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Mr. Loeb said the U.S. government has no way of knowing that the MEK is no longer a terror group since its members have never allowed a thorough inspection of the 15-square-mile Camp Ashraf.

“They say that they have turned over a new leaf, but that has never been verified by the U.S. military,” he said.

The U.N. refugee agency also has started a process of determining refugee status of the dissidents, a necessary first step to resettle them in other countries. But the State Department’s designation of the MEK as a terror group is an obstacle to relocating the dissidents outside Iraq.

U.S. officials say it would require an act of Congress to resettle the dissidents in the U.S.

Britain and the European Union took the MEK off their lists of terrorist groups in 2008 and 2009, respectively.

Judge Stephen Williams said the Iraqi government justifies its actions against the MEK partly due to the fact that the U.S. continues to view the group as a terrorist organization.

Mr. Loeb disagreed: “Their theory is that if we take off the designation that animus will go away … We don’t agree with that.”

The MEK received military and financial support from Saddam Hussein’s regime, according to the State Department.

During the hearing, Mr. Loeb repeatedly referred to Camp Ashraf as a paramilitary base. Mr. Dinh pointed out that the U.S. military had disarmed Camp Ashraf residents years ago.

The U.S. turned over control of Camp Ashraf to the Iraqi government in June 2009.