Following revelations about Qom, Obama, Congress seek much tougher sanctions against Iran

WASHINGTON — In the decades since the 1979 Iranian Revolution, US sanctions policy on Iran might be described as one of pistachios and Persian carpets.
With few exceptions, little beyond these typical Iranian exports is allowed to breach US shores, and the reverse applies to US exports.

Now, unless Iran makes good on its recent promises to open up its nuclear facilities to international scrutiny, Washington is set to use US leverage in world trade to extend those sanctions worldwide.

The Obama administration has given its congressional allies a green light to move ahead with legislation that would effectively create a choice for any foreign entity dealing with Iran:

Stop trade with the Islamic Republic or forget about trade with the US.

US Sen. Chris Dodd (D-Conn.), the chairman of the Senate Banking Committee, called a hearing Tuesday, Oct. 5, that would wrap existing and proposed legislation into a single omnibus sanctions bill.

In the US House of Representatives, Rep. Howard Berman (D-Calif.), the chairman of the Foreign Affairs Committee, is set to allow similar legislation to advance.

“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,” Dodd said.

The central component of the legislation is found in a bill proposed earlier this year by Sens. Evan Bayh (D-Ind.), Joe Lieberman (I-Conn.) and Jon Kyl (R-Ariz.). Read the related IJN editorial

It cuts off from US trade any company, nation or individual that “sold, leased, or provided to Iran any goods, services, technology, information or support that would allow Iran to maintain or expand its domestic production of refined petroleum resources, including any assistance in refinery construction, modernization or repair.”

Iran is a major oil producer, but its refineries are in disrepair and it imports 25% to 40% of its refined petroleum.

If refined petroleum exporters fall into line, the impact could be devastating because gasoline subsidies have been key to sustaining Iran’s faltering economy.

THE revelation last month that Iran has maintained a second secret uranium enrichment plan has reduced reluctance in the Obama administration and in Congress to make the leap to the more draconian sanctions.

“The thinking is, this is not the time for half measures, this goes for the jugular,” one congressional insider said.

The preference is for the UN Security Council to enact similar sanctions should Iran fail to meet its obligations by the end of the year.

If the Security Council falters, Congress will be ready to act, said the congressional insider.

The Security Council has already imposed three rounds without stopping Iran’s nuclear program — December, 2006; and March, 2007; March, 2008.

The US introduced its own direct sanctions after Iranian students, with government sanction, held US Embassy staffers hostage in 1979.

President Ronald Reagan enhanced the sanctions in his first term.

Today they are among the most far-reaching in their strictures.

The Treasury’s Office of Foreign Assets Control lists allowable imports as gifts valued at less then $100; food (including the pistachios); carpets; and texts.

Exports are generally banned unless specifically licensed by the treasury office.

Treasury officials are exacting about such bans.

One December, 2003 letter by the office allows a petitioning US company to include Iranian companies in its searchable database but bans the company from enhancing in any way the Iranian companies’ publicity material. (The company’s name is censored from the document.)

The sanctions being advanced by Dodd and Berman are not the first “secondary” sanctions — targeting third parties doing business with a rogue regime — that the US has imposed on Iran.

Such sanctions have been in place since the 1980s, and they became stricter in 1995.

AIPAC lobbyists capitalized on the jockeying at the time between the Republican Congress and the Clinton administration over who was more hawkish when it came to dealing with rogue states.

The sanctions ordered by President Clinton were enshrined in laws passed by Congress, but never enacted, neither by Clinton nor by George W. Bush.

The sanctions in the Bayh bill are much more severe.

Not only do they ban all refined petroleum exports with Iran — beyond the $20 million investment threshold in the earlier sanctions — but instead of allowing the president options, they become law.

The president must waive the law in order to bypass the ban.

The breadth of the Bayh sanctions might not pass the World Trade Organization test, according to Keith Weissman, the former Iran analyst for AIPAC who helped shape the 1990s sanctions.

It may also create problems for China-US ties, Weissman noted.

“Iran tends to do deals with Third World companies in China, in Indonesia,” he said.

Chinese companies implicated are likely state-owned, which would theoretically subject China’s government to sanctions.

The Obama administration’s outreach to China, encompassing issues as diverse as climate change and disarming North Korea, is delicate. Backers of additional sanctions say that such tests may never come to pass.

The effectiveness of sanctions is less in their reality than in their threat, as a Sword of Damocles hanging over Iran traders.

None of the sanctions from the Clinton-era menu have ever been enacted, but they “had a huge effect; companies were afraid we’d impose it on them,” said the congressional backer of new sanctions.

Another concern is that the sanctions will affect Iranian people. In Iraq, Clinton-era sanctions had the desired effect of killing off Saddam Hussein’s weapons of mass destruction program, but at the same time they helped perpetuate poverty and hunger.

Some Jewish community groups backing sanctions against Iran, particularly the Reform movement, have sought assurances that proposed sanctions will not have similar effects on Iranians.

THERE are other measures wrapped into Dodd’s initiative that are less controversial among opponents of sanctions.

One would expand existing sanctions on companies dealing with Iran’s banks to include its Central Bank.

That would effectively cut off Iran’s economy from the US dollar, the pre-eminent currency in world markets.

Dodd also wants to include legislation championed by Obama when he was a US senator that would protect businesses and other entities — including US states — from lawsuits by shareholders when the businesses divest from companies that deal with Iran.