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Cotton Questions Officials About the Obama Administration’s Changing Story on the Full Amount of Iran Sanctions Relief

May 25, 2016

Contact: Caroline Rabbitt (202)224-2353

Washington, D.C.-- Today, during a Senate Banking Committee hearing Senator Tom Cotton (R-Arkansas) questioned Mr. Adam J. Szubin, Acting Under Secretary of the Treasury for Terrorism and Financial Crimes and the Honorable Stephen D. Mull, Lead Coordinator for Iran nuclear implementation at the U.S. Department of State, about the sanctions relief Iran will receive under the JCPOA. A full transcript of their exchange can be found below. Click here to watch the video in full. 


Q: I want to return first to an exchange that Senator Kirk had, we did not have a prisoner exchange. We released duly convicted prisoners in our courts of law and we waived warrants that were outstanding, they released hostages. I agree with Senator Kirk that the money that was associated with those payments was ransom, but we don't have to get into semantics.

I would like to know this, that $1.7 billion that was released in close proximity to Iran's release of our hostages, how did we pay that? With dollars?

A: I don't believe that dollars were used in those payments.

Q: Does the Treasury Department just have billions of Iranian rials sitting around the basement?

A: No, but Iran has accounts in Europe and other third countries and we can certainly make currency available in other denominations.

Q: And what was that - what currency was it?

A: I would need to go back and check on that, but I would be happy to get you those answers afterwards.

Q: I would like that for the record please. I would also like for the record the currency in which we paid or will pay $8.6 million for Iran's heavy water, the purchase of which was announced recently. Mr. Mull, are we obligated under the JCPOA to buy Iran's heavy water?

A: No sir.

Q: If we had declined to purchase that heavy water, do you believe that would be a legitimate reason for Iran to withdraw from their obligations under the JCPOA?

A: No sir, Iran was compelled under the terms of the deal to stay below the cap of 130 metric tons of heavy water, they have the responsibility to dispose of that excess heavy water by offering it for sale and delivering it to a foreign buyer.

Q: Secretary Moniz stated that purchase was going to be a one-time purchase, so I offered an amendment that would merely codify that commitment, yet the President issued a veto threat of that amendment. Is the Energy Department planning on making further purchases of Iran's heavy water?

A: Secretary Moniz has explained to me that no, the Energy Department does not plan any future purchases at this time. However, heavy water is something very important to our scientific and medical research community. The market supply is unpredictable, so the administration is reluctant to foreclose the possibility of buying heavy water where we are able to.

Q: Which is why we frequently buy it from allies like Canada and India. Moving on, I want to return to questions that Senator Corker and Senator Menendez had and just get a clear answer. Will the administration commit to a pure extension of the Iran Sanctions Act, yes or no?

A: Senator, all I can say is the administration is ready to work with the Congress in studying that question.

Q: You also would not commit to Senator Mendez that such an extension-not a substantive change-just striking the date and extending the current terms, might be a violation of the JCPOA.

A: Um, no. I didn't say yes or no that it would be.

Q: To use Senator Corker's language you were wishy-washy in replying to Senator Menendez.
Let me put it this way, does the Iran Sanctions Act currently violate the JCPOA?

A: Well, the JCPOA came into effect with the Iran Sanctions Act still in place.

Q: I find it hard to believe that a simple extension of it, changing nothing but the date, would therefore be a violation. Has the State Department designated any Iranians as human rights violators since the JCPOA was finalized?

A: Since the JCPOA was finalized last July, there have not been. Although, there has been a history of multiple sanctions on human rights grounds, especially since the passage of the CISADA Act in 2010. There have not been any sanctions imposed for human rights grounds since July of last year. However, the State Department continues to fight very hard to shine a spotlight on human rights violations in Iran through the UN, the Human Rights Committee, also through our regular reporting on the international freedom report, religious freedom report, human rights report.

Q: I understand all of that. I will infer that Iran's human rights record has miraculously changed in the last year then.

A: No, sir.

Q: Mr. Szubin, I want to move to the question-which is in some controversy here, but also in public debate-the total value of sanctions relief that Iran will receive. For the record, I know the answer from private briefings on my other committees. I would like to know from you though, in public here, what is the total value of sanctions relief Iran will receive from the JCPOA? Just top-line, I don't need to know how much debt they have, or bad contracts, or anything else. What is the amount of sanctions relief they will receive?

A: Senator, our top-line figure, in terms of their new access to reserves is around $50 billion.

Q: $50 billion? Five, Zero?

A: Yes, Senator. That's what I've testified here before this committee and what we've said publicly. Your question, though, is asking a bigger question. Which is, how much relief will Iran get? Not, how much of their foreign reserves are coming out from under escrow? Relief, obviously, takes the form of new oil sales. Iran's selling more oil than they were when they were under those sanctions restrictions that Congress put in place. Iran's selling more petrochemicals, Iran's able to import auto kits to try to get its auto industry back online.

Q: So $50 billion, though, that is the gross sanctions relief that they might receive? Not net. Not net of any bad contracts or debts they have to other countries. The gross sanctions relief they will receive?

A: No, no sir.

Q: President Obama suggested in an interview with Jeffrey Goldberg in the Atlantic last month that is might be as high as $150 billion. One, five, zero.

A: Senator, I want to very precise. I'm happy to answer as many questions as your have on this. But, l think its important to be specific about our terms. Fifty billion is not new money that we or the P5 + 1 are giving Iran, that's Iran's own foreign reserves that were bottled up in escrow accounts under the sanctions. As of implementation day those restrictions came off. Iran has access to those today. That is not the total value of the deal to Iran. Iran is also looking to the deal to provide new trade, new investment.

Q: I get that. Barack Obama has brought six percent economic growth to Iran even though he's only brought two percent to the United States. I'm talking about the gross value of sanctions relief. CIA Deputy Director David Cohen, last year when he was still at the Treasury Department, testified that $100 billion in foreign currency reserves were blocked by sanctions before the JCPOA. Is that an accurate figure?

A: Yes.

Q: So now they are no longer blocked?

A: That's right. Those restrictions on Iran's foreign reserves have been released. Which means Iran can now access its foreign reserves. The total amount of those reserves that are accessible is $50 billion, at most. And that's our conservative estimate, but that continues to be our estimate.

Q: Mr. Mull you look like you would like to respond.

A: No, I completely agree.

Q: Well for the record, I would like to say that this administration continues a long-standing pattern of misleading the American people in public settings and telling Congress the truth in private settings.