Mr. Chairman, Senator Scott, thank you for including me in today’s hearing. I’m especially glad to be testifying with two outstanding witnesses.
We are here today to talk about terrorist financing in the wake of the most serious assault on the Jewish people since the Holocaust. For many of us, the horror of the brutality of Hamas was compounded by the one of the most dreadful displays of public antisemitism since, well, the Holocaust. Hatred of Jews is perhaps the last remaining widely-tolerated “ism,” and it has reminded many of us of the reason Israel must exist as a homeland and a safe haven for the Jewish people.
In the important discussions in Congress about how to stem the tide of cash to terrorist groups, Hamas among them, much attention has been given to the $6 billion in cash the Biden administration transferred to Qatar from accounts in South Korea for Iran’s use in September. That $6 billion was advertised as payment for the release of five hostages, but widely understood to be the consideration paid for an “understanding” between the Biden administration and the Iranian regime about its conduct over the coming months, including a pause on attacks on Americans and a slowdown in Tehran’s accumulation of highly enriched uranium. All carefully constructed, of course, to evade the congressional review requirements of the Iran Nuclear Agreement Review Act of 2015.
An additional $10 billion sitting in Oman for the same purpose – Iran – was also transferred from Iraq.
A few things: If this $6 billion was our only problem with Iran, I would thank our lucky stars. This is the tip of the iceberg. But let’s start with the $6 billion. The Biden administration, which came in for substantial criticism for allowing Iran access to this money, has said it will not allow it to be used right now. As Brett McGurk, the White House Coordinator for the Middle East and North Africa, explained, the system for disbursal will work something like a joint signature on a checking account, that should be the end of the story. However, Qatar has contradicted our government.
Should Qatar, a topic I will return to later in this testimony, defy the wishes of the U.S. government and proceed with a disbursal to Iran, you have options. First, it is important for Congress to ascertain whether the government of Qatar has agreed to make Iran whole while it withholds the $6 billion from South Korea. In that scenario, Qatar could simply hand over its own cash to Tehran and pay itself back later from the South Korean funds once the pressure is off. We don’t know if that’s the case, but Iran’s pro-forma protestations don’t sound like those of a government that’s just been deprived of $6 billion.
Second, if Qatar is actually disbursing the cash from South Korea, focus on the bank. If it chooses to become a financier to the Islamic Republic of Iran, the U.S. government can choose to designate that bank as a primary money laundering concern. Should that not deter the Qataris, a designation of that country as a state sponsor of terrorism is an option. Both are Executive actions, but Congress can force a decision with legislation. But I’m getting ahead of myself.
Let’s move on from the $6 billion for now. Since 2021, “the estimated value of Tehran’s additional oil sales — the difference between its realized revenue and what it would have earned had its exports remained at the maximum pressure period’s average level — was $26.3 to $29.5 billion dollars,” per research by the Foundation for Defense of Democracy. From 2019 through the end of 2020, Iranian oil exports averaged .775 bpd. In 2021, per the same report, they rose to an average of 1.14 mbpd, and this year jumped to an average of 1.38 mbpd. Iran’s total revenue from oil exports since 2021 is between $81 and $90.7 billion. Iranian foreign exchange reserves have doubled, growing from $12.4 billion in 2020 to $21.1 billion in 2023. Oil and oil-related exports are Iran’s primary money earner; numbers 2 and 3 are iron and steel and… edible fruits and nuts. So, it’s the oil that is at the heart of the Islamic Republic’s finances.
How did that happen? Simple. The U.S. government allowed it to happen. To review the bidding, in 2016, Iranian oil exports were 2 mbpd. In 2018, they hit 2.8 mpbd. After President Trump pulled the plug on the JCPOA, they dropped to somewhere between half a million and three quarters of a million mbpd. Many, myself included, were skeptical of Trump’s ability to stuff the genie back into the bottle after the wave of JCPOA sanctions waivers opened the spigots to Iran. But sure enough, he did just that.
Read the full testimony to the Senate Committee on Banking, Housing, and Urban Affairs here.