My name is Toby Dershowitz and im the Senior Vice President for Government Relations and strategy. As many of you know, fdd is a nonpartisan policy institute focusing on National Security issues. We are a source for are research and analysis and policy options for congress, for the administration, and for the media and certainly for the wider National Security community. We take no Foreign Government or foreign Corporate Funding and never will. To learn more about fdd, please visit fdd. Org. I want to welcome the online live stream audience and also those watching on cspan today. We invite everyone to join in on the conversation which will be live tweeting fdd. Todays event is hosted by fdd center on economic and financial power. Cefp provised 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 features speaker, david peyman for counter threat finance and sanctions. He overseed 25 sanctions programs at the department of state. He works closely with the department of treasury to implement current and new sanctions. He also interacts with governmen governments around the globe and with the private sector to ensure implementation of our sanctions. Fdd really appreciates the tireless work you and your team undertake. After his remarks, das peyman and david lorber about talk about at problem to addressing the challenges in this area. Eric is the senior director of fdd center on economic and financial power. He previously served as Senior Adviser to the undersecretary for terrorism and financial trillion dollars at the United States department of treasury. Please join me in welcoming deputy secretary of state david peyman. [ applause ] thank you very much for the nice introduction. Good afternoon. Let me start by thank you fdd for having me here this afternoon. I believe you were founded shortly after 9 11. To help protect our country from all threats. And i believe youve done a fantastic job in empowering policymakers with thoughtful analysis and investigative reporting. That really has helped keep our country safe and make our country safer. I think what distinguishes fdd is that you publish not only inciteful and thoughtful analysis but your products are operational. And their actionable. And i could show you that theyre read throughout our government and we look forward to reading more. I like to touch upon three topics today. First, the role of my division threat finance sanctions and sanctions policy and implementation. Second, i would like to discuss our sanctions approach with respect to iran. And third i would like to discuss our enforcement posture and make an announcement with the respect to the maritime industry. It is the key artery for sanctions of asia globally and including sanctions against north korea and our sanctions against venezuela and our sanctions against iran and syria as well. My division consists of two offices, toby mentioned one. The office of sanctions policy implementation manages programs ranging from venezuela, north korea, iran, russia, syria, global magnitsky and nick raug wau and others. We deal with illicit financing through conflict minerals so we are the government representative to the kimberly process and also the state Department Representative to fatif where we work closely with our treasury colleagues to implement antimoney laundering standards within the fatif. One of the key roles is to help design the architecture or the framework for aur respective sanctions regime and we do so by working very closely with our special representatives, especially representative hook on iran, special representative abrams on venezuela, deputy gan and wong on north korea as well as a close daytoday partnership with our treasury colleagues as well. So we were instrumental in helping draft the recent syria executive order 13894 which allows us to designate bad actors who are contributing to the worsening situation in syria. But it allows us to do more. It allows us to designate family members of bad actors. We recognize that this regime along with other dictator regimes are alluding the wealth of their own people and using that wealth to not only enrich themselves but enrich their families. And we intend to hold them accountable. We also play an honest broker role. We dont want to see sanctions in one policy area undermine the National Security priorities and the policies of our president and our secretary in another policy area. For example, when we decided to sanction Venezuelas Oil sector and peta vesa, we worked closely with our Energy Colleagues to ensure that the Venezuela Oil sanctions will not cause instability in price or supply of oil. If it does, obviously it has economic consequences for us here at home and it has consequences with respect to other sanction policies including iran. We conducted that analysis and we determined it would not have a negative impact and i think time has proven that to be true. One thing that weve done that is, i think, quite historic at the state department in the last year is that we created an economic sanctions targeting team within my bureau to focus on designating those that violate sanctions and sanctions authorities, granted to the secretary of state. So this team undertook to sanction costco, which is the largest ship owner in the world. A Major Chinese stateowned enterprise that was violating our sanctions against iran. And i think the very, very clear message that this this designation sent was that we are focused on strategic sanctions. Sanctions that have an impact beyond the designate target itself that have an Impact Across Industries and sectors and the clear message that i think were trying to send that secretary pompeo was trying to send is no company it too big to fail when it comes to protect itting u. S. National security. No company is too safe when it comes to protecting our homeland and the american people. And so we undertook that designate notwithstanding the fact it was a considerable increase in shipping costs globally. Not only with respect to china, to send that very, very clear message. One of the most important things that we do at the state department is to use actionable intelligence, downgrade intelligence engage with foreign actors to determine if there is an opportunity for them to change behavior before we have to resort to enforcement actions. And if they do change behavior, that is a fantastic result. Oftentimes that comes quicker and more efficiently than undertaking a designation. We also take in a multilateral approach to sanctions. So for example we engage with countries and private sectors around the world to make sure they comply with and implement sanctions. Panama signed a president ial decree last year that allows it to withdraw the flag from any ship within 24 hours that vi viet that violate sanctions or used for terrorism financing. Without the right of appeal to the ship owner. Before ship owners would have 30 to 60 days to appeal a decision to deflag. That decision will not come immediately and it will not be appealable. We have also worked with flag registries around the world to help them share information. So one key success was the implementation of the risk. Risk is the registry information sharing compact. An agreement that was initially signed by panama, the Marshall Islands and liberia, among the three largest flag registries in the world. To help share information about bad actors. So if panama or siberia plan to deflag a ship for violating sanctions theyll tell other parties in the risk about that deflagging action to ensure that bad actor doesnt flag hop. I could announce today that saint kits and nieves and honduras and pal ow have signed on to the risk and other countries are currently in negotiations to sign on to the risk as well. Let me move on with respect to our approach toward iran and our sanctions regime toward iran. Our objectives have been laid out by secretary pompeo and special representative hook and they are, number one, to deprive the regime of funding used to gain in the host of malign activities all over the world from developing Ballistic Missiles engaging in proxy wars in syria, to supporting and sponsoring Houthi Rebels in yemen and fire missile news saudi Population Center and sponsorship of terrorist organizations from hezbollah on down. Second, our sanctions are designed to incentivize the regime to come to the negotiating table and address the 12 points laid out clearly by secretary pompeo which really go toward five key objectives. Number one, stop your sponsorship of terrorism. Number two, stop your proxy wars in the region. Number three, give a full accounting of your Nuclear Program with inspection of all sites. Number four, stop your development of Ballistic Missiles. And number five, release all hostages, including, of course, u. S. Hostages. But what were really asking iran to do is come to the table and act like any other normal country in the world. And how have we gotten to achieving our objectives . Well, iran has said they are no longer funding certain Shiite Militia in iraq. Hezbollah for the first time is making public desperate pleas for donation to fund its activities. Lets look at the numbers. Oil revenues are down by 80 . Weve taken 2 Million Barrels a day of oil off the market from iran. That has amounted to 50 billion per year that is not going to the Iranian Regime to fund the malign activities abroad and commit human rights abuses at home. The regime is running out of options to store oil that we have sanctioned and they are now cutting some production. We will target and designate anybody that stores iranian oil, petrochemicals or Refined Petroleum in violation of u. S. Sanctions to sanctions no matter where they are. And well soon announce a sanctions advisory on exactly that topic on the risk private Sector Companies face and other face in storing iranian oil in violation of u. S. Sanctions. We have been quite successful in our campaign to take iranian oil off the market and that has led to iran resorting to petrochemicals and Refined Petroleum products as a major source of revenue and we have now also adjusted our enforcement posture to attack those two sectors as well as the metal and construction sector and other sectors that are sanctioned as well. The regime does not have any good options to fund an even modest budget. According to the imf, it is estimated that irans economy contracted by 9. 5 in 2019, however that number is based on oil exports of approximately 600,000 Barrels Per Day. We know iranian exports are less than that. Some analysts indicate the contraction is actually closer to 12 to 14 . 10 is a depression. Inflation is in doubledigits, it has been hovering around 40 . Unemployment is in doubledigits. 17 out of 18 iranian Pension Funds are bankrupt. They are in the red. That has resorted iran to issuing a false budget. Oil exports typically comprise 30 of irans revenues. And are our sanctions are bringing this number close to zero. The regime itself said it exports about 300,000 Barrels Per Day so it is curious why the regime put out a budget, a draft budget, that assumes exports of 1 Million Barrels per day of oil. Shortly after they release this fake budget, the real tanked. Iran cannot be trusted to run its own economy. This regime cannot be trusted to run its own economy. Iran has a few options to respond. It could cut sub siddys and we saw that when it was forced to raise gas prices. That led to mass protests against the Iranian Regime. For the first time we heard chants of death to the dictator, death to homenei or it could tax the wealthy elite and regime cronies or irgc companies which it is not deciding to do. Instead it is shifting the burden to the middle sector. Iran has a dark economy. It has multibillion dollars socalled charities and foundations run by hoe many and his cronies that are untaxed and whose wealth does not reach the iranian people. 99 of 100 of irans purportedly private companies have an affiliation to the regime or to the irgc. Failing state companies are continuing to be subsidized and protected from taxes, further draining irans coffers. So iran has a choice to make. If the regime continues to divert money to Ballistic Missile, terror sponsorship, proxy wars in the region, it could do so but it will have to start print arie start printing money which will cause the economy to completely collapse or delay spending on salaries, benefits and economic development. But it cannot do both. This is why we are here today in the streets of tehran and across iran death to homenei and people do know that the regime must swallow the bitter sanction in order to finally change behavior. They know that corrupt officials that are mismanaging the economy are responsible for plight. All of the results have happened since the reimposition of sanctions in november 2018, the full reimposition. But actually i would argue that t it has been less than a year sense they decided not to issue sre waivers for several countries that were continuing to import iranian oil. That stopped np may of last year. So it has been less than a year that weve seen all of these results. Weve also made clear that we stand with the iranian people. And we leave open a humanitarian channel for the export of food and medicine into iran. While cautioning that in 2017 and 18 the Treasury Department designated socalled humanitarian companies in iran and libya and im sorry, lebanon, por funneling millions to the irgc. Weve created a swiss mechanism to help facilitate more humanitarian exports to iran while implementing enhanced Due Diligence to to ensure the irgc is not cooperating with the export of humanitarian aid to the iranian people. The u. S. Maintains broad exceptions to facilitate the flow of food and medicine into iran and this swiss mechanism is one option. Special representative hook and our department have recently made public statements that were willing to help the iranian people fight the coronavirus disease and that offer has not, unfortunately, been accepted by the regime. Let me move on to the third topic. Our sanctions enforcement posture more broadly. Id like to announce today that well soon be issuing a Global Maritime sanctions advisory. The shipping sector, the maritime sector at large from flagging registries to Insurance Companies to ship owners to port operators to Terminal Operators and managers and Charter Companies have more work to do to entheir to ensure their vessels are not financing and contributing to terrorisms or violating sanctions at large, u. S. And eu sanctions as well. In this Global Maritime advisory were going to focus on the use of ais. Ais transponders that roprovide the location of vessels should never be turned off. If they are, that is a risk that requires heightened Due Diligence. Flag registration should ask for ais for those that seek to flag their vessels with flagging countries and they should see the history of the ais and if had has been turned off or manipulated that may be a reason to deny services. Same for Insurance Companies and Financial Institutions. There are certain obvious highrisk jurisdictions where vessels engage in ship to ship transactions in order to evade u. S. Sanctions. These include the persian gulf, the uae, iraq, malaysia, hong kong, off the coast of china. False bills of lading are used to disguise the original source of cargoes. I encourage anybody in the private sector who is suspecting a false document to contact the u. S. Government, contact my division, contact ofact to determine if there is guidance on whether that bill of lading or that documentation is indeed fraudulent. Private sector actors, port authorities should be using longrange identification and tracking radar. As appropriate to ensure theyre tracking all vessels in area of operation. For example if youre a port operator in the persian agriculture. Rlit could be used 24 hours a day, sen days a week to determine if all ships in the area have docked in an iran port or stopped in iranian waters to conduct an sds transfer or have stopped just outside of iranian waters to conduct an sds transfer. We are encouraging ship captains and crews to take pictures of the captains and crews of the ships they do an sds exchange with. So if youre getting oil from another ship, it might be appropriate to take pictures of the captain and the crew of that ship and to transparentally inform them if that cargo is sanctions, youll release those pictures to appropriate authorities. Legal representations about sanctions compliance are always appropriate. Importantly it is appropriate to obtain the Beneficial Ownership information of vessel owners and those your providing services to in the maritime sector. Not only the information about the Front Company that might be seeking a flag or the parent of that flag of that Front Company, rather the ultimate Beneficial Owner and the individual principals that