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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


Location: Washington, DC


REP. STEVEN ROTHMAN (D-NJ): Thank you, Madam Chairman. Mr. Secretary, thank you for being here. Thank you for your service to our country.

SEC. PAULSON: Thank you.

REP. ROTHMAN: I wanted to ask you first about Iran's Central Bank, Bank Markazi.


REP. ROTHMAN: I know the administration and others in the world community have imposed sanctions on transactions involving Iranian banks, and they've been somewhat successful with some smaller banks, small and large banks in Iran. But we are told, in particular by the Financial Crimes Enforcement Network, among others, and the State Department, that Iran is still able to us its Central Bank, Bank Markazi, in funneling money, international money, into Iran for various development purposes that have been prohibited or sanctioned by the U.S. and international community.

What more can the U.S. do? What is the U.S. doing with regards to Iran's Central Bank, and specifically, why hasn't the bank been designated pursuant to Executive Order 13224 or 13382?

SEC. PAULSON: Well, first of all, thank you for that question. I think I first highlighted this issue in a speech I made to the Council on Foreign Relations in New York in June. I talked about multilateral sanctions and sanctions based upon strong evidence and when we had strong intelligence and being able to take actions. And at that time, I put a big spotlight on Markazi and the work they've done when CEPA or -- and a number of their other banks that had some -- had had problems.

I think on that, I don't think it's appropriate for me to comment on any actions we haven't yet taken, other than to say we're reviewing these carefully and all the time. And when we believe it makes sense and when we've got the right basis and it's the right time, we will take the appropriate action. And this is -- we've been watching the Central Bank closely, and we've been talking about it publicly.

REP. ROTHMAN: That's a tantalizing answer implying that we may --

SEC. PAULSON: Well, I'm not --

REP. ROTHMAN: -- well either that the allegations of the actions of the Central Bank are not worth our attention, or that our strategy has not matured enough to be executed.

SEC. PAULSON: Well, if I thought it was not worth our attention, I wouldn't have spoken about it.


SEC. PAULSON: (Crosstalk) --

REP. ROTHMAN: So is it the latter, that our strategy is not mature enough yet to be executed?

SEC. PAULSON: No. I'm not going to say it's not mature enough. This is -- I don't think I should be commenting on our intelligence strategy at a public hearing -- (crosstalk) --

REP. ROTHMAN: That's a different -- that's a different answer, and I respect that.

SEC. PAULSON: -- real time. But --

REP. ROTHMAN: Fair enough.

SEC. PAULSON: -- but this is something that is -- we're focused on Iran, and we're well aware of -- (crosstalk) -- Markazi.

REP. ROTHMAN: Fair enough. Fair enough. So this -- perhaps in a closed setting, there might be a different answer?

SEC. PAULSON: Yeah, perhaps. But the -- but clearly, this is -- I --

REP. ROTHMAN: It has not escaped your attention.

SEC. PAULSON: This has not escaped our attention, and --

REP. ROTHMAN: Fair enough, got it.

SEC. PAULSON: -- and I'll send you a copy of my remarks. And we're -- but we are intentionally focused on Iran and their financial sector, and you can't do that without focusing on their Central Bank and its actions.

REP. ROTHMAN: Okay. Saudi Arabia, as you know, cooperation from Arab and Muslim countries is crucial in the global fight against terror financing. Have regulations been put in place to ensure that Saudi international charities are not funding terrorism or -- and what can you tell the committee about Saudi funding of Hamas?

SEC. PAULSON: Well, this is a complicated and an important topic. And again, this is one that I'm sure Stuart Levey would come up and, in a closed session, talk to you about this. But let me say, in an open section, that there have been big strides made in the way in which Saudis have cooperated with U.S. intelligence in dealing with terrorist finance, okay. So there has been major progress, close cooperation. They are a close ally. There is -- (crosstalk) --

REP. ROTHMAN: Is it fair, Mr. Secretary, to say that --

SEC. PAULSON: Let me just finish --

REP. ROTHMAN: -- this continues to be or will continue to be, during your stewardship, a serious, continuous focus on Saudi --

SEC. PAULSON: Yes, and --

REP. ROTHMAN: -- funding of terrorism?

SEC. PAULSON: -- but there's room, as you said, there's room for improvement in certain areas.

And in terms of Saudi funds which leave the country -- and so I think, dealing with financing outside of the countries, it's a difficult -- it's a complex issue. More needs to be done, and there's room for a lot of improvement in that area.

REP. ROTHMAN: And you're working to make those improvements?

SEC. PAULSON: We're continually working to make those improvements.

REP. ROTHMAN: Thank you, Mr. Secretary.

SEC. PAULSON: But it takes two to make the improvements. We can't unilaterally make the improvements, so we're working.

REP. ROTHMAN: Hopefully we have some leverage with them.


REP. ROTHMAN: Thank you, Madam Chairman.


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