Good afternoon and welcome to the foundation for defense of democracies. My name is toby dershowitz. Many of you know we are a nonpartisan policy institute focusing on National Security issues. We are a source for research, and analysis and policy options for congress and the administration and for the media and certainly for the National Security community. We take no Foreign Government or Corporate Funding and never will. To learn more about fdd, please visit fdd. Org. I want to welcome the online lifestream audience and also those watching on cspan today. We invite everyone to join in on the conversation which we will be live tweeting fdd. The center on economic and financial power. We provide actionable recommendations to policymakers on how the u. S. Can leverage its economic and financial power to achieve its National Security objectives. In a moment well hear from our featured speaker, david peyman, deput,deputy assistant secretarf state for counterpart finance sanctions. Mr. Peyman oversees 25 sanctioned programs at the department of state. He works very closely with our department of treasury to implement current and new sanctions. He also interacts with governments around the globe and with the private sector to ensure effective and strategic implementation of the sanctions. Fdd appreciates the playe playet for you and your team undertake. After his remarks, we will have a conversation about the threat environment and the administrations approach to addressing them. The challenges we face in this area. Eric is the senior director of fdd center on economic and financial power. He previously served as the Senior Adviser to the undersecretaradvisor to theunded Financial Intelligence at the u. S. Department of treasury. Please join me in warmly welcoming the secretary of state. [applause] thank you very much for the introduction and good afternoon. Let me start by thanking you for having me here this afternoon. I believe that they were founded shortly after 9 11 to help protect the country from all threats and i believe youve done a fantastic job empowering policymakers with thoughtful analysis and investigative reporting that has helped keep the country safe and make the country safer. I think what distinguishes fdd is that you publish not only insightful and thoughtful analysis, that your products are operational and i can assure you that they are read throughout the government and we look forward to reading more. I would like to touch upon three topics today. First, the role of my division threat of financial sanctions and implementation. Second, i would like to discuss the approach with respect to iran and third enforcement posture more generally an make n announcement with respect to the maritime industry. The maritime industry is the key artery for sanctions globally for multiple policy areas including the sanctions against north korea or against venezuela and iran and syria as well. My division consists of two offices. Toby mentioned one. The policy implementation managers programs ranging from venezuela, north korea, iran, russia, syria, nicaragua and other sanctions. The countermeasure deals with illicit financing for the use of conflict so we are a government representative to the process and we are also at the state Department Representative to work very closely with our treasury colleague to implement antimoney laundering standards within the status. One of our goals is to help design the architecture of the framework for the respective sanctions regimes and we do so by working very, very closely with our special representatives on iran, special representative abrams on venezuela, and the deputy special representative on north korea as well as obviously the Close Partnership with our treasury colleague as well. We were instrumental in helping to draft recent executive order 2984 which allows us to make factors contributing to the situation in syria but it allows us to do more. It allows us to recognize that this regime along with other dictatorial regimes are moving the wealth of their own people and to not only enrich themselves by their families and we intend to hold them accountable. We also play an honest role. We dont want to see sanctioned underlining the National Security priority to the policies of the president and secretary and another policy area. So, for example when we decided to sanction the Venezuela Oil sector we worked closely with our Energy Colleagues to ensure the sanctions would cause instability in price or supply of oil. If it does obviously it has economic consequences for us here at home and consequences with respect to other sanctions policies including iran. We conducted the analysis and determined that it wouldnt have a negative impact and i think that time has proven that to be true. One thing we have done that is quite historic at the state department over the last year is we created an economic sanctions targeting team within my bureau to focus on designating those that violate sanctions granted to the secretary of state. So, this team undertook the largest ship owner in the world iand Major Chinese stateowned enterprise that was violating the sanctions against iran and i think the clear message was we were focused on strategic sanctions that have an impact beyond the designated target itself and has an impact across the industries and across sectors and to create the message but i think we are trying to send the secretary pompeo tried to send is that no company is too big to fail when it comes to protecting u. S. National security. No company is to save when it comes to protecting homeland and american people. And so, we undertook the designation notwithstanding the fact its a considerable increase in shipping costs globally not only with respect to china to send the clear message. One of the most important things we do in the state departmen sts to use actionable intelligence to engage with foreign actors to determine if there is an opportunity for them to change behavior before we have to resort. And its a fantasti fantastic rt often times that comes quicker and more efficiently than undertaking the designation. For example we engage quite considerably with countries and private sectors around the world to ensure they practically implement u. S. Sanctions. Can i mollify the president ial decree last year that allows it to withdraw from any ship within 24 hours used to this update terrorism and progress financing without the right of appeal to the ship owner. To appeal the decision to be flagged that decision will now come immediately to. One success was the implementation of the risk. The registry information sharing compact that was initially signed by a panel into liberia among the registries to help them share information about bad actors. So, then ill decide to be flagged the ship for violating sanctions and they will tell the other parties about that to ensure they do not flagged path. Icann announced today theyve signed ont onto the risk and otr countries are currently in negotiations to sign onto the risk as well. Let me move on to respect to iran and the sanctions regime towards iran they are to deprive the regime of funding is to engage its host of online maligd activities all around the world from developing Ballistic Missiles to engaging in a proxy war. To the sponsorshithrough the spf terrorist organizations from hezbollah on down. To come to the negotiating table and address the points laid out clearly goes towards the five key objectives. Objectives. No one comes to the sponsorship of terrorism. Number two come, stop for a pror in the region. Number three, gav give a full accounting of the Nuclear Program with inspection of all sites and number four, stop your development of Ballistic Missiles and number five, release all hostages including of course the u. S. Hostages. The. Funding the militia hezbollah for the first time is making desperate pleas for donations to fund its activities but look at the numbers. Oil revenues were down 80 . It isnt going to be in the regime to fund its maligned activities abroad and connect the human rights abuses at home. They are now putting some productions. We will target and designate anybody but stores iranian soil, petrochemicals or Refined Petroleum in violation of u. S. Sanctions no matter where they are and we will soon be announcing a sanction advisory on exactly that topic on the risk they face in others face in the storing oil in violation of u. S. Sanctions. We have been quite successful in the campaign to take the wheel of the market and that has led to iran resorting to the petrochemicals and Refined Products as a major source of revenue. We have now also adjusted the enforcement posture to protect those two sectors as well as the metal and construction and others are sanction as well. The regime does not have any good options to fund a modest budget. According to the imf, it is estimated that irans economy contracted by 9. 5 in 2019. However, that number is based on an audio export of approximately 600,000 Barrels Per Day. We know the iranian exports are less than that. Some analysts indicate it is closer to 12 to 14 . 10 is a depression. Inflation isnt a double digits and has been hovering around 40 . Unemployment is a doubl in doube digits. 17 out of every 18 iranian Pension Funds are bankrupt. That has resorted iran to issue being a false budget. Oil exports have comprised 30 of the revenues and the sanctions are bringing this number close to zero. The regime itself says that experts around 300,000 Barrels Per Day so curious why the regime put out the budget assumes 1 million per day. Shortly after they released a state budget it tanked and cannot be trusted to run its own economy. This regime cannot be trusted on its own economy. Iran has a few options to respond. They could cut the subsidies and we sold ou saw that when it wasd to raise gas prices that led to mass protest against the Iranian Regime for the first time we heard death to a dictator. Or it could tack the regime cronies or affiliated companies which it is not deciding to do instead it is shifting the burden to the middle sector. Iran has a multibilliondollar charity and Foundation Run by the cronies whose wealth doesnt reach the iranian people. 99 of 100 of these private companies have an affiliation to the regime. Failing state companies are continuing to be subsidized and protected from taxes further draining their cover so they have a choice to make. If the regime continues to divert money from the missiles into terrorist sponsorship proxy wars in the region it occurred to him so that it would hav he o start printing money which will force the economy to completely collapse or it could be spending on salaries, benefits and Economic Development but it cannot do both. This is why we here in the streets death to a the regime must swallow the bitter medicine of sanctions in order to finally change behavior. They know corrupt officials that are mismanaging the economy over responsible for their plight. All of these results have happened since the reimpositionf the sanctions in november, 2018 since the secretary decided not to issue waivers for several countries that were continuing to import iranian oil. That stopped in may of last year and so its been less than a year but we have seen these results. We also made it clear we leave open a channel for the export of food and medicine into iran while cautioning in 2017 and 2018 at the designated for the socalled humanitarian companies and iran and lebanon for funneling millions to the ir gc. Weve created a swift mechanism to help facilitate more humanitarian exports to iran while implementing Due Diligence to ensure it isnt coopting the export of humanitarian aid. The u. S. Maintains a broad exception to facilitate the flow of food and medicine and of this mechanism is one option. Special representative and the departmenrepresentative and thae public statements that we are willing to help the people fight the coronavirus and that offer unfortunately hasnt been accepted by the regime. With me move on to the third topic. The sanctions enforcement posture more broadly i would like to announce today that we will soon be issuing a Global Maritime sanctions advisory. The shipping sector, the maritime sector at large from fighting registries to Insurance Companies to ship owners and operators to Terminal Operators to managers and companies have more work to do to ensure that their vessels are not financing and contributing to terrorism or violating sanctionby deleting sh large. The sanctions as well. In this Global Maritime advisory, we are going to focus on the use of the ais. The transponders that provide the location of the schools should never be turned off. If they are, that presents a risk that requires heightened diligence. They should be asking from those that seek to register their vessels. They should see the history of this int and because been turnef or manipulated that maybe the reason to deny services. There are highrisk jurisdictions where they engage in the ship to ship transactions in order to invade included the persian gulf off the coast of china in false bills awaiting for accused to disguise and i would encourage anybody in the private sector who is suspecting a false document to contact the u. S. Government can could conty division, contact to determine if there is guidance on whether that documentation is indeed fraudulent. Private sector actors and port authorities should be using identification and tracking radar as appropriate to ensure they are tracking all vessels in the area of operation. So, for example if you were in the persian gulf is used 24 hours a day. If they thought the iranian port or stop the waters to conduct was just outside of the waters to conduct the transfer. We are encouraging ship captains and crews to take pictures but the exchange with. So, if you are getting oil from another ship it may not be appropriate to take pictures of the captain and crew of the ship and transparently inform them of the cargo ends up being sanctioned we would release that information and pictures to the appropriate authorities. Legal representation about the sanctions compliance are always appropriate in its appropriate to obtain the Beneficial Ownership information of the vessels and owners and those that are providing services to in the maritime sector. Not only the information about the Front Companies that might be seeking the flag or the parent of that front company. Rather the ultimate owner of the individual principles that own and control that entity that ultimately get the benefit of the flight. Its also to determine if your counterparty has their own sanctions compliance policies that are not as robust as yours should be. And those that are used in conjunction with other policy tools to achieve our Foreign Policy objectives. This administration has not penetrated use the full weight of the Great American economy to protect the National Security. Thank you very much. [applause] thank you that was a breaking announcement we appreciate you doing that here with us. And for those following us online if you have a question please feel free to tweet us i will check my phone to try and incorporate those in the conversation. To big announcements. And that advisory and then to focus on in the iran and venezuela context. And those in the good actors. There needs to be a greater appreciation and with those Economic Risks and dont have that infrastructure to protect themselves to be sure they are proactive so to have expert advice to meet those requirements the second step that they are before policy tools so it isnt necessarily enough to be compliant with the letter of the law. Perhaps in terms of the risk analysis and health of the business to the letter of the law is important to understand where it is going in the future. We have tried to engage and then to provide financing to ships to send a very clear message. And we want to have an open door policy and we want to see the questions from the private sector and there is much more space that it should be in business was conducted in a certain way or even ten years ago and the use of us sanctions has escalated and we are shown to undertake strategic targeting. The maritime advisory is to answer questions and to get people started on what they must do to where they need to be. Turning to venezuela is to engage in a significant Sanction Campaign so what are you planning with the economy to allow for free and Fair Elections . And to hold those accountable to undermine the democratic process with the dictator and those that are interfering in venezuela and for the continuing operations of venezuela we continue to hold them accountable for their behavior and interference for the maduro regime cronies and hold them accountable for the venezuelans wealth and property and assets block those out for the number one of a legitimate government that can run the country without interference. There is a lot of interesting things. First, it seems like this is a targeted pattern with the administration for those regimes that we dont like of National Interest so you have the trading designation in context of venezuela and then another designation in context of iran is that something your office in particular targets the Material Support network . Absolutely. Wherever we can we will pursue them. The first do not tell anybody what to do. And then to decide who we do business with who gets to use our financial system. And then to make sure we have the strongest and most reliable currency in the world and the strong