing economies, some vibrant democracies and also countries transitioning to democracies, and given their positions along trade routes, the nations of asean are critical to peace and prosperity in asia and the world. the u.s. is among their top trading partners. we are among the largest investors in this region. asean is one of our largest markets for u.s. exports, supporting hundreds of thousands of american jobs.

ade and investment fuels prosperity across our countries. that is why, as part of our rebalance of foreign policies across the asia-pacific, i have deepened engagement with the nations of the asia-pacific and asean. i'm the first u.s. president to meet with the leaders of all 10 and sustaineds cooperation throughout my presidency. earlier, i was proud to host the first asean summit in the united states in california. the meeting in laos marks my ninth to the region. together, the united states and asean have forged a partnership guided by keepers bowls, including that asean will remain key to prosperity in the asia-pacific. to united states has worked

make that organization's the region's leading forum for dealing with challenges, including maritime efficiency. we are shared -- guided by a shared vision -- mutual economy and a peaceful resolution to disputes and respect for human rights. in short, a region where all nations play by the same rules. that is the vision we advanced here. we are stepping up efforts to increase trade and investments. as part of the mission announced -aseanr this year, u.s. connect is doing more so that it is easier to start new ventures together. we are connecting entrepreneurs and encouraging innovation in increasingly digital economies. all of which will reinforce the region's continued economic

integration through the asean community. given that four asean nations are part of the transpacific partnership, i will do everything i can to get the congress to approve tpp before i leave office. with regards to security, our nation has reaffirmed commitment to see that disagreements are resolved peacefully. i've part of the national arbitration ruling in july, which clarifies maritime claims in the south china sea. this includes respecting aw, nottional l militarizing disputed areas, or occupying uninhabited regions and shoals. the united states will stand with allies and partners in

upholding international interests, including freedom of oversight and lawful commerce that is not impeded. the united states and asean continue to deepen cooperation on national challenges and discuss the importance of continuing to share information to prevent terrorism and the flow of foreign fighters. given the threat of climate we agreedour nations, on bringing the paris agreement into force as soon as possible. we agreed to cooperation in the fight against human trafficking, including sharing more information on smugglers, closer law enforcement cooperation, and more support for victims. wethe east asia summit, expressed great concern about missile launches and highlighted the threat posed by ballistic missile programs and agreed to uphold international obligations. finally, i am especially pleased

we continue to deepen connections between the people of asean and america, particularly our young people, like the inspiring people i met with at a town hall yesterday. our commission is 100,000 strong. the women's leadership to maddie -- academy will support civil andety throughout asean help increase language skills amongst students and teachers through our english for all program. in closing, i am mindful this is to last day of my last trip this region as president. when i think to the time i spent here as a boy, i cannot help but be struck by the incredible progress made in the region, even if there is more to be done. it means a great deal to me not only as president but also personally that, over the past eight years, we have increased cooperation between asean

countries and the united states. it is unprecedented in the depth of our relationships and one of the more successful parts of our rebalance policy. we made it clear the united states will continue to stand with the people of this region in advancing the security, prosperity, and dignity. i am optimistic the ties of friendship between our people, as reflected by that room full of young people we saw yesterday, will bring us even closer in the years to come. with that, i am going to take a couple questions. i will start with kathleen hennessey of a.p. >> thanks very much, mr. president. there has been a lot of talk at home about how you were received on this trip. donald trump said you were humiliated. i suspect you think that was

overblown. maybe you could talk a little bit about whether you think your reception here was at all related to the limits and challenges of your asia-pacific policy. and while we are talking about legacy items, if i could ask another quick one on guantanamo bay. you have four months and 60 prisoners left. are you willing to a knowledge the prison will be open by the time you leave office? president obama: in terms of my reception here, as far as i can tell, it has been terrific. i do not know if you have talked to people in laos. they seem happy about my visit. everywhere we have gone, we have had a great reception. just as when we went to vietnam. -- may recall there room were millions of people lining the streets. if this theory about my

and my rebalance policy is based on meet going down the short stairs in china, overblown.k that is inhink any reasonable person say this is not indicative of the work we have done here. if you look at the remarks of ordinary people, the concrete work we have gotten done on everything from economic programs to development programs issues,y of war promoting civil society and that ieople, the concern have heard is not that what we have done has not been important

and successful. the concern i have heard is, will it continue? almost uniformly, i get from other leaders that we hope that america's interest and presents and engagement is the same. and my hope and expectation is that my successor will, in fact, sustain this kind of engagement. because there is a lot happening here. you have countries here that are taking off. you have one of the most dynamic and youngest populations in the world. the action is going to be when it comes to commerce and trade. and ultimately creating u.s. jobs by being able to sell to this market. and that is the only feedback i have received.

that is not just based on what leaders tell me. i do not know if you read local newspapers or talk to people. that has been the same commentary we have received generally. guantanamo, i am not ready to concede it may still remain open. we are still working diligently to continue to shrink the population. i continue to believe that gu antanamo is a recruitment tool for terrorist organizations, urs some ofuds and so the counterterrorism cooperation we need to engage in. hugelyot necessary and expensive for u.s. taxpayers.

is there strong resistance in congress? absolutely. but as we continue to shrink the population to the point where we are looking at 40 or 50 people and are maintaining a multimillion dollar operation to thee these individuals, american people should be asking the question -- why are we spending this kind of money that could be spent on other things when it is not necessary for our safety and security? because no doubt that, of the politics in congress right now, it is a tough road to hoe. but i expect to work really hard over the next four months. five months. 4.5 months. margaret brennan. >> thank you, mr. president. can you tell us if last night president duterte offered

apologies to you and if you said to him the u.s. will help the philippines push back against china? donald trump said vladimir putin has been more of a leader to you and you have reduced american generals to rubble. do you care to defend your legacy? [laughter] president obama: ok. respond. got it. i did shake canceled president night. last it was not a long interaction. what i indicated to him is that our teams should determine how we move forward on a range of issues. as i said when i was asked about i do not take these comments personally because it seems as if it is a

phrase he has used repeatedly, including directed at the pope and others. i think it seems to be, you aow, i have it -- a habit, way of speaking for him. as i said in china, we want to philippines one the particular issue of narco- traffickers, a problem in the philippines and around the world. on that narrow issue, we want to make sure that the partnership we have is consistent with international norms and rule of law. we are not going to back off our position that, if we are working with a country, whether it is on anti-terrorism, going after drug

despicable ass these networks may be, as much damage as they do, it is important, from our perspective, to make sure that we do it the right way. because the consequences of doing it the wrong way is innocent people get hurt. you have a whole bunch of unintended consequences that don't solve the problem. it has no impact on a broader relationship with the philippine people, on the broad range of security programs we have with this treaty ally. it certainly has no impact in terms of how we interpret our obligations to continue to build long-standing alliance we

have with the philippines, however it may play itself out. my hope and expectation is that, duterte and his team get acclimated to his new position, that they are able to define and clarify what exactly they want to get done, how that fits in with the work we are already doing with the philippine government. hopefully, it will be on a strong footing by the time the next administration comes in. i think imr. trump, have already offered my opinion. i do not think the guy is qualified to be president of the united states. that time he speaks, opinion is confirmed. and i think the most important public and the

press is to just listen to what he says and follow-up and ask questions about what appear to be either contradictory or bogus.med or outright there is a process that seems to take place over the course of the election season where, that, inbehavior normal times, we would consider completely outrageous becomes normalized. and people start thinking that we should be grading on a curve. but i can tell you from the over theons i have had last eight or nine days with foreign leaders, this is serious business. you actually have to know what you are talking about.

you have to have done your homework. when you speak, it should actually reflect some of that policy that you can implement. that, if, confidence in fact, people just listen to what he has to say or look at his track record or lack thereof, they will make a good decision. you very much, mr. president. on north korea, there is increasing evidence that china is not enforcing dynamic sections when it comes to coal. second, is it time for an essential rethink of north korea policy, given that all these years of condemnation and increasing stations -- sanctions have not led to a desired outcome? president obama: in my meeting with president xi, we emphasized

the importance of full implementation of the un sanctions put forward. i can tell you that, based on not only their presentations but intelligence evidence we have onn, china has done more sanctions implementation than they have on previous u.n. security council sanctions. but you are absolutely right there are still places where they need to tighten up. we continue to indicate to them the importance of tightening those up. you may have noted that china continues to object to deployment in the republic of korea, one of our treaty allies. what i said to president xi directly is that we cannot have a situation where we are unable to defend ourselves or our treaty allies against increasingly provocative behavior and escalating

capabilities by the north koreans. i indicated to him that if that bothers him, particularly since and does notpose change the strategic balance between the united states and china, that they need to work with us more effectively to change pyongjang's behavior. when it comes to changing pyongjang's behavior, it is tough. my approach since i have been president is to not reward bad behavior. that was based on the fact that, before i came into office, you had a pattern in which north korea would engage in some provocative action. of thea consequence

equivalent of throwing a tantrum, countries would then by givingcate them them humanitarian aid, providing other concessions, or engaging in dialogue, which would relieve some of the pressure. then they would go right back to the same provocative behavior later. so our view was, that was not working. let's try something else. it is entirely fair to say they engage in thed to development of their nuclear program and ballistic missile tests. so we are constantly examining other strategies we can take. close consultations with the republic of korea, japan, russia, and other interested parties. we do believe that, if there are any signs at any point that

north korea is serious about dialogue around de- nuclearization in the korean peninsula, we will be ready to have those conversations. it is not as if we are looking avoiding aem or willingness to engage diplomatically. but diplomacy requires that meet its international obligations. not only is it failing to meet it is notgations, even suggesting they have any intention to do so sometime in the future regardless of the inducements that might be put on the table. look, we are deeply disturbed by what has happened. we are going to make sure that we put extensive measures in

place so that america is protected, our allies are protected. we will continue to put some of the toughest pressure north korea has ever been under as a consequence of this behavior. can i guarantee that it works? no. it is the best option we have available to us right now. we will continue to explore with all parties involved, including china, other potential means by which we can bring about a change in behavior. bob? >> thank you, mr. president. i have a personal question for you. we are almost the same exact age. i am two weeks younger than you. president obama: i noticed when we were in the gym together, you were working out harder than me. clearly making a difference. >> i want to ask you about your thoughts all those years ago.

since we were living in the days of the vietnam era, what were your thoughts during that time? more given what you learned about that and what you have seen and what you witnessed, do you think you should apologize fully to the country of blouse -- laos? for those american veterans who war,erve in the secret special ops, cia, pilots that dropped the bombs. those are the ones that targeted known enemies in a war they did not create. would you be comfortable calling them heroes as we do with those that served in iraq and afghanistan? because we are the same age, you will recall that at the peak of the war, we were still too

young to fully understand the scope of what was taking place. it was the tail end of the war were entering high school and starting to understand the meaning of it. point, i think the even those whod had been strong supporters of the war. they recognize they needed to be some mechanism to bring it to an end. say i was so precocious that i had deep thoughts about that at the time other than the images we all saw on television. retrospect,e now in i think what i can say is that was on thestates right side of history when it

came to the cold war. there may have been moments in which in our single or focus -- singular focus on defeating an expansionist and very aggressive communism that we do not think through all the implications of what we did as policymakers. see they, when you dropping of cluster bombs, trying to figure out how that was going to be effective, particularly since part of the job was to win over hearts and minds. how that was going to work. i think with the benefit of andsight, we have to say that lot of those consequences were not ones that necessarily serve the interests.

having said that, and i said this before. what happens in the white house and decisions made by policymakers, when our men and women in uniform going to action and put their lives on the line and carry out their duty, my attitude is they are always heroes. same thaty are i'm willing to do whatever it takes my commander-in-chief has order to keep the american people safe. job is toion, their put their lives on the line and make sacrifices both seen and unseen and have long-standing ramifications and that act of .acrifice his heroic

things ie business -- if the degree to which i came in respecting our men and women in uniform. i leave here even more and all of what they do. 's it is also one of the reasons i takes it seriously the decisions i make about war and peace because i know whatever decision i make, there are men and women out there who will carry out my decision even if they think it is wrong. even if they did not vote for me. even if they have completely different ideas about what is required or national security.

that is here was in. that is service. that is the mission of it. ont puts a special burden the occupant in my office to get it right or at least as right as he can. hopefully when people look back 20 years from now, the decisions i made, they will be able to say he did pretty good. think you very much, everybody. let's go home. -- thank you very much, everybody. let's go home. >> c-span's washington journal, live every day with news and policy issues that impact you. friday morning, new york republican congressman tom reed will join us to talk about his

endorsement of donald trump. and the statement that he has made on the record saying mr. trump needs to be reined in if he wants to win the election. the new york democratic congressman gregory makes will talk about the latest campaign development including donald trump and hillary clinton's outreach efforts to african-americans and other minority voters as was immigration in the congressional agenda lead up to the november election. the sure to watch c-span's washington journal beginning live at 7:00 a.m. eastern on friday morning. join the discussion. for campaign 2015, c-span continues on the road to the white house. a president for democrats, republicans, and independence. >> we're going to win with education, the second amendment. we are going to win. >> live coverage of the presidential and vice presidential debates on c-span. the c-span radio app and c-span.org.

monday, september 26, the first presidential debate. on tuesday, october 4, the vice presidential candidates debate at longwood university. 9, washingtonober university in st. louis hosts the second presidential debate. debate,d and final taking place at the university of nevada las vegas on october 19. live coverage of the presidential and vice presidential debates on c-span, listen live on the free c-span radio app or watch live in a time on demand at c-span.org. next, a hearing on the cash payment made to iran by the u.s. government. a payment for an unfulfilled arms deal in the 1990's. the payment was made shortly before iran released u.s. prisoners. to thets who objected

hearing left before the second panel. this is 3.5 hours. >> the subcommittee on oversight and investigations will come to order. this is titled fueling care. the dangers of ransom payments to iran. ae judge has authorized recess of the subcommittee at any time. without objection, all members will have five legislative days within which to submit extremist materials to the chair for inclusion in the record. without objection, members of the full committee were not members of this subcommittee may

participate in today's hearing for the purpose of making an opening statement and questioning the witnesses. the chair recognizes himself or two and a half minutes for an opening statement. today's hearing will examine the obama administration's $1.7 billion cash payment to iran to settle long-standing claims predicting the iran revolution. the settlement was disclosed in january, new details about the payment surfaced in august when the wall street journal reported that $400 million of that payment was converted into swiss francs and euros and flown to iran in cash on the same day that five american detainees were released from the islamic republic. on tuesday, administered and officials were forced to admit that the remaining $1.3 billion was handed over in cold hard cash as interest. despite vigorous denials that there was any link between the payment and the release of american prisoners, the evidence

by the administration makes it difficult to believe. iran official certainly believe that this was a ransom payment. a revolutionary guard commander said on state media quote, taking this much money back was in return for the release of the americans. ". prisoners recall that when he to be free come he was told that we are waiting for another plane. if the plaintiff not come, we never let you go. sounds like a ransom payment. an effort to corroborate the administration's claims, this committee requested records about the payment from treasury and the department justice more than a month ago. today, the supper claimed most transparent administration in our history has failed to provide any document to this committee. the witnesses are today only agree to appear under the threat of subpoena.

over tariffction financing, this committee has a right and the responsibility to understand the facts supporting -- surrounding this particular payment. while there is much we do not know, we can be sure that iran is committed to its support for terrorist groups and hezbollah. the enemy of israel and the west whose leader earlier admitted that he gets all his funding from the iranian mullahs. iran support also goes to -- ran support also goes to assad. i look for to nation from our witnesses why we would make it so easy for iran to continue to fuel terrorism. with that, my time has expired. to the gentleman and raking member from texas for five minutes. >> thank you. i appreciate greatly the opportunity to bring some

clarity to this issue and to a good many other issues. he is right. truth crushed to earth shall rise again. today, i would like to take the opportunity to resurrect the truth.to resuscitate the the truth is that the genesis of this hearing is a meeting that took place at or near the time president obama was being sworn in. when a group of very powerful republicans met and made a conscious decision to do everything they could to block any and everything the president attempted to do, at that --ting, the top meetings leaders of the house of representatives.

at that meeting was a person who sits on this committee in people from that day forward have been committed to blocking everything that the president brings forth. and truth be told, they have done a fairly good job. i don't agree with the style of the hearing today. i think a better style for this hearing will be don't bother me with backs. my i just made up think a better style would be, we kept our word because that is what is happening today. wheree a circumstance americans were being held prisoners. they have been brought home. the exchange was money that was owed to the people who were holding them. we are condemning that. you would think we would have a parade. the president would be selected. the people who negotiate would be applauded. chooses to do

what it has consistently done and that is to deny this president any success that they can walk. frank, they fought tooth and now and are still fighting it and what if they could today eliminate the consumer pride and protection bureau. obamacare, they have not replaced it. they don't have a replacement for it. they will repeal it but they do not have a replacement. we voted more than 50 times to repeal obama care. bank, something that has traditionally been agreed upon it has been a great and 50 this country. we had to have an unusual process to take place to keep the xm bank functioning and still we cannot make loans over $10 million because the committee on the senate side refuses to appoint additional

appointees to the board. , not we, theed republicans, to even discuss the budget. usually the budget comes up in the hearing is discussed. discuss thefused to budget. finally, the supreme court. thought that we would hold up the supreme court nomination simply because of an to makehat has been set sure that this president does success.a record of here's where we are. keep bringing it up. this will not be the last time today. here is where we are, we have people on this committee were at the hearing, at least one

person. we have two members of the senior leadership in the house who were there. they are honoring their commitment. that is what this hearing is about today. keeping their word. making sure they do everything they can to stop this president. as a matter of fact, what onrted out as a simple stop the president has gone on steroids. it is a liver -- an effort to destroy the presidency it seems to some. disgraceful if you want to know the truth be i do not believe that this is the conduct that a committee of the statue financial services should be engaged in. we will become the kerfuffle committee if we are not careful. i yield back the balance of my time. >> >> the gentleman yields back. the chair now recognizes the chairman of the full committee, the gentleman from texas for two and a half minutes.

>> thank you, mr. chairman, for convening an incredibly important hearing today. any person here today can take out their iphone or electronic device and google merriam webster's definition of ransom. quote, money is paid in order to free someone who has been captured or kidnapped. the american people want to know, did this administration pay ransom? does it meet the legal definition. and if it doesn't, did it -- did the actions of this administration tragically achieve the same end, and that is to incent terrorists to kidnap american citizens, to put a price on the head of every tourist, soldier, sailor, airman, and marine who serves or visits overseas.

was the cash, cash transaction legal? my guess is if any private citizen had done what this administration had done they would be indicted on money laundering. instead, the administration calls it diplomacy. was the cash transaction legal? if so, should it be legal? and if perfectly legal, why did the administration go to such great lengths to hide it from the american people? why did it take a "wall street journal" expose to bring the true nature of this transaction to our attention? why did i have to threaten subpoenas to get the administration to show up in the first place? did the iranians demand that this payment be made in cash? we we have a terrorist finance task force here that knows it is

cash, cash transactions that fuel terrorism. and it is the obama state department which has labeled iran, quote, the world's foremost state sponsor of terrorism. it is the president's treasury department that has classified it as, quote, a jurisdiction of primary money laundering concern. then why, mr. chairman, why were they given $1.7 billion, $1.3 billion of which was interest taxpayer that could have gone to the united states army, but instead is going to the iranian revolutionary guard. the american people deserve answers, mr. chairman. thank you for demanding the answers and calling this hearing. i yield back. >> the gentleman and chairman yields back. i want to welcome our panel and witnesses today. for introduction, the state department deputy systems secretary for iran affairs and coordinator for sanction policy.

ms. gross, in the house of internal claims and investigative disputes. ms. mccord is the principal deputy assistant in the national security decision of the justice department, and mr. ahern, enforcement and intelligence at the treasury department. welcome to all of you. the witnesses in a moment will be recognized for five minutes to give an oral presentation of their testimony. without objection, the witnesses written statements will be made a part of the record following their oral remarks. i don't believe you have provided written statements, but i anticipate those statements will be coming. so, the chair intends to submit any witness statements pursuant to general leave for inclusion in the hearing record. once witnesses have finished presenting their testimony, each member of the subcommittee will have five minutes within which to ask the panel questions. on your table, i would just note

there are three lights. green means go, yellow means you have one minute left, and red means your time is up. the microphones are sensitive. so please make sure you're speaking directly into them. with that, you are now recognized for your opening statement for five minutes. >> thank you, mr. chairman. as you said, my name is chris beckenmire. i welcome the opportunity to come before the committee and the american people to correct some of the misunderstanding about the settlement reached in january of this year. president obama and secretary kerry announced the settlement on january 17th. when it was concluded and specifically noted that it involved $400 million for the fms fund and $1.3 billion as a compromise on interest in this sum. this was also posted on the state department website.

we received inquiries from congress and offered to provide briefings to members and staff. one member requested such a briefing, which we did provide. it resurfaced and again we received questions and offered to provide a closed briefing. we provided two such briefings to houstone staff and senate staff. i should note at the outset there will be limitations to what i and my colleagues can say in an open setting. we've previously offered closed briefings because there are a number of litigation and diplomatic securities that could jeopardize u.s. interest. specifically, the settlement in january addressed a significant part, but only one part of a much larger multi-billion-dollar claim which is being actively litigated.

this includes statements that have been made in congressional briefings. as a result, it is extremely important that we not say anything in a public setting that would jeopardize our defenses to iran's remaining claims to the tribunal. i think the best way to start is to take a moment to summarize the series of events that occurred on the weekend of january 16th and 17th where we finalized a number of diplomatic interests that advanced u.s. interests in certain ways. we sought to finalize on or around the same time in mid-january. first, we were on the verge of implementing the nuclear deal and the iaea was in the process of verifying iran had met all the requirements under the deal. 98% of its enriched uranium stockpile was removed. we were pushing to get several

wrongly detained american citizens, including rezaian, abedini and head mady safely out of iran. it was a top priority for us and one that i know congress shared. we had been pressing iran to release these americans and continued our efforts to secure release over 14 months. they were facing lengthy prison terms. lastly, our lawyers were working to finalize the settlement of a long-standing claim that the iranians had filed at the claims tribunal. the issue of settling the large remaining claim a number of times -- sorry. the issue of settling the large remaining claims at the hague had been raised by the iranians a number of times over the years. we knew they were eager to settle the case to address

critical economic needs. we realize that we could take advantage of the importance that iran attached to recovering the principal from the fms trust fund in order to drive a bargain on the 37 years of interest. there's been much attention paid to the timing of these various issues. it's worth clarifying some of the mischaracterizations here today. it's important to remember, more than three decades we've had no diplomatic relations with iran and minimal diplomatic contact. there is significant risk that any one of these efforts could unravel at any time. the one we're most worried about was the consular dialogue where we feared our american citizens would not be freed. this process had gone in fits and starts and there were elements inside iran opposed. and we had pretty significant concerns that it would unravel.

on january 16th and 17th, after the terms of the consular arrangement had been finalized, our fears were realized when we were unable to locate the wife and mother of jason rezaian. it was agreed they would also be allowed to leave iran as part of this deal. their disappearance was highly concerning. at this time, they verified iran's commitment and the nuclear deal had begun and my colleagues had begun the necessary arrangements to refund the princepal. when the uncertainty presented itself, we decided to take a pause. specifically the finalization of the payment for the settlement of the fms trust fund. after several high level phone calls, we were able to confirm the location of jason's wife and mother and get them on an airplane so they could leave iran. with that resolved, we moved forward in which we provided relief to certain iranian nationals including several dual

u.s. iranian nationals. and we reinitiated our efforts to finalize the outstanding actions we had agreed to on the hague claims tribunal including the fms trust fund principal. the success of our diplomatic efforts was in serious doubt. we paused, assessed the situation and resolved our concerns before moving forward. through these negotiating tracks, we were able to conclude these issues in a manner that advanced our core interest, ensure iran could never have a nuclear weapon, saving taxpayers billions of dollars, and freeing wrongfully detained americans as well as their family members. it was analyzed and determined to be in u.s. interests. the release of several u.s. citizens was based on reciprocal humanitarian gesture on which we provided relief to several iranian nationals. the release of the monies was based on a settlement of iran's claims for those monies and for

37 years of interest. a settlement that was highly favorable to the united states. thank you, mr. chairman. >> i recognize ms. gross for five minutes. [ inaudible ] >> you have to touch your microphone. >> excuse me. >> thank you. >> thank you, mr. chairman. i am the assistant legal advisor for international claims and investment disputes at the department of state where i've worked to defend the united states against iran at the hague tribunal for nearly 30 years. we have won some cases, lost some, and sometimes we have decided to settle. i'm here to explain as best as i can in this setting the settlement that was announced in january. as my colleague explained, this was only a partial settlement of a very large case. the rest of that case is ongoing at the hague tribunal today.

because of that, i am limited in what i can discuss in this public setting. iran and its lawyers are vigilant in scouring the public record for statements or information that they can use against us in these arbitrations. in fact, i can recall being in the hague tribunal many times and hearing iran quote extensively from things that witnesses and members of congress said in hearings trying to use that to their advantage. these are multi-billion-dollar claims against the united states. for some of your questions i may need to defer the question to a closed setting like the one we did for house and senate staff earlier this week. the united states and iran entered into the accords in 1981 which created the hague tribunal. it was created to address claims of u.s. nationals, but also claims between the two governments. the agreement was entered into by the carter administration. it was endorsed by the reagan administration and debated by

both houses of congress. in the end, it was determined that the accords and the tribunal process were of great benefit to the united states and u.s. nationals. in the first 20 years of the process, it focused primarily on resolving claims of u.s. nationals for debt, contract, appropriation and other measures involving property rights. received over $2.5 billion in awards and settlements from that process. there was significant government to government claims also filed at the tribunal. the majority and certainly the largest were by iran against the united states including iran's large contract claims arising out of its foreign military sales program. like other fms customers, iran paid money into a trust fund used to facilitate prompt payment to the u.s. contractors working on iranian contracts. by january 1979, iran had already been struggleing to make the necessary payments on its contracts. in february 1979, iran and the

united states concluded a memorandum of understanding providing for the cancellation of many of the remaining purchases. the two sides worked on implementing the mou and to wind down iran's fms program over the ensuing months. in november 1979, the hostages were taken and those efforts came to an end. the dispute over the fms trust fund and interest which rultded in the settlement in january of this year, was part of iran's claims that it filed with the tribunal in 1982. so you can imagine the scale of it and the money involved. it covers 1,126 huge fms contracts. before the settlement in january, other parts of the fms claims were decided or settled sometime ago. settlement discussions over technical legal matters have been held in this channel for decades led by the state department legal advisor.

since the early 1980s through the reagan, bush, and clinton administrations, some 40 rounds of claims meetings have occurred at this level. the prior settlements with iran of other portions of the fms claims occurred during the first bush administration. in 1989, the united states and iran settled -- paid from the judgment fund. in 1990, the parties enter into a partial settlement, same trust fund subject of the final settlement in january. they also settled claims for titled fms assets for $278 million and this was paid from the judgment fund. there were other significant settlements between the parties including in 1990 when iran paid the united states $105 million in settlement of certain u.s. national claims and u.s. government claims. these settlements, and in

particular the fms settlements, were reached at key moments in the cases such as before key hearings or verge of going to decision. in the past two years, we revisited the possibility of settlement of tribunal claims through 2014 and 2015. these discussions led to settlement of small claims that were the subject of ongoing hearings. they involved architectural drawings transferred and for fossils transferred to the ministry of the environment. in the spring of 2015 after years of extensive briefing, iran pressed the tribunal to schedule comprehensive hearings in these remaining claims. they ordered both parties to file their respective proposal and iran filed on november 11th, 2015. iran was also pressing for a preliminary ruling on issues including the outstanding balance of the fms trust fund

and interest since 1979. they sought interest based on a provision in the 1979 memorandum of understanding calling for unexpended fms funds associated with iran's fms program to be placed in an interest-bearing account. with the settlements concluded in december 2015 and the hearings and the fms claims on the horizon, we were able to achieve this most recent settlement which finally and fully resolved iran's claim for funds in the fms trust fund as well as interest. as we publicly announced in january, iran received the balance of $400 million in the fms trust fund as well as roughly $1.3 billion representing a compromise on the

interest. the trust fund balance of $400 million was paid from iranian funds depositived it in the fms trust fund itself in connection with the program. the payment for the compromise on interest was provided out of the judgment fund, as was the case for the larger prior settlement during the bush administration. in the claims for the trust fund balance and interest had gone to decision, the united states could well have faced significant exposure in the billions of dollars. iran was seeking very high rates of interest for a period of over three decades. we were able to secure a favorable resolution and avoid potential for a much larger award against us. the details of why we settled for this amount is litigation sensitive. getting into that explanation would get into other issues still pending at the tribunal. iran's lawyers would try to use our rd woulds against us. what i can say here today, i believe this ettlesettlement was -- settlement was the best thing for the united states. thank you. >> thank you. the chair now recognizes ms. mccord. >> good morning. >> for five minutes.

>> good morning, chairman duffy, ranking member greene and members of the subcommittee. thank you for the opportunity to appear before you today to discuss the deptdartment of justice's role in the settlement of iran's claims before the tribunal. this is further funds in the foreign military sales or fms trust fund as well as iran's associated claim for interest on those funds. as the attorney general has made clear when the deal was first announced in january, the department of justice fully supported the administration's resolution of several issues with iran including the settlement of the hague tribunal claim and the arrangements that led to the return of u.s. citizens detained in iran. with respect to the hague settlement, when there is a settlement of litigation that is pending against the united states, it is generally paid from the judgment fund unless there is a separate source of funding for the settlement.

for a payment of a settlement to be made from the judgment fund, the attorney general must certify to the treasury that the payment of the settlement is in the best interest of the united states. here, the attorney general approved the settlement and certified payment from the judgment fund of the portion of the settlement that resolved the interest dispute. the certification was faced on the department of justice's typical assessment for a judgment fund payment. assessment of a settlement payment from the judgment fund includes consideration of the exposure that the united states faces from the claim proposed for settlement. it also considers the likelihood of an adverse ruling against the united states, the likely size of such an award, the background of the litigation, the tribunal, relevant legal arguments, relevant facts, and governing legal doctrines. the department certification of this settlement payment from the judgment fund was based on the assessment that was in the best

interest of the united states. the payment was significantly less than the united states' exposure under the claims for the balance of the fms account and the interest on those funds. the department of justice was also involved in the consular negotiations with iran and in effectuating the ultimate arrangements that led to the release of the detained american citizens. in this regard, the department identified certain criminal cases involving iranian and iranian-american defendants for which relief could be provided as a reciprocal humanitarian gesture. they had been charged with primarily violating the u.s. trade embargo. none were charged with terrorist activity or other violent crimes. the ultimate arrangement involved the pardon or commutation of seven defendants who had been convicted or were awaiting trial

in the united states and the dismissal of criminal charges against 14 others, all of whom were located outside the united states and for whom our attempts to obtain custody through extradition had failed or were assessed to be likely to fail. the department was also responsible for preparing and filing the paperwork related to the pardons, commutations and dismissals. i thank you for the opportunity to testify and i'm happy to answer any questions you may have. >> mr. ahern. >> thank you for inviting me to testify this morning. i'm very pleased to be here with my colleagues from the state department and the justice department. i'm the assistant general council for enforcement and intelligence at the treasury department. i'm here today to discuss treasury's role in effectuating the payments of the long outstanding claim at the iran/united states claims tribunal at the hague. regarding an account established

decades ago with iranian funds as well as the compromise of its claim for interest on that account. the administration publicly announced the $1.7 billion settlement on january 17th, 2016, and that announcement is publicly available at the state department's website. now, for the first settlement payment, treasury assisted the defense finance and accounting service in crafting a wire instruction to transfer $400 million on january 14th, 2016. the $400 million came out of what is typically referred to as the fms account. it amounted to about $600 million until 1990 when the bush administration entered into a settlement. but returned to under $29 to iran. -- $229 million to iran. since that time, the fund has amounted to about $400 million. treasury worked with dfas and the federal reserve bank of new york to transfer to a european bank. they were converted to a foreign currency, withdrawn and physically transported to

geneva. on january 2017, treasury disbursed the payment for transfer to tehran. the funds were under u.s. government control until their disbursement pursuant to the settlement. the second payment was disbursed out of the judgment fund. the judgment fund is the source of funding congress has provide the for use generally in paying judgments and settlements of claims against the united states when there is no other source of funding. awards and settlements of tribunal claims have been paid from the judgment fund in the past. though the payment to settle the dispute over crude interest was one payment, the judgment fund system as a technical limitation that prevents it from processing individual claims in amounts over ten digits in length. the single claim of $1.3 billion was broken into 13 payments and the remainder of 10,390,236.28.

as in similar prior instances, it required a claim to be divided into these smaller amounts. they're displayed on treasury's judgment fund website. treasury disbursed the payment after receiving the appropriate approvals from the department of justice. the payment was initiated through a transfer to a european bank. it was held available for disbursement to iran. pursuant to an arrangement, the european bank converted the 1$1. 3 billion into a foreign currency and disbursed the funds as bank notes to an official from the central bank of iran. it occurred in two installments. i would note that the sanctions regime we built with our

international partners that effectively cut off iran from the international financial system. iran was aware of the difficulties it would face in accessing and using the funds if it were in other form than cash. therefore, effectuating the payment of the funds and the subsequent interest payments in cash was the most reliable way to ensure that they received the funds in a timely manner and it was a method preferred by the relevant foreign banks. to settle the dispute, no direct transfer was made from any u.s. account to iran. they complied with u.s. sanctions law and did not require unique license, waiver, or other form of authorization. treasuries regulations at title 31 of the code of federal regulations section 560. 510 explicitly authorized all transactions necessary to payments pursuant to settlement agreements entered into by the united states government in

which the united states is a party, such as a settlement of claims before the tribunal. thank you again for the opportunity to testify and i look forward to your questions. >> the chair now recognizes himself for five minutes. the panel has made a point of noting that you don't want any information coming from this hearing that could jeopardize your negotiations for future settlements. duly noted, but to the panel, any of the $1.7 billion that has been provided in cash to iran, is any of that going to be used for terrorism and can you guarantee me that that money won't be used to harm any americans? >> congressman, thank you for your question. it's our assessment that the vast majority of the money that iran has gotten from -- >> can you guarantee me that? answer my question. can you guarantee this money won't be used for terrorism. >> the vast majority has gone to the critical economic needs that iran has had. i can't speak to every dollar that's going to go in and out of

iran as you know. we have a -- >> that's not -- i was looking for a guarantee. i just want to note that there is a risk that you have taken in providing $1.7 billion to the lead sponsor of terrorism in the world. i don't want to be chast -- chastised on this committee on information that can hurt your negotiations when i think this deal has endangered the security in the region and u.s. citizens. i want to quickly talk on the issue of ransom. on the day of the prisoner for cash deal, would the prisoners have been released in your assessment if the cash was not sent, the $400 million? >> congressman, i cannot speak to that hypothetical situation. this was not a prisoner for cash deal. >> so you don't know. they might not have been released if you hadn't sent the cash. is that a fair assessment? i'm trying to get to the hear of

-- heart of this. you can't tell me that you're guaranteed our prisoners would have been released had your money not been sent. to put it another way, if the prisoners hadn't been released, would have we sent the money? >> as i noted in my statement, congressman, specifically after we learned we could not locate the wife and mother of jason rezaian, we put a pause on making this payment. not because it was linked to that particular transaction but -- >> so prudent step. you're telling me that you wouldn't have sent the money but for the release of our prisoners. yes? is that a fair assessment? >> had this deal not come together at all in the following week, i cannot tell you we would not have gone down that path. >> most common sense americans look at this and say, hey, this was a payment of $400 million for the release of five prisoners which in everyone's assessment leads us to believe, as the chairman noted, per

webster's dictionary is a ransom payment. let's leave that aside. i'm sure my colleagues will get to that later. out of the tribunal, there's been settlements in the past. and have those settlements all been made in cash? >> yes, mr. chairman. >> every single - >> my experience has been that every single one of these settlements has been sue generous. most of the payments were before sanctions -- >> i only have two minutes. to be clear, when we had settlements, the payments to iran have been made in cash payments, not wire transfers, not any other form. it's a cash payment like what we did with the $1.7 billion. >> i'm not aware that they ever have, but they have all been done on their own merit. some were done by checks, wire transfers. >> that's my point. so this payment did not have to be made in cash. the payment could have been made

in the form that others were made. whether it was a check or a wire transfer. you were not prohibited from using a wire transfer or a check. you didn't have to send cash is my point. is that correct? >> i -- i can't really, you know, speak to that. i do know -- >> you do -- >> -- banking problems because of -- >> you've used wire transfers and checks in the past, yes? >> >> we've used checks in the past. treasury doesn't cut checks anymore. >> if the president says the payment made in other currencies had to be made in cash, you're telling me that that's not true, we've actually made other forms of payment through the tribunal? >> congressman, i can speak to that. these other payments were before the period of the intense international sanctions that we had on iran. we worked closely with this -- >> so you put the handcuffs on yourself. i want to make a couple quick questions. did iran request the money come

in cash payment? >> the terms of this deal for iran were that they would get an immediate refund of the principal. for them, the critical need was immediate access to address the critical economic needs that they had. and at the time, our people were facilitating these transactions about the only way to provide that immediate payment. >> they didn't ask for cash, but you made sure they got this money, the 400 and $1.3 billion. it's untraceable. per media reports, this money has gone to the military. my the iraqi benefit of people. my time is up. i now recognize the ranking member of the full committee, the gentle lady from california, ms. waters. five minutes. thank you very much, mr. chairman. and i'd like to thank our witnesses for being here today. but the first thing i want to say to our state department witnesses is this. much of what happened around

this payment is classified information and i know that holding this hearing puts you in a position where you have to be very careful. and i don't wish you to be intimidated or wish you to make a mistake in trying to answer some of these questions because as i understand it every member of congress has been offered to have classified briefings by the administration and they could have had any of their questions answered. so feel free to resist any questions that will carry you into classified information. be very careful. in addition to that, i simply want to say to our administration witnesses that i am concerned that this may be a part of the strategy that is being employed by my colleagues

on the opposite side of the aisle to discredit the president of the united states of america. i am reminded that on the night of barack obama's inauguration, a group of top gop quietly gathered in a washington state house to lick their wounds and ultimately create the outline of a plan for how to deal with the incoming administration. and that is a quote. and so it appears that this has been a continuing strategy that's been employed by members on the opposite side of the aisle, again, in this attempt to discredit the president. i i could ask you a lot of questions here today, and i suppose a lot of questions will be asked of you about why pay

them in cash, wasn't there basically ransom, et cetera, et etc.. but i'm not going to do that because any questions that i have i'm going to take advantage of the classified hearings -- briefings rather that are being offered to all of us to answer any of the questions we may have. with that, if there's anything you would like to share with us having been -- [ inaudible ] -- please do that at this time. i have no questions for you. would you like to share anything with us, please do it at this time. that's both of our state department representatives here. >> thank you, congresswoman. i think we've laid our remarks in our opening statements, but thank you. >> you're certainly welcome. well, can you help to clarify whether or not the members of congress have been offeredy classified briefings -- offered

classified briefings. >> we have offered since january when these three lines of effort were concluded, we have offered with respect to this particular piece, we have offered classified briefings to all members of congress. we did have one such offer accepted and we provided that briefing. we also offered witness resurfaced recently to have closed staff briefings and we did have two days ago staff briefings in both the house and senate and a classified setting. >> would you please clarify how many members of this committee have taken advantage of that offer? >> congresswoman, i'm afraid i'm not familiar with the one offer that was accepted, so it would be hard for me to say. but but as i mentioned, there was one briefing provided or one briefing accepted and we provided it. >> are you saying there was a

briefing where maybe several members of the committee came or one member was briefed? >> it's my understanding that it was one member. >> only one member. was that member a member of this committee? >> no, he was not. >> so basically it is correct if i conclude that the offer was made, the staff have been briefed, but not one member of the committee, including myself, have taken advantage of that offer. so all of what will be asked here today could have been ask and they could have had access to classified information in that briefing. is that correct? >> that is correct. and the full details of this process are best described in a classified setting given the -- >> is that offer still available to every member of this committee? >> absolutely. >> so today, they can only get information that's not classified but if they're truly interested, they can get a classified briefing and get every question that they have answered, is that correct?

>> that is correct. >> thank you very much. i i have no other questions. >> gentle lady's time has expired. >> you have it. >> the chair now recognizes the former chair of the terrorism financing task force and the vice chair of this committee mr. fitzpatrick for five minutes. >> thank you, chairman duffy for calling this really critical hearing today. my first question is, if abedini had not disclosed the existence of the second plane which contained the pallet of cash, would either congress or the american people have ever learned of the existence? the reason i ask is because i found out about that fact probably the way most of my colleagues did because he spoke about it when he returned and we sought on the news. so how was congress ever going to find out about how that cash was delivered and why? >> have said publicly and we

continue to say that mr. abedini was told was incorrect. the delay in the departure of his flight was due to a variety of complications related to the -- related to the prisoner release deal. >> they occurred simultaneously in the end, did they not? >> the prisoner release deal was held up because we could not located jason rezaian's wife and mother. there were also complications with respect to some of the iranian nationals in the united states. >> just ironic it all happened the same night? >> as i mentioned in my opening statement, we had a desire to conclude all of our lines of effort with the nuclear deal, the consular deal, and the tri -- tribuneal deal around the same time because we believed there was significant diplomatic momentum that allowed us to advance u.s. interests all at the same time, and we believed there was a significant risk if we allowed one or two of those to lag, we would not be able to achieve all of our -- >> moving

to the issue of the timing of the payment and the release of the hostages, this is a follow-up of the question, who specifically made the decision to make this payment in cash? who at the state department, at the department of justice? who who made that decision? >> i cannot speak to who made the decision to make it in cash. what i can tell you is it was the determination of the people who had to facilitate this payment that the way to -- >> who could tell us who made it? you're you're here to testify to this subcommittee, who can tell us? was it a condition? was it a condition of the iranian government or was it a decision of the united states department of state? >> the condition of the deal was that there would be immediate payment. we knew iran had critical economic needs it needed to address immediately and it would not be addressed by the removal of the broader sanctions. >> certainly, there are other ways to make an immediate other than a middle of the night what appears to be a drug drop.

what are the other ways we could have made an immediate payment? >> congressman, i understand your concerns about this, but what i will tell you is the power of the sanctions we had in place in iran and we still have in place, i will remind we have a full u.s. embargo on iran that prohibits transfers of funds through the united states, and there is a great reluctance by global financial institutions, sanctions aside, but doing these -- about doing these sorts of business. so we have seen difficulties with global banks being willing to engage in these particular transactions and this was the way, the mechanism we felt we could guarantee immediate payment. that immediate -- that immediate payment was critical to getting the favorable settlement we did. had we not been able to perform on that obligation, we would have likely not gotten such a favorable settlement for the american people. >> speaking of the favorable settlement, i think you mentioned in your opening statement, you don't want to say anything here today that might compromise united states defenses to other claims of the islamic republic of iran.

was that your opening statement? >> that's correct. >> if this is a joint comprehensive plan of action, a settlement, what are the other possible claims iran still has? we have made a payment of $1.7 billion in cash. what are the other claims they have that we did not settle as part of this joint comprehensive plan of action? >> i'll let my colleague answer that, but that's a reference to the nuclear deal. it does not reference all of these lines of efforts. the joint plan of action was the deal we resolved -- >> you said in your opening statement there were other claims. do you know what they are? it it was your opening statement, sir. do you know what those claims are? >> if you would like more detail, my colleague can provide it. there are other -- >> let me move back to the previous question about other ways you could have made payment other than pounds of cash in the middle of the night. how we conducted payments with

other actors such as north korea who are also cut off from the international financial system, we don't deliver cash -- >> i'm not familiar with any payments of that kind. i couldn't speak to that. >> i have nothing further. >> the gentleman yields back. we recognize the gentleman from massachusetts for five minutes. >> i would like to thank the panel. i don't really speak diplomatic. i have trouble when i listen to people who are doing it. i i have to kind of clarify what i think i heard. i'm not really sure. is there a difference between cash and a check? i guess people at treasury would know that. if somebody owes me money and they pay me cash or a check, does it matter? >> sir, there are a variety of ways to effectuate a payment, cash, check. >> doesn't matter, somebody owes me money, they pay me cash, check, transfer, green stamps if they still have them, it all counts, right? >> there are a variety of ways of making a payment. >> i would like to ask, i guess,

it would be the state department people, regardless, if there was no hostages, no u.s. hostages, no iranian prisoners. by the way, no one wants to talk about the fact we gave up iranian prisoners, this was a prisoner swap in some ways. forget it, would we still have had to pay this money? congressman, the state department has been attempting, as i mentioned, for decades, been discussing -- >> i'm not questioning your judgment on the settlement. >> yes. >> i think -- questioning the judgment on any settlement is a fair question. questioning questioning the iran nuclear deal is a fair question. the question i have, once you made the decision to have a settlement, would we have paid this money whether there were hostages are not? would we have paid this money to iran at some point? >> it's clear to me that we reached a time when we were able to achieve a settlement -- >> look, i'm trying to help.

you don't want me to help, don't go ahead, keep speaking -- very let me. go ahead, keep speaking -- very clear question. forget the hostages. you made a deal. at the hague, which is in the netherlands, not in iran. i'm not questioning the deal. i'm saying, okay, you made a deal. once the deal was made, would you have had to pay iran the amount that you agreed to pay? yes or no, kind of simple. >> yes. the payment would have been made with or without hostages. it sounds to me like my friends on the other side are upset about this would rather we paid iran the money and not gotten our people back. they would have been happy. yippie. -- i would not have been. you would still be here been criticized for not getting americans home.

you can't win this. i hope you understand this is a political game to try once again to number one trash the obama administration. number two, trash the iran nuclear deal. and number three, somehow make them look like criminals, dropping bags of cash in the middle of the night like a drug deal. this is ridiculous. now, i understand, and again, i think there are fair and reasonable and thoughtful and tough questions asked about the iran nuclear deal. i voted for it, but i think questions are reasonable. any legal settlement with the risk of litigation, i was a lawyer back in my previous life when i actually had some useful function to have. any legal settlement is question to negotiations, question to judgment. it's a judgment call. you save money, make money, lose money. fair question. those are fair questions to say whether your judgment was right or wrong on this it's not fair one. to say we should have left four

americans in iran. and if you had done that, let's assume you paid the money. do you trust iran to have lived up to their separate deal to let four americans go? >> no congressman. in fact, as i mentioned, our biggest concern was this particular piece, that they would not -- >> i don't trust them either. actually, it sounds like my friends on the other side trust them more than i do. it's awfully nice that you trust the iranians. the job. great leadership. of course we don't trust them. that's why the nuclear deal had the most invasive, aggressive inspection regime of any deal ever made in the history of this world. again, i don't trust them. i'm glad the americans are home. if this was a separate deal, cash for americans, i would be agreeing with my colleagues on the other side.

ransom is acceptable. but payment by the way, whose , money was this? am i wrong to think that this was the money that we grabbed from iran in 1980? to say everything is on hold, this is money you paid for a contract, we're not giving it back until we negotiate and we'll see you in the hague? is is that right. it was their money? >> that's exactly right. >> we gave them back their money in a form of legal tender that is now very public and yet people are criticizing it because we got four americans. mother of god, thank you. good job. >> the gentleman's time has expired. the chair recognizes the chair of the full committee. the gentleman from texas for five minutes. >> thank you, mr. chairman. it is clear that perhaps the administration and certain democratic members of the house are the only people in america

who believe that ransom was not paid. it is also clear that many believe this is a good u.s. policy. i believe it not to be a good u.s. policy. otherwise, four hostages may lead to 40 hostages that may lead to 400 hostages. and that is why i believe in the history of our republic, it has not been the policy of the united states of america to pay rent some for hostages. the question i have, though, is, again, it is most curious that this payment was made in cash. now, some believe this is not a particularly relevant issue. according to the financial action task force, quote, the physical cross border transportation of currency is one of the main methods used to move illicit funds, launder money, and finance terrorism, and quote.

cash is the currency of terrorism. we paid cash to the world's foremost state sponsor of terrorism. and the question is, again, why was that done? was there a legal obligation? we we heard some of these payments have been made in other methods that could be more transparent through the normal financial channels. and the tribunal itself states it has finalized more than 3,900 cases, so i think one of our witnesses, ms. grosh, did you not say that at least some of these were not made in cash? is that correct? >> congressman, yes, there have been more than 39 cases resolved

at the tribunal. the bulk of those payments came from a security account that iran is obligated to insure all awards in favor of u.s. nationals and u.s. companies and that is what resulted in >> let $2.5 billion. me ask you this question. again, i'm having a little trouble figuring out why this was a cash payment. isn't it true that under the iranian transactions in sanctions regulations, there are exceptions to financial dealings that license payments between the american and iranian financial system in order to receive, pay, or settle claims pursuant to the united states claims tribunal, specifically 31-cfr, section 560510. >> as i mentioned in my opening statement. >> okay, so you didn't have to pay it in cash, but you did pay it in cash. it is again, still unclear, the question has been asked, but it hasn't been answered,

specifically, did someone in the iranian government ask for the cash payment? can anybody on the panel answer the question besides a macro view that iranians wanted money? >> the term of the deal was that they got immediate payment. >> are you aware of anybody specifically in the iranian government asking for a cash payment? >> i'm not aware, nor am i aware of all the conversations that took place. >> who would be aware? who could this panel go to to get an answer to that simple question? >> we would be happy to follow up with you on further details in a closed session, and we would be happy to discuss that with you in that setting. >> are you aware that according to press reports, these funds have ended up in the hands of

the iranian military, the iranian revolutionary guard? >> congressman, i have seen those press reports. as i as i mentioned, it is our assessment that the vast majority of funds that iran has had access to continue to be used for its economic needs. we have seen some press reports of an iranian budget line item. our translators and those in the intelligence community have -- >> line item is roughly 10% of the entire annual defense budget, the military budget, of iran. does this administration not believe that giving the leading state sponsor of terrorism $400 million and cast $1.3 billion, does that not present any serious terrorist financing concerns to you at all? >> congressman, we have made clear from the very beginning that the deals we struck on this day do not resolve all of our concerns with iran, and those

concerned remain significant. what we resolved was the most imminent and critical, which was the nuclear program. you are able to resolve two additional pieces of business at the same time. we still oppose and object to i -- iran's destabilize -- >> my time has expired. thank you. >> we continue that with vigorous cooltools. -- various tools that we have. >> the chair recognizes the gentleman from missouri, mr. which is why i would not allow

my 3-year-old granddaughter to watch the news. and so i can't tell you how disturbed i am. i'm often disturbed, but i'm going to start saying things when this happens on both sides. but i think my colleague who is a good guy, i know him, wheni -- i have been to his home and met his family but when you drop , a word like words like, you know, a drug drop, that creates some discomfort discomfort, and i know that the gentleman didn't mean what could be interpret ed to be really awful awful, and it would be my hope that, you

know, that a misstatement or sometimes we all say things we would rather pull back. i'm i'm assuming he would rather pull that back. because there are a lot of people, i mean, this could mushroom into something that i think would be embarrassing -- an embarrassment to the entire committee. we're talking about this three-hour strategizing meeting, fast forward to this hearing and we're saying, you know, it was like a drug drop. that's not good. that's a little scary. my partisanship doesn't or my , idealogical leanings have to stop at some point. you know, i wouldn't say george

bush, you know, had a drug drop or hopefully anybody. so you know, it's a political gathering and we're supposed to do some of this stuff. i i can't do it because i just -- i think we're -- the whole country is looking at this political process and saying, you know, washington stinks. and we're creating a higher level of stinktivity, yeah, it's a word. i made it up. when we do this kind of thing. we're stinking up the political process. you know, i have some questions, but you know, after that, i just decided, i got good questions. as mr. trump would say, these are very good questions,

they question. but after that, i don't want to engage in this. so i would like to just yield back the rest of my time. >> would you yield to me, mr. cleaver? yes i would. >> thank you, mr. cleaver, and thank you for your thoughts on this. a couple points to be made. we hear people bemoaning the money that was accorded the iranians. but there have been settlements that inured to the benefit of americans totaling about $2.5 billion. americans totaling about $2. so would begin act -- would we get back to that have been $2.5 billion accorded americans in settlements? not a lot of emphasis is being placed on the fact that people came home. thank you.

people came home. americans were freed, would you send them back? would you put them back into harm's way, incarcerated in iran? is that what you are pushing today? this hearing is about headlines, not headway. headway could be made by doing at the honorable maxine waters indicated, classified briefings are available to all of us, and we could make headway. today today it's about headlines. >> the gentleman yields back. the chair recognizes the gentleman from south carolina, mr. mulvaney. >> a couple random questions. i don't know if he asked it this way. the cash payment is in violation of law? cash payment violated 31-cfr is that true? 208 point >> the payment was

done consistent with all of the appropriate treasury regulations. >> i'm reading payment by electronic fund transfer, a waiver, which i don't think is relevant here because it deals with checks, and not withstanding any other provision of law, effective january 2, 1999, all federal payments made by any agency shall be made by electronic funds transfer. didn't this transfer of cash, at least the $400 million in cash, the hard currency, doesn't that violate 208. 3. -- 208.3? >> if i could walk through the flow of the transactions. we'll take the $400 million principle payment. >> do it quickly, please. i only have five minutes. >> generally speaking, that payment was transferred via wire transfer to the account of a foreign central bank. that foreign central bank converted it into foreign currency and disbursed it to the iran. that payment to the payee of the claim not necessarily to the ultimate payment of the claimant.

>> shorter answer is since the wire transfer went to an escrow agent, they paid out the cash. you didn't violate two point -- 208.3. why do we pay interest? my understanding is that the trust fund does not bear interest. >> yes, that's correct. in a in a typical situation, customers pay their funds into the trust fund, and by law, that does not accrue interest. as as i mentioned in the top of my remarks. the united states and iran entered into a memorandum of understanding that had express provisions for unexpended funds to be placed in an interest-bearing account. it's based on that language that iran has brought its claim for interest. >> did we put it in an interest-bearing account? >> the funds were not based on an interest-bearing account. >> so we had an agreement but we didn't do that? >> as a factual matter, that is correct. i could have a lot more to say

about that, but some of these matters are still -- other issues related to that memorandum of understanding are currently being litigated between the parties. >> so i -- >> i would be happy to discuss that further in a closed setting setting. >> the carter administration or the reagan administration had followed the mou, the interest would have been paid by the bank into which we put the escrow account, the escrow moneys? >> all of the administrations since the memorandum in 1979 acted consistently with respect to these funds. >> no, you just told me they didn't. the mou required us to put it in an interest-bearing account and in the next sentence you said we didn't do that. >> that's correct, but each of the administrations treated those funds consistently, not withstanding the language of the mou, there are legal arguments at stake that continue to be before the tribunal, and again, i would be happy to discuss that further in a closed setting. >> we may get that opportunity. last question.

my understanding of the flow of the funds is the original $400 million was indeed a payment by the government of iran under the fms program. i get that. their money. there was a legal lien against that money, wasn't there? that the 2000 victims of trafficking violation protection act of 2000 specifically placed a lean against that exact amount of money. isn't that true? >> well, if you're talking about a judicial lien, that is not true. >> i'm talking about a public law, i don't have the code they. i have 106, 386, and it says that judgments against iran for purposes of funding payments under section a, we're trying to make sure that victims of terrorism got paid, in case of judgments against iran, they should make such payments from liquidated from an amount not to total bmf. in the iran foreign military sales account. this money

was liened by law in 2000. >> yes, i'm familiar with that, congressman. >> did we repeal this law or how did we get around this? >> what happened was the judgments were paid from appropriated funds to the extent of $400 million, which was the balance of the fms trust fund at that time. >> whoa, whoa, so the taxpayers paid $400 million in claims and we could have taken it out of this fund the? >> that's correct. they appropriated funds to be paid to those victims to the level of what was in the balance of the trust fund. >> when did we do that? >> through the very act you're discussing. >> the very act ynl discussing -- we are discussing does not say that. the very act says for purposes of funding payments, woo ego to the fms trust fund. in subsection 2b. >> if you look at that act, it also provides that the united states should be fully subrogated to the extent of the payments. that means the united states made -- >> i'm aware of what subrogation

means. >> they were subrogated to the claims. that means those claims become the u.s. government claims. >> so they are not come at the end of that, they're are not iran's funds anymore. they are the united states government's funds, aren't they? >> no, the funds have remained in the trust fund as iranian moneys in the trust fund. the united states congress appropriated $400 million to be paid to these individuals -- >> instead of taking the money out of the fms trust fund, but by doing so, we thus own the $400 million? >> that is incorrect. i'm sorry. >> the gentleman's time has expired. the chair now recognizes the gentleman from maryland, mr. delaney for five minutes. >> thank you, mr. chairman. did the $400 million actually sit in an account, subrogated at a separate financial institution or just held by the united states government?

>> the $400 million is in what is called the fms trust fund that sits in the treasury. all fms customers pay funds into there and they're separated into accounts for each customer. >> is it fungible cash or is it -- segregated into a separate account? when you say it's held in the treasury, is it fungible with all of the cash in the kroounls and crust tracked as a separate account or is there anywhere the equivalent of a bank account that a large financial institution where there's a statement that says there's $400 million in cash sitting there. >> i believe my colleague at the treasury could speak to this more, but my understanding is it is an account within the u. s. treasury. >> ok. so it seems like what effectively happened in the middle of 2015 is three things can together simultaneously. the iran nucleargreement -- iran nuclear agreement the

, prisoner exchange swap and the settlement of this claim. is that the right way of thinking about it the three separate transactions or agreements were reach by three separate teams? >> congressman, that's correct. we sought to finalize all of those issues on or around the same time to take advantage of the diplomatic momentum we had. >> as it relates to the claim, is it fair to say that a legal obligation of the united states was created in mid-2015 to pay $1.7 billion? >> i would these are matters not put it that way. these are matters that were under litigation for many years, and members of the legal advisers office at the state department had been litigating these fms claims for long time. >> forget about all the history. in the middle of 2015, you said this was settled. >> it wasn't settled. what what we were facing was a hearing date. iran wantedmove -- to have this decision go to hearing and have a decided in a culinary matter. >> what interest rate were they claiming was owed?

>> iran was claiming very high interest rate. >> what rate? >> this is an area that i would prefer not to get into in this -- >> it looks like we settled at higher than a 4% interest rate? is that right? >> i don't know exactly what that translates into. there was certainly a methodology behind it and i woulded be happy to go into that in a closed set in. >> do you know what the interest rate across the period of time was? >> in the 1970s and the 1980s, the interest rates were 18%, 19%, 20%. >> they were high. i've not done the exact map. looking at the chart, it looks like the average rate is about 8% and you settled for about 4%. and the power of compounding is such that at 8%, it would have been $8 billion or $9 billion, and at 4% it was 1.3 billion. so that's the bargain you thought you negotiated, is that correct? >> we agreed to the disposition and a compromise on interest. >> that's right.

was it actually a legal obligation, would you say? whether any kind of formal agreement that was reached where somewhere in the books of the united states of america, we entered a $1.7 billion liability? >> i'm not sure i understand the question, but we certainly -- >> so if someone would have asked the government in the fall of 2015, how much do we owe iran? orh a headset 1.7 billion 400 billion -- 400 million? >> this was referred to by one of your colleagues. this is a matter of litigation risk and issues we look at like any litigating parties when you're actively litigating claims. we could discuss some of that in a closed session. >> i guess the question, was this settled in mid-2015 or still open ended? >> in mid-2015, we were discussing this with iran and we -- there was some urgency because we felt this was going to go to hearing and then a decision by the tribunal. >> were you still discussing it in september of 2015? >> yes.

? >> yes. iran filed its hearing proposal in november of 2015. >> what day do we think we actually agree to the $1.7 billion? like that number? >> are you speaking to the united states or to iran? >> when do we feel like we had an agreement with them as to $1. 7 billion >> again, i think it would be better to discuss those setting. >> that date is relevant. i assume what you are saying here today is that that agreement for 1.7 point dollars was reached before the payment was made. >> that is correct. >> how much in advance of the payment would you say? on issues of timing we had agreed with iran on sometime before the payment was made. i wasn't involved in all the details. >> though some time in more than

30 days or 60 days or 90 days? >> less than 30 days. >> ok. thank you. >> >> the gentleman's time has expired. the gentlelady from missouri. >> thank you to our panel for appearing to answer questions from us, but more importantly, to answer questions for the american people. and shed some light, some transparency on what actually happened with this money transfer to iran. unmarked cash in foreign currencies strapped on wooden pallets and loaded onto a cargo airplane to be sent to a recognized state sponsor of terror. this seems like a scene out of a made-for-tv movie than actual real-life u.s. policy. and as an army mom whose son is an active duty infantry officer and is a former united states

ambassador, i just have to say i am very concerned with the appearance of our government paying ransoms for captured prisoners, and further and future endangering our other soldiers and diplomats abroad. i would like to reference a quote from white house press secretary josh earnest, from earlier august. as to why the u.s. made the settlement payment so quickly to which he said, the iranians, and i quote, were eager to try to address the legitimate concerns of the iranian people about the state of the iranian economy. is it the opinion of the state department or the treasury department that this money transfer would be used for the iranian economy? mr. backemeyer? >> congresswoman, first let me say thank you for the service of your son and your service. we spend our days at the state

department, i know as well as the treasury and justice department, doing our best to advance the u.s. interests and doing our best to protect our men and women overseas, and we're grateful for their service. with respect to your question, this was a situation, as i said, where the timing was related to the various pieces of business we were trying to get done -- >> did you believe it was going to help the iranian economy? either state or treasury? >> as i said, it is our assessment that the vast majority of the funds they -- >> what assurances were you given, sir? >> even if i had gotten assurances from the iranians you would not believe those, nor would i. >> precisely. let me move on. i have a lot of questions and a short amount of time. we have since seen that iran's latest year budget provides for an additional, guess what, $1. 7 billion the same amount , transferred by this

administration to the military establishment to spend as it wishes in iran. why did the white house think this money would be used for the economy when iran ended up using it for their military? >> congresswoman, i'm sorry. that's way out of my league, and i'm not in a position to side that. -- decide that. my expertise involved litigation of these claims at the tribunal and determining -- >> let me ask a relevant question. how do we know that this $1.7 billion increase did not come as a direct result of the cash cancer from the u.s.. >> the press report you're referring to is one we reviewed and had our translators review and we believe it is inaccurate. >> national security adviser susan rice admitted some of the $150 billion iran will receive in sanctions relief from the iran nuclear agreement would, quote, support international terrorism. what assurances do we have that the settlement money will not

end up funding terror proxoes, -- proxies units like hezbollah, , considering they receive support from the revolutionary guard corps. >> we have serious concerned -- concerns with iran's behavior, their support for terrorism, their support for proxy groups. we have a variety of tools to counter those activities. >> let's talk about those. paying iran in all cash make it more riskier the money could end up in supporting terrorism? >> i can't speak to the risk on that, but what i can say is this settlement was made based on its own merits. >> if this settlement funding does in fact end up sponsoring terrorism, what action could we take to punish iran for their behavior? >> we have a variety of tools to enforce our sanctions against iran. these include authority that go entitiesndividuals and like the quds force and those that are involved in terrorism, that involves activities that are operational -- >> i'm

running out of time. what incentive to the u.s. receive in return for structuring the payment so favorably in cash to iran? >> not aware. i know this settlement was in the interest of the united states. >> did iran insist that the settlement be paid in cash? >> i was not part of the negotiations. i can't speak to that. my understanding was settling this -- >> when was it agreed upon that it would be in cash -- >> it saves the united states government from paying billions more to iran. >> my time is expired. i've been more questions. i will submit them for the record. the chair now recognizes the gentle lady from ohio, ms. beatty for five minutes. >> a big thank you to our witnesses who are here today. mr. chairman i just have a few , brief statements, and more so for clarification for me and for all of those who are watching this.

let me start by thanking you for advising us that to get the real answers that we need, if we wanted to move forward, then our leadership and others including myself, had i known about it, would be doing this in a classified briefing. that's number we are often one. chastised on this side of the aisle if we're a little late for complying with some rules, so i'm going to assume since it's my understanding that the title of today's hearing is picked by the majority and the title is "fueling terror, the dangers of ransom payments to iran. " so if they really thought that this was a problem, seemed like you would want to be more armed by being in a classified setting where you could get real information. if you don't want real information and you just want to showboat, then you do or you get what we're seeing here today.

there's been a lot of opening statements in your opening statements, well, let's go back to the opening statement that our chairman made of the financial services -- the chairman mentioned. when he said it was the iranian officials who said this was really a ransom. now, our president, i'm not saying my president. let's get something clear. the president of the united states is our president. so so our president is telling us that it was not. he was trying to save lives and bring them back home. so let's figure out who the real enemy is here. if i'm sitting here listening to this as many americans are, it almost seems like my colleagues are pitting our president against the individuals that they are now chastising us for

bringing our individuals home. so we have been intense in here. we have been somewhat humorous in here. so let me be very abstract in here. since this has been a lot about money, let's just say i wanted to say since they're expecting you after you have actually said in one of your statements that you thought the money went for economic needs, but yet you keep being badgered over the cash and badgered over where the dollars are going, and more specifically, that they're going to fund terrorism. so what if i would say to my colleagues, there's something called the rnc. and moneys that they give go into the rnc. so would they remember or know that their moneys to the rnc that went to the presidential candidate, donald trump, who i believe insights terrorism,

would they be then able to say back to me why they did? let's assume most of them didn't give to him. interesting, isn't it? but we know their dollars will go into fund a presidential candidate who excites terrorism. a presidential candidate who is not about saving lives, who makes fun of those who are disabled, who degrades women, and yet, they stand here wanting to question our president for going back and giving the money that belonged to them already. it was their money. he gave now, i also think you would use words like, it was incredibly brilliant that our president cared so much about those individuals who were being held there that he wanted to do one thing. if he's guilty of something, it was to make sure that the timing

of the transaction -- it was already done that he was giving the money. that was not a secret. we knew he was giving it. we even know how they lined up the foreign currency to be put on the pallets to give to them. that is not a secret. if you're trying to do something that is not legal or fair, you don't publicize and describe it and say it. so it was timing that he wanted to do to make sure that people were returned safely. so i want to thank you for trying to be helpful. i want to thank you for your answers, but i think you said it best when you said you're not there knowing how the dollars -- how the dollars are transferred or what we did, but you do believe they went for economic needs. thank you, and i yield back. >> the gentle lady yields back. the chair recognizes the gentleman from california and the chair of the foreign affairs

committee, mr. royce for five , minutes. >> thank you, mr. chairman. the reason we're concerned with cash going to iran, especially billion in cash, is because iran 1.7 is in the process with the iranian revolutionary guards corps of funding terrorism in the region. and specifically, what they're trying to do is get their hands on hard currency. so when they're trying to develop, for example, for hezbollah, the capability to use gps in order to be able to equip the missiles and rockets and inventory with this special capability to be able to hit the tallest buildings in tel aviv or be able to get around the iron dome, this -- these two things, the transfer of the missiles from iran to hezbollah, they already have transferred 100,000 of these rockets and missiles, and second, it meets the

capability of being able to switch this over to this gps capability. for that kind of terrorism, they need hard currency. that's why we're interested in the $1.7 billion cash payment. because by insisting that it was the only way to get the money to iran, we are strict in maintaining banking sanctions. this is hugely misleading. lead why. the sanctions system was designed with tribunal payments in mind. the iran transactions sanctions regime contains a number of exemptions from the rule, and in this case, they are explicitly authorized and would shield any entity involved in such a transaction from liability under u.s. law if this had been done the proper way without use of cash. no. it was the iranians who wanted the cash. they wanted the cash because they're trying to fund terror. that's what the irgc does.

it's the number one state sponsor of terrorism in the world today. so the administration chose not to license a transaction within the international financial system. they chose to deliver in $1.7 billion untraceable assets, which was the demand on the part of iran. and if everything was on the up and up and there is no connection to hostages, why not go through the process laid out in law? this is a state sponsor of terrorism. so you're right that banks don't want to do business with a country that is backing the slaughter of hundreds of thousands of innocents. and those in syria, and developing missiles, ballistic missiles, by the way, aimed at us because they're intercontinental ballistic missiles, but the truth of the matter is if you wanted to pay through a bank, you could have. the primary example here is north korea and banko delta asia. no one was more toxic than north

korea, not even iran today, but when the last administration wanted to get north korea, wanted to give the funds back to north korea, it found a way using the new york fed and the russian central bank. it found a way through legitimate financial channels which you certainly could have done. likewise, you found a way during the interim agreement to facilitate $700 million back to iran each month through international banking relationships. yes, it would have taken longer, but the dispute, this payment was supposed to settle, was over 35 years old. what's a couple more months? the the only way that i see timing coming into play, if this was a ransom for the release of americans. and if this didn't drive the capture of three more americans and remember, that's what the department of justice said at the time, don't do this. it will be perceived as ransom and we'll have more americans captured.

the heavy water payment, another now, that's not compared to the $10 million. but was this paid in cash, too? $1.7 billion. ? i would certainly like to know, because the danger i see here is cash is going to become the new normal for iranians. and lastly, i would just bring up, pursuant to the victims of trafficking and violence protection act in 2000, $400 million in taxpayer dollars was supposed to go to u.s. citizens to settle judgments against iran for terrorist attacks. it looks to me like part of this understanding is letting iran off the hook for those terrorism claims that was part of that settlement. is that correct? >> with respect to the victims of terrorism claims, as i answered one of your colleague'' questions, those judgments were paid in 2000 with the victims of trafficking act congress appropriated $400 million to pay them, so their judgments were

paid. >> but what about the interest on that that should have come out of this account? >> those claims were then subrogated to the united states so they became u.s. government claims and they were factored into the overall settlement. >> in terms of my question on the situation of how this was handled with north korea, why was it not handled the same way with respect to iran? >> i'm not familiar with north korea, but what i can tell you is this. we share your concerns with respect to iran's troubling activities. we have a variety of tools we use to counter those activities including robust sanctions, including sanctions that continue with respect to hezbollah and legislation that was passed in this body. we we continue to use those and intend to aggressively enforce those as we go forward. with respect to the mechanism of the payment, all i can say is iran -- regardless of the legal prohibitions, iran did not have the international relationships, did not have the accounts, because of the sanctions that

were so strongly imposed by this congress. there were -- accounts were not allowed during the sanction period. as a result, iran did not have those relationships. it was difficult to do anything else in an immediate way, and the immediate payment of these funds is what allowed us to get favorable terms in the interest of the united states. >> the immediate payment is what managed to coincide with -- >> the time has expired. the chair now recognizes the gentleman from washington, mr. hecht for five minutes. >> thank you, mr. chair. my understanding is the most recent settlement at the tribunal was in 1991, when washington and tehran agreed to a $278 million payment as compensation for military equipment that the shawh paid for but was undelivered at the time of the revolution. the final negotiations on that settlement coincided with the release, as you'll recall, of

two western hostages, including one american, by iranian-backed shiite militants in lebanon. according to a "new york times" article dated november 28th, 1991, bush administration officials at the time denied that the deal was linked in any way to the fate of the hostages in lebanon. the state department's legal adviser then as now under president bush said in the times that respect to the arms deal, quote, it's pure coincidence that it's coming together at the same time, the hostages are being released. in your view, is there any reason to doubt the bush administration's claim that the hostages release had anything to do with the arms deal settlement which they claim had been under discussion for a long time? >> congressman, i am familiar with those -- i recall those reports at the time. i wasn't involved in that particular settlement, but our

practices that -- in looking at all of these cases, we assess litigation risk and decide these settlements on their oinwn -- on marriage. >> i'll take that as there is no -- on their own merits. >> i'll take that as there is no reason to doubt the bush administration's claim. i'll ask if you recall any public outcry at the time over that. fact was, there was none from congress. i would also ask you if you recall any hearings being held by any relevant committee of jurisdiction regarding that issue as we are today. i'll save you the time, there were none. and i will also remind you that in the wake of the original iranian hostage crisis back in 1981, we in fact signed a deal to transfer nearly $8 billion, a transfer which was authorized by incoming president reagan, and once again, there were no congressional hearings on the legality of that. nor an indication from the members of

the then-majority party, as now, that it constituted a ransom. so one of my favorite expressions is, consistency is the hobgoblin of small minds. congratulations. evidently, there are no small minds today, because there certainly isn't a lot of consistency. you know, ordinarily, we have hearings often on subjects which i don't agree with, or with such incendiary titles as is today's hearing. but i almost always find a way to thank the chair because i think it at least unlocked the door or opens the door for a

constructive dialogue and questions and answers that can help eliminate. that's not the case today. there's no legitimate reason to be holding this discussion other than to dissemble the facts and engage in propaganda. none whatsoever. indeed, the only thing i want to say, and not further legitimize this hearing, is that for the four of you and your colleagues, however directly or indirectly you were involved in the return of those four americans, you have our thanks. i yield back the balance of my time. >> the gentleman yields back. the china recognizes the gentleman from colorado. >> thank you, mr. chairman. grosh, what is policy of the united states when it comes to ransom for putting out payment for hostages? >> congressman, my understanding is stated by the president that is the u.s. government's policy of the pay ransom. >> we don't pay ransom. you made the comment that there was a desire to be able to conclude all of our lines of effort when payments were made of ultimately cash sitting on

$1.7 billion pallets going in the middle of the night to iran. were the hostages part of that line of efforts that you were talking about? >> congressman, as i described, there were multiple lines of effort. the implementation of the nuclear deal -- >> was there a tie between the hostage and cash and the hostage release? >> there was not a tie. >> how does it go back to your comment about the lines being tied up to achieve the end. >> i don't believe i said the lines tied together. what i was trying to convey is we thought we had a unique opportunity in diplomatic momentum where we could achieve multiple objectives. including bringing home american citizens who had been unjustly detained -- >> so there was a tie -- >> and settling a long standing

outstanding claim. this was not a question of whether to pay 1.7 billion or it zero. was a question of whether to pay 1.7 million or more. >> i would like to be able to get into the terrorism end of this in terms of the agreements that were put forward. during the negotiations for the settlement purposes of the agreement with iran in payments, did anyone in the administration ever bring up the issue could these funds be used for terrorism? was that raised as a concern? >> again, my expertise in all of this is very narrow. it really is to litigating claims assessing litigation risk, and in any of these settlements whether it's this one or the ones we entered into prior to give advice about good advice? caller: any concerns raised by the -- >> any concerns raised by the administration? >> we have multiple concerns with the iranian government. >> what overrode those concerns?

>> as i noted, we have tried to take step-by-step on multiple lines of effort, areas where we think we can advance u.s. interests we do so in a concerted and thoughtful way. we have done that with respect to the most immediate threat, the iranian nuclear program, with respect to one of our top priorities, bringing home our american citizens and with respect to the claim, we did so in a way that saved american taxpayer >> you're talking about dollars. saving taxpayer if we look at dollars. national security adviser susan rice, she admitted that some of the iranian money could be used for terrorism. is that a concern that you took into consideration? >> we are constantly concerned with what iran might do with respect to its support for terrorism and we have a variety of tools to counter that, robust

sanctions passed in this very pass, that includes designations of entatitentatties like the quds force, others that support terrorism. >> maybe you could give me clarity on this. the where you sent over cash in $1.7 billion the middle of the night on pallets to iran that went into their possession, you said the majority of this has gone to infrastructure programs. so we're left assuming they're filling potholes over there. since you're able to track that money, what happened to the rest -- >> where did the other money go to. >> i don't believe i said infrastructure.

saying did, but i recall was the joint domestic economic needs. i made the point again and again we have a variety of tools in place in order to try to counter that. that's an ongoing effort of our government. >> did they give you any guarantees the money wouldn't be used for terrorism? >> i'm not aware of any guarantees. but the way we approached this is from what the u.s. government can't do with respect to our intelligence capabilities with , respect to our operational capabilities and diplomatic capabilities to track and deter those sorts of activities. we have vigorouses efforts to deter and divert shipments to hezbollah. that is an active effort ongoing. we have sanctions which is intended to degrade the potential for those actors and we have other lines of effort where we're trying to resolve other issues of concern and other threats to the united

states. >> >> the gentleman's sometime has inspired. we recognize kildee for five mr. kildee for five minutes. >> thank you, mr. chairman. i'm not on the subcommittee, but i'm here because there's probably not a subject since i have been in congress for the last four years that i have spent more time on than the issue of the u.s. relationship with iran, specifically because one of those americans that people continue to refer to is a young man who lives about a mile from me now. a young man named amir from flint, michigan, my hometown, who gratefully, thankfully, as a result of the great work of the agencies represented here, our secretary of state, president of the united states, is now a free man. at home, pursuing the rest of his life. the reason i make that point is that there were very many members of congress, including some members congress, including

some members who have expressed their outrajge today in this hearing based on their assumption that there was some connection between these three distinct negotiations that took place, that one was a quid pro quote for the other. there were many members of the house of representatives who took time at the point that the jcpoa was enacted agreed to, that the release of these americans should have been a part of that transaction, and that it wasn't. so i have a bit of concern with what i see as some duplicity here, that on one hand when it fits the political narrative, the administration is criticized for not making these separate negotiations all combined into one, and when it fits the political narrative a month or two before a presidential election, suddenly we're criticizing the fact that they

assume that they were. well, they can't have it both ways. this does not make -- these negotiations does not make iran a good player on the global stage. there are still a lot of unresolved issues. certainly some regarding their terrorist activities or their support of terrorist activities fits that category. the fact that we still haven't had information about the status of robert levinson is a great concern. many of us continue to press iran for information regarding his status. but to hear the same voices say these should have been part of the separate negotiations with be now say they were a part, coming out of the same voices, makes it obvious that's what's going on here is simply politics. sadly.

especially when we consider the gravity of not just the relationship between the united states and i run, but to bring the happy release of these americans in to that conversation i think is unfortunate. let me just ask at what point , since 1979 did the united states have any direct negotiations with iran? was there any point in time before president obama and president rowhani spoke by telephone during the general assembly? was was there any direct negotiations, face to face negotiations, officially between the united states and iran between the revolution and that moment in 2013? >> congressman, i wouldn't want to speak to the entire history

but let me summarize and perhaps answer question. diplomatic contact was basically cut off for that entire period. >> i guess the better way to put it, was there ever an opportunity to resolve these long standing disputes through direct negotiation, whether it is the release of the americans or this dispute that resulted in the payment that's the subject of this hearing? was there a moment that occurred prior to the jcpoa negotiations that took place that allowed for another track of negotiations to occur simultaneously? >> well, with respect to the hague tribunals, my colleague has noted, we have had ongoing conversations in that tribunal to settle claims. with respect to the consular issues you raise that we agree a so important, the first tangible opportunity to raise those was in the context of the jcpoa. we took every opportunity to raise those particular cases and it was that channel that allowed us to continue discussions on their ultimate release. >> my point is that it should

come as no surprise to anybody observing a relationship between the united states and iran that for the first time in a very long time, the ability to have bilateral discussion suddenly occurred outside the context of tribunal action. this was bilateral discussion that was able to take place as a negotiation. jcpoa that opened the door for discussion regarding the disposition of the americans. i know that it opened the door for discussion regarding the resolution of these long-standing disputes. the fact that these all took place in a period of time which was coincidental is, as a result, not just a sudden cool incidents, but a change in the nature of the relationship between the two governments. i know i have exceeded my time. thank you very much. >> the gentleman from maine is recognized. >> i appreciated.