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Hearing of the State, Foreign Operations, and Related Programs Subcommittee of the House Appropriations Committee - U.S. Treasury International Assistance Programs and U.S. Contributions to International Financial Institutions

Interview

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Location: Washington, DC

BREAK IN TRANSCRIPT

REP. ADAM SCHIFF (D-CA): Thank you, Madam Chair. I wanted to follow-up on my colleague's questions about the Iranian Central Bank. I had a chance to ask you about it in one of your prior appearances before the subcommittee, and I also raised it with your counterpart at Commerce and with the Secretary of State.

It seems that, and not just with respect to the Central Bank, but with also energy companies that are doing business, Swiss companies and others, with Iran that we probably have the information we need to take action under the Iran Sanctions Act. We haven't done it. And I'm sure there are reasons why that is the case, but in Congress we're kind of left in the dark about it.

We provide a tool --

SEC. PAULSON: Right.

REP. SCHIFF: -- and it looks like the tool is not being applied. And I think under the Iran Sanctions Act, the process is to report to Congress about a violation and a decision to waive the violation or not pursue it for national security or other reasons. But I want to renew the request that I've made, because we haven't heard from --

SEC. PAULSON: Right.,

REP. SCHIFF: -- any department yet about what kind of investigations are ongoing, in the past where have those investigations led, why have we decided either not to take action, or are we planning to take action when we get further information?

SEC. PAULSON: Let me give you, because -- which may not be a totally satisfactory answer to you, but the first thing is the sanctions is -- this is not a province of Treasury. This is State Department, okay. And so this is out of my lane, but I'm interested in the area. And I will just give you an answer from 1,000 feet, which is that -- which is consistent with what I said to an earlier question.

I have watched behavior, and I believe it is, just in general in this world -- this isn't always true, but we will have much more success if we do something on a multilateral basis. It will really have an impact. And so when we -- if we -- and when we are working with countries and making progress to do something on a multilateral basis, if then the U.S., using its extraterritorial reach, goes in and starts sanctioning on an ad hoc basis countries, you may -- that may actually work to help the regime we're trying to affect, because it may undermine the multilateral effort.

But that should not be taken as an answer to any specific why are we under any sanctions act. We haven't sanctioned anyone or why -- if we -- and the sanctions program, because this is not something that is in the control of Treasury and -- (crosstalk) --

REP. SCHIFF: But Mr. Secretary --

SEC. PAULSON: -- but I think you should get someone from the State Department to come up and brief.

REP. SCHIFF: Well, and I agree, and we've asked for that, both the information and the briefing. None of it has taken place yet. The State Department has its tools.

SEC. PAULSON: Yeah.

REP. SCHIFF: You have your tools. They may not be on the Iran Sanctions Act, but you have used those tools, as I understand it, in dealing with --

SEC. PAULSON: Yeah.

REP. SCHIFF: -- some of the other private banks in Iran that were skirting --

SEC. PAULSON: Right, yeah.

REP. SCHIFF: -- the prohibitions on --

SEC. PAULSON: Right.

REP. SCHIFF: -- financing terrorist organizations. So you do have tools in your toolbox that have been employed with some of those private banks. The question my colleague asked, which I'm interested in too, is why are we not employing those tools with respect to the Central Bank if they're doing the same thing. Now, I understand there may be reasons, and you've alluded to some.

SEC. PAULSON: I can't answer this any differently for you than I did for him. So I -- (crosstalk) --

REP. SCHIFF: Well, you know, what I'm trying to express is that --

SEC. PAULSON: You'd like to see us use our tool and --

REP. SCHIFF: Well, but more than that, we would like to know, when we give you tools that either you're using them or you have a good reason not to use them. And if you can't describe in an open session why you're not using them, then I would ask that you discuss with us in a closed session --

SEC. PAULSON: Right.

REP. SCHIFF: -- what the status of our investigations are, what we've concluded, why we've decided that -- for example, there's a Swiss company that's going to invest in Iran's energy sector. And again, this is out of your bailiwick, but let's --

SEC. PAULSON: We should probably stick to the Central Bank -- (crosstalk) --

REP. SCHIFF: All right, well let's stick to the Central Bank. Let --

SEC. PAULSON: -- and on that I will have Stuart Levey or one of his people come up and talk to you and tell you what we know about that situation. And what I -- because I think, in this area when it comes to dealing with actions taking against Iranian banks, and I think a very imaginative set of actions in terms of going to all kinds of other banks around the world. You will like what you see, and you will see a level of activity from the Treasury secretary on down, which I think has been extraordinary.

And I think the reason everybody is focused on Central Bank is because I talked about it, and we've talked about it publicly. And so we're all over that, and we -- and we will -- when we think it's appropriate to do something there, we will. And I'd be very happy to talk with you and have our people talk to you about it privately.

REP. SCHIFF: Thank you very much, Mr. Secretary. Thank you, Madam Chair

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