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The Iran Nuclear Deal and its Impact on Terrorism Financing

Testimony by Ilan Berman
U.S. House of Representatives Financial Services Committee Task Force to Investigate Terrorism Financing
July 22, 2015

 Chairman Fitzpatrick, Ranking Member Lynch, distinguished members of the Task Force: 

Thank you for the invitation to appear before you today to discuss the new nuclear agreement with Iran and its implications for U.S. policy. There is, quite simply, no more urgent issue facing Congress and the American people today in the national security and foreign policy arena. 

After months of reporting and speculation, we are now able to assess the particulars of the nuclear compromise struck between Iran and the P5+1, formally known as the Joint Comprehensive Plan of Action (JCPOA). The agreement contains a number of positive aspects, including significant constraints on Iranian uranium enrichment, a reduction on the number of centrifuges operated by the Islamic Republic, and a major delay of the "plutonium track" of the regime's nuclear program.[1] Nevertheless, it is deficient in several material respects, with potentially grave consequences for American security. 


In his July 14th statement formally announcing the agreement, President Obama asserted that it "prevents" Iran from developing a nuclear weapon.[2] In point of fact, however, it does no such thing. The JCPOA is time-limited in nature, designed to last for just a decade, with the majority of its provisions expiring in 2025 (and some doing so earlier). 

For the coming ten years, the deal will indeed make it more difficult - although not impossible - for Iran to develop the constituent parts of a nuclear program. However, certain key processes (such as research and development of nuclear technology, as well as design of advanced centrifuges) are still permitted during this timeframe, allowing the Iranian nuclear effort to progress, albeit at a significantly slower pace.[3] At the same time, experts say, a clandestine "pathway" to the bomb via the covert procurement ofmateriel from foreign suppliers remains open.[4] And a number of key provisions of the JCPOA - including Russian cooperation on nuclear research at the Fordow Fuel Enrichment Plant, European aid in strengthening Iranian nuclear security, and international assistance in aiding Iran to master the nuclear fuel cycle through fuel fabrication - will actually help to improve the capability and sophistication of Iran's nuclear effort over time. And once the JCPOA expires, Iran will be under no constraints whatsoever not to nuclearize, and can be expectedly to do so rapidly. What the White House has accomplished, therefore, can be said to be at best a temporary reprieve, at the end of which Iran will be closer to a baseline nuclear capability than it is currently - and U.S. options for responding to it will be more constrained. 

The JCPOA also suffers from critical shortcomings relating to oversight. It is useful to remember that at the outset of negotiations, the objective of the Administration was to obtain a "freeze for freeze," under which Iran would agree to halt its uranium enrichment activities in exchange for a lifting of sanctions. The Iranian regime, however, rejected this demand as both "unacceptable" and "unreasonable."[5] In response, the White House gravitated towardthe more modest goal of "freeze for transparency": sanctions relief in exchange for comprehensive Western oversight of Iran's nuclear facilities. 

Yet the deal concluded in Vienna does not reach even this more limited standard. The idea of "anytime, anywhere" access - once championed by the White House as vital to proper oversight[6] - has fallen by the wayside. (Administration officials have since said that the term itself was nothing more than a rhetorical flourish, and not a core American demand.[7]) Instead, the JCPOA codifies an oversight regime that is robust in principle, but extremely convoluted in practice. Under its terms, the UN's nuclear watchdog, the International Atomic Energy Agency (IAEA), theoretically will have the power to inspect most of Iran's numerous known nuclear facilities. However, the Iranian regime will have the power to deny entry to international inspectors - touching off a complex mediation process, which, in the best case, would provide the West with access to Iranian facilities only after a substantial delay. (Access to undeclared facilities, if and when they are uncovered, would follow the same procedure, and may be denied altogether.) Under such limitations, categorical declarations that Iran will not be able to cheat on its nuclear commitments[8] are decidedly premature. 

Moreover, even in the best-case verification scenario, U.S. knowledge of Iranian facilities will remain secondhand at best. National Security Advisor Susan Rice has confirmed that, in keeping with the provisions of the IAEA, inspection teams will be staffed by nationals of countries with full diplomatic relations with Iran. The United States is not one of those nations,and therefore no Americans can be directly involved in the process of monitoring and verification.[9] 

Perhaps the most concerning aspect of the agreement, however, is the extent of the sanctions relief that will be obtained by the Islamic Republic as a result. Here, it is useful to remember that the cumulative impact of Western sanctions was what originally brought Iran to the nuclear negotiating table, in secret beginning in 2012, and then publicly in November of 2013. The rapid, comprehensive removal of these sanctions has been a cardinal objective of the Islamic Republic in its negotiations with the P5+1 powers since. 

The terms of the JCPOA demonstrate that the Iranian regime has persevered on this point. Under the agreement, Iran is poised to receive massive economic relief in the near future. Specifically, later this year, upon IAEA verification that Iran has divulged the requisite details of its military-related nuclear work, the U.S. will beginunblocking $100 billion or more of Iranian revenue from oil sales that had been locked in escrow accounts in China, South Korea, and other nations. To put this sum in context, it amounts to roughly a quarter of Iran's annual gross domestic product (GDP), which totaled $415 billion in 2014.[10] 

What will this financial windfall be used for? White House officials have expressed hope that the Iranian regime will focus on improving domestic conditions with the added funds. Deputy National Security Advisor Ben Rhodes has said that "the vast majority of these resources are likely to go to the Iranian economy, which is in a terrible state, and address certain debts of the Iranian government."[11] It is indeed possible that they will. However, the sheer scope of the anticipated relief, and the fungible nature of financial resources, means that the Iranian regime will have significant added money to spend on two key regime priorities. 


Since its inception in 1979, Iran's clerical regime has harnessed terrorism as a key tool of strategic influence and foreign policy. At home, the first formative years of the Ayatollah Ruhollah Khomeini's government saw the creation of an elaborate domestic infrastructure for the support and propagation of terrorism, spanning multiple ministries and agencies, as well as the investment of hundreds of millions of dollars in the cause of Islamic "resistance" globally.[12] 

During the decade that followed, and despite a bloody and grinding eight-year war with Saddam Hussein's Iraq, the fledgling Islamic Republic sunk colossal resources into becoming a hub of "global resistance." In keeping with Khomeini's declaration that "Islam will be victorious in all the countries of the world,"[13] the Iranian regime threw open its borders to a bevy of third world radicals, from Palestinian resistance fighters to Latin American leftist revolutionaries. These disparate factions (many of which hailed from outside the Muslim world) gravitated to the Islamic Republic, where they obtained military, political and economic support from an Iranian government eager to demonstrate its revolutionary bona fides and its commitment to a global Islamic order.[14] 

The United States felt the effects of this activity firsthand in April of 1983, when a truck bomb destroyed the U.S. embassy in Beirut, Lebanon, killing 63, and then again that October, when a similar explosive device targeted the U.S. Marine Barracks in Beirut, killing 241. Both attacks were definitively traced back to the Islamic Republic, which - working through proxies such as Hezbollah and the Islamic Jihad Organization - sought to dislodge the American presence in the Levant.[15] In response, the Reagan administration formally designated Iran a state sponsor of terrorism the following year. 

The death of Khomeini in the late 1980s - and a period of sustained economic and political stagnation in the 1990s - led many in the West to believe that Iran had entered a "post-revolutionary era."[16] That hope, however, turned out to be fleeting. Khomeini's successor as Supreme Leader of Iran, the Ayatollah Ali Khamenei, was quick to reaffirm the "revolutionary" nature of the Iranian regime he inherited. And, in the aftermath of the Iran-Iraq War, Iran increasingly emphasized terrorism as a strategic tool - a low-cost, low-risk alternative to direct confrontation with its global adversaries. 

So the situation has remained. Today, the Islamic Republic still ranks as the world's foremost sponsor of international terrorism - a designation that its leaders wear proudly in the name of "resistance" against the "Great Satan" (the United States) and the West more broadly. If anything, the nearly fourteen years since the terrorist attacks of September 11, 2001 and the subsequent start of the "war on terror" have seen the Islamic Republic deepen its investment in global instability. It has done so through what some scholars have described as an "action network": a web of official and proxy organizations that are "involved in crafting and implementing the covert elements of Iran's foreign policy agenda, from terrorism, political, economic and social subversion; to illicit finance, weapons and narcotics trafficking; and nuclear procurement and proliferation."[17] 

The scope of this effort is enormous. As of 2007, then-Under Secretary of the Treasury for Terrorism and Financial Intelligence Stuart Levey estimated publicly that Tehran "has a nine-digit line item in its budget for support to terrorist organizations."[18] While Iran's expenditures in this arena are difficult to quantify authoritatively, they are known to include: 

- Between $100 and $200 million annually to Lebanon's Hezbollah militia for more than two decades;[19] 

- Between $3 million and $18 million a year to the Palestinian Hamas movement from the mid-2002 until 2012, when the two sides fell out over Iran's support for the regime of Bashar al-Assad in Syria[20] (That, however, could be a low-ball estimate: other sources have reported Iranian support to have totaled as much as $25 million monthly during this period.[21]) 

- Tens of millions of dollars for Hamas over the past year, to rebuild tunnels and infrastructure damaged during the summer 2014 Gaza War with Israel,[22] and; 

- The entire annual operating budget of the smaller Palestinian Islamic Jihad (estimated at some $2 million).[23] 

The challenge that this poses to the United States and its allies is clear. As scholars Scott Modell and David Asher have noted, despite years of economic and political pressure, "Iran seems undeterred in its mission to confront the ‘enemies of Islam’ and create new centers of non-Western power around the world."[24] The resources at Iran's disposal to do so are now poised to expand exponentially as a result of the sanctions relief it has successfully negotiated with the P5+1. 


Over the past several years, the Islamic Republic has launched an ambitious, multi-pronged effort to reshape the region in its own image. In the opening stages of the Arab Spring, Iranian officials attempted to recast the regional ferment taking place in the Middle East and North Africa as an outgrowth of the Islamic Republic's successful revolution, and as the start of an "Islamic awakening" in which their country would play a leading role.[25] Iran matched its words with concrete action. In the wake of the February 2011 ouster of Hosni Mubarak in Egypt, the Iranian government sought to court first the country's transitional government and then the Muslim Brotherhood-dominated Islamist one of Mohammed Morsi. In Bahrain, meanwhile, it initiated clandestine support for the efforts of the country's Shi'a majority to overthrow its Sunni minority government.[26] 

Neither of these early attempts succeeded. In Egypt, Iranian reconciliation efforts were cut short by Morsi's ouster in 2013, and his subsequent replacement by an unfriendly military regime headed by General Abdel Fattah al-Sisi. In Bahrain, Iran's efforts at subversion precipitated large-scale military intervention on the part of the Gulf Cooperation Council, which succeeded in stabilizing the rule of the al-Khalifa clan. Iran's subsequent regional initiatives, however, have attained far greater success. 

The Iranian regime, for example, has become a vital - if undeclared - player in the bloody conflict taking place between the regime of Syrian dictator Bashar al-Assad and its assorted opponents. In the four-and-a-half years since the start of the Syrian civil war, assistance from the Islamic Republic has been a crucial component of Assad's continued hold on power. This aid has come in the form of fighters (including hundreds of trained snipers) from Iran's clerical army, the Islamic Revolutionary Guard Corps (IRGC), who have reinforced regime forces and increased their lethality.[27] Iran, together with its Lebanese proxy Hezbollah, has also played a key role in organizing pro-Assad militias among the country's Alawite and Shi’a communities, as well as facilitating the flow of foreign pro-regime recruits from Iraq, Yemen, Lebanon and Afghanistan.[28] The Iranian regime likewise has been complicit in providing significant amounts of arms and war materiel (including unmanned aerial vehicles) to the Syrian government - capabilities that have subsequently been used by Assad against his domestic opposition.[29] Iran has become a financial lifeline for the Assad regime as well, providing it with massive lines of credit to purchase crude oil and other products that the United States and Europe have sought to limit.[30] All told, Iran's campaign in Syria is estimated to total some $6 billion or more annually.[31] From Tehran's perspective, moreover, it has been wildly successful; as Iranian officials make clear, through their support of Syria, the Islamic Republic has successfully created strategic depth with, and expanding its range of options against, both Israel and the United States.[32] 

In Yemen, Iran has provided extensive backing for the al-Houthi rebels in their long-running insurgent campaign against the country's central government. Although both Iran and the Houthis themselves have denied the Islamic Republic's clandestine role, the evidence is incontrovertible. Since 2009, multiple reports have highlighted Iran's extensive support, which has come in the form of arms deliveries[33], military training[34] and financial infusions.[35] This assistance has helped tip the political scales decisively in the Houthis' favor; beginning last Fall, the rebels began a major strategic advance, culminated in the Fall 2014 takeover of the Yemeni capital, Sana'a, and the subsequent collapse of the pro-Western government of President Abed Rabbo al-Hadi. All of which has made the Houthis the de facto government in Sana'a, and their sponsor, Iran, a key power broker in Yemen's future. 

Finally, in Iraq, Iran has successfully exploited mounting domestic turmoil - and the recent rise of the Islamic State terrorist group - to further consolidate its already-extensive influence and strategic reach. That leverage was created shortly after the U.S. invasion of Iraq in 2003, when Iran launched a multi-pronged strategy on the territory of its western neighbor. This plan involved, inter alia, the cooptation of various Iraqi politicians; political and material support to both Sunni and Shi’ite militias; the massive infiltration of Iranian paramilitary forces and proxies onto Iraqi soil, and; the provision of a wide spectrum of lethal weaponry (including improvised explosive devices) to Iraqi insurgents fighting the Coalition.[36] The geopolitical goals of this effort were clear. According to a 2008 study by the Combatting Terrorism Center at West Point, "Iran has a robust program to exert influence in Iraq in order to limit American power‐projection capability in the Middle East, ensure the Iraqi government does not pose a threat to Iran, and build a reliable platform for projecting influence further abroad."[37] 

Today, Iran is closer to this goal than ever before. With Iraq's government in continuing disarray despite an October 2014 parliamentary election and a change of political leadership, and amid signals from Washington that sustained U.S. boots on the ground are simply out of the question in the fight against the Islamic State terrorist group, Iran has emerged as what is perhaps the best long-term guarantor of Iraq's security. This can be seen in the growing role being played by the IRGC and in particular its Quds Force paramilitary wing, headed by General Qassem Suleimani, in organizing, resourcing and leading the fight against Islamic State militants.[38] Coupled with the extensive aid and political support being provided by Iran to Iraq's assorted Shi'ite militias, these efforts guarantee that the Islamic Republic will be a dominant player in Iraqi politics into the foreseeable future, irrespective of the outcome of the country's current counterterrorism fight. 

As the forgoing suggests, Iran's regional efforts are extensive. However, they are also expensive - and have been limited at least in part by the real-world economic constraints imposed to date by Western sanctions. Those restrictions, however, will shortly be relaxed significantly pursuant to the provisions of the JCPOA. As a result, the Islamic Republic is now poised on the brink of a financial windfall - one that will dramatically expand its capacity for adventurism in the Middle East and beyond, with major adverse consequences for the United States and its regional partners. 


Although Administration officials continue to insist that the nuclear deal is "transactional" in nature, the agreement is clearly predicated on the assumption that it will lead to fundamental change within the Islamic Republic. The shape, duration and structure of the deal all reflect the prevailing view in Washington and European capitals that coming to terms with Iran over its nuclear program will inevitably lead to a larger and long-term political normalization between the Islamic Republic and the West. 

This, however, is not how the nuclear agreement is perceived in Iran. Throughout the negotiating process, Iranian officials took pains to indicate that the talks have no bearing on the regime's larger strategic outlook.[39] And, in the aftermath of the JCPOA's signing, Iran's Supreme Leader has proclaimed publicly that that - despite the deal - Iran remains steadfast in its opposition to the United States, as well as in its efforts to reshape the region in its own image.[40] 

Iran believes that it now possesses a unique strategic opportunity to do so. Even before the conclusion of the JCPOA, Iran's Supreme Leader had noted publicly his conviction that the existing international system is now "in the process of change" and a "new order is being formed." These changes represent a mortal blow to the West and a boon to Iran, Ayatollah Khamenei made clear in an address to a meeting of the Assembly of Experts, the Islamic Republic's premier religious supervisory body, in September of 2014. "The power of the West on their two foundations - values and thoughts and the political and military - have become shaky" and can be subverted, he said.[41] 

The signing of the JCPOA has now imbued the Islamic Republic with dramatically greater resources and ability to make this vision a reality. The United States and its allies will be forced to contend with the practical ramifications of this development in the years ahead. 


[1] For a short summary of these and other stipulations, see Blaise Misztal, "Iran Deal: Section-by-Section Analysis," Bipartisan Policy Center, July 14, 2015, 

[2] "Obama Comments on Iranian Nuclear Deal," Associated Press, July 14, 2015, 

[3] Misztal, "Iran Deal: Section-by-Section Analysis." 

[4] Orde F. Kittrie, "The China-Iran Nuclear Pipeline: How to Shut it Down," Foreign Affairs, July 13, 2015, 

[5] "Iran FM Rejects Obama's 10-Year Nuclear-Freeze Demand," Al Jazeera (Doha), March 4, 2015, 

[6] Jim Snyder, "Inspectors Need Full Access in Iran Nuclear Deal, Moniz Says," Bloomberg, April 20, 2015, 

[7] Herb Keinon, "Top US Official: 'Anytime, Anyplace Access' to Iranian Facilities was Rhetorical Flourish," Jerusalem Post, July 16, 2015, 

[8] See, for example, James Acton, "Iran Ain't Gonna Sneak Out Under This Deal," Foreign Policy, July 16, 2015, 

[9] Susan Rice, interview with Wolf Blitzer, CNN Situation Room, July 15, 2015, 

[10] "Iran GDP," Trading Economics, n.d., 

[11] Nadia Bilbassy-Charters, "Ben Rhodes: Iran's New Money Post Deal will Go to Uplift 'Terrible Economy,'" Al Arabiya (Riyadh), July 16, 2015, 

[12] For a detailed overview of Iran's terror infrastructure, see Ilan Berman, Tehran Rising: Iran’s Challenge to the United States (Lanham, MD: Rowman & Littlefield, 2005), 3-30. 

[13] As quoted in Robin Wright, Sacred Rage: The Wrath of Militant Islam (New York: Simon & Schuster, 1986), 21. 

[14] Ibid., 21, 32-35. 

[15] See, for example, Robert Baer, See No Evil: The True Story of a Ground Soldier in the CIA's War on Terrorism (New York: Crown Publishers, 2002). 

[16] See, for example, Daniel Byman et al., Iran's Security Policy in the Post-Revolutionary Era(Santa Monica: RAND, 2001), 

[17] Scott Modell and David Asher, Pushback: Countering the Iran Action Network (Center for a New American Security, September 2013), 8, 

[18] Under Secretary of the Treasury for Terrorism and Financial Intelligence Stuart Levey, Remarks before the 5th Annual Conference on Trade, Treasury and Cash Management in the Middle East, Abu Dhabi, United Arab Emirates, March 7, 2007, 

[19] Department of Defense, Unclassified Report on Military Power of Iran, April 2010,

[20] Matthew Levitt, Hamas: Politics, Charity, and Terrorism in the Service of Jihad (New Haven: Yale University Press, 2006), 172-173. 

[21] "Admiral Mullen's Meeting With Egis Chief Soliman," Wikileaks, April 30, 2009, 

[22] Stuart Winer, "Iran Gives Hamas Tens of Millions to Rebuild Tunnels, UK Report Says," Times of Israel, April 5, 2015, 

[23] Brigitte Dusseau, "US Renews Calls for Dialogue with Iran to Address Terrorism Concerns," Agence France Presse, March 11, 1998. 

[24] Modell and Asher, Pushback, 28. 

[25] "Lawmaker: Uprisings in Region Promising Birth of Islamic Middle-East," FARS (Tehran), February 5, 2011, 

[26] Elise Labott, "Bahrain Government Accuses Hezbollah of Aiding Opposition Groups," CNN, April 25, 2011, 

[27] Luke McKenna, "Syria is Importing Iranian Snipers to Murder Anti-Government Protesters,"Business Insider, January 27, 2012, 

[28] Babak Dehghanpisheh, "Elite Iranian Unit's Commander Says His Forces are in Syria,"Washington Post, September 16, 2012,; Karen DeYoung and Joby Warrick, "Iran, Hezbollah Build Militia Networks in Syria in Event that Assad Falls, Officials Say," Washington Post, February 10, 2013,; Farnaz Fassihi, "Iran Recruiting Afghan Refugees to Fight for Regime in Syria," Wall Street Journal, May 15, 2014,

[29] See, for example, Jonathan Saul and Parisa Hafezi, "Iran Boosts Military Support in Syria to Bolster Assad," Reuters, February 21, 2014, 

[30] "Iran, Russia, China Prop Up Syria Economy, Official Says," UPI, June 28, 2013, 

[31] Eli Lake, "Iran Spends Billions to Prop Up Assad," BloombergView, June 9, 2015, 

[32] As cited in "Iran Military Chief: 'We Will Support Syria to the End,'" Agence France Presse, September 5, 2013, 

[33] Phil Stewart, "Large Arms Shipment Intercepted Off Yemen, Iran Eyed As Source," Reuters, January 28, 2013, 

[34] Yara Bayoumi & Mohammed Ghobari, "Iranian Support Seen Crucial For Yemen's Houthis," Reuters, December 15, 2014, 

[35] Eric Schmitt & Robert F. Worth, "With Arms For Yemen Rebels, Iran Seeks Wider Mideast Role," New York Times, March 15, 2012, 

[36] Kimberly Kagan, "Iran's Proxy War Against the United States and the Iraqi Government," Institute for the Study of War Iraq Report, May 2006-August 20, 2007, 

[37] Joseph Felter and Brian Fishman, "Iranian Strategy in Iraq: Politics and 'Other Means,'" Combatting Center at West Point Occasional Paper, October 13, 2008, 

[38] See, for example, Erik Ortiz, "Iran's Qasem Soleimani is Guiding Iraqi Forces in Fight Against ISIS," NBC News, March 13, 2015, 

[39] See, for example, Adam Kredo, "Iran Holds Nationwide 'Death to America' Parades,"Washington Free Beacon, November 4, 2014, 

[40] "Khamenei: Deal or No Deal, Iran Won't Stop Opposing US, Supporting People of Palestine," Reuters, July 18, 2015, 

[41] Arash Karami, "Ayatollah Khamenei Urges Iran to Prepare for 'New World Order,'" Al-Monitor, September 5, 2014,