President George W. Bush signed a bill August 3 to renew the Iran-Libya Sanctions Act (ILSA) for five years.
Set to expire August 5, five years after it became law, ILSA seeks to punish entities for investing in Iranian or Libyan petroleum industries, aiming to prevent Tehran or Tripoli from gaining petroleum profits that could be used to develop or acquire weapons of mass destruction or to finance terrorism.
The law requires the United States to impose sanctions on foreign companies that invest over $20 million per year in Iranian oil or gas development. Entities investing over $40 million per year in Libyan oil or gas development would also be sanctioned. The new extension law reduces this cap on investment in Libya to $20 million.
The administration had appealed for a two-year reauthorization of the act, largely to give it flexibility as it embarks on a broad review of U.S. sanctions policy. But Congress overwhelming approved the five-year extension in July and did not provide a mechanism for adjusting or reassessing the sanctions. The extension, however, allows the administration to report to Congress on the sanction's effectiveness, and it retains provisions of the original law that grant the president the right to waive sanctions.
No sanctions have ever been imposed under ILSA since it took effect in 1996, despite major violations by French, Malaysian, Russian, and Italian entities.