Treasury and State Department officials said that the Joint Comprehensive Plan of Action, the July 2015 nuclear deal reached between Iran, the U.S. and its allies, has extended the time it would take Tehran to get a nuclear weapon, enhancing U.S. security and that of its allies in Europe and the Middle East.
But they spent the bulk of a House Foreign Affairs Committee hearing reassuring Republican and Democratic lawmakers who questioned how aggressively the Obama administration is penalizing Iran for its destabilizing activities in the Middle East and how strictly it is enforcing the deal.
"We need to make sure it's implemented to the letter," said New York Democratic Rep. Eliot Engel, "and hold Iran's feet to the fire with respect to" what he called its troublemaking in the region.
Engel and other lawmakers cited Iran's support for the militant groups Hamas and Hezbollah, as well as Shiia militants in Iraq, Houthi rebels in Yemen and the regime of Syria's President Bashar al-Assad. They also raised Iran's ballistic missile tests in March, in particular two test-fired rockets inscribed with the Hebrew phrase "Israel must be wiped off the Earth," according to Iran's semi-official Fars News Agency.
Obama administration officials said they are approaching Iran on two tracks, one for the Iran deal and another that continues to target the regime's destabilizing activities.
"While the threat of a nuclear-armed Iran has been addressed through implementation of the JCPOA, Iran's continued conventional weapons proliferation and its efforts to develop increasingly capable ballistic missile systems remain among our most important nonproliferation challenges, and pose very real threats to regional and international security," said Thomas Countryman, the State Department's Assistant Secretary for International Security and Nonproliferation.
"We have no intention of reducing our focus on Iran's other programs, even as we continue with the implementation of the JCPOA," Countryman said.
Adam Szubin, the acting Treasury Under Secretary for Terrorism and Financial Intelligence, told the committee that while the JCPOA allows exceptions for the sale of commercial passenger aircraft, parts, and services, and the import of Iranian carpets and foods such as pistachios, the primary U.S. embargo on Iran remains in place.
"That means we will continue to prohibit U.S. persons from investing in Iran, importing or exporting to Iran most goods or services, or otherwise engaging in commercial or financial dealings with most Iranian persons or companies," Szubin said. "Iran will also continue to be denied access to U.S. markets." He said sanctions remain on more than 200 Iranian firms.
Rep. Royce, the California Republican who chairs the committee, grilled Szubin about Iran's ability to access the U.S. banking system indirectly. "The concern is that while Iran wouldn't be allowed access to the dollar, you could structure a scheme offshore," Royce said.
Szubin said U.S. sanctions govern the conducts of what U.S. actors can do, wherever they are in the world. "Our sanctions do not control the actions of non-U.S. persons," he said. "Foreign actors aren't under our jurisdiction if they choose to give" dollar holdings to Iran, he said.
"Along these lines," Szubin added, "let me also say clearly that we have not promised nor do we have any plans, to give Iran access to the U.S. financial system, or to reinstate what's called the 'U-turn' authorization," a banking maneuver that would give Iran a way to avoid sanctions.
Mark Dubowitz, executive director of the Foundation for Defense of Democracies, said that if Congress targeted Iran's U.S. dollar transactions outside the U.S. financial system, it wouldn't necessarily be infringing on the nuclear deal.
"Iran did not negotiate these dollarized concessions as part of the JCPOA," Dubowitz said, "so any legislation to block these transactions would be outside of the ambit of the nuclear agreement."
Dubowitz argued that legislation that targets dollarized transactions "would be considered non-nuclear sanctions, since they target Iran's illicit activities related to ballistic missiles, terrorism, regional destabilization and the money laundering and illicit finance underpinning these activities."