[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
ATTACKING HEZBOLLAH'S FINANCIAL NETWORK: POLICY OPTIONS
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HEARING
BEFORE THE
COMMITTEE ON FOREIGN AFFAIRS
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
JUNE 8, 2017
__________
Serial No. 115-51
__________
Printed for the use of the Committee on Foreign Affairs
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COMMITTEE ON FOREIGN AFFAIRS
EDWARD R. ROYCE, California, Chairman
CHRISTOPHER H. SMITH, New Jersey ELIOT L. ENGEL, New York
ILEANA ROS-LEHTINEN, Florida BRAD SHERMAN, California
DANA ROHRABACHER, California GREGORY W. MEEKS, New York
STEVE CHABOT, Ohio ALBIO SIRES, New Jersey
JOE WILSON, South Carolina GERALD E. CONNOLLY, Virginia
MICHAEL T. McCAUL, Texas THEODORE E. DEUTCH, Florida
TED POE, Texas KAREN BASS, California
DARRELL E. ISSA, California WILLIAM R. KEATING, Massachusetts
TOM MARINO, Pennsylvania DAVID N. CICILLINE, Rhode Island
JEFF DUNCAN, South Carolina AMI BERA, California
MO BROOKS, Alabama LOIS FRANKEL, Florida
PAUL COOK, California TULSI GABBARD, Hawaii
SCOTT PERRY, Pennsylvania JOAQUIN CASTRO, Texas
RON DeSANTIS, Florida ROBIN L. KELLY, Illinois
MARK MEADOWS, North Carolina BRENDAN F. BOYLE, Pennsylvania
TED S. YOHO, Florida DINA TITUS, Nevada
ADAM KINZINGER, Illinois NORMA J. TORRES, California
LEE M. ZELDIN, New York BRADLEY SCOTT SCHNEIDER, Illinois
DANIEL M. DONOVAN, Jr., New York THOMAS R. SUOZZI, New York
F. JAMES SENSENBRENNER, Jr., ADRIANO ESPAILLAT, New York
Wisconsin TED LIEU, California
ANN WAGNER, Missouri
BRIAN J. MAST, Florida
FRANCIS ROONEY, Florida
BRIAN K. FITZPATRICK, Pennsylvania
THOMAS A. GARRETT, Jr., Virginia
Amy Porter, Chief of Staff Thomas Sheehy, Staff Director
Jason Steinbaum, Democratic Staff Director
C O N T E N T S
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Page
WITNESSES
Matthew Levitt, Ph.D., director and Fromer-Wexler fellow, Stein
Program on Counterterrorism and Intelligence, The Washington
Institute for Near East Policy................................. 4
David Asher, Ph.D., member, Board of Directors, Center on
Sanctions and Illicit Finance, Foundation for Defense of
Democracies.................................................... 18
Mr. Derek Maltz, executive director, Governmental Relations, Pen-
Link, Ltd...................................................... 31
Mara Karlin, Ph.D., associate professor of practice and associate
director of strategic studies, School for Advanced
International Studies, Johns Hopkins University................ 42
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Matthew Levitt, Ph.D.: Prepared statement........................ 7
David Asher, Ph.D.: Prepared statement........................... 20
Mr. Derek Maltz: Prepared statement.............................. 34
Mara Karlin, Ph.D.: Prepared statement........................... 44
APPENDIX
Hearing notice................................................... 76
Hearing minutes.................................................. 77
The Honorable Thomas A. Garrett, Jr., a Representative in
Congress from the Commonwealth of Virginia: Material submitted
for the record................................................. 79
The Honorable Theodore E. Deutch, a Representative in Congress
from the State of Florida: Material submitted for the record... 84
The Honorable Gerald E. Connolly, a Representative in Congress
from the Commonwealth of Virginia: Prepared statement.......... 86
Written responses from David Asher, Ph.D., to questions submitted
for the record by the Honorable Christopher H. Smith, a
Representative in Congress from the State of New Jersey........ 88
Written responses from Matthew Levitt, Ph.D., and David Asher,
Ph.D., to questions submitted for the record by the Honorable
Michael T. McCaul, a Representative in Congress from the State
of Texas....................................................... 89
ATTACKING HEZBOLLAH'S FINANCIAL NETWORK: POLICY OPTIONS
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THURSDAY, JUNE 8, 2017
House of Representatives,
Committee on Foreign Affairs,
Washington, DC.
The committee met, pursuant to notice, at 10:08 a.m., in
room 2172, Rayburn House Office Building, Hon. Edward Royce
(chairman of the committee) presiding.
Chairman Royce. This hearing will come to order. This
hearing is on attacking Hezbollah's financial network, and
different policy options that we have. So we consider these
additional steps needed to confront one of the top terror
threats in the world, and that threat is Hezbollah. It is a
terrorist group that is based in Lebanon, where it is a
significant political force as well. If you look at the
history, it dates back to 1982 when members of Tehran's
Revolutionary Guard Corps' Quds Force first deployed in
Lebanon's Beqaa Valley. And they created, armed, and funded a
small force which became Hezbollah.
Today, as the leading Iranian proxy, Hezbollah continues to
be Iran's front line against Israel. Since its 2006 war with
Israel, Hezbollah has dramatically grown its supply of rockets
and missiles, allowing it to strike throughout Israel, with
much greater precision and force.
I was in Haifa in 2006, and at that point in time, there
were 10,000 of these rockets fired out of an inventory of about
20,000. I saw the consequence of it. There were 600 victims
from Haifa in the trauma hospital who were being treated as a
result of the attacks on civilian neighborhoods.
It is 11 years since that period of time, and now, instead
of 10,000 rockets and missiles remaining in the inventory,
there are 110,000, and these are of increasing sophistication.
One observer even wrote that Hezbollah is now, in his words,
``more militarily powerful than most North Atlantic treaty
organization members.'' One of reasons for this, by the way, is
that many of these newer missiles Iran is working on
developing--and I am talking about the government, Iran's
Islamic Revolutionary Guard Corps--is working on the ability to
make these GPS-guided missiles.
Hezbollah is putting its military power to very effective
use. In Syria, its fighters are key to the efforts by Iran's
Islamic Revolutionary Guard Corps and Moscow's efforts to prop
up the Assad regime, along with Russian troops and Iran's
Revolutionary Guards.
For 30 years, Hezbollah has remained Iran's proxy, and Iran
remains Hezbollah's primary source of financial support. In
April 2015, its leader, Hassan Nasrallah, boasted that even
under sanctions, Iran still funded Hezbollah's terror war. And
he anticipated that a rich--in his words, ``a rich and powerful
Iran, which will be open to the world,'' would be able to do
even more. The Iran nuclear agreement has made it possible for
Iran to provide Hezbollah with a windfall. As one witness will
testify today, Hezbollah's activities since the nuclear
agreement have ``expanded in scope.''
But Tehran is not Hezbollah's only source of income,
because since its inception, Hezbollah has developed a broad
criminal network involved in a range of illegal activities--
from drug trafficking, to cigarette smuggling, to money
laundering, to counterfeiting. These global terrorists double
as global criminals.
Indeed, in February 2016, the U.S. Drug Enforcement
Administration--in an operation led by one of the witnesses who
is here with us today--implicated Hezbollah in a multimillion
dollar drug traffic and money laundering network that spanned
four continents and put cocaine ultimately on the streets of
the United States.
The committee is focused on the best way to attack
Hezbollah's financial network and its tentacles across the
globe. And in 2015, we led the way to enact the Hezbollah
International Financing Prevention Act to target those that
facilitate financial transactions for Hezbollah. This has
helped put Hezbollah in the ``worst financial shape in
decades,'' according to the top Treasury official, despite
Iran's continued support. Part two of this legislation is
coming, but, unfortunately, that is of little comfort to
Israelis staring down at an arsenal of rockets that sit just
across the border from Lebanon or the Syrians being slaughtered
at the hands of Hezbollah operatives that are participating in
ethnic cleansing in Syria.
We look forward to hearing from our witnesses today on ways
in which the United States can further tighten the grip.
I now yield to our ranking member today, Mr. Deutch, for
any opening comments he may have.
Mr. Deutch. Thank you, Mr. Chairman. I would like to thank
you and Mr. Engel for holding today's hearing on what is
arguably one of the greatest threats to U.S. security interests
and the interests of so many of our allies. And thanks to the
witnesses for being here today as well.
Hezbollah is a terrorist organization that has attempted to
carry out, or has successfully carried out, attacks on multiple
continents, from the bombing on in the U.S. Marine barracks in
1983, to the bombing of a Jewish center in Argentina in 1994,
to the bus bombings in Bulgaria in 2012. Hezbollah's reign of
terror has no geographical boundaries.
Perhaps most concerning in recent years has been
Hezbollah's entry into Syria. Working on behalf of the
murderous Assad regime, there are estimated to be 7,000
Hezbollah fighters inside Syria. Receiving significant military
support from Iran, Hezbollah, along with various Iranian-backed
militias, has assisted the Assad regime in devastating attacks
on the Syrian people.
In turn, ISIS-affiliated retaliatory attacks have been
launched inside Lebanon, killing innocent Lebanese civilians.
Hezbollah's involvement in Syria has fed the emergence of the
Russia-Iran-Assad alliance. Open source reporting now details
the transfer of advanced weaponry from Russia to Hezbollah. It
is reported that Hezbollah is in possession of Russian designed
surface-to-air shoulder-mounted missiles. This is in addition
to the precision-guided missiles it is apparently now receiving
from Iran that will add to its arsenal of over 120,000 rockets
capable of reaching every corner of Israel. And Hezbollah is
now sending fighters to Iraq and to Yemen.
Let me be clear: There can be no future in Syria where Iran
and/or Hezbollah has a permanent, military presence. And it
remains to be seen how this administration thinks that it can
cooperate with Russia and Syria when Russia has so far been
unwilling to separate itself from Iranian efforts to strengthen
Assad.
Last month, Hezbollah's leader, Hassan Nasrallah, stated
that the conflict had entered what he described as a new and
critical phase in which Damascus, Moscow, Tehran, and Hezbollah
were, and I quote, ``in more harmony politically and militarily
than at any time.''
Hezbollah has long received hundreds of millions of dollars
a year from Iran. However, Hezbollah has expended its own
financing operations to include what has become known as the
business affairs component, a transnational criminal network
that engages in everything from narcotrafficking to money
laundering, to the sale of counterfeit cigarettes and goods.
These operations have gained significant foothold in Latin
America, in Europe, and in Africa. Increased cooperation
between U.S. law enforcement and law enforcement entities
around the world has resulted in significant exposure and
breakup of many of Hezbollah's illicit financing networks.
Project Cassandra, a DEA-led effort, which we will hear more
about from our witnesses, exposed a massive narcotrafficking
ring.
International cooperation is crucial to our efforts to
disrupt Hezbollah. And this is precisely why our allies in
Europe must join the United States, the GCC, Canada and others
in designating the whole of Hezbollah as a terrorist
organization. The idea that there is separation between
Hezbollah's military and political wings is, quite frankly,
laughable, which is why I recently introduced a resolution
urging that you designate Hezbollah, in its entirety, as a
terrorist organization.
I am proud to be joined by a bipartisan group of members in
this effort, including members of this committee, our chairman
emeritus Ros-Lehtinen, and Mr. Lieu, Mr. Zeldin, and Mr.
Schneider.
Congress has played a significant role in preventing funds
from flowing to Hezbollah. In 2015, I was proud to join
Chairman Royce in introducing and passing the Hezbollah
International Financing Prevention Act. And I just want to note
that when we first introduced those new sanctions, we were
told, as we so often are warned against the perils of using
economic sanctions, that the Lebanese banking sector would
collapse. But through the work of this committee and outreach
to those Lebanese banks, that has not been the case. In fact,
Lebanon's central bank has shut down the accounts of Hezbollah
members and affiliates. But there is more that we can do.
Secondary sanctions, for one, proved extremely effective in our
policy toward Iran.
Today provides us with an opportunity to hear from our
witnesses new policy prescriptions for cracking down on
Hezbollah, both on the military and terrorism fronts, and ways
to stop its funding streams.
Mr. Chairman, before turning back over, I would ask
unanimous consent to enter into the record a statement by the
Anti-Defamation League supporting new legislative efforts to
crack down on Hezbollah's funding.
Chairman Royce. Without objection.
Mr. Deutch. I appreciate that. I look forward to this
committee working together, as we regularly do, in a bipartisan
manner under your leadership, Mr. Chairman, to move forward
with these new efforts. I thank you and I yield back.
Mr. Connolly. Mr. Chairman, if I could just add, I have
joined in the resolution so there are other members as well.
Mr. Deutch. I thank my friend from Virginia.
Chairman Royce. Thank you, Mr. Connolly.
This morning, we are pleased to be joined be a very
distinguished panel. We have Dr. Matt Levitt, a director at the
Washington Institute for Near East Policy. And he previously
served as a senior official at the Treasury Department. He has
written extensively on Hezbollah.
We also have Dr. David Asher. He is a member of the board
at the Foundation for Defense of Democracies, and he has played
a senior role in numerous economic and financial pressure
campaigns. He was an early pioneer in tackling North Korea's
proliferation network.
We also have Mr. Derek Maltz with us, the executive
director of government relations at Pen-Link. Previously, Mr.
Maltz led the Drug Enforcement Administration's special
operations division in actively targeting narcotics trafficking
tied to Hezbollah.
We have Dr. Mara Karlin, associate professor with the Johns
Hopkins School of Advanced International Studies. She
previously served as an aide to the Under Secretary for Policy
at the Department of Defense with a focus on the Levant.
So without objection, the witnesses' full prepared
statements will be made a part of the record, and members will
have 5 calendar days to submit any statements or questions or
extraneous material for the record. We will start with Dr.
Levitt, and we will ask you to summarize your remarks.
STATEMENT OF MATTHEW LEVITT, PH.D., DIRECTOR AND FROMER-WEXLER
FELLOW, STEIN PROGRAM ON COUNTERTERRORISM AND INTELLIGENCE, THE
WASHINGTON INSTITUTE FOR NEAR EAST POLICY
Mr. Levitt. Thank you, Chairman, Mr. Deutch, members of the
committee. It is a pleasure to be here to testify before you
today, and assess our efforts and those pursued to date to
counter Hezbollah's ability to exploit the international
financial system to its benefit. The regional international
threats posed by Hezbollah have only increased over time,
underscoring the importance of denying the group the financing
and resources critical to its ability to function.
Hezbollah has, in fact, experienced a series of financial
setbacks, in part because of the actions we have taken, leading
U.S. officials to describe the group as being ``in the worst
financial shape in decades.'' In recent months, Hezbollah has
resorted to launching an online fundraising, crowd-sourcing
campaign entitled Equip a Mujahid Campaign, which calls for
donations large and small, payable all at once, or in
installments, to equip Hezbollah fighters. It has also promoted
a fundraising campaign on billboards and posters in Lebanon,
promoting a program in which supporters can avoid recruitment
into Hezbollah's militia forces for a payment of about $1,000.
These are desperate measures for a group suffering through
tough financial times. And yet it has enough money to do a
great many disturbing things around the world.
I should stress here that of the various actions we are
suggesting, that I am suggesting and others, the idea is not to
undermine the Lebanese economy, but to protect it from exposure
to the criminal and money-laundering enterprises in which
Hezbollah is deeply involved. It should, therefore, not
surprise that after Congress passed the Hezbollah International
Finance Prevention Act, Lebanon Central Bank issued a circular
ordering Lebanese banks to close accounts belonging to
individuals and institutions associated with Hezbollah.
According to the Central Bank, hundreds of Hezbollah-linked
accounts have since been closed.
Now Hezbollah continues to operate in Europe, despite the
partial ban in July 2013, and it is aggressively engaged in
criminal enterprises and Africa and in South America. And
despite being designated as a terrorist group by the Gulf
Cooperation Council, Hezbollah reportedly began storing some of
its funds outside Lebanon in response to the effects of the
HIFPA legislation, including in places like Iraq and Dubai.
Now, Hezbollah continues to get significant support from
Iran, but I think today I want to focus on its global criminal
enterprise. Now I am going to leave the business affairs
components and other things to my colleagues. What I want to
highlight here are some of other successes. For example, the
extent of Hezbollah's drug connection was underscored in the
wake of the U.S. Treasury's narcotics kingpin designation of
the Panama based Waked Money Laundering Organization in May
2016. This action wasn't taken under a terrorism authority, and
the press release said nothing about Hezbollah, but when this
particular money laundering organization was targeted, it tied
up the illicit finances linked to various elements within the
Iran threat network, including Hezbollah, and forced them to
find other money laundering channels in the region. Much of
that activity reportedly shifted to the Tri-Border Area, and to
Paraguay in particular. Hezbollah criminal enterprises run deep
in Africa, as evidenced most recently by the arrest in Morocco,
Hezbollah financier Kassim Tajideen, who has since been
extradited to the United States and indicted in Washington, DC.
There a bunch of steps I think we can do to further actions
we have already taken. The first is to designate additional
Hezbollah entities as appropriate. HIFPA prescribes doing
business with designated Hezbollah entities. So the more a
Hezbollah entity is designated, the more impactful the
legislation will be. This should include, but not be limited
to, entities operating in Lebanon. For example, consider the
list of Lebanese businesses designated with Lebanon-based IRGC
Quds Force operative, Hasan Ebrahimi, in February.
Targeting Hezbollah criminal enterprises in South America,
Africa, and Europe will be very important as well. Again, think
about the Waked money laundering organization and that success.
And finally, in this regard, consider follow-on actions to
existing designations where appropriate. For example, the IRGC
official in Lebanon, Ebrahimi, was providing Hezbollah funds
through Hezbollah's al Waad construction firm, which we had
already designated in 2009 or this Equip a Mujahid Campaign in
Lebanon is being run by the Islamic Resistance Support
Organization, IRSO, which Treasury already designated back in
2006.
Second, we should target Hezbollah criminal support
networks of a variety of different types. I get into those in
my testimony.
Third, we should consider applying secondary sanctions
under HIFPA to financial institutions banking Hezbollah, its
associates outside the Middle East. And here, for example, I
think we should look at places like Balboa Bank & Trust, which
was designated by Treasury in the context of the action taken
against the Waked money laundering organization.
We should revisit the question of designating Hezbollah a
transnational criminal organization, which it absolutely is
without question. We should resume sanctioning Iran for state
sponsorship of terrorism.
Again, we saw the Ebrahimi action in February, but the Quds
Force, Mahan Air--a whole host of other low-hanging fruit,
Iranian entities involved in Tehran's support for terrorism--
should be designated. And this, in no way, would jeopardize or
conflict with the JCPOA Iran deal.
And finally, we absolutely must continue to enhance
interagency coordination and cooperation against the Iran
threat network. That began to fall apart a little bit in the
context of the Iran deal where some agencies wanted to push
harder and some did not. Today there is, I think, greater
consensus on the need to push hard on the maligned activities
that Iran is engaged in beyond procurement, such as support for
terrorism. And I think that there is a lot more we can do here.
There are positive signs, on this I will conclude, for example,
of using the global counterterrorism forum, the law enforcement
and coordination group, both to address best practices for
countering Hezbollah terrorist, criminal, and other terrorist
activities that have been a great success. The State
Department, similarly, has used the counterterrorism
partnership fund to launch an international initiative in very
close partnership with the Department of Justice to raise
awareness about Iran and Hezbollah's broad range of terrorist
and criminal activities around the world, and to help train our
allies around the world to figure out how best to prosecute and
deal with those activities. These types of efforts should be
doubled down on. There is a lot more we can do. I thank you for
the opportunity to testify before you today.
[The prepared statement of Mr. Levitt follows:]
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Chairman Royce. Thank you. Mr. Asher.
STATEMENT OF DAVID ASHER, PH.D., MEMBER, BOARD OF DIRECTORS,
CENTER ON SANCTIONS AND ILLICIT FINANCE, FOUNDATION FOR DEFENSE
OF DEMOCRACIES
Mr. Asher. Chairman Royce, Ranking Member Deutch, and other
members of the Foreign Affairs Committee, thanks for the
opportunity to discuss with you the challenges we face
countering Hezbollah's rapidly expanding global web of terror,
crime, and insurgency, including its direct ties to the United
States.
I will be brief about the challenges we face in combating
Lebanese Hezbollah's illicit web of activities and finances,
and begin with a little recounting of how I got involved.
Beginning in 2008, in the summer, I had the honor of advising
the man on my left and several others in the room at the Drug
Enforcement Administration and the Department of Treasury,
Special Operations Command, Department of State, and Customs
Border Protection on developing and spearheading a unified
strategy across law enforcement and special operations to
pursue Hezbollah's web of activities, with the goal of
fundamentally disrupting Hezbollah's growing involvement in
cocaine trafficking and money laundering, including through the
United States financial system and through our own borders.
I am proud to say that a seamless collaborative web of
combining a small group of U.S. agencies was established and
leveraged to combat these activities using every agency's
unique authority. So it is a whole-of-government approach that
makes you proud about being part of this government. It is a
combination of law enforcement, financial, criminal, civil, and
regulatory authorities that led to a wide range of actions that
you have heard about, providing a framework to deter, disrupt,
and publicly illuminate the global illicit Hezbollah network. I
think it was probably the most successful operational effort
taken against Hezbollah to date by the U.S. Government after
many years of inaction.
Yet, in the last years of the previous administration, for
reasons that most definitely had to do with the Iran deal and
concerns of interfering with it, which I thought were totally
unfounded as a former nuclear negotiator with Iran and North
Korea, we lost much of the altitude that we had gained in our
global effort. And many aspects--including key personnel who
were reassigned, budgets that were slashed, and many key
elements of the investigations that were underway--were
undermined. And it was a bit of a tragedy and a travesty. And I
think it was, again, very unfounded. But today, we have to deal
with the legacy of that and how to rebuild this capability,
knowing that you can have a nuclear deal with Iran and you can
contain and disrupt its illicit activities and terrorist
activities, and we really have to do both.
But the result today is that criminal states and criminal
terrorist organizations continue to benefit from a type of
implicit immunity from prosecution. And Mr. Royce, you and I
have gone over this with North Korea over the years. We still
haven't seen the types of charges that were assembled against
that government, even in the wake of the Sony attacks, and more
recently, hacking of the Federal Reserve Bank in New York.
Moreover, neither al-Qaeda nor Hezbollah has ever been
organizationally prosecuted by the Department of Justice for
repeatedly attacking the United States, killing thousands, or
hundreds, of our citizens, and for being tied to a wide range
of transnational organized crimes and violations of our laws.
And by the way, the same is true with the Islamic State, of
which I had the honor to be the Deputy Special Coordinator on
the economic warfare side at the State Department a couple
years ago.
We have not applied Mafia-style RICO prosecutions that
would aim to incarcerate the members of these organizations for
life, take away their sanctuaries, strip them of their
finances, and undermine their credibility. I, frankly, have no
good answer why, except that I have heard from people,
including Director Comey, that there is a sense of fear that if
we do this, it is going to lead to reprisals.
I personally spearheaded the targeting of a Lebanese
Canadian bank, a $5\1/2\ billion bank that was at the heart of
Hezbollah and Iran's finances in Lebanon. We did not receive
retaliation as a nation for bankrupting their largest financial
institution. I think the fears are overwrought, and I find the
phobias surrounding prosecution of terrorists baseless,
bizarre, and moreover, largely against the spirit in the letter
of the laws we are sworn to uphold.
Today, I would like to highlight that the Department of
Justice needs to rebuild, properly fund, and expand
capabilities and investigations against what I call the Iran
action network, not just the threat network: Hezbollah's
terrorist and military wing and their friends and partners in
criminal states like Venezuela and North Korea.
And indeed, we can discuss this if you would like. The
level of cooperation between the Government of Venezuela, the
Government of Iran, the Government of Syria, and Lebanese
Hezbollah that we observed in undercover operations with which
we personally were involved, including people in this room, was
absolutely astonishing. The evidentiary basis to take down this
entire global network exists. The facts are clear, and they are
already revealed in many unsealed indictments.
Thank you for your time and I look forward to any questions
you have.
[The prepared statement of Mr. Asher follows:]
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Chairman Royce. Mr. Maltz.
STATEMENT OF MR. DEREK MALTZ, EXECUTIVE DIRECTOR, GOVERNMENTAL
RELATIONS, PEN-LINK, LTD.
Mr. Maltz. I would like to thank you for this opportunity
to discuss this important topic. I retired from DEA, but I
remain in daily contact with my colleagues and I pay close
attention to the emerging threats to our country. I lost my
brother Michael, U.S. Air Force para rescue early in the war
and I am very passionate about national security and public
safety issues. During the period I was the director of SOD, I
had the privilege of working with numerous law enforcement
agencies around the world, the intelligence community, and the
Department of Defense. We had 30 agencies to include the U.K.,
Australia, Canada, NYPD, and we represented a center that was
synchronizing efforts around the globe. I have witnessed the
amazing results that have been achieved when agencies share
operational intelligence and coordinate their efforts.
Unfortunately I have also witnessed the lost opportunities that
have been created when information wasn't shared.
In response to September 11th, very smart people in the
government decided to form a counter-narco terrorism center
inside the SOD operation. And they had vision because they knew
the nexus between drugs and terrorism and crime was very, very
closely tied, so the coordination became really important.
Over the years the nexus between crime and terror has
grown. It is all about the money, they need money to operate.
That is the bottom line. We heard from the experts that they
are losing money, they are in bad financial shape, so drug
trafficking is very important. We must shut down these funding
streams, and we must use all the powerful tools of national
power to attack this global threat. We can't investigate
terrorism in a cocoon. The American public expects the
government to cooperate and share information on these major
threat investigations. And we must work very hard to break down
the barriers that currently exist between those that
investigate criminal groups, and those that are responsible for
preventing terrorism. We need to develop a mutually supportive
framework so the law enforcement actions can enhance
intelligence community actions and vice versa, so intelligence
community actions can enhance law enforcement actions.
I was the head of SOD when we started this initiative back
in 2006, 2007 looking at global trade-based money laundering
very, very alarming to me. I was fortunate to meet Admiral
James Stavridis, the commander of SOUTHCOM, and he showed me a
very disturbing visual that remains in my iPhone today, a
fireball when narco terrorists and Islamic terrorists are
joined; that is what I saw in my observations working on
Project Cassandra, Operation Titan for almost 10 years. It was
alarming that this decorated admiral had the vision back in
those days to see what was evolving in South America with the
drug traffickers.
Unfortunately, based on what I observed, this is what I see
everyday in my mind, that fireball. Hezbollah, one of the worst
terrorist organizations--killing all these Americans around the
world--was laundering proceeds of cocaine through the Lebanese
Canadian Bank. They were operating like a major drug cartel.
Now, in the press, we are hearing about the Captagon all over
Syria. And I have some other information on that we can't
discuss today.
Despite the limited support that our CNTOC task force
received, we were very effective in what we were able to do.
Project Cassandra was a long-term initiative target against a
very significant organized crime network. We combined the
resources and the expertise of some really, really smart people
in the government from Treasury, CBP, and other agencies--
including Dr. Asher and the lead agent in the back, Jack Kelly,
who was the catalyst on this operation.
We were able to use the tools of national power to make a
difference for our country's safety. And we went after this
bank very hard, and we did a 311 action, we did civil actions
with the Southern District of New York, and we actually seized
$150 million from a bank account in Lebanon, because of really,
really innovative and powerful laws of the United States. And
you know what? They felt the pain because they tried to hide
the money from us in LCB and they moved it to another bank, but
we found it because we have some good investigators in this
country. Thanks to the CNTOC task force, we actually ultimately
forfeited $102 million, and it is in the U.S. asset forfeiture
fund, so we are very proud of that.
Investigators documented $300 million moving into the U.S.
from Lebanon for the purchase and the shipment of these cars to
west Africa. There were 30 businesses named in this particular
action. Unfortunately, and sadly, there are many more
businesses operating that were not affected because of the lack
of information sharing.
Although criminal law enforcement, the intelligence
community, and others working on terrorism have come a long way
in sharing information, there is a lot more to be done. At this
point in this country's history, we don't need any more
inspector general reports talking about lack of information
sharing. We need some accountability on the people that aren't
sharing. As state sponsorship of terrorism is fueled by drug
trafficking, and criminal activities are on the rise, we have
to pay more attention. The special operations division, within
the Department of Justice, established itself as a multiagency
coordination center that can immediately deconflict
investigative information, coordinating operation and
mitigating threats through its resources and its global
capabilities.
I would highly recommend that this committee and other
Members of Congress consider enhancing the special operations
capabilities and designate it as the transnational organized
crime center for America. It is critical, in my view, that we
continue to use all the powerful laws and we continue to
enhance the laws. There must be open and collaborative efforts
between the criminal investigations and the intelligence
community because we are in this together. We all are going to
face the same consequences if we don't work together. We must
illuminate the networks with the really smart people we have in
America. We must use every tool and have an all-tools-available
approach.
As the Senate report adequately and accurately depicted,
the Lebanese Canadian Bank investigation served as a model for
interagency success. I am excited and hopeful that the
Department of Justice and Homeland Security under the Trump
administration will examine operations like Project Cassandra
and pick out the best lessons learned and let us move forward.
Thank you for the opportunity to appear before you today.
And I would like to discuss this important topic in any
details. Thank you.
[The prepared statement of Mr. Maltz follows:]
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Chairman Royce. Thank you, Mr. Maltz. Thank you for your
service.
Dr. Karlin.
STATEMENT OF MARA KARLIN, PH.D., ASSOCIATE PROFESSOR OF
PRACTICE AND ASSOCIATE DIRECTOR OF STRATEGIC STUDIES, SCHOOL
FOR ADVANCED INTERNATIONAL STUDIES, JOHNS HOPKINS UNIVERSITY
Ms. Karlin. Chairman Royce, Mr. Deutch and members of the
committee, thank you for this opportunity to appear before you
today. Having examined Hezbollah as a national security
policymaker and a researcher for nearly two decades, I can
confidently say this is a critical time to assess it. To
effectively examine Hezbollah's financing, one must consider
the political military context, particularly the impact and
implications of the Syria conflict. Hezbollah has both
benefited from and suffered because of its involvement there.
Starting with the latter, support around the region has been
shaky, as Sunnis around the Middle East watch Hezbollah aid in
Syria's destruction. In Lebanon, the Shia see body bags of its
youth. With estimates of 5,000 to 10,000 Hezbollah members
fighting in Syria, it is hemorrhaging members like never
before. Indeed, it has bled more in Syria than in fighting
Israel, over a much shorter period of time. Hezbollah is waging
a counterinsurgency to prop up Assad. The American military has
learned, over the last decade and a half, that this type of
conflict is extremely difficult and costly in blood and in
treasure. Notable power shifts are at play because of the Syria
conflict. The Assad regime owes its continued existence to
Hezbollah. Meanwhile, Hezbollah has become a regional player--
it has a substantial presence in at least four different
countries--but is increasingly exerting Iran's mandate.
Today, Qassem Soleimani is the decider of Hezbollah's
future, not Hassan Nasrallah. The conflict in Syria shifted the
dynamics between them such that Hezbollah seems willing to do
whatever Iran wants, whenever it asks, and regardless of the
cost. Iran is willing to fight until the last Hezbollah member
in Syria, and it appears Hezbollah is, too; that is a problem
for Hezbollah. Lebanon Shia are isolated, increasingly
disillusioned by Hezbollah, but see few protectors. Many of
those now joining Hezbollah focus on money. Indeed, one out of
every four Lebanese Shia receives a salary from Hezbollah.
Given this, the Lebanese Shia desperately need alternative,
political representation and new opportunities, particularly in
the economic sector.
Now to be sure, Hezbollah has benefited from its
involvement in the Syrian conflict. Ten years ago, I was most
worried about Hezbollah's weapons, now I am more worried about
the experience Hezbollah has gained. Before it was a capable
military force, good at a limited number of missions. Its
portfolio has expanded dramatically. It has become a hardened
force, adept at facilitating Iranian power projection around
the Middle East. It has learned to command and control a
complicated conflict in collaboration with numerous actors. It
has acquired substantial experience in diverse environments,
using increasingly sophisticated weapons. And as the operating
space in Syria becomes crowded, and the U.S. military deepens
its direct involvement there, we could see inadvertent or
deliberate interactions with Hezbollah.
Now turning to Lebanon. While the situation appears quiet,
one should not be fooled. For a country of a few million
brimming with sizable populations of long-term Palestinian
refugees, and more recent Syrian ones, and 18 or so different
confessional groups, it is a miracle Lebanon exists. That is
important to remember--the state has institutions, but they are
fragile. They do little in the way of actual governing, and are
often beholden to nonstate forces or external actors.
As you all know well, Lebanon's military is a top recipient
of U.S. security assistance. It is in U.S. interests for the
military to fight nefarious actors whenever it is willing.
Without U.S. support, its ability to do so is minimal. It has
deployed throughout much of Lebanon and taken important, albeit
insufficient, steps to counter violent actors. The Lebanese
military is flawed, but it is nationally supported and well-
respected in a country with few institutions that can be
described as such. It has an impeccable record of maintaining
control over its weapons over the last decade. And, of course,
Hezbollah does not need the Lebanese military's weapons. It has
Tehran and Damascus for that. Hezbollah poses the most potent
threats to Lebanon's internal security. It turned its weapons
on the Lebanese people in 2008 and will do so again if
necessary.
There is a memorial to the civil war at the front of
Lebanon's ministry of defense composed of weapons collected
from various groups melted together. You will not, however,
find Hezbollah stockpile in that hunk of resting metal.
As you seek to legislate further action against Hezbollah,
I urge you to ask the following questions: To the White House,
is the strategy focused on ISIL or does it include the Assad
regime? To the intelligence community, how are Iran, Syria, and
Russia adjusting their support for and/or collaboration with
Hezbollah and Syria? What points of friction exist between them
and Hezbollah? Can they be exploited? And what about between
the Lebanese Shia and Hezbollah? To the State and Defense
Departments, how are they regularly assessing their program to
strengthen the Lebanese military? And to the Defense
Department, how is the U.S. military accounting for the
increased potential of U.S.-Hezbollah confrontation in and
around Syria? Thank you very much.
[The prepared statement of Ms. Karlin follows:]
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Chairman Royce. Thank you. If I could just ask a question
here on, I guess a striking lesson in life, which is the zeal
for the deal which becomes eventually a deal at any cost, how
people get caught up on that. In April, it was reported that
the Justice and the State Departments in the Obama
administration denied or delayed requests from prosecutors and
agents to lure some key Iranian fugitives to friendly countries
so that they could be arrested for procuring material for
Iran's nuclear program. This is something that Dr. David
Albright spoke to before this committee, a former U.N. weapons
inspector. He testified that out of a misplaced fear of
negatively affecting the deal, the Obama administration also
interfered in U.S. law enforcement efforts.
So it is with interest to note Dr. Asher's testimony this
morning, because in that testimony, he says: ``In narrow
pursuit of the Iran nuclear agreement, the administration
actively mitigated investigations and prosecutions needed to
effectively dismantle Hezbollah in the Iran action network.
Senior leadership presiding, directing, and overseeing various
sections within the Department of Justice, the Department of
Homeland Security, the Department of State, and portions of the
U.S. intelligence community, systematically disbanded any
action that threatened to derail the administration's policy
agenda focused on Iran.''
So I was going to ask Dr. Asher what details you could give
us on that and maybe ask Mr. Maltz your opinion as well. Dr.
Asher?
Mr. Asher. Well, I had the unfortunate experience of being
at the State Department coming back to work on the counter ISIL
economic warfare plan as the coordinating under General Allen,
so I saw a lot of this happening. This was after I departed the
Hezbollah effort, largely because it was being defunded inside
the DOD. And so I saw a lot of this directly, you know, we had
money flowing, pallets and pallets of money flowing to Iran.
There was a lot of stuff. Let's recall, in fairness, the Bush
administration stripped the Department of Justice of its
authorities to indict the Government of North Korea, to pursue
the North Korean nuclear program, which we had a very
sophisticated plan to destroy.
Chairman Royce. Another case of the zeal for the deal.
Mr. Asher. Another case of the zeal for the deal. I
predicted to my colleagues that by the end of the Obama
administration, we would see the same dynamics. This is a
bipartisan syndrome, okay? It is not, you know, blame the Obama
administration, blame the Bush administration. There is
something about people wanting to have a deal at almost any
cost. And in the case of the Iran deal, there are a lot of
things around here talking about the nuclear negotiations, but
there is no provision, as we discussed before, in outsourcing,
even though they built a North Korea nuclear reactor in Syria
right under the noses, right under the Six Party talk. There
are a lot of holes in this cheese. Law enforcement didn't have
to be one of them. It doesn't have to be one of them. People
respect, including in Iran and Lebanon, when laws are enforced.
The arrest recently of Kassim Tajideen, one of the most
important super facilitators for Iran and Hezbollah, has sent a
shock wave through the leadership of Hezbollah and the Iranian
regime. The fact that we have him in prison here and that maybe
he might cooperate, I am sure that has gotten their attention.
We had the ability, I can't comment on those two operations
which I am aware of, that were essentially aborted, but we had
many more that we were inhibited from acting on, for political
reasons. We had operations that were denied overseas; we had
funding that was cut. People were making a decision that the
counterterrorism mission and the Iran nuclear deal was a
central and all-important element, whereas containing Iran's
malevolent forces was less important. I think you can do both,
and we have to do both. I don't think it is an either/or.
If the Iranians don't like it, too bad, they blew up our
Embassy twice, they killed hundreds of Marines. They went after
us in Iraq when I was working with the Special Operations Task
Force in support of them there, and killed nearly 800 Americans
with explosively formed projectiles designed by Hezbollah. I
have a beef against these people, obviously. And we have the
tools, thanks to the great work of the DEA and other law
enforcement agencies, to take them apart financially,
economically, politically, and strategically, using law
enforcement which the world will respect.
Chairman Royce. And maybe also I will ask Mr. Maltz what
steps do we need to take? What steps does Congress need to take
to rebuild our enforcement capabilities there?
Mr. Maltz. Well, like I said, sir, the Special Operations
division has a history of success. As a matter of fact, you
were very, very supportive in the Viktor Bout case. The last
time I was before you was when you supported the DEA on the
extradition of Viktor Bout, so I will never forget that. Thank
you.
Chairman Royce. By the way it sends a powerful message to a
lot of other miscreants on this globe, the fact that he is
behind bars, and thank you very much for your success on that.
Mr. Maltz. So on that note, SOD had had this counter narco-
terrorism operation center for the purpose of coordinating
these type of investigations. We created that to provide a
unity of effort. That is the purpose, because we are in this
together. You cannot separate out the terrorist aspects and the
criminal aspects, because at the end of the day, it is what is
in the best interest of the U.S. Government. So I compliment
some folks in the government in the Department of Justice and
Admiral McRaven specifically, because we organized a U.S.
Government interagency effort on this threat. And every agency
that came to the table agreed that Hezbollah was a priority
against the United States. So the idea was to put all the
resources on the table. We went down to Florida for this big
government meeting where the Attorney General, the Department
of Homeland Security Director, and all these other officials
were there.
So the idea would be, let's put the stuff on the table and
work together. As soon as we left the meeting and as soon as
Admiral McRaven retired, it fell apart, in my view. And I was
the one in charge of the operation at SOD, so I could say that
very clearly. And so for me, how the heck can you have an
action against this organization running the Southern District
of New York, the best in the country, and interagency did not
come together and provide the necessary information to make it
a more powerful action. So we had the right concept, but we
didn't complete the deal. You know how upset I was when I saw
The Wall Street Journal article at the end of last year? Very
much--very accurate article. The car parks are booming in west
Africa because the business is booming. We had a chance to
knock them dead, and we held back because of interagency
cooperation. So we have to end it.
Chairman Royce. We are going to return to that issue. I
have to go to Mr. Deutch, and thank you.
Mr. Deutch. Thank you, Mr. Chairman. And thank you to the
witnesses for a really excellent presentation.
Dr. Karlin, you said that Qassem Soleimani is now the
decider of Hezbollah's future, and you talked about using
Hezbollah for Iranian power projection. My question is how that
is done, and whether it is Iraq, or Yemen, Bahrain, UAE,
Saudis, are you suggesting that Hezbollah, or can you speak to
whether Hezbollah is more than a model for the terrorist groups
looking to act in those countries, and is, in fact, playing an
operational role. If so, how broadly?
Ms. Karlin. Thank you for that question, Mr. Deutch.
Hezbollah is the best design model Iran could have really hoped
for in a number of ways. And I think when you look at attempts
to build a similar force, say, Iranian support to the Houthis,
it is just not going to be equivalent for domestic Yemeni
reasons, among others. But, I think, for those of us who spent
so long looking at Hezbollah, it was always a question of, if
Iran asked Hezbollah to get involved in circumstances that
would be really problematic domestically, what would Hezbollah
do?
This was particularly thought of if there was some sort of
entanglement between Israel and Iran, what would Hezbollah do
if this ended up being a problem? And what we have seen is
because Hezbollah can only play its singular role in Lebanon
with Iran's weapons, what is happening now is existential for
it.
And so this debate that used to occur doesn't occur
anymore. Indeed, any thoughts Nasrallah might have are
immaterial. If someone like Qassem Soleimani needs Hezbollah to
go bleed in Syria, he doesn't really have a choice anymore,
which is why you see not just the bleeding in Syria, which is
obviously really problematic from a domestic and regional
support perspective, but Hezbollah getting involved in training
Houthis in Yemen, also not core to its interests really at all.
It doesn't have a whole lot of options here. And we have
seen this ability so that when we put on, say, U.S. Defense
Department hats, one worries about Iran's conventional
military, but it is the ability to build these violent nonstate
actors like Hezbollah, and then deploy them in the various
circumstances against their own interests in really problematic
and lethal ways.
Mr. Deutch. I appreciate that. Dr. Levitt, in 2012, a
bipartisan group of members began sending letters to our EU
partners, urging them to designate Hezbollah. In 2013, they
declared Hezbollah's military wing a terrorist organization.
And as I mentioned earlier in my comments, the U.S. and others
don't make this distinction between political and military
wings. What impact would a full designation from the EU have on
Hezbollah's ability to operate on the continent? And what more
could the U.S. be doing now to encourage the EU to declare
Hezbollah, in its entirety, a terrorist organization?
Mr. Levitt. Thank you for the question. When this was going
on, my book on Hezbollah had just been finished and spent 8
months with Georgetown University press, God bless them, till
it came out. That gave me an opportunity to make seven, eight,
nine different trips to Europe, Brussels and most capitals at
the time trying to push them on this issue.
Some of their concerns were some of the concerns you heard
earlier about reprisals, about who are we to ban an entity that
is duly elected in Lebanon? For many of the governments,
however, at the end of day, their decision to ban even part of
Hezbollah, the military and terrorist wing, had nothing to do
with what terrorism Hezbollah had carried out around the world,
let alone in Europe, but had everything to do with Syria. And
so, that provided us a real opportunity.
What the legislation in Europe does already is it gives us
an opportunity to go to the Europeans and get them to cooperate
with us on Hezbollah investigations related to the terrorism
and military activities, but Hezbollah is a large movement, and
it doesn't operate a Hezbollah terrorism incorporated. And so
it is often very difficult to explain to the Europeans, or
prove to the Europeans, in open source, in a way that they can
go public with, that an entity we want to target with them is,
in fact, related to the military and terrorist wing, and not
just politics or social welfare. Banning all of Hezbollah would
end that debate and discussion, and it would stop giving
Hezbollah a pass in which it could just, through basic front
organizations and money laundering, pretend that something is a
legitimate actor, part of their ``legitimate side of the
house,'' when, in fact, it is supporting, or also supporting
the terrorist and military activities.
If I may follow up also on the earlier question related to
this. I don't think we can just target Hezbollah anymore. We
need to bring this into a larger picture in targeting the Iran
threat or the Iran action network more broadly. In particular,
the Shia militias that are now so active in Iraq and in Syria.
I think the likelihood that we could see some direct conflict
between U.S. forces and these, including Hezbollah in Tanf from
southern Syria is very, very real. And what we need to realize
is that many of these Shia militants are not going to go back
to being pharmacists and farmers when the immediate conflict is
over in Iraq or in Syria.
And that means that we are seeing, right now, right before
our eyes, the creation of an Iranian foreign legion of people
who can go and do things for them in an asymmetric kind of way
that Mara was talking about. It reminds me of Hezbollah and
Iran's proxies just a few years after the Iranian revolution,
where Iran wanted attacks carried out against U.S. and other
interests, say, for example, in Kuwait. And they sent Hezbollah
operatives and they sent Iraqi Shia operatives. Some of the
same people operating today, people like Hadeel Ammari, people
like Abu Mahdi al-Muhandis, the very same people, these
relationships go back 30 years. And we need to be targeting of
course Hezbollah but not only Hezbollah. The Europeans as well.
Chairman Royce. We will go to Ileana Ros-Lehtinen.
Ms. Ros-Lehtinen. Thank you so much, Mr. Chairman and the
ranking member.
Hezbollah is one of the most dangerous and formidable
terror organizations in the world responsible for some of
history's most notorious terror attacks. As Dr. Karlin noted,
Hezbollah is more than just a partner in the Iranian regime, it
is an extension of Iran's IRGC Quds Force and it is fulfilling
Tehran's every wish, including propping up the murderous Assad
regime in Syria, a mission which has only increased Hezbollah's
sophistication, its stockpile, and its capabilities. We cannot
ignore Hezbollah's influence and control over the Lebanese
state, and by extension, the Lebanese Armed Forces, or LAF.
In your written testimony, Dr. Karlin, you state that the
LAF is ``easily manipulated'' and ``only as capable as its
political leadership permits.'' So if the LAF is easily
manipulated, and Hezbollah has such a large influence over
Lebanese institutions, how can we, in the U.S., reconcile U.S.
support for the LAF? And I would like to hear the other
witnesses respond to that, also.
And even with some of the safeguards that are in place, are
we not running the risk of U.S. assistance to the LAF
indirectly helping Hezbollah?
Ms. Karlin. Thank you for that question. If I might start
with a little bit of history, the very first time I went to
Lebanon was during the Syrian occupation----
Ms. Ros-Lehtinen. Well, thank you, Dr. Karlin. I do
appreciate history, but I only have 3 minutes. How can we
reconcile? How can both things be true? It is, LAF is ``easily
manipulated, it is only as capable as the political leadership
permits'' and yet we support the LAF. It is confusing, yes?
Ms. Karlin. Ideally, we want the Lebanese Government to be
able to secure its territory, right, to have a monopoly on
violence. And the more that there are violent nonstate actors
that exist and proliferate around Lebanon, whether it is groups
like Hezbollah, or it is groups within the refugee camps, like
we have seen with Fatah Islam historically, the more that we
want the Lebanese military to be capable of trying to shrink
that operating space.
Ms. Ros-Lehtinen. Thank you. And how about the other
witnesses, if you care to comment?
Mr. Levitt. The other witnesses are all pointing to me. I
would just say that you are absolutely right, it is
complicated. The LAF has done some very good things in taking
the fight to the Islamic State, for example, but the LAF is
compromised, even as it is the most basic glue that holds the
Lebanese state together. So I think what we need to do is try
and have as much influence with the LAF as possible, and
understand that our expectations need to be limited, and that
explains why, sometimes, we are very careful with what weapon
systems we provide.
Ms. Ros-Lehtinen. Thank you. Let me just get to one last
question. The U.S. Government has issued an interagency report
stating that there are links, as we have discussed, between
cigarette smuggling and terrorist organizations, such as
Hezbollah. Do you have any recommendations on what we can do in
Congress or the administration should do to clamp down on this
source of funding for Hezbollah and other terrorist groups?
Mr. Asher. I mean, there is no doubt that we saw, in many
cases, the cigarettes being moved away, same route, same
facilitation networks as the cocaine. So one of the best ways
to do this is a public-private partnership. I had a great
opportunity when I was running the North Korea illicit
activities initiative and actually partnered with the Secret
Service and the Philip Morris Corporation. It actually worked.
We let the people affected by the cigarettes underwrite some of
the law enforcement activities and we got support from members.
Ms. Ros-Lehtinen. So you would recommend----
Mr. Asher. I think we can do a lot together with the
private sector to go after this, but we need to have a joint
task force. This is the most important element, because these
are polymorphic crimes. It is not just cocaine smuggling or
Captagon. They are basically doing anything they can make a
buck on, and cigarette smuggling is definitely one of them.
Ms. Ros-Lehtinen. Thank you.
Any other comments?
Mr. Maltz. I would say that, in my experience, one of the
last cases that I was involved with at the SOD was another very
disturbing trend, groups from Yemen operating all over the
United States, involved with cigarette, unpacked cigarettes, K2
and spice, EBT fraud counterfeit goods and sending millions and
millions of dollars right back to Yemen. So we have these
global trade-based schemes going on from America back to these
countries. So we have to step up the efforts.
Ms. Ros-Lehtinen. Thank you so much. Mr. Schneider?
Chairman Royce. I think Mr. Brad Schneider is next.
Mr. Schneider. Thank you. And I, again, want to thank the
committee for calling this hearing, the witnesses for your
testimony, but also for your long and dedicated work on this
issue. We talked, in this hearing, quite a bit about the link
between Iran and Hezbollah, Hezbollah's international activity,
and the impact of Syria. Dr. Karlin, I think you said it very
well, what I would look for, and I am anxious to understand
better, is the administration's strategy for the Levant and how
we take that on. I only have 5 minutes, so I am going to say I
want to see it and we can talk about it later.
I would like to bring an issue that we haven't talked about
here, and that is Russia's involvement with Hezbollah. To what
extent--maybe I will turn it to you, Dr. Karlin--to what extent
have you seen Russian cooperation with Hezbollah and Syria?
Ms. Karlin. Thank you. At a tactical and operational level
we have seen Russian air cover for Hezbollah ground movement,
we have seen the likelihood of joint operating centers, that is
worrisome. What worries me a lot more is that Russia's
military, if you follow its modernization over the years, has
gotten pretty good. And I worry about Hezbollah learning about
things, like how to use cyber warfare, how to use electronic
warfare. It is worth noting, however, that strategically, this
is a relationship of convenience. This conflict is existential
for Hezbollah and Syria, it is not for the Russians.
Mr. Schneider. But I know it was reported last year in the
Daily Beast, I believe, that Russia was providing Hezbollah
long-range tactical missiles and other material. Have you seen
that, and is there any evidence that the relationship is going
to outlast the Syrian conflict?
Ms. Karlin. I have not seen evidence of that beyond those
reports which I have also read. Russia has its own problems
with groups like Hezbollah, which is why I still see this as a
relationship of convenience rather than an actual partnership
or alliance. And indeed, it is conceivable that the Russians
will want to come to a serious negotiation on Syria way before
Hezbollah will, because it is just not in their interest for a
Syrian conflict to turn out any other way than Assad remaining
in power.
Mr. Schneider. Great, thank you. I am going to turn to Dr.
Levitt in a little different direction. You talked a fair
amount about the Hezbollah International Financing Prevention
Act. Thank you for your help with that. A broader question--
what metric should we be using to determine whether or not it
is working, and what steps we should take further to push
forward?
Mr. Levitt. First of all, let me thank you for your
leadership on the Hezbollah International Financial Prevention
Act. You were involved in this in the very, very beginning
before many others were. I think there are so many tools here,
that we were using some of them as you heard, and then we all
but stopped. And in order to have a real effect, you have to
have some continuity. There were prosecutions that were put on
ice. There were designations that didn't happen. The fact that
Kassim Tajideen was--we worked with the Moroccans, he was
arrested in Morocco, he was extradited to the United States. He
is now here in Washington, DC, in custody, been indicted. That
I think is a very, very, positive sign, but there is a lot more
that has to happen, across the interagency. The type of
interagency cooperation that we have had in the past and we now
need to have looking forward that you heard from myself and
from my colleagues.
I also think we lost a real opportunity under the original
HIFPA, the decision on whether or not to designate Hezbollah as
a transnational organized criminal enterprise was given not to
law enforcement, but to the DNI. And that decision was largely
politicized and didn't move forward. It really boggled the
mind. I wrote about it at the time. There may be reasons to
decide not to move forward with it that I would disagree with,
but there is no question that Hezbollah operates as a
transnational organized criminal enterprise, and to designate
them as such would really not only tar and feather them, but
give us even more opportunities to target them.
Again, I think that Mara Karlin is right, that Qassem
Soleimani is calling the shots more than anybody else. And the
reason for that is because Hezbollah is so incredibly beholden
to Iran for funds and weapons, and its position, which means
that we need to be targeting not only Hezbollah operatives, but
also the Iranian operatives and entities that are overseeing
this relationship, which means getting comfortable with the
idea of holding Iran's feet to the fire for its support for
terrorism in particular, leaving the human rights and ballistic
missiles aside, which we should be doing as well in the context
of the Iran deal. This does not undermine or cross the Iran
deal.
Mr. Schneider. Thank you. I am almost out of time. So let
me just reiterate: I agree with you. I think we have to hold
Iran to account for its activities, not just support of
terrorism throughout the world, but also its activities within
the region and its human rights activities at home. And I agree
with what you said earlier; I don't think that threatens the
JCPOA.
So, again, thank you to the witnesses,
And, with that, I yield back.
Chairman Royce. We go to Mr. Dan Rohrabacher of California.
Mr. Rohrabacher. Thank you very much, Mr. Chairman, and
thank you for your leadership on, again, another really
important issue for the safety of our country.
Let me ask some fundamental questions. Is Hezbollah, the
people who make up Hezbollah, are they all Palestinians?
Mr. Asher. No.
Mr. Rohrabacher. Tell me what Hezbollah is made up of then.
Mr. Levitt. Hezbollah is a Lebanese group. It is not a
Palestinian group----
Mr. Rohrabacher. Okay. But----
Mr. Levitt [continuing]. Comprised primarily of Lebanese
Shiites.
Mr. Rohrabacher. I guess the reason I was asking that is
that we know that large numbers of Palestinians went to
Lebanon, and I assumed that that was the group that eventually
became Hezbollah. That is not correct?
Mr. Levitt. No. When it was founded, it got support from
Fatah and other Palestinian groups to be sure and Imad
Mughniyah and others. It does also see other sub-units. There
is a Sunni sub-unit that includes some Palestinians called the
Resistance Brigades, but that is not Hezbollah.
Mr. Rohrabacher. So they are Lebanese?
Mr. Levitt. Yes.
Mr. Asher. Mr. Rohrabacher, I can assure you that Imad
Mughniyah himself studied at the financial feet of Yasser
Arafat, and it is an interesting--and operationally and
financially, we have a very substantial relationship between
Palestinian Islamic jihad financiers and Hezbollah's Islamic
jihad organization, i.e., the terrorist wing.
So it is a very interesting question, and they are based
around a place called Burj al-Barajneh, which is near the
airport. That was the historical base of the Palestinian
Islamist jihad. It is interesting that there is so much of the
Hezbollah terrorist and military wing activity right there, as
well.
Ms. Karlin. Sir, if I might add, I have been to Burj al-
Barajneh, and it is worth noting that actually traditionally
the relationship between Hezbollah and the Palestinians in
Lebanon is quite fraught because the Palestinians in Lebanon
are Sunni. Hezbollah is Shia. And when the Palestinian refugees
came to Lebanon, they threw off a very delicate confessional
balance. So it is a very complicated thing, sir.
Mr. Rohrabacher. Yes, it is very complicated, and that is
the reason why I asked that question. I have always been under
the assumption that, yes, they were from Lebanon, but they were
basically Palestinian refugees that are now Lebanese. So thank
you for clarifying that.
What is the budget for Hezbollah? Do we have an overall
budget? Anybody?
Mr. Levitt. No.
Mr. Rohrabacher. No?
Mr. Levitt. Hundreds of millions at a minimum, but I have
seen no open-source and--I mean, no open-source numbers----
Mr. Rohrabacher [continuing]. Do they put those hundreds of
millions in a bank somewhere?
Mr. Levitt. Pardon?
Mr. Rohrabacher. Do they put those hundreds of millions in
a bank? Do they have bank accounts, because I thought this is
what this was all about today.
Mr. Levitt. So, when we got inside the Lebanese Canadian
Bank, which we did one way or another, we observed billions of
dollars that were under the control both of the Lebanese
Hezbollah, which we knew which accounts they were and how much
money was in them through unclassified means, as well as
Iranian money, and it was billions of dollars, too.
Mr. Rohrabacher. What banks were those again?
Mr. Asher. The Lebanese Canadian Bank, but there were many
others that were part of a network. Everything we saw was
larger than anyone expected.
And the other thing was that the connection to money
laundering and drug trafficking proceeds were much greater than
we ever expected.
Mr. Rohrabacher. Okay. So, if we know they have billions of
dollars or hundreds of millions of dollars in these banks,
can't we do something about that? Aren't we just--if nothing
else, I mean, we could use our ability to hack into systems and
destroy their bank accounts.
Mr. Maltz. Sir, like I said before, we did identify $150
million sitting in a bank, Banque Libano-Francaise, and we
did--because of the great work in the U.S. with the Southern
District of New York--seize $150 million. They transferred the
money to the U.S. Marshals' account from Lebanon, and we
forfeited $102 million.
Mr. Rohrabacher. Congratulations on that.
Mr. Maltz. But there is a lot more.
Mr. Rohrabacher. Why aren't we doing more of it then? They
are still there.
Mr. Maltz. Well, if we get the interagency task force
together and we enforce some accountability on the folks
involved, then we can do a lot more.
Mr. Rohrabacher. Okay.
I have just a couple more seconds here. Let me just note
that we have recently seen an attack on Iran and the Iranian
Government. The mullahs believe the Sunni forces have attacked
them. This may signal a ratcheting up of certain commitments by
the United States of America. And as far as I am concerned--I
just want to make this point and see what you think--isn't it a
good thing for us to have the United States finally backing up
Sunnis who will attack Hezbollah and the Shiite threat to us?
Isn't that a good thing? And if so, maybe it is a Trump
strategy of actually supporting one group against another,
considering that you have two terrorist organizations.
Mr. Levitt. Those attacks were claimed by the Islamic
State. It is never in our interest to support a terrorist group
like the Islamic State. We should condemn the attacks in Iran,
as----
Mr. Rohrabacher. Even----
Mr. Levitt [continuing]. We should condemn any act of
terrorism, even as we hold Iran accountable for its sponsorship
of terrorism.
Mr. Rohrabacher. So that is like Joe Stalin was a horrible
guy; we must never associate with horrible guys like that, even
to get Hitler. And so maybe it is a good idea to have radical
Muslim terrorists fighting each other. I will leave it at that.
Thank you.
Mr. Asher. I mean, having coordinated the economic warfare
plan against the Islamic State, I would not condone an attack
by the Islamic State, much like Matt. I would be determined to
destroy them financially----
Mr. Rohrabacher [continuing]. Hezbollah----
Chairman Royce. I think we need to go to Joaquin Castro
here from Texas for his time.
Mr. Castro. Thank you, Chairman.
And thank you, the witnesses, for being here today and for
your testimony.
Dr. Karlin, I wanted to follow up on a point that you were
making or ask a question based on a point that you made. We
know that Russia has assisted and helped Hezbollah. And, of
course, we have been dealing in our Nation with the prowess of
Russia's cyber capabilities and their abilities for cyber
malfeasance.
Can you talk about your concern, if you have a concern,
that they are sharing this information or this ability,
capabilities, with groups like Hezbollah, and do we have an
assessment of what Hezbollah's cyber capabilities are right now
and terrorists groups like them?
Ms. Karlin. Thank you for that question. I have not seen an
unclassified assessment of Hezbollah's cyber capabilities.
What I might say on the Russian military front, and my most
recent job as the Deputy Assistant Secretary for Strategy and
Force Development meant I spend a lot of time thinking about
Russian military modernization and the trajectory that it is
on, and it is pretty worrisome because not only do we see
Russian investments in kind of weapons like its nuclear
stockpile, but we also see some worrisome doctrine.
So the Russians have what is known as the Gerasimov
Doctrine: Escalate to deescalate. The idea is that if I punch
you, you should punch me a whole lot harder so that I give up.
That is a pretty dangerous doctrine to play around with, and I
worry about Hezbollah not necessarily getting the weapons from
Russia, but I worry about them watching how Russia uses its
doctrine, employs its doctrine, and then maybe starting to use
it itself, say, vis--vis Israel.
Mr. Castro. But certainly they could be trained in some of
these essential capabilities?
Ms. Karlin. Oh, absolutely conceivable.
Mr. Castro. Sure. And then it is interesting: Obviously, we
consider Hezbollah a terrorist organization, but they also have
some measure of political control in municipal governments in
Lebanon, Parliament seats, which makes them almost a hybrid of
a state actor and a nonstate actor, you know, versus ISIS,
right, which doesn't seek to elect people, at least as far as
we can tell, in the same way in politics.
So let me ask you guys, what do you see them as? Do you see
them as a state actor or as a nonstate actor? I open that up to
the panel.
Mr. Levitt. Thanks for the question. You are right: They
are both. But we need to see them as a nonstate actor in terms
of the explicitly illicit conduct that they are conducting
around the world as a transnational criminal organization, as a
terrorist organization, and as a militia independent of
Lebanon.
They are able to do that function even as they run for
municipal government and they run for Parliament and they hold
ministerial positions, because we allow it. If you allow an
organization that, independent of the country, does all these
other things, then, also, by the way, has people run for
office, then it can pretend to have more legitimacy than it
does.
But I think Mara Karlin was right: The greatest threat to
Lebanon, on so many levels--financial, stability--is Hezbollah.
And I think it is in part our fault, the international
community's fault, as Mr. Deutch suggested, for failing to see
Hezbollah holistically as a group that, whatever else it is
involved in, it is very much involved in a whole host of
explicitly illicit activities, as Mara pointed out, that have
nothing to do with the interests of Lebanon, even its interests
as a party in Lebanon.
So, ultimately, it is a nonstate actor that engages in some
state activities because it benefits them to do so.
Ms. Karlin. Mr. Castro, I couldn't agree more with Matt's
comments. I might just add that the weaker the Lebanese state
is, the better it is for Hezbollah.
Mr. Asher. Just if I could add, we identified publicly in
DEA the business affairs component of the Islamist jihad
terrorist wing of Hezbollah, the military wing of Hezbollah, as
at the center of the narcotrafficking, money laundering
conspiracy that involved the Lebanese Canadian Bank, a massive
number of cells in Europe distributing cocaine, cocaine coming
into the United States. So there is no doubt--and I am not
trying to say we shouldn't go after the entire organization,
designate the entire organization--but the case that could be
made most directly from a law enforcement perspective just
following the facts would tie the terrorist wing under Imad
Mughniyah, who died, and his successor and his business manager
Adham Tabaja, who he designated, to the cocaine money
laundering.
So there is a strategy that could be pursued where we go
after the business affairs component of Islamist jihad, charge
Islamist jihad for having blown up our Embassies and killed our
people, and we leave the rest of Hezbollah sort of off to the
side. That is an option that some prosecutors have advocated,
but I am not sure that that is necessarily really comporting
with the facts fully.
Mr. Levitt. I will just add to that. This is where people
get most uncomfortable, right? If you really dig down to the
information, you will find time and again that the
``political'' or ``social welfare leadership'' is involved in
all of this illicit activity. The business affairs component
was directly tied to Abdallah Safieddine. Safieddine is a
political senior Hezbollah official.
And so, for those who are uncomfortable recognizing that
Hezbollah actually is one holistic entity, for those who are
uncomfortable with the consequences of having to follow the
evidence to where it leads, that may explain why some people
are hesitant to do so. It is inexcusable. We should be
following the evidence where it takes us, whether it is in a
murder case or a bank robbery case or a terrorism case.
Mr. Castro. Thank you.
I yield back, Mr. Chairman.
Chairman Royce. Mr. Perry.
Mr. Perry. Thanks, Mr. Chairman.
Thanks to the panel.
Generally speaking, maybe it is Dr. Levitt and Dr. Asher,
why shouldn't the U.S. Treasury Department sanction the Central
Bank of Lebanon?
Mr. Levitt. The simple answer is because they are actually
very good partners. The Central Bank of Lebanon put out a
circular making sure that the Lebanese financial system would
enforce things like HIFPA and did a very good job of doing so.
As Mara said before, completely destabilizing Lebanon,
destabilizing the financial system there is not in our
interest, and of the partners we have, they are one of the
best.
Mr. Perry. Are they facilitating payments that benefit
Hezbollah?
Mr. Levitt. I can't answer that question in any
specificity. Because Hezbollah has such a large footprint in
the Lebanese economy, it is likely that that happens at some
point. Would you, by targeting the Lebanese Central Bank, at
the end of the day have a net benefit? No.
Mr. Perry. Okay. Why shouldn't the Department sanction
Iranian banks for which sanctions were lifted under the JCPOA?
Anybody?
Mr. Levitt. My colleagues keep looking at me. That is fine.
I think that we need to be careful that banks that were
delisted, when we look at them for relisting or we look at
other banks, we are very, very careful and specific to make
sure that we are doing these under the authorities that still
exist, and they do exist. There will be people who will tell
you that you can't redesignate an Iranian entity that was taken
off the list, but if it was taken off a proliferation list and
it is still today involved, for example, in sponsorship of
terrorism, it absolutely can and should be----
Mr. Perry. And should be, right?
Mr. Levitt [continuing]. Considered for designation.
Mr. Perry. Okay.
Mr. Asher. We are legally mandated, essentially, to do
this. That is something, from your oversight perspective, Mr.
Perry, that you can remind people. We have a legal
responsibility to enforce this act, and we can't willfully
ignore the facts. I, unfortunately, have seen a lot of willful
ignorance in my career as----
Mr. Perry. You can't use the JCPOA to be derelict in your
duty, right?
Mr. Asher. That is right.
Mr. Perry. And that is what is happening in this case----
Mr. Asher. And it is happening.
Mr. Perry. Considering they are intensifying international
criminal activities, is there any reason the administration
shouldn't consider designating Hezbollah as a transnational
criminal organization?
Mr. Levitt. They absolutely should. As I said in my
testimony and get into more detail in the written testimony, we
should revisit this immediately.
Mr. Perry. Is there any disagreement among the panel?
Some of the most lucrative activities happen in the TBA,
the Tri-Border Area. Can any of you talk about the current
measures and what additional measures should be included
regarding their criminal syndicate activities in Latin America,
et cetera? Anybody?
Mr. Maltz. All I can say, sir, is that, when I was the head
of the SOD, we saw a lot of cocaine leaving the TBA, going all
over to the world, working closely with folks in Venezuela,
connected to the highest levels of the government in Venezuela,
but as far as currently, I can't give you an accurate
assessment of what they are seeing in the TBA now.
Mr. Perry. And what is your recommendation for continued or
further action in that regard?
Mr. Maltz. Again, like I have said all along, the best
recommendation I can give to this committee: It has to start
with information sharing. Let's stop pushing it under the rug.
Get the experts together in a room, designate these as
priorities. Every agency should be mandated to put the
information on the table and then focus on the targets, and
that is not happening.
Mr. Asher. If I could just say, I think the most powerful
current way for the Department of Justice to impose a huge
legal penalty against Lebanese Hezbollah, including its
terrorist wing, would be to actively prosecute the government
of Nicolas Maduro and his associates, including Tareck El
Aissami, his executive vice president, for their involvement
and complicity and active conduct in cooperating with Hezbollah
in narcotrafficking money laundering on an international scale.
Mr. Perry. Okay.
Mr. Levitt. If I can add one last thing here.
Mr. Perry. Sure.
Mr. Levitt. Again, under HIFPA, we can apply secondary
sanctions--and as I described in my testimony at length, so I
won't describe it now--we can and should be looking for
secondary sanctions, financial institutions with which we can
hit secondary sanctions, in particular in South America and,
after the Waked Money Laundering Organization was shut down, we
saw a lot of that movement interest the Tri-Border Area,
Paraguay in particular. There are no shortage of targets.
Mr. Perry. Okay.
Dr. Asher, Dr. Levitt, and Mr. Maltz, and I guess Dr.
Karlin, as well, I did some time in Iraq. I just want, if you
can in the few moments that are remaining, to assess the role
of Iraqi financial institutions and businesses in enabling
Hezbollah in Iran.
Mr. Levitt. We do know that, in the wake of the original
HIFPA legislation, some Hezbollah money was moved out of
Lebanon for fear that it wasn't quite as safe there as it once
might have been, and some of it was moved, we understand, to
places like Dubai and to Iraq.
The first order of business is to try and pressure the
Iraqi Government to work as closely with us as possible in ways
that they already have, for example, on countering the Islamic
State financing, exchange houses, et cetera. Then, short of
that, if there are illicit banks that are still providing these
types of services knowingly, then we should consider the
secondary sanctions option. But that doesn't need to be our
first choice. But we definitely need to be working further on
the financial system as it relates to these threats.
Mr. Asher. Very quickly, based on open-source commercial
records, you can see a very significant movement of Hezbollah
financial operatives tied to the business affairs component of
Islamist jihad into Iraq in the last few years. They have
established a whole string of businesses in the south in
partnership with Iraqi militant groups. It is obviously part of
some sort of strategy that they are executing for their Iranian
friends.
Mr. Perry. Just for clarification, in the south, do you
mean in places like Basra and Nasiriyah?
Mr. Asher. Yes, but also into the southern belts of Baghdad
as well, so you see it in some of the mixed areas. They have an
economic action plan that they are executing to infiltrate the
Iraqi economy, with the Lebanese playing a much more
significant role.
Chairman Royce. We go now to Dan Donovan from New York.
Mr. Donovan. Thank you, Mr. Chairman.
Dr. Levitt, during your testimony, you talked about how we
should again sanction Iran. Last year, the United States
Government paid Iran $1.7 billion to their government. The
official purpose of that was a payment for $400 million for a
contract for military weapons from decades ago. The remaining
$1.3 billion was the interest that was collected on that $400
million while it remained in the United States. If we are going
to sanction countries, if we are going to sanction entities,
what kind of message do we send them when they are receiving a
benefit for us freezing their assets in the United States, that
$1.3 billion that they gained in interest?
Mr. Levitt. So that action was, I believe, an unfortunate
but a technical action in terms of the interest. Interest was
there. Whether that had to be done or not is another discussion
for another time. My feeling is we are where we are. That
happened. There is no undoing that. And what we need to do, I
believe in keeping with the Iran deal, whether you like the
Iran deal or not, whether I like the Iran deal or not, is to
hold Iran's feet to the fire on its continuing illicit conduct
because that was how the deal was sold to us.
We were told by the previous administration's officials
time and again that we would continue to hold their feet to the
fire on these issues. We need to. It does not violate the deal
to do so. The problem is, because we didn't do anything, Iran
has been emboldened. Because we didn't do anything and Iran
went around the world, including the Governor of the Central
Bank who came here and spoke in Washington, DC, at the Council
on Foreign Relations and elsewhere and said the era of
sanctions is over, people started buying that narrative. That
narrative is false. And so the first thing we need to do is
push back on that narrative with our European and Asian allies,
make them understand--I hope, because we are where we are--that
we will hold up to the letter of the Iran deal, which means
enforcing terrorism, ballistic missile, and human rights
sanctions.
Mr. Asher. So I have on my cell phone some pictures that
were sent to me by a financial source who is not a U.S.
Government source. I do some work for financial institutions on
anti-money laundering sanctions compliance, and that source
sent me pictures of $1 billion in two pallets of shrink-wrapped
U.S. Federal Reserve $100 bill notes that were moved through a
European country into West Africa and into a South American
country by Iranian agents, it appears, to set up some sort of
port-to-port scheme, perhaps involving narcotics trafficking.
Whether the money is the money that was given by my State
Department colleagues, unfortunately, in my mind, or not--you
don't see $1 billion in palletized cash with Federal Reserve
Bank of New York symbols on them, the wrappers, every day--the
fact is that money is being moved around for operational and
devious reasons. I don't think it contributed whatsoever to
creating a more peaceful relationship with the Iranian people.
Mr. Donovan. You know, I always ask witnesses when they
testify before us that we are lawmakers, and, you know, we
create laws, and we have to ask experts like you, what laws
would you like to see Congress create that would achieve the
goals that we all have here?
Would each of you be able to just tell me for a moment what
you would think about a law that would prohibit a terrorist
organization or a state terrorist organization from receiving a
benefit from having their assets in a United States bank?
Mr. Asher. I say I think we need to demand, sir, if you
could and your members, colleagues, that the RICO, Racketeer
Influenced and Corrupt Organizations Act, which terrorism is a
predicate for RICO, be used assiduously against the major
terrorist organizations to go after their members, their money,
and their facilities, knowing that we can use long-arm statutes
like we did against this Banque Libano-Francaise to go after
their money and correspondent bank accounts here, even if we
can't get to it in Lebanon or Iran or somewhere in the Middle
East.
So RICO is an absolutely central feature. It doesn't need
to be legislated, but you could encourage its use. It has never
been used in a large way, other than against the FARC, and that
was quite successful.
Mr. Donovan. And as Dr. Levitt had said earlier, if we
designate Hezbollah as a criminal enterprise, RICO then would
be available to us.
Mr. Levitt. RICO is available anyway. That would provide
other benefits, but we could do RICO yesterday.
Mr. Donovan. Thank you.
Mr. Chairman, I yield back the remainder of my time.
Chairman Royce. Mr. Garrett?
Mr. Garrett. Thank you, Mr. Chairman.
With the risk of--let me see how gentle I can be. I think
we have missed the target here. As we discuss in this very
meaningful and worthwhile hearing attacking Hezbollah's
financial network tangentially, certainly we have discussed
Iran, but I have a rather convoluted line chart here that I
have done that shows Iran giving what is estimated to be,
depending upon your source: Open source, $60 million to $200
million a year to Hezbollah; the IRGC controlling the entire
black economy in Iran and big, large portions of the above-
ground economy in Iran; and, just in the black economy side,
controlling revenue between $25 billion and $50 billion a year
and them supporting Iran. We have drug ops in Lebanon
supporting Hezbollah, but the drug ops in Lebanon really took
off after the Syrian civil war escalated, creating a vacuum.
And when the LAF stopped patrolling the fields in the areas in
the Beqaa Valley, we saw a skyrocketing production of drugs. So
that was caused largely by Iran, who now has coopted the LAF to
the point now where I recently read an article that said, ``The
distinction between Hezbollah and the Lebanese state is
meaningless.''
In fact, the Lebanese President is a Hezbollah ally, and
the Lebanese were the only nation not to sign the resolution
condemning the attacks on the Saudi consulate and Embassy in
Iran, and so what we see here is we are talking about
Hezbollah, but that is a branch on a tree. The tree should be
called Iran. The roots of the tree should be called the IRGC.
And if you want to solve the long-term problem, we need to take
on the IRGC.
One of these gentlemen--and I apologize because I was
copiously taking notes, so I don't know which of you it was--
said we need to hold up to the agreement of the JCPOA, which I
not jokingly referred to as the JCPOS--you can figure that one
out--which means enforcing ballistic missile sanctions and, I
quote: ``Hold up to the agreements of the JCPOA, which means
enforcing ballistic missile sanctions.''
I wish--and I don't know how to do this because I am new
here--that I could have read into the record an article from,
of all places, NPR, which points out that the JCPOA is so
tragically flawed that the lawyers that wrote it should be
disbarred. Let me read to you from the U.N. Security Council
Resolution 1929, which requires ``Iran shall not undertake any
activity related to ballistic missiles.''
Fast forward to the JCPOA--if anybody knows this nod along
with me--which reads: ``Iran is called upon not to undertake
any activity regarding ballistic missiles.''
I am not that good a lawyer, but I know the difference
between ``shall not'' and ``called upon not to.'' And so we
either intentionally sent really bad lawyers to negotiate a
deal that puts Iran on a glidepath, not only to destroy
sanctity and peace and stability in the region; we either
intentionally did that or we hired the worst possible
negotiators, who don't know the difference between ``may'' and
``shall,'' which you learn as a first-year law student.
No enmity intended toward anyone in the room and
particularly not the lady and gentlemen on the committee--I had
to look, Dr. Karlin, to make sure--but would you not agree that
the root of the problem with Hezbollah is Iran and that the
root of the problem in Iran is the IRGC and that the root of
the IRGC is Quds, if I want to walk this dog farther down the
trail?
I mean, if we really want to attack the source of this, do
we not look to the IRGC in returning peace and stability and
functionality to Iran, whose people want it but whose people
can't have it when the Quds Forces are willing to shoot student
protestors in the head, right, with impunity, and the United
States does nothing.
I apologize. I pride myself not on doing soliloquies and
diatribes in these things, but I am frustrated because I think
we are mistargeting. Would any one of you gentlemen or lady, is
the root of the Hezbollah problem not Iran?
Mr. Asher. Absolutely.
Mr. Garrett. And is the root of the Iran problem----
Mr. Asher. The IRGC, of course. And I worked to build a
plan at CENTCOM where we went after the Iranians on various
levels for various things that they did, including the IRGC, of
which, unfortunately, much was abandoned as we got closer to
the JCPOA. Whether you advocate a regime change or not, we
don't accept the regime and its activities, and there is no way
to divorce the IRGC from the Iranian economy and from the
Lebanese state, in effect.
Mr. Garrett. I am a big fan of peace and stability, and I
advocate loud and vociferously on behalf of regime change. I
don't think it needs to be done at the point of a gun, but I do
think that we created circumstances in the JCPOA, and we have
not pursued our allies, particularly in Europe, who do business
with the IRGC, and we can do this with open sources documented
to make them pick who they want to do business with.
Yes, sir?
Mr. Levitt. Let me just put some meat on this bone, for
example. The Financial Action Task Force gave Iran a year, a
year that ends this month, to improve its behaviors on money
laundering terror finance. Among the many things it is supposed
to do are some very technical things and some very broad
things. One of the things Iran has said it will not do is
delete the cutout that it has for anything it describes as a
resistance organization, i.e., Hezbollah. And it doesn't appear
they are going to change that. That is this month, and we need
to make sure that the administration makes its position very,
very clear this is unacceptable for us because you will
probably not get Iran off the FATF blacklist for special
measures right now, but you will probably get them a little bit
of an extension to see if they can do more.
Mr. Garrett. Mr. Chairman, I am over time.
I wanted to say, in conclusion, we can have a regime change
if we will strictly enforce sanctions. We have never been
willing to do that. Hopefully this administration will change
that. Thank you.
Chairman Royce. Thank you, Mr. Garrett.
We go now to, I think, Mr. Ted Yoho--oh, Mr. Gerry Connolly
is here.
Mr. Connolly. Thank you, Mr. Chairman.
Sorry, Ted.
Mr. Yoho. I yield.
Mr. Connolly. I thank my friend from Florida.
Welcome, to the panel.
Dr. Karlin, are you familiar with the JCPOA?
Ms. Karlin. Yes, sir, I am.
Mr. Connolly. Was it an all-comprehensive agreement that
covered all of Iranian behavior and our concerns?
Ms. Karlin. I did not work on the JCPOA as an Obama
administration official. My understanding is that it is
primarily focused on the nuclear piece.
Mr. Connolly. Correct. Can you think of a treaty governing
an adversary that was all comprehensive in history?
Ms. Karlin. Not off the top of my head.
Mr. Connolly. Right. So, when President Kennedy, for
example, negotiated the first Nuclear Test Ban Treaty to ban
atmospheric testing of nuclear weapons with then Nikita
Khrushchev and it was widely lauded as a peaceful measure, it
didn't address other Soviet behaviors. Is that not correct?
Ms. Karlin. Indeed. Usually, one----
Mr. Connolly. Right. And when one looks at the JCPOA in
terms of metrics, based on the fact that it was designed to
curb and, in fact, reverse aspects of the nuclear development
program in Iran, have those metrics been met, or is it widely
agreed that Iran has, in fact, cheated and violated the terms
of the agreement?
Ms. Karlin. I think it is a complicated picture, and I am
probably not the best person to address it.
Mr. Connolly. I don't think it is complicated. By and
large, all of the specific metrics with respect to the Iranian
nuclear development program have, in fact, been met, which may
be why we are trying to----
Mr. Asher. Could I just make one interjection?
Mr. Connolly. Excuse me, sir. No, please. And that may be
why we want to divert attention sometimes in this hearing to
other aspects of the Iranian behavior that indeed are to be
decried and, to the best of our ability, sanctioned.
I take enormous exception to my colleague from Virginia
asserting that maybe this administration will get serious about
sanctions when the previous one did not. It was precisely
because sanctions were working in the Group of 5, holding it
together, that brought Iran to the table for the first time.
Ms. Karlin. I couldn't agree more, sir.
Mr. Connolly. And we don't get to rewrite history. You
don't have to like it, but you don't get to rewrite it, and I
think the record needed to be corrected.
So, maybe, Dr. Levitt or Dr. Karlin, but I am intrigued by
Hezbollah's expanding role in the Syrian civil war,
particularly, where they have been exposed. What is your sense,
Dr. Levitt, of the cost? I mean, they have lost thousands of
fighters. They have lost leadership. Has it weakened Hezbollah,
or have they been able to use the exposure in Syria to their
advantage in terms of strengthening the organization and its
capabilities?
Mr. Levitt. And the honest answer to that question is yes.
Mr. Connolly. Yes, it has weakened them?
Mr. Levitt. Yes, it has weakened them, and yes, it has
strengthened them both. I thought Mara addressed this well in
her remarks. Hezbollah had lost more people killed and more
people wounded in this so far fairly brief conflict than in all
the wars with Israel. It is costing Hezbollah a tremendous
amount of money. The fighting in Syria is still getting the
funds, but not everything in Lebanon that Hezbollah
traditionally does--some of the other social welfare, political
things are not. Again, showing the ties between military
terrorism activities and political, social welfare activities,
it is having an impact in terms of their supporters as well as
some people's families are getting more money than other
people, depending on how long you fought. The fact that they
are now having to put up banners on the streets in Lebanon
saying, ``Well, if you don't really want to fight, you can make
about a $1,000 donation and get out of it,'' it is like people
are trying to get out of the forced conscription in Russia or
Turkey back in the day.
Mr. Connolly. Right.
Mr. Asher. And so they are facing those types of problems.
They have, however, had the benefit of the Islamic State rising
to be such a threat that there has been a circling of the
wagons in Lebanon--and elsewhere too, but we will focus on
Lebanon--where the people say: I don't like Hezbollah, but
Hezbollah is effectively defending me against the Islamic
State, and so I don't have the luxury of still being angry at
them for dragging my country, Lebanon, into the civil war.
Mr. Connolly. Do you believe that the costs are hurting
them back in Lebanon, either in terms of credibility, ability
to recruit, or, for that matter, participate in whatever
governance they participate in?
Mr. Levitt. It is hurting them in terms of their ability to
run their programs and their ability to recruit. There is
dissension within the ranks among their supporters, but they
are getting by just fine. And we need, therefore, right now to
take the financial measures that will further undermine them.
All of your comments on the JCPOA I understand. Under the
JCPOA, we were told these other things were going to continue.
It is a fact that some of these were halted a little bit
because some people felt they didn't want to shake the deal. I
don't mean to make a statement about the deal there.
Now, we are where we are. Now is the opportunity to get
back on the saddle here because we do have an opportunity to
further exacerbate those financial tensions for Hezbollah.
Mr. Connolly. Yes. And this is a test of a new
administration, whether its close ties to Russia can be put to
our advantage in terms of curbing the behavior of Hezbollah and
the Iranian Revolutionary Guard in areas we care about: Syria
and Iraq. And maybe it is time to now put that question to the
new administration.
Thank you. My time is up.
Chairman Royce. Thank you.
We go now to Mr. Ted Yoho.
Mr. Yoho. Thank you, Mr. Chairman.
And I appreciate the panel being here.
I read an article about Hezbollah about a month ago and how
it said that it has become a force of over 100,000 very well
armed, very well trained, one of the top fighting forces in the
world. And I am going to ask the panel--who wants to weigh in
on this--was that possible before the JCPOA and the release of
the money that Iran got, or did that benefit Hezbollah to
become that strong of a force? Dr. Karlin?
Ms. Karlin. Thank you for that question. That number is a
little larger than I have heard, but the concept, I think, is
absolutely spot on, that Hezbollah has grown. It has grown more
capable quantitatively and qualitatively.
But we have seen it on this trajectory for a while now.
Back in 2010 or so, my former boss Secretary Gates noted that
Hezbollah had more missiles and rockets than most governments
in the world. I would say the money has been useful, but it is
the Syria conflict that has been determinative.
Mr. Yoho. Right. And that is where it was; it was in Syria,
was the report I read. And they are not affiliated with a
nation as far as a national government. They are kind of a
proxy group, correct?
Ms. Karlin. Hezbollah does serve in the Lebanese
Government.
Mr. Yoho. Okay. And then, Mr. Levitt, I want to get
clarification. Did you say that Iran should be redesignated as
a state sponsor of terror?
Mr. Levitt. Iran is designated a state sponsor of terror.
There is no redesignation then.
Mr. Yoho. That is what I thought, and I misheard you then.
Mr. Levitt. It was a response to a question about whether
the context of redesignating Iranian entities that may have
been taken off lists under the JCPOA and my argument that it
would be in no way a violation of the JCPOA if they were
relisted under still existing sanctions authorities like
counterterrorism, which need to be very, very clear and show
that evidence, that this is not simply just putting an entity
back on the list for proliferation purposes.
Mr. Yoho. Okay.
And then, Dr. Asher, you had a comment you wanted to talk
to Mr. Connolly about, and I will give you about 30 seconds if
you want to add to it.
Mr. Asher. So I respect Mr. Connolly's points about the
JCPOA as a former negotiator in the Six Party Talks of North
Korea and also working on North--Iran nuclear at one stage, but
I am very concerned about outsourcing.
The thing we learned with North Korea in 2002 with the Al
Kibar agreement was that countries can outsource. In 2002,
there was an agreement between North Korea and Syria to build
Al Kibar, the nuclear reactor for the nuclear weapons program
with Syria. That broke ground in October 2003, according to
unclassified information you can get on the internet. That is
exactly when the NIE--the CIA--or the National Intelligence
Council said the Iranians put their weapons program on hold.
The idea that they could have outsourced it has always bothered
me personally as an official at the time.
And then, in 2012, the Iranians and the North Koreans
signed a science technology agreement that is almost exactly
the same as what they signed with Syria between North Korea and
Syria in 2002, and at the signing ceremony was Fereydoun
Abbasi-Davani, the head of the Iranian nuclear weapons program.
He just didn't show up very often to meetings. The question is,
what is going on? And is it possible that Iran has outsourced?
There is no provision in JCPOA over outsourcing, and it does
worry me.
Mr. Yoho. All right.
And, Dr. Karlin, I want to come back to you. Is there
continued production of heavy water in Iran, and does that come
from nuclear activity?
Ms. Karlin. I am not aware of that, sir.
Mr. Yoho. All right. I believe the answer is yes. Is the
volume beyond what the JCPOA allows for, which, again, we have
read the reports--they are producing more than they should be--
and then is that production and value in violation of JCPOA? If
they are doing that, would you say that was in violation?
Ms. Karlin. If that were happening, that is beyond my
expertise, sir.
Mr. Yoho. Can anybody else answer that?
All right. Mr. Maltz, I am going to go to you because the
work you have done I find very interesting, and I don't know if
it was you or Dr. Asher talking about the combination of the
terrorist groups with the narcotrafficking. And do you see that
increasing in the future?
Mr. Maltz. Absolutely. I mean, everyone in government says
that terrorists are increasingly turning to crime and criminal
networks for funding because the U.S. Government and our allied
forces have done such a great job at shutting down their
funding streams. They need funds to operate, and one of the
biggest things that I saw that is really disturbing is the
corruption factor. You can't pay off a general in West Africa
with a Visa and a Mastercard. You need a suitcase of cash.
Mr. Yoho. Right.
Mr. Maltz. So the cash that is being generated from drug
trafficking, the U.N. estimated, what, about $400 billion? So
it is just common sense that they are going to get involved in
drug trafficking and other illicit activity to be able to carry
out their agenda. So, yes, I am very concerned, and it is
evolving as far, as I am concerned.
Mr. Yoho. Do any of you believe that Hezbollah has been
involved in the most recent Iranian kidnapping of the U.S.
citizens or U.S. legal permanent residents? And if I don't have
the time, Mr. Chairman, if they could submit that.
Chairman Royce. Is that a nod yes or a nod no? Pardon?
Mr. Levitt. I have seen no evidence to that effect.
Mr. Yoho. Okay. Thank you.
Chairman Royce. All right. Thank you.
We go to Ann Wagner of Missouri. Ambassador.
Mrs. Wagner. Thank you, Mr. Chairman, for hosting this
hearing.
Hezbollah is obviously a constant violent threat to our
allies and to us. The joint statement released by the U.S. and
Saudi Arabia last month expressed the importance of supporting
the Lebanese state in order to disarm Hezbollah. But I, along
with many of my colleagues, are concerned that financial
support to Lebanon may mean empowering Hezbollah.
Dr. Asher and Mr. Maltz, kind of as a follow-on to
Congressman Yoho's questioning, it is well known that Syrian
women and children are at risk of being trafficked in Lebanon.
We also know that Hezbollah generates revenue from drug
trafficking and, allegedly, human trafficking in the Americas.
Can you please discuss Hezbollah's involvement in human
trafficking in Lebanon, Syria, and globally?
Mr. Asher. I mean, I have one specific case I can't
discuss, but I am aware of one of the top-tier targets; we call
them super facilitators. We actually had a thing called the
Iran-Hezbollah super facilitators initiative targeting key
functional financiers for the Hezbollah-Iran network globally.
And I am aware of one very significant case of Syrian
children being trafficked all the way into West Africa by an
individual, and it was a very painful case for us because the
U.S. Government was well aware of it, and we did nothing. And
it still haunts me that these poor children--and they were like
young girls and boys--were sent to a heinous country in West
Africa probably to their death because the guy in charge seemed
to like torturing children. So, you know, that is one case, and
he was definitely a Hezbollah senior functional official also
tied to the Iranians.
Mrs. Wagner. Disturbing, but thank you, Dr. Asher.
Dr. Karlin, your testimony on Iran-Hezbollah relations was
fascinating. Can Lebanon or other actors help fill a void with
the Lebanese Shia who are dependent on Hezbollah, as your
testimony laid out, in terms of political representation and
economic opportunities? And could you also maybe flesh out for
me the factors preventing these opportunities?
Ms. Karlin. Thank you very much for that question. I am
delighted that that was useful.
There are ways to fill this void, particularly if you look
at strengthening Lebanon economically.
So what we have seen, because of the Syria conflict, is
people who are joining Hezbollah because they don't have job
opportunities and Hezbollah pays, obviously. So, to the extent
you can look at microloans or other types of assistance so
that, when you go into these areas where Hezbollah is strong,
you actually see other entities there.
What I find most interesting on political representation,
ma'am, is that you do hear some alternative voices to
Hezbollah, but in particular, over the last few years, there
were fewer and fewer people in Lebanon defending Hezbollah, and
that quiet is meaningful and notable.
Mrs. Wagner. Interesting. Well, Dr. Karlin, I will just
stay with you for a moment. On Tuesday, we witnessed U.S.-led
air strikes near al-Tanf and on the Iranian-backed militias in
Syria. How interconnected are Hezbollah and these militias, and
do you believe that economic sanctions on these militias could
help stem Hezbollah's financing?
Ms. Karlin. Thank you for that question. I, too, am really
concerned about what is happening right now around al-Tanf. We
see U.S. military getting more involved here, and it is very
conceivable something could happen with these militias or with
Hezbollah.
I think the Hezbollah-militia relationship is extremely
tight. They are very much looking to one another. I defer to my
colleagues regarding the financial piece, but my instinct is,
if you can help weaken one, that is largely beneficial.
Mrs. Wagner. Anyone else?
Mr. Levitt. I will just add on two points, both of which
are in my written testimony. One is, absolutely, we need to be
targeting not just Hezbollah but the other Shia militias with
which it is partnering very, very closely and, to get to some
of the earlier questions, both of them together with Iranian
soldiers and operatives on the ground in Syria. Al-Tanf is
something we need to look at very, very closely. In the wake of
that strike that you mentioned, Hezbollah issued a kind of
veiled warning to the U.S. not to cross its--Hezbollah's--red
lines in the area.
Mrs. Wagner. Uh-huh.
Mr. Levitt. And the other thing regarding Dr. Asher's
comment on the super facilitators, I mentioned briefly in my
oral remarks the need to target these key networks, and my
written testimony gets into detail that we should be targeting,
among those, the super facilitators, some of whom, I think
including the one that Dr. Asher was referring to, are really--
they are Hezbollah people. Others are not. Others, they are not
Hezbollah operatives. They are criminals. They are super
facilitators who will help Hezbollah today and some other
criminal enterprise tomorrow, but they play these mission
critical roles, whether it is money laundering or accessing
banks. And we should be targeting them as well, even if they
are not card-carrying Hezbollah members, because they are
providing mission critical, particularly logistic and
financial, support to Hezbollah.
Mrs. Wagner. I thank you all.
And I thank you, Mr. Chairman. I believe I am out of time,
and I will yield back.
Chairman Royce. We are out of time, but thank you very
much, Ambassador Wagner.
We appreciate the time, the service, and the expertise of
our witnesses here this morning. And as we have heard, there is
much work to be done to rebuild our law enforcement
capabilities to tackle Hezbollah, and we look forward to
working with our witnesses as we press the administration to do
just that.
Thank you very much. We stand adjourned.
[Whereupon, at 11:54 a.m., the committee was adjourned.]
A P P E N D I X
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Material Submitted for the Record
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Material submitted for the record by the Honorable Thomas A. Garrett,
Jr., a Representative in Congress from the Commonwealth of Virginia
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Material submitted for the record by the Honorable Theodore E. Deutch,
a Representative in Congress from the State of Florida
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