By Yeganeh Torbati and Patricia Zengerle
WASHINGTON (Reuters) - Obama administration officials told lawmakers on Wednesday that sanctions relief under the Iran nuclear deal will not be allowed to be used to bankroll terrorism and said the sanctions can be "snapped back" quickly if Tehran violates the agreement.
The White House is conducting a lobbying blitz to convince Congress to back the agreement announced on July 14 between the United States, five other world powers and Iran. Lawmakers have until Sept. 17 to decide whether to reject the deal.
The United States will continue to target Iran's support for militants even though the deal lifts nuclear-related sanctions, Adam Szubin, the Treasury Department's acting under secretary for terrorism and financial intelligence, told a Senate hearing.
He explained that sanctions, from both the United States and other countries, tied to Iran's "bad activity outside the nuclear file" would remain in place despite the nuclear deal.
Members of the Senate Banking Committee questioned Szubin and State Department Under Secretary for Political Affairs Wendy Sherman, who was the lead U.S. negotiator during the nuclear talks, intensely over whether sanctions would be able to "snap back" quickly if Iran violated the deal.
One particular concern was whether contracts signed with Iran in the wake of the deal would be "grandfathered in" and remain in effect if Iran did not keep its promise to curtail its nuclear program.
"There is no grandfather clause. No provision in the deal gives signed contracts special status," Szubin said.
He said any violations of the nuclear deal are likely to be incremental, not major, but would still require a U.S. response.
"What we need to do then is obviously hit Iran in a proportionate way, show them that those breaches have consequences. Otherwise, we're just asking for larger breaches," he said.
Szubin also told the committee it will take at least six to nine months for Iran to fulfill the necessary conditions for initial sanctions relief.
If Iran were to violate its commitments under the deal, U.S. sanctions could be reimposed "in a matter of days," he said.
Sherman repeatedly reminded the panel that the military option remains on the table and insisted the deal was the best alternative to war.
"I believe the joint comprehensive plan of action is the most profound, most far-reaching arms control agreement ever negotiated," she said.
President Barack Obama, in a separate speech defending the deal, said Iran will be caught if it tried to cheat and build a nuclear weapon.