Rep. Ed Royce: Iran Is Following North Korea's Playbook

The congressman explains the urgent need to restore sanctions on the Islamic Republic at the West Coast Retreat.

Editor’s note: Below are the video and transcript of Congressman Ed Royce's speech at the Freedom Center’s West Coast Retreat, held at the Terranea Resort in Palos Verdes, California from March 21-23, 2014:

Ed Royce: The advantage of having some seniority on the Foreign Affairs Committee is you get an opportunity to see the same mistakes made over and over again, and there's a certain advantage to that.  With North Korea I used to wonder: am I the only guy in this meeting who thinks it's odd that we want to lift sanctions on North Korea?  I mean, we've got them by the throat.  The Treasury Secretary, Steward Levy, was finally able, after we caught them counterfeiting $100.00 bills, finally able to use his authority, since nobody else in the government would do it, to say, well, there's only 11 banks they use.  We just freeze the accounts.  They've got a decision to make in China whether they're going to do business with the United States or business with North Korea.  What do you think they're going to do?  Of course, the North Koreans couldn't move a dime.

Now, I had the unique experience of actually interviewing the fellow who was in charge of propaganda for three of these Kims in the dynasty, for the father, the grandfather, the grandson, right?  So he tells me that it shut that economy down like a drum.  I mean, it just absolutely capped all economic activity.  There was nothing they could do.  The fellow who defected out of the missile program told me for eight months everything was closed down on the missile line.  He said, you know we used to buy these clandestine black market gyroscopes that we needed for our missile programs out of Japan.  It costs more on the black market to buy what you need for an underground nuclear program and missile program.  But he said we couldn't buy a thing.  Well, the whole thing was collapsing.  He made one astute observation, which I have tried to remember.  You know, if you're the dictator and you can't pay the generals, that's not a good position to be in, and he said that was the position that Kim Jong-Il was in.  And yet somehow, out of the State Department, comes the idea that if we only lift $25,000,000.00 in sanctions at least it might get them back to the bargaining table.  Why?  I mean, we were in the position.  I mean, I was arguing at the time, it's collapsing.  Bring it on.  Let's see what we get.  No, no, no, no, no, says the State Department.  We have to lift those sanctions, it's just $25,000,000.00 and of course once we lifted the $25,000,000.00 what was the result?  Everybody had their confidence to go back in and do business again in North Korea.  All right.  There's the sign.  They're lifting the sanctions.  Let's get back in and do some business and they were out from underneath the pressure.

Now apparently, since we know the Iranians were always over there assisting them, that's what Intel says, apparently somebody was taking notes.  Apparently Iran decided, well if that's the way the State Department likes to play this game -- and believe me I have debated the individual right now who's in charge of these negotiations years and years ago in a 50 minute debate over this same issue with respect to North Korea.  But now you hear the same arguments.  Well, if we just lift the sanctions a little bit we'll get a little bit more serious.  Now, if we can just extend an olive branch, to quote one administration official fairly high up, since it was the Secretary of State, if we just extend an olive branch we will get their attention.  And the consequences are that while we sanction the United States right here and refuse to export our natural gas -- by the way, at a time when our natural gas would be worth something since we're capping wells here because of the glut, we're flaring natural gas, it could really turn out to be handy in Eastern Europe at the moment if we were exporting, but no, no, no, we're sanctioning our own because of our fossil fuel concerns; we're sanctioning the export of our natural gas into Eastern Europe, but we're willing to lift those sanctions.  For three months in a row now we've had an increase in petroleum exports out of Iran.  Well, maybe this has changed Iran's behavior.  Maybe this is worth it.  Let's think that through.  Let's see, what did we have in March?  We had Iran getting caught in the Red Sea with a scheme to first purchase out of Syria M302 missiles with a much longer range than anything that they've been buying lately, 100 miles, and then transfer those into Iran.  And then find a ship, hide it under, I think it was cement, ship that to Iraq again in order to keep it from being discovered, transfer it into Sudan, and unfortunately for Iran, the IDF were monitoring all of this.  This elaborate ruse, in order to disguise the magnitude of a transfer so big, in terms of heavy mortars, in terms of the longest ranged rockets ever to be introduced into a mosque. How long was the range?  Well, enough to hit the Mangurian Airport, enough to hit Tel Aviv, enough to hit Jerusalem.  I mean, these are serious payload, long-range, rockets and fortunately the IDF managed to seize the cargo ship.

So what was interesting to me was the reaction by the reporters.  Reading the story, and the reporter asks by what right does Israel board a cargo ship on the high seas.  Well, that's a penetrating question.  How about the question by what audacity in the middle of these negotiations does Iran transfer this new capability to Hamas and why is it that everybody standing there smiling in the pictures shaking hands with the foreign minister or Rouhani instead of asking the question, what the hell is going on and how can it be that this is not the question that all of us are wrestling with right now?  How is it humanly possible in the middle of this for Iran to be showing its true intentions, its true character, the fact that the regime cheats, and that isn't the storyline?  That isn't the introductory paragraph?

I am reminded of when I was in Haifa, went over during the second Lebanon war.  Somebody's got to talk to the marketing department over in Tel Aviv, that has got to be called the Hezbollah War but for some reason we call it the Second Lebanon War.  The war with Hezbollah and those rockets were coming in every day slamming into Haifa.  We were in Haifa.  I went down to the trauma hospital and there were 600 victims in there.  Now that is what Syrian and Iranian rockets were able to do with their limited range in shutting down one city, Haifa.  Imagine with these longer-range rockets now what it would mean in Tel Aviv and Jerusalem. Now, fortunately along the way Israel had the prescience to develop the Iron Dome.  And that is an Israeli development, something that after the fact we looked at and said, wow they did that for a dime on the dollar for what we could of, if we could have thought of it.  And so now it's important, like the Arrow Program where we're cooperating with Israel, now it's very important to us and to our allies.

For those who ask about our foreign aid support to Israel, you should ask them, where do you think these ideas come from and where are they trained on the battlefield, and how much would it cost to replace Israel if it was not in the Middle East as the bulwark against what is developing as a result of the chaos throughout the region.  But I just bring it up as an example because the press at the time had those same attitudes.  When I was talking to the reporters in Haifa trying to get them to focus on Israel, no, no, no, the focus was on Israel's defense of itself.  The question was, well yeah but look at this counter-battery fire into Lebanon.  And I would say, well, yeah but to put this into context, I've been watching it on CNN, I've been seeing this on the BBC, but why don't you reporters come down to the trauma hospital and do a story about why it's happening?  It's happening because Haifa is under siege and has been under siege for weeks.  But we have got to carry that narrative, my friends, because it is not going to happen in the major media, because I was told by the reporters even if we wanted to do that our editors tell us that would not be balanced.  Okay, so, by the way at that time my wife was in Jerusalem and I called her and I was venting, as I am right now, and she said, well, why don't you take some of the barbarians and just put them - take the shrapnel, pick it up, put it in a bag, start going on the shows showing it, because they can't resist that, they can't resist a demonstration of the shrapnel.  And she was right and then we got that out on CNN and so forth.

But, fortunately for Israel, Israel developed the Iron Dome.  So now Israel has the capacity to knock out a lot of these incoming rockets.  But the fact that we are looking the other way while Iran is doing this in the middle of negotiations is so similar to exactly what the way in which North Korea was emboldened during the negotiations there.  What were they doing?  They were transferring their nuclear weapons capability to Syria, and on the banks of the Euphrates they were building a weapons program for the Syrians this time.  That's what North Korea was doing in the middle of these negotiations.  So we have to learn from history and for that reason, the legislation, which I authored, which was this Iran's Sanction Bill, took Stewart Levy's ideas. I had asked him, if you wanted to just shut an economy down and collapse a government how would you do it?  And his response was well you just block the repatriation of earnings, this whole swift system, the whole system that is used to cash checks and so forth.  It's simple.  It's just that we lack the will to do it.  So we laid out in the legislation how to do that and what to do on petroleum, etc., and the impact of that would have been to simply implode the regime.  And I think it was Stewart that first said it, give the Ayatollah a choice between regime survival or compromise on his weapons.  So I wrote the Act, sat down with Eliot Engle from New York, from the Bronx. Eliot said this is exactly what we need. He's the ranking member, I chair foreign affairs, and he's the ranking member, and Eliot said let's try to get everybody on board.  We presented it to our committee, despite the administration's opposition, we had a unanimous vote in the foreign affairs committee.  We got it out onto the floor, and boy then the administration was working full throttle.  We can't have this pass, no, we've got to extend an olive branch, we can't do this.  And working time and a half, they were able to have it pass 400 to 20.  They got 20 votes, the progressive caucus got 20 votes.

So, now we're in the Senate and we're working towards two-thirds support, but of course the administration found a strategy here.  They went to Harry Reid who was willing to do their bidding, and despite the overwhelming support in the Senate for the bill, they bottled it up.  What I notice are more and more people saying, what is going on?  As you know, I do a lot of work out in the communities, in Los Angeles, Orange County, San Bernardino. I have parts of all of those counties, and my district is very ethnic, and so I've taken on the responsibility of going out into all these communities in LA and in Southern California and carrying our message because I've come to the conclusion that David's come to, waiting for other people to do it, it's just not going to happen.  So, as I'm out there what I notice is community after community have connected the dots.  We have got to get out friends out there talking to more people in more communities because everybody is waking up and saying, wait a minute, this was not the way it was supposed to turn out.  When we pushed the reset button with Russia wasn't the strategy that we would kick the Poles and the Czechs in the teeth, but pull out the interceptors, we wouldn't do the program to defend Europe against any launch out of Iran, and defend ourselves out of any launch from Iran, and in exchange we would get respect from Russia.  Russians would work with us because after all we pushed the restart button by doing something Russians wanted us to do.

And when we extended the olive branch to the Ayatollah wasn't the result supposed to be that they would stop the centrifuges from spinning, not that we would find out that the Ayatollah himself was the biggest investor in the chemical operation in Iran and that we were now lifting sanctions and exporting petro chemicals and making the Ayatollah rich. That wasn't supposed to be the outcome.  The outcome was not supposed to be that Iran in the middle of this negotiation was going to continue to be the No. 1 export power for terror around the globe.  He can get caught doing it again.  And wasn't it supposed to be that the centrifuges would stop spinning and the work on the Iraq plutonium reactor would stop, and then you see the foreign minister being quoted, no we're not stopping construction on the plutonium reactor.  Well you've got a bomb-making factory there, it seems pretty clear cut.  I mean, well, in the six-month agreement you just saw Catherine Ashton, you had the foreign minister for the EU say in all probability it's going to go beyond six months.  Oh, they're going to continue to run the clock like North Korea?  I mean, how many similarities are there in this playbook?  Well, my friends, this foreign policy is bankrupt.  This strategy is doomed to fail.  And the reality is that across the United States, and frankly in Europe, people are beginning to realize the cost.

Now you, in this room, have been the most dedicated to this cause because you understand the power of ideas, the power of getting those ideas out to the public.  So I actually shouldn't be up here venting with you because frankly you are the ones that have helped support David through all of these efforts, and the reason that we are in the position we are in is because of the intellectual ammunition that comes out of his shop and others allied with his cause.  If we were solely dependent on getting our ideas out of the State Department you know exactly where we would be.  And frankly, because of his ideas, the Republican Party has another chance.  We have another chance.  And we as a country have another chance to set this right, and that chance is coming up in November.  And if we keep our wits and we don't embarrass ourselves and we stay focused on the goal and we tell those who want to have these internecine battles within the party right now, look, the fate of the country is at stake, and I will tell you, there are a lot of Democrats with second thoughts who share those thoughts with me, right?  And in terms of taking on the administration on these issues, I mean, I still think about when you put these ideas front and center, the fact that we ended up with a unanimous vote in the foreign affairs committee, because looking at the hard reality of it people went along.

Now I want to just share with you when we talk about the State Department and the mindset one rather recent experience of mine.  I was over in Israel and met with the Prime Minister.  We were going through some legislation that I advanced through the committee for Israel's qualitative military edge and some other issues, and the State Department said well you have a delegation of seven members here.  Could you go meet with President Abbas?  I said certainly.  And so I started reading his recent communications to the Palestinian people.  Now, for many years I've tried to get through legislation in the Congress that gave us leverage, and we give Israel leverage on this question of Palestinian incitement, and every year the State Department had been able to block it.  But here was something new.  I had the remarks of Abbas himself, President Abbas himself, Dr. Abbas.  So I thought, well, here's an opportunity to talk with him.  And so in that exchange with our delegation I asked him about his broadcast on Iranian-owned radio in which he denied the existence of the Holocaust and I told him I brought with me the photographs my father took when Dachau was liberated.  And, as my father says, this was one camp, on one day, and there were camps all over Europe.  How can anyone deny, I know I'm supposed to call you Dr. Abbas because you have your doctorate in Holocaust Denial from the University of Moscow.

Now, by the way, you and I all know that the Russians knew better because they liberated camps in the east.  They knew exactly what they were doing when they stamped his doctorate in the University of Moscow and made him a doctor of Holocaust Denial.  They knew they were using a pawn there in the Palestinian authority.  That's all they were doing.  But he proudly is Dr. Abbas and everyone refers to him as such.  So I simply asked him, how could you do that?  And he said well it's been a long time and there are arguments about this or that, but regardless, he started back up, regardless of that the Palestinians shouldn't suffer today because of what happened then.  I said, no, the incitement language, my question goes to the incitement language you used, because the incitement language you used is the same language used in the 1930s to demonize a race of people, to marginalize a race of people, and the consequences of that we know what that was.  So you, knowing that, why would you use this language of incitement yourself?  Now we're no longer talking, my friends, about the fact that it's in the school books.  This is the president of the Palestinian's authority.  And he tried to change the topic.  And I said, and on your map, where is Israel on your map?  He said let's see your map, let's see your map.  Well, at about that point in time he remembered something and he started yelling at me, and you, Ted, you, you called my son a crook.  And I was trying to figure out what he was talking about.  And then I saw Ted Deutch from Florida sort of raise his hand.  He said, I'm sorry Mr. President, it was me.  It was Ted.  I called your son a crook.  Well anyway the conversation sort of went downhill from them, but we did later meet with some other Palestinian former representatives who did say the boss's son is a crook.  I said tell Ted, tell Ted Deutch.

The bottom line is this.  Afterwards, the State Department said we've never had a conversation go quite like that before.  I said well isn't it about time somebody talked about the messaging that's going on, because if you're not, what I had told President Abbas was, if you're not preparing the next generation for peace, if you're not educating them, if instead you're just inciting them to hate, if you're just poisoning the minds of the next generation, is the point I'm making to you, then how is there going to be peace?  And if the State Department keeps arguing against putting into the inclusion of the bill -- this year I got that included in legislation and we passed it out.  But I will tell you unless we continue to point out the obvious to the American public, and to our colleagues, frankly it's not going to help pointing it out to the State Department, I've come to that conclusion, but pointing it out to the world, that we're going to continue to find ourselves in the position we're in and our allies are going to continue to be in that position.  If, on the other hand, we find the voice to get out there and speak about the world as it really is and speak about our enemies as they are and call upon Americans to assist us, and of course correction, in November then I think we're going to see some very real changes.  Thank you all very much for the opportunity to talk with you here.

Audience Member: Congressman, it's my understanding that during the Clinton administration, Clinton approved trade with North Korea without any verification to see that they were living up to their promises.  Can you elaborate on that?

Ed Royce: Well we had conflict divisions, shall we say, between the Clinton administration and some of us in Congress, including Mark Kirk and myself.  Kirk was then a staff member on our committee on this whole issue and as you know, my policy is Stewart Levy's policy and then you have on the other end the engagement theory, and I think it's been proven out that engagement is simply a life line manipulated by regimes like that to keep themselves in power at the expense of their own people.  And I think the humane thing to do is to bring that government down, exert enough pressure that people want to get rid of the head of state.  If you don't pay the generals, let them turn up the heat, do Radio Free Europe, Radio Liberty-style broadcasting into the country, create dissent.  We've got the wrong format in terms of dealing with regimes like that.  I asked the Gallup pollster what percentage of people in Iran want change.  Two-thirds of the country want what they call a western-style democracy and the end of theocracy in Iran.  Well, you've got two choices there.  You can increase the unemployment.  You can increase the inflation.  You can increase the angst and the opposition to the regime or you can make the portfolio for Rouhani and for the Ayatollah grow in value.  You can, as I made my point, while we're sanctioning ourselves on exports of gas, either way, we've been asked, they're not writing to the president on this anymore, the heads of state of Hungary, Slovakia, the Czech Republic for Poland have all written the speaker to say please start a crash program to send gas east.  The cost is four times the price because he has a monopoly.
President Putin has 52 percent of his income for his military coming from oil and gas.  All we have to do is break the monopoly.  All we have to do is use competition.  That's something we're supposed to be for, competition.  You want to give him second thoughts about where he goes with policy?  How about competition?  You want to make Eastern Europe more independent?  How about giving them the gas that we're flaring and the wells that we're capping, right?  Why don't we engage with that kind of a strategy?  We had an Apollo program.  Why don't we have a crash course to do this?  So this is the request, as well as from the Ukraine.  That's how Ukraine got into this mess, because Russia had them by the throat over this issue and they were able to manipulate it, right?
Why not do the easy thing, but suffice it to say that we are not using that strategy and instead we are allowing the economy in Iran to recover.  I held up the Wall Street Journal when we had the Secretary of State testify during one of our hearings and the headline was Businesses Beat a Path to Iran for Opportunities, words to that effect.  Bill, you had a question.

Audience Member: Yeah. Congressman, you made some kind of statement to the effect that you've given up on trying to convince the State Department or something like that.

Ed Royce: Right.  Right.  I may have been overly tough on that.

Audience Member: But why are they like that?  Are they anti-American citizens?

Ed Royce: Listen.  Some people, Billy, Billy, some people just come to a different conclusion.  If we sit down and reason together, Billy, we ought to be able to come to a conclusion.  And that's the way a lot of educated people that have doctorates, if we can just sit at the table and talk back and forth.  But, Billy, that presupposes the person on the other side of the table is using reason and logic.  What if our Western constructs for that is not what's motivating them?  What if they're willing to lie and cheat and steal to get to their goal?  And what if their goal is not world peace as you and I assume everybody in this room's goal is.  What if their goal is to destabilize an entire region?  This is what was interesting about a conversation I had with a Middle Eastern ambassador, one of the Sunni ambassadors.  Myself and Eliot Engle, we were both at the table with him.  He said, now, I know that your government thinks one thing about how they're going to handle Iran, but let me tell you what I and other ambassadors believe will happen.

He said, I think that when they get this relief from sanctions, far from putting that money into assisting anybody in Iran, that money is going to go to destabilizing regimes all over the region.  He said, what do I mean?  There's a low-level insurgency going on in Saudi Arabia among the Shiite population because Iran is funding it.  Azerbaijan, they're sending imams into Azerbaijan, and they're saying, why are you supporting the secular government here?  Your Shia.  The Islamic Republic is Shia.  You're part culturally and historically of, you should be joining the Islamic Republic of Iran.  You should be part of us.  You should overthrow this government.  He said -- this is as close as I can remember to his examples -- they are that close to toppling the government in Yemen, the Iranian forces, their intelligence forces.  And he said, and I need not tell you the history they played in Sudan, and then he went down a long laundry list in terms of North Africa and everything else that you -- so let's just say for a minute there is a conflict division between the world that you and I want to see versus the objective of the Iatola in terms of sowing that instability.  I readily understand how people at the State Department can come to a different conclusion.  But the conclusion I have come to is more like Ronald Reagan's short retort about well, how does this end between the Soviet Union and the United States.  We win.  They lose.  I think the shorter answer is better because I think as Reagan understood that his adversaries didn't have the same goal and therefore it was necessary to spread a different ideal for human progress.  I think it's that kind of a situation.  Was there one more question?

Audience Member: Congressman, please give us what you think or how the confrontation with Russia will play out over the Ukraine and Eastern Europe in view of what you've said about the State Department and as you perceive the administration's mindset.  Is this mindset going to change?

Ed Royce: I think we are going to get more and more support for the legislation which we passed out of committee that calls for a massive targeted export of our L and G reserves into Ukraine and Eastern Europe, as well as support for shell gas exploration in Western Ukraine and a whole host of initiatives that will help make Eastern Europe independent of Russian pressure.  I think the consequences on that are far more important than the calculus on any sanctions on an individual business tycoon or whatever.  I think the only thing that matters is that 70 percent of Russia's exports are gas and oil.  And the profit, where they make the most profit is in that Eastern Europe and Central Europe market, and I believe that if that is threatened, the whole calculus in the Kremlin changes and they begin to say, okay, how do we wind this thing down, how do we take this down a notch?  And that's how you get their attention and that's the way forward, and, as I said, that's the way you give Europe some breathing room to be more independent and not to feel that any decision they might make counter to Moscow would risk turning off the valves again, which is exactly what the Russians have done in the winter.  So if we put up an alternative and if we also begin to develop pipelines from Central Asia into the region, that all will come with time.  But what's most important is that markets react very quickly, so if the administration were to announce a crash course and announce that the L and G facilities in Texas right now are shipping to that market, instantaneously the future's market would react.  The stock market in Moscow would react and certainly the currency would react and that is the clarifying moment for those in charge of policy in Russia.  And you're doing it through competition which is the capitalist way.

Audience Member: Hi.  I'm just wondering if there's any move in Congress to get arms to the Ukrainians.

Ed Royce: Well, there is, Jack.  There were efforts to assist the Ukraine in that way but I can tell you in order to have a credible threat that would impact Russia's calculus economically, the most overt and quickest thing we could do is gas because that's what would change the balance.

Audience Member: And if we don't do these things and Putin continues his march and NATO does nothing, will NATO collapse?

Ed Royce: I think Russia is a dying power.  I think if we look ahead, well, it's not a dying power, but you've seen the demographics of the birth rates in Russia and you know what's happening with radical Islam.  You all saw the footage from Beslan the school.  I know several, in Dagestan several moderate, actually Muslim representatives there.  They're scared to death of what's happening with radical Islam.  I think Putin is very much locked in the past.  I'll tell you a quick story, doctor.  The first time I met him, he was a councilman from Saint Petersburg.  There were two of them and two members of Congress were asked to stay over and meet with them and I had a friend there and Jack was -- some of you know Jack Wheeler -- Jack was arm wrestling Putin.  Putin, we'd had a few drinks and Putin's very competitive, and in the middle of this effort, well, actually Jack won the first round because he's very muscular.  He works out a lot but he had a hard time.  I mean this was really, Putin's a strong guy.  So Jack wins and Putin says, I think he says, I'm left handed.  Now the other arm.  And so in the middle of that second match, Putin looks at Jack and jumps up, Jack jumps up and Putin pokes him in the chest.  Jack had done some work in Central Asia and he yells, CIA.  And Jack goes, KGB.  Then Putin lets out this big laugh, and my take away is that Putin is very much in the past, a KGB guy that remembers the high point of the empire or what-have-you, but at the same time what he has to contend with is a declining birth rate, an ever-encroaching radicalization of a part of the population and ten years from now we're going to be dealing with somebody else in Russia.  And Russia's big problem is going to be what's happening in Southern Russia with respect to radical Islam.

Al-Qaida affiliates are operating all through that region and they're growing explanentially.  And so I think Russia's real, long-term -- I mean we've screwed this up in all the ways that I've explained to you.  But we can get it back in terms of a situation that can be managed because the real challenge for the West is going to be the Al-Qaida affiliated organizations, they're going to continue to grow and let's keep our eye on that ball.  Let's solve this problem. To solve this problem, let's show the world what we can do.  We produce far more gas than Russia.  It's just Russia exports more into that one little market where they've got a monopoly.  Let's knock them off their game there.

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