مقالات و بیانیه ها

[Congressional Record Volume 141, Number 49 (Thursday, March 16, 1995)]

[Senate]

[Page S4116-S4118]

From the Congressional Record Online through the Government Printing Office [www.gpo.gov]

[[Page S4116]]

ADDITIONAL STATEMENTS

IRAN

Mr. D'AMATO. Mr. President, I rise today to discuss a topic of

great concern to this country, as well as the world: Iran.

In January, I introduced a bill, entitled ``The Comprehensive Iran

Sanctions Act of 1995.'' The recent press regarding the aborted Conoco

deal with the national Iranian oil company, has further brought the

problem of the purchase of Iranian oil by overseas subsidiaries of

American companies to light. These purchases help Iran fund their

terrorism and keep their economy afloat. We can no longer subsidize

Iran's violence and terrorism.

For this reason, it is of paramount important that this bill becomes

law. In regard to this, I ask that the following answers to a series of

questions on Iran's economic status that I posed to Manouchehr Ganji,

Secretary General of the Organization for Human Rights and Fundamental

Freedoms for Iran, who is based in Paris, be printed in the Record. His

answers are enlightening and provide the view of someone who knows with

intimate detail, the threat that Iran poses to the world.

The material follows:

Organization for Human Rights and Fundamental Freedoms

for Iran,

Paris, France, March 14, 1995.

Senator Alfonse D'Amato,

Chairman, U.S. Senate, Committee on Banking, Housing and

Urban Affairs.

Dear Senator D'Amato, In response to your letter of March

9, 1995, I herewith enclose my reflections to the questions

posed. As you will note I have added a sixth question and

provided my responses to it as well. I will be available for

any further questions or clarifications.

Please accept Sir, the assurances of my highest

considerations.

Sincerely,

Manouchehr Ganji,

introduction

Under today's deteriorating economic, social and political

conditions in Iran, a total U.S. trade embargo on Iran is the

single most important policy initiative that needs to be

taken if the overwhelming majority of Iranians, inside and

outside the country, are to be given the incentive to play

their full part in bringing about a change of government--to

allow power to be transferred to civilized, progressive and

democratic forces; an outcome which would, among other

things, remove the threat to the region and the world that

the present regime in Iran represents. It is my considered

opinion that a total U.S. trade embargo will ultimately be

effective, if (a) it is part of a coordinated strategy which

enjoys the actual as well as the declared support of other

governments and their agencies; and if (b) U.S. and other

policy-makers and their agencies are fully coordinated with

those civilized, progressive and democratic Iranian forces on

the ground, inside and outside Iran, which will take the lead

in bringing about a change of power. However, if such a

policy is not coordinated and well organized, it will not

necessarily bring about the desired results, and could even

be counter-productive. It is also my view that your list of

five questions should be extended to include one more. I am

therefore responding hereunder to six questions.

Question 1. We are aware of the severe problems that the

Iranian economy is facing. The government cannot serve all of

its short and long term debts, and basically is teetering on

total collapse. What benefits does Iran derive from its trade

with the United States, and how much importance does Iran

place on this trade?

Answer. The deterioration of the economic and financial

situation of Iran has been accelerating during the past

several months at an unprecedented rate. The situation can be

summarized as follows:

(1) The incapability of the country to service its short

and long term debts. This is in spite of the regime's efforts

to reschedule its debts of around $37 billion dollars, which

does not even include the debts to former communist

countries.

Presently, the debt service and foreign exchange policies

are out of control and the regime is incapable of taking

concrete steps to redress the situation.\1\

Footnotes at end of report.

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(2) From 1979 to 1995, the value of the Rial to the Dollar

had lost 30 times its value in the free market, whereas

during the last two months the value of the Rial has fallen

by an additional 50%,\2\ and no end is seen to the collapse

of the Rial. Most banks in the world are presently refusing

letters of credit from Iran.

(3) The shortage of foreign exchange has limited the import

of even essential goods such as pharmaceutical products, raw

materials, and spare parts. Domestic production is falling

rapidly--industrial production is running at 17%-20% of its

capacity.\3\ Agricultural production is also in trouble due

to the shortage of seeds, fertilizers and pesticides.

(4) To a large extent, Iran has also become ``a Dollar

economy'', in the sense that local prices are related to the

Dollar exchange rate. Consequently, the fall in the value of

the Rial, and the decreasing supply of goods (due to

shrinking imports and falling production) have been causing

price increases during the last two months of between 50% and

100%. This inflation is taking place in a country that is not

used to--contrary to some other countries--the psychology of

inflation, and lacks the experience and the mechanisms to

adapt to daily price increases.

It is in such exceptional context that we have to evaluate

the importance of trade between the United States and Iran.

Since the 1979 revolution, more than anytime before, oil

revenues play the central role in Iran's economy. In 1994

Iran's oil revenues amounted to $11.9 billion.\4\ In 1994,

oil purchases of U.S. oil companies from Iran amounted to

$2.567 billion, or 25% of total oil revenues.\5\ The direct

U.S. exports to Iran were around $800 million in 1994. Not

only are these imports essential and substantial for the

regime, but, in addition, they allow it to cover certain

technological needs as well as other goods that Iran must

purchase from the U.S. due to its close economic and

industrial ties prior to the 1979 revolution.

Consequently, an embargo by the U.S. under the present

circumstances would substantially affect a crucial factor for

the regime which is its foreign exchange earnings from oil.

Even if one argues that the regime will find other buyers and

suppliers, this substitution shall take some time, whereas

the various effects of the embargo would be felt much

quicker. More importantly, the psychological impact of such

an embargo by the U.S. would be greater than the effect on

the actual flow of revenues and goods.

Question 2. Owing to its severe economic condition, what

effect (socially, politically and perhaps even

psychologically) would a total U.S. trade embargo have on

Iran?

Answer. Generally speaking, the ruling mullahs have been

talking about the U.S. trade embargo on Iran since the

seizure of the U.S. Embassy in 1979, and they have told so

many lies and boasted on their ability to survive the embargo

that the term ``embargo'' does not carry much weight unless

the U.S. clearly indicates that it means business and that

the ``embargo'' is much more than mere political rhetoric.

Thus, the embargo must be effective and must be seen as

effective; which means it must affect the regime's finances,

deprive the regime from buying the goods it needs-- including

instruments needed for its security forces--and finally,

financially pressure the regime to scale down its budget,

especially the allocation to its radical constituency and

forces of repression.

The most important effect of a total U.S. trade embargo

would actually be the psychological one--from two quite

different points of view. In so far as the present regime can

be said to have any confidence in its ability to survive,

that confidence is based on its ability to demonstrate that

it is continuing to enjoy at least a measure of U.S. support.

A critical factor in this light is the fact that U.S.

companies, oil companies in particular, are being allowed to

continue to purchase large amounts of oil from Iran. The

present regime is thus able to say to itself ``Powerful U.S.

vested interests need us as much as we need them. We're okay.

We can ride this storm out.'' In effect, the U.S. oil

companies, in order to protect their own short-term vested

interests as they see them, are sending the signal that gives

the present regime its hope for survival. A total U.S. trade

embargo would therefore undermine and probably destroy

whatever remaining confidence the present regime has of its

survival chance.

On the other hand, the psychological impact on the

overwhelming majority of the Iranian people--who will pay any

price necessary to rid themselves of the present regime,

provided only they believe that further hardship, suffering

and sacrifice will lead to the removal of the present

regime--will be in my opinion enormous and positive. For most

of the past sixteen years the main cause of despair in the

hearts of the largely silent, frightened and anti-regime

majority in Iran has been the perception that, to one degree

or another, the U.S. and other major powers were supportive

of the regime. The peoples of nations are no fools? They have

learned that when the U.S. in particular, and other major

powers in general, are supporting repressive regimes, there

is little or no point in those being repressed risking

everything in an effort to remove the source of repression.

Orinary Iranians do not believe that the ruling mullahs

have stayed in power simply on the strength of their own

resources and wits. They truly believe that the mullahs have

the hidden support of the big powers, including the oil

companies and international

financial institutions, and that is why they have survived

despite their obvious inefficiency and ignorance of the

ways of the modern world.

The psychology of the Iranian society, which for historical

reasons at times overestimates the role and influence of

foreign powers, particularly the United States, would view a

total U.S. trade embargo as a clear signal that the United

States has finally taken a definitive position against the

ruling mullahs. At the same time, the regime's supporters

will also lose confidence and morale for the same reason.

Furthermore taking into account the general state

[[Page S4117]] of dissatisfaction and opposition to the

regime which prevails in Iran today\6\, the positive

interpretation of a total U.S. trade embargo would be

manifold greater than the immediate adverse financial effects

of it. It can be assumed that large economic interests mainly

in the bazaar and close to the regime would then be more

inclined to distance themselves from the regime, and

establish contacts with the dissatisfied middle classes and

lower income classes whose living standard have been

completely disrupted by inflation and unemployment.

A total U.S. trade embargo would therefore be the signal

for which the overwhelming majority of Iranians have been

waiting for. Meaning that the U.S. does no longer support, in

any shape or form, the present regime and that the commitment

to the final struggle to remove it is for Iranians to make.

In effect, the positive psychological impact on the

overwhelming majority of Iranians will lead, by definition,

to a positive political impact. One may ask, what of the

social impact? It can be said that the hardship and suffering

of most Iranians could hardly be worse than it already is.

But as indicated above, most Iranians are willing to make the

further sacrifices required of them provided they feel that

it could result in the collapse of the present regime and the

opening of the door to a worthwhile and democratic future.

This indirect support of the opposition forces at this

crucial stage when a power struggle within the regime is also

taking new dimensions would be well received inside and

outside of Iran.

Therefore, an embargo in the case of the Islamic Republic

is not only a trade issue and should not be looked upon only

as a balance sheet of what U.S. companies will be losing and

what will be the financial loss to the regime. Such a policy

will be suffocating to the ruling mullahs and will be taken

as a signal of support for those struggling for the freedom

of Iran. It will also act as a very strong signal to other

countries that the time for ``the party to which terrorists

are invited'' is over!

However, the sine qua non for the success of the

administration's policy to isolate the Islamic Republic of

Iran internationally is for the U.S. to do as it preaches and

to effectively take the lead in this regard thus making

itself a model by strictly adhering to such a policy. How can

the U.S. persuade other countries to restrain from relations

with the Islamic Republic when the U.S. is in fact itself a

major trading partner of that renegade regime? There is no

doubt that a total U.S. trade embargo would strengthen the

U.S. position in its efforts to isolate the Tehran regime.

Terrorism and extremism are like drugs, they have to be

fought internationally. Oil money in the hand of the Tehran

mullahs--the symbol of state terrorism and dark ages in

today's world--is like cleaned drug money in the hands of

drug smugglers. It is oil money combined with foreign aid and

assistance that has prolonged the life of the extremist

regime in Iran, enabling it to continue to disregard all

rights and freedoms of the Iranian people to carry out acts

of terrorism abroad, and to destabilize the moderate pro-

western Moslem countries.

Question 3. In its present form, does the Clinton

Administration's policy of ``dual containment'' of Iran and

Iraq work?

Answer. An evaluation of this policy has to be made

separately with regard to each country.

Iraq: After Iraq's invasion of Kuwait a radical change of

U.S. policy towards Iraq took place. The former policy of

support for Iraq against the regime in Tehran turned into a

policy of isolation. Destruction of Iraq's war power and of

its chemical and nuclear facilities became paramount. Since

the war between Iran and Iraq had ended, there was no longer

the need for military support of Iraq against the Islamic

Republic of Iran. Although Saddam Hussein is still in power

in Baghdad and continues his repressive policies. Iraq's

aggressive designs have been checked and neutralized. The

integrity of Iraq has been preserved, which is most

important, taking into account the possibility of a

fundamentalist Shiite state in the south and the possibility

of the Kurdish secession in the north. Although some volume

of trade has been going on between Iran and Iraq, taking into

account the historical issues and quarrels between the two

countries, no united front against the U.S. has been formed.

One can safely say that on the whole the policy of

containment has been successful concerning Iraq.

Iran: Taking into account the nature of the Islamic

Republic, the implication of this policy must be viewed

separately. Today, the Islamic Republic is the center of

support for the extremist fundamentalist movements such as

the Hamas, Jihad and Hizballah in their efforts to fight and

derail the Middle East peace process. The ruling mullahs in

Iran believe that if these extremist movements success in

destroying the peace process, they would also succeed in

destabilizing the moderate pro-western countries in the

region with Tehran's help and leadership. In spite of the

dual containment policy declaration and the U.S. government's

efforts to isolate the Islamic Republic, trade relations

between the two countries have remained the same or have even

risen. Oil purchases by U.S. oil companies and direct or

indirect trade between the two countries have continued at

even a higher level than before. The Tehran regime still

continues to pursue arms and weapons of mass destruction,

support international terrorism, subvert the Arab-Israeli

peace process, abuse human rights at home, assassinate

political opponents abroad and promote militant Islamic

fundamentalist movements in other Muslim countries in the

Middle East and in North Africa.

Under these circumstances, the regime in Tehran has

concluded that the United States is not serious and has no

real policy against it. In fact, they may be right as they

compare the U.S. policy towards themselves with the U.S.

policy toward Iraq, both of

which are within the context of the dual containment policy.

Therefore, the dual containment policy would be more

successful if tougher criteria would also be applied vis-

a-vis the regime in Tehran. The embargo is certainly a

first and a right step in that direction. It is imperative

however, that the stated target and aim of the sanctions

be the regime and not the people of Iran.

Question 4. What response would you have to the charge by

U.S. companies (oil companies in particular) that an embargo

only hurts U.S. companies and will not hurt Iran?

Answer. By definition a total U.S. embargo will result in

short term losses for U.S. companies, oil companies in

particular. In their position I would insist that my

government does everything in its power to see that the

embargo is global. In their position I would also have good

cause for grievance if other governments allowed their

companies to make short term gains at my expense. In other

words, there is a case for saying that a total U.S. trade

embargo could hurt U.S. companies more than it would hurt the

regime in Iran if the U.S. was unable to persuade all other

major powers to make common cause with it.

But there is another more important argument which U.S.

companies (oil companies in particular) would be well advised

to consider even if other governments did allow their

companies to go on trading with the Islamic Republic of the

Iran. If U.S. companies continue to be seen by a growing

number of Iranians as the agencies which are doing most to

prop up the present discredited and despised regime in Iran,

there will come a time when the present regime is replaced,

when U.S. companies will have much and perhaps everything to

lose. What U.S. companies would be well advised to weigh

carefully is what they might gain in the short term against

what they could lose in the longer term. If they give the

matter the consideration it deserves, U.S. companies should

not have that much difficulty in concluding that it is in

their best longer term interest to support a total embargo,

particularly under the current intense economic and political

conditions in Iran.

If other governments did then allow their companies to make

short term gains at the expense of their American

counterparts, U.S. companies would end up being the longer

term beneficiaries--because they would be seen by the

overwhelming majority of Iranians in a new Iran to have

played a part in bringing an end to the present discredited

and despised regime.

Question 5. If the United States were to impose an embargo

cited in Senator D'Amato's bill, in your opinion, would the

industrialized countries follow?

Answer. Since the Iranian regime is a real threat to

international peace and stability, and in view of the fact

that its declared policy is to harm U.S. interests, it seems

that the United States has a perfect moral and legal case in

seeking to internationalize its embargo in the same way it

mobilized the international community against the Iraqi

regime.

The argument that isolating the Iranian regime would only

make it more intransigent is wrong. So is the argument that

by bringing the mullahs into the international fold one can

tame them. Today, this argument is presumably put forward by

the Germans and the Japanese more than others. The fact is

that the Iranian mullahs, being extremely cynical, receive

the wrong signal from appeasement and accommodation. They

interpret such overtures as a sign of weakness which

indicates that the West is not serious about their unruly

behavior and lacks resolve and political will to confront

them. However, experience has shown that the ruling mullahs,

being bullies, lose their morale quickly as soon as they are

convinced that their adversary is strong, determined and

means business.

My guess is that some major powers would be mightily

tempted to seek to make short term gain at America's

expense--it least until it is clear that the present regime

in Iran is close to being toppled. Then they would try to

change horses. I am therefore of the opinion that U.S.

policy-makers would be well advised to every effort to bring

other major power on board. Much could depend on the extent

to which other major powers are consulted by the U.S. before

any announcement, (if there is to be one) of a total trade

embargo. If the British, French, Germans and others are able

to say, ``we were not consulted'', they consider that they

have enough scope to play games. If the United States clearly

indicates that it means business and that the embargo is more

than more political rhetoric, other industrialized nations

will think twice about doing business with the present regime

in Iran under the prevailing economic and political

conditions.

Question 6. If the United States were to impose an embargo

cited in Senator D'Amato's bill, what in your opinion would

be the likelihood of the present regime in Iran, or elements

within it, deciding to mount a terror campaign against U.S.

interests for the purpose of weakening American resolve and,

[[Page S4118]] intimidation, driving a wedge between the U.S.

and other major powers, the Europeans especially? And if you

think the present regime in Iran (or elements within it)

might consider such a strategy, how do you assess the ability

to perform?

Answer. The clerical regime has been in power in Iran for

sixteen years and it still claims it does not condone, much

less support, terrorism. By now, however, so much evidence to

the contrary has accumulated in so many countries that Tehran

clerics professions of innocence are seen as little more than

self-serving lies. There are no signs that the clerical

regime has any intention to mending its way. Reports from

throughout the Middle East and North Africa reflect the

Tehran regime's determination to use terrorist violence to

achieve its expansionist aims. One of the regime's latest

weapons in its war on the world is Hamas, a radical

fundamentalist Palestinian group on which the Islamic

Republic has lavished millions of Dollars as well as weapons

and guerrilla training.

As I know to my cost, the present regime has the ability to

carry out single-hit assassinations in virtually any place of

its choice. But the evidence of Lockerbie would seem to

suggest that for more complex terror operations the Tehran

regime requires (or prefers) the organizational assistance of

international extremist forces such as the

Hizballah, Jihad and Hamas. If the need to contain the

possibility of terror strikes by the present regime in

Iran arises due to the imposition of trade sanctions,

history dictates that the proper course of action is the

policy of combating terrorism at its source, and making it

clear to the proponents of terrorism that they have much

to lose as a consequence of their actions.

conclusion

A relatively effective trade embargo on Iran will place

noticeable constraints on the regime's finances. This will

deprive the regime from access to funds which it can use to

finance oppressive operations at home and mischievous

activities abroad. However, in order to maximize the effects

of a total trade embargo, there must be a coordinated and

well organized political action to further isolate the Tehran

regime at home and abroad. Such a political action should

embody measures to deny the regime the prestige and

respectability associated with a government in charge of a

State on the one hand, while it strengthens popular

opposition to the regime both at home and abroad on the other

hand. Most importantly, it is imperative that the stated

target and aim of the sanctions be the regime in Tehran as

opposed to the Iranian people. This distinction is extremely

crucial.

Action by the United States alone in imposing a total trade

embargo on the Islamic Republic will be effective

economically, politically and psychologically. However, there

is no reason why the U.S. should not seek to enlarge the

embargo by trying to internationalize it, particularly since

a coordinated strategy which enjoys the declared support of

other governments would unquestionably yield a much greater

success in isolating the Tehran regime. The policies of the

present regime in Iran are no less repulsive than those of

the apartheid regime in South Africa. It would be worth

reviewing the type of actions which were undertaken against

the apartheid regime of South Africa in the 1970's and 1980's

which were ultimately successful in promoting freedom and

democracy.

The United States Senate can initiate a campaign of moral

opposition to the regime in Iran by giving international

dimensions to its opposition to the clerical regime's

renegade behavior and inhuman policies. Unlike the ambiguous

policies of the past, a total U.S. trade embargo as proposed

by Senator D'Amato would not only send the right signal to

the ruling mullahs, but it would also solidify the leadership

position of the U.S. and enable it to successfully convince

its allies to comply and adhere to such a policy, and thereby

enhance the probability of success.

Footnotes

\1\In the Fiscal Year April 1994-1995, 56 billion have been

rescheduled up to now and will ultimately need to be repaid.

this amount would represent about 60% of expected oil

revenues for that Fiscal Year.

\2\In 1979, 1 Dollar was equivalent to 78 Rials; in January

1995, 1 Dollar was equivalent to 2000-2200 Rials, and in

March 1995, 1 Dollar was equivalent to 4000-4500 Rials.

\3\Imports of $2.5 billion are required if the industry works

at 25% of its capacity. Another $4.5 billion are needed for

projected subsidies.

\4\An additional $800 million non-oil exports revenues sold

to the Central Bank (out of total non-oil exports of $3.8

billion) has to be added to this figure.

\5\To show the importance of this figure, it should be noted

that in Fiscal Year 1995-1996 the Islamic Republic has

allocated $3 billion (arms purchases excluded) in foreign

exchange as current expenditures for military and security

matters.

\6\See interview with the late Prime Minister Mehdi Bazargan

in Frankfurter Rundschau of 12 December 1994. Mr. Bazargan

was the first prime minister of the Islamic Republic in

1979.