Mr. D'AMATO. Mr. President, I rise today to discuss
a topic of great concern to this country, as well as
the world: Iran.
In January, I introduced a bill, entitled `The
Comprehensive Iran Sanctions Act of 1995.' The
recent press regarding the aborted Conoco deal with
the national Iranian oil company, has further
brought the problem of the purchase of Iranian oil
by overseas subsidiaries of American companies to
light. These purchases help Iran fund their
terrorism and keep their economy afloat. We can no
longer subsidize Iran's violence and terrorism.
For this reason, it is of paramount important
that this bill becomes law. In regard to this, I ask
that the following answers to a series of questions
on Iran's economic status that I posed to Manouchehr
Ganji, Secretary General of the Organization for
Human Rights and Fundamental Freedoms for Iran, who
is based in Paris, be printed in the Record.
His answers are enlightening and provide the view of
someone who knows with intimate detail, the threat
that Iran poses to the world.
The material follows:
ORGANIZATION FOR HUMAN RIGHTS AND FUNDAMENTAL
FREEDOMS FOR IRAN,
Paris, France, March 14, 1995.
Senator Alfonse D'Amato,
Chairman, U.S. Senate, Committee on Banking,
Housing and Urban Affairs.
Dear Senator D'Amato, In
response to your letter of March 9, 1995, I herewith
enclose my reflections to the questions posed. As
you will note I have added a sixth question and
provided my responses to it as well. I will be
available for any further questions or
clarifications.
Please accept Sir, the assurances of my highest
considerations.
Sincerely,
Manouchehr Ganji,
Secretary-General.
--
INTRODUCTION
Under today's deteriorating economic, social and
political conditions in Iran, a total U.S. trade
embargo on Iran is the single most important policy
initiative that needs to be taken if the
overwhelming majority of Iranians, inside and
outside the country, are to be given the incentive
to play their full part in bringing about a change
of government--to allow power to be transferred to
civilized, progressive and democratic forces; an
outcome which would, among other things, remove the
threat to the region and the world that the present
regime in Iran represents. It is my considered
opinion that a total U.S. trade embargo will
ultimately be effective, if (a) it is part of a
coordinated strategy which enjoys the actual as well
as the declared support of other governments and
their agencies; and if (b) U.S. and other
policy-makers and their agencies are fully
coordinated with those civilized, progressive and
democratic Iranian forces on the ground, inside and
outside Iran, which will take the lead in bringing
about a change of power. However, if such a policy
is not coordinated and well organized, it will not
necessarily bring about the desired results, and
could even be counter-productive. It is also my view
that your list of five questions should be extended
to include one more. I am therefore responding
hereunder to six questions.
Question 1. We are aware of the severe
problems that the Iranian economy is facing. The
government cannot serve all of its short and long
term debts, and basically is teetering on total
collapse. What benefits does Iran derive from its
trade with the United States, and how much
importance does Iran place on this trade?
Answer. The deterioration of the economic and
financial situation of Iran has been accelerating
during the past several months at an unprecedented
rate. The situation can be summarized as follows:
(1) The incapability of the country to service
its short and long term debts. This is in spite of
the regime's efforts to reschedule its debts of
around $37 billion dollars, which does not even
include the debts to former communist countries.
Presently, the debt service and foreign exchange
policies are out of control and the regime is
incapable of taking concrete steps to redress the
situation. 1
Footnotes at end of report.
(2) From 1979 to 1995, the value of the Rial to
the Dollar had lost 30 times its value in the free
market, whereas during the last two months the value
of the Rial has fallen by an additional 50%, 2 and
no end is seen to the collapse of the Rial. Most
banks in the world are presently refusing letters of
credit from Iran.
(3) The shortage of foreign exchange has limited
the import of even essential goods such as
pharmaceutical products, raw materials, and spare
parts. Domestic production is falling
rapidly--industrial production is running at 17%-20%
of its capacity. 3 Agricultural production is also
in trouble due to the shortage of seeds, fertilizers
and pesticides.
(4) To a large extent, Iran has also become `a
Dollar economy', in the sense that local prices are
related to the Dollar exchange rate. Consequently,
the fall in the value of the Rial, and the
decreasing supply of goods (due to shrinking imports
and falling production) have been causing price
increases during the last two months of between 50%
and 100%. This inflation is taking place in a
country that is not used to--contrary to some other
countries--the psychology of inflation, and lacks
the experience and the mechanisms to adapt to daily
price increases.
It is in such exceptional context that we have to
evaluate the importance of trade between the United
States and Iran. Since the 1979 revolution, more
than anytime before, oil revenues play the central
role in Iran's economy. In 1994 Iran's oil revenues
amounted to $11.9 billion. 4 In 1994, oil purchases
of U.S. oil companies from Iran amounted to $2.567
billion, or 25% of total oil revenues. 5 The direct
U.S. exports to Iran were around $800 million in
1994. Not only are these imports essential and
substantial for the regime, but, in addition, they
allow it to cover certain technological needs as
well as other goods that Iran must purchase from the
U.S. due to its close economic and industrial ties
prior to the 1979 revolution.
Consequently, an embargo by the U.S. under the
present circumstances would substantially affect a
crucial factor for the regime which is its foreign
exchange earnings from oil. Even if one argues that
the regime will find other buyers and suppliers,
this substitution shall take some time, whereas the
various effects of the embargo would be felt much
quicker. More importantly, the psychological impact
of such an embargo by the U.S. would be greater than
the effect on the actual flow of revenues and goods.
Question 2. Owing to its severe economic
condition, what effect (socially, politically and
perhaps even psychologically) would a total U.S.
trade embargo have on Iran?
Answer. Generally speaking, the ruling mullahs
have been talking about the U.S. trade embargo on
Iran since the seizure of the U.S. Embassy in 1979,
and they have told so many lies and boasted on their
ability to survive the embargo that the term
`embargo' does not carry much weight unless the U.S.
clearly indicates that it means business and that
the `embargo' is much more than mere political
rhetoric. Thus, the embargo must be effective and
must be seen as effective; which means it must
affect the regime's finances, deprive the regime
from buying the goods it needs-- including
instruments needed for its security forces--and
finally, financially pressure the regime to scale
down its budget, especially the allocation to its
radical constituency and forces of repression.
The most important effect of a total U.S. trade
embargo would actually be the psychological
one--from two quite different points of view. In so
far as the present regime can be said to have any
confidence in its ability to survive, that
confidence is based on its ability to demonstrate
that it is continuing to enjoy at least a measure of
U.S. support. A critical factor in this light is the
fact that U.S. companies, oil companies in
particular, are being allowed to continue to
purchase large amounts of oil from Iran. The present
regime is thus able to say to itself `Powerful U.S.
vested interests need us as much as we need them.
We're okay. We can ride this storm out.' In effect,
the U.S. oil companies, in order to protect their
own short-term vested interests as they see them,
are sending the signal that gives the present regime
its hope for survival. A total U.S. trade embargo
would therefore undermine and probably destroy
whatever remaining confidence the present regime has
of its survival chance.
On the other hand, the psychological impact on
the overwhelming majority of the Iranian people--who
will pay any price necessary to rid themselves of
the present regime, provided only they believe that
further hardship, suffering and sacrifice will lead
to the removal of the present regime--will be in my
opinion enormous and positive. For most of the past
sixteen years the main cause of despair in the
hearts of the largely silent, frightened and
anti-regime majority in Iran has been the perception
that, to one degree or another, the U.S. and other
major powers were supportive of the regime. The
peoples of nations are no fools? They have learned
that when the U.S. in particular, and other major
powers in general, are supporting repressive
regimes, there is little or no point in those being
repressed risking everything in an effort to remove
the source of repression.
Orinary Iranians do not believe that the ruling
mullahs have stayed in power simply on the strength
of their own resources and wits. They truly believe
that the mullahs have the hidden support of the big
powers, including the oil companies and
international
financial institutions, and that is why they have
survived despite their obvious inefficiency and
ignorance of the ways of the modern world.
The psychology of the Iranian society, which for
historical reasons at times overestimates the role
and influence of foreign powers, particularly the
United States, would view a total U.S. trade embargo
as a clear signal that the United States has finally
taken a definitive position against the ruling
mullahs. At the same time, the regime's supporters
will also lose confidence and morale for the same
reason. Furthermore taking into account the general
state of dissatisfaction and opposition to the
regime which prevails in Iran today 6 , the positive
interpretation of a total U.S. trade embargo would
be manifold greater than the immediate adverse
financial effects of it. It can be assumed that
large economic interests mainly in the bazaar and
close to the regime would then be more inclined to
distance themselves from the regime, and establish
contacts with the dissatisfied middle classes and
lower income classes whose living standard have been
completely disrupted by inflation and unemployment.
A total U.S. trade embargo would therefore be the
signal for which the overwhelming majority of
Iranians have been waiting for. Meaning that the
U.S. does no longer support, in any shape or form,
the present regime and that the commitment to the
final struggle to remove it is for Iranians to make.
In effect, the positive psychological impact on the
overwhelming majority of Iranians will lead, by
definition, to a positive political impact. One may
ask, what of the social impact? It can be said that
the hardship and suffering of most Iranians could
hardly be worse than it already is. But as indicated
above, most Iranians are willing to make the further
sacrifices required of them provided they feel that
it could result in the collapse of the present
regime and the opening of the door to a worthwhile
and democratic future. This indirect support of the
opposition forces at this crucial stage when a power
struggle within the regime is also taking new
dimensions would be well received inside and outside
of Iran.
Therefore, an embargo in the case of the Islamic
Republic is not only a trade issue and should not be
looked upon only as a balance sheet of what U.S.
companies will be losing and what will be the
financial loss to the regime. Such a policy will be
suffocating to the ruling mullahs and will be taken
as a signal of support for those struggling for the
freedom of Iran. It will also act as a very strong
signal to other countries that the time for `the
party to which terrorists are invited' is over!
However, the sine qua non for the success of the
administration's policy to isolate the Islamic
Republic of Iran internationally is for the U.S. to
do as it preaches and to effectively take the lead
in this regard thus making itself a model by
strictly adhering to such a policy. How can the U.S.
persuade other countries to restrain from relations
with the Islamic Republic when the U.S. is in fact
itself a major trading partner of that renegade
regime? There is no doubt that a total U.S. trade
embargo would strengthen the U.S. position in its
efforts to isolate the Tehran regime. Terrorism and
extremism are like drugs, they have to be fought
internationally. Oil money in the hand of the Tehran
mullahs--the symbol of state terrorism and dark ages
in today's world--is like cleaned drug money in the
hands of drug smugglers. It is oil money combined
with foreign aid and assistance that has prolonged
the life of the extremist regime in Iran, enabling
it to continue to disregard all rights and freedoms
of the Iranian people to carry out acts of terrorism
abroad, and to destabilize the moderate pro-western
Moslem countries.
Question 3. In its present form, does
the Clinton Administration's policy of `dual
containment' of Iran and Iraq work?
Answer. An evaluation of this policy has to be
made separately with regard to each country.
Iraq: After Iraq's invasion of Kuwait a radical
change of U.S. policy towards Iraq took place. The
former policy of support for Iraq against the regime
in Tehran turned into a policy of isolation.
Destruction of Iraq's war power and of its chemical
and nuclear facilities became paramount. Since the
war between Iran and Iraq had ended, there was no
longer the need for military support of Iraq against
the Islamic Republic of Iran. Although Saddam
Hussein is still in power in Baghdad and continues
his repressive policies. Iraq's aggressive designs
have been checked and neutralized. The integrity of
Iraq has been preserved, which is most important,
taking into account the possibility of a
fundamentalist Shiite state in the south and the
possibility of the Kurdish secession in the north.
Although some volume of trade has been going on
between Iran and Iraq, taking into account the
historical issues and quarrels between the two
countries, no united front against the U.S. has been
formed. One can safely say that on the whole the
policy of containment has been successful concerning
Iraq.
Iran: Taking into account the nature of the
Islamic Republic, the implication of this policy
must be viewed separately. Today, the Islamic
Republic is the center of support for the extremist
fundamentalist movements such as the Hamas, Jihad
and Hizballah in their efforts to fight and derail
the Middle East peace process. The ruling mullahs in
Iran believe that if these extremist movements
success in destroying the peace process, they would
also succeed in destabilizing the moderate
pro-western countries in the region with Tehran's
help and leadership. In spite of the dual
containment policy declaration and the U.S.
government's efforts to isolate the Islamic
Republic, trade relations between the two countries
have remained the same or have even risen. Oil
purchases by U.S. oil companies and direct or
indirect trade between the two countries have
continued at even a higher level than before. The
Tehran regime still continues to pursue arms and
weapons of mass destruction, support international
terrorism, subvert the Arab-Israeli peace process,
abuse human rights at home, assassinate political
opponents abroad and promote militant Islamic
fundamentalist movements in other Muslim countries
in the Middle East and in North Africa.
Under these circumstances, the regime in Tehran
has concluded that the United States is not serious
and has no real policy against it. In fact, they may
be right as they compare the U.S. policy towards
themselves with the U.S. policy toward Iraq, both of
which are within the context of the dual containment
policy. Therefore, the dual containment policy would
be more successful if tougher criteria would also be
applied vis-a-vis the regime in Tehran. The embargo
is certainly a first and a right step in that
direction. It is imperative however, that the stated
target and aim of the sanctions be the regime and
not the people of Iran.
Question 4. What response would you have
to the charge by U.S. companies (oil companies in
particular) that an embargo only hurts U.S.
companies and will not hurt Iran?
Answer. By definition a total U.S. embargo will
result in short term losses for U.S. companies, oil
companies in particular. In their position I would
insist that my government does everything in its
power to see that the embargo is global. In their
position I would also have good cause for grievance
if other governments allowed their companies to make
short term gains at my expense. In other words,
there is a case for saying that a total U.S. trade
embargo could hurt U.S. companies more than it would
hurt the regime in Iran if the U.S. was unable to
persuade all other major powers to make common cause
with it.
But there is another more important argument
which U.S. companies (oil companies in particular)
would be well advised to consider even if other
governments did allow their companies to go on
trading with the Islamic Republic of the Iran. If
U.S. companies continue to be seen by a growing
number of Iranians as the agencies which are doing
most to prop up the present discredited and despised
regime in Iran, there will come a time when the
present regime is replaced, when U.S. companies will
have much and perhaps everything to lose. What U.S.
companies would be well advised to weigh carefully
is what they might gain in the short term against
what they could lose in the longer term. If they
give the matter the consideration it deserves, U.S.
companies should not have that much difficulty in
concluding that it is in their best longer term
interest to support a total embargo, particularly
under the current intense economic and political
conditions in Iran.
If other governments did then allow their
companies to make short term gains at the expense of
their American counterparts, U.S. companies would
end up being the longer term beneficiaries--because
they would be seen by the overwhelming majority of
Iranians in a new Iran to have played a part in
bringing an end to the present discredited and
despised regime.
Question 5. If the United States were to
impose an embargo cited in Senator D'Amato's bill,
in your opinion, would the industrialized countries
follow?
Answer. Since the Iranian regime is a real threat
to international peace and stability, and in view of
the fact that its declared policy is to harm U.S.
interests, it seems that the United States has a
perfect moral and legal case in seeking to
internationalize its embargo in the same way it
mobilized the international community against the
Iraqi regime.
The argument that isolating the Iranian regime
would only make it more intransigent is wrong. So is
the argument that by bringing the mullahs into the
international fold one can tame them. Today, this
argument is presumably put forward by the Germans
and the Japanese more than others. The fact is that
the Iranian mullahs, being extremely cynical,
receive the wrong signal from appeasement and
accommodation. They interpret such overtures as a
sign of weakness which indicates that the West is
not serious about their unruly behavior and lacks
resolve and political will to confront them.
However, experience has shown that the ruling
mullahs, being bullies, lose their morale quickly as
soon as they are convinced that their adversary is
strong, determined and means business.
My guess is that some major powers would be
mightily tempted to seek to make short term gain at
America's expense--it least until it is clear that
the present regime in Iran is close to being
toppled. Then they would try to change horses. I am
therefore of the opinion that U.S. policy-makers
would be well advised to every effort to bring other
major power on board. Much could depend on the
extent to which other major powers are consulted by
the U.S. before any announcement, (if there is to be
one) of a total trade embargo. If the British,
French, Germans and others are able to say, `we were
not consulted', they consider that they have enough
scope to play games. If the United States clearly
indicates that it means business and that the
embargo is more than more political rhetoric, other
industrialized nations will think twice about doing
business with the present regime in Iran under the
prevailing economic and political conditions.
Question 6. If the United States were to
impose an embargo cited in Senator D'Amato's bill,
what in your opinion would be the likelihood of the
present regime in Iran, or elements within it,
deciding to mount a terror campaign against U.S.
interests for the purpose of weakening American
resolve and, by intimidation, driving a wedge
between the U.S. and other major powers, the
Europeans especially? And if you think the present
regime in Iran (or elements within it) might
consider such a strategy, how do you assess the
ability to perform?
Answer. The clerical regime has been in power in
Iran for sixteen years and it still claims it does
not condone, much less support, terrorism. By now,
however, so much evidence to the contrary has
accumulated in so many countries that Tehran clerics
professions of innocence are seen as little more
than self-serving lies. There are no signs that the
clerical regime has any intention to mending its
way. Reports from throughout the Middle East and
North Africa reflect the Tehran regime's
determination to use terrorist violence to achieve
its expansionist aims. One of the regime's latest
weapons in its war on the world is Hamas, a radical
fundamentalist Palestinian group on which the
Islamic Republic has lavished millions of Dollars as
well as weapons and guerrilla training.
As I know to my cost, the present regime has the
ability to carry out single-hit assassinations in
virtually any place of its choice. But the evidence
of Lockerbie would seem to suggest that for more
complex terror operations the Tehran regime requires
(or prefers) the organizational assistance of
international extremist forces such as the
Hizballah, Jihad and Hamas. If the need to contain
the possibility of terror strikes by the present
regime in Iran arises due to the imposition of trade
sanctions, history dictates that the proper course
of action is the policy of combating terrorism at
its source, and making it clear to the proponents of
terrorism that they have much to lose as a
consequence of their actions
