Thursday I (Dany) testified before the Senate Banking Committee on the question of terrorist financing. Below are excerpts from my testimony and recommendations, hopefully of interest. Let us know what you think. And have a good weekend.
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In the important discussions in Congress about how to stem the tide of cash to terrorist groups, Hamas among them, much attention has been given to the $6 billion in cash the Biden administration transferred to Qatar from accounts in South Korea for Iran’s use in September. That $6 billion was advertised as payment for the release of five hostages, but widely understood to be the consideration paid for an “understanding” between the Biden administration and the Iranian regime about its conduct over the coming months, including a pause on attacks on Americans and a slowdown in Tehran’s accumulation of highly enriched uranium. All carefully constructed, of course, to evade the congressional review requirements of the Iran Nuclear Agreement Review Act of 2015.
The Biden administration, which came in for substantial criticism for allowing Iran access to this money, has said it will not allow it to be used right now. As Brett McGurk, the White House Coordinator for the Middle East and North Africa, explained, the system for disbursal will work something like a joint signature on a checking account, that should be the end of the story. However, Qatar has contradicted our government.
Should Qatar defy the wishes of the U.S. government and proceed with a disbursal to Iran, you have options. First, it is important for Congress to ascertain whether the government of Qatar has agreed to make Iran whole while it withholds the $6 billion from South Korea. In that scenario, Qatar could simply hand over its own cash to Tehran and pay itself back later from the South Korean funds once the pressure is off. We don’t know if that’s the case, but Iran’s pro-forma protestations don’t sound like those of a government that’s just been deprived of $6 billion.
Second, if Qatar is actually disbursing the cash from South Korea, focus on the bank. If it chooses to become a financier to the Islamic Republic of Iran, the U.S. government can choose to designate that bank as a primary money laundering concern. Should that not deter the Qataris, a designation of that country as a state sponsor of terrorism is an option. Both are Executive actions, but Congress can force a decision with legislation.
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Since 2021, “the estimated value of Tehran’s additional oil sales — the difference between its realized revenue and what it would have earned had its exports remained at the maximum pressure period’s average level — was $26.3 to $29.5 billion dollars,” per research by the Foundation for Defense of Democracy. From 2019 through the end of 2020, Iranian oil exports averaged .775 bpd. In 2021, per the same report, they rose to an average of 1.14 mbpd, and this year jumped to an average of 1.38 mbpd. Iran’s total revenue from oil exports since 2021 is between $81 and $90.7 billion. Iranian foreign exchange reserves have doubled, growing from $12.4 billion in 2020 to $21.1 billion in 2023.
How did that happen? Simple. The U.S. government allowed it to happen. Why? One thing: Enforcement. It was no secret that the President hoped to reenter the JCPOA; The issue was not the lack of sanctions on the books or necessary authorities. Simply, the White House, or more accurately, Treasury stopped imposing sanctions.
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Who was buying the oil? Businesses in the People’s Republic of China, among others. So as China escalated threats against the US and Taiwan in the Pacific, sanctions against Chinese companies for buying Iranian oil dropped off.
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The cost to Iran of supporting these proxies isn’t cheap. In 2016, Hezbollah Secretary General Hassan Nasrallah credited Iran for “Hezbollah’s budget, everything it eats and drinks, its weapons and rockets, comes from the Islamic Republic of Iran.” In 2018, the Treasury Department pegged Iranian aid to Hezbollah at more than $700 million per annum. Hamas reportedly costs Iran about $100 million a year, though new reports estimate it could be up to $350 million a year. Palestinian Islamic Jihad (whose failed rocket inflicted the casualties at the al Ahli hospital) receives in the tens of millions as well.
To give you a sense of what happens when Iran has less money at its disposal, during the height of the so-called maximum pressure campaign, transfers to Iran’s terrorist proxies dropped dramatically, with Hezbollahis complaining to the Washington Post about furloughs, cut salaries, and necessary withdrawal from Syria where they had been fighting to support Bashar al Assad. Hezbollah was so strapped for money, it doubled down on organ trafficking, reportedly an important source of cash. In short, evidence suggests that when Iran doesn’t have money, terrorists don’t have money. +++
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Terrorist groups do have other sources of income. Hamas in particular earns substantial amounts from corruption, with almost every import into Gaza subject to “taxes” that go into Hamas leaders’ pockets. Indeed, while the UN bemoans the plight of Gaza residents – and rightly so – we should note that senior Hamas officials in both Gaza and Qatar, where the Hamas leader resides, have gotten very, very rich.
Numerous reports cite Doha-based Hamas leader Ismail Haniyeh’s net worth at $4 billion. His predecessor Khaled Meshaal is said to be $2.6 billion, with money in Qatar and Egypt. And there are others in Hamas worth billions.
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And then there’s Qatar. There has been an unholy understanding between Israel and Qatar for some time: While Israel maintained its embargo of Gaza, carefully filtering employees and imports across the Israel-managed crossings, Qatar has been allowed to act as a pressure valve, funneling cash into Gaza to allow Hamas to buy peace with occasional distributions of energy and basic goods. But Israel’s dealings with Qatar are not a get out of a jail card from U.S. congressional scrutiny.
Indeed, I would ask you, what role does Qatar play in the Middle East? It enjoys positioning itself as an entrepot – just a middle man with no favorites. That’s garbage. Qatar’s favorites are the Islamist extremists it promotes with its pet television channel, al Jazeera. Who lives or has lived in Qatar? The Taliban. Al Qaeda. The Hamas leadership. ISIS leaders. All of them, cheek by jowl with one of America’s major airbases in the region, Al Udeid. Now should be the moment Congress begins to scrutinize Qatar.
So, what else should Congress do?
1) Understand how U.S. assistance to both the West Bank and Gaza is enabling the perpetuation of both Hamas and Fatah rule.
2) Understand how UNRWA, the recipient of almost $6 billion in US support since 1950, has aided, nurtured and supported Hamas in Gaza.
3) Understand why it is that Lebanon, a country ruled by Hezbollah, a beachhead of anti-Israel attacks at its northern border, has been able to skate without a state sponsor designation.
4) And most importantly, shut down the loopholes in sanctions enforcement that, since 2021, have been permitted to facilitate Iran’s accumulation of cash that funds and arms and trains Hamas, Palestinian Islamic Jihad and Hezbollah, among so many others.
Full testimony here.