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The White House
Office of the Press Secretary

Remarks by Dennis Ross, Special Assistant to the President and Senior Director for the Central Region AIPAC National Summit

As Prepared for Delivery –
Thank you for inviting me here today to your National Summit.  It is always good to get out of Washington for a day, although coming down to Florida without playing golf means I’ll have to come back soon.
Thank you, Howard, for your continued leadership of this fine organization.  And thank you, Rosy, for your continued friendship to President Obama and his administration.
It is always a pleasure to speak to AIPAC, one of the most active and well-informed foreign policy groups in the country.
I want to spend some time talking to you today about an issue you care deeply about and where the AIPAC membership has been deeply engaged: Iran.  It is also the issue on which I spend much of my time.
When Secretary of State Hillary Clinton spoke to your Policy Conference in Washington six months ago, she laid out the Obama administration’s fundamental approach to what is one of the most complicated and serious challenges facing the United States today.  It is an approach rooted in the fundamentals of diplomacy and statecraft: building leverage through creative and persistent diplomacy to change the behavior of a government insistent on threatening its neighbors, supporting terrorism, and pursuing a nuclear program in violation of its international obligations.
The first step in this process was making an unmistakable offer of engagement to the Iranians to show their government – and the rest of the international community – that we were committed to resolving our long-standing differences with Iran through peaceful diplomacy on the basis of mutual respect.  We recognized that during the years of not talking, Iran significantly expanded its nuclear program and sowed its breed of terror and coercion across the region.
Engagement was also designed to take away excuses: the excuses of those in Iran who focused on blaming us for the failure of diplomacy; and the excuses of many in the international community who would not support additional pressure on Iran, because the United States was too often seen as part of the problem and not the solution.
And finally, engagement clearly signaled to Iran that there is a path of peace it could take by fulfilling its international obligations and restoring the confidence of the international community in the peaceful nature of its nuclear program.
Iran’s own behavior over the past two years, however, has demonstrated that it prefers defiance and secrecy to transparency and peace.  Iran continues to provide incomplete information about its nuclear program to IAEA inspectors.  When it revealed last September that it had constructed a covert enrichment facility outside Qom, Iran only raised greater suspicions about its nuclear program.  The Iranian government’s continued repression and intimidation of its own people following the presidential election last year demonstrated the lack of respect it shows even to its own citizens.  And in the Middle East, Iran continues to rely on tactics of intimidation and coercion to gain influence, a pattern clearly on display during President Ahmadinejad’s provocative recent visit to Lebanon and through Iran’s ongoing support for Hizballah.    
So the combination of our diplomatic initiative and Iran’s behavior has helped build a broad-based international coalition that is now imposing significant pressure on Iran to change its behavior.
But that coalition did not emerge on its own.  It required President Obama’s commitment and leadership on this issue.  Over the past 18 months, the President has consistently devoted more time to this issue than almost any other national security challenge.  It has been a focal point in his meetings and conversations with President Medvedev of Russia and President Hu of China, with our European partners, and other key international leaders around the world.  The President’s focus on this issue has been matched with the same level of intensity by the rest of the administration, especially Secretary Clinton and our new National Security Advisor Tom Donilon, who tirelessly orchestrated our diplomatic campaign.  As a result of these efforts, we produced United Nations Security Council Resolution 1929, which established the most comprehensive set of sanctions on Iran to date.
UNSCR 1929 bans a wide range of Iranian activities including ballistic missile activity, Iranian investment in nuclear industries abroad, and the export of certain heavy weapons to Iran, which the Russians in particular have used as the basis for canceling the sale of an advanced air defense system to Iran.
The resolution provides mechanisms for inspecting Iranian cargo and seizing contraband, and requires member states to exercise vigilance when conducting business with any Iranian entity, including the Iranian Revolutionary Guard Corps and Iran’s shipping firm IRISL.
The resolution highlights the potential linkage between Iran's energy sector revenues and procurement, proliferation, and its nuclear activities and.  And perhaps most significantly, the Resolution calls upon member states to prevent all financial services, including banking, insurance, and reinsurance if there are reasonable grounds to believe that such services could contribute to Iran’s nuclear or missile programs.  This provision, in particular, has provided the legal basis for states to take additional strong steps of their own.
Following the passage of 1929, we have seen the EU, and others in the international community from Australia and Canada to Japan and South Korea adopt additional sanctions measures of their own.  The EU prohibited the opening of new outlets of Iranian banks, the establishment of any new correspondent accounts by Iranian banks, and the provision of insurance or re-insurance to the Government of Iran or any Iranian entity.  In other words, Iran is no longer able to conduct business as usual abroad.  
And of course, with strong encouragement from AIPAC, Congress amplified all of these measures by passing the Comprehensive Iran Sanctions, Accountability, and Divestment Act, which the President signed on July 1.  This was a completely bipartisan bill indicating that the entire American political spectrum views the challenge of Iran as a foremost national security priority of the United State.  
This legislation makes it increasingly difficult for companies doing certain business in Iran to do business with the United States.  It makes it harder for the Iranian government to purchase and trade refined petroleum and the goods, services and materials to modernize Iran’s oil and natural gas sector.  It makes it harder for the Revolutionary Guards and banks that support Iran’s nuclear programs and terrorism to engage in international finance.  And companies that want to work with the United States government must now certify that they’re not engaged in prohibited business with Iran.
When Secretary Clinton spoke to you in March, she noted, “Our aim is not incremental sanctions, but sanctions that will bite.”  I think it is fair to say that over the last several months, we have produced biting sanctions.
Here are some of the results we have observed since the adoption of USCR 1929 and the additional sanctions measures:

  •  More and more international companies and foreign subsidiaries of American companies have stopped doing business in Iran.  These include:  Toyota, Kia, Daimler, Lukoil, Allianz, Lloyds, Royal Dutch Shell, and many others.
  • Major fuel suppliers, such as Total and TUPRAS are cutting back fuel shipments to Iran, forcing Iran to divert its own fuel production capabilities to cover domestic needs.
  • At the same time, investors in Iran’s energy sector are pulling out of projects, making it far more difficult for Iran to modernize its infrastructure or develop new oil and gas fields.  These include Royal Dutch Shell, the Spanish firm Repsol, and the Japanese energy firm INPEX.  Iran has been unable to increase production despite the presence of large oil and gas reserves, and its actual production will likely begin declining in the near future as a result of these difficulties.  Iran has limited abilities to advance Liquified Natural Gas projects, because the western companies with the required specialized technologies and services are now unwilling to work in Iran.
  • Earlier in October, the Iranian rial experienced a sudden drop in value by 10-20 percent, and the Central Bank had to intervene to stabilize the currency.  Iran is struggling to sell its currency abroad and access hard currency from its traditional suppliers.  The currency run is symptomatic of the public’s concern that the government is mismanaging the economy.  With an unhealthy and unstable banking sector, Iran’s currency problems are likely to get even worse.
  • Bazaari merchants in several cities including Tehran and Shiraz went on strike in July and again in October to protest government plans to impose value added taxes on certain guilds.  These are the kinds of reactions we can expect to see from Iranians as the government moves to raise funds to make up for economic mismanagement.
  • And we have already seen the Iranian government postpone a decision to implement a drastic cut in domestic subsidies due to the unrest it expects will take place when it has to raise prices on heavily subsidized gasoline and other important items.  With high unemployment and inflation, Iran has little margin for error.

The point here is that the pressure on Iran only continues to grow.
As my colleague Stuart Levey from the Treasury Department circles the globe explaining sanctions measures to governments and companies, and highlighting the risks of doing business with Iran, we expect that more banks and more industries will continue to cut ties with Iran.  The Iranians are a proud people – and rightfully so.  Their heritage and civilization are worthy of international respect and admiration.  But the Iranian people are now experiencing isolation because of the actions of their government.
Sanctions, like engagement, were always intended as a tool, not as an end to themselves.  There is no question Iran has been surprised by the magnitude of the sanctions and the depth of support for them in the international community.  They can no longer rely on those in the international community they thought would block such measures on their behalf.
Ultimately, we hope that the severe pressure Iran faces today will compel a change in behavior.  The door for diplomacy is still open and we certainly seek a peaceful resolution to our conflict with Iran.  But should Iran continue its defiance, despite its growing isolation and the damage to its economy, its leaders should listen carefully to President Obama who has said many times, “we are determined to prevent Iran from acquiring nuclear weapons.”
Before I leave you today, I’d like to say a few words about the Obama administration’s relationship with Israel, which is of course foremost on your minds.
I was fortunate to be able to visit Israel with then-Senator Obama in the summer of 2008.  I saw through his engagements with Israeli officials and with the Israeli people, including in Sderot, that he immediately understood Israel’s unique situation, its achievements, and the many threats it still faces.  The President has insisted repeatedly that our commitment to Israel is rock solid.  I see this commitment every day in the serious and unique manner in which we work to improve Israel’s security.
Just last week, I participated in the U.S.-Strategic Dialogue, a biannual event that includes a comprehensive exchange of views on regional issues crucial to both the United State and Israel.  It is a serious discussion among inter-agency representatives from both sides, and this administration has upgraded the level of our participation.
But more importantly, the Strategic Dialogue is just one of many, ongoing, and high-level exchanges that occur regularly between the United States in Israel.  I’m not aware of another country that we engage more regularly on such a wide range of issues.  These types of exchanges not only provide opportunities for discussion of ideas on policy, but they also help solidify connections between our two governments.  Over the last two years, I have seen four-star generals, intelligence officers, and high-ranking diplomats all develop personal relationships with their Israelis counterparts.
Frankly, this degree of coordination is unprecedented.  I have participated in these types of discussions for the last 30 years, and they have never been as intense or focused, reflecting the serious cooperation that we have today with Israel.
But our commitment to Israel’s security is defined not by talk.  It is defined by the kinds of actions and deeds that help make both of our countries safer and stronger in the face of common threats.  This year, President Obama decided to supplement our annual $3 billion in military assistance to Israel with a $205 million request to Congress to support Israel’s indigenously-developed Iron Dome short-range rocket defense system.  This assistance comes in addition to the existing multi-year commitments we have made for jointly developing Israel’s David’s Sling and Arrow missile defense systems.
Our military regularly conducts exercises with the IDF, including the JUNIPER COBRA ballistic missile defense exercise in Israel a year ago that involved 1300 U.S. servicemen and women, as well as other exercises involving our Navy, Marines, and Air Force.  These commitments are real.  They are tangible.  And they solidify the truly special relationship between the United States and Israel.  
This administration’s commitment to Israel has also been demonstrated in our work to defeat efforts in international organizations to single out or delegitimize Israel.  Most recently, we successfully coordinated the opposition to a resolution at the IAEA General Conference singling out Israel’s nuclear program for rebuke.  A similar resolution passed in 2009, but together with our international partners, we defeated the resolution last month in part because the Obama administration has restored America’s standing in international organizations.  We will continue to stand up for Israel in these organizations, but there should be no mistake that our efforts are strengthened when Israel is actively participating in peace negotiations.
I don’t have time to go through how we are working intensively to jump-start negotiations today, but I do want to close with a couple of points about the need for peace and the importance for both sides to take the strategic and historic decisions that are required to preserve a two-state solution before it is too late.
First, while we will continue to do whatever we can to support Israel’s security needs and to fight efforts to delegitimize Israel, the only true way for Israel to gain the long-term security it deserves is through a genuine peace with its neighbors.  There is a struggle today in the region between radicals and pragmatists, between those aligned with Iran and those who are not, between those who reject peace and those who are prepared to coexist with Israel.  It is in our interests and in Israel’s interests for the pragmatists to succeed in that struggle.  It is in our mutual interests to strengthen the pragmatists and discredit the narrative of the rejectionists – and real progress toward peace can make a significant difference in this struggle.
Second, there has been remarkable progress on the ground in the West Bank over the past two years in security and the economy.  I remember conversations not so long ago with Israeli security officials doubting that Palestinian security forces could ever take serious steps against terrorism.  Today, the situation is very different.  Palestinian security forces have reached new levels of training and professionalism, and they coordinate more closely than ever with their Israeli counterparts.  They are committed to stopping the kind of violence that only feeds the conflict.  Just last week, Palestinian security forces uncovered a large cache of weapons in Ramallah that can no longer be used in support of terrorism.  These positive developments will be difficult to sustain if the prospects for peace look less and less real.
Third, under Prime Minister Salam Fayyad, the Palestinian Authority is building the kinds of transparent and effective institutions required for a functioning, independent state.  Fayyad has said many times that he models his efforts in part after Ben-Gurion’s record of building the institutions of Israel so that the state could function once it was established.  Fayyad and President Mahmoud Abbas represent unique Palestinian leaders committed to non-violence, negotiations, and state-building.  Their interest in peace represents a strategic opening and it should not be lost.
Now, no one is more familiar with the challenges of reaching an agreement than I am.  And there are serious and difficult issues that must be resolved both in the near-term and in the long-run to achieve an agreement and ensure that it lasts.  I am certainly under no illusions about how hard that will be.   But no one should underestimate the strategic importance of peace for Israelis, for Palestinians, and for the United States.
I hope that as you continue to advocate on behalf of the United States and Israel, you will continue to advocate for peace, security, and the decisions that will be necessary to realize these objectives.
Thank you very much.