US looks at stiffening Iran sanctions

THE NATIONAL

Steven Stanek, Foreign Correspondent

October 07. 2009 12:59AM UAE / October 6. 2009 8:59PM GMT

Left to right, government officials, Jeffrey Feltman, Stuart Levey and Daniel Hill testify at the hearing yesterday in Washington. Alex Wong / Getty Images

WASHINGTON // Even as Barack Obama has praised the “constructive beginning” to US diplomatic engagement with Iran, a simultaneous effort is under way here to stiffen US sanctions against the Tehran government.

Mr Obama has called for “increased pressure” on Iran if talks fail to assuage US concerns about the Islamic republic’s secretive nuclear programme. Members of Congress from both parties, meanwhile, have proposed a variety of measures that would authorise the president to impose harsher sanctions as a parallel track to diplomacy.

Senator Christopher Dodd, chairman of the senate banking committee, said in a hearing on Iran sanctions yesterday that he plans to move forward this month with “comprehensive sanctions legislation”.

“I am committed, as I think my colleagues are as well, to ensuring that this congress equips this president with all of the tools he needs to confront the threats posed by Iran,” he said. “Our legislation will complement … and reinforce ongoing diplomatic efforts, and send a very, very clear signal to Iran’s leaders of what’s in store if they continue to defy the will of the international community.”

Among the options under consideration is a measure that would allow the president to cut US ties to foreign companies involved with supplying refined petroleum to Iran. Iran is one of the world’s largest oil producers, but it lacks the capacity to refine it into petrol, a potential pressure point that some have referred to as the country’s economic “Achilles heel”.

Senators have also sought to extend the US trade embargo to new entities, including a range of financial institutions and companies involved in the construction of Iran’s oil pipelines.

A measure proposed by Senator Robert Casey, a Democrat, and Sam Brownback, a Republican, would seek to ensure that the investments of state and local governments do not support companies doing business with Iran.

Senator Charles Schumer, a Democrat, and Lindsey Graham, a Republican , have introduced the Reduce Iranian Cyber-Suppression Act, which would prohibit the US government from dealing with firms that export communication technology to Iran.

The talk of stiffer sanctions comes a week after the Islamic republic agreed to grant access to international inspectors at the previously clandestine nuclear site near the city of Qom. In talks with the United States and five other world powers in Geneva last week, Iran also agreed to send most of its openly declared enriched uranium outside its borders to be turned into fuel.

But US legislators yesterday made clear that they do not believe Iran is negotiating on good faith.

“Iran, when it’s caught red-handed, has a habit of promising just enough to avoid a strong response from the international community. Not this time,” Mr Schumer said. “We should continue talks with the Iranians, but we should not trust them. The threat of new sanctions will only serve to strengthen the president’s hand as we pursue a diplomatic solution.”

Iran has faced US sanctions, in one form or another, since the Iranian revolution in 1979, when the US froze US$12 billion (Dh44bn) in Iranian assets. The Iran Sanctions Act, which bars US companies from directly investing or trading with Iran, has been renewed yearly since 1995, the last time in March by Mr Obama.

Daniel Hill, the acting under-secretary of commerce for industry and security, said at yesterday’s banking committee hearing that US authorities recently broke up a network of companies exporting US electronic components to Iran. The components later turned up in improvised explosive devices in Iraq and Afghanistan, he said.

Mr Hill also cited the case of James Gribbin, a former sales manager for Oyster Bay Pump Works in New York, who was sentenced in January to three years’ probation for attempting to export laboratory equipment worth $300,000 to Iran via the UAE. The US has led a largely successful effort to persuade the world’s major banks not to deal with Iran, added Stuart Levey, the under-secretary for the Office of Terrorism and Financial Intelligence at the US Treasury, who also testified at the hearing. Mr Levey said his department has completed work on a tough package of sanctions, though he did not provide specifics.

Without stronger international support, however, sanctions have had little bite, according to John Tirman, the executive director of the Massachusetts Institute of Technology’s Center for International Studies and an expert on US policy towards Iran. Mr Tirman estimates that overall sanctions have diminished the Iranian economy only by about one per cent.

“That hurts a little bit, but it really doesn’t hurt a lot and it clearly has not changed Iran’s behaviour,” he said.

Critics of sanctions worry that penalties aimed at Iran’s oil and gas industry could disproportionally affect average Iranians, perhaps stoking anti-US sentiment or bolstering the country’s leaders. Others are concerned that the failure to secure stronger international support for sanctions will continue to blunt their effectiveness.
The UN Security Council has imposed three sets of sanctions on Iran since 2006, but the measures have been diluted by Russia and China, two permanent members with deep economic ties to the Islamic republic.

China in particular has expanded its trade relationship with Iran in recent years and now supplies up to one third of Tehran’s daily petrol imports, according to a recent report in the Financial Times.

After the revelation of the Qom facility last month, Russia expressed some openness to sanctions, though many analysts still doubt the Kremlin would sign off on harsh penalties, particularly without China also going along.

The deputy secretary of state, James Steinberg, who testified at yesterday’s hearing, said he discussed sanctions last week with senior Chinese officials and stressed the importance of Chinese co-operation. “Quite frankly, the spotlight now is on Iran. We’ve come to the table; everyone is looking for their response.”

Mr Steinberg said the administration plans to meet Iranian officials on October 19 to review the details of its recent concessions, including the inspection of the Qom facility, which is scheduled for October 25.

“By the end of the month, we will have some very clear indications about what their intentions are,” he said.

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